Somafer SA v. Saar-Ferngas AG

French-registered Somafer SA (defendant) conducted some business in Germany, where it had an office that it described as “Representation in Germany.” Somafer performed demolition work in Germany near gas lines owned by Saar-Ferngas AG (Ferngas) (plaintiff). Ferngas took precautions to protect its gas lines during the demolition work and later sued Somafer in Germany to recover the expenses it incurred in doing so. Ferngas asserted that jurisdiction was proper in Germany because the parties’ dispute related to Somafer’s German branch, agency, or other establishment (collectively, branch) within the meaning of Article 5(5) of the Brussels Convention of 1968 (convention). Somafer denied operating a German branch. The German court referred several questions to the European Court of Justice regarding the interpretation of Article 5(5). The first question concerned which approach to use in determining whether an entity operated a foreign branch—reference to the law of a convention signatory (contracting state) or independent evaluation of the issue (i.e., in accordance with the convention’s objective and systems along with general legal principles). The second question concerned what the relevant criteria were if Article 5(5) should be interpreted independently. The advocate general opined that (1) whether an entity operated a branch should be decided independently and (2) an entity must have certain decision-making independence and be empowered to act on behalf of the parent company and to bind the parent company but must also be subject to the parent’s control and direction.