Resolution of 26 April 2022, Case No 30 Cdo 3690/2021 –⁠⁠⁠⁠⁠⁠ Different legal bases for claims against defendants in single proceedings

Resolution of the Supreme Court of 26 April 2022, Case No 30 Cdo 3690/2021 

(Different legal bases for claims against defendants in single proceedings, jurisdiction under the Brussels I bis Regulation, contractual and delictual liability)

The third defendant in a lower instance case raised a jurisdictional challenge under Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (hereinafter "Brussels I bis Regulation") to a claim for damages flowing from a loss of investment.

The first instance court found a lack of jurisdiction to try the case on the basis of Article 7 of the Brussels I bis Regulation. The three defendants made all decisions about investments, as well as the investments themselves, from the Republic of Malta. It was held that pursuant to Article 7(1)(b)(ii) only Maltese courts have the jurisdiction to try the case. It was also found that the third did not operate a branch, agency or other establishment in the sense of Article 7(5) from the Czech Republic that could give rise to jurisdiction therein. 

The first instance judgment was successfully appealed at the High Court in Olomouc. The High Court found that the establishment operated by the third defendant in the Czech Republic – for the purposes of postal and customer communication – satisfied the criteria in Article 7(5). Further, the other two defendants were members of the third defendant's board of directors and negotiated with the appellant in her name. Jurisdiction could therefore be found under Article 8(1) of the Regulation since the claims against the three defendants were so closely connected that it was expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Being a person domiciled in the Republic of Malta, a Member State, the third could also be sued in the courts for the place where any one of the other defendants were domiciled – in this case, the Czech Republic. The third defendant filed an extraordinary appeal to the Supreme Court.

The Supreme Court's decision was primarily concerned with the interpretation of Article 8(1) of the Brussels I bis Regulation. The third defendant pointed to paragraph 50 of the judgment of the Court of Justice of the European Union of 27 October 1998, Réunion Européenne SA, C-51/97 (hereinafter "Réunion Européenne"), arguing that two claims in one action for compensation, directed against different defendants and based in one instance on contractual liability and in the other on liability in tort or delict cannot be regarded as connected. The appellant entered a contract with the third defendant while liability of the other two defendants could only result from a breach of law. It was argued that the different legal bases of the claims obviated the risk of irreconcilable judgments resulting from separate proceedings with which Article 8(1) is concerned. Since the claims could not be regarded as connected, the third defendant argued she could not be sued in Czech courts on the basis of proceedings against the other two defendants.

The Supreme Court relied on existing Court of Justice of the European Union (hereinafter "CJEU") jurisprudence to distinguish Réunion Européenne from the present facts. Réunion Européenne dealt with Article 5 of the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (now Article 7 of the Brussels I bis Regulation) and hence its ratio does not apply to Article 8(1) of the Brussels I bis Regulation. Article 7 lays out an exhaustive list of cases of when the Article can give rise to jurisdiction. To base decisions about further proceedings on Article 7 jurisdiction would interfere in the scheme of the Regulation. On the other hand, the fact that claims against various defendants in single proceedings have different legal bases is not an obstacle to finding jurisdiction under Article 8(1) of the Brussels I bis Regulation. The Court also noted that this finding is supported by later CJEU jurisprudence as well as an earlier resolution of the Supreme Court of the Czech Republic from 29 October 2015, 29 Cdo 1849/2013.

The Supreme Court held that the third defendant may be sued in the Czech Republic since the claims against her and the other defendants are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. As the CJEU noted in its judgment of 11 April 2013, Sapir and Others, C-645/11, claims are closely connected despite relying on different legal basis when they are directed at the same interest – in this case, the retrieval of damages from the lost investment. The Supreme Court held that the actions against the defendants were sufficiently closely connected since all three knew that the appellant did not fulfil the prerequisites of a qualified investor but allowed her to invest in their fund regardless, the other two defendants were members of the third defendant's board of directors and dealt with the appellant before and after she concluded a contract with the third defendant, and the various claims are directed at the same interest. The Supreme Court therefore upheld the decision of the High Court in Olomouc and found jurisdiction under Article 8(1) of the Brussels I bis Regulation. Since jurisdiction was thus established, it was not necessary for the Supreme Court to examine the issues under Article 7(5) raised at the lower instances. The extraordinary appeal was dismissed.