Case Law: Case C-383/95, P.W. Rutten v. Cross Medical Ltd., 9 January 1997

3 Colum. J. Eur. L. 292 (1997)

Marta Pertegás Sender. Assistant, Center for International and Foreign Law, Katholieke Universiteit Leuven.

Brussels Convention Article 5(1) – Contract of Employment – Jurisdiction – Place of Performance of the Contractual Obligation

  1. Facts and Procedure

Transnational contracts of employment, strongly encouraged in light of the free movement of workers in the European Union, may bring about problems when parties must determine which court(s) have international jurisdiction to hear cases arising from disputes between employer and employee. Due to the international nature of the agreement, it was not a priori foreseeable which judge had jurisdiction to hear the case until the Brussels Convention on Jurisdiction and Enforcement of Judgments (“the Brussels Convention”) codified the rules on international jurisdiction of the Contracting States.

Besides the general rule of jurisdiction based on the defendant’s domicile, Article 5(1) of the Brussels Convention confers jurisdiction in disputes arising out of employment contracts on the courts of the place where the employee habitually carries out his work. In the present case, the national court, whose jurisdiction had been contested by the defendant, sought guidance from the Court of Justice as to the interpretation of this provision when the working activities are performed in several Contracting States. Mr. Rutten, a Dutch citizen domiciled in the Netherlands, was employed by two companies belonging to the same group: first by Cross Medical BV, established in the Netherlands, and then by the mother company, Cross Medical Ltd., established in England. Following his dismissal by Cross Medical Ltd. on October 1, 1991, Mr. Rutten brought an action against that company before the Kantonrechter (Cantonal Court) of Amsterdam claiming damages of arrears of salary and interest. The case reached the highest court in the Netherlands – the Hoge Raad – without the merits having been decided: the international jurisdiction of the Dutch courts was contested by Cross Medical Ltd., and the dispute primarily focused on the interpretation of Article 5(1) of the Convention. By derogation to the general principle laid down in Article 2, according to which the courts of the State where the defendant is domiciled are to have jurisdiction, Article 5(1)1 also provides conditions for jurisdiction in cases concerning employment contracts. According to this provision, “a person domiciled in a Contracting State may, in another Contracting State, be sued: in matters relating to a contract, in the courts for the place of performance of the obligation in question; in matters relating to individual contracts of employment, this place is where the employee habitually carries out his work, or if the employee does not habitually carry out his work in any one country, the employer may also be sued in the courts for the place where the business which engaged the employee was or is now situated.” The Jenard Report states that this additional ground of jurisdiction is justified by the fact that “there must be a close connecting factor between the dispute and the court with jurisdiction to resolve it.”14 This “close connecting factor” is considered to be the employee’s habitual performance of work in one Contracting State (Article 5(1), second sentence). When this factor is lacking, the employee has only a second-best alternative: the place where the business which engaged him was (at the time of the contract) or is now (during the proceedings) (Article 5(l), third sentence). Whether the second or third sentence of this provision is applicable can be of great importance to the, outcome of the case. Indeed, in the first alternative, the plaintiff – being the employee like in the case at issue – may file proceedings before the courts of his place of residence, if, like in the majority of cases, his residence coincides with the place where he works. On the other hand, Article 5(l), third sentence, might deprive the employee of any choice if, as is likely to occur, this basis of jurisdiction leads to the same Contracting State as Article 2.

When the employee performs his activities in a single Contracting State, Article 5(1) provides a straightforward answer: the courts of that Contracting State may have jurisdiction. When, as in the case at hand, the working activities of the employee are performed in several States, it is uncertain which courts have jurisdiction on the grounds of Article 5(1). In the present case, Mr. Rutten carried out about two-thirds of his work in the Netherlands and one-third, among other countries, in the United Kingdom, Belgium, Germany and the United States. The national court asked the Court of Justice whether Article 5(1), second sentence, is still applicable under those circumstances, or whether only the subsidiary connecting factor of Article 5(1) in fine can be invoked. More precisely, the Dutch court wished to know how the word habitually, used for the first time in the 1989 version, should be interpreted and whether the case law on Article 5(1), based on a former version of this provision,5 was relevant to this purpose.