Court of Justice 07-04-2005 ECLI:EU:C:2005:205

On the first question

17. By its first question, the Oberlandesgericht seeks to know whether the exclusive jurisdiction contained in Article 16(1) covers proceedings concerning a contract to use a particular type of apartment in a hotel complex for a specific period each year for almost 40 years, even where the contract provides for the simultaneous and obligatory membership of a club.

18. As is evident, the contract at issue in the main proceedings constitutes a type of so-called ‘timeshare’ agreement. Timeshare agreements, as is well-known, involve the right to use property on a part-time basis - that is, for a specific period of each year - and are often entered into by holidaymakers who, rather than purchasing a holiday home outright, simply purchase the right to stay in the property for part of the year only. The administration and maintenance fees for the property are usually split between the various timeshare ‘owners’.

19. As a preliminary matter, I note that, in its submissions, the United Kingdom Government requests the Court to give its view on a wider question than that posed by the national court, namely, on whether, and the circumstances in which, timeshare agreements in general fall within Article 16(1) (a) of the Convention.

20. Although in theory the idea of a generally applicable ‘test’ has certain attractions, I would, however, be very reluctant to attempt its formulation. A powerful reason for this is that the content and legal nature of timeshare arrangements vary greatly across Member States. For example, such arrangements fall in some Member States under the law of obligations, in some under company law,⁽⁵⁾ and in some Member States under property law.

21. This heterogeneity is recognised in the principal Community law act in the area, namely Directive 94/47 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis.⁽⁶⁾ For example, the preamble to the Directive provides, ‘the legal nature of the rights which are the subject of the contracts covered by this Directive [i.e., timeshare contracts] varies considerably from one Member State to another... .’⁽⁷⁾ The Directive was very careful to refrain from an attempt to harmonise the nature of these rights, stating that it was ‘not designed to regulate the extent to which contracts for the use of one or more immovable properties on a timeshare basis may be concluded in Member States or the legal basis for such contracts ... .’⁽⁸⁾ For this reason, application of the Directive, which aims at establishing a minimum basis of common rules on timeshare arrangements so as to ensure proper operation of the internal market and to protect purchasers, is confined to very specific aspects of such arrangements, namely ‘aspects relating to information on the constituent parts of contracts, the arrangements for communicating such information, and the procedures and arrangements for cancellation and withdrawal.’⁽⁹⁾

22. As a result of this heterogeneity, a general ‘rule’ on the applicability of Article 16 (1)(a) to timeshare arrangements in general would, in my view, be inappropriate and could compromise the rationale of this provision, which I have summarised above. Such a test would, with regard to this objective, risk being over-inclusive in some circumstances and under-inclusive in others. Whilst it is true that, as observed by the United Kingdom Government, the interpretation of Article 16(1)(a) cannot depend on the formal characterisation of a particular timeshare arrangement under national law, in my view the differences in the legal nature of these arrangements between Member States are so substantial that an attempt to formulate a uniformly applicable rule would be artificial and counterproductive. This would be particularly undesirable given that, as an exception to the general rules of jurisdiction of the Convention, Article 16(1) must ‘not be given a wider interpretation than is required by [its] objective.’⁽¹⁰⁾

23. Bearing this in mind, I turn now to consider whether, on the facts of the present case as communicated to us by the referring court, a timeshare arrangement such as that to which the Kleins became a party falls under the rule of exclusive jurisdiction set out in Article 16(1)(a). As is clear, the answer to this question depends on the interpretation of the phrase ‘proceedings which have as their object ... tenancies of immovable property’, a phrase which must be interpreted independently as a matter of Community law.⁽¹¹⁾

24. In my view, this question should be answered in the affirmative, for the following reasons.

25. The first point to be made is that, in evaluating whether the contract at issue in the main proceedings falls under Article 16 (1), it is the substance, and not merely the form, of the parties' agreement that is decisive. As observed by the German Government, it is for the Court, in assessing the true substance of the contract, to ‘lift the veil’ from the form of the contract. Although the language used in the contractual agreement, as well as the formal categorisation of the agreement under national law, are factors to be taken into account in making the assessment, neither can be decisive. Thus, in the present case, it is not decisive that the timeshare arrangement at issue in the main proceedings took the form of participation in a ‘club’, that the title of the contract was ‘Request for and Contract of Membership’, and that, according to the terms of the contract, most of the contractual sum due was in the form of a ‘membership fee’ (‘Mitgliedschaftsgebühr’). If it were otherwise, this would enable circumvention of the Convention's rules, which would compromise the consistency of their application. I would add that the risk of such circumvention is particularly to be avoided in the context of timeshare arrangements, which typically involve relationships between consumers and commercial enterprises.

26. Second, in evaluating the substance of the agreement, the question is whether the principal object of the parties' agreement amounts to a tenancy of immovable property. Thus in Sanders v Van der Putte, the Court held that an agreement whereby one party agreed to take over the running of a flower shop business, and to pay to the other part a sum in respect of goodwill and a monthly rent, did not fall under Article 16(1) as the rationale of that provision did ‘not apply where the principal aim of the agreement is of a different nature, in particular, where it concerns the operation of a business.’⁽¹²⁾ Similarly, in Hacker v Euro-Relais, the Court found that a complex contract concerning a range of services provided in return for a lump sum paid by the customer did not fall under Article 16(1), on the ground that such an agreement was ‘outside the scope within which the exclusive jurisdiction laid down by Article 16(1) finds its raison d'être ... .’⁽¹³⁾

27. Applying this reasoning to the present case, it is my view that, as noted by the referring court in its order for reference, the substance, and principal object, of the contract for the Kleins was, albeit via membership of the Sun Beach Holiday Club, the right to use an apartment on a timeshare basis. Aside from this right of use, the additional benefits stemming from membership - in particular the right of access to the exchange organisation RCI, as well as the right of access to hotel services such as reception services - seem, on the basis of the facts before the Court, marginal.⁽¹⁴⁾ In this respect, the present case can be distinguished from the Hacker case, in which the range of additional services provided - including the provision of information and advice, the reservation of accommodation, reservation of seats in connection with travel arrangements, and possibly travel cancellation insurance - were clearly more substantial.⁽¹⁵⁾

28. The third stage in evaluating the contract's substance is to consider whether the agreement displays the principal characteristics of a tenancy of immovable property. As observed by the German Government, as a general rule the essence of such a tenancy is the conclusion of an agreement to lease an immovable property for a specified length of time in return for the payment of rent.⁽¹⁶⁾ I find the dictum of the Court in Rosier, in which it listed a number of typical features of a lease, instructive in this regard:

‘Leases generally contain terms concerning entry into possession by the tenant, the use to which the property is to be put, the obligations of the landlord and tenant regarding the maintenance of the property, the duration of the lease and the giving up of possession to the landlord, the rent and the incidental charges to be paid by the tenant, such as water, gas and electricity charges.’⁽¹⁷⁾

29. A further instructive aspect of the Rosier case for present purposes is its holding that the Article 16(1) exception applies even to a short term lease related only to the use and occupation of a holiday home. In reaching this conclusion, the Court held that, in view in particular of the uncertainty that would be created if exceptions were to be allowed to the general rule of Article 16(1)(a), this article applies to ‘all tenancies of immovable property irrespective of their special characteristics.’⁽¹⁸⁾

30. In the present case, the arrangement in my view displays sufficient characteristics of a ‘tenancy of immovable property’ to bring it within Article 16(1). In particular, the contract entitles the Kleins to use an apartment in a hotel complex for a specific period each year in return for rent, subject to maintenance charges. Although it would seem, on the basis of the order for reference, possible that the Kleins might not return to precisely the same apartment year on year, I do not find this sufficient to alter my assessment. To my mind, the rationale of the attribution of exclusive jurisdiction under Article 16(1), namely that the courts of the locus rei sitae enjoy special advantages of legal and geographical proximity to the dispute, applies equally to such a situation.⁽¹⁹⁾ In addition, one way of viewing the legal structure of such a timeshare arrangement, which I find useful for present purposes, is as an agreement for tenancy of a specific apartment for a particular period, with the proviso of possible arrangements to exchange this for another apartment in future years.

31. For these reasons, I would conclude that a timeshare arrangement such as that at issue in the main proceedings falls within the scope of Article 16(1) (a) of the Convention.

On the second question

32. By its second question, the Oberlandesgericht asks whether, in the event of an affirmative answer to its first question, the exclusive jurisdiction resulting from Article 16(1)(a) would extend to a claim based on the right to reimbursement of a sum erroneously paid in excess of the contractual rent.

33. In my estimation, the exclusive jurisdiction conferred by Article 16(1)(a) does not extend to such a claim.

34. As already observed, as an exception to the more general rules of jurisdiction found in the Convention, the scope of Article 16(1) (a) should be interpreted strictly and applied only insofar as is necessary to achieve its objective.⁽²⁰⁾ Three cases are in my view of particular interest in interpreting this scope for present purposes.

35. The first is Reichert, in which the Court adopted a narrow approach to the types of action covered by the provision, holding that,

‘Article 16(1) must be interpreted as meaning that the exclusive jurisdiction of the Contracting State in which the property is situated does not encompass all actions concerning rights in rem in immovable property but only those which both come within the scope of the Brussels Convention and are actions which seek to determine the extent, content, ownership or possession of immovable property or the existence of other rights in rem therein and to provide the holders of those rights with the protection of the powers which attach to their interest.’⁽²¹⁾

36. The Court concluded that claims based on the French action paulienne, an action by which creditors could challenge transactions entered into by their debtors in fraud of their rights, did not fall within the scope of Article 16(1) as such actions were ‘based on the creditor's personal claim against the debtor and seeks to protect whatever security he may have over the debtor's estate.’⁽²²⁾

37. Similarly, in Rosier, the Court held that the scope of Article 16(1) extended to, ‘any dispute concerning the existence of tenancies or the interpretation of the terms thereof, their duration, the giving up of possession to the landlord, the repairing of damage caused by the tenant or the recovery of rent and of incidental charges payable by the tenant, such as charges for the consumption of water, gas and electricity ... Disputes concerning the obligations of the landlord or of the tenant under the terms of the tenancy fall within that exclusive jurisdiction. On the other hand, disputes which are only indirectly related to the use of the property let, such as those concerning the loss of holiday enjoyment and travel expenses, do not fall within the exclusive jurisdiction conferred by that Article.’⁽²³⁾

38. The final case to consider is Dansommer, which concerned an action for damages for taking poor care of premises and causing damage to accommodation which a private individual had rented for a few weeks' holiday, where the action was not brought directly by the owner of the property but by a professional tour operator, to whom the rights of the owner of the property had been subrogated. In holding that such an action fell within the scope of Article 16(1), the Court emphasised that, although an action would not fall under this provision merely because it was ‘connected’ with immovable property,⁽²⁴⁾ the crucial question was whether the subject matter of the proceedings was directly linked to a tenancy of immovable property.⁽²⁵⁾ The fact that the contract at issue contained a clause relating to insurance to cover the costs in the event of cancellation was only an ancillary provision which could not alter the status of the tenancy agreement to which it related, in particular as this clause was not in issue before the referring court.⁽²⁶⁾

39. Applying this reasoning to the present case, it seems clear from the order for reference that the claim to restore the amount paid in excess of the contractual rent is not based on a right or obligation arising under the timeshare agreement. Rather, it would seem that the foundation of the claim is an action for unjust enrichment.⁽²⁷⁾ In my view, such a claim does not fall within the rationale of Article 16(1), that is to say, the hearing of the claim does not involve the assessment of facts or the application of rules and practices of the locus rei sitae in such a way as to justify conferring jurisdiction on a court of the State in which the property is situated.⁽²⁸⁾ As a result, the claim lacks the necessary link of proximity with the jurisdiction in which the property is situated and thus, to my mind, falls outside the scope of Article 16(1).⁽²⁹⁾