The landscape of Article 5(1) of the Brussels I Regulation concerning the allocation of jurisdiction within the EU has fundamentally changed. In a matter relating to a contract the courts of “the place of performance of the obligation in question” can take jurisdiction. The original wording of Article 5 of the Brussels Convention led to a number of cases which sought to identify the obligation in question and its place of performance. The English courts were particularly adept in locating the obligation in question in England in order to obtain jurisdiction. A more strict rule was subsequently inserted by Article 5(1)(b). The first indent gives the courts of the place of delivery in a sale of goods contract jurisdiction. In a contract for the provision of services the second indent similarly gives jurisdiction to the courts of the place where the services were provided. In Peter Rehder v. Air Baltic Corporation (Case C-204/08 [2009] E.C.R. I-6073) the Court of Justice of the EU emphasized that both indents of Article 5(1)(b) are to be interpreted similarly. Whatever the issue, from non-delivery to non-payment via breach of warranty and whether the claim is in damages or for a negative declaration, all matters are referred to the courts of the place of delivery or provision of services. In Color Drack GmbH v. Lexx International Vertriebs GmbH (Case C-386/05 [2007] E.C.R. I-3699) the Court of Justice held that this place is an autonomous linking factor providing a close link to the contract. It is referable neither to national law nor conflict of laws rules. One justification is that those courts are particularly well placed to determine any claim arising out of the contract. Alternatively, the rule is certain and predictable. That attempts to answer the common criticisms that in fact those courts are not well placed to deal with many issues, especially those relating to non-payment, or that there is no close link. Application of this Article is more complicated than might first appear, as three recent decision of the Court of Justice illustrate.

First, what if there are several places of delivery or provision of services? Where these are all in one Member State Color Drack held that the court at the “place of the principal delivery” determined by “economic criteria” has sole jurisdiction. There identical goods were delivered in differing quantities at the same price so the principal delivery was merely the one with the largest number of units. Different facts make it more difficult. Where there is no one principal place, the CJEU held that the claimant can choose one of the places of delivery in which to sue for all the claims arising. Previous Brussels Convention caselaw was different. In Case C-420/97 Leathertex v. Bodetex [1999] E.C.R. I-6747 the claimant also had a choice in these circumstances, but could only sue for the part of the obligation which was performed in that place. Leathertex lead to a depeçage of the proceedings, and the possibility of irreconcilable judgments: neither is appealing. The solution in Leathertex does not survive for Article 5(1)(b) contracts (Rehder, [37]). In Wood Floor Solutions Andreas Doomberger GmbH v. Silva Trade SA (Case C-19/09, Judgment of 11 March 2010, not yet reported) Color Drack and Rehder were developed to cover the case where the places of delivery or provision of services are in several Member States. The claimant sought damages for termination of a commercial agency contract. It had provided the agency services (negotiating and concluding contracts, communicating with the principal and complying with instructions) in a number of states, but its business activity was largely conducted in Austria. The CJEU identified the place of provision of services as “the place of the main provision of services by the agent”. This place must be deduced from the provisions of the contract itself, or if that is not possible, by the actual performance of the contract. That is a question of fact for the national court (para. [40]). If it cannot be decided, then the place where the agent is domiciled is the place of performance.

Secondly, how is the place of delivery or provision of services to be identified? Where the contract expresses where performance is to be achieved, that is decisive. In Car Trim GmbH v. KeySafety Systems Srl (Case C-381/09, Judgment of 25 February 2010, not yet reported) Car Trim claimed damages from KeySafety for wrongful termination of a contract under which Car Trim was to manufacture, supply and deliver airbags to KeySafety's specification. The CJEU held that the place of delivery can be chosen by the parties because Article 5(1)(b) provides “unless otherwise agreed...the place in a Member State where, under the contract, the goods were delivered”. Linking the two phrases together does not seem to permit the parties to choose another obligation under the contract to locate jurisdiction, such as the place of payment. Additionally, the previous caselaw did not permit a fictional place of delivery (Case C-105/95 MSG v. Les Gravières Rhénanes [1997] E.C.R. I-911). Nevertheless, what if there is no express place of delivery? The Brussels Convention caselaw referred to the private international law rules of the forum in order to identify the applicable law of the contract whose rules of domestic contract law would fill the gap with an implied term as to the place of delivery (Case C-12/76 Tessili v. Dunlop [1976] E.C.R. 1473). The Court of Justice in Car Trim rejected this solution. It noted that the autonomous definition of the place of delivery required after Color Drack precluded an application of the private international law rules of the forum. The place of delivery was to be “based on a purely factual criterion”, ([52]). In this case where the sale included carriage of the goods that is where they “were physically transferred or should have been physically transferred to the purchaser at their final destination”, ([60]). This is consistent with a finding in Wood Floor that factual performance of the contract can be relied on, but only so far as that is consistent with the parties' intentions, ([40]).

Those conclusions do not resolve the problems where there is no performance of the delivery obligation. If the contract is silent as to the place of delivery or if performance is at the option of one of the parties, how is the place of delivery or provision of services to be identified? It is possible that in such a case Article 5(1)(b) does not apply. If that is right, either Article 5(1)(a) fills the gap (including the rule in Tessili) or Article 5 is altogether inapplicable: see Besix SA v. Kretschmar (Case C-256/00 [2002] E.C.R. I-1699).

Where the contract can be described as having one indivisible obligation, such as a contract to fly a passenger from one country to another, then neither place is principal (Rehder). The claimant passenger suing for compensation for a cancelled flight can choose whether to sue in the place of take-off or of landing. A provider of flights suing a passenger for non-payment can presumably likewise choose, although it is doubtful that the passenger defendant would have expected to be sued in those places.

Thirdly, how are contracts classified within Article 5(1)? Does a contract of sale which contains some continuing obligation on the supplier (for example, to maintain the goods sold) fall within Article 5(1)(b)? If so, into which indent? Or does it fall in Article 5(1)(a)? Contracts which do not come within Article 5(1)(b) are dealt with by Article 5(1)(a) (Article 5(1)(c)). These include contracts the performance of which takes place outside the EU. Also, contracts which cannot be classified as falling within a particular indent of Article 5(1)(b) are referred back to Article 5(1)(a) following Falco Privatstiftung (Case C-533/07 [2009] E.C.R. I-3327). There a claim under a contract for the use of intellectual property was neither a sale of goods nor a provision of services. In Car Trim the CJEU noted that each indent of Article 5(1)(b) identifies the characteristic obligation of the particular type of contract (delivery or provision of services). Therefore in order to decide into which indent a contract falls, the court held that one must determine the characteristic obligation of the contract. The factors to take into account include matters of EU and international law. For example, Article 1(4) of Directive 1999/44 on the sale of consumer goods and associated guarantees (O.J. [1999] L 171/12) which deems certain contracts for the supply of consumer goods to be contracts of sale. The CJEU also referred to Article 3(1) of the Vienna Convention on Contracts for the International Sale of Goods and Article 6(2) of the United Nations Convention on the Limitation Period in the International Sale of Goods, both of which consider certain contracts ones for the supply of goods. As neither Convention has been adopted into English law, these factors are more difficult for an English court to apply. Additionally, where the purchaser has supplied materials the contract is more likely to be a contract for the provision of services. Finally, if the seller bears the responsibility for the quality of the goods then it is more likely to be one for the sale of goods. These factors only help classify straightforward contracts. The last factor in particular appears to need reference to some domestic system of law to determine on whom responsibility lies. This is inconsistent with its conclusion that the place of delivery or provision of services is an autonomous concept.

It does not seem from these cases that the insertion of Article 5(1)(b) has achieved greater simplicity or clarification.