After the conclusion of negotiations conducted by one of its employees at the offices in Como of the company Industrie Tessili Italiana Como (hereinafter referred to as Tessili and after receipt of several samples, the company Dunlop A.G. (hereinafter referred to as Dunlop), whose registered office is in Hanau, sent an order by letter dated 29 April 1971 to Tessili for 310 women's ski suits.

Printed on Dunlop's letter were its conditions of purchase containing in particular the following clause:

Tessili completed the ski suits ordered and sent them on 31 July 1971 to Dunlop through the intermediary of a transport undertaking appointed by the latter. Dunlop took delivery on 18 August 1971.

Also on 31 July 1971 Tessili made out an invoice which Dunlop received on 3 August 1971 and on the back of which Tessili's general conditions of sale were printed. These contained in particular the following clause:

Dunlop considered that there were defects in the manufacture of the ski suits delivered by Tessili and on 28 June 1973, after a voluminous exchange of correspondence with Tessili brought an action before the Landgericht Hanau (Hanau Regional Court) for annulment of the contract.

Tessili argued before the Landgericht that German courts had no jurisdiction and in particular that the Landgericht Hanau had no jurisdiction ratione loci. Dunlop, on the other hand, claimed that the Landgericht Hanau did have jurisdiction.

By interlocutory judgment dated 10 May 1974 the Landgericht Hanau dismissed the objection to jurisdiction.

On 22 July 1974 Tessili appealed against this decision to the Oberlandesgericht Frankfurt am Main (Frankfurt am Main Higher Regional Court).

Dunlop cited Article 5 (1) of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters which provides that a person domiciled in a Contracting State may, in another Contracting State, be sued in matters relating to a contract, in the courts for the place of performance of the obligation in question and the 21st Civil Senate of the Oberlandesgericht considered that the matter should be brought before the Court of Justice under Articles 2 (2) and 3 (2) of the Protocol on the Interpretation by the Court of Justice of the Convention of 27 September 1968. By order dated 14 January 1976 it stayed the proceedings until the Court had given a preliminary ruling on the interpretation of the concept of place of performance of the obligation in question within the meaning of Article 5 (1) of the Convention.

The order of the Oberlandesgericht Frankfurt am Main was registered at the Court on 13 February 1976.

In accordance with Article 5 (1) of the Protocol of 3 June 1971 and Article 20 of the Statute of the Court of Justice of the EEC written observations were lodged on 15 April 1976 by the Commission of the European Communities, on 21 April by Tessili, on 28 April by the Government of the Federal Republic of Germany and by Dunlop and on 20 May by the Government of the United Kingdom of Great Britain and Northern Ireland.

To the question whether Member States which are not parties to the Convention of 27 September 1968 are entitled to submit observations in the present case, an answer in the affirmative has been given to the Court by Tessili and Dunlop, the Governments of the Kingdom of Belgium, the Kingdom of Denmark, the Federal Republic of Germany, Ireland, the Kingdom of the Netherlands and the United Kingdom of Great Britain and Northern Ireland and by the Commission of the European Communities, and an answer in the negative by the Government of the French Republic which cites in particular Articles 4 (4) and 5 of the Protocol of 3 June 1971.

After hearing the report of the Judge-Rapporteur and the views of the Advocate-General the Court decided to open the oral procedure without a preparatory inquiry.

The appellant Tessili takes the view that, having regard to the increase which has taken place or is sought in international commercial relations more particularly in the context of the European Community, the objective of the Convention of 27 September 1968 is to lay down uniform rules on jurisdiction applicable to the settlement by courts of disputes arising from these relations and likely to guarantee that in the future similar situations will be dealt with in the same way. Article 5 (1) of the Convention establishes the jurisdiction in international law of the court of the place of performance; having regard to the unification which the Convention seeks to achieve this rule implies the recognition in advance of a uniform jurisdiction in respect of every contractual relationship of international law regarded as a whole, both with regard to the performance originally provided for by the contract and any retroactive settlement particularly in the event of actions for breach of warranty in respect of defective goods.

It follows that in the absence of agreements to the contrary conferring jurisdiction within the meaning of Article 17 of the Convention, all the vendor's obligations must be performed at the vendor's registered place of business. It would be right therefore to reply to the question put to the Court that as regards the obligations imposed on a vendor under an international contract of sale the place of performance of the obligation in question within the meaning of Article 5 (1) of the Convention of 27 September 1968 is always the domicile or registered place of business of the vendor.

The respondent to the appeal, Dunlop, observes that the concept of place of performance of the obligation in question may either be interpreted uniformly on the basis of comparative law or be interpreted on the basis of principles of international law and in particular of the substantive law applicable.

To take the general view with regard to contracts of sale that the domicile of the vendor was the place of performance would lead to unjust and unacceptable solutions. The desirable unification of the concept of place of performance would be disregarded in so far as that concept applies a priori only to contracts of sale. Moreover a not inconsiderable number of purchasers would be put at a great disadvantage: in international trade goods are not always delivered free on board; in numerous cases vendors deliver their products to the purchaser's address and also bear the risks of transport. There is no reason in such cases to regard the vendor's domicile as the place of performance.

In short only the place where the service has actually been supplied may be regarded as the place of performance; it depends on the facts of the case and in particular on the nature of the particular obligation. Agreements between parties derogating from these factual elements can be recognized only if they satisfy the formalities laid down in Article 17 of the Convention.

With regard to obligations arising under warranties this solution would lead to the felicitous result that these obligations must be performed at the place where the defective goods are. It is at this place that any defects may be most easily examined and if appropriate made good.

It would therefore appear fair to regard as the place of performance of obligations under warranties the place where the defective goods are.

The Government of the Federal Republic of Germany would be happy to see the Court of Justice hold that the concept of the court for the place of performance within the meaning of Article 5 (1) of the Convention depends on the national law applicable in each case. There are however certain difficulties in this respect: the concept of place of performance differs in the various Member States since the provisions of private international law and the substantive law applicable in each case have not yet been harmonized. The Federal Government likewise considers it in accordance with the given legal position that the Court of Justice should have recourse to the relevant national law in providing an interpretation. Article 5 (1) of the Convention should however be interpreted in such a way that there is only one court for the place of performance for one and the same party under obligation.

In the present case the place of performance must be interpreted uniformly since this concept, derived from substantive law, is defined exclusively in terms of conferring jurisdiction. Regard must be had in this respect to the main service owed in each case by a party or to the centre of gravity of his obligation. Recourse would thus be had to a method similar to that which is already employed at present in private international law to resolve the question of what is the law applicable to determine the concept of place of performance. Such a uniform interpretation would be facilitated by a uniform interpretation of the concept of place of performance for each party to the contract.

It is necessary to accept in the context of this interpretation that the concept of the substantive law of the place of performance may not coincide in certain cases with that given by the rules of procedure.

The Government of the United Kingdom observes that the objective of the Protocol of 3 June 1971, like that of Article 177 of the EEC Treaty, is to achieve uniform application of the Treaties to the factual or legal matters which may arise before national courts, but not to unify the substantive law of the Member States to which the Treaty provisions are to apply. Both in the context of the Convention of 27 September 1968 and in that of the EEC Treaty it is necessary to distinguish clearly the jurisdiction of the Court of Justice to give a general interpretation and the application to particular factual situations which is for the national courts. Unless this distinction is clearly drawn there is a risk of far-reaching disturbance of the substantive national law of Member States.

If the Court were to answer the question where the place of performance of an obligation is to be found by reference to the particular facts of the case before the referring court, it would, for practical purposes, be determining that place as a matter of substantive law of contract, which would need to be applied as such in all Member States. For although the ruling would be for the purpose of establishing jurisdiction under the Convention, that jurisdiction is by Article 5 (1) founded on a duty to perform an obligation as between the parties to a contract. Seeing that national laws at present differ on where performance is to take place, the ruling given by the Court would result in a change of the law of some, perhaps all, of the Member States; the effect of the ruling would extend to all aspects of performance of contracts of the type in question and would have repercussions even beyond the performance of the contract to other aspects of the law which are directly or indirectly linked with performance.

Moreover, the question where performance is to take place would call for a separate answer for every different type of contractual relationship, and would in every instance ultimately be a matter to be referred to the Court of Justice. Serious uncertainty would be introduced into the law.

In the present case the Court should confine itself to laying down the method by which national courts must themselves arrive at the appropriate answer on the facts before them. What the relevant obligations are under a particular contract, which obligations under the contract are in issue in the proceedings and where the relevant obligations are to be performed should be matters to be determined by the national court. That court should apply national law, including the rules of private international law forming part of that national law, to determine what law governs the contract. Applying the law so found to the contract, the national court should then determine the nature of the obligations which flow from the contract and the place where those obligations are to be performed. Where the contract is one for the sale of goods, and the issue before the national court concerns the failure of the seller to deliver satisfactory goods, the place of performance of that obligation should therefore depend on the rules regarding the place of delivery on a sale of goods laid down by the law governing the contract.

A uniform interpretation of Article 5 (1) of the Convention and the taking into account of the national law on the place of performance as a matter of comparative study leading to a uniform Community rule would have undesirable consequences. It is true that, if national courts apply their national law in the way suggested by the Government of the United Kingdom, they could arrive at different results on the same facts and that there would consequently still be some lack of uniformity. Greater uniformity of application can, however, ultimately be achieved by the adoption of uniform rules throughout the Community on the choice of law applicable to contractual obligations. By adopting the method of ascertainment of the nature and place of performance of obligations which the United Kingdom has suggested, national courts would then, on any given facts, arrive at the same result in the great majority of cases.

The United Kingdom does not regard it as profitable to put forward any arguments as to what should be the place of performance of the seller's obligation in the type of contract which has come before the Oberlandesgericht Frankfurt. The United Kingdom would not agree that, as suggested by that court, the permanent residence of the seller is the most appropriate place of performance. The place of performance of a contractual obligation should, for the purposes of Article 5 (1), be determined by the national court in which the proceedings are instituted in accordance with the law applicable to the contract; and that applicable law should be determined by the rules of private international law of the legal system of the national court.

The Commission of the European Communities states that Article 5 (1) of the Convention must be considered together with the first paragraph of Article 2 thereof; the Convention distinguishes between general jurisdiction — the defendant's domicile — and special jurisdiction — in the present case, the court for the place of performance — the plaintiff having the choice of the competent court. The plaintiff has this choice provided that it has not been agreed that a court of a Contracting State should have exclusive jurisdiction in accordance with Article 17 of the Convention; it is for the Oberlandesgericht Frankfurt to decide whether this is so in the present case.

As regards the interpretation of Article 5 (1) it should be observed that the Convention itself contains no actual definition of place of performance. In this respect it is proper to mention a number of factors: the intention of the parties, the uniform provisions of international law relating to sale which may be applicable, the rules of conflict of laws of the lex fori, having regard to the fact that the Convention attempts to achieve unification of the law in the sphere which it governs.

With regard to the express or implied intention, the parties are, according to the legal systems of the Member States, free to determine the place of performance of their contractual obligations or, in the case of contracts containing mutual obligations, to determine several places of performance. The Convention does not in any way interfere with the parties' independence in this matter.

With regard to the international purchase of goods, there is a uniform law, the Convention of The Hague of 1 July 1964 on the International Sale of Goods. According to the Oberlandesgericht Frankfurt this uniform law does not apply to the contract in question in the main action.

There is as yet no uniform law of conflict of laws in the EEC in respect of contractual obligations and the Convention of 27 September 1968 does not alter the position since it is for the national court to settle according to its own law of conflict of laws the preliminary question whether the place of performance has been determined. According to the German private international law the place of performance is determined in accordance with German law.

In this respect it should be noted that at least in German law there is not necessarily only one place of performance of contracts containing mutual obligations.

The Convention on the other hand has regard to the place of performance of the obligation in question.

This concept should be given a uniform interpretation and for this purpose account should be taken on each occasion only of the main obligation of a contract to the exclusion of ancillary or secondary obligations which may arise, for example, from the defective performance of the main obligation. It would thus be possible to avoid expressly determining in respect of each of the obligations of a party the place of performance in terms of the private international law of a State, which could lead to a multiplicity of places of performance of the contract and thus of courts having jurisdiction.

This interpretation finds support in the objective of the Convention, which is to contribute to the unification of European law and thus to have connected claims brought before and tried as far as possible by one court.

The question raised should be answered as follows:

Article 5 (1) of the Convention of 27 September 1968 must be interpreted as meaning that as regards the determination of the place of performance of the obligation in question reference must be made in the first place to the intention of the parties, in the second place to relevant international Conventions and in the third place to the national law of conflict of laws. In so far as the latter is decisive account should be taken of the necessity of, having, if possible, only one place of performance for all the obligations on a party under the contract. To this end the place of performance should logically be that of the main contractual obligation, the non-performance or defective performance of which is the basis of the litigation.

The appellant, Tessili, represented by Dieter Helm, Rechtsanwalt, Frankfurt am Main, the respondent to the appeal, Dunlop, represented by Peter Toelle, Rechtsanwalt, Frankfurt am Main, the Government of the United Kingdom, represented by Peter Scott, and the Commission of the European Communities, represented by its Legal Adviser, Rolf Wägenbaur, submitted oral observations and gave answers to questions raised by the Court at the hearing on 30 June 1976.

The Advocate-General delivered his opinion at the hearing on 15 September 1976.