ShareWood Switzerland (Law applicable to contractual obligations - Consumer contracts - trees planted for the sole purpose of being harvested for profit - Judgment) [2022] EUECJ C-595/20 (10 February 2022)

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(Reference for a preliminary ruling – Judicial cooperation in civil matters – Law applicable to contractual obligations – Regulation (EC) No 593/2008 (Rome I) – Consumer contracts – Choice of applicable law – Article 6(4)(c) – Exclusion of contracts relating to a right in rem in immovable property or to a tenancy of immovable property – Contract of sale, including a lease agreement and a service agreement, relating to trees planted for the sole purpose of being harvested for profit)

REQUEST for a preliminary ruling under Article 267 TFEU from the Oberster Gerichtshof (Supreme Court, Austria), made by decision of 28 September 2020, received at the Court on 13 November 2020, in the proceedings

composed of N. Jääskinen, President of the Chamber, M. Safjan (Rapporteur) and M. Gavalec, Judges,

– the European Commission, initially by M. Wasmeier and M. Wilderspin, and subsequently by M. Wasmeier and W. Wils, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

1 This request for a preliminary ruling concerns the interpretation of Article 6(4)(c) 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) (OJ 2008 L 177, p. 6) (‘the Rome I Regulation’).

2 The request has been made in proceedings between UE and ShareWood Switzerland AG (‘ShareWood’) and VF concerning their obligation to pay UE a sum of money under a framework agreement concluded between those parties.

‘The substantive scope and the provisions of this Regulation should be consistent with Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [(OJ 2001 L 12, p. 1)] (Brussels I) and Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations [(Rome II) (OJ 2007 L 199, p. 40].’

‘1. Without prejudice to Articles 5 and 7, a contract concluded by a natural person for a purpose which can be regarded as being outside his trade or profession (the consumer) with another person acting in the exercise of his trade or profession (the professional) shall be governed by the law of the country where the consumer has his habitual residence, provided that the professional:

(a) pursues his commercial or professional activities in the country where the consumer has his habitual residence, or

(b) by any means, directs such activities to that country or to several countries including that country,

2. Notwithstanding paragraph 1, the parties may choose the law applicable to a contract which fulfils the requirements of paragraph 1, in accordance with Article 3. Such a choice may not, however, have the result of depriving the consumer of the protection afforded to him by provisions that cannot be derogated from by agreement by virtue of the law which, in the absence of choice, would have been applicable on the basis of paragraph 1.

(c) a contract relating to a right in rem in immovable property or a tenancy of immovable property other than a contract relating to the right to use immovable properties on a timeshare basis within the meaning of Directive 94/47/EC [of the European Parliament and the Council of 26 October 1994 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 (OJ 1994 L 280, p. 83];

The dispute in the main proceedings and the question referred for a preliminary ruling

5 Between January 2012 and June 2014, UE, a consumer resident in Austria, entered into a framework agreement with ShareWood, a company established in Switzerland, and a further four purchase contracts for the acquisition of teak and balsa trees in Brazil.

6 The four contracts were for the purchase of 705 teak trees costing EUR 67 328.85, 2 690 teak trees costing EUR 101 716.53, 2 600 teak trees costing EUR 111 583.34 and 1 860 balsa trees costing EUR 32 340. The framework agreement also included a lease agreement and a service agreement. The ground rent for that lease agreement, which granted the right to grow the trees in question, was included in the purchase price of those trees. The service agreement provided that ShareWood would manage, administer, harvest and sell the trees and would remit the net return on the timber to UE. The difference compared to the gross return, expressed as a percentage of the return, was retained by ShareWood as its fee for the provision of those services.

‘3.1. [ShareWood] shall sell the trees in the [ShareWood] and [Sharewood do Brasil Reflorestadora Ltda] plantations in its own name and on its own account to [UE]. [ShareWood] undertakes to transfer ownership of the trees to [UE] on payment of the purchase price.

3.2. [UE] shall purchase individually identified trees already planted. Trees are individually identified through to harvest and sale by tree number, plot number, parcel number and plantation number, recorded in an inventory of trees.

4.2. Once payment has been received, a tree title deed recording the individual identification markers of the trees purchased shall be served on [UE] in confirmation of completion of the sale.

7.1. On purchasing the trees, [UE] shall simultaneously lease the ground (see individual contract) for as long as the trees purchased from [ShareWood] are standing on them or, at least, for a term not exceeding that stipulated in the individual contract. The lease shall only confer the right to grow the trees.

7.3. The lease can only be transferred if the trees are resold. Sub-leasing is prohibited.

8.1. [UE] may sell and transfer ownership of his trees to a third party at any time with or without a service agreement. [UE] promises to transfer the ground lease to the third party and to ensure that the third party makes the same undertaking.

9.1. [ShareWood] recommends that the trees be tended to regularly to ensure they retain and increase their value. [ShareWood] offers that service under the service agreement.

11.1. In entering into a service agreement with [ShareWood], [UE] entrusts [ShareWood] with the management, administration, care, harvesting and sale of the trees purchased in accordance with plantation management policy and with international standards on sustainable plantation management and to remit to [UE] the net return achieved from the timber sales to the account designated by him. [ShareWood] shall also discharge all obligations pursuant to the ground lease.

11.9. [ShareWood] shall decide, on [UE]’s behalf and in accordance with its plantation management policy, which trees are to be harvested in which years and shall advise [UE] accordingly prior to the harvest. Unless [UE] rejects the harvesting proposal within 10 days of receipt of the advice by post or email, the proposal shall be construed as accepted.

15.1. [ShareWood] shall insure the land and the teak trees (but not the other trees) against fire, lightning strike, gales, precipitation and frost damage for [UE] and for itself for the first 4 years after planting. [UE] acknowledges that insurance shall not cover losses of less than 10% of the teak trees.

24.1. The framework agreement and each individual agreement shall be governed by Swiss substantive law, to the exclusion of (i) international conventions, including the United Nations Convention on Contracts for the Sale of International Goods of 11 April 1980 (CISC) and (ii) conflict of law rules. …’

8 The contract for the purchase of 2 600 teaks, referred to in paragraph 6 above, was terminated by mutual consent of the parties.

9 UE brought an action before the Handelsgericht Wien (Commercial Court, Vienna, Austria) seeking a declaration that ShareWood had failed to fulfil its obligation to take ownership of the trees in question and that ShareWood and VF, director and member of the board of directors of that company, should be jointly and severally liable to pay him the sum of EUR 201 385.38 plus interest and costs. Furthermore, in that action, UE argued that, as a consumer, he had, under Austrian law, the right to terminate the three other purchase contracts referred to in paragraph 6 above and to obtain damages.

10 By judgment of 9 September 2019, the Handelsgericht Wien (Commercial Court, Vienna) dismissed that action. By decision of 25 February 2020, the Oberlandesgericht Wien (Higher Regional Court, Vienna, Austria) upheld that judgment.

11 Hearing an appeal on a point of law brought by UE against that decision, the referring court, the Oberster Gerichtshof (Supreme Court, Austria), finds that the contractual relationship between UE and ShareWood falls under Article 6(1)(b) of the Rome I Regulation. It is apparent from the framework agreement referred to in paragraph 5 above that the parties agreed that Swiss law would apply. However, in accordance with Article 6(2) of that regulation, that choice of law may not have the result of depriving the consumer of the protection afforded to him or her by provisions that cannot be derogated from by agreement by virtue of the law which, in the absence of choice, would have been applicable on the basis of Article 6(1), namely, in the present case, Austrian law.

12 However, that court notes that, in the context of the dispute before it, mandatory national provisions of that kind, which are designed to protect the consumer, could be relied on only if the framework agreement at issue does not fall within the category of contracts referred to in Article 6(4)(c) of the Rome I Regulation, namely contracts relating to a right in rem in immovable property or to a tenancy of immovable property.

13 In those circumstances the Oberster Gerichtshof (Supreme Court) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Is Article 6(4)(c) of [the Rome I Regulation] to be interpreted as meaning that a contract for the purchase of teak and balsa trees between an undertaking and a consumer, which is intended to confer ownership of the trees, which are then managed, harvested and sold for profit, and which includes for that purpose a lease agreement and a service agreement, is to be regarded as “a contract relating to a right in rem in immovable property or a tenancy of immovable property” within the meaning of that provision?’

14 By its question, the referring court asks, in essence, whether Article 6(4)(c) of the Rome I Regulation must be interpreted as meaning that a contract of sale, including a lease agreement and a service agreement, relating to trees planted on leased land for the sole purpose of being harvested for profit, constitutes a ‘contract relating to a right in rem in immovable property or a tenancy of immovable property’ within the meaning of that provision.

15 As a preliminary point, it should be recalled that, under Article 6(2) of the Rome I Regulation, the parties to a consumer contract, that is to say a contract entered into by a consumer with a professional, may choose the law applicable to the contract, in so far as that choice does not have the result of depriving the consumer of the protection afforded to him or her by the provisions that cannot be derogated from by agreement by virtue of the law which, in the absence of choice, would have been applicable on the basis of Article 6(1) of that regulation.

16 Article 6(1)(b) of that regulation, which, according to the referring court, applies to the dispute in the main proceedings, provides that a contract entered into by a consumer with a professional is to be governed by the law of the country where the consumer has his or her habitual residence, provided that the professional, by any means, directs such activities to that country or to several countries including that country, and the contract falls within the scope of such activities.

17 Furthermore, Article 6(4) of the Rome I Regulation sets out the situations in which paragraphs 1 and 2 of Article 6 do not apply. More specifically, Article 6(4)(c) provides that paragraphs 1 and 2 do not apply to contracts relating to a right in rem in immovable property or a tenancy of immovable property other than a contract relating to the right to use immovable properties on a timeshare basis within the meaning of Directive 94/47.

18 In those circumstances, the application of Austrian law to the dispute in the main proceedings depends on whether the contract at issue in the main proceedings falls within the concept of a ‘contract relating to a right in rem in immovable property or a tenancy of immovable property’ within the meaning of Article 6(4)(c) of the Rome I Regulation.

19 It is in the light of those preliminary considerations that it must be determined whether a contract such as the one at issue in the main proceedings relates to a right in rem in immovable property or a tenancy of immovable property, within the meaning of that provision.

20 In that regard, it should be noted that the Rome I Regulation does not define the concept of a ‘contract relating to a right in rem in immovable property or a tenancy of immovable property’, nor does it define a ‘right in rem in immovable property’ or ‘immovable property’.

21 According to settled case-law, it follows from the need for uniform application of EU law and from the principle of equality that the terms of a provision of EU law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the European Union (judgment of 18 October 2016, Nikiforidis, C‑135/15, EU:C:2016:774, paragraph 28 and the case-law cited).

22 As Article 6(4)(c) of the Rome I Regulation makes no express reference to the law of the Member States, it should therefore be interpreted autonomously and uniformly.

23 In that regard, it should be added that the fact that trees planted in circumstances such as those at issue in the main proceedings may be treated as immovable property in the various national legal systems cannot have any effect whatsoever.

24 As regards, in the first place, the question whether the contract at issue in the main proceedings relates to a ‘right in rem in immovable property’, it must be recalled that, under that contract, the professional undertakes to transfer to the consumer the ownership of trees planted on land for the sole purpose of harvesting them and selling their timber.

25 For the right in ownership conveyed by that contract to fall within the concept of a ‘right in rem in immovable property’, those trees must also, before being harvested, be capable of being treated as immovable property for the purposes of Article 6(4)(c) of the Rome I Regulation.

26 In the present case, it is common case that the transfer of the right of ownership by the professional under the contract at issue in the main proceedings does not concern the land on which the trees concerned are planted, but only the trees. Although it is true that those trees are planted on that land so that they may grow, it is apparent from the order for reference that the main purpose of that contract is to generate income from the sale of the timber obtained after the harvesting of those trees; the ownership of the trees is transferred only at the point in time when they are individually identified, a task which is carried out by the professional until such time as the trees have been harvested and the resulting timber has been sold.

27 In particular, by that contract, it was agreed between the parties that the trees in question were planted on the land concerned for the sole purpose of being harvested, at the end of the growing season, for sale of the resulting timber.

28 In those circumstances, those trees must be regarded as being the proceeds of the use of the land on which they are planted. Although such proceeds will, as a general rule, share the same legal status as the land on which the trees concerned are planted, the proceeds may nevertheless, by agreement, be the subject of personal rights of which the owner or occupier of that land may dispose separately without affecting the right of ownership or other rights in rem appertaining to that land. A contract which relates to the disposal of the proceeds of the use of land cannot be treated in the same way as a contract which relates to a ‘right in rem in immovable property’, within the meaning of Article 6(4)(c) of the Rome I Regulation.

29 It follows that a contract relating to trees planted on land for the sole purpose of harvesting them and selling their timber does not relate to a ‘right in rem in immovable property’ within the meaning of that provision.

30 As regards, in the second place, the question whether the contract at issue in the main proceedings relates to a ‘tenancy of immovable property’, it should be noted that, under that contract, the consumer is to lease the ground on which the trees concerned are planted for as long as they are standing.

31 However, the mere existence of a lease agreement in respect of immovable property, such as land, is insufficient for that contract to be regarded as falling within the scope of Article 6(4)(c) of the Rome I Regulation.

32 As regards Article 16(1)(a) of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (OJ 1972 L 299, p. 32), which provided, in relation to leases of immovable property, for the exclusive jurisdiction of the courts of the Contracting State in which the property is situated, the Court held that the classification of a lease agreement for the purposes of that provision requires the existence of a sufficiently close link between the contract and the property concerned (see, to that effect, judgment of 13 October 2005, Klein, C‑73/04, EU:C:2005:607, paragraph 26).

33 More specifically, the Court held that a complex contract concerning a range of services provided in return for a lump sum paid by the consumer, such as a contract to provide services beyond the transfer of a right of use which constitutes the subject‑matter of a lease agreement, is outside the scope within which the exclusive jurisdiction laid down by that provision finds its raison d’être and does not constitute a tenancy as such, within the meaning of that provision (see, to that effect, judgment of 13 October 2005, Klein, C‑73/04, EU:C:2005:607, paragraph 27 and the case-law cited).

34 It should be noted that, according to recital 7 of the Rome I Regulation, the substantive scope and enacting terms of that regulation should be consistent with Regulation No 44/2001. In so far as that regulation was repealed and replaced by Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2012 L 351, p. 1), that objective of ensuring consistency also applies to that regulation (judgment of 8 May 2019, Kerr, C‑25/18, EU:C:2019:376, paragraph 36).

35 Moreover, in so far as Regulation No 44/2001 replaced, in relations between the Member States, the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters, that objective of ensuring consistency also applies to that convention, provided, however, that its provisions may be regarded as equivalent to those of Regulations No 44/2001 and No 1215/2012.

36 In the light of the objective of ensuring consistency, referred to in the two preceding paragraphs, the considerations set out in paragraphs 32 and 33 above must also be taken into account for the purposes of interpreting Article 6(4)(c) of the Rome I Regulation.

37 In the present case, the main purpose of the contract at issue in the main proceedings is not the use, in the context of a lease, of the land on which the trees concerned are planted, but, as has been pointed out in paragraph 26 above, to generate income from the sale of the timber obtained following the harvest of those trees. As is apparent from the order for reference, the lease provided for in that agreement, which includes only the right to allow those trees to grow and has no purpose other than the acquisition of those trees, is intended merely to enable the sales and services elements provided for in the contract to be carried out.

38 In those circumstances, it must be held that an agreement such as the one at issue in the main proceedings does not have a sufficiently close link with the land concerned to be classified as a ‘tenancy of immovable property’ within the meaning of Article 6(4)(c) of the Rome I Regulation.

39 In the light of all the foregoing, the answer to the question is that Article 6(4)(c) of the Rome I Regulation must be interpreted as meaning that a contract of sale, including a lease agreement and a service agreement, relating to trees planted on leased land for the sole purpose of being harvested for profit, does not constitute a ‘contract relating to a right in rem in immovable property or a tenancy of immovable property’ within the meaning of that provision.

40 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Article 6(4)(c) 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’) must be interpreted as meaning that a contract of sale, including a lease agreement and a service agreement, relating to trees planted on leased land for the sole purpose of being harvested for profit, does not constitute a ‘contract relating to a right in rem in immovable property or a tenancy of immovable property’ within the meaning of that provision.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> ShareWood Switzerland (Law applicable to contractual obligations - Consumer contracts - trees planted for the sole purpose of being harvested for profit - Judgment) [2022] EUECJ C-595/20 (10 February 2022) URL: http://www.bailii.org/eu/cases/EUECJ/2022/C59520.html Cite as: EU:C:2022:86, ECLI:EU:C:2022:86, [2022] EUECJ C-595/20

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