Droit international général

State immunity in global COVID-19 pandemic: Alters, et. al. v People’s Republic of China, et. al.

By Zheng Sophia Tang and Zhengxin Huo

1. Background

Four American citizens and a company filed the class-action against Chinese government for damages suffered as the result of the COVID-19 pandemic. None of the named plaintiffs were infected by the COVID-19 but they suffered financial loss due to the outbreak. The defendants include the People’s Republic of China, National Health Commission of PRC, Ministry of Emergency Management of PRC, Ministry of Civil Affairs of PRC, Government of Hubei Province and Government of the City of Wuhan. The plaintiff argued that Chinese government knew COVID-19 was dangerous and capable of causing a pandemic yet covered it up for their economic self-interest and caused injury and incalculable harm to the plaintiffs. (here)

2. State Immunity and US Courts’ Jurisdiction

The Defendant is a sovereign state and enjoys immunity from jurisdiction of other countries. Most countries, like the U.S., adopt the restrictive immunity approach, and apply exception to the immunity of a state when the disputed state’s act, for example, relates to commercial activities or commercial assets, or constitutes tort. The Foreign Sovereign Immunities Act (FSIA) of 1976 provides the sole basis for obtaining jurisdiction on an action against a foreign state. (Argentine Republic v Amerada Hess Shipping Corp, 488 US 428) Plaintiffs relied on the Foreign Sovereign Immunities Act (FSIA) of 1976, 28 U.S.C. §§1602 et seq. §1605 states:
“(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case—
…
(5) …money damages are sought against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment; except this paragraph shall not apply to—
(A) any claim based upon the exercise or performance or the failure to exercise or perform a discretionary function regardless of whether the discretion be abused, or
(B)any claim arising out of malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights;”

This is not the first time for China to be sued in the US court under §1605(a)(5) of the FSIA (for example, see Youming Jin et al., v Ministry of State Security et al., 475 F.Supp. 2d 54 (2007); Jin v Ministry of State Security, 557 F.Supp. 2d 131 (2008); Walters v Industrial and Commercial Bank of China, 651 F.2d 280 (2011)), but given the impact of COVID-19 this case probably is the most influential one. The purpose of this provision is to provide the victim the right to claim damages against a foreign state for tortious activities that may be legalised by the foreign law. The U.S. court thus will apply the local law to interpret this provision. Some crucial concepts, such as “tortious act” and “discretionary function”, are interpreted by the relevant US law. (Doe v Federal Democratic Republic of Ethiopia, 189 F.Supp. 3d 6 (2016)) However, since the FSIA is a unilateral domestic statute with clear impact in the foreign sovereign and international comity, it is inappropriate to apply the U.S. law, as the national law of a state of equal status, to determine if the foreign state has committed tort. This approach impliedly grants the U.S. and U.S. law the superior position over foreign states and foreign law. If the FSIA aims to protect humanity and basic rights of individuals that are universally recognised and protected, an international law standard instead of U.S. one should be more appropriate.

Anyway, although the U.S. has adopted the restrictive immunity approach and the U.S. standard to protect the tort victim against foreign government, this exception is applied with a high threshold, making the jurisdiction hurdle difficult to cross. Firstly, the alleged tort or omission must occur in the U.S. The Supreme Court in Argentine Republic v Amerada Hess Shipping, 488 US 428 (1989) articulated the “entire tort” rule, holding that the non-commercial tort exception “covers only torts occurring within the territorial jurisdiction of the United States” (Argentine v Amerada, 441) “Entire tort” means only when both tort action and damage occur in the US, jurisdiction may be asserted. (Cabiri v Government of Ghana, 165 F.3d 193 (2d Cir. 1999) Even if the damage caused by COVID-19 occurred in the U.S., the alleged tort conduct of Chinese government were conducted exclusively out of the territory of the U.S. Arguably, the Supreme Court did not consider the situation where tort actions abroad may causing damages in the US in its 1989 judgment. However, there is no authority support extension of jurisdiction to cross-border tort.

Secondly, pursuant to the common law on tort, the plaintiffs should prove the defendants had a duty of care, breached this duty, and the breach caused the foreseeable harm. Chinese government undoubtedly owes the duty of care to Chinese citizens and residents. Does Chinese government owe any duty to non-residents? Such a duty cannot be found in Chinese domestic law. Relevant duties may be found in international conventions. Art 12 of the International Covenant on Economic, Social and Cultural Rights states a state member should recognise the right of everyone to enjoy the highest standard of health and should take steps necessary for “(t)he prevention, treatment and control of epidemic, endemic, occupational and other diseases”. (Art 12(2)(c)) This duty applies to nationals and non-nationals alike. (Art 2(2)) However, none of the named plaintiffs in this suit were infected by COVID-19. The damage is sought for the damage to their commercial and business activities instead of physical or mental health. Furthermore, the International Health Regulation 2005 provides the state parties international obligations to prevent spreading of disease, such as thee duty to notify WHO of all events which may constitute a public health emergency of international concern within its territory within 24 hours of assessment of public health information (Art 6(1)) and sharing information (Art 8), but these obligations are not directly owed to individuals and cannot be directly enforced by individuals in ordinary courts. It is thus hard to argue Chinese government owes the plaintiff a duty of care.

Even if the plaintiffs seek damages for personal injury. It is difficult to prove China has breached the duty and the breach “caused” the COVID-19 outbreak in the US or other part of the world. Since COVID-19 is a new virus with many details remaining unknown, it takes time to truly understand the virus and be able to contain the spread of the disease. Therefore, when the first case of “a mysterious pneumonia” was discovered in Wuhan in December 2019, there was no enough knowledge and information to piece together an accurate picture of a yet-to-be-identified new virus, let alone to predict its risk of quick spreading and the later global pandemic. After the first case was identified on 31 December 2019, Wuhan airport started to screen passengers from 3 Jan 2020, WHO issued travel restriction instruction on 5 Jan, and COVID-19 was only identified on 7 Jan. On 8 Jan, the first suspected case was reported in Thailand. It shows that the Chinese government responded quickly and the virus spread out of China before enough information was collected to understand it. After the seriousness of COVID-19 was confirmed, China has adopted the most restrictive measures, including lockdown the City of Wuhan and put the whole country under full or partial quarantine to contain the disease, which was a critical move to slow the spread of the virus to the rest of the world by two or three weeks. It is hard to argue that Chinese government has breached the duty. It is even harder to claim that the conduct of Chinese government caused the outbreak in the US. US confirmed the first case on 21 Jan, evacuated citizens out of Wuhan on 26 Jan and started visa travel ban on Chinese travellers on 8 Feb. Only 10 cases were confirmed in the US by 10 Feb. It suggests that the later outbreak in the US was not caused by the Chinese government. As of now, China is the only country in the whole world which has brought the COVID-19 pandemic back under control.

Finally, a foreign state does no loss immunity under §1605(a)(5) of the FSIA for discretionary conducts. The discretion shield aims to “prevent judicial ‘second-guessing’ of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an action in tort. The exception … protects only governmental actions and decisions based on considerations of public policy.” (Berkovitz v US, 486 U.S. 531, 546-37) Discretion is assessed by a two-limb test. Firstly, if the defendant followed any statute, regulation, or policy specifically prescribing a course of action, the conduct was non-discretionary. Secondly, if, in the absence of regulatory guide, the defendant’s decision was grounded in social, economic, or political goals, such an action is deemed the exercise of discretion. (Berkovitz, 531) An exercise of power contrary to regulatory guidance is not shielded by the discretion exemption. (Doe v Ethiopia, 26) Measures adopted to prevent epidemic are largely discretion-based, which closely related to the local economy and culture.

3. Likely Response from China

As mentioned above, it is not the first case that China was sued before an American court; therefore, the likely response from China can be predicted. A general judgment is that the Chinese government will reiterate its position in case of need that it will accept no suit against it at a domestic American court, and China will not enter into appearance before the American court.

Unlike the U.S., China is one of the few countries that insist on absolute immunity approach. This has been clearly affirmed by the continuous assertion of absolute immunity by its central government in various occasions. (Russell Jackson et al. v People’s Republic of China, 794 F.2d 1490, 1494 (11th Cir. 1986); Memorandum sent by the Chinese Embassy in Washington, DC, in Morris v. People’s Republic of China, 478 F. Supp. 2d 561 (S.D.N.Y. 2007). It is worth mentioning that on 14 September2005, the then Chinese Foreign Minister signed the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property (not yet in force), which is understood by some observers to be a signal that China is switching to endorse the restrictive approach in relation to the application of the principle of state immunity. Nonetheless, it is still too early to conclude that China has abandoned the absolute doctrine, and has chosen to embrace the restrictive doctrine, insofar as the Standing Committee of the NPC has not ratified the United Nations Convention on Jurisdictional Immunities of States and Their Property so far, and there is no signal to suggest the NPC should do so in the foreseeable future.

In this light, it can be predicted that China will argue that it enjoys immunity from jurisdiction of domestic American court. To be more specific, if the U.S. District Court for the District of Southern Florida authorized the summons directed to the Defendant, China’s possible response may be analysed as follows, depending on specific means of the service of process.

Firstly, if counsel to the Plaintiffs submitted the summons to the Chinese government by mail, a common practice of American lawyers, the Chinese government may choose to ignore it. Service in United States federal and state courts on foreign sovereigns and their agencies and instrumentalities is governed primarily by the FSIA. Since there is no special agreement for service of process between China and the U.S., pursuant to the FSIA, the Hague Service Convention to which both countries are party is the applicable instrument in this case. It is worth noticing that upon accession and ratification of the Hague Service Convention, China notified the Hague Conference on Private International Law of its objection, in accordance with Article 10, sub-paragraph (a) of the Convention, to service of process via postal channels; therefore, service by counsel to the Plaintiffs of a summons on the Defendant via mail will not be effective. Hence, ignoring the request advanced by counsel to the Plaintiffs is the most reasonable option for China.

Second, if the summons is served on the Chinese government through diplomatic channels, China will choose to turn it down by resorting to the Hague Service Convention. Pursuant to Article 13 of the Hague Service Convention, where a request for service complies with the terms of the present Convention, the State addressed may refuse to comply therewith only if it deems that compliance would infringe its sovereignty or security. As China insists on absolute immunity approach, it is logic that China will refuse the request advanced by counsel to the Plaintiffs and returned the documents by Article 13 of the Hague Service Convention.

Last, but not least, as the present development suggests that the U.S. government is blaming China for the spread ofthe COVID-19, accusing China of delaying America’s response, China would probably deem the lawsuit as a part of the American smear campaign to blame it. The possibility that China responds to this case via legal measures is further reduced. Therefore, we submit that there is a big chance that China may not enter into appearance before the court in Florida and would raise diplomatic protest.

State immunity in global COVID-19 pandemic: Alters, et. al. v People’s Republic of China, et. al.

By Zheng Tang and Zhengxin Huo

1. Background

Four American citizens and a company filed the class-action against Chinese government for damages suffered as the result of the COVID-19 pandemic. None of the named plaintiffs were infected by the COVID-19 but they suffered financial loss due to the outbreak. The defendants include the People’s Republic of China, National Health Commission of PRC, Ministry of Emergency Management of PRC, Ministry of Civil Affairs of PRC, Government of Hubei Province and Government of the City of Wuhan. The plaintiff argued that Chinese government knew COVID-19 was dangerous and capable of causing a pandemic yet covered it up for their economic self-interest and caused injury and incalculable harm to the plaintiffs (here)

2. State Immunity and US Courts’ Jurisdiction

The Defendant is a sovereign state and enjoys immunity from jurisdiction of other countries. Most countries, like the U.S., adopts the restrictive immunity approach, and applies exception to the immunity of a state when the disputed state act, for example, relates to commercial activities or commercial assets, or constitutes tort. The Foreign Sovereign Immunities Act (FSIA) of 1976 provides the sole basis for obtaining jurisdiction on an action against a foreign state. (Argentine Republic v Amerada Hess Shipping Corp, 488 US 428) Plaintiffs relied on the Foreign Sovereign Immunities Act (FSIA) of 1976, 28 U.S.C. §§1602 et seq. §1605 states:
“(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case—
…
(5) …money damages are sought against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment; except this paragraph shall not apply to—
(A)any claim based upon the exercise or performance or the failure to exercise or perform a discretionary function regardless of whether the discretion be abused, or
(B)any claim arising out of malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights;”

This is not the first time for China to be sued in the US court under §1605(a)(5) of the FSIA (for example, see Youming Jin et al., v Ministry of State Security et al., 475 F.Supp. 2d 54 (2007); Jin v Ministry of State Security, 557 F.Supp. 2d 131 (2008); Walters v Industrial and Commercial Bank of China, 651 F.2d 280 (2011)), but given the impact of COVID-19 this case probably is the most influential one. The purpose of this provision is to provide the victim the right to claim damages against a foreign state for tortuous activities that may be legalised by the foreign law. The U.S. court thus will apply the local law to interpret this provision. Some crucial concepts, such as “tortuous act” and “discretionary function”, are interpreted by the relevant US law. (Doe v Federal Democratic Republic of Ethiopia, 189 F.Supp. 3d 6 (2016)) However, since the FSIA is a unilateral domestic statute with clear impact in the foreign sovereign, it is inappropriate to applying the U.S. law, as the national law of a state of equal status, to determine if the foreign state has committed tort. This approach impliedly grants the U.S. and U.S. law the superior position over foreign states and foreign law. If the FSIA aims to protect humanity and basic rights of individuals that are universally recognised and protected, an international law standard instead of U.S. one should be more appropriate.

Anyway, although the U.S. has adopted the restrictive immunity approach and the U.S. standard to protect the tort victim against foreign government, this exception is applied with the high threshold, making the jurisdiction hurdle difficult to cross. Firstly, the alleged tort or omission must occur in the U.S. The Supreme Court in Argentine Republic v Amerada Hess Shipping, 488 US 428 (1989) articulated the “entire tort” rule, holding that the non-commercial tort exception “covers only torts occurring within the territorial jurisdiction of the United States” (Argentine v Amerada, 441) “Entire tort” means only when both tort action and damage occur in the US, jurisdiction may be asserted. (Cabiri v Government of Ghana, 165 F.3d 193 (2d Cir. 1999) Even if the damage caused by COVID-19 occurred in the U.S., the alleged tort conduct of Chinese government were conducted exclusively out of the territory of the U.S.

Secondly, pursuant to the common law on tort, the plaintiffs should prove the defendants own a duty of care, have breached this duty, and the breach caused the foreseeable harm. Chinese government undoubtedly owes the duty of care to Chinese citizens and residents. Does Chinese government owe any duty to non-residents? Relevant duties can be found in international conventions. Art 12 of the International Covenant on Economic, Social and Cultural Rights states a state member should recognise the right of everyone to enjoy the highest standard of health and should take steps necessary for “(t)he prevention, treatment and control of epidemic, endemic, occupational and other diseases”. (Art 12(2)(c)) This duty applies to nationals and non-nationals alike. (Art 2(2)) However, none of the named plaintiffs in this suit were infected by COVID-19. The damage is sought for the damage to their commercial and business activities instead of physical or mental health. Furthermore, the International Health Regulation 2005 provides the state parties the obligation to notify WHO of all events which may constitute a public health emergency of international concern within its territory within 24 hours of assessment of public health information (Art 6(1)), sharing information (Art 8), etc., but these obligations are not directly owed to individuals and cannot be directly enforced by individuals in ordinary courts. It is thus hard to argue Chinese government owes the plaintiff a duty of care.

Even if the plaintiffs seek damages for personal injury. It is difficult to prove China has breached the duty and the breach “caused” the COVID-19 outbreak in the US or other part of the world. Since COVID-19 is a new virus with many details remaining unknown, it takes time to truly understand the virus and be able to contain the spread of the disease. Therefore, when the first case of “a mysterious pneumonia” was discovered in Wuhan in December 2019, there was no enough knowledge and information to piece together an accurate picture of a yet-to-be-identified new virus, let alone to predict its risk of quick spreading and the later global pandemic. After the first case was identified on 31 December 2019, Wuhan airport started to screen passengers from 3 Jan 2020, WHO issued travel restriction instruction on 5 Jan, and COVID-19 was only identified on 7 Jan. On 8 Jan, the first suspected case was reported in Thailand. It shows that the Chinese government responded quickly and the virus spread out of China before enough information was collected to understand it. After the seriousness of COVID-19 was confirmed, China has adopted the most restrictive measures, including lockdown the City of Wuhan and put the whole country under full or partial quarantine to contain the disease, which was a critical move to slow the spread of the virus to the rest of the world by two or three weeks. It is hard to argue that Chinese government has breached the duty. It is even harder to claim that the conduct of Chinese government caused the outbreak in the US. US confirmed the first case on 21 Jan, evacuated citizens out of Wuhan on 26 Jan and started visa travel ban on Chinese travellers on 8 Feb. Only 10 cases were confirmed in the US by 10 Feb. It suggests that the later outbreak in the US was not caused by the Chinese government. As of now, China is the only country in the whole world which has brought the COVID-19 pandemic back under control.

Finally, a foreign state is not liable for tort for discretionary conducts.The discretion shield aims to “prevent judicial ‘second-guessing’ of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an action in tort. The exception … protects only governmental actions and decisions based on considerations of public policy.” (Berkovitz v US, 486 U.S. 531, 546-37) Discretion is assessed by a two-limb test. Firstly, if the defendant followed any statute, regulation, or policy specifically prescribing a course of action, the conduct was non-discretionary. Secondly, if, in the absence of regulatory guide, the defendant’s decision was grounded in social, economic, or political goals, such an action is deemed the exercise of discretion. (Berkovitz, 531) An exercise of power contrary to regulatory guidance is not shielded by the discretion exemption. (Doe v Ethiopia, 26) Measures adopted to prevent epidemic are largely discretion-based, which closely related to the local economy and culture.

3. Likely Response from China

As mentioned above, it is not the first case that China was sued before an American court; therefore, the likely response from China can be predicted. A general judgment is that the Chinese government will reiterate its position in case of need that it will accept no suit against it at a domestic American court, and China will not enter into appearance before the American court.

Unlike the U.S., China is one of the few countries that insist on absolute immunity approach. This has been clearly affirmed by the continuous assertion of absolute immunity by its central government in various occasions. (Russell Jackson et al. v People’s Republic of China, 794 F.2d 1490, 1494 (11th Cir. 1986); Memorandum sent by the Chinese Embassy in Washington, DC, in Morris v. People’s Republic of China, 478 F. Supp. 2d 561 (S.D.N.Y. 2007). A more strong, and persuasive, evidence is a legislative interpretation promulgated by the Standing Committee of the National People’s Congress (NPC). In the case of FG Hemisphere Associates v Democratic Republic of Congo([2009] 1 HKLRD 410; [2010] 2 HKLRD 66; (2011) 14 HKCFAR 95), the Court of Final Appeal of Hong Kong (CFA) decided that before deciding on the issue of state immunity, a reference had to be made to the Standing Committee of the NPC pursuant to Article 158 of the Basic Law of Hong Kong. The Standing Committee of NPC gave its answer by issuing a legislative interpretation on 26 August, clarifying that “state immunity concerns whether the courts of a state have jurisdiction over foreign states and their properties”, and “directly relates to the state’s foreign relations and international rights and obligations”. Thus, as the issue of sovereign immunity falls within the realm of foreign affairs, the Chinese central government has the power to decide on this issue, and Hong Kong courts are bound to follow the PRC’s practice in adopting the absolute approach. Consequently, the CFA formally disposed of the case by allowing the appeal by Congo on 8 September 2011. As the Standing Committee of the NPC is China’s national legislature, its legislative decision, therefore, has the legal status of national law.

It is worth mentioning that on 14 September 2005, the then Chinese Foreign Minister signed the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property, which is understood by some observers to be a signal that China is switching to endorse the restrictive approach in relation to the application of the principle of state immunity. Nonetheless, it is still too early to conclude that China has abandoned the absolute doctrine, and has chosen to embrace the restrictive doctrine, insofar as the Standing Committee of the NPC has not ratified the United Nations Convention on Jurisdictional Immunities of States and Their Property so far, and there is no signal to suggest the NPC should do so in the foreseeable future.

In this light, it can be predicted that China will argue that it enjoys immunity from jurisdiction of domestic American court. To be more specific, if the U.S. District Court for the District of Southern Florida authorized the summons directed to the Defendant, China’s possible response may be analysed as follows, depending on specific means of the service of process.

Firstly, if counsel to the Plaintiffs submitted the summons to the Chinese government by mail, a common practice of American lawyers, the Chinese government may choose to ignore it. Service in United States federal and state courts on foreign sovereigns and their agencies and instrumentalities is governed primarily by the FSIA. Since there is no special agreement for service of process between China and the U.S., pursuant to the FSIA, the Hague Service Convention to which both countries are party is the applicable instrument in this case. It is worth noticing that upon accession and ratification of the Hague Service Convention, China notified the Hague Conference on Private International Law of its objection, in accordance with Article 10, sub-paragraph (a) of the Convention, to service of process via postal channels; therefore, service by counsel to the Plaintiffs of a summons on the Defendant via mail will not be effective. Hence, ignoring the request advanced by counsel to the Plaintiffs is the most reasonable option for China.

Second, if the summons is served on the Chinese government through diplomatic channels, China will choose to turn it down by resorting to the Hague Service Convention. Pursuant to Article 13 of the Hague Service Convention, where a request for service complies with the terms of the present Convention, the State addressed may refuse to comply therewith only if it deems that compliance would infringe its sovereignty or security. As China insists on absolute immunity approach, it is logic that China will refuse the request advanced by counsel to the Plaintiffs and returned the documents by Article 13 of the Hague Service Convention.

Last, but not least, as the present development suggests that the U.S. government is blaming China for the spread of the COVID-19, accusing China of delaying America’s response, China would probably deem the lawsuit as a part of the American smear campaign to blame it. The possibility that China responds to this case via legal measures is further reduced. Therefore, we submit that there is a big chance that China may not enter into appearance before the court in Florida and would raise diplomatic protest.

State immunity in global COVID-19 pandemic: Alters, et. al. v People’s Republic of China, et. al.

By Zheng Sophia Tang and Zhengxin Huo

1. Background

Four American citizens and a company filed the class-action against Chinese government for damages suffered as the result of the COVID-19 pandemic. None of the named plaintiffs were infected by the COVID-19 but they suffered financial loss due to the outbreak. The defendants include the People’s Republic of China, National Health Commission of PRC, Ministry of Emergency Management of PRC, Ministry of Civil Affairs of PRC, Government of Hubei Province and Government of the City of Wuhan. The plaintiff argued that Chinese government knew COVID-19 was dangerous and capable of causing a pandemic yet covered it up for their economic self-interest and caused injury and incalculable harm to the plaintiffs. (here)

2. State Immunity and US Courts’ Jurisdiction

The Defendant is a sovereign state and enjoys immunity from jurisdiction of other countries. Most countries, like the U.S., adopt the restrictive immunity approach, and apply exception to the immunity of a state when the disputed state’s act, for example, relates to commercial activities or commercial assets, or constitutes tort. The Foreign Sovereign Immunities Act (FSIA) of 1976 provides the sole basis for obtaining jurisdiction on an action against a foreign state. (Argentine Republic v Amerada Hess Shipping Corp, 488 US 428) Plaintiffs relied on the Foreign Sovereign Immunities Act (FSIA) of 1976, 28 U.S.C. §§1602 et seq. §1605 states:
“(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case—
…
(5) …money damages are sought against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment; except this paragraph shall not apply to—
(A) any claim based upon the exercise or performance or the failure to exercise or perform a discretionary function regardless of whether the discretion be abused, or
(B)any claim arising out of malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights;”

This is not the first time for China to be sued in the US court under §1605(a)(5) of the FSIA (for example, see Youming Jin et al., v Ministry of State Security et al., 475 F.Supp. 2d 54 (2007); Jin v Ministry of State Security, 557 F.Supp. 2d 131 (2008); Walters v Industrial and Commercial Bank of China, 651 F.2d 280 (2011)), but given the impact of COVID-19 this case probably is the most influential one. The purpose of this provision is to provide the victim the right to claim damages against a foreign state for tortious activities that may be legalised by the foreign law. The U.S. court thus will apply the local law to interpret this provision. Some crucial concepts, such as “tortious act” and “discretionary function”, are interpreted by the relevant US law. (Doe v Federal Democratic Republic of Ethiopia, 189 F.Supp. 3d 6 (2016)) However, since the FSIA is a unilateral domestic statute with clear impact in the foreign sovereign and international comity, it is inappropriate to apply the U.S. law, as the national law of a state of equal status, to determine if the foreign state has committed tort. This approach impliedly grants the U.S. and U.S. law the superior position over foreign states and foreign law. If the FSIA aims to protect humanity and basic rights of individuals that are universally recognised and protected, an international law standard instead of U.S. one should be more appropriate.

Anyway, although the U.S. has adopted the restrictive immunity approach and the U.S. standard to protect the tort victim against foreign government, this exception is applied with a high threshold, making the jurisdiction hurdle difficult to cross. Firstly, the alleged tort or omission must occur in the U.S. The Supreme Court in Argentine Republic v Amerada Hess Shipping, 488 US 428 (1989) articulated the “entire tort” rule, holding that the non-commercial tort exception “covers only torts occurring within the territorial jurisdiction of the United States” (Argentine v Amerada, 441) “Entire tort” means only when both tort action and damage occur in the US, jurisdiction may be asserted. (Cabiri v Government of Ghana, 165 F.3d 193 (2d Cir. 1999) Even if the damage caused by COVID-19 occurred in the U.S., the alleged tort conduct of Chinese government were conducted exclusively out of the territory of the U.S. Arguably, the Supreme Court did not consider the situation where tort actions abroad may causing damages in the US in its 1989 judgment. However, there is no authority support extension of jurisdiction to cross-border tort.

Secondly, pursuant to the common law on tort, the plaintiffs should prove the defendants had a duty of care, breached this duty, and the breach caused the foreseeable harm. Chinese government undoubtedly owes the duty of care to Chinese citizens and residents. Does Chinese government owe any duty to non-residents? Such a duty cannot be found in Chinese domestic law. Relevant duties may be found in international conventions. Art 12 of the International Covenant on Economic, Social and Cultural Rights states a state member should recognise the right of everyone to enjoy the highest standard of health and should take steps necessary for “(t)he prevention, treatment and control of epidemic, endemic, occupational and other diseases”. (Art 12(2)(c)) This duty applies to nationals and non-nationals alike. (Art 2(2)) However, none of the named plaintiffs in this suit were infected by COVID-19. The damage is sought for the damage to their commercial and business activities instead of physical or mental health. Furthermore, the International Health Regulation 2005 provides the state parties international obligations to prevent spreading of disease, such as thee duty to notify WHO of all events which may constitute a public health emergency of international concern within its territory within 24 hours of assessment of public health information (Art 6(1)) and sharing information (Art 8), but these obligations are not directly owed to individuals and cannot be directly enforced by individuals in ordinary courts. It is thus hard to argue Chinese government owes the plaintiff a duty of care.

Even if the plaintiffs seek damages for personal injury. It is difficult to prove China has breached the duty and the breach “caused” the COVID-19 outbreak in the US or other part of the world. Since COVID-19 is a new virus with many details remaining unknown, it takes time to truly understand the virus and be able to contain the spread of the disease. Therefore, when the first case of “a mysterious pneumonia” was discovered in Wuhan in December 2019, there was no enough knowledge and information to piece together an accurate picture of a yet-to-be-identified new virus, let alone to predict its risk of quick spreading and the later global pandemic. After the first case was identified on 31 December 2019, Wuhan airport started to screen passengers from 3 Jan 2020, WHO issued travel restriction instruction on 5 Jan, and COVID-19 was only identified on 7 Jan. On 8 Jan, the first suspected case was reported in Thailand. It shows that the Chinese government responded quickly and the virus spread out of China before enough information was collected to understand it. After the seriousness of COVID-19 was confirmed, China has adopted the most restrictive measures, including lockdown the City of Wuhan and put the whole country under full or partial quarantine to contain the disease, which was a critical move to slow the spread of the virus to the rest of the world by two or three weeks. It is hard to argue that Chinese government has breached the duty. It is even harder to claim that the conduct of Chinese government caused the outbreak in the US. US confirmed the first case on 21 Jan, evacuated citizens out of Wuhan on 26 Jan and started visa travel ban on Chinese travellers on 8 Feb. Only 10 cases were confirmed in the US by 10 Feb. It suggests that the later outbreak in the US was not caused by the Chinese government. As of now, China is the only country in the whole world which has brought the COVID-19 pandemic back under control.

Finally, a foreign state does no loss immunity under §1605(a)(5) of the FSIA for discretionary conducts. The discretion shield aims to “prevent judicial ‘second-guessing’ of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an action in tort. The exception … protects only governmental actions and decisions based on considerations of public policy.” (Berkovitz v US, 486 U.S. 531, 546-37) Discretion is assessed by a two-limb test. Firstly, if the defendant followed any statute, regulation, or policy specifically prescribing a course of action, the conduct was non-discretionary. Secondly, if, in the absence of regulatory guide, the defendant’s decision was grounded in social, economic, or political goals, such an action is deemed the exercise of discretion. (Berkovitz, 531) An exercise of power contrary to regulatory guidance is not shielded by the discretion exemption. (Doe v Ethiopia, 26) Measures adopted to prevent epidemic are largely discretion-based, which closely related to the local economy and culture.

3. Likely Response from China

As mentioned above, it is not the first case that China was sued before an American court; therefore, the likely response from China can be predicted. A general judgment is that the Chinese government will reiterate its position in case of need that it will accept no suit against it at a domestic American court, and China will not enter into appearance before the American court.

Unlike the U.S., China is one of the few countries that insist on absolute immunity approach. This has been clearly affirmed by the continuous assertion of absolute immunity by its central government in various occasions. (Russell Jackson et al. v People’s Republic of China, 794 F.2d 1490, 1494 (11th Cir. 1986); Memorandum sent by the Chinese Embassy in Washington, DC, in Morris v. People’s Republic of China, 478 F. Supp. 2d 561 (S.D.N.Y. 2007). It is worth mentioning that on 14 September2005, the then Chinese Foreign Minister signed the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property (not yet in force), which is understood by some observers to be a signal that China is switching to endorse the restrictive approach in relation to the application of the principle of state immunity. Nonetheless, it is still too early to conclude that China has abandoned the absolute doctrine, and has chosen to embrace the restrictive doctrine, insofar as the Standing Committee of the NPC has not ratified the United Nations Convention on Jurisdictional Immunities of States and Their Property so far, and there is no signal to suggest the NPC should do so in the foreseeable future.

In this light, it can be predicted that China will argue that it enjoys immunity from jurisdiction of domestic American court. To be more specific, if the U.S. District Court for the District of Southern Florida authorized the summons directed to the Defendant, China’s possible response may be analysed as follows, depending on specific means of the service of process.

Firstly, if counsel to the Plaintiffs submitted the summons to the Chinese government by mail, a common practice of American lawyers, the Chinese government may choose to ignore it. Service in United States federal and state courts on foreign sovereigns and their agencies and instrumentalities is governed primarily by the FSIA. Since there is no special agreement for service of process between China and the U.S., pursuant to the FSIA, the Hague Service Convention to which both countries are party is the applicable instrument in this case. It is worth noticing that upon accession and ratification of the Hague Service Convention, China notified the Hague Conference on Private International Law of its objection, in accordance with Article 10, sub-paragraph (a) of the Convention, to service of process via postal channels; therefore, service by counsel to the Plaintiffs of a summons on the Defendant via mail will not be effective. Hence, ignoring the request advanced by counsel to the Plaintiffs is the most reasonable option for China.

Second, if the summons is served on the Chinese government through diplomatic channels, China will choose to turn it down by resorting to the Hague Service Convention. Pursuant to Article 13 of the Hague Service Convention, where a request for service complies with the terms of the present Convention, the State addressed may refuse to comply therewith only if it deems that compliance would infringe its sovereignty or security. As China insists on absolute immunity approach, it is logic that China will refuse the request advanced by counsel to the Plaintiffs and returned the documents by Article 13 of the Hague Service Convention.

Last, but not least, as the present development suggests that the U.S. government is blaming China for the spread ofthe COVID-19, accusing China of delaying America’s response, China would probably deem the lawsuit as a part of the American smear campaign to blame it. The possibility that China responds to this case via legal measures is further reduced. Therefore, we submit that there is a big chance that China may not enter into appearance before the court in Florida and would raise diplomatic protest.

The author of this post is Tomaso Ferando, Research Professor at the University of Antwerp. This is the third in a series of posts aimed to explore the impact of the coronavirus crisis on the phenomena of mobility and exchange that form the constituent elements of private international law, and to discuss the responses that private international law rules provide to the challenges posed by the crisis itself (see the previous contributions by Giovanni Chiapponi and Matthias Lehmann). The EAPIL blog welcomes further contributions on these topics, either in the form of comments to the published posts or in the form of guest posts. Those interested in proposing a guest post for publication are encouraged to contact the blog’s editorial team at blog@eapil.org.   

If we leave aside for a second the worrisome death toll that the covid-19 virus is claiming, there is no doubt that the spread of the virus from one wet market in Wuhan to more than 162 countries sheds light on interesting aspects of the contemporary world such as the existence of privileged patterns of human mobility that can facilitate the diffusion of diseases, the impact of aviation and daily commuting on greenhouse gases emissions, and the porosity of national borders (and people’s minds) when the threat is hidden in the lungs of businesspeople and tourists rather than in the lives of refugees and economic migrants.

Among economists, the ongoing pandemic has also triggered concerns with regards to the slowdown in production and consumption and the consequences that it is having on global growth’s projection, international trade and the performances of specific sectors such as manufacturing, energy, aviation and tourism. In the words of Japanese Finance Minister Taro Aso: “The spread of the new coronavirus is a public health crisis that could pose a serious risk to the macro economy through the halt in production activities, interruptions of people’s movement and cut-off of supply chains.”

The reliability of supply chains, i.e. the complex network of people, materials and logistic that makes the continuous provision of goods and services possible, is under the spotlight. In few weeks, the alleged efficiency of global networks of production has been compromised by the lockdowns of the Hubei province imposed by the Chinese Government, by the emergency measures adopted by countries all over the planet and by the change in patterns of consumption, with some goods that experienced unexpected high demand and other that lost any traction.

In a global scenario characterized by hyper-reliance on China as the factory of the world, the isolation of 15 Chinese provinces that was ordered at the end of January did not really matter because it concerned more than 57 million people, which is less than 1% of the global population. It mattered because that corner of the world is responsible for almost 90% of the Chinese GDP and 80% of the Chinese export: despite the global nature of the supply chains, it didn’t take long for such geographically defined measures to generate enormous repercussions on the global economy.

In the last weeks, Global Value Chains’ experts, governments, workers and citizens have been increasingly reflecting on the high level of risk and fragility that is intrinsic to overly integrated and interdependent value chains that rely on just-on-time worldwide logistic, depend on the supply of components provided by hundreds of intermediary producers located in different corners of the planet (although mainly in China) and are based on the uninterrupted coordination among all the parties involved – regulators, producers, traders, retailers and consumers alike. After the Japanese earthquake that suspended numerous production line, covid-19 seems to be the ultimate stress test for the global economic system: one that may leave the world economy – and global health – significantly changed.

For lawyers interested in the relationship between law, global capitalism and the production and allocation of value across jurisdictions and among people, there is no doubt that the speed of the economic contagion and the content of the regulatory responses aimed at mitigating or preventing the economic contagion provide a new opportunity to discuss the central role that law plays in constructing, weakening, preserving, oiling and – in some cases – destroying,  the multi-layered, multi-territorial, inter-dependent and extremely fragile expression of contemporary financial capitalism that is often described with the less controversial notion of Global Value Chains.

Why does law matter for Global Value Chains?

Although it may not be evident, law is central to the existence, functioning and distributive processes that are related to global value chains. This is certainly the case of contract law, which is often represented as the backbone of a complex system of horizontal interaction between suppliers and purchasers, the glue that keeps them together and that guarantees, through a system of standards, requirements, alternative dispute resolution mechanisms and public enforcement (and along with reputation and the possibility of long-term commercial relationships), that goods and services of the right kind are delivered on time – normally by the global brand company that consumers recognize. But this is not all. As we discuss in the Manifesto on The Role of Law in Global Value Chains, the link between law and supply chains go beyond the organization and management of their complexity and concerns the creation and allocation of value itself: property law, labor law, trade and investment law, intellectual property law, health and safety law, tort law, etc. not only determine commercial choices on where to source, the logistic routes to follow and the overall geographical footprint of the chain, but also who will be appropriating the value generated by the combination of labor, nature and capital.

When we think at the impact that the lockdown in the Hubei province had on a car manufacturer like Toyota, that relies on 2,192 distinct firms (both direct and indirect suppliers) to source and assemble the circa 30,000 pieces needed to produce a car, we can certainly think at the contractual implications of delays and breaches or, as suggested by the Digital Supply Chain Institute, at the way global brands may use contract to “develop an ecosystem of suppliers that have a commitment to meeting your requirements, even in the face of challenges,” an advice that we may interpret as the construction of legal obligations that overcome the economic and logistic difficulties of lockdowns. But this is not everything.

Another way of thinking about law, coronavirus and global value chains is to ask what legal structures have contributed to the construction of chains, like automotive, precision instruments and communication equipment, that are strongly dependent on the inputs originating from one country. Then, we would not talk about contracts, but about trade liberalization, the adoption of the TRIPs, labor and fiscal requirements, the non-internalization of environmental externalities in China or in the market of destination, the use of legislation to provide public subsidies to oil, and the whole set of legislative and regulatory forces that pushed production away from Europe and the United States and pulled it into China. From this perspective, law in its widest and most diverse meaning is one of the main reasons why the global economy is structured around supply chains and the health crisis has triggered a rapid economic contagion.

Moreover, law is central to the responses offered by governments across the world in their attempt to limit the impact of the economic contagion or improve their position in the supply chain by seizing a larger share of the – future and possible – pie (what is generally known as ‘upgrading’). For example, governments around the world may perceive the slowdown in Chinese production as an opportunity to provide financial and regulatory support the production sites capable of filling the current gap or to attract future investments by companies interested in diversifying their sourcing or in delocalizing away from a region where production is particularly exposed to health risks. Similarly, governments of countries strongly dependent on oil and commodity export (like Saudi Arabia, Chile, Brazil, Norway, etc.) may use their regulatory and legislative powers to reduce the cost of production and extraction – with the consequent implications on society and the environment – or try to create the conditions to diversify their economies and reduce their exposure to the systemic risk of a highly interconnected economy.

Independently on the regulatory or legislative interventions that will be adopted, there is no doubt that law will be central to designing the future geographies of global supply capitalism. More importantly, law already has a core role in redefining the way in which value is extracted and distributed and on the allocation of power between workers, capital and nature. With the help of one concrete example, the next section shows the importance of adopting a systemic approach to the interaction between supply chains and law, specifically through the lenses of value, coercion and redistribution.

Law and State of Necessity at the Service of Global Value Chains

We all know too well that masks and hand sanitizers may significantly reduce the risk of contagion. We also know that they are in high demand, extremely hard to find and that stocks cannot be produced at the speed that is needed by hospitals, let alone the totality of the world population. What may be less known is that before the outbreak of the virus China – yes, China – was producing more than a half of the N95 sanitary masks used by medical personnel around the planet, and that in the last month the number has multiplied by ten thanks to the financial support of the government and the conversion of factories from iPod assemblers into masks producers.

Given the dependence on Chinese provisions and the limited national production, individual European countries and the European Union stepped into the supply chain: public procurement, legally determined maximum prices and export bans have been three of the measures adopted to redesign the shape and reach of the chains. In particular, Italy, Czech Republic, Germany and France used their regulatory powers to ban or require ad hoc administrative authorization to the export of any protective equipment, directly redefining the extension and distributive effects of the global supply chain. In this context, the European Commission represents an illustrative example of the multiple ways in which law and regulatory power can shape the geography and content of supply chains. On 14 March, the Commission threatened to open an infraction procedure against Germany to favor the conclusion of a deal with Italy for the purchase of 1 million masks: the fear of a sanction opened a new route for the global supply chain of masks that would have otherwise not being in place. On 15 March, it published the so-called implementing act requiring that any export of face masks and medical to non-EU countries be subject to authorization by member states, thus limiting the possibility of the supply chains to reach third countries and their people. On 16 March, it launched a joined public procurement with member states for testing kits and respiratory ventilators. And the lockdowns have only started.

However, the story of the global supply of masks and hand sanitizers is not only one of public incentives, trade dependence on China and the strategic use of the state of health necessity to justify restrictions to trade or interventions in the global supply chain with significant impact on the availability of crucial medical equipment across Europe and in countries outside the EU potentially less prepared than the European Union in avoiding the contagion. The sudden surge in the demand for medical equipment is also the story of the women and men who in the production lines across the planet and the competition between countries and producers to guarantee a cheap and quick supply.

In Taiwan, Czech Republic, Kerala, Israel and Hong Kong alike, hundreds of thousands of prisoners have been organized in production lines to supply their ‘unfree’ labor to the global demand for masks and sanitary products, a situation that border on paradox if we consider the recent strikes in Italian prisons due to the poor hygienic conditions and the draconian confinement measures introduced to prevent the spread of the virus among prisoners. In Hong Kong, women inmates at the Lo Wu prison have volunteered – or been asked, according to other sources – to work night shifts to make 2.5m face masks a month for a monthly compensation of HK$800 (£80), a sum that is significantly under Hong Kong’s minimum wage. In Israel, inmates in the Ayalon and Rimonim prisons – two of the complexes where Palestinian prisoners have recently been on hunger strike – have been producing  face masks will serve police officers, firefighters and health inspectors. In the State of New York, the governor has promised that 100 gallons a week of “NYS Clean” will be distributed for free to residents, schools and the Metropolitan Transportation Authority: behind them, there is the work of nearly 100 inmates in the State’s prisons who perceive an average hourly salary of $0.65 cents, significantly lowered than the $15 an hour in New York and $11.10 in the rest of the state.

Yet, poorly paid and exploited labor is not only a prerogative of newly established supply chains aimed at providing cheap and abundant emergency medical equipment. In these weeks more than ever, factory and logistic workers who cannot operate from remote are fighting an even harder battle against emergency decrees that often abide by the imperatives of competitiveness, productivity and the need to keep the global supply chain running. Because, even in the state of necessity and the risk for the workers’ health, there are supply chains that have not been halted or – tin the case of logistic workers and couriers – there has been an increase in demand. Excluded from the lockdown, factory workers and operators in the logistic sector depend on the decisions of their employers and on the implementation of safety measures that are often incompatible with the production line and the security procedures.

In Italy, for example, FCA Fiat Auto decided not to close the factories producing intermediate components for international supply chains and the National Association of the Automotive Industrial Chain (Antia) released a manifesto on behalf of the Italian automotive sector asking “workers to resist and continue in the effort to maintain the international competitiveness of one of the leaders of the Italian economy.” The fear of losing its place in the global supply chain and the absence of a strong regulatory intervention converge in requiring workers to leave the safety of their houses and assume a higher risk than most of the national workforce. In the logistic sector, Amazon has announced 100,000 new jobs to increase its emergency delivery capacity both in Europe and the United States. The positive moment for the company and the need to keep the business going have their repercussions on workers and working conditions. In Italy, the Amazon workers in Torrazza, Piedmont, organized a protest against the company’s decision not to close the operations after one of the employees tested positive to covid-19 and to just quarantine part of the workforce and sanitize the warehouse. In Piacenza, near Milan, Amazon warehouse workers are on strike to denounce the company’s lack of appropriate response to the multiple coronavirus cases across Europe and the incompatibility between the company’s procedures and the health and safety requirements imposed to the whole country with the Decree on 10 March. Not to talk about the truck drivers, farm workers and the deliverers whose work is essential to making everyone else’s isolation possible and is legally excluded from the lockdown but have not received any specific form of guidance, protection and support in the legal construction of the state of emergency.

Law and Global Value Chains after covid-19

The coronavirus pandemic is already leaving an indelible mark on both global health and global economy. In this context, the role of law as one of the main tools the construction of interdependent world and interconnected supply chains cannot be overlooked. Similarly, a systemic and critical approach to law can help better understanding the rationale and distributive effects of national and regional interventions at the time of the global state of emergency. Yet, it is also important to focus on the space that law will play in shaping lives, interactions and commercial interconnections once the biological threat is over. As a matter of fact, there are at least three main lessons that we can learn from what is happening.

1. First of all, it is clear that states, national economies and citizens (above all non-skilled workers, consumers, and the most vulnerable) are exposed to highly volatile and fragile global supply chains. Law was central to the construction of the present complexity and could be a passive observer of the continuous delocalization of production away from Europe into the neighbor countries or in the loss of works without any form of public support. However, it can also intervene to subordinate market dynamics to the needs and interests of the public. Financial and regulatory incentives, bans, public procurement, universal basic income, fiscal coordination and other measures can be adopted to shape and redesign the geographies and distributive implications of global commodity capitalism. Why, therefore, not using this opportunity to rethink the relationship between states, supply chains and citizens? Why not recognizing the precariousness of supply chains and recognize the inevitability of legislative measures aimed at redistributing wealth and income? Why not using public prerogatives to build resilient, affordable, sustainable and reliable chains – for example for food and medical equipment – that guarantee citizens’ rights and essential needs and are spared from the uncertainties and profit-driven prerogatives of global competitiveness?

2. Secondly, the pandemic is revealing what jobs (factory and logistic workers) are truly essential to global supply capitalism and how their indispensability is often twisted against them to ask for more without providing enough (for example, going to work even if they are exposed to high risk of contagion). Yet, the actions of resistance undertaken in Piacenza, Torrazza and in other logistic and production sites across the world reveal the disruptive potential of strikes and protests in the context of just-on-time and transnationally coordinated supply chains. In the absence of adequate responses from the state and their employers, warehouse, automotive and manufacturing workers in Italy – and soon elsewhere in the world – are leveraging their power as potential choke points of transnational supply chains, bottlenecks of disruption in a system that depends on their labor but does not recognize it with salaries and precautions. In light of, national labor law will territorialize the transnational character of supply chains and co-define their pace and the distributional implications: will future labor law continue to be conceived as an opportunity to smoothen global production and circulation of goods/services? Will it favor automation and the replacement of humans with machines in order not to lose investments and growth opportunities? Or will it recognize the centrality of workers in the continuation of global supply capitalism and strike a new balance?

3. Finally, the health-economic crisis is highlighting the socio-environmental risks behind the mantra of competitiveness and the continuous search for cheap inputs (labor, nature, animals, etc.). The economic downturn is closely linked with the hyper-dependence on China as the (cheap) global factory. Some of the last epidemics (covid-19, swine flu, avian flu and the ‘mad cow’) were all triggered by lack of consideration for animals and the dire exploitation of their flesh and environment. On the other hand, the reduction in greenhouse gases, the rediscovery of social interactions, the abandonment of unnecessary consumerism and the rebirth of solidarity are proving that human and non-human beings can – and must – go slower. This is not an invitation of a perennial state of exception, but an invitation to assessing the compatibility of global supply capitalism with the objectives and limits of people and planet. Are we going to get more or the same or take advantage of this situation to pause and reflect? So far, the use of underpaid inmates to address the urgent need for increased production of masks and hand sanitizers and the reduction in the price of oil to stimulate the economy demonstrate that both private and public solutions to the crises have been looked for within the same unsustainable framework. Without a shift away from cheapness and competitiveness, the interlinked future of supply chains, health and global economy can only be bound to more crises, more contagions, more deaths and more precariousness. Is it too ambitious to join Capra and Mattei and hope that lawyers will be in the front line of a radical move away from social and environmental self-destruction and in the adoption of new a new paradigm that does not see law as an enabler of value accumulation through global supply chains but as a tool to build a new ecological order informed by principles of environmental and social justice?

By Ennio Piovesani. The author is a PhD Student at the Università degli Studi di Torino and at the Universität zu Köln.

1. Summary

The Italian Government has adopted a series of Decree-Laws [1] introducing measures to fight the emergency caused by the “new” Coronavirus.

These measures include “self-proclaimed” overriding mandatory provisions on the reimbursement of prices paid under transport, package travel and accommodation contracts by specified persons affected by the Coronavirus.

2. Arts. 28 of Decree-Law No. 9/2020 and 88 of Decree-Law No. 18/2020

In particular, on 2.4.3020, the Italian Government adopted Decree-Law No. 9, titled “Urgent measures to support families, workers and businesses, in connection with the epidemiological emergency by COVID-19” [2].

Article 28 of Decree-Law No. 9/2020 provides for “Reimbursement of Travel Tickets and Travel Packages”.

The first paragraph of Article 28 stipulates that, obligations arising from transport and package travel contracts, concluded by specified persons affected by the Coronavirus [3], are to be considered as impossible under Article 1463 of the Italian Civil Code [4].

Paragraphs 2 to 7 of Article 28 establish a specific procedure for obtaining and making the reimbursement of the price paid under the transport or package travel contract covered by the same Article.

The following paragraph 8 “proclaims”:

“The provisions of the present article constitute overriding mandatory provisions within the meaning of Article 17 of Law of 31 May 1995, No. 218 [“Italian PIL Act”] [5, 6] and of Article 9 of Regulation (EU) No. 593/2008 of the European Parliament and of the Council, of 17 June 2008 [“Rome 1 Regulation”]”.

On 17.3.2020, the Italian Government has adopted a new Decree-Law (dubbed “Heal Italy”), introducing new measures to fight the emergency caused by the Coronavirus [7].

Art. 88(1) of new Decree-Law No. 18/2020 extends the provisions of Art. 28 of Decree-Law No. 9/2020 to accommodation contracts.

3. Short Comment

As a short comment to the above, I note that it is not the first time that the Italian legislator enacts “self-proclaimed” overriding mandatory provisions [8].

However, as known, it is questionable whether, EU Member States can freely enact similar provisions when they fall within the material scope of Union private international law instruments, such as the Rome 1 Regulation.

In fact, this practice appears to be particularly questionable in cases such as that at issue, where the self-proclaimed overriding mandatory provisions do not appear to be “crucial” for safeguarding public interests within the meaning of Article 9(1) of the Rome 1 Regulation, but rather appear to be exclusively purported to protect private interests (for however widespread they may be).

Notes

[1] In the Italian legal order, a Decree-Law is a provisional act having force of law, adopted in extraordinary cases of necessity and urgency by the Government. A Decree-Law must be “converted” into a Law within a period of 60 days from its publication, or otherwise it loses its effects. See, in particular, Art. 77 of the Costituzione della Repubblica Italiana, Gazzetta Ufficiale No. 298 of 27.12.1947, www.gazzettaufficiale.it/eli/id/1947/12/27/047U0001/sg.

[2] Decree-Law of 2.3.2020, No. 9, Misure urgenti di sostegno per famiglie, lavoratori e imprese connesse all’emergenza epidemiologica da COVID-19, Gazzetta Ufficiale, Serie Generale No. 53 of 2.3.2020, www.gazzettaufficiale.it/eli/id/2020/03/02/20G00026/sg.

[3] See Art. 28(1)(a) to (f) of Decree-Law No. 9/2020.

[4] Article 1463 of the Italian Civil Code, headed “Total Impossibility”, can be translated as follows: “In [case of] contracts with reciprocal performances, the party that is freed due to supervening impossibility of the performance owed cannot demand counter-performance, and must return that which he has already received, in accordance with the rules on undue payment”. See, Royal Decree of 16.3.1942, No. 262, Approvazione del testo del Codice civile, Gazzetta Ufficiale, Serie Generale No. 79 of 4.4.1942, www.gazzettaufficiale.it/eli/id/1942/04/04/042U0262/sg.

[5] Law of 31.5.1995, No. 218, Riforma del sistema italiano di diritto internazionale privato, Gazzetta Ufficiale, Serie Generale No. 128 of 3.6.1995, Supplemento Ordinario No. 68, https://www.gazzettaufficiale.it/eli/id/1995/06/03/095G0256/sg.

[6] Article 17 of the Italian PIL Act, is the Italian (autonomous) private international law provision governing overriding mandatory provisions. Article 17, headed “Norms of necessary application”, can be translated as follows: “Norms of necessary application. 1. Italian norms which, considering their object and their objective, must be applied notwithstanding reference to foreign law, prevail over the following provisions”.

[7] Decree-Law of 17.3.2020, No. 18, Misure di potenziamento del Servizio sanitario nazionale e di sostegno economico per famiglie, lavoratori e imprese connesse all’emergenza epidemiologica da COVID-19, Gazzetta Ufficiale, Serie Generale No. 70 del 17.3.2020, https://www.gazzettaufficiale.it/eli/id/2020/03/17/20G00034/sg.

[8] See, e.g., Article 32-ter of the Italian PIL Act.

Ilaria Pretelli (Swiss Institute of Comparative Law) has posted Provisional Measures in Family Law and the Brussels II Ter Regulation on SSRN.

Provisional and Protective Measures in family matters need special consideration because they are not limited to economic matters and significantly interfere with the self-determination of persons and often of vulnerable persons, namely children. This circumstance explains the exceptional regime of the Brussels II ter Regulation as compared to the general regime of the Brussels I and Lugano systems. The article also deals with the problem of the law applicable to provisional measures, in the absence of a specific European rule on this matter. We argue that, whenever a provisional or protective measure is taken by the judge who will not rule on the substance of the matter and especially in cases where the measure is provisional and anticipates the merits, judges should avoid the application of the law of their forum and apply the law applicable to the substance to the provisional measure they are required to issue.

The paper is forthcoming in the Yearbook of Private International Law.

By Ennio Piovesani. The author is a PhD Student at the Università degli Studi di Torino and at the Universität zu Köln.

1. Summary

The Italian Government has adopted a series of Decree-Laws [1] introducing measures to fight the emergency caused by the “new” Coronavirus.

These measures include “self-proclaimed” overriding mandatory provisions on the reimbursement of prices paid under transport, package travel and accommodation contracts by specified persons affected by the Coronavirus.

2. Arts. 28 of Decree-Law No. 9/2020 and 88 of Decree-Law No. 18/2020

In particular, on 2.4.3020, the Italian Government adopted Decree-Law No. 9, titled “Urgent measures to support families, workers and businesses, in connection with the epidemiological emergency by COVID-19” [2].

Article 28 of Decree-Law No. 9/2020 provides for “Reimbursement of Travel Tickets and Travel Packages”.

The first paragraph of Article 28 stipulates that, obligations arising from transport and package travel contracts, concluded by specified persons affected by the Coronavirus [3], are to be considered as impossible under Article 1463 of the Italian Civil Code [4].

Paragraphs 2 to 7 of Article 28 establish a specific procedure for obtaining and making the reimbursement of the price paid under the transport or package travel contract covered by the same Article.

The following paragraph 8 “proclaims”:

“The provisions of the present article constitute overriding mandatory provisions within the meaning of Article 17 of Law of 31 May 1995, No. 218 [“Italian PIL Act”] [5, 6] and of Article 9 of Regulation (EU) No. 593/2008 of the European Parliament and of the Council, of 17 June 2008 [“Rome 1 Regulation”]”.

On 17.3.2020, the Italian Government has adopted a new Decree-Law (dubbed “Heal Italy”), introducing new measures to fight the emergency caused by the Coronavirus [7].

Art. 88(1) of new Decree-Law No. 18/2020 extends the provisions of Art. 28 of Decree-Law No. 9/2020 to accommodation contracts.

3. Short Comment

As a short comment to the above, I note that it is not the first time that the Italian legislator enacts “self-proclaimed” overriding mandatory provisions [8].

However, as known, it is questionable whether, EU Member States can freely enact similar provisions when they fall within the material scope of Union private international law instruments, such as the Rome 1 Regulation.

In fact, this practice appears to be particularly questionable in cases such as that at issue, where the self-proclaimed overriding mandatory provisions do not appear to be “crucial” for safeguarding public interests within the meaning of Article 9(1) of the Rome 1 Regulation, but rather appear to be exclusively purported to protect private interests (for however widespread they may be).

Notes

[1] In the Italian legal order, a Decree-Law is a provisional act having force of law, adopted in extraordinary cases of necessity and urgency by the Government. A Decree-Law must be “converted” into a Law within a period of 60 days from its publication, or otherwise it loses its effects. See, in particular, Art. 77 of the Costituzione della Repubblica Italiana, Gazzetta Ufficiale No. 298 of 27.12.1947, www.gazzettaufficiale.it/eli/id/1947/12/27/047U0001/sg.

[2] Decree-Law of 2.3.2020, No. 9, Misure urgenti di sostegno per famiglie, lavoratori e imprese connesse all’emergenza epidemiologica da COVID-19, Gazzetta Ufficiale, Serie Generale No. 53 of 2.3.2020, www.gazzettaufficiale.it/eli/id/2020/03/02/20G00026/sg.

[3] See Art. 28(1)(a) to (f) of Decree-Law No. 9/2020.

[4] Article 1463 of the Italian Civil Code, headed “Total Impossibility”, can be translated as follows: “In [case of] contracts with reciprocal performances, the party that is freed due to supervening impossibility of the performance owed cannot demand counter-performance, and must return that which he has already received, in accordance with the rules on undue payment”. See, Royal Decree of 16.3.1942, No. 262, Approvazione del testo del Codice civile, Gazzetta Ufficiale, Serie Generale No. 79 of 4.4.1942, www.gazzettaufficiale.it/eli/id/1942/04/04/042U0262/sg.

[5] Law of 31.5.1995, No. 218, Riforma del sistema italiano di diritto internazionale privato, Gazzetta Ufficiale, Serie Generale No. 128 of 3.6.1995, Supplemento Ordinario No. 68, https://www.gazzettaufficiale.it/eli/id/1995/06/03/095G0256/sg.

[6] Article 17 of the Italian PIL Act, is the Italian (autonomous) private international law provision governing overriding mandatory provisions. Article 17, headed “Norms of necessary application”, can be translated as follows: “Norms of necessary application. 1. Italian norms which, considering their object and their objective, must be applied notwithstanding reference to foreign law, prevail over the following provisions”.

[7] Decree-Law of 17.3.2020, No. 18, Misure di potenziamento del Servizio sanitario nazionale e di sostegno economico per famiglie, lavoratori e imprese connesse all’emergenza epidemiologica da COVID-19, Gazzetta Ufficiale, Serie Generale No. 70 del 17.3.2020, https://www.gazzettaufficiale.it/eli/id/2020/03/17/20G00034/sg.

[8] See, e.g., Article 32-ter of the Italian PIL Act.

The Department of Law of the University of Aarhus and the European Association of Private International have decided to postpone by one year the Association’s founding conference, originally scheduled to take place on 14, 15 and 16 May 2020.

The conference is now set to take place on 27, 28 and 29 May 2021.

The decision comes in response to the challenges posed, and the concerns raised, by the coronavirus crisis.

The venue, Aarhus, remains unchanged, and so does the conference program.

The Department of Law of the University of Aarhus and the European Association of Private International Law hope that all those who expressed an interest in the event will attend the conference next year.

Registered participants wishing to maintain their registration are invited to write an e-mail to this effect to Gitte Schneider (gs@law.au.dk) by 17 April 2020.

All other registered participants will automatically receive their fees back. This will occur in the days following the above date.

For further information, please visit the webpage of the conference in the website of the Aarhus University, here.

See you in Aarhus in 2021!

In Manitou v J.C. Bamford Excavators, (defendant is better known as ‘JCB’ which in England is an eponym for ‘digger’ or excavator) the Paris Court of Appeal held that French Courts have jurisdiction in an interesting tale of patent insults. JCB (England incorporated) had obtained a French injunction against Manitou (domiciled at France) obliging it to halt production of one of its products possibly in violation of a JCB patent. On the eve of an important trade fair taking place in France, JCB boasted about the injunction in a Twitter, Linked-in and website post. Manitou argue the post was insulting and an act of unfair competition.

Manitou claim jurisdiction on the basis of A7(2) BIa, special jurisdiction for tort, per CJEU C-618/15 Concurrences /Samsumg /Amazon, which I reviewed here. It refers to all sites on which the news was posted being accessible in France (Pinckney would have been strong authority here); to the post discussing a French judgment which is only aimed at and enforceable in France; and that its publication was timed to coincide with the aforementioned French fair. JCB on the other hand argue mere accessibility does not suffice and that the sites did not target readers in France.

The Court refers both to Shevill and to Concurrences; decides that the very fact that the site was published in English does not insulate it from French jurisdiction (seeing also that plenty of potential clients looking to buy from Manitou at the time would have been in France for the fair); and that the publication clearly would have affected the brand’s reputation in France and also its sales there. Jurisdiction therefore established.

Geert.

(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2

Unfair competition, publication by UK defendant of judgment concerning #patent infringement
Jurisdiction, Article 7(2) Brussels Ia.
Paris CA upholds FR jurisdiction citing Shevill, Concurrences (on which https://t.co/Ibsofl7Jsl) https://t.co/WD61WwHtwv

— Geert Van Calster (@GAVClaw) March 5, 2020

Following the ratification of Qatar last week, on 12 March 2020, the United Nations Convention on International Settlement Agreements Resulting from Mediation will enter in force on 12 September 2020: that was quick!

Source: here

 

The Council on General Affairs and Policy of the Hague Conference met from 3 to 6 March 2020. Its conclusions and decisions are now available.

Key points:
“The projects on normative work include two further meetings of the Experts’ Group on Jurisdiction before CGAP 2021, the continuation of the Parentage / Surrogacy Project and the Tourists and Visitors Project, further work on the draft Practical Guide on cross-border recognition and enforcement of agreements reached in the course of family matters involving children and, subject to available resources, some exploratory work of the intersection of private international law and intellectual property and the monitoring of developments with respect to the private international law implications of distributed ledger technology (DLT).

In relation to post-Convention services, CGAP noted, amongst others, the approval of the Guide to Good Practice on Article 13(1)(b) under the 1980 Child Abduction Convention and the Guide to Good Practice on the Use of Video-Link under the 1970 Evidence Convention. CGAP also approved the holding of a first Special Commission on the 2007 Child Support Convention and its Protocol. In addition, CGAP invited another meeting of the Working Group on Preventing and Addressing Illicit Practices under the 1993 Adoption Convention, and an Experts’ Group to explore whether broader use of new technologies, including DLT, may further enhance the e-APP, in particular in relation to e-Registers”.

Source: here and there

For the Guide to Good Practice under the HCCH Convention of 25 October 1980 on the Civil Aspects of International Child Abduction – Part VI – Article 13(1)(b), see here

Last week, on 11 March 2020, the Court of Justice delivered its judgment in case C‑511/17 (Györgyné Lintner v UniCredit Bank Hungary Zrt.), which is about Directive 93/13 on unfair terms in consumer contracts:

“1. Article 6(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts must be interpreted as meaning that a national court, hearing an action brought by a consumer seeking to establish the unfair nature of certain terms in a contract that that consumer concluded with a professional, is not required to examine of its own motion and individually all the other contractual terms, which were not challenged by that consumer, in order to ascertain whether they can be considered unfair, but must examine only those terms which are connected to the subject matter of the dispute, as delimited by the parties, where that court has available to it the legal and factual elements necessary for that task, as supplemented, where necessary, by measures of inquiry.

2. Article 4(1) and Article 6(1) of Directive 93/13 must be interpreted as meaning that, while all the other terms of the contract concluded between a professional and that consumer should be taken into consideration in order to assess whether the contractual term forming the basis of a consumer’s claim is unfair, taking such terms into account does not entail, as such, an obligation on the national court hearing the case to examine of its own motion whether all those terms are unfair”.

Source: here

Teemu Juutilainen is the author of Secured Credit in Europe – From Conflicts to Compatibility, which is about to be published by Hart Publishing.

The abstract reads as follows.

This monograph seeks the optimal way to promote compatibility between systems of proprietary security rights in Europe, focusing on security rights over tangible movables and receivables. Based on comparative research, it proposes how best to tackle cross-border problems impeding trade and finance, notably uncertainty of enforceability and unexpected loss of security rights. It offers an extensive analysis of the academic literature of more recent years that has appeared in English, German, the Scandinavian languages and Finnish. The author organises the concrete means of promoting compatibility into a centralised substantive approach, a centralised conflicts-approach, a local conflicts-approach and a local substantive approach. The centralised approaches develop EU law, and the local approaches Member State laws. The substantive approaches unify or harmonise substantive law, while the conflicts approaches rely on private international law. The author proposes determining the optimal way to promote compatibility by objective-based division of labour between the four approaches. The objectives developed for that purpose are derived from the economic functions of security rights, the conditions for legal evolution and a transnational conception of justice.

More information here.

Dr. Gérardine Goh Escolar, First Secretary at the Hague Conference on Private International Law, has prepared a lecture on the main features of the Hague Conference and its work. The lecture is available in three languages (English, French and Spanish) in the UN Audiovisual Library of International Law.

You can watch the lectures here. 

Many thanks 2TG for initially flagging the judgment, and for Maura McIntosh and colleagues not just for further reviewing it but also for sending me copy: for the case has not yet appeared on the usual sites.

In Pandya v Intersalonika [2020] EWHC 273 (QB), Tipples J held that proceedings were time-barred in accordance with Greek law as the lex causae, where the claim form was issued in the English courts before the expiry of the applicable Greek limitation period, but was not served until after that period had expired.

The claim arises out of a road traffic accident that happened in Kos, Greece on 29 July 2012. The claimant is a UK national and was on holiday in Kos with her family when she was struck by a motorcycle as she was crossing the road. The claimant suffered a severe traumatic brain injury and was then aged fifteen. Defendant is the Greek-registered insurance company which provided insurance to the motorcyclist or the motorcycle that he was riding.

That claimant is entitled to sue the insurer in England is not of course, contrary to Tipples J passing reference, a result of Rome II but rather of Brussels IA. Jurisdiction however at any rate was not under discussion.

Defendant then relies on A15(h) Rome II to argue a time bar under Greek law, the lex locus damni: service of the claim is a rule of Greek law in relation to limitation and a claim has to be issued and served to interrupt the limitation period. This means that the requirement of service cannot be severed, or downgraded, to a step which is simply governed by the rules of civil procedure under English law. Claimant by contrast argues that service of the claim is a point of pure procedure, which falls squarely within Article 1(3) and is governed by the rules of civil procedure under English law.

At 25 ff Tipples J discusses the issue (I highlight the most relevant arguments)

• starting with the principle of autonomous interpretation;
• further, a need for wide interpretation of A15 which she derives from its non-exhaustive character. I do not agree that non-exhaustive listings necessarily equate broad interpretations;
• thirdly the need, by contrast, to interpret A1(3) narrowly ‘because it is an exception’ to the general rule of lex locus damni in A4. This too I disagree with: A1(3) states it ‘it shall not apply to evidence and procedure, without prejudice to Articles 21 and 22’ (which concern formal validity and burden of proof). In my view A1(3) like A1(2) defines the scope of application, like A1(2). It is listed separately from the issues in A1(2) for unlike those issues, part of the excluded subject-matter is partially brought back into the scope of application. If anything therefore needs to be interpreted restrictively, it is the partial cover of evidence and procedure.  Seemingly between parties however this was not disputed.
• Further support is found in Dicey & Morris 15th ed., which refers to Wall v Mutuelle de Poitiers a case which discusses the issues somewhat, yet if anything more in support of English law applying to the discussion in Pandya rather than the other way around. (A reference further on in Andrew Dickinson’s Rome II Volume with OUP in my mind, too, further underlines the opaqueness of the A1 /A15 distinction and does not clearly lend support pro the lex causae argument).
• Fifth, predictability and certainty are cited in support however how these gazump exclusions from the scope of application is not clear to me.
• Finally PJSC Tatneft v Bogolyubov is referred to but dismissed as irrelevant (which surprises me).

Held: the claim was time-barred and therefore dismissed.

I would suggest there is plenty of scope for appeal here.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 3.

Dr. Gérardine Goh Escolar, First Secretary at the Hague Conference on Private International Law, has prepared a lecture on the main features of the Hague Conference and its work. The lecture is available in three languages (English, French and Spanish) in the UN Audiovisual Library of International Law.

You can watch the lectures here. 

The Court of Justice of the European Union on 27th February 2020 delivered its judgment in Corporis/Gefion Insurance, Case C-25/19. The case concerned rules surrounding service of documents in a specific, yet increasingly common context.

Corporis is a Polish insurance company, who was assigned damages by the owner of a vehicle following a car accident for the value of 30 euro. Gefion was the Danish insurance company covering the risk related to the accident. Under the Solvency II Directive, insurance undertakings may provide services in other Member States without having there an agency or an establishment – yet, for compulsory motor insurance coverages they must appoint a representative with “sufficient powers to represent the undertaking … including the payment of such claims, and to represent it or, where necessary, to have it represented before the courts and authorities of that Member State in relation to those claims” (Art 152). The Polish representative of Gefion was Crawford Polska.

When Corporis wanted to start judicial proceedings, it served legal documents upon the prospective defendant, in Denmark. Documents were not translated, and the recipient of the documents, according to Art 8 of the Service of Documents Regulation (no. 1393/2007), refused to accept service on the ground that it was in not in the condition to understand the content of the documents.

Polish courts suspended proceedings, requesting Corporis advanced payment for translation for 1.500 euro. Failing such payment, the court dismissed the case.

On appeal, the court of appeal questioned whether the Service of Documents Regulation was applicable, as its recital 8 states that it “should not apply to service of a document on the party’s authorised representative in the Member State where the proceedings are taking place regardless of the place of residence of that party”.

The Court of Justice was thus called to rule on whether the rules on the appointment of representatives contained in the Solvency II Directive and the scope of application of the Service of Documents Regulation as reconstructed in light of its recital extend the competence and duties of said representative to receive service of documents in the language of that specific host State for which he has been appointed.

The Court of Justice has confirmed that the Service of Documents Regulation is not applicable to service of a document on the party’s authorized representative in the Member State where the proceedings are taking place (para 28 f). The applicability of the regulation is set aside in light of its recital 8, according to which it should not be applied “to service of a document on the party’s authorised representative in the Member State where the proceedings are taking place regardless of the place of residence of that party”. This sets the difference from the previous case law of the court, namely the Alder judgment Case C-325/11, where there was no local representative of the foreign defendant, nor a legal obligation to appoint such a representative.

Yet, in the Court’s eye, the non-application of the Service of Documents Regulation in the case at hand does not mean that EU law remains silent in general. The Solvency II Directive creates a harmonized regime for the pursuit of insurance activities between Member States. Amongst its goals, not only the promotion of cross-border services, but the protection of persons as well. The necessity for an insurance undertaking to appoint a representative in a State where it decides to offer services without opening an agency or an establishment is pre-ordered at the protection of persons; even though the Solvency II Directive is silent on the matter, according to the Court, not recognizing the right to victim to serve documents in his own language to the representative with whom it has already taken preliminary steps would, in essence, deprive the provisions of their effet utile.

Interestingly, in terms of legal narrative, the matter is mostly constructed in positive terms. The Court speaks of the “possibility for that representative to accept service” (para 37); it stress the negative consequences of excluding “the powers [of the] representative to accept service of documents” (para 42). Evidently, from the perspective of the foreign insurance company and its representative, this is more a matter of legal obligation to accept service.

The approach and the perspective followed by the Court becomes apparent in the conclusion. The Court does not clearly say that the representative has an obligation to accept service – it says that the rules on appointment in the Solvency II Directive include the power to receive service of documents. An argumentative style that appears to little prejudice to the conclusion: insurance companies now know that when they appoint a representative in another Member State under Artt. 152 Solvency II Directive, persons will have the possibility to serve documents to that representative, and avoid a cross-border service of documents.

In May 2018, the European Commission published a proposal for a Regulation amending the 2001 Evidence Regulation. The name of the proposal immediately clarifies the lack of ambition of the project: the intention is to amend the existing text, not to recast it.

The Commission Proposal

The Proposal aims at improving the 2001 Regulation by: using electronic transmission as the default channel for electronic communication and document exchanges; promoting modern means of taking evidence such as videoconferencing and incentives (via the financing of national projects) for Member States to equip courts with videoconferencing facilities; removing legal barriers to the acceptance of electronic (digital) evidence; tackling divergent interpretations of the term ‘court’;  communicating the importance of the uniform standards provided by the Regulation (streamlined procedures, equal standard of protection of the right of the parties involved); best practices for competent courts, to help them apply the procedures properly and without delay; and raising courts’ and legal professionals’ awareness of the availability of the direct channel of taking evidence under the Regulation.

On 13 February 2019, the European Parliament adopted its first-reading position on the proposal, with 37 amendments to the text of the Commission.

On 29 November 2019, the Council of the European Union adopted a general approach of the text.

The main purpose of the proposal is to improve transmission of requests and communication by using modern communication technology. There is no doubt that this is an important concern. Yet, the operation of the Evidence Regulation arguably raises much more important issues.

The Optional Regulation

The Evidence Regulation should further European integration by facilitating and expediting the taking of evidence in other Member States.

Instead, it is the experience of many European practitioners that the Regulation does just the opposite. It creates obstacles, and slows down the taking of evidence abroad. The reason is simple: the Regulation requires the intervention of authorities in the requested state as a preliminary step to the taking of evidence abroad. The most liberal provision in this respect is Article 17, which introduced “Direct taking of evidence by the requesting court” in other Member States. But even under Article 17, it is necessary to “submit a request to the central body or the competent authority” of the requested state.

The European Union has abolished the exequatur procedure for judgments rendered in civil and commercial matters. Under the Brussels II bis Regulation, decisions on the return of a child are immediately enforceable and may not be challenged in the requested state, even for alleged violations of human rights. But the taking of evidence abroad is still subject to a preliminary procedure. The system completely lags behind.

In Lippens and ProRail, the Court of Justice of the European Union (CJEU) addressed the issue by ruling that the application of the Evidence Regulation was not mandatory, and that Member States could simply ignore it and take evidence abroad under their own procedures, without seeking any kind of approval from the requested state. In particular, the CJEU ruled in ProRail:

43. (…) it must be recalled that, according to recitals 2, 7, 8, 10 and 11 in the preamble to Regulation No 1206/2001, the aim of the regulation is to make the taking of evidence in a cross-border context simple, effective and rapid. The taking of evidence, by a court of one Member State in another Member State must not lead to the lengthening of national proceedings. (…)

45. An interpretation of Articles 1(1)(b) and 17 of Regulation No 1206/2001 according to which the court of a Member State is obliged, for any expert investigation which must be carried out directly in another Member State, to take evidence according to the method laid down by those articles would not be consistent with those objectives. In certain circumstances, it may be simpler, more effective and quicker for the court ordering such an investigation, to take such evidence without having recourse to the regulation. 

The CJEU however reserved cases where the taking of evidence would affect the powers of the requested Member State.

The Proposal of the Commission does not address the optional character of the Regulation. This means that the future amended Regulation will remain an optional instrument that the courts of the Member States are free to (continue to) ignore.

Liberalizing the Taking of Evidence in Other Member States

The most important issue that the Proposal does not tackle, however, is that of the obstacles that the Regulation creates in the taking of evidence abroad, and that litigants avoid by resorting to national law.

During the legislative process which lead to the adoption of the initial Evidence Regulation, Germany had proposed to fully liberalize the operation of judicial experts in other Members States. Under this exception, courts could appoint a judicial expert to carry out his mission in other Member States without any need for a preliminary procedure in the requested state. The exception was eventually not adopted. However, this is exactly what the CJEU has allowed in ProRail, which was concerned with the operation of a judicial expert in another Member State.

The reform of the Evidence Regulation was thus the perfect opportunity to reconsider the issue. A much more ambitious reform would have attempted to identify cases where the taking of evidence abroad could be liberalized by abolishing any preliminary procedure, and cases where some kind of involvement of the requested state would still appear to be justified.

Instead, the European lawmaker is about to ignore the problem and, by doing so, to generate considerable uncertainty.

Disclosure: the author was a member of the expert group established by the European Commission for the purpose of drafting the Proposal of the Commission.

The Covid-19 pandemic is on everybody’s mind. Around the world, countermeasures limit public life and freedom of movement, especially cross-border traffic. This raises the question to which extent Private International Law is relevant and capable of handling this new situation. Here are some provisional thoughts on the potential impact of travel bans and other emergency measures under the Rome I and II Regulation.

Transport contracts

Some countries have restricted free movement from persons coming from areas affected by the Corona virus. Austria, for instance, does not allow people coming from Italy into its territory, while the US has just banned travel from Europe with the sole exception of the UK. As a result, flights, trains and bus trips have been cancelled.

For courts in the EU (with the exception of Denmark), the law governing these transport contracts is regulated by Article 5 of the Rome I Regulation. The determination of the applicable law is quite straight forward: The fallback rule is that the law of the habitual residence of the passenger applies (Article 5(2) Rome I). The trickier question, however, is which impact the local law at the place of destination might have on the contract.

The answer for EU courts is given by Article 9 of the Rome I Regulation. The prohibition to enter the territory of a Member State certainly qualifies as an overriding mandatory rule in the sense of paragraph 1 of the provision. Should the courts of that Member State decide over the case, they would apply this provision as part of their lex fori (see Article 9(2) Rome I). The result would certainly not be very different for courts outside the EU, which would apply such provisions as part of their public policy.

The court of another Member State, for instance those of the place of departure, may give effect to the overriding mandatory rules of the state of destination because the contract is to be performed there (see Article 9(3) Rome I). In case the latter has prohibited all travel, this would render the performance of the contract unlawful in the sense of the provision. Mind that the courts of the other states have discretion whether to give effect to the travel ban (see the word “may” in Article 9(3) Rome I).

Cancelled or Postponed Events

The virus has led to the cancellation of events around the world, from congresses to concerts and soccer matches. Usually, the tickets to these events will be subject to the local law where the event takes place.

However, this is not always the case. The parties may have chosen another law (Article 3 Rome I). The consumer protection rules do not interfere with this choice, when the event takes place in a state in which the consumer does not have its habitual residence (see Article 6(4)(a) Rome I). In the absence of a choice, the law at the habitual residence of the service provider applies (Article 4(1)(b) Rome I). If it is – as usual – a corporate entity, the law at the place of its central administration governs (Article 19(1) Rome I). These laws may be replaced by that of a branch that has concluded or executed the contract (Article 19(2) Rome I).

If as a result a foreign law governs the contract, the law of the place of the event may be applied as an overriding mandatory rule under the conditions set by Article 9 of the Rome I Regulation. Insofar, the same considerations as for transport contracts apply. Where the law of the event does not call for a full cancellation, but rather for some changes, such as a postponement or the shift to another place, this law may be considered as the law of the place of performance (lex loci solutionis) under Article 12(2) of the Rome I Regulation.

Cancelled or Delayed Deliveries

Where deliveries of goods were cancelled or postponed, the solution is much the same as for events. The law of the place of performance may apply either as an overriding mandatory provision under Article 9 of the Rome I Regulation or is to be taken into account as lex loci solutionis under Article 12(2) of the same Regulation.

An interesting extension of the concept of public policy rules can be observed in China: According to a recent post on Chinese law a Chinese authority is issuing so-called force majeure certificates pretending to absolve Chinese companies from the need to fulfill contracts with foreign parties. The author assumes that courts of the People’s Republic could consider these certificates as part of public policy even in the absence of compulsory government orders.

From an EU viewpoint, the assessment is quite different. European courts apply legal concepts independently of any measures by administrative authorities. And while compulsory restrictions certainly qualify as overriding mandatory rules, the same is not true for the doctrine of force majeure, which does not meet the requirements of Art 9(1) Rome I. European courts will therefore follow this concept only where it is part of the law governing the contract, and assess independently whether its conditions are met. They can merely take into account, as a matter of fact, mandatory provisions at the place of performance if the applicable substantive law so allows (see to this effect the ruling of the Court of Justice in Nikiforidis, para 51).

Infections

It is hard to identify the source of a Corona infection, but it may not be impossible. A victim may for instance sue the operator of a foreign airport, hospital or hotel for the failure to take appropriate precautions. If both parties are privy to a contract, the law applicable to that contract will decide over the necessary measures, including duties of information and warning in the pre-contractual phase (Article 12 Rome II).

It is also possible that the parties are not contractually bound to each other. Imagine for instance a passenger of a flight suing another passenger who has neglected her infection. Which law applies? EU courts will have to search for the solution in the Rome II Regulation.

A first idea that might spring to mind is to apply Article 7 of the Rome II Regulation, which deals with environmental damages. Yet Recital 24 of the Rome II Regulation defines ‘environmental damage’ as ‘adverse change in a natural resource, such as water, land or air, impairment of a function performed by that resource for the benefit of another natural resource or the public, or impairment of the variability among living organisms’. The virus is respiratory and travels by air, but arguably, it does not change this natural resource. Its main negative effects are on the health of other individuals. While one may debate this assessment, it seems more certain that Corona does not impair fauna’s variation.

Hence the general rule of Article 4 of the Rome II Regulation applies. The first, rather curious, result is that any claim is governed by the law of the common habitual residence of the sick and the infected person (Article 4(2) Rome II). The dispute between two Italian residents on a plane from Frankfurt to Moscow would thus be governed by Italian law, unless there is a manifestly closer connection (Article 4(3) Rome II).

If the parties to the dispute reside in different states, then the law of the place where the damage occurred applies (Article 4(1) Rome II). Airplanes are considered as being part of the territory of the country where they are registered. The suit of a Swedish passenger against a Swiss resident on a flight from Stockholm to Geneva in a plane registered in Ireland would thus be governed by Irish law.

Cross-border infections, for instance by sending contaminated goods or livestock, are also governed by the law of the place of damage (Article 4(1) Rome II) or by the common habitual residence of the parties (Article 4(2) Rome II). Mind you, however, that the rules of safety and conduct at the place where the tortfeasor acted have to be taken into account (Art 17 Rome II). Thus, when infected animals are sent from Rome to Paris, the sanitary restrictions of Italian law would have to be considered by a court. But this is only the case insofar as they “appropriate”.

These results can again be influenced by overriding mandatory rules of the forum (Article 16 Rome II). Whether the court can also apply foreign overriding mandatory rules under the Rome II Regulation is subject to dispute. This should however be allowed in analogy to the possibility provided under the Rome I Regulation (Article 9(3) Rome I).

Conclusion

These considerations only concern private international law and leave out interesting questions of substantive law, such as those relating to force majeure, frustration or impossibility, which may be decided differently in each Member State. Moreover, they are merely provisional thoughts. It remains to be seen in which exact shape and form conflict of laws issues will arise from Covid-19.

The Court of Justice of the European Union on 27th February 2020 delivered its judgment in Corporis/Gefion Insurance, Case C-25/19. The case concerned rules surrounding service of documents in a specific, yet increasingly common context.

Corporis is a Polish insurance company, who was assigned damages by the owner of a vehicle following a car accident for the value of 30 euro. Gefion was the Danish insurance company covering the risk related to the accident. Under the Solvency II Directive, insurance undertakings may provide services in other Member States without having there an agency or an establishment – yet, for compulsory motor insurance coverages they must appoint a representative with “sufficient powers to represent the undertaking … including the payment of such claims, and to represent it or, where necessary, to have it represented before the courts and authorities of that Member State in relation to those claims” (Art 152). The Polish representative of Gefion was Crawford Polska.

When Corporis wanted to start judicial proceedings, it served legal documents upon the prospective defendant, in Denmark. Documents were not translated, and the recipient of the documents, according to Art 8 of the Service of Documents Regulation (no. 1393/2007), refused to accept service on the ground that it was in not in the condition to understand the content of the documents.

Polish courts suspended proceedings, requesting Corporis advanced payment for translation for 1.500 euro. Failing such payment, the court dismissed the case.

On appeal, the court of appeal questioned whether the Service of Documents Regulation was applicable, as its recital 8 states that it “should not apply to service of a document on the party’s authorised representative in the Member State where the proceedings are taking place regardless of the place of residence of that party”.

The Court of Justice was thus called to rule on whether the rules on the appointment of representatives contained in the Solvency II Directive and the scope of application of the Service of Documents Regulation as reconstructed in light of its recital extend the competence and duties of said representative to receive service of documents in the language of that specific host State for which he has been appointed.

The Court of Justice has confirmed that the Service of Documents Regulation is not applicable to service of a document on the party’s authorized representative in the Member State where the proceedings are taking place (para 28 f). The applicability of the regulation is set aside in light of its recital 8, according to which it should not be applied “to service of a document on the party’s authorised representative in the Member State where the proceedings are taking place regardless of the place of residence of that party”. This sets the difference from the previous case law of the court, namely the Alder judgment Case C-325/11, where there was no local representative of the foreign defendant, nor a legal obligation to appoint such a representative.

Yet, in the Court’s eye, the non-application of the Service of Documents Regulation in the case at hand does not mean that EU law remains silent in general. The Solvency II Directive creates a harmonized regime for the pursuit of insurance activities between Member States. Amongst its goals, not only the promotion of cross-border services, but the protection of persons as well. The necessity for an insurance undertaking to appoint a representative in a State where it decides to offer services without opening an agency or an establishment is pre-ordered at the protection of persons; even though the Solvency II Directive is silent on the matter, according to the Court, not recognizing the right to victim to serve documents in his own language to the representative with whom it has already taken preliminary steps would, in essence, deprive the provisions of their effet utile.

Interestingly, in terms of legal narrative, the matter is mostly constructed in positive terms. The Court speaks of the “possibility for that representative to accept service” (para 37); it stress the negative consequences of excluding “the powers [of the] representative to accept service of documents” (para 42). Evidently, from the perspective of the foreign insurance company and its representative, this is more a matter of legal obligation to accept service.

The approach and the perspective followed by the Court becomes apparent in the conclusion. The Court does not clearly say that the representative has an obligation to accept service – it says that the rules on appointment in the Solvency II Directive include the power to receive service of documents. An argumentative style that appears to little prejudice to the conclusion: insurance companies now know that when they appoint a representative in another Member State under Artt. 152 Solvency II Directive, persons will have the possibility to serve documents to that representative, and avoid a cross-border service of documents.