Court Rules on Terms and Conditions in a Foreign Language - International Law Office

Facts
Decision

The Austrian Supreme Court has made some basic statements on agreements on jurisdiction under European civil procedural law (July 14 1999 - 7 Ob 176/98b, published in JBl 2000, 121 f).

Facts

The plaintiff was a company which had its corporate seat in Salzburg, Austria, and which purchased shoes from an Italian company. The orders (agreements) referred to general terms and conditions of the plaintiff, which were printed on the reverse page of the orders. These contained a clause which provided that the regional court in Salzburg had jurisdiction. Both contracting parties signed the orders. The general terms were drafted in English.

Decision

The Austrian Supreme Court ruled that the case would be decided on the basis of the convention on jurisdiction and the enforcement of judgments in civil and commercial matters established at Lugano on September 16 1998 (ie, the Lugano Convention. In this case, the relevant provisions are identical to those in the Brussels Convention of September 27 1968). The court held that European conventions take precedence over Austrian national laws. Pursuant to Article 2 of the Lugano Convention, persons domiciled in states in which these conventions apply will be sued in the courts of that state, regardless of their nationality.

Agreements that confer jurisdiction must meet the formal requirements of Article 17 of the Lugano Convention. That is, they must be made either:

• "in writing or evidenced in writing";
  
  
• "in a form which accords with practices which the parties have established between themselves"; or
  
  
• in a form according to customs of trade.

A written reference to general terms and conditions which contain an acknowledgement of jurisdiction may be accepted as fulfilling the first of these requirements. However, the reference must be explicit and the general terms must have been physically available (printed terms on the reverse page of signed agreements would certainly suffice).

Since the general terms containing the provisions regarding jurisdiction were drafted in a foreign language, the Austrian Supreme Court had to rule on the admissibility of the written reference. It followed decisions made by the German courts and affirmed its legal effectiveness if (i) the written reference to the general terms was made in the language of the contract (and the negotiations) and (ii) the other party (to whom the language of the general terms is foreign) declared an unrestricted acceptance.

For further information on this topic please contact Thomas Kustor at Freshfields Bruckhaus Deringer by telephone (+43 1 515 15) or by fax (+43 1 512 63 94) or by e-mail (thomas.kustor@freshfieldsbruckhaus.com).
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