About the territorial jurisdiction to claim the payment of community fees to owners domiciled in other countries. STJUE of May 8, 2019, Case C-25/18.
The judgment under comment is STJUE, B. Andrew Kerr v. Pavlo Postnov and Natalia Postnova, Case C-25/18, 8 May 2019, which concerns a request for a preliminary ruling, pursuant to Article 267 TFEU, by the Okrazhen sad — Blagoevgrad (Provincial Court, Blagoevgrad, Bulgaria), by decision of 19 December 2017, received at the Court on 16 January 2018, which concerns the interpretation of Article 7.1(a) of Regulation (EU) No 1215/2012, concerning jurisdiction, the recognition and enforcement of judgments in civil and commercial matters, and Article 4.1.b and (c) of Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Rome I), in the context of a dispute concerning non-payment of the annual fees of a community of owners in horizontally property.
The facts at the subject of that request for a preliminary ruling are as follows:
- Postnov and Ms. Postnova, domiciled in Dublin, Ireland, own an apartment that is part of a community in horizontally property located in Bansko (Bulgaria).
- Agreements on annual quotas for the maintenance of common elements were adopted at the annual community meeting of that property.
- Kerr, in his role as manager of that property, brought an action before the Rayonen sad Razlog (Court of First Instance, Razlog, Bulgaria) seeking that Mr Postnov and Ms Postnova be ordered to pay the unpaid annual fees and to pay compensation for late payment.
- By order which it decided that claim, the Rayonen sad Razlog (Court of First Instance, Razlog) held that, under Article 4(1) of Regulation No 1215/2012, it lacked the power to hear the dispute of Mr. Kerr with Mr. Postnov and Ms Postnova, since they were domiciled in Dublin and the conditions for the application of the exceptions to the rule of general jurisdiction contained in that provision were not satisfied.
Mr. Kerr brought an action against that order before the referring court, which decided to stay the proceedings and to refer two main questions to the Court for a preliminary ruling, which are:
- If agreements of communities of owners, which lack legal personality, create a ‘contractual obligation’ for the purpose of determining international jurisdiction in accordance with Article 7(1)(a) of the Regulation.
- If it must be considered that agreements of communities of owners on costs for the maintenance of buildings must be classified as ‘contracts for the provision of services’ within the meaning of Article 4(1)(b) of [Regulation No 593/2008] or as contracts on a ‘real right’ or ‘lease’ within the meaning of Article 4(1)(c) of that regulation?’
What Article 4.1 of the Regulation says is that, in general, persons domiciled in one Member State shall be subject, whatever their nationality, to the courts of that State, and, in accordance with Article 5, may only be sued before the courts of another Member State under the same Regulation (Article 2 to 7) , laying down Article 7 which is possible to do so: ‘(a) in contractual matters, before the court of the place where the obligation under appeal has been fulfilled or must be fulfilled’, which, according to subparagraph (b), it is ‘in the case of a supply of services, the place of the Member State in which, according to the contract, have been or should be provided’.
The question raised in Case C-25/18 –which is not trivial for the owners´ communities– is, in short, whether the payment of community fees approved at the owners’ community meeting can be regarded as contractual matters, despite the absence of a contract itself, and in such a case whether it could be regarded as a provision of services, which would determine the jurisdiction of the court in which the property is located, in the face of the general jurisdiction of the defendant’s domicile.
The Court of Justice of the European Union makes a number of considerations and states:
- The conclusion of a contract is not a condition for the application of the rule of jurisdiction laid down in Article 7 of the Regulation.
- However, it is essential for it to be applicable, on the contrary, to identify an obligation, since the jurisdiction of the national court under that provision is determined on the basis of the place where the obligation to serve as the basis for the claim has been or should be fulfilled, and that the concept of ‘contractual matters’ within the meaning of that provision cannot be understood as referring to a situation in which there is no commitment freely undertaken by one party to the other.
- That obligations which are intended to pay an amount of money and which are based on the links between an association and its members must be regarded as included in the ‘contractual matter’, since accession to an association creates, between partners, close links of the same type as those established between the parties in a contract.
- That while it is true that participation in a community of owners is required by law, it is no less so than the details of the administration of the common elements of the property in question are, where appropriate, contractually regulated and that adherence to the community is done through the voluntary acquisition of a home together with the corresponding share of participation in the common elements of the property , so that an obligation of the owners with regard to the community, such as that at issue in the main proceedings, must be regarded as a freely assumed legal obligation, without any impact on the fact that the owners concerned have not participated in or opposed the adoption of this agreement since, when acquiring and retaining the co-owner status of a property, each co-owner consents to submit to all the provisions of the act governing the corresponding horizontally owned property and to the agreements approved by the general meeting of owners.
- That the action before the referring court concerns the enforcement of an obligation to pay the contribution of the persons concerned to the charges of the property in which they are owned and the amount of which was fixed by the general meeting of owners, and, consequently, must be regarded as not having as its object a real real estate right, but a provision of services within the meaning of Article 4(1)(b) of that regulation.
In conclusion of all the foregoing, the Court (First Chamber) states that:
- ‘Article7(1)(a) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction, the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that a dispute having the object of a payment obligation arising from an agreement of the general meeting of owners of a community in horizontally property which has no legal personality and which has been constituted in particular by law to exercise certain rights, which has been approved by the majority of its members band which binds all its members, belongs to the area of ‘contractual matters’ , within the meaning of this provision.
- Article 4(1)(b) of Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008, on the law applicable to contractual obligations (Rome I), it must be interpreted as meaning that a dispute, such as that raised in the main proceedings, which concerns an obligation to pay resulting from an agreement of the general meeting of owners of a community in horizontally property, relating to the costs of maintaining the common elements of that property, must be considered a dispute relating to a contract for the provision of services, within the meaning of that provision’.
In short, the Court of Justice of the European Union declares the jurisdiction of the courts of place in which the property is located in the face of the general jurisdiction of the defendant’s domicile, which is certainly good news for the communities of owners of any country belonging to the Union which, otherwise, would have had to face a serious problem in these cases of claiming quotas to persons, national or foreign, domiciled in other countries.
José Ignacio Martínez Pallarés