A German company agreed to sell food products to Adam, who wanted to sell them to a customer in France. They concluded the agreement by exchanging the emails, but they didn’t say which court should solve a dispute that may occur between them. Adam paid the money before the products were supposed to be delivered. The products never came. Adam asked for his money back in a French court, but the German company said the French court has no jurisdiction here.
Both the Buyer and Seller have their residence in the European Union. To figure out which court should solve any problems, we use a set of rules called Regulation (EU) No 1215/2012. It’s a law made by the European Parliament and Council on December 12, 2012, that helps solve problems in business and civil matters. (so called. „Brussels I bis”).
The article 4 section 1 of the Regulation states that people who live in a European Union country can be sued in that country’s courts, no matter what their nationality is. This means that a Polish entrepreneur can be sued in a Polish court because that’s where their business is located. So, the general rule is that you can sue someone in the country where they live or where their business is registered.
However, Adam referred the case to a French court.
Was Adam right?
According to the Article 7, point 1, letter b) indent 1 of the Brussels I bis Regulation, which regulates cases of special jurisdiction, a person who has the residence in the territory of a member state may be sued in another member state before the court of the place where the obligation was performed. In the case of a contract the sale of movable goods, this is the place where the goods were or should have been delivered.
Therefore, jurisdiction in the analyzed case belonged to courts in both Poland and France. It should be remembered that in the case of special jurisdiction, the plaintiff can choose which basis of jurisdiction to use – general rule or special one.
In the indicated case, Adam was right and the French court was competent to hear the lawsuit filed against the German company, as special jurisdiction applied. Adam could also choose whether to sue the German company in a Polish or French court.
Joanna Lubecka
attorney
However, when there is a dispute in the court, the basic practical difficulty leads to answering the question - where will such a dispute take place. In the contractor country or abroad? Can it be secured somehow?
One of the most important points that needs to be clarified in a B2B contract concluded with a foreign contractor are the terms of payment of the agreed remuneration. Payment after delivery of the subject of the contract or prepayment? And if so, what should be its amount? Which solution to choose? Read below.
Regardless of the form in which the agreement with a foreign partner is concluded, it is important that the parties agree on the most crucial elements of the contract. Incorporating these clauses will enable the parties to execute the contract in a transparent manner, without any ambiguity or uncertainties.
When force majeure events occur in international trade contracts, significant problems may arise in the process of its performance. However, including appropriate clauses in the contract that address such issues can help to manage the situation in a controlled and orderly manner.
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Case study. Check what Adam forgot when negotiating a contract with a foreign contractor
Although the indicated issues should be clearly regulated in each contract on the basis of which the guarantee is granted, in the case of foreign deliveries they are particularly important.
Below you will find some useful information on how to negotiate contracts concluded with a foreign business partner.
The purpose of the NDA is to secure the confidential nature of information that is provided to the other party in connection with the commencement of negotiations, determining the terms of possible cooperation between the parties, the concluded contract, cooperation or employment.
The standard practice is to start reading each document from the beginning. In the case of B2B contracts concluded with a foreign contractor, it is worth reversing this order.