THE GUGGENHEIM LITIGATION IN FRANCE,
IMPACT OF THE EUROPEAN CONVENTION
ON JURISDICTION AND RECOGNITION OF JUDGMENTS (THE BRUSSELS CONVENTION)
ON DISPUTES BETWEEN U.S. NATIONALS
By:
Georges R. Delaume
Washington, D.C.
There still exist in European countries exorbitant rules of adjudicatory jurisdiction based on such factors as the nationality of the plaintiff (Article 14, French Civil Code), the domicile of the plaintiff (Article 126(3), Dutch Code of Civil Procedure), the presence of minimal assets within the forum (Article 23, German Code of Civil Procedure) or, in contractual maners, the fact that the contract is governed by the lex fori (England, Rules of the Supreme Court, Rule 1(d)(iii)). Nonetheless, as a resull of the 1968 Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters (supplemented in 1978 and 1982 to account for the entry of new countries into the European Communities) and of the 1988 Lugano Convention on the same subject between the members of the European Communities and the members of the European Free Trade Association, the exorbitant rules of jurisdiction have been abolished as among member States.
At the same time, both Conventions give a new dimension to exorbitant rules, which remain in force vis-à-vis non-EEC/EFTA countries (such as the United States). Pursuant to Article 4(1) of each Convention, any defendant who is not domiciled within a State Party remains subject to the jurisdictional rules in force in any such State, and, pursuant to Article (4)(2), any person domiciled in such a State, may, irrespective of his/her nationality, invoke, like a national of that State, all the jurisdictional rules in force in its territories, including those of an exorbitant character. Also, as a result of the rules for recognition set forth in the Conventions, a judgment rendered in any State Party on the basis of exorbitant rules is practically assured recognition in the other States.
The possibility of abuse of jurisdictional privileges is clear. It had been flagged by early commentators on the Brussels Convention.
A concrete illustration is found in a judgment of the Court of Appeals of Paris of November 17, 1993 (Soci ety Foundation Solomon R. Guggenheim v. David Helion et al., 112 Journal du Droit International 671 (1994)). It concerns the use by American plaintiffs domiciled in France (heirs of Ms. Peggy Guggenheim) of the exorbitant rule based on Article 14 French Civil Code (the nationality of the plaintiff) to assert jurisdiction over the Guggenheim Foundation.
The facts of the case are simple. Ms. Guggenheim had given to the Foundation a palace located in Venice, Italy, including a collection of modern art. She had made it a condition that nothing in the palace and the collection was to be touched. Believing that the Venice museum had been the object of changes incompatible with Ms. Guggenheim's will, three of her descendants, domiciled in France, brought action against the Foundation in the Parisian courts, seeking an order for the restoration of the museum's original condition and reserving their rights to seek total or partial revocation of the gifts if it were established that the Foundation had not respected Ms. Guggenheim's instructions.
The Foundation objected to the jurisdiction on the ground that, even though it was incorporated in New York, it was also registered with the Tribunal of Venice and should be deemed to have a secondary place of business or domicile in that city, with the result that it should be regarded as an Italian domiciliary. As such, it could rely on the provisions of Article 2 of the Brussels Convention conferring jurisdiction on the courts of the State in which a defendant is domiciled and could also rely on Article 3 of the Convention pursuant to which the French exorbitant rule based on nationality could not be relied on to invoke the jurisdiction of the French courts.
This defense failed. The Court noted that, even though the Foundation was registered in Venice as regards the operation of the museum, it was incorporated in New York City and should be treated as a New York domiciliary. Under the circumstances, the Foundation's registration in Italy was irrelevant and the Parisian courts were entitled to assert jurisdiction.
This case may serve as a reminder that, unlike European countries, the United States is not a party to any treaty regarding the jurisdiction of courts in international matters and the recognition and enforcement of foreign judgements. An attempt made in the late seventies to conclude a treaty on the subject with the United Kingdom failed to lead to positive results.
This lack of treaty arrangements contrasts singularly with the number of arbitration treaties concluded by the United States, including, in addition to friendship commerce and navigation treaties and bilateral investment treaties, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the Panama Convention on the same subject and the ICSID Convention.
