On September 19 2013, in a matter concerning international jurisdiction, the Supreme Court ruled that, in accordance with Article 22(1) of the Brussels I Regulation, the courts of the member state where immovable property is situated have exclusive jurisdiction for cases dealing with rights in rem for the lease or tenancy of immovable objects, without regard to the parties’ domicile.

This international exclusive jurisdiction issue supersedes the general jurisdiction of the courts in the domicile state of the defendant (Article 2 of the regulation), as well as the special jurisdictions (Article 5 and following of the regulation).

The European Court of Justice had ruled in regard to the preceding rule in Article 16 of the Lugano Convention that disputes relating to immovable property often require investigation and the work of expert witnesses, which necessarily must be performed on site. Exclusive jurisdiction is thus in the interest of appropriate legal protection. The lease and tenancy of immovable property are usually regulated by special sets of laws and the application of these laws is, in light of their complexity, best left to the courts of the countries where they apply.

However, this reasoning does not apply if the main object of the contract is of a different nature, specifically if it applies to the tenancy of a retail store. Therefore, the term ‘lease and tenancy of immovable property’ must not be interpreted to cover a contract on the tenancy of a retail store where such store is operated at an immovable property that the lessor itself leased from a third party.

A lawsuit resulting from the tenancy of a hotel or a retail store is not subject to the exclusive jurisdiction of Article 22 of the Brussels I Regulation and an agreement on jurisdiction is therefore permissible.

Endnotes

(1) Case 2 Ob 63/13y.