Mon, Aug. 22, 2005

Pleading Jurisdictional Defects

.   In a victory for foreign plaintiffs, the eighth civil division of the Federal Supreme Court, Bundesgerichtshof, in Karlsruhe decided on June 1, 2005 that a motion to dismiss for lack of local jurisdiction should be construed to incorporate a motion to dismiss for lack of international jurisdiction.

The decision in the matter VII ZR 256/04, published at involves a contract for payment for goods sold by a German manufacturer to a Belgian distributor. The court found the German conflicts of laws rules and terms of the supply agreement to point to jurisdiction over the Belgian defendant in a German court. The defendant had moved to dismiss the complaint for lack of local jurisdiction and had failed to expressly plead a lack of international jurisdiction.

The Supreme Court examined the applicable EU directives and their transformation in German law as well as the rules of construction for procedural pleadings. It found that the defective pleading was open to interpretation, but not the view that the defendant meant to plead that another German court had jurisdiction over the defendant. Instead, the only possible view is that any German court would lack international jurisdiction. This is the only result that the lower court should have arrived at, the upper court held. Accordingly, the lower court should not have construed the defective pleading as a waiver of the defense of lacking international jurisdiction.

This segment of the ruling would apply also in a German-American setting, although the ultimate outcome of the case was controlled by EU and German law.

The German concept of local jurisdiction is somewhat similar to personal jurisdiction in the United States, but also contains elements of the concept of venue. The concept of international jurisdiction under German law is frequently overlooked.

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