Suffering financial damage in a member state is not enough, in itself, to justify the jurisdiction of that member state’s courts, the European Court of Justice (ECJ) has held.
Universal Music, a Netherlands company which forms part of Universal Music Group, bought a Czech company, B&M. A dispute between Universal and B&M’s shareholders went to arbitration in the Czech Republic, and settled. Universal then brought proceedings against its Czech lawyers in the Dutch courts, arguing that it suffered the financial loss in the Netherlands. The Supreme Court of the Netherlands sought guidance from the Court of Justice on the question of jurisdiction.
In Universal v Schilling (Case C-12/15), published last week, the court ruled that jurisdiction belongs to the member state in which the defendant is domiciled, as a general rule. In special cases, the courts where the harmful event occurred may have jurisdiction but these special rules of jurisdiction must be interpreted independently and strictly.
In this case, the court noted that the contract was negotiated and signed in the Czech Republic, and the mere fact Universal paid by a transfer from a Netherlands bank account was not enough to establish jurisdiction.
