Jurisdiction in non-EU sales disputes 22 November 2023 – Posted in: News

By lawyers Mr. Augusto Vacca and Mrs. Silvia Sulli and by Ms. Monica Vernillo

The Court of Venice, in its recent judgment no. 1515/2023 of 6.9.2023, discussed the existence of Italian jurisdiction in commercial matters where the defendant is not domiciled in a European Union Member State.

The dispute giving rise to the ruling had been brought by a company incorporated under Italian law that had brought an action against its former subsidiary, governed by Indian law, to obtain an order against the latter for the payment of a debt arising from supplies of goods made by the parent company when they belonged to the same group.

The Court upheld the plea of lack of jurisdiction raised by the Indian company, declaring the claims inadmissible.

In order to reach this conclusion, the Court of Venice has carried out a careful legal reconstruction that provides the starting point for reviewing the main criteria used to determine when the jurisdiction of the Italian court may be deemed to exist against a defendant domiciled outside the European Union.

Generally speaking, the scope of the Italian court’s jurisdiction is defined by Article 3 of Law 218 of 31 May 1995 on the “Reform of the private international law system in Italy”, which not only affirms the existence of Italian jurisdiction where the defendant is domiciled or resident in Italy, but also defines the criteria for determining whether Italian jurisdiction exists in the event that the defendant resides or is domiciled outside the territory of the State.

In particular, paragraph 2 of Article 3 of Law No. 218/1995 states that “Jurisdiction shall also subsist in accordance with the criteria established by Sections 2, 3 and 4 of Title II of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial and Protocol Matters, signed at Brussels on 27 September 1968, made enforceable by Act No. 804 of 21 June 1971, as amended for Italy, even when the defendant is not domiciled in the territory of a Contracting State, when it is a matter falling within the scope of the Convention”.

The Court of Venice, complying with the most recent jurisprudence of legitimacy on the matter (“Cass. civ., Sez. Unite, Ord. no. 19571 of 10/07/2023 and Cass. civ., Sez. Unite, Ord. no. 32362 of 13/12/2018), interpreted the above-mentioned provision by considering that it operates a so-called “mobile reference” to the Brussels Convention of 27 September 1968.

A mobile reference, also known as a ‘dynamic’ reference, occurs when a legislative act refers to a rule in force but variable, in its wording and scope, ratione temporis.

Unlike what happens in the so-called ‘static’ reference, in which reference is made exclusively to the provision expressly referred to as it is, which ideally becomes part of the referring act in the wording in force at the time the reference is made, in the dynamic reference, the reference is made not to the provision recalled in itself but to its source and, therefore, the mobile reference is also capable of encompassing all subsequent amendments to which the rule being referred to will be subject.

For this reason, as the Court of Venice agrees, the reference contained in paragraph 2 of Article 3 of Law 218/1995 must now be understood as referring to the subsequent Regulation (EU) No. 1215/2012 (the so-called “Brussels I bis Regulation”), which, in Article 68, expressly states that “this Regulation shall, as between the Member States, supersede the 1968 Brussels Convention”.

Examining, therefore, the normative dictate of Article 6 of Regulation (EU) No. 1215/2012, it follows that, if the defendant is not domiciled in the EU Member State in which he is sued, the jurisdiction of the Member State is governed by the law of that State, i.e., in Italy, by Law No. 218/1995.

It follows that, when the dispute concerns matters of civil and commercial law included in the scope of application of EU Regulation No. 1215/2012, the identification of the jurisdiction of the Italian court in the presence of a defendant domiciled outside the European Union must follow the criteria (or the so-called “special jurisdiction”) defined by Article 7 of the Regulation itself.

This article specifies, inter alia, that in contractual matters a person may be sued before a court of a State other than his domicile if that is the State where the obligation in question is to be performed. In this respect, Art. 7 distinguishes between contracts for the purchase and sale of goods and contracts for the provision of services; in the former case, the place where the obligation has to be performed is to be understood, for the purposes of the application of the above rule, as the “place in a Member State where, under the contract, the goods were delivered or should have been delivered”; in the second case, on the other hand, it must be understood as the place “in a Member State where, under the contract, the services were provided or should have been provided”.

The Court of Venice, therefore, having reconstructed in the foregoing terms the criteria for the determination of the existing jurisdiction of the Italian court, and having ascertained that, in the present case, the contract sued by the Italian plaintiff company concerned the sale of goods to be delivered in India, declared its lack of jurisdiction in favour of the Indian court.