Act: Mr Manson, Solicitor, Glasgow
Alt: No appearance
CUPAR, 28 March 2013. The Sheriff Principal, having resumed consideration of the cause, allows the appeal and recalls the sheriff's interlocutor of 20 June 2012 complained of; finds that Cupar Sheriff Court has jurisdiction; remits to the sheriff to determine the motion (no. 7/1 of process) and thereafter to proceed as accords.
 This is an appeal against the sheriff's interlocutor finding that Cupar sheriff court has no jurisdiction and refusing the pursuers' motion for decree. The pursuers' registered office is in Cupar. The first defenders have their registered office in Edinburgh, which is also where the second defender resides. The issue of jurisdiction was raised by the sheriff on his own motion. Although the second defender lodged a notice of intention to defend he has played no part in the proceedings and there was no contradictor at the appeal hearing.
 The action is directed to recovery of the price of goods and services supplied to the first defenders under contract, the payment of which was guaranteed by the second defender. The pursuers contend that the sheriff at Cupar has jurisdiction in terms of paragraph 2(b) of Schedule 8 of the Civil Jurisdiction and Judgments Act 1982 (hereinafter referred to as "the 1982 Act"), Cupar being the place at which the sums sued for ought to have been paid.
 Schedule 8 of the 1982 Act provides rules as to jurisdiction in Scotland. The primary basis of jurisdiction in terms of Schedule 8 is the domicile of the defender but there are a number of other grounds of special jurisdiction set out in paragraph 2, one of which is that a person may also be sued "in matters relating to a contract, in the courts of the place of performance of the obligation in question".
 Section 20(5) of the 1982 Act provides as follows:-
"In determining any question as to the meaning or effect of any provision contained in Schedule 8 -
(a) regard shall be had to any relevant principles laid down by the European Court in connection with Title II of the 1968 Convention or Chapter II of the Regulation and to any relevant decision of that court as to the meaning or effect of any provision of that Title or Chapter: ..."
 The reference to the 1968 Convention is a reference to what is known shorthand as the Brussels Convention. The Regulation is the Council Regulation (EC) No. 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (commonly referred to as "the Brussels I Regulation").
 Article 5 of the Brussels Convention provides inter alia that "a person domiciled in a Contracting State may, in another Contracting State, be sued - (1) in matters relating to a contract, in the courts for the place of performance of the obligation in question; ...".
 Article 5 of the Brussels I Regulation provides inter alia as follows:
"A person domiciled in a Member State may, in another Member State, be sued:
1(a) in matters relating to a contract, in the courts for the place of performance of the obligation in question;
(b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:
- in the case of the sale of goods, the place in the Member State where, under the contract, the goods were delivered or should have been delivered,
- in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided,
(c) if subparagraph (b) does not apply then subparagraph (a) applies."
 The sheriff took the view that Article 5(1)(b) of the Brussels I Regulation gave an autonomous meaning to the phrase "place of performance of the obligation in question" and that he ought to interpret paragraph 2(b) of Schedule 8 consistently with that meaning. In reaching that view he had regard to the decision of the European Court in Color Drack GmbH v Lexx International Vertriebs GmbH 2007 EUCJ C-386/05 (3rd May 2007). He refers specifically to paragraph 45 of that decision where the court considered the question of what happens where there are a number of places of delivery within a Member State. He refers to the statement of the court that:-
"In such a case, the court having jurisdiction to hear all the claims based on the contract for the sale of goods is that for the principal place of delivery, which must be determined on the basis of economic criteria. In the absence of determining factors for establishing the principal place of delivery, the applicant may sue the plaintiff (sic) in the court for the place of delivery of its choice."
 The learned sheriff understood this paragraph to mean that the European Court was deciding in that case not only where international jurisdiction lay but was also pointing to where jurisdiction lay internally within a Member State. He suggests that, were it otherwise, a situation could arise in which a litigant could found jurisdiction in Scotland in terms of the Brussels I Regulation but, in applying a different meaning to paragraph 2(b) of Schedule 8, there might be no sheriff court in which that jurisdiction could be made good.
 The solicitor for the appellants submitted that in adopting this approach the sheriff had misdirected himself. The preamble to the Brussels I Regulation made it clear that it was aimed at conflicts between the rules governing jurisdiction in Member States and Article 5 expressly confined its scope to those cases in which a person domiciled in one Member State might be sued in another Member State. Accordingly it had no application or relevance to a purely domestic litigation in which both parties were domiciled in Scotland. So far as concerned Article 5(1)(b) of the Regulation it was pointed out that the definition provided was expressly "for the purpose of this provision", that is to say for the purpose of those cases to which Article 5 applied. This was not such a case. It followed that, in applying the provisions of section 20(5) of the 1982 Act, Article 5(1)(b) and the decision in Color Drack GmbH were not "relevant" to the question of the meaning and effect of paragraph 2(b) of Schedule 8 to the 1982 Act. Section 20(5) ought not to be read as requiring the court to have regard to any principles laid down by, or any decision of, the European Court in interpreting the provisions of Schedule 8 unless those provisions were to some extent derived from the Brussels Convention or Brussels I Regulation (see Maher & Rodger Civil Jurisdiction in the Scottish Courts para. 2-21). It was pointed out that, notwithstanding the coming into force of the Brussels I Regulation, paragraph 2(b) retained the original formulation of the special rule for contract and this must be assumed to have been deliberate.
 In my opinion the submissions for the appellants are well founded. Assuming that the proceedings fall within the scope of the Brussels I Regulation so far as the subject matter of the claim is concerned (article 1), the primary rule is that persons domiciled in a Member State shall be sued in the courts of that Member State (article 2). Article 3 provides by way of derogation from the primary rule that a person domiciled in a Member State may also be sued in the courts of another Member State by virtue of the rules set out in sections 2 to 7 of chapter II of the Regulation. Article 5 is part of section 2 and, according to its terms, it provides the basis for a person domiciled in one Member State to be sued in another Member State. Accordingly it does not apply and does not need to apply to proceedings brought within the United Kingdom against a defender domiciled there.
 Against that background the issue in the present case is essentially one of the proper construction of paragraph 2(b) of Schedule 8. This paragraph is in identical terms to paragraph 3(a) of Schedule 4 and it is helpful to consider these provisions together, while recognising that it is unnecessary and impracticable to address every aspect of these provisions. The current versions of Schedules 4 and 8 were introduced by the Civil Jurisdiction and Judgments Order 2001/3929. These were two of the legislative changes needed in consequence of the coming into force of the Brussels I Regulation on 1 March 2002, which is also the date on which the material articles in the Order came into force. It is important to recall that, unlike the Brussels Convention, the Brussels I Regulation is directly applicable in the law of the United Kingdom without the need for any incorporating legislation. There was thus no need to amend the 1982 Act to give effect to it nor has that been done, a course of action which would in any event have been contrary to basic rules of European Union law. While the Order makes amendments to the 1982 Act consequential upon the making of the Regulation it is inaccurate to say, as the sheriff does, that the Regulation has been incorporated into the 1982 Act. Schedules 4 and 8 contain provisions analogous to those found in the Regulation but the very fact that these provisions have been enacted illustrates the point that these Schedules are essentially dealing with matters of the internal law of the United Kingdom and Scotland respectively and not governed by the provisions of the Brussels I Regulation.
 Schedule 4 provides rules for the allocation of jurisdiction within the United Kingdom in those cases in which the person sued is domiciled in the United Kingdom. For Schedule 4 to apply in allocating jurisdiction to a court in Scotland (assuming rule 11 does not apply) it is a pre-condition that the defender is domiciled in another part of the United Kingdom (but not in another EU Member State) - see Maher & Rodger para. 2.10. Section 16 of the 1982 Act states in terms that Schedule 4 contains a "modified" version of chapter II of the Regulation, which is a clear indication that it is dealing with a situation not governed by the directly applicable Regulation. In similar vein, section 20(1) of the 1982 Act provides that Schedule 8 has effect subject to the Regulation and Schedule 4, which in effect is a provision that Schedule 8 does not apply to a case governed by either the Regulation or Schedule 4 (see Maher & Rodger paras. 2-04 and 2-12 and Macphail Sheriff Court Practice 3rd edn. paragraph 3.77).
 That is not to say that the provisions of Schedules 4 and 8 have not been modelled on the provisions of the Regulation in the same way that the previous versions of Schedules 4 and 8 were modelled on the provisions of the Brussels Convention. However the provisions of these Schedules do not completely replicate the provisions of the Brussels I Regulation and, given the particular context in which the Schedules came to be amended, it seems to me that any divergence must be taken to have been deliberate. Thus, as a simple matter of construction, the omission from paragraph 2(b) of Schedule 8 of the definition contained in Article 5(1)(b) of the Brussels I Regulation indicates an intention that the original format of this special rule, which was aligned to that of Article 5 of the Brussels Convention, will continue to apply. This is confirmed by the terms of the Explanatory Note attached to the 2001 Order which amended both Schedules 4 and 8. It is stated that one of the main purposes of the Order is to amend the 1982 Act to make new but analogous provision in respect of the Regulation. It then goes on to particularise the new provisions and, in relation to contractual matters, states that the Order:
"(d) amends Schedule 4 to the Act, which contains provisions for the allocation of intra-UK jurisdiction which previously were modelled on the Brussels Convention, broadly so as to bring those provisions into line with the equivalent provisions of the Regulation; an exception is jurisdiction in contractual matters, which continues to be aligned on article 5(1) of the Convention rather than article 5(1) of the Regulation (my emphasis);
(e) makes similar amendments to Schedule 8 to the Act, which contains provisions on jurisdiction in Scotland."
 In that state of affairs in my view it cannot be right that section 20(5) of the 1982 Act should be read in a way which requires the court to attach a meaning to a provision of Schedule 8 which the legislature has deliberately refrained from adopting. I am fortified in that view by the unreported decision of Master Fontaine in IHP Ltd v Fleming (10 July 2009 QBD) where a similar conclusion was reached in a case related to paragraph 3(a) of Schedule 4. Such a result is avoided by the requirement to have regard to "relevant" principles or decisions and in my view there is merit in a formulation such as that suggested by Maher & Rodger that section 20(5) ought only to apply to those provisions which are to any extent "derived" from or "based on" the provisions of the Convention or Regulation, as the case may be (see paragraphs 2-21 and 4-01).
 Applying this approach to the circumstances of the present case it is clear that regard ought to be had to the relevant principles laid down by the European Court in connection with Title II of the Brussels Convention and to any relevant decision of that court as to the meaning and effect of any provision of that Title, since paragraph 2(b) of Schedule 8 is in identical terms to and plainly derived from Article 5(1) of the Brussels Convention. Furthermore, article 5(1)(a) of the Brussels I Regulation replicates this provision and the European Court has stressed the importance of continuity of interpretation of identical provisions in the Convention and Regulation respectively (see Falco Privatstiftung v Weller-Lindhorst 2009 ECR I-3327). Therefore full effect can be given to section 20(5) of the 1982 Act by looking at the decisions of the European Court in relation to what is now article 5(1)(a) of the Regulation.
 In the circumstances of this case it is unnecessary to embark on any detailed analysis of the jurisprudence of the European Court on this matter. Suffice it to say that the European Court's definition of the term "obligation in question" is "that which corresponds to the contractual right on which the plaintiff's action is based" (see De Bloos v Bouyer 1976 ECR 1497 and Custom Made Commercial Ltd v Stawa Metallbau GmbH 1994 ECR 1-2913). This definition has been applied in a number of Scottish cases (see for example Britwise Ltd v CPS Broadcast Products 2003 SLT 455 and JS Swan & Son (Printing) Ltd v Kall Kwik UK Ltd 2009 SCLR 688). There is European jurisprudence which deals with the situation where there is more than one obligation on which the claim is based but that is not relevant to the present discussion. The sheriff had to ascertain therefore whether the sheriff court district of Cupar was the place of performance of the obligation which forms the basis of the claim in this action, namely the obligation to pay the price for goods delivered. The sheriff appears to accept that, if the definition of Article 5(1)(b) of the Brussels I Regulation did not apply, Cupar was the place at which the sum sued for ought to have been paid. That conclusion is supported by what was said by the Inner House in Bank of Scotland v Seitz (1990 SLT 584) approving the statement in Gloag on Contract (2nd edn.) that "Where the contract makes no express provision regarding the place of payment, the legal implication is that the debtor is bound to tender payment to the creditor at his residence or place of business." It follows that the sheriff ought to have been satisfied that he had jurisdiction to deal with the case.
 That is sufficient for disposal of the appeal. Nevertheless I ought to address briefly the sheriff's analysis of the effect of the European Court decision in Color Drack GmbH and his concerns that a situation could arise in which a litigant would have recourse to a court in Scotland in terms of the Brussels I Regulation but in terms of Schedule 8 there would be no sheriff court with jurisdiction. It seems to me that the sheriff's concern overlooks the fact that Article 5(1) of the Brussels I Regulation allocates jurisdiction, not just to the courts of a Member State, but to the court of a particular place. There is accordingly no need to have recourse to Schedule 8, which, as I have already indicated, does not apply where a case is governed by the Brussels I Regulation (or for that matter by Schedule 4) - section 20(1) of the 1982 Act.
 In relation to the sheriff's interpretation of the effect of the decision of the European Court in Color Drack GmbH, it is important to look at the scope of the question which was put to the European Court. The question is set out in paragraph 14 but at paragraph 15 the court describes it as "essentially asking whether the first indent of article 5(1)(b) of Regulation 44/2001 applies in the case of a sale of goods involving several places of delivery within a single member state". The question of which particular court within that member state should have jurisdiction only arose if the answer was in the affirmative. The case is therefore primarily concerned with the question whether article 5(1)(b) applies at all, it being uncontroversial that the article would apply had there been only one place of delivery. In answering the question posed in the affirmative the court then went on emphasise the importance of only one court having jurisdiction to hear all the claims arising out of the contract (paragraph 38) and resorted to an approach which identified the place of the principal delivery as pointing to the court to which jurisdiction was allocated (paragraph 40). It is clear therefore that the case is only concerned with the effective application of article 5(1), the scope of which, as already noted, is confined to those cases in which a person domiciled in one Member State might be sued in another Member State. Accordingly I am unable to accept the sheriff's view that it has any wider implication for those cases in which article 5(1) of the Brussels I Regulation does not apply.
 In the result I shall recall the sheriff's interlocutor, sustain the jurisdiction of Cupar sheriff court and remit to the sheriff to determine the pursuer's motion for decree.