No international jurisdiction when consumers move countries? - AG Sánchez-Bordonna in Commerzbank (C-296/20)

On September 9 AG Sánchez-Bordonna issued an opinion in the case Commerzbank (C-296/20) on whether the Lugano II Convention was applicable in the case to determine the jurisdiction over consumer credit contract.

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Lugano II Convention is an international convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters to which the EU is a party. It provides consumers with an additional layer of protection in order to restore the balance in the complex situation of international jurisdiction matters (paras 23-24). There is a question of whether this Convention should apply to the case at all, as at the moment of the conclusion of the consumer credit contract both parties were domiciled in the same Member State - Germany. There was, therefore, no international element to their transaction at that time that could have required the use of international conventions to determine the appropriate forum for their dispute resolution. However, when the bank sought to recover payments from the consumer of their debit balance on their current account, the consumer has changed it domicile to Switzerland. This has prompted the reference to the Lugano II Convention.

AG Sánchez-Bordonna emphasises that the Lugano II Convention should not be applicable in a situation where the foreign, international element of the legal relationship between the parties to a contract arises subsequently to the contract's conclusion. AG's reasoning is based partially on the historical reasons for the adoption of the special consumer jurisdiction rules, as well as economic arguments, which support an interpretation that only if a trader or service provider established in one Member State pursues a commercial activity and directs it at consumers in another country, these special rules could apply. By such active targeting of consumers in another country, the professional willingly takes on themselves the risk of having to accept international jurisdiction if there is a dispute between them and their consumers (e.g. para 56). If a consumer with whom the trader has a contract decides to change domicile, that lies beyond what the trader can reasonably foresee, however (e.g. para 72).

The AG proposes an alternative solution as well, that is to accept the fact that a different international jurisdiction may be applicable to the dispute when the consumer has moved their domicile after the contract's conclusion but only if the country to which they moved is one where the trader pursues their economic activity, as well. As the trader would have needed to foresee the possibility of the application of the foreign jurisdiction in such cases, their interests would have been protected more (para 100).

Overall, AG Sánchez-Bordonna recommends the Court to conduct a careful balancing of interests exercise to ensure that both consumers' and traders' interests are protected.