A client of the Luxembourg-based bank Banque Privée Edmond de Rothschild Europe introduced a claim against the bank and its affiliate, Société Compagnie Financière Edmond de Rothschild, having its registered office in Paris, in relation to significant losses in the value of its portfolio. The client claimed for damages against the bank and its affiliate before a court in Paris. The defendants argued that the French Court should deny jurisdiction based on a clause in the agreement with the client attributing exclusive jurisdiction for all claims against the bank to the courts of Luxembourg, while allowing the bank to claim against the client in any appropriate jurisdiction.
The French Cour de cassation rejected this defence against the claim from the French client based on two considerations:
(i) Firstly, the French Cour de cassation, based on the consideration that the jurisdiction clause imposed on the client to call exclusively on the Luxemburgish courts, while the bank reserved the right to act in the domicile of the client or before "any other competent court", concluded that the clause was only binding on the client and was thus of a discretionary nature in regard to the bank (caractère potestatif), which is contrary to the object and purpose of the jurisdiction clause exception of Article 23 of EC Regulation 44/2001 of 22 December 2000 ( the "Brussels 1 Regulation").
(ii) In a second argument, the court responded to the bank's criticism, based on Article 6 paragraph 1 of the Brussels 1 Regulation, that the Court of Appeal had not explained why it had agreed to hear together two cases which did not have the same object and were subject to different governing laws (Luxembourg and French). The Cour de cassation judged that, by adopting the position of the first judges that the cases had an identical object and raised the same question, the Court of Appeal had justified its decision to hear the two cases together in order to avoid irreconcilable solutions (on the basis of Article 6-1 of the Brussels 1 Regulation), regardless of whether the requests were based on different laws.
This decision, although issued by the French Cour de cassation, received considerable attention among legal practitioners in Luxembourg, because Luxembourg courts sometimes follow French court precedents, in particular in matters of civil procedure and in the interpretation of European regulations.
However, the reactions to this case are widely critical, based on the obviously erroneous reference to the concept of the "potestativité" (i.e. full discretion) in relation to the exercise of a right (a right being always, and by essence, discretionary, and being limited only by the test of abusiveness). Another reason for criticism is that the French Cour de cassation decided not to call on the European Court of Justice in the context of this case to seek clarification on the interpretation of the provisions of the Brussels 1 Regulation on which it based its decision.
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