On 13 March 2014, the Court of Justice of the European Union ("ECJ") handed down a judgment on a reference for a preliminary ruling from the Regional Court of Krefeld, Germany (the "German Court"), in case Marc Brogsitter v. Fabrication de Montres Normandes EURL and Karsten Fräßdorf (case C-548/12) concerning the interpretation of Article 5 of Regulation 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters ("Regulation 44/2001"). Pursuant to this Article 5, jurisdiction in matters relating to a contract lies with the courts of the place of performance of the obligation in question, whereas jurisdiction in matters relating to tort lies with the courts located in the place where the harmful event occurred or may occur.

The claimant before the German Court, Mr. Brogsitter, domiciled in Germany, had contracted with the French company Fabrication de Montres Normandes EURL ("FMN") and its sole shareholder, manager and master watchmaker, Mr. Fräβdorf, to develop two watch movements for luxury watches. In addition to their work related to these two movements, FMN and Mr. Fräβdorf also developed, in parallel, other watch movements, cases and watch faces and marketed them in their own names and on their own behalf.

Mr. Brogsitter considered that these other activities were in breach of the agreed contract terms in that FMN and Mr. Fräβdorf would have undertaken to work exclusively for him. Therefore, he initiated proceedings before the German Court seeking termination of these activities. In addition, Mr. Brogsitter sought damages in tort because of unfair competition, in particular breach of business confidentiality, disruption of business, commitment of fraud and breach of trust.

Faced with these claims, FMN and Mr. Fräβdorf argued lack of jurisdiction. They contended that, having regard to Article 5 of Regulation 44/2001, only French courts have jurisdiction as both the place of performance of the contract at issue and the allegedly harmful event were situated in France.

Uncertain about this argument, the German Court decided to stay the proceedings and question the ECJ on whether Mr. Brogsitter's claims under tort law had nonetheless to be considered as concerning "matters relating to a contract" within the meaning of Article 5(1) of Regulation 44/2001, having regard to the contract between the parties.

The ECJ held, in accordance with established case law, that the concepts of "matters relating to a contract" and "matters relating to tort" as used in Article 5 of Regulation 44/2001 must be interpreted independently, by reference to the Regulation's scheme and purpose. It explained that, in order to ensure that Regulation 44/2001 is applied uniformly in all EU Member States, the meaning of these concepts cannot depend on how the legal relationship in question is classified by the relevant national law.

The ECJ continued that it is for the German Court to determine, regardless of any national law classification, whether the civil liability claims in question are truly contractual in nature. According to the ECJ, that will be the case only if the conduct complained of can reasonably be regarded as a breach of the rights and obligations set out in the contract between the parties, taking into account the contract's purpose. This will be the case where the interpretation of the contract is indispensable to establishing lawful or unlawful nature of the conduct complained of.

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