The “battle of forms” and jurisdiction clauses.

 The dispute over international jurisdiction as a result of conflicting jurisdiction clauses.

Das "battle of forms" und Gerichtsstandsklauseln

In commercial and distribution law disputes, it is often not so easy to determine international jurisdiction if both contracting parties use jurisdiction clauses in their terms and conditions and thus produce the so-called “battle of forms”. This article shows how international jurisdiction can nevertheless be determined and how disputes can be avoided.

Anyone who sells goods or offers services in the B2B sector will be familiar with this process: The seller or supplier sends an offer with their own terms and conditions of sale, the buyer or customer accepts the offer with an order and refers to their own terms and conditions of purchase and the seller confirms the transaction with an order confirmation, which in turn refers to the terms and conditions of sale.

The “battle of forms”

The contracting parties are creating a problem that is probably familiar to all internationally active companies, but perhaps not under the name it has in the legal world: the “battle of forms”. This refers to the battle of terms and conditions: purchasing conditions fight against sales conditions, and in the event of a dispute – the case that matters – neither party knows which still applies.

The “battle of forms” must necessarily be decided when it comes to liability, statute of limitations or delivery conditions that arise from the terms and conditions and contradict each other, but also when it comes to jurisdiction clauses, because terms and conditions almost always also contain a jurisdiction clause, a provision according to which the courts should usually have jurisdiction at the registered office of the respective user of the general terms and conditions.

Effects of the “battle of forms” on international jurisdiction

In an international context, the decision on this question can have serious consequences. Whether the courts in Hamburg or Düsseldorf or in Rome, Lisbon or Cyprus have jurisdiction has an impact on the duration of proceedings, costs, language and associated translations and the possible need to engage another lawyer abroad, which is associated with additional costs.

Regardless of whether the foreign court is the better choice in individual cases, for example because the courts there are known to be quick and inexpensive, the parties in dispute tend to bring the case “home”. But do they succeed in doing so?

How do courts decide the “battle of forms”?

Parties in major commercial disputes often spend weeks and months arguing about international jurisdiction. Courts decide according to their own procedural law, the so-called “lex fori”. Thankfully, jurisdiction law is standardized within the European Union, namely in Regulation (EU) No. 1215/2012 (often and hereinafter also referred to here as the “Brussels Ia Regulation”), at least if the defendant is also from the EU. Therefore, if the German buyer brings an action against its Spanish supplier, the Hamburg or Düsseldorf court will assess international jurisdiction in accordance with the Brussels Ia Regulation.

In Article 25, this contains statements on “agreements on jurisdiction”, i.e. agreements on jurisdiction. It does not explicitly regulate how the question of jurisdiction is to be decided as a result of a “battle of forms”. First of all, it only explicitly sets out requirements for the form of the jurisdiction agreement in Art. 25 para. 1 sentence 2, which can be in writing or orally with written confirmation, whereby electronic transmission is sufficient (Art. 25 para. 2), so that the usual conclusion of contract “offer – order – order confirmation” by e-mail is sufficient. However, unlike in German national legal transactions, the contractual partner must actually have received the text of the terms and conditions (ECJ, judgment of 14. 12. 1976 – Case 24/76), whereby a hyperlink to the terms and conditions is now sufficient (ECJ, judgment of 24.11.2022 – C-358/21).

However, this does not say anything about whether the place of jurisdiction was actually agreed, which cannot be assumed in the case of an exchange of contradictory general terms and conditions without further evidence of consent to one of the two clauses (BGH, judgment of 09-03-1994 – VIII ZR 185/92).

Consequently, international jurisdiction on the basis of a jurisdiction agreement in the “battle of forms” is ruled out in the EU context. The situation is similar with Switzerland, Liechtenstein and Iceland, with which the EU has concluded the so-called Lugano Convention, which is modeled on the Brussels Ia Regulation.
German courts apply the jurisdiction rules of the German Code of Civil Procedure (ZPO) analogously to third countries. According to Section 38 (1) ZPO, a jurisdiction agreement between entrepreneurs is even tacitly possible. However, in the case of conflicting jurisdiction clauses, it will be just as difficult to assume an agreement as it is under the Brussels Ia Regulation.

Determining jurisdiction without an agreement on jurisdiction

So if – at least in principle – no jurisdiction agreement is reached in the “battle of forms”, what determines international jurisdiction?

Simply, according to the general rules of jurisdiction. According to Art. 4 para. 1, 63 Brussels I Regulation, in the case of legal persons, this is generally the registered office of the defendant company (general place of jurisdiction). The German company in the original case would therefore have to sue abroad. According to the Lugano Convention (Switzerland, Iceland, Norway) and the ZPO regulations (all other countries), the situation is very similar. A German court would not accept the claim for judgment.

Under certain circumstances, one of the special places of jurisdiction can help. In the Brussels Ia Regulation, this is in particular the place of jurisdiction of the place of performance in accordance with Art. 7 Brussels Ia Regulation. According to this, each party may – in deviation from the general place of jurisdiction – sue at the place of performance. For deliveries of goods, this may also be in Germany, depending on the Incoterms clause used (e.g. for DDP). The same applies to the Lugano Convention and the analogously applied places of jurisdiction from the ZPO for third countries.

Strategies for disputes

A cross-border commercial or distribution law case should be entrusted to a specialist, such as a lawyer specializing in international commercial law. These lawyers are familiar with the “battle of forms” and know what to look out for.

If a “battle of forms” rules out an agreement on jurisdiction, it is possible to check whether the terms and conditions of the contractual partner have been effectively included at all. If this is not the case, it is possible that a “battle of forms” has not even arisen and that the contracting party’s own terms and conditions, including the jurisdiction clause, have prevailed. However, this is a separate point of examination and should be assessed with the necessary technical expertise.

Preventive strategies in contract management

In order to avoid the “battle of forms” and the resulting uncertainties, retail and manufacturing companies should implement a contract management system. This means much more than simply putting the industry association’s standard terms and conditions on the website.

Contract management means implementing processes and structures that allow cross-border contracts to be concluded in a legally compliant, effective and efficient manner. The management should implement contract management for its own sake, because without such contract management, undreamt-of risks lie dormant in business relationships that only materialize in the event of a dispute.

Thinking about the “battle of forms” is part of contract management. It can be avoided, for example, by trained employees who recognize, address and negotiate the “battle of forms”, or it can be avoided by good framework agreements, which may also contain arbitration clauses.

The “battle of forms” is one of the trickiest issues in international commercial law and international civil procedural law when determining international jurisdiction. Internationally operating companies should be aware of it and deal with it preventively in contract management and, in the event of a dispute, rely on the expertise of specialized litigation lawyers.