UPC: New Restrictions Placed on Service under Rule 271?

In resolving a long-fought issue about service on companies belonging to the same group of companies in which some companies are within and some companies are outside of the EU, the UPC Court of Appeal appear to have applied a new restriction on the use of Rule 271 of the UPC Rules of Procedure (RoP) for service.

The RoPs distinguish between service on defendants within the Contracting Member States (RoPs 270 – 272) and (the often considered more onerous) service outside of Contracting Member States (RoPs 273 – 274).

In separate actions, Nera Innovations, Daedalus Prime and Panasonic all attempted service on Chinese-based companies in the Xiaomi group by affecting service on other companies in the same group but located within the UPC Contracting States. This was generally rejected at first instance, at least in the absence of agreement by the affected defendant. 

After the claimants appealed this refusal, the Court of Appeal has now stepped in to issue their decision on the matter. In decisions under cases UPC_COA_86/2024, UPC_COA_205/2024, and UPC_COA_183/2024 issued in early August 2024, the CoA considered the argument of the appellants. Rule 271.5a of the RoP recites:

5. Service under this Section shall be effected at the following place: 

(a) where the defendant is a company or other legal person, at its statutory seat, central administration or principal place of business within the Contracting Member States or at any place within the Contracting Member States where the company or other legal person has a permanent or temporary place of business;

The appellants argued that the construction of Rule 271.5a indicates that it is only required that the defendant has a permanent or temporary place of business within the Contracting Member States, without its registered office, central administration or principal place of business having to be located within the Contracting Member States.

The CoA have rebutted this interpretation of Rule 271.5a. The Panel decided that the wording of the rule, namely the way that the second half of the sentence refers back to the first half in use of the phrase “the company”, implies that the rule can only be applied where companies have their statutory seat, central administration or principal place of business within the Contracting Member States. Hence, as the Chinese companies did not meet this criterion, the second half of Rule 271.5a was deemed not to apply. Consequently it was found that, instead Rule 274 (concerning service outside the Contracting Member States) applied.

It will be interesting to see if an earlier decision from the Dusseldorf (first instance)_ Local Division (UPC_CFI_216/2024 issued on 17 June 2024) can in future be relied upon. In that decision, service on defendant based in Istanbul was affected at the PRS Europe trade fair taking place in Amsterdam. The Dusseldorf Local Division had interpreted Rule 271.5a in the way argued by the appellants, in that service could be effected at any place within the Contracting Member States where the company had a permanent or temporary place of business. The Dusseldorf Local Division had not mandated that the defendant have their principal place of business be in a Contracting Member State, but it would appear that going forward such a condition will be required to have been met for service under Rule 271.5a to be allowed.