2019/08/28 – 27 Cdo 4352/2017 (summary)

Resolution of the Supreme Court of 28 August 2019, Ref. No. 27 Cdo 4352/2017
(Unjust enrichment, international jurisdiction, breach of duties by the member of the board of directors)

The claimant in this case demanded a payment of the amount of almost 25 million Czech crowns. She based its claim on the fact that the first defendant as a sole shareholder of the claimant in collaboration with the second defendant who was in relation to the claimant in the position of a controlling person, decided, in the period from 2006 to 2012, about the distribution of the profit. According to the claimant, these decisions were made contrary to the law and good morals and thus were null and void. On the basis of these decisions the first defendant received the above mentioned sum and the second defendant was the final recipient. Thus, both defendants received an unjust enrichment to the detriment of the claimant. In the proceedings before the regional court the defendant raised the objection of lack of international jurisdiction of Czech courts pointing at his residence in Switzerland. The regional court dismissed the objection recalling the rules applicable when determining international jurisdiction in the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“the Lugano Convention II”). It concluded that the jurisdiction to decide the case is given on the basis of Art. 5 (3) of Lugano Convention II. The regional court also referred to the case C-228/11 of the Court of Justice of the European Union (“CJEU”) according to which a ‘place where the harmful event occurred or may occur’ is intended to cover both the place where the damage occurred and the place of the event giving rise to it, so that the defendant may be sued, at the option of the applicant, in the courts for either of those places. In this case, the place where the harmful event occurred was according to the regional court the seat of the company of the claimant, i.e. the Czech Republic. In the end, the regional court also refused the argument of the defendant referring to Art. 6 of the Lugano Convention. The High Court confirmed the judgment in the appeal.

The Supreme Court firstly considered the relationship between Art. 5 (3) and Art. 6 of the Lugano Convention. It confirmed the conclusion of the appeal court that Articles 5 (3) and 6 of the Lugano Convention II are two separate and independent rules determining a jurisdiction. The Supreme Court refused, however, the conclusion of the appeal court according to which in order to establish international jurisdiction of Czech courts it suffices that they have jurisdiction with regards to at least one of the more claimed reasons on which the claim is based. Such a conclusion is contrary to the case-law of the CJEU. Nevertheless, in the present case, the only claim on which the action was based and which falls under Art. 5 (1) instead of Art. 5 (3) of the Lugano Convention II, is the breach of duties by the member of the board of directors of the claimant company. According to the Supreme Court, the court having jurisdiction in this case is the court within whose jurisdiction the contractual duty was supposed to be fulfilled where in the consequence of breach of this duty the claimant incurred damage. The Supreme Court was of the opinion that the second defendant, as the member of its board of directors, ought to fulfil his duties mostly in the Czech Republic, i.e. in the seat of the claimant company. The Supreme Court thus concluded that in accordance with Art. 5 (1) of the Lugano Convention it is the Regional Court in Ostrava which shall have the jurisdiction to hear the case where the member of the board of directors breached his duty.