Droit international général

Ilaria Viarengo and Francesca C Villata recently published a new book titled: “Planning the Future of Cross Border Families: A Path Through Coordination“ under the prestigious Hart Studies in Private International Law. The abstract reads as follows:

This book is built upon the outcomes of the EUFam’s Project, financially supported by the EU Civil Justice Programme and led by the University of Milan. Also involved are the Universities of Heidelberg, Osijek, Valencia and Verona, the MPI in Luxembourg, the Italian and Spanish Family Lawyers Associations and training academies for judges in Italy and Croatia. The book seeks to offer an exhaustive overview of the regulatory framework of private international law in family and succession matters. The book addresses current features of the Brussels IIa, Rome III, Maintenance and Succession Regulations, the 2007 Hague Protocol, the 2007 Hague Recovery Convention and new Regulations on Property Regimes.
The contributions are authored by more than 30 experts in cross-border family and succession matters. They introduce social and cultural issues of cross-border families, set up the scope of all EU family and succession regulations, examine rules on jurisdiction, applicable law and recognition and enforcement regimes and focus on the current problems of EU family and succession law (lis pendens in third States, forum necessitatis, Brexit and interactions with other legal instruments). The book also contains national reports from 6 Member States and annexes of interest for both legal scholars and practitioners (policy guidelines, model clauses and protocols).

This CEPEJ report, published on 22nd October 2020, contains data on the functioning of the judicial systems of 45 European States and 3 Observer States (Morocco, Israel and Kazakhstan). The findings are the following:

“Budget

– In 2018, European States spent on average more than 1 billion Euros for their judicial systems, equal to 72 € per inhabitant (8 € more than in 2016) and 0,33% of GDP. On average, member States allocated 65% of judicial system budget to courts, 24% to prosecution services and 11% to legal aid. Switzerland and Monaco are the countries that spend the most significant amount per inhabitant (220 € and 197 €), while Montenegro and Bosnia and Herzegovina dedicate to judicial system the highest percentage of their GDP (0.88% and 0.72%).

– Countries with a higher GDP per capita invest more per inhabitant in judicial systems, while less wealthy countries allocate more budget as a percentage of GDP, showing a greater budgetary effort for their judicial systems.

– Between 2010 and 2018, the member States and entities have slightly increased the average budget allocated to the judicial system. In 2018, all States and entities have increased the budget allocated to their judicial systems (+8%). The most significant increase (between 2016 and 2018), equal to 13% on average, has been recorded for courts’ budget and it concerns, in particular, investments in new buildings and computerisation.

– Less wealthy countries invest proportionally more on prosecution services (32% on average), while States and entities with higher GDP per capita spend relatively more in legal aid (19% on average).

– The budget allocated to courts seems to be related not only to the wealth of the country, but also to the number of courts. This may seem logical given that 65% of the court budget is spent on salaries.

– In order to rationalise budgetary resources of courts and, at the same time, reinforce specialisation and expertise, an increasing trend to outsource certain services is confirmed.

– Generally speaking, all the countries have implemented a legal aid system in criminal and other than criminal matters (representation by a lawyer before the court or legal advice), in compliance with the requirements of the European Convention on Human Rights and the case-law of the European Court which advocates an appropriate legal aid system to ensure access to justice for everyone.

– Some countries tend to have a low cost per legal aid case and a high number of cases granted legal aid, while others choose to provide a higher amount for a smaller number of cases.

Professionals

– While the number of professional judges remains globally stable, 21 judges per 100 000 inhabitants on average, significant differences are still noticed between States and entities (from 3.1 in UK-England and Wales to 101.8 in Monaco per 100 000 inhabitants). The latter can be partly explained by the diversity of judicial organisations, use of occasional professional judges and/or lay judges. Variations over the years have not led towards harmonisation.

– The number of prosecutors is tending to increase, on average 12 prosecutors per 100 000 inhabitants (in 2018, the number varies from 2.2 in Ireland to 25.1 in Ukraine).

– 31 Member States of 47 declared that public prosecutors are statutorily independent.

– While the number of prosecutors increased, their workload decreased since 2010 from 4.2 to 3.1 cases per 100 inhabitants.

– The trend towards the feminisation of judges and prosecutors is confirmed but the glass ceiling remains a reality: in 2018, at the level of all instances, there was 46% of men and 54% of women judges but 66 % male court presidents as opposed to 34 % of female court presidents; for the prosecutors : 48% of men and 52% of women but 64% of male and 36 % of female head of public prosecution offices. More and more States and entities seem to be focusing on the topic of specific provisions in favour of

– gender parity in the procedures for the recruitment and promotion of judges and prosecutors. Taking measures to promote gender balance in the higher and highest justice functions should be encouraged.

– The ratio between non-judge staff and professional judges is about 4 in 2018, this figure being quite stable through the years, the minimum being 1 in Luxembourg and the maximum 10 in UK – Northern Ireland.16 European States set up Rechtspfleger.

–  Salaries of judges vary widely between States and entities, but also between instances. The changes in salaries in recent years are not uniform and do not lead to harmonisation. The ratio between salaries of judges and national average salary shows significant disparities in Europe: from 0.9/1.6 in Germany (at the beginning /the end of career) to 4.8/31.5 in Ukraine (at the beginning /the end of career).

– Meaningful disparities also persisted in the salaries of prosecutors. The ratio between salaries of prosecutors and national average salary shows significant disparities in Europe: from 0.8 in Ireland and 4.0 in Romania (at the beginning of the career); 1.6 in Germany and 6.4 in Italy (at the end of the career). 

– Prosecutors’ salaries are, on average, lower than those of judges.

– The number of lawyers is also continuing to increase in Europe, with an average of 164 lawyers per 100 000 inhabitants, with important disparities between States (in 2018, from 16 per 100 000 inhabitants in Azerbaijan to 488 per 100 000 inhabitants in Luxembourg). This constant increase between 2010 and 2018 (27%) is mainly due to economic growth.

– Recent developments suggest that the topic of gender balance with regard to lawyers is being taken into account by an increasing number of States and entities. Currently, however, European lawyers are still predominantly male.

Courts

– Between 2010 and 2018 there was a reduction in the number of courts in Europe, both in terms of legal entities (-19% on average for the first instance courts of general jurisdiction) and geographical locations (-10 % on average).

–  For the same period, we can also notice an increase in the specialization of courts (the average share of specialized courts increased from 21% to 26,7% from 2010 to 2018).

– Small claims were only slightly affected by the above-mentioned developments. Only the average amount of what constitutes a small claim has increased (from 4 029 € in 2016 to 4 836 € in 2018).

Court users

– More and more member States provide specific information to users, both on the judicial system in general and on individual court proceedings.

– States address more and more specific information and arrangements to vulnerable categories of users (the complaints procedures regarding functioning of justice exist in 43 States, implementation of compensation systems (the average amount of compensation is 6 353 € in 2018), user satisfaction surveys, establishment of monitoring mechanisms in respect of violations of the European Convention on Human Rights).

– In order to improve further social responsibility and trust in the judicial system, member States should devote additional resources and staff to improvecommunication with the users of justice.

– The analyses and use of data, gathered through quantitative and qualitative research into the satisfaction of court users, increases the legitimacy of judicial systems and helps court leaders and administrations provide a better and more efficient service of justice.

– The use of information systems to support such activities is crucial. However, it is “interactional justice “- the human touch, the treatment of all involved in judicial proceedings with dignity and respect, that substantially helps to provide just decisions and consequently build trust in justice.

Information and communication technology (ICT)

–  ICT has become a constitutive part of justice service provision. States have focused their efforts on court and case management tools, more then on decision support and communication tools. The general ICT index (court and case management, decision support and communication with courts) varies from 1.52 in Cyprus to 9.79 in Latvia.

– European judicial systems are increasingly moving from paper-based procedures to electronic ones. This is true for the activities carried out within the courts, as well as for the communication exchanges between courts and all parties.

– The economic cost of this innovation should be considered with caution as the ICT budget may vary considerably during the development, deployment and maintenance phases.

– Court systems with comparatively higher resources generally tend to invest a higher percentage of the court budget in ICT.

– ICT are an integral component of the judicial systems, which is reflected both in the regulatory and governance choices implemented by the member States.

– Member States and entities have set up various solutions regarding leadership in ICT governance: most States tend to consider both of them equally relevant, with a slight prevalence of the judicial one.

– As basic technologies are now generally fully deployed in member States and entities, this analysis has focused on court and case management tools, decision support tools and tools for communication between courts, professionals and/or court users, showing very high levels of deployment.

– The high levels achieved in the areas of decision support, e-communication and remote proceedings increase the need to monitor the impact of these tools on principles such as fairness, impartiality and judicial independence.

Justice in the context of the Covid-19 crisis

– ICTs have proven to be valuable and even indispensable tools for the continued work of judicial systems during the COVID-19 crisis in Europe.

– In many cases, their use has required not only changes in legislation but also technical improvements, as has been observed in member States and entities.

– Concerns have been expressed about the use of certain ICT tools in court proceedings, but it is still too early to assess their actual impact on the parties’ rights.

– To address these issues, the CEPEJ has adopted on 10 June 2020 a  Declaration on lessons learnt and challenges faced by the judiciary during and after the Covid-19 Pandemic.

Efficiency

– The clearance rates give a generally positive balance sheet (stable and close to 100%) and conclusions can be more usefully drawn from the disposition time analysis. Criminal justice is the most effective at all three levels of court (disposition time at first instance: 122 days; second instance: 104 days ; third instance: 114 days) and the second instance courts appear as the most efficient in all areas (disposition time in civil and commercial cases: 141 days; administrative cases: 209 days; criminal cases: 104 days). It should be noted that although the results are unquestionably positive, they have deteriorated over time in several States and entities analysed.

– Conversely, it is at first instance and in the field of administrative law that the courts have proven to be the least efficient. Administrative cases tend to record the highest DT (241 days at 1st instance, 209 days at 2nd instance, 228 days at 3rd instance) with, however, considerable disparities between States and entities.

– Cases concerning asylum seekers and the right to entry and stay for aliens continue to have a strong impact on European jurisdictions. Many States and entities reported productivity problems related to these case types. In 2018, States received 291 443 cases concerning asylum seekers or 8 % fewer than in 2016. 183 920 incoming cases pertaining to the right to entry and stay for aliens represent an increase of 84 %. The highest number of incoming cases concerning asylum seekers was recorded in Germany, 149 593 cases. The second highest inflow is in France which received 58 671 asylum seekers cases and 79 807 right of entry and stay for aliens cases. Italy, then, received 48 891 asylum seekers cases and 2 224 right of entry and stay for aliens cases.

– The share of cases older than two years is available for a limited set of States and entities. Within these, the shares of cases older than two years do not vary over time.

– A number of States and entities have undergone or are currently undergoing significant justice sector reforms which have influenced the performance of their systems. The results of these States and entities need to be monitored cautiously and with an understanding of the context”.

Source: https://rm.coe.int/link-to-the-presentation-note-en/16809fdc75

For further information, see https://www.coe.int/en/web/cepej/special-file-publication-of-the-report-european-judicial-systems-cepej-evaluation-report-2020-evaluation-cycle-2018-data-

The ANNUAL MEETING OF THE ROYAL NETHERLANDS SOCIETY OF INTERNATIONAL LAW (ILA Dutch Branch) is online accessible on Friday 6 NOVEMBER 2020 (13:30 – 16:30 CET).  

 Over the decades, international law adapted in many ways to the quickly evolving, multi-facetted digital reality, and one of the central questions now is whether or not concepts and ideas developed in the ‘predigital era’ still fit the digitalised world. Is international law, both public and private, ready for the digital era or has it rather been a ‘fragmented follower of developments’ and should it fundamentally rethink a number of notions and approaches? 

Four speakers will present their papers on the adaptability of (private) international law to the digital environment. Two officials of the Dutch Ministry of Foreign Affairs (M. BUSSTRA and W. THEEUWEN) will give an overview on “International Law in the Context of Cyber Operations”. Y. BURUMA, a Justice of the Supreme Court of The Netherlands, will present his views on “International Law and Cyberspace – Issues of Sovereignty and the Common Good”, while D. SVANTESSON, Professor at the University of Bond (Australia) will consider whether “International Law [Is] Ready for the (Already Ongoing) Digital Age: Perspectives from Private and Public International Law”. 

There is ample room for debate after these presentations. Given the topical theme and the open debate with public and private international lawyers, this event may be of interest to some readers of this blog. Should you be interested, please register no later than 3 November 2020 by sending an email to info@knvir.org.

Thanks to Marta Pertegás Sender for providing the text

In the very recent case of Yankey v Austin (2020) LPELR-49540(CA)  the Nigerian Court of Appeal was faced with the issue of whether a court in the United State has jurisdiction to make an order affecting immovable property in Lagos, Nigeria.

The facts of the case was that the claimant/respondent previously sued the defendant/appellant before the Family Court Division, of the District of the Fourth Judicial District, County of Hennepin, State of Minnesota (“US Court”) – where they resided at the time, for dissolution of their marriage that was celebrated in Nigeria. The defendant/appellant as respondent before the US Court did not contest the dissolution of the marriage. They entered into a Mutual Termination Agreement, which is called Terms of Settlement in the Nigerian legal system. There was no trial and no evidence was adduced. Their homestead at 4104 Lakeside Avenue, Brooklyn Center, Minesota was awarded exclusively to the claimant/respondent as petitioner before the US Court. It did not end there.

The claimant/respondent subsequently instituted proceedings before the Lagos State High Court, Nigeria, and claimed joint ownership of the defendant/appellant’s property situated in Lagos, by relying on the US judgment. The lower court granted the claim.

The defendant/appellant appealed to the Court of Appeal, which unanimously allowed the appeal by overturning the decision of the lower court. The Court of Appeal (Ogakwu JCA) thoroughly analysed the documents which were in issue: (1) Mutual Termination Agreement, (2) Judgment of the US Court, and (3) petition for the dissolution of the parties marriage in the US Court. The Court of Appeal reached the conclusion that there was nothing in the documents in issue which suggests that the US judge granted joint ownership of the defendant/appellant’s landed property with the plaintiff/respondent. It also held that based on the principle of lex situs the US Court cannot make an order affecting immovable property in Nigeria.

The decision in Yankey  is an important decision from the perspective of public and private international law. Based on the principle of territorial sovereignty, a foreign court cannot make an order affecting immovable property in another country.  This rule as applied in Nigeria  –  often referred to as the  Mocambique  rule  –  is derived from the English case of British South Africa Company v Companhia de Mocambique [1893] AC 602. In that case, the plaintiff s’   statement of claim alleged that they were rightful owners of large tracts of land in South Africa, yet agents of the defendants unlawfully took possession of the lands and displaced the plaintiff  company and its servants, agents, and tenants. The plaintiffs also alleged that the defendants not only stole the plaintiff s’  personal property, but also assaulted and imprisoned some of them. It was held that an English court would not entertain an action to recover damages for a trespass to land situated abroad.

It is worth mentioning that in Nigeria, an  exception to the Mozambique rule exists where the action between the parties is founded on some personal obligation arising out of a contract or implied contract, a fiduciary relationship, fraud or other unconscionable conduct, and does not depend on the law of the  locus  of the immovable property to exist (British Bata Shoe Co Ltd v Melikian   ( 1956 )  1 FSC 100;     Aluminium Industries Aktien Gesellschaft  v Federal Board of Inland Revenue   ( 1971 )  2 ALR Comm 121   , (1971) 2 NCLR 1)

The Mozambique rule has been applied  by the Nigerian  Supreme Court only in inter-state matters such as in Lanleyin v Rufai  ( 1959 )  4 FSC 184. Yankey is the first case where it was applied in a case with truly international dimensions. Admittedly, the Court of Appeal did not explicitly mention the Mozambique rule or the Nigerian Supreme Court cases that have applied it in inter-state matters. The truth is that there was no need for the Court of Appeal to do so. Based on the facts of the case, the US Court never made an order for joint ownership of landed property in Lagos.

Yankey is a most welcome decision. If the lower court’s decision was allowed to stand, it would mean that any foreign court can generally make an order affecting landed property in Nigeria. The Court of Appeal was therefore right to hold that the US Court never made an order for joint ownership of landed property for the parties in this case. It was also right to hold that a foreign court cannot make an order of joint ownership of immovable property in Nigeria.

Written by Bastian Brunk, research assistant at the Humboldt University of Berlin and doctoral candidate at the Institute for Comparative and Private International Law at the University of Freiburg.

 

In April of 2020, EU Commissioner Didier Reynders announced plans for a legislative initiative that would introduce EU-wide mandatory human rights due diligence requirements for businesses. Only recently, Reynders reiterated his intentions during a conference regarding “Human Rights and Decent Work in Global Supply Chains” which was hosted by the German Federal Ministry of Labour and Social Affairs on the 6. October, and asseverated the launch of public consultations within the next few weeks. A draft report, which was prepared by MEP Lara Wolters (S&D) for the European Parliament Committee on Legal Affairs, illustrates what the prospective EU legal framework for corporate due diligence could potentially look like. The draft aims to facilitate access to legal remedies in cases of corporate human rights abuses by amending the Brussels Ibis Regulation as well as the Rome II Regulation. However, as these amendments have already inspired a comments by Geert van Calster, Giesela Rühl, and Jan von Hein, I won’t delve into them once more. Instead, I will focus on the centre piece of the draft report – a proposal for a Directive that would establish mandatory human rights due diligence obligations for businesses. If adopted, the Directive would embody a milestone for the international protection of human rights. As is, the timing could simply not be better, since the UN Guiding Principles (UNGPs) celebrate their 10th anniversary in 2021. The EU should take this opportunity to present John Ruggie, the author of the UNGPs, with a special legislative gift. However, I’m not entirely sure if Ruggie would actually enjoy this particular present, as the Directive has obvious flaws. The following passages aim to accentuate possible improvements, that would lead to the release of an appropriate legal framework next year. I will not address every detail but will rather focus on the issues I consider the most controversial – namely the scope of application and the question of effective enforcement.

 

General Comments

 

To begin with a disclaimer, I believe the task of drafting a legal document on the issue of business and human rights to be a huge challenge. Not only does one have to reconcile the many conflicting interests of business, politics, and civil society, moreover, it is an impossible task to find the correct degree of regulation for every company and situation. If the regulation is too weak, it does not help protect human rights, but only generates higher costs. If it is too strict, it runs the risk of companies withdrawing from developing and emerging markets, and – because free trade and investment ensure worldwide freedom, growth, and prosperity – of possibly inducing an even worse human rights situation. This being said, the current regulatory approach should first and foremost be recognised as a first step in the right direction.

 

I would also like to praise the idea of including environmental and governance risks in the due diligence standard (see Article 4(1)) because these issues are closely related to each other. Practically speaking, the conduct of companies is not only judged based on their human rights performance but rather holistically using ESG or PPP criteria. All the same, I am not sure whether or not this holistic approach will be accepted in the regulatory process: Putting human rights due diligence requirements into law is difficult enough, so maybe it would just be easier to limit the proposal to human rights. Nonetheless, it is certainly worth a try.

 

Moving on to my criticism.

 

Firstly, the draft is supposed to be a Directive, not a Regulation. As such, it cannot impose any direct obligations on companies but must first be transposed into national law. However, the proposal contains a colourful mix of provisions, some of which are addressed to the Member States, while others impose direct obligations on companies. For example, Article 4(1) calls upon Member States to introduce due diligence obligations, whereas all other provisions of the same article directly address companies. In my eyes, this is inconsistent.

 

Secondly, the Directive uses definitions that diverge from those of the UNGPs. For example, the UNGPs define “due diligence” as a process whereby companies “identify, prevent, mitigate and account for” adverse human rights impacts. This seems very comprehensive, doesn’t it? Due diligence, as stipulated in the Directive, goes beyond that by asking companies to identify, cease, prevent, mitigate, monitor, disclose, account for, address, and remediate human rights risks. Of course, one could argue that the UNGP is incomplete and the Directive fills its gaps, but I believe some of these “tasks” simply redundant. Of course, this is not a big deal by itself. But in my opinion, one should try to align the prospective mechanism with the UNGPs as much as possible, since the latter are the recognised international standard and its due diligence concept has already been adopted in various frameworks, such as the UN Global Compact, the OECD Guidelines for Multinational Enterprises, and the ISO 26000. An alignment with the UNGP, therefore, allows and promotes coherence within international policies.

 

Before turning to more specific issues, I would like to make one last general remark that goes in the same direction as the previous one. While the UNGP ask companies to respect “at minimum” the “international recognized human rights”, meaning the international bill of rights (UDHR, ICCPR, ICESCR) and the ILO Core Labour Standards, the Directive requires companies to respect literally every human rights catalogue in existence. These include not only international human rights documents of the UN and the ILO, but also instruments that are not applicable in the EU, such as the African Charter of Human and People’s Rights, the American Convention of Human Rights, and (all?) “national constitutions and laws recognising or implementing human rights”. This benchmark neither guides companies nor can it be monitored effectively by the authorities. It is just too ill-defined to serve as a proper basis for civil liability claims or criminal sanctions and it will probably lower the political acceptance of the proposal.

 

Scope of Application

 

The scope of application is delineated in Article 2 of the Directive. It states that the Directive shall apply to all undertakings governed by the law of a Member State or established in the territory of the EU. It shall also apply to limited liability undertakings governed by the law of a non-Member State and not established within EU-territory if they operate in the internal market by selling goods or providing services. As one can see, the scope is conceivably broad, which gives rise to a number of questions.

 

First off, the Directive does not define the term “undertaking”. Given the factual connection, we could understand it in the same way as the Non-Financial Reporting Directive (2014/95/EU) does. However, an “undertaking” within the scope of the Non-Financial Reporting Directive refers to the provisions of the Accounting Directive (2013/34/EU), which has another purpose, i.e. investor and creditor protection, and is, therefore, restricted to certain types of limited liability companies. Such a narrow understanding would run counter to the purpose of the proposed Directive because it excludes partnerships and foreign companies. On the other hand, “undertaking” probably does mean something different than in EU competition law. There, the concept covers “any entity engaged in an economic activity, regardless of its legal status” and must be understood as “designating an economic unit even if in law that economic unit consists of several persons, natural or legal” (see e.g. CJEU, Akzo Nobel, C-97/08 P, para 54 ff.). Under EU competition law, the concept is, therefore, not limited to legal entities, but also encompasses groups of companies (as “single economic units”). This concept of “undertaking”, if applied to the Directive, would correspond with the term “business enterprises” as used in the UNGP (see the Interpretive Guide, Q. 17). However, it would ignore the fact that the parent company and its subsidiaries are distinct legal entities, and that the parent company’s legal power to influence the activities of its subsidiaries may be limited under the applicable corporate law. It would also lead to follow-up questions regarding the precise legal requirements under which a corporate group would have to be included. Finally, non-economic activities and, hence, non-profit organisations would be excluded from the scope, which possibly leads to significant protection gaps (just think about FIFA, Oxfam, or WWF). In order to not jeopardise the objective – ensuring “harmonization, legal certainty and the securing of a level playing field” (see Recital 9 of the Directive) – the Directive should not leave the term “undertaking” open to interpretation by the Member States. A clear and comprehensive definition should definitely be included in the Directive, clarifying that “undertaking” refers to any legal entity (natural or legal person), that provide goods or services on the market, including non-profit services.

 

Secondly, the scope of application is not coherent for several reasons. One being that the chosen form of the proposal is a Directive, rather than a Regulation, thus providing for minimum harmonisation only. It is left to the Member States to lay down the specific rules that ensure companies carrying out proper human rights due diligence (Article 4(1)). This approach can lead to slightly diverging due diligence requirements within the EU. Hence, the question of which requirements a company must comply with arises. From a regulatory law’s perspective alone, this question is not satisfactorily answered. According to Article 2(1), “the Directive” (i.e. the respective Member States’ implementation acts) applies to any company which has its registered office in a Member State or is established in the EU. However, the two different connecting factors of Article 2(1) have no hierarchy, so a company must probably comply with the due diligence requirements of any Member State where it has an establishment (agency, branch, or office). Making matters worse (at least from the company’s perspective), in the event of a human rights lawsuit, due diligence would have to be characterised as a matter relating to non-contractual obligations and thus fall within the scope of the new Art. 6a Rome II. The provisions of this Article potentially require a company to comply with the due diligence obligations of three additional jurisdictions, namely lex loci damni, lex loci delicti commissi, and either the law of the country in which the parent company has its domicile (in this regard, I agree with Jan von Hein who proposes the use not of the company’s domicile but its habitual residence as a connecting factor according to Article 23 Rome II) or, where it does not have a domicile (or habitual residence) in a Member State, the law of the country where it operates.

 

That leads us to the next set of questions: When does a company “operate” in a country? According to Article 2(2), the Directive applies to non-EU companies which are not established in the EU if they “operate” in the internal market by selling goods or providing services. But does that mean, for example, that a Chinese company selling goods to European customers over Amazon must comply fully with European due diligence requirements? And is Amazon, therefore, obliged to conduct a comprehensive human rights impact assessment for every retailer on its marketplace? Finally, are states obliged to impose fines and criminal sanctions (see Article 19) on Amazon or the Chinese seller if they do not meet the due diligence requirements, and if so, how? I believe that all this could potentially strain international trade relations and result in serious foreign policy conflicts.

 

Finally, and perhaps most controversially in regard to the scope, the requirements shall apply to all companies regardless of their size. While Article 2(3) allows the exemption of micro-enterprises, small companies with at least ten employees and a net turnover of EUR 700,000 or a balance sheet total of EUR 350,000 would have to comply fully with the new requirements. In contrast, the French duty of vigilance only applies to large stock corporations which, including their French subsidiaries and sub-subsidiaries, employ at least 5,000 employees, or including their worldwide subsidiaries and sub-subsidiaries, employ at least 10,000 employees. The Non-Financial Reporting Directive only applies to companies with at least 500 employees. And the due diligence law currently being discussed in Germany, will with utmost certainty exempt companies with fewer than 500 employees from its scope and could perhaps even align itself with the French law’s scope. Therefore, I doubt that the Member States will accept any direct legal obligations for their SMEs. Nonetheless, because the Directive requires companies to conduct value chain due diligence, SMEs will still be indirectly affected by the law.

 

Value Chain Due Diligence

 

Value chain due diligence, another controversial issue, is considered to be anything but an easy task by the Directive. To illustrate the dimensions: BMW has more than 12,000 suppliers, BASF even 70,000. And these are all just Tier 1 suppliers. Many, if not all, multinational companies probably do not even know how long and broad their value chain actually is. The Directive targets this problem by requiring companies to “make all reasonable efforts to identify subcontractors and suppliers in their entire value chain” (Article 4(5)). This task cannot be completed overnight but should not be impossible either. For example, VF Corporation, a multinational apparel and footwear company, with brands such as Eastpack, Napapijri, or The North Face in its portfolio, has already disclosed the (sub?)suppliers for some of its products and has announced their attempt to map the complete supply chain of its 140 products by 2021. BASF and BMW will probably need more time, but that shouldn’t deter them from trying in the first place.

 

Mapping the complete supply chain is one thing; conducting extensive human rights impact assessments is another. Even if a company knows its chain, this does not yet mean that it comprehends every potential human rights risk linked to its remote business operations. And even if a potential human rights risk comes to its attention, the tasks of “ceasing, preventing, mitigating, monitoring, disclosing, accounting for, addressing, and remediating” (see Article 3) it is not yet fulfilled. These difficulties call up to consider limiting the obligation to conduct supply chain due diligence to Tier 1 suppliers. However, this would not only be a divergence from the UNGP (see Principle 13) but would also run counter to the Directive’s objective. In fact, limiting due diligence to Tier 1 suppliers makes it ridiculously easy to circumvent the requirements of the Directive by simply outsourcing procurement to a third party. Hence, the Directive takes a different approach by including the entire supply chain in the due diligence obligations while adjusting the required due diligence processes to the circumstances of the individual case. Accordingly, Article 2(8) states that “[u]ndertakings shall carry out value chain due diligence which is proportionate and commensurate to their specific circumstances, particularly their sector of activity, the size and length of their supply chain, the size of the undertaking, its capacity, resources and leverage”. I consider this an adequate provision because it balances the interests of both companies and human rights subjects. However, as soon as it comes to enforcing it, it burdens the judge with a lot of responsibility.

 

Enforcement

 

The question of enforcement is of paramount importance. Without effective enforcement mechanisms, the law will be nothing more than a bureaucratic and toothless monster. We should, therefore, expect the Directive – being a political appeal to the EU Commission after all – to contain ambitious proposals for the effective implementation of human rights due diligence. Unfortunately, we were disappointed.

 

The Directive provides for three different ways to enforce its due diligence obligations. Firstly, the Directive requires companies to establish grievance mechanisms as low-threshold access to remedy (Articles 9 and 10). Secondly, the Directive introduces transparency and disclosure requirements. For example, companies should publish a due diligence strategy (Article 6(1)) which, inter alia, specifies identified human rights risks and indicates the policies and measures that the company intends to adopt in order to cease, prevent, or mitigate those risks (see Article 4(4)). Companies shall also publish concerns raised through their grievance mechanisms as well as remediation efforts, and regularly report on progress made in those instances (Article 9(4)). With these disclosure requirements, the Directive aims to enable the civil society (customers, investors and activist shareholders, NGOs etc.) to enforce it. Thirdly, the Directive postulates public enforcement mechanisms. Each Member State shall designate one or more competent national authorities that will be responsible for the supervision of the application of the Directive (Article 14). The competent authorities shall have the power to investigate any concerns, making sure that companies comply with the due diligence obligations (Article 15). If the authority identifies shortcomings, it shall set the respective company a time limit to take remedial action. It may then, in case the company does not fulfil the respective order, impose penalties (especially penalty payments and fines, but also criminal sanctions, see Article 19). Where immediate action is necessary to prevent the occurrence of irreparable harm, the competent authorities may also order the adoption of interim measures, including the temporary suspension of business activities.

 

At first glance, public enforcement through inspections, interim measures, and penalties appear as quite convincing. However, the effectiveness of these mechanisms may be questioned, as demonstrated by the Wirecard scandal in Germany. Wirecard was Germany’s largest payment service provider and part of the DAX stock market index from September 2018 to August 2020. In June of 2020, Wirecard filed for insolvency after it was revealed that the company had cooked its books and that EUR 1.9 billion were “missing”. In 2015 and 2019, the Financial Times already reported on irregularities in the company’s accounting practices. Until February 2019, the competent supervisory authority BaFin did not intervene, but only commissioned the FREP to review the falsified balance sheet, assigning only a single employee to do so. This took more than 16 months and did not yield any results before the insolvency application. While it is true that the Wirecard scandal is unique, it showcased that investigating malpractices of large multinational companies through a single employee is a crappy idea. Public enforcement mechanisms only work if the competent authority has sufficient financial and human resources to monitor all the enterprises covered by the Directive. So how much manpower does it need? Even if the Directive were to apply to companies with more than 500 employees, in Germany alone one would have to monitor more than 7.000 entities and their respective value chains. We would, therefore, need a whole division of public inspectors in a gigantic public agency. In my opinion, that sounds daunting. That does not mean that public enforcement mechanisms are completely dispensable. As Ruggie used to say, there is no single silver bullet solution to business and human rights challenges. But it is also important to consider decentralised enforcement mechanisms such as civil liability. In contrast to public enforcement mechanisms, civil liability offers victims of human rights violations “access to effective remedy”, which, according to Principle 25, is one of the main concerns of the UNGP.

 

So, what does the Directive say about civil liability? Just about nothing. Article 20 only states that “[t]he fact that an undertaking has carried out due diligence in compliance with the requirements set out in this Directive shall not absolve the undertaking of any civil liability which it may incur pursuant to national law.” Alright, so there shouldn’t be a safe harbour for companies. But that does not yet mean that companies are liable for human rights violations at all. And even if it were so, the conditions for asserting a civil claim can differ considerably between the jurisdictions of the Member States. The Directive fails to achieve EU-wide harmonisation on the issue of liability. That’s not a level playing field. This problem could be avoided by passing an inclusive Regulation containing both rules concerning human rights due diligence and a uniform liability regime in case of violations of said rules. However, such an attempt would probably encounter political resistance from the Member States and result in an undesirable delay of the legislative process. A possible solution could be to only lay down minimum requirements for civil liability but to leave the ultimate drafting and implementation of liability rules to the Member States. Alternatively, the Directive could stipulate that the obligations set out in Articles 4 to 12 are intended to determine the due care without regard to the law applicable to non-contractual obligations. At least, both options would ensure that companies are liable for any violation of their human rights due diligence obligations. Is that too much to ask?

Published in the BRICS Law Journal by Dr Saloni Khanderia, Associate Professor – OP Jindal Global University, India; and Visiting Associate Professor, Faculty of Law, University of Johannesburg.

 

The outbreak of the COVID-19 or the coronavirus disease 2019 has severely impacted the performance of several contracts across the globe. In some situations, the outbreak may render the performance of contracts impossible as a result of governmental restrictions in the form of national lockdowns to curb its spread. Likewise, the pandemic may adversely impact the execution of the contractual obligations by dramatically affecting the price of the performance and, thus, resulting in hardship or commercial impracticability. At other times, the pandemic will be legally construed to not affect the performance of a contract. In domestic contracts, the consequences of such non-performance would depend on the principles of national law.

In comparison, agreements with a foreign element (international contracts) are likely to increase the complexity of deciding claims arising from the non-performance of contracts due to the COVID-19 outbreak. The rights and liability of the parties would chiefly depend on the law that will govern the agreement – which differs across the globe. Several contracts would include a force majeure clause to exonerate the parties from performance on the occurrence of an event such as a pandemic. The courts’ interpretation of such force majeure clauses similarly differs across the globe. The laws of some countries would excuse the parties from performing their contractual obligations even if the pandemic resulted in hardship. Others would strictly construe the terms of such clauses and would invalidate them if the occurrence of the pandemic did not make the performance impossible. The purpose of this paper is to examine the non-performance of transnational contracts due to the COVID-19 outbreak when they are governed by Indian law. It highlights the situations when an international contract for the sale of goods or services whose performance has been allegedly hindered due to COVID-19 would a) frustrate and b) breach the agreement under Indian law. The paper provides a comparative analysis of Indian law with several jurisdictions such as France, Germany, Austria, China, the United Kingdom [UK], Australia and the United States [US] to demonstrate that the law of the former is not well-equipped to deal with complex lawsuits arising due to the non-performance of contracts as a result of the pandemic.

The article may be accessed here.

A collection of essays edited by Florian Heindler (Sigmund Freud University, Vienna) has recently been published by Jan Sramek Verlag, in its Interdisciplinary Studies of Comparative and Private International Law series. The book celebrates the 40th birthday of the Austrian Private International Law Act.

The essays collected are authored by scholars for various countries and focus on the possible reform of the Act and its current value.

Authors include Andrea Bonomi, Axel Flessner, Fabienne Jault-Seseke, Thomas John, Caroline Sophie Rupp, Thomas Bachner, Ena-Marlis Bajons, Wolfgang Faber, Edwin Gitschthaler, Florian Heindler, Helmut Heiss, Brigitta Lurger, Martina Melcher, Andreas Schwartze, and Bea Verschraegen.

More details available here.

The Russian Legal Information Agency has announced that Russia’s Justice Ministry, acting jointly with the Foreign Ministry and the Supreme Court of the Russian Federation, proposed that the Government pass a recommendation to sign the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the ‘Convention’).

Although there were previously fake news circulating on the internet in this respect, it seems that Russia may well ratify the Convention or, at the very least, that Russian elites are contemplating doing so.

But why would Russia do that?

According to the Russian Agency, the answer seems to be that Russia would want to “create conditions for the recognition and enforcement of decisions taken by Russian courts in all [contracting States] of the new Convention.”

So, Russia hopes to improve the enforcement of Russian judgments abroad. This seems quite logical. Improving the enforcement of the forum’s judgments abroad is a common rationale for entering into bilateral treaties on the enforcement of foreign judgments and for having a reciprocity requirement in the forum’s law of foreign judgments.

There is, however, a downside: by entering into a treaty on the enforcement of foreign judgments, the contracting States also commit themselves to enforcing judgments rendered by other contracting States. In other words, if Russia ratifies the 2019 Convention, it will also promise to enforce in Russia judgments rendered by the courts of other contracting States.

The Russian law of foreign judgments is not liberal. The basic rule is that Russia only enforces judgments on the basis of a treaty. While Russian courts have sometimes accepted to enforce foreign judgments in the absence of treaty under the principle of comity, Russian law remains conservative in this respect.

In contrast, many other States have a very liberal law of foreign judgments, and have enforced Russian judgements on the basis of their common law of foreign judgments, without caring for any form of reciprocity. These liberal States include, among many others, the United States and France. In the US, in particular, courts have enforced Russian judgments on numerous occasions (in 2018, Russian judgments were enforced by New York and California courts, for instance). The 2019 Convention will not improve the prospects of enforcement of Russian judgments in those states.

So the main effect of entering into the 2019 Convention may well be that Russia will commit to enforce judgments that it would not enforce today. In other words, the 2019 Convention would certainly liberalize the Russian law of foreign judgments, but it is unclear to which extent it would improve the enforcement of Russian judgments abroad.

Surely, there are other States with a conservative law of foreign judgments. If these other States ratify the Convention, Russia will have improved the prospects of enforcing its judgments in these states. But who are these states and are they planning to sign the 2019 Convention? And are these states Significant trading partners of Russia? Otherwise, why should Russia care?

Germany is no doubt one of the biggest trading partners of Russia, and there is a reciprocity requirement under the German law of foreign judgments. Maybe German courts have denied enforcement to Russian judgments, but maybe they have considered that the prospects of enforcement of German judgments in Russia were such that German courts should enforce Russian judgments. Our German readers will tell.

A major judicial partner of Russia has been, lately, England. The English common law of judgments is pretty conservative, in particular with respect to the assessment of the jurisdiction of foreign courts. Because of Brexit, England is likely to sign the 2019 Convention. By entering into the Convention as well, the enforcement of Russian judgments in England would then improve. This might be enough of an incentive for Russia to enter into the Convention.

It would be great news for the rest of the world if Russia ratified the 2019 Judgments Convention. Whether it would be good news for Russia remains to be seen.

Today (25 October 2020) is the 40th Anniversary of the HCCH Child Abduction Convention. With more than 100 Contracting Parties, the HCCH Child Abduction Convention is one of the most successful Conventions of the Hague Conference on Private International Law (HCCH). As indicated in the title, this is a time for celebration but also a time for reflection. The Child Abduction Convention faces several challenges, some of which have been highlighted in this blog. The most salient one is that primary carers (usually mothers) are now the main abductors, which many argue was not the primary focus of the deliberations in the late 70s and that the drafters assumed that primarily (non-custodial) fathers were the abductors. See the most recent statistical analysis by Nigel Lowe and Victoria Stephens (year: 2015 applications), where it shows that 73% of the abductors were mothers (most primary or joint-primary carers) and 24% were fathers.

A related issue is that custody laws continue to change and are granting custody rights to non-primary carers (e.g. unmarried fathers, ne exeat clauses, etc.), which expands the scope of the Child Abduction Convention. There is also a growing trend of joint parenting.

Another challenge is the increasing importance of human rights law and its interaction with the Child Abduction Convention (see our previous post Opening Pandora’s Box); in addition, the implementation and application of article 13(1)(b) of the Child Abduction Convention also poses challenges (see our previous posts on the HCCH Guide to Good Practice on the grave-risk exception under article 13(1)(b) of the Child Abduction Convention through the lens of human rights: Part I and Part II).

Moreover, other challenges have arisen in these difficult times of pandemic. In this regard, Nadia Rusinova wrote a post on the “Child Abduction in times of Corona” and another one on “Remote Child-Related Proceedings in Times of Pandemic – Crisis Measures or Justice Reform Trigger?”

Last but not least, there is much uncertainty surrounding Brexit and the new legal framework of the UK. How about all the UK case law regarding Brussels II bis and the related issues regarding the Child Abduction Convention?

Such obstacles are not insurmountable (at least, I hope). Nevertheless, much reflection is needed to continue improving the operation of the Child Abduction Convention in this ever-changing world. Undoubtedly, the Child Abduction Convention is a must-have tool for States to combat internationally removal and retention of children by their parents or someone from the inner family circle in accordance with the UN Convention on the Rights of the Child.

For those of you who are interested in getting more information about this Convention: In addition to the Guides to Good Practice published by the HCCH (open access), some of the leading works in this area are (I will concentrate on books as there are countless articles, see also bibliography of the HCCH here. Some of the books are from Hart, click on the link on the top of the banner for more info):

Monographic works:

Schuz, Rhona. The Hague Child Abduction Convention: A Critical Analysis. Studies in Private International Law; Volume 13. Oxford: Hart Publishing, 2013.  Former Secretary General of the HCCH, Hans van Loon, wrote a very helpful book review. See Van Loon, Hans, “R. Schuz, the Hague Child Abduction Convention: A Critical Analysis.” Netherlands International Law Review, 62, no. 1 (April, 2015): 201–206.

Beaumont, Paul R. and Peter E. McEleavy. The Hague Convention on International Child Abduction. Oxford Monographs in Private International Law. Oxford: Oxford University Press, 1999.

Garbolino, James D. and Federal Judicial Center. The 1980 Hague Convention on the Civil Aspects of International Child Abduction: A Guide for Judges, 2015 (open access).

More specific topic:

Written by Conflictoflaws.net’s General Editor: Thalia Kruger.

Kruger, Thalia. International Child Abduction: The Inadequacies of the Law. Studies in Private International Law; Vol. 6. Oxford: Hart Publishing, 2011.

Works in Spanish:

Child abduction and mediation

Chéliz Inglés, María del Carmen. La sustracción internacional de menores y la mediación: Retos y vías prácticas de solución. Monografías. Valencia: Tirant lo Blanch, 2019.

Forcada Miranda, Francisco Javier. Sustracción internacional de menores y mediación familiar. Madrid: Sepín, 2015.

Within the Latin-American region

Tenorio Godínez, Lázaro, Nieve Rubaja, Florencia Castro, ed. Cuestiones complejas en los procesos de restitución internacional de niños en Latinoamérica. México: Porrúa, 2017.

Tenorio Godínez, Lázaro, Graciela Tagle de Ferreyra, ed. La Restitución Internacional de la niñez: Enfoque Iberoamericano doctrinario y jurisprudencial. México: Porrúa, 2011.

This is just a short list; please feel free to add other books that you may be aware of.

The HCCH news item is available here. The HCCH Access to Justice Convention is also celebrating its 40th anniversary. Unfortunately, this Convention is less used in practice.

Yesterday, 23 October 2020, the Republic of Serbia ratified the HCCH Convention of 23 November 2007 on the International Recovery of Child Support and Other Forms of Family Maintenance, which will enter into force for Serbia on 1 February 2021.

Source: https://www.hcch.net/en/news-archive/details/?varevent=757

INTRODUCTION
Commercial arbitration is now very popular around the globe. It forms an important part of Nigerian jurisprudence. It is regulated by the Arbitration and Conciliation Act (“ACA”), Cap. A18, LFN 2004.

Clauses designating an arbitral tribunal to resolve disputes between the parties are now common place in international commercial transactions. Generally, Nigerian courts respect and strictly enforce the parties’ choice to resolve their dispute before an arbitral tribunal in both domestic and international cases. This right is however not absolute. The right to resolve disputes before an arbitral tribunal could be waived by submitting to the jurisdiction of the Nigerian court. Indeed, Section 5 (1) of the ACA provides that: “If any party to an arbitration agreement commences any action in any court with respect to any matter which is the subject of an arbitration agreement any party to the arbitration agreement may, at any time after appearance and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceeding.” In essence, if a party to an international arbitration clause delivers any pleadings or takes any steps in the proceedings, such a party is deemed to have waived its right to an arbitration clause by submitting to the jurisdiction of the Nigerian court,

What provokes this comment is that in a recent Nigerian Court of Appeal decision in The Vessel MT. Sea Tiger & Anor v Accord Ship Management (HK) Ltd. (2020) 14 NWLR (Pt. 1745) 418 (“Tiger”), the Court of Appeal held inter alia that where a party is served with a judicial claim, in breach of an international arbitration agreement, but fails to appear before the court, such a party is deemed to have waived its right to an arbitration agreement by submitting to the jurisdiction of the Nigerian court. It also held that payment of an out of court settlement amounts to submission.

This comment holds that the Court of Appeal’s decision was wrongly decided in so far as it held that where proceedings are instituted in breach of an international arbitration clause, failure to appear before judicial proceedings and payment of an out of court settlement amounts to waiver by submitting to the jurisdiction of the court.

FACTS

In Tiger (supra), the 2nd plaintiff-appellant and the 1st defendant-respondent – both foreign companies before the Nigerian Court – entered into a ship management agreement on 18th of February 2012 in Hong Kong for the management of the 1st plaintiff-appellant vessel. The parties agreed that any dispute arising from their agreement shall be referred to international arbitration in London.

When a dispute arose as to the payment of the management fees between the parties, the 1st defendant-respondent instituted proceedings (suit No. FHC/L/CS/1789/2013) at the Federal High Court Nigeria for the arrest of the 1st plaintiff-appellant vessel. In that proceeding, the 1st defendant-respondent (as plaintiff) sued the plaintiff-appellants (the vessel and owners of the vessel) as the defendants in that case. The plaintiff-appellants settled the claim out of court by making payments to the 1st defendant-respondent. Subsequently, on 27th February 2014, the 1st defendant-respondent as plaintiff in suit No. FHC/L/CS/1789/2013 withdrew its suit and the vessel was ordered to be released.

In consequence of the arrest of the 1st plaintiff-appellant from 31st December 2013 to 27th February 2018, the appellants sued the defendant-respondents in the Federal High Court, Lagos for huge compensation arising from what it claimed to be the wrongful arrest of the 1st plaintiff-appellant in breach of their agreement to settle their dispute by international arbitration in London.

DECISION
The Court of Appeal unanimously dismissed the claim of the plaintiff-appellants by holding that they had waived their right to the international arbitration clause by submitting to the jurisdiction of the Nigerian Court. The decision was reached on two principal grounds. The first ground was failure to appear and challenge the proceedings after being served with court processes. The second ground was the payment of an out of court settlement in order to release the vessel. In order to provide more clarity, the relevant portions of the decisions are quoted.

First, Garba JCA in his leading judgment held that: “The failure or refusal by it (plaintiff-appellants) to appear in reaction to the originating processes to enable the appellant challenge the jurisdiction of the lower court on the ground of the arbitration clauses in the Ship Management Agreement…left no other reasonable presumption in law and option to the lower court than that the appellants had submitted to the jurisdiction of that court to adjudicate over the suit since the only challenge to the suit by the appellants was entirely and completely predicated and founded on the arbitration clauses in the Ship Management Agreement and not on the lack of jurisdiction on the part of the court, in any event, entertain the suit on any cognizable ground of law. The failure or refusal to enter an appearance and be represented in the suit constituted and amounted to a muted but clear submission to the jurisdiction of the lower court in the case.”

Second, Garba JCA held that: “…the lower court is right that the appellants submitted to its jurisdiction in the suit no:FHC/L/CS/1789/2013 by the payment and settlement of the 1st respondent’s claim in order to secure the release of the 1st appellant from the arrest and detention it was placed under in the case thereby not only taking a step in the case, but actively and effectively so, in the circumstances of the case.”

COMMENTS
The Court of Appeal’s decision in Tiger (supra) is very important from the perspective of private international law and international commercial arbitration. The implication of Tiger (supra) is that where proceedings are instituted in a Nigerian court in breach of a foreign arbitration clause, the party requesting arbitration would be wise to appear before the court and immediately request the court to stay its proceedings in favour of a foreign arbitration clause. If this is not done, an international arbitration clause is ineffective in Nigerian law on the basis that the party requesting arbitration would be deemed to have waived its right by submitting to the jurisdiction of the court. In addition, payment of an out of court settlement would amount to waiver by submitting to the jurisdiction of the Nigerian court.

Prior to Tiger (supra), waiver to an arbitration clause by submission to the jurisdiction of the Nigerian court could only be established where the defendant entered an unconditional appearance or defended the case its merits.

It is submitted that Tiger (supra) is a wrong extension of the principle to the extent that it holds that failure to appear before proceedings which breach an international arbitration clause constitutes waiver by submission to the jurisdiction of a court. A defendant that did not appear before court proceedings cannot be deemed to have waived its right by submitting to the jurisdiction of the Nigerian court. In other words, failure to appear to proceedings upon being duly notified is the very antithesis of submission to the jurisdiction of a court. It is illogical to hold that such a defendant has “delivered pleadings” or “taken steps in the proceedings” in the eyes of Section 5 of the ACA. A defendant is entitled to ignore court proceedings by sticking to the arbitration clause. This should also be seen as a pro-arbitration stance that is consistent with Nigeria’s approach of upholding the sanctity of arbitration agreements. Indeed, as stated in the introduction, Nigerian courts generally enforce arbitration agreements strictly.

The truth is that Tiger’s case reflects the attitude of Nigerian judges to absentee defendants. Nigerian judges regard it as impolite for a defendant not to appear to court proceedings. The preferable approach in Nigerian jurisprudence is to enter a conditional appearance and then challenge the jurisdiction of the court. Indeed, in Muhammed v Ajingi (2013) LPELR-20372 (CA), the Court of Appeal (Abiru JCA) unanimously held that a defendant who has been duly notified of proceedings but fails to appear to promptly challenge the jurisdiction of the court is deemed to have waived its right by submitting to the jurisdiction of the Nigerian court. Though, Muhammed v Ajingi was not an arbitration case, it demonstrates the attitude of Nigerian courts to absentee defendants.

The Court of Appeal was also wrong to have regarded the payment of the settlement sum by the plaintiff-appellants to release the vessel as waiver by submitting to the jurisdiction of the court. Such an approach does not amount to delivering pleadings or taking steps in the proceedings in the eyes of Section 5 of the ACA. Indeed, in the earlier case of Confidence Insurance Ltd v The Trustees of the Ondo State College of Education Staff Pension (1999) 2 NWLR (Pt. 591) 373, 386, the Court of Appeal (Achike JCA as he then was) unanimously held that: “effort made out of court to settle the matter in controversy between the parties” does not amount to submission. Nigerian courts should be seen to encourage out of court settlement. If the law is that efforts made out of court settlement amounts to submission, this might discourage a potential defendant from making out of court settlements, where there is the presence of a foreign arbitration clause.

Tiger (supra) properly so called was an action in damages for breach of an international arbitration clause. Since it has been argued in this case that the plaintiff-appellants did not submit to the jurisdiction of the Nigerian court, damages should have been awarded for breach of the international arbitration clause. If the Court of Appeal had adopted this approach, it would have honoured Nigerian judiciary’s approach to generally and strictly enforce the sanctity of arbitration agreements. It was obvious in this case that the plaintiff-appellants suffered loss from the arrest of its ship in breach of an international arbitration clause. It is unfortunate that the Court of Appeal did not award compensation in this case.

CONCLUSION
It remains to the seen whether Tiger (supra) will go on appeal to the Nigerian Supreme Court. If it does go on appeal, it is proposed that the Supreme Court overturns the Court of Appeal’s decision. If it does not go on appeal to the Supreme Court, it is proposed that the Nigerian Court of Appeal and Supreme Court in future holds that the failure to appear to proceedings in breach of an international arbitration to arbitrate and the payment of out of court settlement does not constitute waiver by submission to the jurisdiction of the Nigerian court.

Ronald A. Brand (University of Pittsburgh School of Law) has published a paper titled Comparative Method and International Litigation on the Journal of Dispute Resolution 273 (2020).

The abstract reads:

In this article, resulting from a presentation at the 2019 Annual Meeting of the American Society of Comparative Law, I apply comparative method to international litigation. I do so from the perspective of a U.S.-trained lawyer who has been involved for over 25 years in the negotiations that produced both the 2005 Hague Convention on Choice of Court Agreements and the 2019 Hague Convention on the Recognition and Enforcement of Judgments in Civil or Commercial Matters. The law of jurisdiction and judgments recognition is probably most often taught in a litigation context. Nonetheless, that law has as much or more importance to the transaction planning lawyer as to the litigator, and affects my focus here for comparative study of developments both in the Hague Conference process and in national (and regional) legal systems during the negotiation of the two treaties with which I have been involved. I look not only at domestic law, but also at treaties and other international legal instruments – the comparative evolution of the law. Moreover, I look at both legal rules and legal systems, addressing the comparative evolution of the institutions that make the law. This includes a comparison of the most influential legal systems at the start of the Hague negotiations. The differences resulting from that comparison ultimately affected the focus of the negotiations and the text of the resulting legal instruments. I end with a set of four conclusions based on these observations and comparisons.

See also here.

Another day and another application for a stay on the basis of Article 30 Brussels Ia. Lopesan Touristik SA v Apollo European Principal Finance Fund III (Dollar A) L.P. & Ors [2020] EWHC 2642 (Comm) engages a Sale and Purchase Agreement (SPA) between Lopesan as seller and Spanish company Oldavia as buyer, for Lopesan’s interest in the Buenaventura hotel in Spain. The Hotel is owned by Creative Hotel Buenaventura SAU.

Oldavia is a special purpose vehicle through which Apollo, who are private equity interests, acquired the Hotel for c.€93 million. That funding commitment was reflected in the terms of an Equity Commitment Letter (ECL), under which Apollo promised Oldavia, on the terms and conditions set out in the ECL, to provide it with the funding required to complete the SPA, which obligation was expressly made enforceable by Lopesan under the Contracts (Rights of Third Parties) Act 1999.

The SPA is governed by Spanish law and contains an exclusive jurisdiction clause in favour of the Spanish courts. The ECL is governed by English law and contains an exclusive jurisdiction clause in favour of the English courts.

Completion did not take place, and there are disputes between Lopesan and Oldavia as to whether Oldavia was or is obliged to complete under the SPA.

On 12 August 2020, Lopesan commenced proceedings against Oldavia in Madrid seeking specific performance of Oldavia’s obligation to complete under the SPA. Parties agree that those proceedings will not be determined for at least 12 months. On 20 August 2020, Lopesan wrote to Apollo seeking confirmations and undertakings intended to ensure that, if the specific performance claim against Oldavia succeeded, Apollo would provide the funds to Oldavia to allow completion to occur. Apollo disputed that Oldavia was under any obligation to complete, and as a result that it was under any corresponding obligation to put Oldavia in funds to enable it to complete.

On 15 September 2020 Lopesan then issued proceedings seeking to enforce its rights as a third party beneficiary under the ECL by way of an order for specific performance of Apollo’s obligation to put Oldavia in funds. Lopesan also issued an application for a speedy trial of that action to ensure judgment was delivered before 1 January 2021: there is a potential argument that Apollo’s obligations will lapse on 1 January 2021, even if, before that date, Oldavia came under a legal obligation to complete the SPA.

Apollo seek a stay of the proceedings under A30(1) BIa.

At 47 Foxton J refers to the Privatbank /EuroEco discussion which he summarises as ‘whether actions are related for the purposes of A30 only when the actions can in fact be heard and determined together, or whether actions are related where they would be heard and determined together but for some external factor (such as exclusive jurisdiction agreements or subject-matter limits on the jurisdiction of a particular court) which prevents this.’ Effective v theoretical hearing together, in other words. He sides with Privatbank but also accepts, with reference to Privatbank, that a practical inability to achieve an outcome where both cases are heard and determined together will be a factor which weighs against granting a stay as a matter of the discretion which Article 30 grants the judge, and that “absent some strong, countervailing factor, the fact that proceedings cannot be consolidated and heard together will be a compelling reason for refusing a stay”.

Further, and with reference to The Alexandros and to Generali v Pelagic Fisheries, where the factor which prevents the two actions being heard together is an exclusive jurisdiction clause, that of itself will constitute a powerful (although not insuperable) factor against staying proceedings which have been brought in the parties’ chosen jurisdiction pending the determination of proceedings elsewhere. At 50 he holds that this is a factor even when the other proceedings have themselves not been commenced in breach of contract.

At 57 Foxton J points that neither the relatedness of the actions nor that the Spanish court is first seised, are disputed. Relatedness exists given that any issue arising in the English proceedings which concerns the issue of whether Oldavia was obliged to complete the SPA necessarily arises in Spain. He then holds that the degree of relatedness is high and that the Spanish courts have much closer proximity to the subject matter of the case, involving, as it does, issues as to the effect of Covid-19 and the Spanish government’s response to it on a Spanish hotel, and the legal effects of those and other matters on a contract governed by Spanish law. However, at 58, if the English proceedings are stayed, it will not be possible to hear and determine the claims in the English and Spanish proceedings together, given the conflicting exclusive jurisdiction clauses in the ECL and the SPA. The decision (whether on issues of law or fact) in the Spanish proceedings would not be binding in the English proceedings, although if Lopesan fails in the Spanish proceedings, that will in practice be determinative of the English proceedings. Findings of law in the Spanish proceedings will also have a strong evidential value in the English proceedings.

Nevertheless, the significance of the English jurisdiction clause and the practical impossibility to hear the claims together in the Spanish courts, make him decide at 60 ff against a stay. His judgment displays the characteristic support of the English courts and English law for party autonomy: parties have deliberately structured the transaction so that claims under the ECL would be heard in a different jurisdiction to claims under the SPA. Consider his reasoning at 61:

That choice having been made, no doubt for good commercial reasons, and the events which have transpired being a scenario which must have been squarely within the parties’ contemplation, it would take a very strong case to justify staying proceedings brought as of right here pending the outcome of proceedings in another jurisdiction. The closer proximity of the Spanish courts to the dispute, nor its status as the natural forum to determine issues of Spanish law, are not sufficient to justify a stay, both because this must have been obvious to the parties when they put this arrangement in place, and because the parties expressly agreed not to raise any objections to proceedings in England on the ground that proceedings have been brought in an inconvenient forum. I do not suggest that this last factor is determinative or that it precludes an Article 30(1) stay. There is a public, as well as a purely private, interest in avoiding irreconcilable judgments within the Brussels Recast regime. However, the factor that the parties wanted the dispute to be determined in their chosen forum regardless of whether another court might be a more convenient forum is a factor which weighs in the balance against a stay.

A relevant judgment.

Geert.

(Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 2.2.14.5. Third edition forthcoming February 2021

 

I.a. application (dismissed) for a stay under A30(1) Brussels Ia.
Foxton J holding that the proceedings in Spain are related however no risk of irreconcalibility. https://t.co/gAeqYZNeEI

— Geert Van Calster (@GAVClaw) October 8, 2020

On 20 October 2020, the European Parliament adopted a resolution with recommendations to the Commission on a civil liability regime for artificial intelligence. These recommendations include a suggested regulation on liability for the operation of Artificial Intelligence-systems. Article 9 confirms the previous JURI Report (see this blog on 12 May 2020): “Civil liability claims brought in accordance with Article 8(1) shall be subject, in relation to limitation periods as well as the amounts and the extent of compensation, to the laws of the Member State in which the harm or damage occurred”.

Unfortunately, the exact nature of some key provisions such as Article 2, or the relationship between the suggested regulation as a whole and Rome II, remain unclear and different interpretations could usefully be clarified. It remains to be seen whether the European Commission will shed some light on this point when drafting the official proposal for the regulation.

See https://www.europarl.europa.eu/doceo/document/TA-9-2020-0276_EN.pdf

A rather strange ‘amendment’ to the French version of Brussels II ter was published two days ago at the OJEU: Rectificatif au règlement (UE) 2019/1111 du Conseil du 25 juin 2019 relatif à la compétence, la reconnaissance et l’exécution des décisions en matière matrimoniale et en matière de responsabilité parentale, ainsi qu’à l’enlèvement international d’enfants, OJEU L 347, 20.10.2020, p. 52–160 (FR), https://eur-lex.europa.eu/legal-content/FR/TXT/?uri=uriserv%3AOJ.L_.2020.347.01.0052.01.FRA&toc=OJ%3AL%3A2020%3A347%3ATOC

In reality, a new version of the entire Regulation is provided, far from the single amendment the title may suggest. As the readers from this blog will know, a few days ago, a corrigendum to Brussels I bis in some linguistic versions has been published. What’s next and why are the corrections only published now, even if later is better than never?

On 20 October 2020, the European Parliament adopted – with a large margin – a resolution with recommendations to the Commission on a civil liability regime for artificial intelligence (AI). The text of this resolution is available here; on other issues of AI that are part of a larger regulatory package, see the Parliament’s press release here. The draft regulation (DR) proposed in the resolution is noteworthy from a choice-of-law perspective because it introduces new, specific conflicts rules for artificial intelligence (AI) (on the general issues of AI and PIL, see the conference report by Stefan Arnold here). With regard to substantive law, the draft regulation distinguishes between legally defined high-risk AI systems (Art. 4 DR) and other AI systems involving a lower risk (Art. 8 DR). For high-risk AI systems, the draft regulation would introduce an independent set of substantive rules providing for strict liability of the system’s operator (Art. 4 DR). Further provisions deal with the amount of compensation (Art. 5 DR), the extent of compensation (Art. 6 DR) and the limitation period (Art. 7 DR). The spatial scope of those autonomous rules on strict liability for high-risk AI systems is determined by Article 2 DR, which reads as follows:

“1.        This Regulation applies on the territory of the Union where a physical or virtual activity, device or process driven by an AI-system has caused harm or damage to the life, health, physical integrity of a natural person, to the property of a natural or legal person or has caused significant immaterial harm resulting in a verifiable economic loss.

2. Any agreement between an operator of an AI-system and a natural or legal person who suffers harm or damage because of the AI-system, which circumvents or limits the rights and obligations set out in this Regulation, concluded before or after the harm or damage occurred, shall be deemed null and void as regards the rights and obligations laid down in this Regulation.
3. This Regulation is without prejudice to any additional liability claims resulting from contractual relationships, as well as from regulations on product liability, consumer protection, anti-discrimination, labour and environmental protection between the operator and the natural or legal person who suffered harm or damage because of the AI-system and that may be brought against the operator under Union or national law.”

The unilateral conflicts rule found in Art. 2(1) DR would prevail over the Rome II Regulation on the law applicable to non-contractual relations pursuant to Art. 27 Rome II, which states that the Rome II Regulation shall not prejudice the application of provisions of EU law which, in relation to particular matters, lay down conflict-of-law rules relating to non-contractual obligations. Insofar, it must be noted that Art. 2(1) DR deviates considerably from the choice-of-law framework of Rome II. While Art. 2(1) DR reflects the lex loci damni approach enshrined as the general conflicts rule in the Rome II Regulation (Art. 4 Rome II), one must not overlook the fact that product liability is subject to a special conflicts rule, i.e. Art. 5 Rome II, which is considerably friendlier to the victim of a tort than the general conflicts rule. Recital 20 Rome II states that “[t]he conflict-of-law rule in matters of product liability should meet the objectives of fairly spreading the risks inherent in a modern high-technology society, protecting consumers’ health, stimulating innovation, securing undistorted competition and facilitating trade”. In order to achieve these purposes, the Rome II Regulation opts for a cascade of connections, starting with the law of the country in which the person sustaining the damage has his or her habitual residence when the damage occurred, provided that the product was marketed in that country (Art. 5(1)(a) Rome II). If that connection fails because the product was not marketed there, the law of the country in which the product was acquired governs, again provided that the product was marketed in this state (Art. 5(1)(b) Rome II). Finally, if that fails as well, the Regulation returns to the lex loci damni under Art. 5(1)(c) Rome II, if the product was marketed there. This cascade of connections is evidently influenced by the desire to protect the mobile consumer from being confronted with a law that may be purely accidental from his point of view because it has neither a relationship with the legal environment that he is accustomed to (his habitual residence) nor to the place where he decided to expose himself to the danger possibly emanating from the product (place of acquisition). The rule reflects the presumption that most consumers will be affected by a defective product in the country where they are habitually resident. Insofar, Art. 2(1) DR is, in comparison with the Rome II Regulation, friendlier to the operator of a high-risk AI system than to the consumer.

Even if one limits the comparison between Art. 2(1) DR and the Rome II Regulation to the latter’s general rule (Art. 4 Rome II), it is striking that the DR does not adopt familiar approaches that allow for deviating from a strict adherence to lex loci damni. Contrary to Art. 4(2) Rome II, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, Art. 2 DR does not allow to apply the law of that country. Moreover, an escape clause such as Art. 4(3) or Art. 5(2) Rome II is missing in Art. 2 DR. Finally yet importantly, Art. 2(2) DR bars any party autonomy with regard to strict liability for a high-risk AI system, which deviates strongly from the liberal approach found in Art. 14 Rome II.

Apart from the operator’s strict liability for high-risk AI systems, the draft regulation would introduce a fault-based liability rule for other AI systems (Art. 8 DR). In principle, the spatial scope of the latter liability rule would also be determined by Art. 2 DR as already described. However, unlike the comprehensive set of rules on strict liability for high-risk systems, the draft regulation’s model of fault-based liability is not completely autonomous. Rather, the latter type of liability contains important carve-outs regarding the amounts and the extent of compensation as well as the statute of limitations. Pursuant to Art. 9 DR, those issues are left to the domestic laws of the Member States. More precisely, Art. 9 DR provides that

“Civil liability claims brought in accordance with Article 8(1) shall be subject, in relation to limitation periods as well as the amounts and the extent of compensation, to the laws of the Member State in which the harm or damage occurred.”

Thus, we find a lex loci damni approach with regard to fault-based liability as well. Again, all the modern approaches codified in the Rome II Regulation – the cascade of connecting factors for product liability claims, the common habitual residence rule, the escape clause, and party autonomy – are strikingly absent from the draft regulation.

Moreover, the draft regulation, in principle, limits its personal scope to the liability of the operator alone (as legally defined in Art. 3(d)–(f) DR). Recital 9 of the resolution explains that the European Parliament “[c]onsiders that the existing fault-based tort law of the Member States offers in most cases a sufficient level of protection for persons that suffer harm caused by an interfering third party like a hacker or for persons whose property is damaged by such a third party, as the interference regularly constitutes a fault-based action; notes that only for specific cases, including those where the third party is untraceable or impecunious, does the addition of liability rules to complement existing national tort law seem necessary”. Thus, for third parties, the conflicts rules of Rome II would continue to apply.

At first impression, it seems rather strange that a regulation on a very modern technology – artificial intelligence – should deploy a conflicts approach that seems to have more in common with Joseph Beale’s First Restatement of the 1930’s than with the modern and differentiated set of conflicts rules codified by the EU itself at the beginning of the 21st century, i.e. the Rome II Regulation. While the European Parliament’s resolution, in its usual introductory part, diligently enumerates all EU regulations and directives dealing with substantive issues of liability, the Rome II Regulation is not mentioned once in the Recitals. One wonders whether the members of Parliament were aware of the European Union’s acquis in the field of private international law all. In sum, compared with Rome II, the conflicts approach of the draft regulation would be a regrettable step backwards. It remains to be seen how the relationship between the draft regulation and Rome II will be designed and fine-tuned in the further course of legislation.

In June 2020, the Freiburg Institute for Advanced Studies (FRIAS) held an online symposium dealing with “Global Perspectives on Responsible Artificial Intelligence (AI)”. The range of topics included the implications of AI for European private law (Christiane Wendehorst, ELI/University of Vienna), data protection (Boris Paal, Freiburg), corporate law (Jan Lieder, Freiburg), antitrust (Stefan Thomas, Tübingen), and, last but not least, private international law (Jan von Hein, Freiburg). The videos of the presentations are now available here.

Matthias Weller (University of Bonn) has posted The HCCH 2019 Judgments Convention: New Trends in Trust Management on SSRN.

The abstract reads:

On its 22nd Diplomatic Session on 2 July 2019, the Hague Conference on Private International Law concluded its Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. The adoption of this Convention completes intense efforts of the HCC and the participating State Parties since 1992. One of the controversial issues in the last steps before the adoption was what has been called, in other contexts, “trust management”. This concept refers to the question how to embark on meaningful judicial cooperation in civil matters with participating states whose administration of justice is perceived as not sufficiently trust-worthy by other participating states – the “real elephant in the room”. At the same time, judicial integration in civil matters is an indispensable part of regulating transnational trade relations. Undoubtedly, international commercial arbitration should have the fullest possible freedom and support. However, without any effective alternative, there is no “alternative” dispute resolution and no “freedom of choice”. Rather, nations and regions, particularly those trading within frameworks of economic integration and thus on an intensified scale, should strive for an “integrated approach”. Against this background, the text explores new trends of trust management of the new HCCH instrument.

The article was published in the Festschrift für Herbert Kronke zum 70. Geburtstag.

by Marta Pertegás Sender, Maastricht University and University of Antwerp

On 5 February 2021 a group of renowned experts will discuss the attractiveness of Dutch courts in an online interactive seminar. The event will more generally address the settlement of complex private transnational disputes in light of recent Dutch and European legislation.

The starting point for this event is the observation that a number of complex multijurisdictional cases find their way to the Dutch courts. Notorious examples of past and pending collective redress cases include the Shell Nigeria (environmental claims), Libor (market manipulation claims), Petrobras (investor claims) and the “truck cartel” (competition claims) cases.

This “Dutch-bound” trend raises questions about the adequacy of the legal framework for such complex cases, in particular with regard to the international jurisdiction of the Dutch courts, the scope of application of the new law on collective redress, the domestic and international coordination of proceedings, the available (extraterritorial) remedies, etc.

Furthermore, this trend begs a more fundamental question about the position of the Dutch courts in a fragmented legal landscape. The broad application of the Law on Collective Settlements and the more restrictive scope of the new law on collective action, illustrate some of these controversies. Should The Netherlands remain an international dispute settlement hub ( forum conveniens) for such disputes?

Dutch and international academic experts, practitioners and policy-makers will lead the discussion from a legal, political and societal perspective. The attractive programme and line of speakers will soon be available here. For now, please save the date and join us for an in-depth reflection on how to tackle such collective redress cases.

This conference is organised by Maastricht University, Tilburg University and University of Amsterdam (UvA), with the collaboration of the Open University, in the context of the Netherlands Sector Plan on the transformative effects of globalisation in the law.

 

The EAPIL Blog hosts today two posts on the ruling of the Court of Justice in E.E., a case regarding the Succession Regulation decided on 16 July 2020. The firs post, by Matthias Lehmann, appeared this morning. The second post, by Carlos Santaló Goris, a research fellow at the MPI Luxembourg and a Ph.D. candidate at the University of Luxembourg, is featured below.

Introduction  

On 16 July 2020, the Court of Justice of the European Union (“CJEU”) delivered its sixth judgment on Regulation No 650/2012 (the Succession Regulation): C-80/19, E. E.

The preliminary reference allowed the CJEU to address several questions about the
Succession Regulation’s rules on jurisdiction, applicable law, and recognition and enforcement. It also gave the CJEU the opportunity to clarify certain elements of the Succession Regulation: some of them new (such as the determination of the habitual residence), others already familiar to the Court (e.g. are notaries ‘courts’ for the purposes of the Succession Regulation?).

Facts of the Case and Questions Referred

E.E.’s mother – the deceased – was a Lithuanian national who, in 2013, got married to a German national and moved to Germany. The same year she made a will before a Lithuanian notary. In 2017, she passed away in Germany. E.E., also of Lithuanian nationality, requested a notary in Kaunas (Lithuania) to open the succession and issue a certificate of succession rights. The notary rejected the requests arguing the deceased was habitually resident in Germany: therefore, according to the jurisdictional rules of the Succession Regulation, it was up to German authorities to open the succession. E.E. challenged the notary’s refusal. The case ended up before the Supreme Court of Lithuania, which referred the following questions to the CJEU:

(1) Is a situation such as that in the case under examination — in which a Lithuanian national whose habitual place of residence on the day of her death was possibly in another Member State, but who in any event had never severed her links with her homeland, and who, inter alia, had drawn up, prior to her death, a will in Lithuania and left all of her assets to her heir, a Lithuanian national, and at the time of the opening of the succession it was established that the entire estate comprised immovable property located solely in Lithuania, and a national of that other Member State surviving his spouse expressed in clear terms his intention to waive all claims to the estate of the deceased, did not take part in the court proceedings brought in Lithuania, and consented to the jurisdiction of the Lithuanian courts and the application of Lithuanian law — to be regarded as a succession with cross-border implications within the meaning of [the Succession Regulation]?

(2) Is a Lithuanian notary who opens a succession case, issues a certificate of succession rights and carries out other actions necessary for the heir to assert his or her rights to be regarded as a ‘court’ within the meaning of Article 3(2) of [the Regulation]?

(3) If the second question is answered in the affirmative, are certificates of succession rights issued by Lithuanian notaries to be regarded as being decisions within the meaning of Article 3(1)(g) of [the Succession Regulation] and must jurisdiction for that reason be established for the purpose of issuing them?

(4) If the second question is answered in the negative, should the provisions of Articles 4 and 59 of [the Succession Regulation] be construed as meaning that Lithuanian notaries are entitled to issue certificates of succession rights without following general rules on jurisdiction and that such certificates will be held to be authentic instruments which also give rise to legal consequences in other Member States?

(5) Must Article 4 of [the Succession Regulation] (or other provisions thereof) be construed as meaning that the habitual place of residence of the deceased can be established in only one specific Member State?

Should the provisions of Articles 4, 5, 7 and 22 of [the Regulation] be construed and applied in such a way that, in the present case, in accordance with the facts as set out in the first question, it must be concluded that the parties concerned agreed that the courts in Lithuania should have jurisdiction and that Lithuanian law should be applied?

One or More Habitual Residence(s), and Where?

The CJEU addressed first whether a deceased may have more than one habitual residence for the purposes of the Succession Regulation. Indeed, in the case at hand, there were data suggesting that the habitual residence of the de cujus could have been located in two Member States: she had lived for a while in Germany when she passed away, but she held Lithuanian nationality and all her assets were in Lithuania. However, the CJEU made it clear that there can be only one habitual residence. A different answer would lead to a fragmented succession, something that the Succession Regulation aims at avoiding (para. 41).

Was the habitual residence of the deceased in Germany, or rather in Lithuania? The Regulation itself acknowledges that determining the place of habitual residence is not always easy. Some domestic courts have already struggled with this issue. The CJEU relies on the guidance offered by the Regulation’s Preamble, Recitals 23 and 24, inviting the referring court to consider both in order to establish the habitual residence of the deceased in the case at hand.

It is here submitted that by relying on the recitals, the CJEU has vested them with some kind of normative value. From now on, domestic authorities shall consider recitals 23 and 24 of the Succession Regulation when confronted with the need to determine the habitual residence of a deceased. Moreover, the Court’s reasoning indicates how to apply the recitals. First, the national authorities shall rely on Recital 23 to try and establish a close and stable connection with a Member State, taking into account both subjective factors (e.g., why the deceased lived in that Member State) and objective factors (e.g., how long the deceased spent in that Member State). Only if they fail can domestic authorities rely on Recital 24 and consider other data, such as the nationality or the location of the assets.

A Succession with Cross-border Implications?

The CJEU was asked as well whether the succession of E.E.’s mother qualified as one with cross-border implications. Indeed, as the CJEU recalls, the Succession Regulation only applies to such successions (paras. 34 – 35). However, there is no definition of what the European legislator meant by ‘cross-border implications.’ In this sense, the CJEU states: “it must be assessed whether the succession has a cross-border nature due to the location of another element of it in a State other than that of the deceased’s last habitual residence” (para. 42). But what are these other elements? In a non-exhaustive manner, the CJEU referred to the location of the deceased’s assets in a Member State other than the one of habitual residence of the deceased (para. 43). Therefore, in the present case, the succession of E.E.’s mother would fall under the scope of the Regulation if Germany prevails as “habitual residence”, for the estate assets (an apartment) are located in Lithuania.

By contrast, if ultimately (very unlikely, though) the national court prefers Lithuania as place of habitual residence, both the assets and habitual residence would be located in the same Member State. Would the succession be a purely internal one, then? The question arises whether other factors confer a cross-border dimension to a succession; the E.E. judgment is of little help here. Instead, one should look at the AG Opinion, where reference is made as well to the heirs’ habitual residence as a significant element to determine the succession’s cross-border implications (para. 65). In the present case, both potential heirs (E.E. and his stepfather) had their habitual residence in Germany. Therefore, should the deceased’s habitual residence be deemed to be Lithuania, the succession would still be one of interest for the Regulation.

Nothing New Concerning (Lithuanian) Notaries

The referring court also asks whether Lithuanian notaries are “courts” within the meaning of the Succession Regulation. A positive answer would have meant that they are subject to the Succession Regulation’s jurisdictional rules. The question is not new for the CJEU. In C-658/17, WB, a similar one had been referred concerning Polish notaries. The CJEU answered in the negative: the Polish notaries lack “judicial functions” (para. 61), i.e., “the power to rule of [their] own motion on possible points of contention between the parties concerned“(para. 55).

The CJEU applied the same logic in E.E. It appears from its reasoning that Lithuanian notaries in functions like the one deployed in the case at stake are not courts within the meaning of Article 3 of the Succession Regulation (para. 53). However, the CJEU does not say it so in so many words, but leaves it to the referring court to decide (para. 54).

Since the CJEU follows WB, the same critical remarks the judgment has met within scholarly circles will probably apply to E.E.. The CJEU did not fully elaborate on the notion of court, but simply referred to one of the characteristics mentioned in Article 3(2). Additionally, the notion of “jurisdictional functions” retained appears to be inconsistent with C-20/17, Oberle, where the CJEU ruled that the issuance of a domestic certificate of succession by a German court was subject to the Succession Regulation’s jurisdictional rules, in spite of the fact that the proceeding were not “judicial” in the sense of WB (and, now, E.E.). Several scholars have expressed their surprise that a certificate of succession rendered by a German court fall within the Succession Regulation’s jurisdictional scheme, but one rendered by a Lithuanian or a Polish notary does not.

One may wonder whether E.E. was actually a suitable occasion to work out a comprehensive notion of “court”. True, in E.E., the question was formulated in slightly broader terms than in WB. In the latter, the referring court asked whether a Polish notary issuing a certificate of succession is a ‘court’. Conversely, in the latter, the referring court asked whether a Lithuanian notary was a court when it “issues a certificate of succession rights and carries out other actions necessary for the heir to assert his or her rights.” This notwithstanding, it seems that Lithuanian and Polish notaries are quite similar. Thus, it is not surprising that the CJEU followed the same approach. There might be better occasions to address the issue again.

The Lithuanian Certificate of Succession: Judgment or Authentic Instrument?

The CJEU was also requested to determine whether a Lithuanian domestic certificate of succession was a judgment (if notaries are regarded as courts), or an authentic instrument (if notaries are not regarded as courts). The Court explored both possibilities:

Should the notaries be “courts” in the sense of the Regulation, they would be subject to its jurisdictional rules (para. 62), and the national certificate of succession would be a judgment within the meaning of Article (para. 63).

Conversely, if notaries are not ‘courts’, the certificate of succession would be an ‘authentic instrument,’ as long as it fulfils the characteristics imposed by the Succession Regulation on this type of instruments (paras. 72 – 73).

The CJEU’s outcome is hardly surprising considering that it had already explored this point in WB, on the Polish domestic certificate of succession.

The Parties’ Autonomy

In principle, under the Succession Regulation, the courts’ jurisdiction and the applicable law corresponds to the Member State of the deceased’s habitual residence. However, the Regulation grants a certain degree of autonomy to the deceased and to the heirs to opt for a different applicable law and another jurisdiction, respectively. This freedom is nonetheless limited: the deceased can only choose the law of the State his/her nationality (Article 22); the heirs can only opt for the courts of a Member State whose law had been chosen by the deceased (Article 5, Article 7). In E.E., the referring court was uncertain as to whether the deceased had actually opted for the law of her nationality, and the heirs for the jurisdiction of the Lithuanian courts.

Concerning the applicable law, E.E.’s mother had not expressly chosen the law of her nationality. Nonetheless, Article 83(4) of the Regulation creates a fiction according to which “if a disposition of property upon death was made prior to 17 August 2015 in accordance with the law which the deceased could have chosen in accordance with this Regulation, that law shall be deemed to have been chosen as the law applicable to the succession”. Since E.E.’s mother drew up her will before a Lithuanian notary in 2013 according to Lithuanian law, the fiction applies (para. 26) .

Lithuanian law being applicable, the referring court wondered if the potential heirs (E.E. and the deceased’s husband) had chosen the jurisdiction of Lithuanian courts. According to the Succession Regulation they could have done it through a choice-of-court agreement (Article 5); or through express declarations in which they accepted the jurisdiction of the court seized (Article 7). In the present case, unilateral declarations had been made by the deceased’s husband in Germany waiving any claim to the estate, consenting to the jurisdiction of the Lithuanian court and refusing to enter an appearance before it in the proceedings under way in that State. It is clear that these declarations do not amount to an Article 5 choice-of-agreement (para. 85); could they be an “express declaration” in the sense of Article 7? One more time, the CJEU leaves the question open, to be decided by the referring court. AG Campos Sánchez-Bordona went a step further, suggesting a flexible reading of the party’s autonomy. In his words, “it is appropriate to recall that the Regulation must not be read in such a way as to prevent parties from settling a succession out of court in a Member State which they have chosen, if that is possible under the law of that Member State” (para. 122).

Overall Assessment

E.E. will hardly be seen as a landmark case on the Succession Regulation. The main contribution/output of this judgment is the elaboration on an autonomous concept of “habitual residence”, based on the Preamble of the Regulation; and the characterization of Article 83(4) as a fiction, and not a presumption. Beyond that, the answer to the other questions is relatively basic, sometimes even disappointing . The CJEU either relies on what it had already said in previous cases without moving forward (e.g., Oberle; WB); or it paraphrases the text of the Succession Regulation. The referring court may find the AG’s Opinion more instructive than the judgment: something not unusual, and – even if not aimed at by the CJUE’s procedural and estructural rules- a good example of teamwork.

At any rate, E.E. remains an interesting case in that it reflects common difficulties faced by the domestic authorities when dealing with the Succession Regulation.