18. June 2014
Parties who sign undertakings to cease and desist in a foreign country are bound by the relevant domestic jurisdiction clause contained in the undertaking.
Cease and desist obligations
A court in Berlin, Germany, has ruled that where foreign parties sign undertakings to cease and desist containing a domestic jurisdiction clause, they are bound by that clause.
The court stated that where a party refuses to accept the jurisdiction clause, there is serious doubt as to the sincerity of the undertaking. As a result, injunction proceedings would succeed (judgment from 25.04.2014, case ref. 5 U 178/11).
Facts of the case
A Dutch company received warning letters from the claimant requesting the cessation of several competition law infringements. The company submitted an undertaking to cease and desist which contained a clause imposing a contractual penalty should the terms of the undertaking be violated in the future. However, the company refused to sign an agreement on jurisdiction.
The claimant brought injunction proceedings on the basis that there was a risk of the infringements being repeated. The court agreed, finding that although the Dutch company had submitted an undertaking to cease and desist, there was serious doubt as to the sincerity of the undertaking.
The court reasoned that if the defendant refused to sign the jurisdiction agreement and breached the undertaking, the claimant would have had to have brought the claim in the Netherlands. This would have been a significant burden on the claimant, as the claim would have had to have been brought in a foreign language and in accordance with foreign rules of procedure. In addition, should the claimant go on to win such proceedings, it would have had to have paid some of the procedural costs. Moreover, the Dutch company had targeted its products directly at the German market, therefore making it justifiable that the claim be heard in Germany.
According to the Berlin court, these factors would have been unreasonable on the claimant.
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