Regulation (EU) No 1215/2012 (Brussels Recast) is built on the general rule that defendants are to be sued in the courts of their domicile, complemented by limited heads of special jurisdiction designed to reflect a close connection between the dispute and an alternative forum in specific circumstances. In contractual matters, Article 7(1) permits a claimant to sue “in the courts for the place of performance of the obligation in question”, while Article 7(1)(b) autonomously defines that place, in relation to the provision of services, as the place where the services were provided or should have been provided. These rules seek to ensure legal certainty and predictability, allowing claimants to identify competent courts and enabling defendants reasonably to foresee where they may be sued.

Within this framework, Falco Privatstiftung (C-533/07) and VariusSystems (C-526/23) are two important judgments on the scope and operation of the “provision of services” head of jurisdiction. Together, they delineate which contracts fall under Article 7(1)(b) and, in the case of cross-border digital services, how the place of performance is to be established.

Falco Privatstiftung and Rabitsch v Weller-Lindhorst concerned a contract under which the Vienna based owners of copyright in a concert licensed the defendant, domiciled in Munich, to market video recordings of the concert in Austria, Germany and Switzerland. The licensors claimed royalties including in respect of audio recordings allegedly marketed without contractual basis.

The Austrian Supreme Court referred questions on Article 5(1) of Regulation 44/2001 (now Article 7(1) Brussels Recast), asking whether the licence agreement is a “contract for the provision of services” within the second indent of Article 5(1)(b), and if not, how jurisdiction is to be determined.

The Court held that the concept of “provision of services” presupposes that the provider carries out a particular activity in return for remuneration. A contract whereby the owner of an intellectual property right merely grants its contractual partner the right to use that right involves no such activity: the owner undertakes essentially to refrain from opposing the use and does not “perform” a service in the autonomous sense used by the Regulation. The second indent of Article 5(1)(b) therefore does not cover a bare licence agreement of that kind.

The Court emphasised that the rules of special jurisdiction are derogations from the domicile-based principle and must be interpreted narrowly, resisting attempts to import broader notions of “services” drawn from free movement or VAT law. For contracts that are neither sales of goods nor provision of services, jurisdiction remains governed by Article 5(1)(a)/7(1)(a). In such cases, the court must identify the specific contractual obligation whose non‑performance is alleged and, under the applicable law, determine where that obligation had to be performed.

VariusSystems Digital Solutions GmbH v GR concerned an oral contract between an Austrian software development company and a German customer for the development and operation of software enabling the analysis of COVID-19 screening tests for use in Germany. VariusSystems was remunerated per successful test.  There being no written agreement, no jurisdiction clause or express designation of the place of performance was agreed. VariusSystems sued in Austria for EUR 101,587.68 in outstanding fees, arguing that all development, maintenance and adaptation work was carried out in Vienna. GR contested Austrian jurisdiction, contending that the relevant service was provided in Germany because the intended use of the software was in Germany.

The Court first confirmed that this is a contract for the provision of services, as it entails a range of activities including the design, programming, maintenance and continuous adaptation of individualised software, satisfying the Falco criterion of a positive activity in return for remuneration.

The Court then reiterated that Article 7(1)(b) establishes the connecting factor as the place where the services “were provided or should have been provided”, and that this factor applies to all claims arising from the same service contract. Where several obligations arise, it is necessary to identify the obligation which characterises the contract. Design and programming work, although essential, do not constitute the characteristic obligation from the customer’s perspective. The service is only actually provided once the software is operational and made available so that it can be used and its quality assessed. Accordingly, the characteristic obligation is the making available of the software, and the “place of performance” is the place where the customer accesses and uses it.

Where the software is intended to be used in different locations, that place is localised at the customer’s domicile or, for a company, its registered office. This provides a definite and identifiable location for both parties and is conducive to efficient evidence-gathering. The Court added that this conclusion is independent of any contested issues of substantive national law, such as compliance with German regulatory specifications which cannot determine the jurisdictional connecting factor under Article 7(1)(b).

The two judgments interact on several levels. First, both are consistent on the autonomous and restrictive definition of “provision of services”. Falco holds that a bare licence without a performative obligation falls outside Article 7(1)(b), leaving such contracts governed by Article 7(1)(a). VariusSystems operates in the opposite situation: a genuinely performance-intensive contract, which implicitly applies the Falco criterion by recognising that bespoke software development and operation constitute “services”.

Secondly, both judgments respect the structural distinction introduced by the Recast Regulation: only contracts for sale of goods or provision of services benefit from the simplified, uniform connecting factor in Article 7(1)(b), while all other contracts revert to Article 7(1)(a) and the traditional methodology. VariusSystems then refines the autonomous branch for digital service contracts, clarifying that the “place of performance” is anchored at the customer’s place of access and use, or its registered office where use is not limited to one site.

Thirdly, both decisions are guided by the dual aims of predictability and proximity. By refusing to treat a bare licence as a ‘service’, Falco prevents Article 7(1)(b) from becoming a catch‑all rule and keeps the overall system of jurisdiction balanced between the defendant’s domicile and a limited number of clearly defined exceptions. VariusSystems selects a connecting factor (the customer’s place of access and use) that is foreseeable for both parties and is closely linked to the practical operation of the contract.

Taken together, Falco and VariusSystems map a jurisdictional continuum stretching from passive IP licensing at one end, to active digital service delivery (SaaS-style contracts) at the other, equipping courts and practitioners with clear, autonomous criteria for locating performance wherever contractual obligations cross borders.