Flux des sites DIP

The Permanent Bureau of the Hague Conference on Private International Law (HCCH) is seeking an Assistant Legal Officer. The successful candidate will work in the field of International Family Law and Child Protection, primarily in relation to the 2000 Convention on the Protection of Adults and the 2007 Convention on Child Support and its Protocol, but also the 1961 Convention on the Form of Testamentary Dispositions and 1970 Convention on the Recognition of Divorces.

Applications should be submitted by Friday 23 July 2021 (00:00 CEST). For more information, please visit the Recruitment section of the HCCH website.

This post is published by the Permanent Bureau of the Hague Conference of Private International Law (HCCH). 

 

In spite of the numerous studies and decades of analysis, the interface between private international law and human rights keeps scholars busy.

No surprise, thus, that the (current) 4th Commission of the Institut de Droit International is presenting a new Draft Resolution next August, on the occasion of the IDI biannual meeting, held on line.

The Resolution, whose reporter is Fausto Pocar, will be based on the preparatory documents – including the
Report of Jürgen Basedow, Rapporteur until The Hague session in 2019 -, the previous draft resolutions, the written proposals of amendments submitted at The Hague that could not be discussed, and the plenary discussions as they result from the minutes of the Hague session.

The text in its version of 27 January 2021, is available on line. It is preceded by a thorough introduction to the work done until that date and to the general and specific issues dealt with. For a proper understanding of the Draft Resolution, it is worth noting that it addresses, without necessarily espousing, the two main points of criticism at the Hague session: “the Draft Resolution then discussed did not capture sufficiently the relationship between private international law and the public international law dimension of human rights protection, sometimes indulging in technical descriptions of private international law issues that had no or a too limited human rights component”; and “it was observed that the consideration of human rights in that Draft Resolution might appear to the reader exceedingly influenced by western values rather than focused on a global vision which would better suit an Institute’s Resolution” (NoA: Having read the documents available online regarding the first draft resolution I personally fail to understand the first reproach, but I am probably too much familiar with PIL technicalities myself. No opinion on the second ground for criticism).

The current Draft Resolution consists of 20 provisions. In a nutshell, like the former one it addresses the impact of human rights on international jurisdiction, applicable law and recognition: the tripartite division typical to cross-border settings underlies indeed the narrative of the Resolution – although not in the unsophisticated way I am describing it. Also like the former text, the present one includes provisions devoted to specific heterogeneous areas (name, identity, marriage, parentage, property, corporate social responsibility…), to explicitly tackle human rights concerns germane to each area. By way of example: under the heading “Marriage” the following is written:

(1) Child marriage and marriage agreed upon in the absence of the free and full consent of the two spouses infringe upon human rights and shall not be recognized

Or, under the heading “Protection of property”:

(2) Where a change of the applicable law resulting from private international law is conducive to the loss of such right, the forum State shall grant the holder an equivalent right to the extent possible.

The Resolution is short; so are its articles, separately taken. The wording is clear, attention is paid to stay in the realm of PIL and, I believe, to avoid assertions that may not be palatable to the IDI majority of Public International Law members. The scholarly distinction still exists (not only at the IDI), whether one likes it or not, and the gap does not seem to be without consequences.

I fear human rights activists will feel a little bit deceived by the Draft Resolution, should it be adopted as it stands. It may indeed be in the nature of this kind of document not to be too ambitious. This one remains to a large extent programmatic; it defers to other instruments or fora; it openly prefers to promote the accession to, and the respect of existing international conventions instead of coming up with detailed, statutory-like proposals. It is soft in the proper sense of the word. However, to my mind, it is no less relevant because of this character, which is obviously a conscious choice following in-depth analysis and reflections. It may be the only one possible to date.

– Picture: Session of The Hague 2019. ©Marieke Wijntjes)

I have reported before on the jurisdictional consequences of CJEU Vereniging van Effectenbezitters v BP. In this post for the European Association of Private International Law, I give my views on the impact for applicable law.

Geert.

Blogged.

My view on applicable law in cases of purely economic damage, following #CJEU Vereniging voor Effectenbezitters. https://t.co/U8lijC8sGB

— Geert Van Calster (@GAVClaw) June 23, 2021

This is the third post of an online symposium on the recent judgment of the CJEU in Vereniging van Effectenbezitters v. BP after the posts of Matthias Lehmann and of Laura van Bochove and Matthias Haentjens.

The author of this post is Prof. Geert van Calster, who teaches at and is Head of the department of European and International Law of the University of Leuven (Belgium), and an independent legal practitioner at the Brussels Bar.

Leiden University’s Round Table on the consequences of CJEU Vereniging van Effectenbezitters v BP (VvE) provided me with an opportunity not just to talk on the consequences of the ruling for applicable law, but also to discuss those views with an excellent group of scholars. That afternoon’s discussion no doubt has had an impact on some of what I write below, however clearly this post is my own responsibility.

Contractual or non-contractual obligations?

Clearly a first element of note is that the applicable law picture looks entirely different depending on whether one is looking at a contractual (triggering application of the Rome I-Regulation) or non-contractual (meaning Rome II will apply) relationship. The general assumption is that in a case like VvE, Rome II is engaged.

This results firstly from parties claiming jurisdiction on the basis of Brussels IA’s tort gateway, Article 7(2). The suggested parallel between the Brussels Ia and Rome Regulations then indicates that where jurisdiction goes, applicable law needs to follow (below I talk more about that parallel).

Further, there is CJEU case-law making a contractual jurisdictional basis unlikely. In CJEU C-366/13 Profit Investment Sim, the Court held that a choice of court contained in a prospectus produced by the bond issuer concerning the issue of bonds may be relied on against a third party who acquired those bonds from a financial intermediary under quite narrow circumstances only. These circumstances include considerations of applicable national law. In CJEU C-375/13 Kolassa the Court held that, on the facts of the case, there were no indications that there was a contract under either the consumer title or the general Article 7(1) gateway, between the holder of a securities account and Barclays, the issuer of certificates held in that account.

On the other hand, following the CJEU’s much stretched notion of ‘contract’ in C-337/17 Feniks and follow-up case-law, I do not think that the existence of a ‘contract’ between the issuer of the financial instruments and the (very) downstream investor can be entirely ruled out.

In the remainder of this post however I shall assume the majority’s intuition that the applicable law analysis be pursued under the Rome II Regulation.

A reminder: the general rule of Article 4(1) Rome II

The standard applicable law rule to purely economic loss, is included in Article 4(1) Rome II and holds that the applicable law is the

‘law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur’

There is no specific rule for purely economic loss as such. However, there may be circumstances in which purely economic loss may be covered by one or two of the specific categories included in Rome II. I am thinking in particular of the product liability rules (with discussions on whether financial instruments may be qualified as a ‘product’ under same), and the rules on unfair competition and infringement of competition law.

Further variations to the rule exist in Article 4 itself, and via the scope of applications, which excepts a number of non-contractual obligations hence giving space for residual, national private international law to take over.

Need for absolute parallel between Rome II and Brussels Ia?

To the degree one assumes that Article 7(2) Brussels Ia’s tort jurisdictional gateway, and Rome II’s rules on applicable law for non-contractual obligations need to be applied in synchronicity, clearly a judgment like VvE will have an important impact on the application of Article 4 Rome II’s general rule.

However the CJEU itself is ambivalent on the need for such parallel. In Kainz, the CJEU specifically rejected the need for consistency between Brussels Ia and Rome II, while in other cases the recital’s encouragement of consistency has had an impact on the court’s rulings.

Once must tread with caution therefore in extending the VvE findings to the applicable law discussion. Those with an interest in doing so will find support in the authorities to talk down the impact of VvE on applicable law.

Echoes of an exception, and a tailor-made lex causae not achieved

First the Finnish and then the UK delegation to the Rome II Committee, actually (unsuccessfully) suggested an exclusion from the scope of application for financial instruments. The UK proposal to that effect would have added to Rome II’s exclusions from the scope of application

“Non-contractual obligations arising out of transactions, such as issuing, admission to trading, offering or marketing, relating to financial instruments, including transferable securities, moneymarket instruments, units in collective investment undertakings, options, futures and other derivatives instruments“

In that discussion reference was also made to the fall-back lex contractus rule for certain financial instruments in Article (4)(1)h of the Rome I Regulation.

When it transpired that the proposal for this exception had the support of neither the EC nor enough Member States, the UK suggested singularity of lex causae by introducing a specific heading for financial instruments in which either the lex loci incorporationis (of the issuer) or the law of the place where the issuer has its primary listing, would be applicable to non-contractual loss.

The former suggestion echoed somewhat the difficulties in establishing the exact scope of Rome II’s corporate law exception (Article 1(2)d Rome II). CJEU Kolassa (a 1980 Rome Convention case) unfortunately failed to bring much clarity on this point.

 National case-law: Petrobas

In Petrobas Rotterdam, the Dutch court identified the locus damni in an investor suit as

the location of the market(s) where the financial instruments are listed and traded.

It emphasised predictability and it conceded a Mozaik effect, including of course application of non-EU laws (in the case at issue, viz the Brazilian and Argentinian investors). This finding might in fact chime with the CJEU in VvE where as other posts on this blog clarify, the

place of statutory duties of information

was upheld as locus damni. This synergy between the finding at the applicable law level in Petrobas, and the jurisdictional criterion in VvE, only applies of course provided all places of listing and trading are subject to such duties.

If one were to apply the ‘law of the place of statutory duties of information’, however, rather like at the jurisdictional level, this would raise the mental twister that this criterion is more akin to locus delicti commissi than locus damni, as Matthias Lehmann has pointed out.

Moreover, like in VvE, such criterion does not help us for unlisted financial instruments.

Finally, Article 4(3)’s ‘manifestly more closely connected’ variation to the lex loci damni rule clearly will give a judge some (but not much: the Article needs to be applied restrictively) room for manoeuvre to identify a different law with more, and intense, affinity to the case.

Help on the horizon? Pending case before the CJEU

As was helpfully pointed out by Tomas Arons at the aforementioned Round Table, in the pending case C-498/20 ZK , in his capacity as liquidator in the bankruptcy of BMA Nederland BV v BMA Braunschweigische Maschinenbauanstalt AG, locus damni considerations in Rome II in a case of purely economic loss (alleged breach of duty of care by a mother holding for allegedly failing to provide its daughter company with adequate financing) are currently sub judice before the CJEU. The judgment in that case will undoubtedly feature VvE and will hopefully clarify the application of Rome II to cases of purely economic loss.

This is the second post of an online symposium on the recent judgment of the CJEU in Vereniging van Effectenbezitters v. BP after the post of Matthias Lehmann. 

The authors of this post are Dr. Laura van Bochove (Assistant Professor at Leiden University) and Prof Dr Matthias Haentjens (Professor of Private Law at Leiden University)

On 3 June 2021, Leiden University hosted a seminar with international experts from the judiciary, law firms, civil service and academia to discuss the recent CJEU judgement in Vereniging van Effectenbezitters v. BP. The discussion clearly showed that the judgment may be interpreted differently. Some experts, including Matthias Lehmann (see here), argued that in VEB/BP, the CJEU refused to localise the Erfolgsort at the place of an investment account and, instead, localised damage at the place of listing. We see some merit in attributing jurisdiction to the court of the place of listing, but we do not think the CJEU has chosen such a radical departure from existing case law. Rather, we believe the CJEU continues to (try to) localize the Erfolgsort, also in cases of financial loss, and may continue to consider as connecting factors in that context the investment account, possibly next to the place of listing.

We believe VEB/BP represents another change in direction. We see that the CJEU introduced ‘foreseeability’ as a relevant consideration when having to determine the place where losses have materialized. This clearly derogates from previous CJEU case law and raises new questions.

Connecting factor #1: bank account

One of the participants to our seminar, Dorine Verheij, once said that when a Dutchman rides his bike on the Champs-Elysees and gets hit by a 2CV, it is clear in which jurisdiction the damage was caused and also where it materialized. This is not so for financial loss. Financial loss, by its very nature, is immaterial and therefore as a matter of logic, not localizable. However, the CJEU has continued to (try to) localize the Erfolgsort in several financial loss cases, including Kronhofer, Kolassa, Universal Music and Löber. This case law has been fiercely criticized in legal literature. In his Opinion in VEB/BP, Advocate General Campos Sánchez-Bordona sided with this critique and suggested to abandon the Erfolgsort in financial loss cases. The CJEU did not follow suit, and we believe this is a strong indication the Court continues to (try to) localize the Erfolgsort, also in cases of financial loss. Moreover, the Court did not explicitly depart from the case law just referred to (ie Kronhofer, Kolassa, Universal Music and Löber). In these cases, the court considered as relevant connecting factors the applicant’s “bank account” (Kolassa, Löber, Universal) as well as “other specific circumstances of that situation” (Löber). In VEB/BP, the Court specifically considered the “investment account” as a possible connecting factor, whilst that it held that this factor was insufficient to attribute jurisdiction in this case.

As one of us has written elsewhere, we believe that when securities have lost value or have become worthless, possibly as a result of misleading information from the issuer of the securities, any losses suffered by the owner of the securities concern those securities specifically. Thus, it is the relevant securities account in which those securities are credited, that is the ‘place’ where the financial loss materializes (wherever that may be), rather than in any bank account from out of which these securities were initially purchased. We therefore believe it is welcome that the Court has now clarified that it is the ‘investment account’ (rather than the bank account) that may be of relevance as a connecting factor when having to determine where to localize financial loss. However, and as we have also argued elsewhere, the localization of an investment account (which we thus understand to be the relevant securities account) is dogmatically and logically impossible, since securities accounts have no physical location. This fact makes a securities account or ‘investment account’ unsuitable for any attribution of jurisdiction.

In the VEB/BP case, however, the Court concluded for other reasons that the ‘investment account’ was not adequate as a connecting factor to attribute jurisdiction to the court of the Member State where the account is held, as it held that as a connecting factor, an investment account could not ‘ensure’ the ‘objective of foreseeability’. Before we turn to discuss foreseeability as a connecting factor, first we will pay attention to the ‘place of listing’, which the Court introduced in VEB/BP as a possible connecting factor.

Connecting factor #2: the place of listing

Which factors should be considered relevant or decisive so as to attribute jurisdiction in a specific case, remains elusive. In Kronhofer, the Court held that the place of the applicant’s domicile may not be sufficient if the relevant investment account is located in another jurisdiction. This judgment did not say, however, which connecting factor would suffice to attribute jurisdiction. When the place of the applicant’s domicile coincides with the relevant investment account, this may suffice, the Court held in Kolassa and Löber. But in Universal Music, the Court dismissed this combination of connecting factors on the ground that the other case law concerned a “specific context” (yet without explaining what the element of distinction was), so that “the ‘place where the harmful event occurred’ may not be construed as being, failing any other connecting factors, the place in a Member State where the damage occurred, when that damage consists exclusively of financial damage which materialises directly in the bank account of the applicant and is the direct result of an unlawful act committed in another Member State.” Arguably, in VEB/BP, the Court found such ‘other connecting factor’ in the place of listing.

More specifically, in paragraph 35 the CJEU held:

“It follows that, in the case of a listed company such as that at issue in the main proceedings, only the jurisdiction of the courts of the Member States in which that company has complied, for the purposes of its listing on the stock exchange, with the statutory reporting obligations can be established on the basis of the place where the damage occurred. It is only in those Member States that such a company can reasonably foresee the existence of an investment market and incur liability.”

In isolation, this paragraph appears to provide for a clear jurisdiction rule, attributing jurisdiction on the basis of the place where the damage occurred to the courts of the Member State in which the listed company has complied, for the purposes of its listing on the stock exchange, with the statutory reporting obligations (the place of listing). However, this paragraph [35] must not be considered in isolation, as indicated by the introductory words “[i]t follows that”. These words refer to the previous paragraph [34], where the CJEU held that in the present case, the applicant’s domicile and the place of its investment account would not ensure the objective of foreseeability. In other words, the CJEU held in paragraph [34] that the combination of connecting factors that were considered sufficient for attribution of jurisdiction in Löber and Kolassa, proved inadequate in the present case, as it would not guarantee that the defendant would be able to reasonably foresee where it could be sued.

We think the Court has been most persuasive where it held that in financial loss cases such as VEB/BP, the location of the applicant’s investment account is arbitrary and not reasonably foreseeable for the defendant, ie the issuer of the relevant securities. However, this does not mean that the place of listing can logically be considered as a ‘place where the damage occurred’, as the Court seems to suggest. Neither should this be interpreted to mean that the place of listing suffices, in and by itself, as a connecting factor that can attribute jurisdiction, because the Court gives no indication that it departed from earlier case law.

First, the place of listing is a place where securities are traded. This place has no, if only indirect relevance for the localization of the place “where the alleged damage actually manifests itself” (Löber, cited in VEB/BP, para. 31), ie the place “where the applicant has suffered financial consequences” (VEB/BP, para. 29). An investor commonly orders his investment firm (ie bank or broker), to acquire or sell certain financial instruments. The investment firm may proceed to acquire those instruments, for that investor, on a regulated exchange, but these can also be acquired on other official trading venues such as multilateral trading facilities, organized trading facilities, or even internally settled on the books of the investment firm. This practical reality shows, we think, that the investor does not “suffer financial consequences” on the place of listing (possibly with the exception of the rare instance where the investor itself is an admitted member of an exchange). We therefore think the place of listing may be a relevant connecting factor, but logically in most cases it cannot qualify as an Erfolgsort.

Second, the Court introduced the place of listing only in the context of foreseeability of damage. It did not explicitly (or implicitly) depart from its earlier case law, where other connecting factors were considered adequate as discussed above. Therefore, we consider it likely (but the Court does not make this explicit), that the Court may continue to consider the investment account as the place where financial damage ‘actually manifests itself’, but that this connecting factor was not deemed sufficient in the present case for reasons of foreseeability only. Rather, the Court seemed to imply that the place of the investment account may be considered foreseeable for the defendant only if that defendant’s securities are listed in the same Member State. If anything, this interpretation would accord (better) with Kolassa and Löber.

Relevant circumstance: foreseeability

Whilst we welcome the Court’s dismissal of the investment account as a sole connecting factor in the present case, the CJEU’s introduction of and reliance on ‘reasonable foreseeability’ as a relevant circumstance is not unproblematic, as the CJEU’s interpretation of ‘reasonable foreseeability’ in VEB/BP seems to deviate from its previous case law. In that earlier case law, the threshold for foreseeability is often low, as illustrated in the ‘Dieselgate’ case VKI/Volkswagen. In that case, the CJEU attributed jurisdiction to the courts of the place where the applicants bought their cars from a third party. This third party virtually never was the same as the defendant that equipped the cars with manipulative software. Here, the CJEU held that that the manufacturer ‘by knowingly contravening the statutory requirements imposed on it’ may reasonably expect to be sued in the courts of the place where the car was purchased by the final purchaser, even though this could potentially lead to the jurisdiction of the courts of all EU member states, since the purchases of second-hand or imported cars were not excluded. Similarly, in eDate Advertising, the CJEU readily assumed the foreseeability of the place of damage in case of online infringement of personality rights, which could be anywhere where the content on the website was accessible.

Thus, in VEB/BP the CJEU seemed to have interpreted ‘reasonable foreseeability’ more restrictively and as a ground to deny jurisdiction, whilst in VKI/Volkswagen and eDate Advertising the Court used reasonable foreseeability more liberally and as a ground to attribute jurisdiction. Put differently, on the basis of VKI/Volkswagen and eDate Advertising, one could have expected the CJEU to attribute jurisdiction in VEB/BP to the courts of the Netherlands, as BP directs its activities and communications to investors worldwide. But we would think that the Court’s relatively strict interpretation of ‘foreseeability’ in VEB/BP accords better with the objectives of Brussels Ibis, ie ensuring legal certainty by preventing a multiplicity of courts having jurisdiction. Whether the CJEU will use a similar, strict interpretation of reasonable foreseeability in future cases remains to be seen.

VEB/BP and future case law

The VEB/BP case was eagerly awaited, especially by Dutch investors, multinationals and their lawyers. Should the CJEU have attributed jurisdiction to the Netherlands, this would have allowed other collective actions for investment losses to be opened in the Netherlands, making the Dutch courts an attractive go-to jurisdiction for the recovery of investment losses. This now seems to have been limited to cases where the financial losses were ‘reasonably foreseeable’ to have materialised in the Netherlands. Consequently, the CJEU’s judgment in VEB/BP will also have implications for other pending cases, including VEB’s pending collective action in the Amsterdam court against Volkswagen for misleading information in relation to ‘Dieselgate’.

We believe VEB/BP is to be applauded in view of the objectives of the Brussel Ibis Regulation, as the Court has dismissed the investment account which has always been highly unreliable a connecting factor. However, the Court’s reasoning gives rise to several new questions which does not seem helpful for applicants or defendants, including: has the investment account been permanently dismissed as a connecting factor? (we think not); is the place of listing to be considered as the sole connecting factor in cases concerning listed securities? (we think not); is reasonable foreseeability now to be interpreted strictly? (we are doubtful). It is to be hoped that the CJEU answers these questions in future cases, which will be as eagerly awaited as VEB/BP.

Georgia acceded on 31 May 2021 to the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters and the Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters. The first one will enter into force for Georgia on 1 January 2022, subject to the Article 28 procedure. The second one will enter into force for Georgia on 30 July 2021.

Source: https://www.hcch.net/en/news-archive/details/?varevent=803

 Comparative Procedural Law and Justice (CPLJ) is a global project of the Max Planck Institute Luxembourg for Procedural Law, with the support of the Luxembourg National Research Fund (019/13946847), involving more than one hundred scholars from all over the world.

CPLJ is envisioned as a comprehensive study of comparative civil procedural law and civil dispute resolution schemes in the contemporary world. It aims at understanding procedural rules in their cultural context, as well as at highlighting workable approaches to the resolution of civil disputes.

In this framework, the Max Planck Institute Luxembourg for Procedural Law will host its 6th CPLJ Webinar on 2 July 2021, 3:00 – 5:15 pm (CEST).

The programme reads as follows:

Chair: Loïc Cadiet (University of Paris I Panthéon-Sorbonne)

3:00 pm         Bruno Deffains (University of Paris II Panthéon-Assas / University Institute of France)

            Comparative procedural law and economics

3:30 pm          Discussion

4:00 pm          Intermission

4:15 pm           Remco van Rhee (Maastricht University)

            The use of foreign models of civil procedure in national law reform: ‘Lessons‘ from History?

4:45 pm           Discussion

5:15 pm           End of conference

The full programme is available here.

Participation is free of charge, but registration is required by 29 June 2021 via a short e-mail to events@mpi.lu.

(Image credits:  Rijksmuseum, Amsterdam)

 

This post was contributed by Thomas Mastrullo, who is a lecturer at the Sorbonne Law School (Paris 1)

On 31 March 2021, the Legal High Committee for Financial Markets of Paris (“Haut Comité juridique de la Place Financière de Paris” – HCJP) has published a report on the applicable law to companies  (Rapport sur le rattachement des sociétés – see here). This report is of great interest for those who are interested in the evolution of international company law.

Context

For several years, there has been a reflection in France about the conflict-of-law rule in corporate matters.

We know that two theories coexist in international company law: the theory of incorporation, which consists in applying to the company the law of the State where it was incorporated and where its registered office, or statutory seat, is located; the real-seat theory, which submits the company to the law of the State where its head office, or central administration, is localised.

In French law, the conflict-of-law rule in corporate matters is laid down in unilateralist terms, with almost the same drafting, in Article 1837 of the Civil Code (see here) and in Article L. 210-3 of the Commercial Code (see here).

The doctrine is divided on the interpretation of these texts, which have been bilateralized by French Cour de cassation (e.g. Com. 9 mars 1993, n° 91-11.003, Bull. civ. IV, n° 94 ; see here). The traditional view among French writers is that the connecting factor is in principle the real seat, because the statutory seat is not enforceable against third parties in case of dissociation of the registered office and the head office. But the modern view is that the connecting factor is in principle the statutory seat, considering that third parties have an option between the registered office and the head office in case of dissociation.

In this context, by letter dated 18 February 2020, the HCJP was jointly seized by the Ministry of Justice and the Ministry of the Economy with a request for a study on the “Opportunity, feasibility and conditions of turning to the theory of incorporation”. This initiative takes place in an environment of increased economic and legal competition: the adoption of the theory of incorporation might strengthen the legal attractiveness and economic influence of France. But the referral letter does not ignore that such a liberal conflict-of-law rule might also encourage opportunistic behaviors by economic actors and departure of French companies abroad.

Several questions were therefore raised in the referral letter: Consequences of adopting the theory of incorporation in terms of attractiveness? Experience of other EU Member States? Compatibility with EU law? Risks of forum and law shopping? Consequences for matters related to company law?

Finally, the letter requested that “the necessary legislative and regulatory changes” be proposed.To meet this demand, a working group was set up under the chairmanship of Professor Hervé Synvet, composed of academics and legal practitioners.

The result of the working group’s reflection is the report under consideration, which is divided into two parts.

Impact of a New Conflict-of-law Rule in Corporate Matters on Other Matters

In the first part, the HCJP studies the impact that the evolution of the French connecting factor in corporate matters would have on other branches of law. Several matters are taken into consideration: tax law, insolvency law, social law, capital market law, regulation of foreign investments, banking and financial law. The conclusion is that the adoption of the theory of incorporation would have little impact on these different branches of the law, and in any case no negative effects likely to prevent a reform. Indeed, these different disciplines have their own conflict-of-law rules and the connecting categories are quite clearly defined in French private international law. In addition, each of these matters has a specific approach to the company seat.

Proposed Reform

In the second part, the working group argues in favor of an evolution of the French conflict-of-law rule. More precisely, it proposes to adopt a new connecting factor relying exclusively on the statutory seat – or registered office, and to abandon any reference to the real seat.

Arguments in favor of the adoption of the connecting criterion by the statutory seat

Several arguments are advanced in support of this proposition.

Firstly, this conflict-of-law rule would be simpler and, as a consequence, more favorable to legal certainty. Indeed, on the one hand, it would eliminate the touchy question of the place of the real seat and, on the other hand, it would guarantee respect for the operators’ choice of the law to rule their company or even their group of companies. Thus, France’s attractiveness might be reinforced. Secondly, the solution is inspired by the comparative private international law (German, Irish, Luxembourg, Dutch, British, Swiss and Delaware law are studied) which reveals a strong tendency towards the generalization of the theory of incorporation or connecting criterion by the registered office. Thirdly, the solution is presented as more suited to the development of EU law which, through the jurisprudence of the CJEU – and in particular the Centros, Uberseering, Inspire Art and Polbud judgments – and some regulations – such as European Regulation n° 2157/2001 on SE (see here), tends to favor the registered office as a connecting factor.

Although it is not unaware of the risk of law shopping, the HCJP considers that this risk should not be overestimated since the laws of the EU’s Member States have “a common base” because of the European directives adopted on corporate matters, which is likely to prevent a “race to the bottom”. Moreover, the transfer of registered office from one Member State to another is still difficult, which is an obstacle to law shopping.

Proposed new texts

The HCJP recommends amending the Civil Code, and in particular Article 1837, and repealing Article L. 210-3 of the Commercial Code.

The new bilateral conflict-of-law rule, applicable to all companies with legal personality, is set out in Article 1837, paragraph 1, of the Civil Code. It provides that the company would be governed by the law of the State in which it has its statutory seat – or registered office. Rather than a reference to the company’s incorporation, this formulation is chosen because it would ensure terminological continuity with the current Article 1837 and would model the French conflict-of-law rule on that of the European Regulation on the SE.

Besides, the HCJP devotes paragraph 2 of Article 1837 to companies without statutory seat. For these companies, the conflict-of-law rule would be inspired from the solutions provided by the Rome 1 Regulation: the applicable law would be the law chosen by the partners or, in the absence of choice, the law of the country with which the company is most closely connected.

The proposed Article 1837 reads:

Article 1837 du Code civil

La société est régie par la loi de l’État dans lequel elle a son siège statutaire.

À défaut de siège statutaire, la société est régie par la loi choisie par ses associés ou, à défaut de choix, par la loi de l’État avec lequel elle présente les liens les plus étroits.  

The HCJP proposes also to introduce a new article 1837-1 of Civil Code devoted to the lex societatis’ scope of application, inspired from Swiss law. The aim is to increase the readability and, as a result, the attractiveness of French law. A list of questions falling within the scope of lex societatis would be drawn, this list being non-exhaustive as suggested by the use of the French adverb “notamment” (which can be translated by “in particular”).

The proposed Article 1837-1 reads:

Article 1837-1 du Code civil

La loi applicable à la société en vertu de l’article précédent régit notamment : a) la nature juridique de la société ; b) la capacité juridique de la société ; c) la dénomination ou la raison sociale ; d) la constitution de la société ; e) la nullité de la société, ainsi que celle des délibérations sociales ; f) la dissolution et la liquidation de la société ; g) les opérations emportant transmission universelle de patrimoine et le transfert du siège statutaire ; h) l’interprétation et la force obligatoire des statuts ; i) la modification des statuts, en particulier la transformation de la société ; j) l’organisation et le fonctionnement de la société, ainsi que sa représentation ; k) les droits et obligations des associés ; l) la preuve, l’acquisition et la perte de la qualité d’associé ; m) la détermination des titres susceptibles d’être émis par la société ; n) la détermination des personnes responsables des dettes sociales et l’étendue de leur responsabilité ; o) la responsabilité civile encourue en cas de violation des règles gouvernant la constitution, le fonctionnement ou la liquidation des sociétés, ou d’obligations statutaires. 

In addition, the HCJP considers the introduction of an Article 1837-2 which includes a substantive rule aiming at protecting “French” contracting parties of foreign companies. More precisely, the legal or statutory restrictions on the capacity or the powers of the representatives of a company under foreign law, which would produce effect in external relations according to the foreign law, would be unenforceable against “French” co-contractors, as long as they are of good faith. This rule aims mainly to protect the co-contractors of companies incorporated outside EU – such as American companies which apply the ultra vires doctrine ; the risk is indeed lower in EU, thanks to the protective regime of directive 2017/1132/UE (see here).

The proposed Article 1837-2 reads:

Article 1837-2 du Code civil  

Les restrictions légales ou statutaires à la capacité juridique ou aux pouvoirs des représentants d’une société de droit étranger concluant un acte juridique en France qui, selon la loi régissant la société, produiraient effet dans ses relations externes, sont inopposables au cocontractant ayant légitimement ignoré ces restrictions. 

In conclusion, the HCJP’s “Report on the connecting factor of companies” appears to be a stimulating contribution for the modernisation of French international company law.

Written by the Asian Business Law Institute and the Permanent Bureau of the HCCH

It was reported previously that the Asian Business Law Institute (ABLI) and the Permanent Bureau of the Hague Conference on Private International Law (HCCH) were to co-host a webinar titled HCCH 1970 Evidence Convention and Remote Taking of Evidence by Video-link on 1 June.

The session has since been successfully held. The organisers would like to share the summary and key takeaways of the session with readers of this blog. Readers who are interested in learning more about the session and requesting access to the video recording may contact ABLI at info@abli.asia.

On 1 June 2021, the Permanent Bureau of the Hague Conference on Private International Law (HCCH) and the Singapore-based Asian Business Law Institute co-hosted webinar HCCH 1970 Evidence Convention and Remote Taking of Evidence by Video-link, welcoming attendees from 30 different jurisdictions, including representatives of Central Authorities, HCCH Members, private practitioners, international public service officers and business professionals.

Dr Christophe Bernasconi, Secretary General of the HCCH, opened the webinar with a welcoming address where he underscored that the success of the 1970 Evidence Convention was attributable to not only its simplified transmission procedures and its flexibility to accommodate the needs of different legal traditions, but also the technology-neutral approach adopted by drafters, which has allowed the Convention to remain fit for purpose in the 21st century. Specifically, Dr Bernasconi highlighted that the Convention, with 63 Contracting Parties representing every major legal tradition, facilitated the transmission of thousands of requests for taking of evidence every year and allowed the use of video-link technology in the taking of evidence abroad.

Professor Yun Zhao, Representative of the HCCH Regional Office for Asia and the Pacific, was next to speak where he gave an overview of the operation of the Evidence Convention. He explained how the Convention provided, in Chapter I, a main channel of transmission under which a judicial authority in a requesting State may send a Letter of Request directly to a Central Authority in the requested State, before elaborating that the Convention also provided, in Chapter II, a streamlined process for the direct taking of evidence by commissioners or consuls, to which Contracting Parties may object upon or after accession. Professor Zhao pointed to the recently published Guide to Good Practice on the Use of Video-Link under the 1970 Evidence Convention and outlined a plethora of ways in which video-link technology may be used to take evidence abroad, e.g. to facilitate the presence of the parties and their representatives by video-link at the execution of a request or to permit a commissioner located in the State of Origin to take evidence by video-link in the State of Execution.

Following Professor Zhao’s presentation, Mr Alexander Blumrosen, Partner at Polaris Law (Paris), provided a historical account of the use of the Evidence Convention in the United States and the significance of the landmark Supreme Court decision Aérospatiale. He went on to explain in detail, and by reference to his practical experience, how evidence located in France but needed for U.S. civil or commercial proceedings may be taken through a Letter of Request (under Chapter I) or more swiftly through a commissioner (under Chapter II). Mr Blumrosen highlighted that the execution of a Chapter I Letter of Request in France usually took between six weeks and three months, and that under Article 9 of the Convention, foreign counsel may be allowed to participate in the direct or cross examination of witnesses by video-link provided that such participation was expressly requested in the Letter of Request and allowed by local law and practice as it is in France. Mentioning that the taking of evidence by commissioner under Chapter II could be even faster and more flexible, Mr Blumrosen added that once the Central Authority had authorized a commissioner – which could take between one to ten days, depending on the matter – the evidence may be taken immediately either in person in conference room facilities or using video-link, without needing any further intervention or participation by a local judge. He mentioned the increased use of Chapter II discovery in requests from the U.S. over the last ten years, and applauded the qualified Article 23 reservation adopted by France to the Convention that allows for pre-trial discovery but requires requests to be “enumerated limitatively” and to be relevant to the underlying dispute in order to avoid overly broad “fishing expeditions”.

Turning attendees’ attention from France to Singapore was Mr Edmund Kronenburg, Managing Partner of Braddell Brothers LLP, who presented a brief overview of the operation of the Evidence Convention in Singapore by looking at the country’s legal framework. In his view, the popularity of the Convention was likely to increase in the coming years in tandem with Singapore’s efforts to reinforce its dispute resolution hub status. Mr Kronenburg then moderated a lively panel discussion among all panelists, including Mr Blumrosen, Justice Anselmo Reyes of the Singapore International Commercial Court, Dr João Ribeiro-Bidaoui, First Secretary at the HCCH and Professor Zhao.

To conclude the session, Dr Ribeiro-Bidaoui spoke of the salient benefits and main features of another HCCH instrument, the 1965 Service Convention, highlighting that the Service Convention, with 78 Contracting Parties, was accessible to almost 70% of the global citizenship who represents more than 80% of the world’s GDP.?

The Permanent Bureau of the HCCH and ABLI are heartened by the positive feedback received after the webinar. Some Singaporean practitioners who were in the midst of preparing for virtual hearings found the session especially timely. One attendee from the business community commented that although not legally trained, he found the discussions useful in understanding the difficulties involved in multi-jurisdictional legal processes from the perspective of running a multinational business. Attendees joining from outside of Singapore said they benefited most from learning about the implementation of the Evidence Convention in places other than their home jurisdictions. Specifically, Matthijs Kuijpers and Sofja Goldstein from Amsterdam-based law firm Stibbe shared that they found it extremely valuable for their international litigation practice to have judges, practitioners and academics from various jurisdictions exchange and discuss experiences and best practices. In particular, they very much appreciated that the organisers actively engaged practitioners during the session as such engagement helped overcome issues that would inevitably rise over time given that the methods of taking evidence today differ significantly from how it was envisioned when the Convention was drafted.

The organisers thank all attendees for their active participation and warm reception and look forward to having more such opportunities for exchange of ideas and sharing of experiences.

The full version of the key panel discussion takeaways can be read here.

The Young Research Network of the European Association of Private International Law (EAPIL) has just launched its latest research project, which is being led by Tobias Lutzi, Ennio Piovesani, and Dora Rotar. The project will focus on the national rules on jurisdiction in civil and commercial matters over non-EU defendants, in light of the report envisioned in Article 79 Brussels Ia Regulation.

As the project will primarily be based on national reports describing the situation in each Member State (structured by a detailed questionnaire), the organizers are currently still looking for participants who would be interested in providing a national report for one of the following Member States: Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, and Sweden.

The full Call for Participants can be found here.

The EAPIL’s Young Research Network has just launched its latest research project, which is being led by Tobias Lutzi, Ennio Piovesani, and Dora Rotar. The project will focus on the national rules on jurisdiction in civil and commercial matters over non-EU defendants, in light of the report envisioned in Article 79 Brussels Ia Regulation.

As the project will primarily be based on national reports describing the situation in each Member State (structured by a detailed questionnaire), the organizers are currently looking for participants who would be interested in providing a national report for one of the following Member States: Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, and Sweden.

The full Call for Participants can be found here.

If you are a junior researcher (below full professor) or practitioner under the age of 45 and would like to receive information about similar projects before they are posted publicly, you can join the EAPIL Young Research Network by simply filling out this form.

Xu Huang, Wuhan University Institute of International Law

1. Background
On 10 June 2021, China’s Standing Committee of the National People’s Congress (hereinafter “NPC”) issued “Anti-Foreign Sanctions Law of the People’s Republic of China” (hereinafter “CAFSL”), which entered into force on the date of the promulgation. This is a reaction in response to the current tension between China and some western countries, in particular, the US and the EU that have imposed a series of sanctions on Chinese officials and entities. For example, in August 2020, the Trump administration imposed sanctions on 11 individuals for undermining Hong Kong’s autonomy and restricting the freedom of expression or assembly of the citizens of Hong Kong. In June 2021, President Biden issued Executive Order 14032 to amend ban on US persons purchasing securities of certain Chinese companies. In March 2021, the EU imposed unilateral sanctions on relevant Chinese individuals and entity, based on the human rights issues in Xinjiang. China has responded by imposing counter sanctions, which were issued by the Ministry of Foreign Affairs as administrative orders. The Anti-Foreign Sanctions Law provides the legal basis for China’s further action and counter measures. This law was enacted after only two reading rather than normal three demonstrating China’s urgent need to defend itself against a growing risk of foreign hostile measures.

2. The main content

Competent Authority: All relevant departments under the State Council have been authorized to involve in issuing the anti-sanction list and anti-sanction measures (Art. 4 and Art. 5). The “Ministry of Foreign Affairs” and “other relevant departments under the State Council” are authorized to issue orders of announcement (Art. 9). Reviewing from the current practice of China’s response to foreign sanctions, the Ministry of Foreign Affairs has always issued sanctions lists against foreign individuals and organizations, so it is likely that the China’s Ministry of Foreign Affairs will still lead the movement of announcing and countering the foreign sanctions. However, other departments now also have the authority to sanction relevant individuals and entities. This provides flexibility if the foreign sanctions relate to a particular issue that is administrated by the particular department and when it is more efficient or appropriate for the particular department to handle it directly.

Targeted measures: Circumstances under which China shall have the right to take corresponding anti-sanction measures are as follows: (1) a foreign country violates international law and basic norms of international relations; (2) contains or suppresses China on various pretexts or in accordance with its own laws; (3) adopts discriminatory restrictive measures against any Chinese citizen or organization; (4) meddles in China’s internal affair (Art. 3).The CAFSL does not expressly specify whether the circumstances should be satisfied simultaneously or separately. From the perspective of legislative intent, it is obvious that the full text of the CAFSL is intended to broaden legal authority for taking anti-sanctions measures in China, so it may not require the fulfilment of all four conditions.

It does not clarify the specific meanings of “violates international law and the basic norms of international relations”, “contains or suppresses”, and “meddles in China’s internal affairs”, which vary in different states and jurisdictions. But considering the sanctions issued by China and answers by the NPC spokesman, the key targeted circumstances are meddling China’s internal affairs. It is reasonable to assume that these circumstances mainly aimed at unilateral sanctions suppressing China under the pretexts of so-called sea-based, epidemic-based, democracy-based and human rights-based issues in Xinjiang, Tibet, Hong Kong and Taiwan. Therefore, other issues may not be included.

Art. 3 aims against the sanctions imposed by foreign states, for example the US and the EU. But from the text of the law, the concept of “sanctions” is not used, instead the concept of “discriminatory restrictive measures” is adopted, which isvery vague and broad. Discriminatory restrictive measures can be interpreted as foreign unilateral sanctions directly targeting Chinese individuals and organizations, which are the so-called “primary sanctions”, different from the “secondary sanctions” restricting Chinese parties from engaging in normal economic, trade and related activities with directly sanctions third state’s parties. In a press conference, the NPC spokesman stated that “the main purpose of the CAFSL is to fight back, counter and oppose the unilateral sanctions against China imposed by foreign states.” It should only apply to tackle the primary sanctions against China.

Targeted entities: The targeted entities of anti-sanction list and anti-sanction measures are vague and broad. The targeted entities of anti-sanctions list include individuals and organizations that are directly involved in the development, decision-making, and implementation of the discriminatory restrictive measures (Art. 4). What means involvement in the development or decision-making or implementation is ambiguous. And the indirect involvement is even vaguer, which may broaden the scope of the list. Besides, following entities may also be targeted: (1) spouses and immediate family members of targeted individuals; (2) senior executives or actual controllers of targeted organizations; (3) organizations where targeted individuals serve as senior executives; (4) organizations that are actually controlled by targeted entities or whose formation and operation are participated in by targeted entities (Art. 5).

Anti-sanction measures: The relevant departments may take four categories of anti-sanction measures: (1) travel ban, meaning that entry into China will not be allowed and deportation will be applied;(2) freezing order, namely, all types of property in China shall be seized, frozen or detained; (3) prohibited transaction, which means entities within the territory of China will not be allowed to carry out transactions or other business activities with the sanctioned entities; (4) the other necessary measures, which may include measures like “arms embargoes” or “targeted sanctions” (Art. 6). Former three anti-sanction measures have been taken by the Ministry of Foreign Affairs in practice. For example, on 26 March 2021, China decided to sanction relevant UK individuals and entities by prohibiting them from entering the mainland, Hong Kong and Macao of China, freezing their property in China, and prohibiting Chinese citizens and institutions from doing business with them.

Relevant procedure: The decisions made by the competent authorities shall be final and not subject to judicial review(Art. 7).The counterparty shall not file an administrative lawsuit against anti-sanction measures and other administrative decisions. The counterparty can change the circumstance causing anti-sanction measures, and request the relevant department for the modification and cancellation of anti-sanction measures. If any change in the circumstances based on which anti-sanction measures are taken happens, the competent authorities may suspend, change or cancel the relevant anti-sanction measures (Art. 8). The transparency requirement stipulates the relevant orders shall be announced (Art. 9).

A coordination mechanism for the anti-foreign sanctions work shall be established by the state to coordinate the relevant work. Coordination and cooperation, and information sharing among various departments shall be strengthened. Determination and implementation of the relevant anti-sanction measures shall be based on their respective functions and division of tasks and responsibilities (Art. 10).

Legal consequences of violation: There are two types of legal consequences for violating the obligation of “implementation of the anti-sanction measures”. Entities in the territory of China will be restricted or prohibited from carrying out relevant activities (Art. 11). Any entities, including foreign states’ parties, will be held legally liable (Art. 14).
Besides, a party suffering from the discriminatory restrictive measures may be entitled to bring a civil action against the entities that comply with the foreign discriminatory measures against China (Art. 12). The defendant, in theory, includes any entities in the world, even entities that are the nationals or residents of the country imposing sanctions against China. It is curious how this can be enforced in reality. In particular, if a foreign entity has no connections with China, it is hard for a Chinese court to claim jurisdiction, and even taking jurisdiction, enforcing judgments abroad can also be difficult, if not impossible. Because enforcement jurisdiction must be territorial, without assets and reputation in China, a foreign state’s party may disregard the Chinese anti-sanction measure.

3. Impact of the CAFSL

The CAFSL is a higher-level legislation in Chinese legal system than the relevant departmental rules, such as the Chinese Blocking Rules and “unreliable entity list” . It is a much more powerful legal tool than former departmental rules as it directly retaliates against the primary sanction on China. It provides a legal basis and fills a legal gap. However, it may not be good news for international businesses that operate in both the US and China. Those companies may have to choose between complying with foreign sanctions or Chinese laws, which may probably force some enterprises to make strategic decision to accept risk of penalty from one country, or even to give up the Chinese or US market. The CAFSL is vaguely drafted and likely to create unpredictable results to the commercial transaction and other interests. The application and enforcement of the CAFSL and Chinese subsequent rules and regulations may give detailed interpretation to clarify relevant issues to help parties comply with the CAFSL. However, to China, the CAFSL serves apolitical purpose, which is more important than the normal functioning of a law. It is a political declaration of China’s determination to fight back. Therefore, the most important matter for Chinese law-makers is not to concern too much of the detailed rules and enforcement to provide predictability to international business, but to send the warning message to foreign countries. International businesses, at the same time, may find themselves in a no-win position and may frequently face the direct conflict of overriding mandatory regulations in China and the US. By placing international businesses in the dilemma may help to send the message and pressure back to the US that may urge the US policy-makers to reconsider their China policy. After all, the CAFSL is a counter-measure, which serves defensive purposes, and would not be triggered in the absence of sanctions against Chinese citizens and entities.

The Hague Academy of International Law is holding its Summer Courses on Private International Law for the first (and perhaps last) time online from 26 July to 13 August 2021. Registration is open until Sunday 27 June 2021 at 23:59 The Hague time. More information is available here.

As you may remember, we announced in a previous post that the 2020 Summer Courses were postponed and that the only prior time that the courses were cancelled was World War II.

This year’s general course will be delivered by NYU Professor Linda Silberman and is entitled The Counter-Revolution in Private International Law in the United States: From Standards to Rules. The special courses will be given by José Antonio Moreno Rodríguez, Mary Keyes, Pietro Franzina (former editor of Conflictoflaws.net), Sylvain Bollée, Salim Moollan, Jean-Baptiste Racine and Robert Wai. The inaugural lecture will be delivered by Alexis Mourre, President of the International Court of Arbitration of the ICC. The poster is available here.

The holding of the Summer Courses in times of the Covid-19 pandemic attests to the perseverance of the Hague Academy, which has organised two live broadcasts per day to cater to people living in different time zones.

Please note that “no certificate of attendance will be delivered upon completion of the courses. Instead, each attendee will receive an electronic certificate of enrolment at the end of the session.”

If you are interested in a more full-fledged experience, you may consider registering for the Winter Course, which appears to be an in-person course. Registration for the Winter Courses 2022 is open since 1 June 2021 and will end 31 July (scholarships) and 29 September 2021 (full fee). For more information, click here.

 

The first issue of 2021 of the Netherlands Journal of Private International Law (Nederlands Internationaal Privaatrecht – NIPR) has been published. More information about the review is available here.

The following articles are included in the issue:

R. Vriesendorp, W. van Kesteren, E. Vilarin-Seivane and Sebastian Hinse on Automatic recognition of the Dutch undisclosed WHOA procedure in the European Union

On 1 January 2021, the Act on Court Confirmation of Extrajudicial Restructuring Plans (‘WHOA’) was introduced into the Dutch legal framework. It allows for extrajudicial debt restructuring outside of insolvency proceedings, a novelty in the Netherlands. If certain requirements – mostly relating to due process and voting – are met, court confirmation of the restructuring plan can be requested. A court-confirmed restructuring plan is binding on all creditors and shareholders whose claims are part of that plan, regardless of their approval of the plan. WHOA is available in two distinct versions: one public and the other undisclosed. This article assesses on what basis a Dutch court may assume jurisdiction and if there is a basis for automatic recognition within the EU of a court order handed down in either a public or an undisclosed WHOA procedure.

T. Arons, Vaststelling van de internationale bevoegdheid en het toepasselijk recht in collectieve geschilbeslechting. In het bijzonder de ipr-aspecten van de Richtlijn representatieve vorderingen (in English, Determination of international jurisdiction and applicable law in collective dispute resolution. In particular, the PIL aspects of the Representative Actions Directive)

The application of international jurisdiction and applicable law rules in collective proceedings are topics of debate in legal literature and in case law. Collective proceedings distinguish in form between multiple individual claims brought in a single procedure and a collective claim instigated by a representative entity for the benefit of individual claimants. The ‘normal’ rules of private international law regarding jurisdiction (Brussel Ibis Regulation) and the applicable law (Rome I and Rome II Regulations) apply in collective proceedings. The recently adopted injunctions directive (2020/1828) does not affect this application. Nonetheless, the particularities of collective proceedings require an application that differs from its application in individual two-party adversarial proceedings. This article focuses on collective redress proceedings in which an entity seeks to enforce the rights to compensation of a group of individual claimants. Collective proceedings have different models. In the assignment model the individual rights of the damaged parties are transferred to a single entity. Courts have to establish its jurisdiction and the applicable law in regard of each assigned right individually. In the case of a collective claim brought by an entity (under Dutch law, claims based on Art. 3:305a BW) the courts cannot judge on the legal relationships of the individual parties whose rights are affected towards the defendant. The legal questions common to the group are central. This requires jurisdiction and the applicable law to be judged at an abstract level.

C. Bright, M.C. Marullo and F. J. Zamora Cabot, Private international law aspects of the Second Revised Draft of the legally binding instrument on business and human rights

Claimants filing civil claims on the basis of alleged business-related human rights harms are often unable to access justice and remedy in a prompt, adequate and effective way, in accordance with the rule of law. In their current form, private international law rules on jurisdiction and applicable law often constitute significant barriers which prevent access to effective remedy in concrete cases. Against this backdrop, the Second Revised Draft of the legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises has adopted a number of provisions on private international law issues which seek to take into account the specificities of such claims and the need to redress the frequent imbalances of power between the parties. This article analyses the provisions on jurisdiction and applicable law and evaluate their potential to ensure effective access to remedy for the claimants.

B. Van Houtert, Jurisdiction in cross-border copyright infringement cases. Rethinking the approach of the Court of Justice of the European Union (dissertation, Maastricht University, 2020): A summary

The starting point of this research are the three rulings in the Pinckney, Hi Hotel, and Pez Hejduk in which the CJEU particularly focused on the interpretation of ‘the place where the damage occurred or may occur’ – the Erfolgsort – for determining jurisdiction according to Article 7(2) Brussels Ibis. The Court developed three criteria for jurisdiction in cross-border copyright infringements cases: (1) the state of the court seised should protect the copyright relied on, the so-called locus protectionis criterion, (2) the ‘likelihood of damage’ criterion which means that it should be likely that the damage may occur in the state where the court is located, and (3) court’s jurisdiction will be territorially limited to assess the damage caused within the forum state. The dissertation proceeds to demonstrate the need to rethink the CJEU’s approach to jurisdiction in cross-border copyright infringement cases. Based on common methods of interpretation, the author examines the leeway that the CJEU has regarding the interpretation of Article 7(2) Brussels Ibis in cross-border copyright infringement cases. She also examines alternative approaches to jurisdiction in cross-border copyright infringement cases adopted by scholars and courts of EU Member States and states of the United States of America distilling three main approaches: the ‘copyright holder’s centre of interests’ approach; the ‘substantial damage’ approach; and the ‘directed activities’ approach. The last part of the dissertation suggests that a combined approach to jurisdiction can be adopted in the recast of the Brussels Ibis Regulation or a future EU Copyright Regulation. Van Houtert considers that the proposals can also be adopted at the international level as they satisfy common principles of private international law and copyright law. Additionally, several global issues are considered in the analysis carried out such as copyright havens, online piracy, the cross-border flow of information, international trade, and the trend of competing jurisdictional claims.

N. Touw, The Netherlands: a forum conveniens for collective redress? (Conference Report)

On the 5th of February 2021, the seminar ‘The Netherlands: a Forum Conveniens for Collective Redress?’ took place. The starting point of the seminar is a trend in which mass claims are finding their way into the Dutch judicial system. To what extent is the (changing) Dutch legal framework, i.e. the applicable European instruments on private international law and the adoption of the new Dutch law on collective redress, sufficiently equipped to handle these cases? And also, to what extent will the Dutch position change in light of international and European developments, i.e. the adoption of the European directive on collective redress for consumer matters, and Brexit? In the discussions that took place during the seminar, a consensus became apparent that the Netherlands will most likely remain a ‘soft power’ in collective redress, but that the developments do raise some thorny issues. Conclusive answers as to how the current situation will evolve are hard to provide, but a common ground to which the discussions seemed to return does shed light on the relevant considerations. When legal and policy decisions need to be made, only in the case of a fair balance, and a structural assessment thereof, between the prevention of abuse and sufficient access to justice, can the Netherlands indeed be a forum conveniens for collective redress.

The Court of Justice delivered last Thursday (17 June) its judgment in case C-800/19 (Mittelbayerischer Verlag KG v SM), which is about Brussels I bis. The judgment is currently available in all EU official languages (save Irish), albeit not in English. Here is the French version (to check whether an English translation has finally been made available, just click on the link below and change the language version):

« L’article 7, point 2, du règlement (UE) no 1215/2012 […] doit être interprété en ce sens que la juridiction du lieu où se trouve le centre des intérêts d’une personne prétendant que ses droits de la personnalité ont été violés par un contenu mis en ligne sur un site Internet n’est compétente pour connaître, au titre de l’intégralité du dommage allégué, d’une action en responsabilité introduite par cette personne que si ce contenu comporte des éléments objectifs et vérifiables permettant d’identifier, directement ou indirectement, ladite personne en tant qu’individu ».

Source: https://curia.europa.eu/juris/document/document.jsf?text=&docid=243103&pageIndex=0&doclang=FR&mode=lst&dir=&occ=first&part=1&cid=1427608

At issue in  Khalifeh v Blom Bank S.A.L. [2021] EWHC 1502 (QB) is inter alia whether an anti-suit injunction is available to  a claimant who purports to have the protection of Section 4 of the Brussels Ia Regulation. That is the section which protects consumers by granting them a forum actoris and by limiting suits against them to, in principle (limited extensions are possible) their place of domicile. The contract is one in the banking sector, for the opening of 2 USD accounts. Defendant is a Lebanon-incorporated bank. The proceedings which are to be restrained, take place in Lebanon. Current order concerns anti-suit only. Other issues, including applicable law per Rome I (where of course the consumer title also plays a role) are not addressed.

The case is part of my essay questions in a conflicts exam at Leuven today. I would expect students to refer to the discussions in Gray v Hurley and to any reasons for EU courts to exercise, or not, judicial muscle-power in upholding the jurisdiction of courts in the EU as against that of courts outside it.

Claimants calls in support upon Samengo-Turner v J & H Marsh [2007] EWCA Civ 723 and Petter v EMC Europe Ltd [2015] EWCA Civ 828. In those cases, concerning employees, anti-suit was employed viz employers’ potential action outside the EU. Defendant doubts the authority of both (and in particular of Samengo-Turner, a first instance judgment). It refers to both scholarly criticism of the position, and to the Court of Appeal’s recent finding in Gray v Hurley, referred to the CJEU but unfortunately (for reasons of legal certainty) since dropped.

At [38] Freedman J holds he need not make a ‘binary’ decision at this stage, and refuses the application for anti-suit, leaving the discussion for full debate at trial. Part of his reason for doing so is defendant’s commitment not to take the case in Lebanon any further at this stage (no commitment has been made of it to be dropped). At that trial, the ATI debate may continue (this, one imagines, will depend on defendant’s actions in Lebanon), as of course will the applicability of Rome I’s protected categories of consumers.

A trial to look out for.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.24.

Khalifeh v Blom Bank [2021] EWHC 1502 (QB)
Echoes of Gray v Hurley
Whether anti-suit injunction may be issued, targeting Lebanese proceedings, to protect rights as a consumer under Brussels Ia
Analysis forthcoming on the bloghttps://t.co/9fX1ecn2SZ

— Geert Van Calster (@GAVClaw) June 14, 2021

On 14 June 2021, the Research Service of the European Parliament released a briefing paper related to the proposal for a regulation on a computerised system for communication in cross-border civil and criminal proceedings (e-CODEX system), authored by Rafał Mańko (EP Research Service).

The abstract reads:

The e-CODEX system is the digital backbone of EU judicial cooperation in civil and criminal matters. e-CODEX comprises a package of software products that allow the setting up of a network of access points for secure digital communication between courts and between citizens and the courts, while also enabling the secure exchange of judicial documents.

The project, which was launched in 2010 with EU grant funding, is managed by a consortium of Member States and other organisations and is coordinated by the Ministry of Justice of the German Land of North Rhine-Westphalia. Even though it is currently used by 21 Member States, e-CODEX lacks a clear, uniform and EU-wide legal basis. To remedy this situation, on 2 December 2020 the Commission put forward a proposal for an e-CODEX legal instrument (a regulation) to formally establish the e-CODEX system at EU level. The management of the project would be entrusted to eu-LISA (the EU Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice).

Within the European Parliament, the LIBE and JURI committees are jointly in charge of the file, and the draft report is expected shortly.

The Briefing can be freely downloaded here.

Thanks to Jorg Sladic for the tip-off.

I reviewed the AG’s Opinion in C-800/19 Mittelbayerischer Verlag KG v SM here. The CJEU held yesterday (no English version yet at the time of posting). Tobias Lutzi already has analysis up here.

As I reported at the time, the AG suggested that despite the need for restrictive interpretation of the special jurisdictional rules, in the case at issue there was foreseeability of many a Pole’s centre of interests as a tort gateway, given the predictable fall-out of protest among Poles given the contents and context of the article (please refer to earlier post for detail): an ‘objective foreseeability test’.

The CJEU however restricts the availability of the centre of interests gateway further:  [46]

article 7, point 2, du règlement no 1215/2012 doit être interprété en ce sens que la juridiction du lieu où se trouve le centre des intérêts d’une personne prétendant que ses droits de la personnalité ont été violés par un contenu mis en ligne sur un site Internet n’est compétente pour connaître, au titre de l’intégralité du dommage allégué, d’une action en responsabilité introduite par cette personne que si ce contenu comporte des éléments objectifs et vérifiables permettant d’identifier, directement ou indirectement, ladite personne en tant qu’individu.

The aggrieved needs to be identifiable, at the time of publication, as an individual, not as belonging to an abstract group of offended persons.

With Gtflix TV pending, the CJEU will have a further opportunity to clarify the A7(2) gateway for defamation.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.12.2.5, and para 2.598 in fine.

 

 

Judgment just out in Mittelbayerischer Verlag: jurisdiction in online defamation cases
For my review of AG Opinion see https://t.co/2d2Fjp70KT
Court takes a strict line of foreseeability, insists on nominatim or in abstracto identification of the victimhttps://t.co/EqSmpCeVol

— Geert Van Calster (@GAVClaw) June 17, 2021

AG Bobek delivered today his opinion in case C‑55/20 (Ministerstwo Sprawiedliwości joined parties: Pierwszy Zastępca Prokuratora Generalnego, Prokurator Krajowy, Rzecznik Dyscyplinarny Izby Adwokackiej w Warszawie), which is about the Rule of Law in Poland.

Context: “  In July 2017, the Prokurator Krajowy – Pierwszy Zastępca Prokuratora Generalnego […] (‘the National Prosecutor’) requested the Rzecznik Dyscyplinarny Izby Adwokackiej w Warszawie (Disciplinary Agent of the Bar Association in Warsaw, Poland) […] to initiate disciplinary proceedings against the lawyer of the former President of the European Council, Donald Tusk. In the view of the National Prosecutor, the statements made by that lawyer when publicly commenting on the possibility of his client being charged with a criminal offence amounted to unlawful threats and disciplinary misconduct. Twice, the Disciplinary Agent either refused to initiate such proceedings or decided to discontinue them. Twice, the Sąd Dyscyplinarny Izby Adwokackiej w Warszawie (Disciplinary Court of the Bar Association in Warsaw, Poland) […], following an appeal lodged by the National Prosecutor or the Minister of Justice, overturned those decisions and remitted the case back to the Disciplinary Agent.

2. The present request for a preliminary ruling has been made in a third ‘round’ of those proceedings, within which the Disciplinary Court is examining the decision of the Disciplinary Agent to discontinue once more the disciplinary inquiry against that lawyer, following an appeal lodged again by the National Prosecutor and the Minister of Justice. The referring court seeks to know whether Directive 2006/123/EC (‘the Services Directive’) (2) and Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’) are applicable to disciplinary proceedings pending before it. However, it appears that the crux of the matter before the referring court lies elsewhere: what concrete consequences, in procedural terms, is the referring court to draw from the Court’s judgment in A. K. and Others, (3) in view of the fact that its ruling might be subsequently appealed before the Izba Dyscyplinarna Sądu Najwyższego (Disciplinary Chamber of the Supreme Court, Poland)? How can that court, in specific and practical terms, ensure compliance with EU law?”

The suggested decision (Extract): “On the basis of the primacy of EU law:

–  A national court is required to set aside the provisions of national law which reserve jurisdiction to rule on cases to a court which is not an independent and impartial tribunal, so that those cases may be examined by a court which meets the requirements of independence and impartiality and which, were it not for those provisions, would have jurisdiction.

– A national court must, if necessary, disregard the rulings of a higher court if it considers that they are incompatible with EU law, including situations in which incompatibility derives from the lack of independence and impartiality of that higher court”.

Source: https://curia.europa.eu/juris/document/document.jsf?docid=243109&mode=req&pageIndex=1&dir=&occ=first&part=1&text=&doclang=EN&cid=14807561

The CJEU has just rendered its decision in Case C-800/19 Mittelbayerischer Verlag (currently only available in French). The Court held that the courts of the claimant’s ‘centre of interests’ have jurisdiction (on this basis) only if the content complained of contains ‘objective and verifiable elements allowing to identify, directly or indirectly, the claimant as an individual’ (para 46). Accordingly, a Polish Holocaust survivor could not sue a German publishing house over the use of the term ‘Polish extermination camp’ in an online article in Poland.

The factual and legal background of the case are described in some detail in our report on the AG Opinion – in a nutshell, the case is about whether a Polish survivor of the Holocaust can sue the publisher of a German newspaper in Poland for an alleged violation of his personality rights (including his national dignity) by an online article containing the phrase ‘Polish extermination camp’. As the claimant sought a range of remedies, at least some of which should only be available in a court with ‘full’ jurisdiction (as per the Court’s decision in Case C-194/16 Bolagsupplysningen, para 48), he needed to rely on the Court’s ‘centre of interests’ criterion to seize the Polish courts. Yet, both the referring court and AG Bobek had doubts if this criterion would not require some kind of limit to prevent the publisher of an online article to be sued in all member states in which a person potentially affected in their national dignity might have their centre of interests.

Upon a first reading of the decision, four aspects may be noted:

(1) The Court appears to have followed the AG’s proposition to adopt “a narrow and minimalist approach [to] this case” (Opinion, para 43). Thus, instead of a full reconsideration of the ‘centre of interests’ criterion, let alone of its interpretation of Art. 7(2) Brussels Ia with regard to personality rights as a whole (as Geert van Calster was hoping for), the Court has opted for its incremental readjustment.

(2) But the importance of the readjustment should not be underestimated. Despite giving access to the ‘full’ range of remedies, the Court has never had an opportunity to specify the exact requirements of ‘centre of interests’ jurisdiction as introduced in Joined Cases C-509/09 and C-161/10 eDate. Although clearly intended to protect the claimant (see eDate, para 47), para 50 of the decision certainly left room for additional requirements regarding the connection between the publication in question and the forum.

The CJEU now has indeed picked up this paragraph and argues that in a situation such as the present one, in which the claimant has – unlike in eDate and Bolagsupplysningen – not been directly targeted by the publication in question, it would hurt the aim of predictability if the claimant could sue for the entirety of the damage (and all injunctions) at their ‘centre of interests’, which the defendant could not reasonably predict (paras 35–38). In support, the Court also cites the need for a particularly close link between the case and the forum for special jurisdiction (para 40), as well as the aim to prevent a multiplication of grounds of jurisdiction (para 39 – a point not easily reconcilable with the Court’s continued adherence to the mosaic principle). On this basis, it formulates the rule cited above:

[46] article 7, point 2, du règlement no 1215/2012 doit être interprété en ce sens que la juridiction du lieu où se trouve le centre des intérêts d’une personne prétendant que ses droits de la personnalité ont été violés par un contenu mis en ligne sur un site Internet n’est compétente pour connaître, au titre de l’intégralité du dommage allégué, d’une action en responsabilité introduite par cette personne que si ce contenu comporte des éléments objectifs et vérifiables permettant d’identifier, directement ou indirectement, ladite personne en tant qu’individu.

(3) It is certainly a step forward that for once, the Court acknowledges the difficulties that its previous case law created for defendants of claims of alleged violations of personality rights through the internet (as to which see Lutzi, Private International Law Online, 2020, paras 4.75–83).

Yet, the Court does not go as far as proposed by AG Bobek, who, like AG Cruz-Villalón did before him, suggested the introduction of an objective foreseeability test, focusing on the relationship between the forum and the content in question (Opinion, paras 58–74; which would not necessarily have prevented the Polish courts from taking jurisdiction here). As a consequence, the new criterion introduced by the Court will raise many of the difficult questions of fact that AG Bobek warned against (Opinion, paras 45–57).

(4) The fact that the Court only considered ‘centre of interests’ jurisdiction may be seen as confirmation that at least some of the remedies sought by the claimant were ‘indivisible’ and therefore required ‘full’ jurisdiction. In this regard, the decision lends support to the reading of Bolagsupplysningen according to which most, if not all injunctions fall into this category (see Stadler, JZ 2018, 94, 95; Lutzi (2018) 34 LQR 208, 212).

With regard to the case at hand, the Court has been very clear that it does not pass the newly introduced threshold for ‘centre of interests’ jurisdiction (see also paras 36, 43, 45):

[44] Or, en l’occurrence, [le demandeur] n’est manifestement pas identifié en tant qu’individu, que ce soit directement ou indirectement, dans le contenu mis en ligne sur le site Internet de Mittelbayerischer Verlag […].

Accordingly, the Court did not need to engage with a number of follow-up questions raised obiter by AG Bobek (paras 75–87), including the potential role of the e-Commerce Directive.

Overall, it seems like the court has added another piece to the mosaic (pun intended) that is its case law on international jurisdiction for violations of personality rights through the internet. It appears not unlikely that the Court will continue to incrementally readjust individual pieces of this mosaic, rather than ever reconsidering it in its entirety – the next opportunity for which is just around the corner with Case C-251/20 Gtflix Tv.