DELIVERED ON 11 MAY 1982 (*1)

Mr President,

Members of the Court,

A contract was made in September 1971 between Mr Ivenel, the plaintiff in the main action, resident in Strasbourg, and Mr Schwab, the defendant in the main action who runs an engineering works in the Federal Republic of Germany. According to the contract the plaintiff was to sell machinery in France on behalf of the defendant and receive therefor commission at the rate of 15 % of the amount of the relevant orders. Since August 1975 the defendant allegedly ceased to pay commission which led to the plaintiff's having to give up his work for the defendant in July 1976.

The plaintiff sees that as discharge of the contract for which the defendant is responsible. In January 1977 the plaintiff therefore brought the matter before the Conseil de Prud'Hommes Commerciaux in Strasbourg claiming that the defendant be ordered to pay various sums (commission, compensation for goodwill, payment in lieu of notice and holiday payments and the balance of a so-called internal account).

Since the defendant objected to the territorial and substantive jurisdiction of the court before which the matter was brought, that court gave judgment on 17 April 1978 on the question of jurisdiction. On the one hand it confirmed that it had jurisdiction ratione materiae because the claims made derived from a contract of employment. Further it held that it had jurisdiction ratione loci on the basis of Article 5 (1) of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters which provides:

“A person domiciled in a Contracting State may, in another Contracting State, be sued:

(1)In matters relating to a contract, in the courts for the place of performance of the obligation in question.”

In that regard the court took the view that the various obligations in a mutual contract did not have to be separated but that the essential issue was what was the characteristic obligation. In a contract for representation that was the obligation of the representative; since, however, that was to be performed in the place in which the representative had his office, the French courts had jurisdiction in the present case, and in particular because there was no agreement on jurisdiction.

The defendant appealed against the judgment, which adjourned the hearing of the claims to a later date, to the Cour d'Appel in Colmar where he was partly successful. The Social Affairs Division of the Cour d'Appel in its judgment of 13 October 1978 confirmed the view of the court of first instance that there was a contract of employment and in consequence the relevant courts had jurisdiction ratione materiae. On the other hand it held that under Article 5 (1) on the Convention on Jurisdiction the French courts had no jurisdiction ratione loci. The criterion for that purpose was the obligations on which the action was based. Since however both under French and German law claims for the payment of commission and other amounts were payable at the address of the debtor and not the creditor the place of performance could in that respect be only in the Federal Republic of Germany.

Upon the plaintiff's appeal in cassation on 22 December 1978 the Social Affairs Division of the French Cour de Cassation came to the view in considering the case that in a contract for representation giving rise to mutual obligations some of which were to be performed in France the question of the determination of a place of performance for the purposes of the Convention on Jurisdiction was fraught with difficulties. It therefore decided to stay the proceedings and by judgment of 2 April 1981 requested an interpretation of Article 5 (1) of the Convention on Jurisdiction with reference to the particular features of the facts before it.

My opinion on that question is as follows.

1.Where the issue is one of determining the court for the place of performance within the meaning of Article 5 (1) of the Convention on Jurisdiction, that is to say, of ascertaining the place in which certain contractual obligations are to be performed, the court before which the matter comes must first of all solve a problem of conflict of laws. It has to determine, in accordance with the private international law by which it is bound, the law applicable to the contractual relationship and then ascertain, on the basis of the rules of that law, the place of performance. That was the tenor of the decision in Case 12/76, in view of the fact that the Convention on Jurisdiction contains no definition of the concept “place of performance”, and that no doubt must remain the situation, since the present case and the observations made with regard thereto in any event give no cause to contemplate other possible solutions.

This preliminary analysis of course raises the issue of a determination of the contractual relationship in question. In the present case, as is known, the courts of first and second instance took the view that it was an employment relationship.

On that assumption the conclusion is obviously that French law applies, namely Article L 751 — 1 et seq. of the Code du Travail. That seems to be the opinion of French legal writers; the plaintiff cited Battifol Traité de Droit International Privé 1976, No 576. It is, however, also in conformity with what is provided for in the Convention on the Law Applicable to Contractual Obligations (Official Journal L 266, 9 October 1980, p. 1), which has not yet entered into force. Article 6 provides that in the absence of a choice of law the contract of employment is to be governed by the law of the country in which the employee habitually carries out his work in performance of the contract and it even provides that a choice of law is not to have the result of depriving the employee of the protection afforded to him by the mandatory rules of the law to which reference has just been made as in general governing the matter.

The plaintiff in the main action and the Commission have argued exclusively on that legal basis. My view, however, is that this leads to an unacceptable restriction of the area for consideration.

The defendant in the main action in fact puts forward a number of reasons, which I will not now mention since we do not have to resolve the problem of definition, against the finding that there is a contract of employment and he vigorously propounds the view that the plaintiff is to be regarded as an independent commercial representative. It may be that we cannot even be certain that the question of definition has already been finally decided. That is because, on the one hand, since in any event the jurisdiction ratione loci of the French courts was denied by the Cour d'Appel in Colmar, the defendant has so far had no cause to challenge the finding that the labour courts have jurisdiction, and on the other, because the Cour de Cassation which has not been asked to decide the question of jurisdiction ratione materiae, may come to another conclusion as regards the question of definition when it applies Article 5 (1) of the Convention on Jurisdiction.

It is more reasonable therefore to undertake the interpretation of Article 3 (1) of the Convention on Jurisdiction, as we have been requested, not only from the point of view that a contract of employment is at issue in the main proceedings but rather more comprehensively.

2.The court making the reference which has to determine, in the manner which I have described, the place (or places) of performance of the contract at issue must in addition be referred to the judgment in Case 14/76 for the correct application of Article 5 (1) of the Convention on Jurisdiction.

In that judgment it was held, following my Opinion in which I had set out the conclusive arguments therefor, that Article 5 (1) was not based on the notion of a single place of performance which had to apply to the contract as a whole and was to be determined according to the obligation characterizing the contract. On the contrary the term “obligation” within the meaning of Article 5 (1) was that contractual obligation which formed the basis of the legal proceedings; the relevant obligation was therefore that which corresponded to the contractual right on which the action was based.

That must be stressed in view of certain references in the very brief judgment making the reference which give the impression that in the view of the Cour de Cassation it may suffice for the purposes of the application of Article 5 (1) that some of the obligations mutually entered into in the contract at issue have to be performed in France even though they themselves are not at issue.

Moreover, there is nothing in the present proceedings to provide a basis for a general derogation from the said principle. I shall later discuss the question whether a certain modification may be appropriate for normal contracts of employment.

3.Those guidelines could lead to the result, and obviously we do not have to decide that now, that in the case at issue in the main proceedings a place of performance in France and thus jurisdiction of the French courts is to be assumed as regards the claims which have been brought.

As we know, the plaintiff is essentially claiming that the defendant be ordered to pay commission, compensation for failure to give notice and for goodwill, conceived as compensation for the unjustified termination of the contract. What is at issue, therefore, is partly performance of the contract (payment of commission, settlement of an “internal account” through which sums collected and claims of the plaintiff were to be taken into account) and partly claims for nonperformance (holiday allowance, compensation for failure to give notice and for unwarranted unilateral termination of the contract).

As regards the first-mentioned matters it is possible to gain the impression, in view of what has been submitted, that they are to be complied with in France, at least if it is assumed that the contract is one of employment. In that respect I would refer to the plaintiff's observations, which he supported with references to the case-law, to the effect that according to French law payments of salary are to be made at the place in which the work is done, that, furthermore, emoluments to travellers are to be paid at their residence and that in such cases where there is an obligation to pay by cheque or bank transfer that likewise generally means performance at the place of residence of the employee.

The same should apply to the claims for nonperformance (damages for termination of the contract and compensation for failure to give notice) since they are based on the defendant's obligation not to disturb the plaintiff in the performance of his work and thus obviously only one place of performance can be contemplated, namely in the area in which the plaintiff should do his work. In that respect reference may be made to the abovementioned article by Vander Elst and the case-law of Belgian courts CCour d'Appel, Mons, judgment of 3 May 1974, Cour de Cassation, judgment of 6 April 1978, Cour d'Appel, Liège, judgment of 12 May 1977, printed in the Digest of Case-law Relating to the European Communities, Series D, Article 5 of the Convention of 27 September 1968).

If that is so, and the national court has in the end to decide that, as well as to adjudicate upon the defendant's objections to the effect that the plaintiff insisted on the application of the terms of payment applied to German representatives and the payment of his remuneration in German marks, it would in fact to some extent be consistent with the judgment, cited by the Commission, of the Cour d'Appel, Angers, of 29 January 1980 in a similar case. That can be said to be so at least in so far as the judgment proceeds on the basis that the relevant obligations in regard to payment replace the obligations in the contract which have not been performed and that as regards the claims for compensation for failure to give notice and for goodwill acquired, these are claims for the breach of the obligation to continue to perform the contract. On the other hand the view, which is also to be found in the judgment, to the effect that the claims for commission and holiday allowance are based on the nonperformance of obligations which are to be treated as consideration for work done and that therefore in the case of those obligations the place of performance is that where the work is carried out, must be queried in view of the previous case-law of this Court.

The result which I have indicated would further be in conformity with the desire expressed in the Jenard Report to recognize the venue of the place of performance as being in the country whose law governs the contract at issue.

In conclusion, however, I would like to return, as I previously mentioned, to the question whether at least for contracts of employment a very clear modification of the law as laid down in the judgment in Case 14/76 does not appear to be appropriate.

The Commission has evolved a line of thought which points in that direction. It obviously has in mind to ascertain in the case of legal relationships of this kind one focal point (namely the area in which the work has to be done and whose mandatory legal provisions require application) which alone would determine the place of performance for the purposes of Article 5 (1), that is to say, there would be one place of performance only for the whole contract. In that way the argument that the determinant factor is the obligation characterizing a contract and that the venue of the place of performance is to be ascertained accordingly would be recognized at least as far as the law of employment is concerned.

That, however, seems to me a difficult case to argue in the present state of the law.

It must be admitted that in the Jenard Report which is unquestionably of importance in interpreting the Convention on Jurisdiction it is stated that in drafting the Convention the special problems of contracts of employment were seen and that it emphasizes that “it is desirable that disputes over contracts of employment should as far as possible be brought before the courts of the State whose law governs the contract”. I cannot, however, disregard the fact that the provision contained in the preliminary draft of the Convention to the effect that in matters relating to contracts of employment the courts of the Contracting State in which the undertaking concerned was situated or in which the work was to have been performed was not included in the Convention. It is expressly stated in the Report that it was decided not to insert in the Convention any special provisions on jurisdiction in the matter of the law on employment, obviously having regard to the work undertaken by the EEC Commission in harmonizing the provisions on employment law in the Member States; further it is expressly stated that the general rules of the Convention will apply to contracts of employment and, as has been shown in Case 14/76 with regard to Article 5(1), the theory that the determinant factor is the obligation characterizing a contract is not compatible with those rules. Finally there can also be no question of departing from this because in the meantime the Convention, which has not yet entered into force, on the law applicable to contractual obligations has come into existence, for it is stated quite clearly in the Jenard Report:

“Once the work of the Commission in this field has been completed, it will always be possible to amend the provisions of the Convention, either by means of an additional protocol, or by the drafting of a convention governing the whole range of problems relating to contracts of employment ...”

I can therefore propose only that the question put by the French Cour de Cassation should be answered as follows:

Article 5 (1) of the Convention on Jurisdiction must be interpreted to the effect that in the case of contracts imposing mutual obligations there can be no question of determining one place of performance according to the criterion of the obligation which characterizes the contract but rather account must be taken of that obligation which provides the basis on which the claim is brought. In the case of claims for breach of contractual obligations the obligation whose nonperformance is alleged is to be taken as the criterion. If several claims are brought in relation to one contract then it is necessary to ascertain according to the law applicable to the contract what is to be considered as the corresponding main obligation of the defendant; its place of performance then determines the venue of legal proceedings with regard thereto.

(1) Tramuttd trom ine Grrnur.

(2) luacmrr.i oi 6 October 1976 in Case 12/76, B. A. de B SPR v Societe par action Bover [1976] ECR 1473.

(3) Judgment of 6 October 1976 in Case 12/76, B. A. de B SPR v Societe par action Bover [1976] ECR 1473.