OGH: Jurisdiction for Software Contracts Needs Clarification

Sept 29, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has asked the  European Court of Justice (hereinafter ECJ) to clarify where the ‘place of performance’ as defined in Article 7(1)(b)(2) of Regulation (EC) 1215/2012 on Jurisdiction and Recognition and Enforcement of Decisions in Civil and Commercial Matters (Brussels I), lies in software service contracts. At the same time, the OGH also gave its opinion on the solution it preferred.

In the original case, the plaintiff, a limited liability GmbH company based in Vienna, had developed software for the defendant who was based in Germany. The software was used to evaluate corona tests in German test centres in accordance with the requirements of German legal regulations. The subject of the contract was the initial and ongoing development and operation of the software in Germany. No place of jurisdiction or place of performance had been agreed between the parties.

The plaintiff sued for payment of an outstanding fee and claimed that Austrian courts had jurisdiction under Article 7(1)(b), second indent, of the Brussels I Regulation because the service had been provided in Vienna within the meaning of the contract.

The defendant, however, assumed that the place of performance was Germany. This was because the characteristic performance was the use of the software in accordance with German law for German test persons.

In order to clarify this question, the OGH referred the matter to the European Court of Justice for a preliminary ruling. The question is whether the place of performance for software contracts like this one is the place where the software is intellectually created, i.e., programmed, or the place where the software reaches the customer, is accessed, and used.

The OGH tends to favour the first interpretation. The ‘place of performance’ for the supply of services is the place where the service provider has to carry out their activities, according to the case law of the ECJ. The place of supply of services is the place where the provision of the service is primarily at issue. This would indicate that the place of performance was in Austria, according to the OGH.

In the legal literature, however, other opinions have been expressed on which the ECJ has not yet ruled. Therefore, a referral to the ECJ was necessary for the OGH.

OGH 1 Ob 73/23a (13 July 2023)