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In Fernandes v. Wal-Mart Canada  2017 MBCA 96 the Court of Appeal of Manitoba offers great material for comparative conflict of laws. I will leave the Canadian analysis to the experts, in particular Chloe Snider who alerted me to the case. Suffice to say here that the gist of the ruling is that where a corporation carries on business in the territory (here: Wal MArt operating stores), this suffices to establish jurisdiction (here: re an employment issue): no ‘real and substantive connection’ test needs to be separately established. (Cue comparative litigation: compare with ‘domicile’ and extended notions of domicile in EU conflicts law).

The action was eventually still stayed on forum non conveniens grounds in favour of Ontario (extra cue for comparative review here: for this was so held despite the fact that the Ontario limitation period had probably expired).

Geert.

 

The International Conference “Regulation and Enforcement in the Digital Age” will take place on 16 & 17 November in Nicosia, Cyprus.

The conference sessions are the following:

Copyright law in the digital era

Internet regulation and enforcement

Special issues in online data protection

Data protection and consumer rights

Emerging trends and challenges of e-commerce and consumer law

Cybersecurity and Internet regulation

PhD Students Special Session: Internet regulation: New challenges, new ideas.

For more info, press here

Bastian Brunk, research assistant and doctoral student at the Institute for Comparative and Private International Law at the University of Freiburg (Germany), has provided us with the following first thoughts on the CJEU’s groundbreaking Polbud judgment.

The Judgment

In its judgment in Polbud (C-106/16), the CJEU again took the work out of the EU legislature’s hands while further developing the freedom of establishment provided for in Articles 49 and 54 TFEU. The case was heard following a request for a preliminary ruling under Article 267 TFEU by the Sad Najwyzszy (Supreme Court of Poland). In short, the CJEU had to decide on the following questions:

(1) Are Articles 49 and 54 TFEU applicable to a transfer of the registered office of a company incorporated under the law of one Member State to the territory of another Member State with the purpose of converting its legal form, when the company has no intention to change the location of its real head office or to conduct real economic activity in the latter Member State?

(2) Is a national legislation that makes the removal of a company from the commercial register and, accordingly, the out-migration of that company conditional upon its liquidation compatible with the freedom of establishment?

Answering these questions, the CJEU made Polbud, the company at stake, a liberal gift and strengthened the mobility of companies within the European Single Market. First, the CJEU stated that the freedom of establishment applies to the transfer of the registered office of a company from one Member State to another even if no real business is intended to be conducted in the latter Member State. Secondly, the CJEU ruled out national legislation providing for the mandatory liquidation of a company if the company requests the removal from the initial commercial register in cases of outward migration.

The facts

In September 2011, the shareholders of Polbud, a limited liablity company established under Polish law, decided to transfer the company’s registered office from Poland to Luxembourg. The resolution made no reference to a simultaneous transfer of either the real head office or the place of real economic activity. Based on that resolution, the registry court in Poland recorded the opening of the liquidation procedure. In May 2013, following a resolution adopted by a shareholder meeting in Luxembourg, the registered office of Polbud was transferred to Luxembourg. Polbud was renamed to Consoil Geotechnik and its legal form was changed to the Société à responsabilité limitée (S. à r. l.), the Luxembourgish private limited liability company. Subsequently, Polbud lodged an application with the Polish registry court for its removal from the commercial register. This application was refused to be registered because, as the registry court stated, Polbud failed to provide evidence of the successful execution of a liquidation procedure. Polbud appealed against this decision, arguing that no liquidation was needed because the company continued to exist as a legal person incorporated under Luxembourgish law.

The precedents

Articles 49 and 54 TFEU provide for the freedom of establishment. According to the CJEU case-law, the concept of “establishment” within the meaning of these Articles is a very broad one, allowing a Union national to participate, on a stable and continuous basis, in the economic life of another Member State and to profit therefrom (CJEU in Gebhard, C-55/94, para. 25 and Almelo, C-470/04, para. 26). It involves the actual pursuit of an economic activity through a fixed establishment in another Member State for an indefinite period (CJEU in Factortame and Others, C-221/89, para. 20 and Commission v. United Kingdom, C-246/89, para. 21). In order to claim freedom of establishment, it is generally necessary to have secured a permanent presence in the host Member State (CJEU in Centro di Musicologia Walter Stauffer, C-386/04, para. 19 and Schmelz, C-97/09, para. 38). This case law can, generally speaking, be translated as “no freedom of establishment without establishment”.

On the other hand, the CJEU generously extended the application of Articles 49 and 54 TFEU to letterbox companies without “fixed establishment” and/or “permanent presence” in their home Member State. In Centros (C-212/97) the Court ruled that EU law is applied to the set-up of subsidiaries, branches and agencies in other Member States and, in that regard, it is immaterial that the company was formed in one Member State only for the purpose of establishing itself in another Member State, where its main, or indeed entire, business is to be conducted (Centros, para 17).

The CJEU then used its 2009 Cartesio judgment (C-210/06) as an opportunity to, obiter dictu, set guidelines for cross-border transfers of seat. It stated that, on the one hand, a Member state has the power to define both the connecting factor required of a company if it is to be regarded as incorporated under the law of that Member State and, as such, capable of enjoying the right of establishment, and that required if the company is to be able subsequently to maintain that status (thus treating companies as legal creatures of their country of origin). On the other hand, freedom of establishment comprises the right of a company to move from one Member State to another. If domestic legislation of the Member State of origin requires the liquidation of the company, thereby preventing it from converting itself into a legal person governed by the law of the target Member State, such a measure cannot be justified under the rules on freedom of establishment (Cartesio, paras. 110 ff.).

This jurisdiction was complemented by the CJEU in Vale (C-378/10) where the Court clarified the legal position of the Member State of destination. If a Member State allows for the conversion of companies governed by national law, it must also grant the same possibility to foreign EU companies (Vale, para. 46). In the absence of relevant EU-law, the target Member State may set up procedural rules to cover the cross-border conversion but must ensure that they are not less favourable than those governing similar domestic situations (principle of equivalence) and that they do not render impossible in practice or excessively difficult the exercise of rights conferred by the European Union legal order (principle of effectiveness) (Vale, para. 48).

The Opinion of AG Kokott

In her Opinion of 4 May 2017 (see here), AG Kokott took up a distinct position emphasizing the need for actual establishment for the application of Articles 49 and 54. This criterion is sufficiently met, as AG Kokott states, if, at least, the company intends to set up an actual establishment in the sense of conducting at least a nominal economic activity in the target Member State (Opinion, para 36). The AG underlines her position citing the above mentioned CJEU case-law in Factortame and Others (C-221/89), Commission v. United Kingdom (C-246/89), Centro di Musicologia Walter Stauffer (C-386/04) and Schmelz (C-97/09). She concludes that the freedom of establishment “gives economic operators in the European Union the right to choose the location of their economic activity, it does not give them the right to choose the law applicable to them” (Opinion, para. 38).

Implications of the Polbud judgment for the internal market

The CJEU now takes a different point of view: Once formed in accordance with the legislation of a Member State, companies enjoy the full range of that freedom. Nothing new, so far, as Geert van Calster suggests in his comment (see here). But what makes Polbud (r)evolutionary?

First, the CJEU creates legal certainty in an area that is particularly important for the functioning of the European Single Market. In its Cartesio judgment, the Court allowed for the cross-border conversion of EU companies in general but did little to shape the relationship between the involved Member States. Therefore, it was widely thought, that, just like AG Kokott propounds, the conversion of a company from one Member State to another required a genuine economic link with the State of destination. In Polbud, the CJEU clarifies that the regulatory power of a Member State ends when a company converts itself into a company governed by the law of another Member state. It is for the latter State to determine the legal and/or economic conditions that have to be satisfied by the company in order to bring the conversion into effect (paras 33 ff.). Under Articles 49 and 54 TFEU, the State of origin is only allowed to provide legislation for the protection of public interests (such as the protection of creditors, minority shareholders and employees) but cannot impose mandatory liquidation.

Secondly, the CJEU obliges the State of origin to observe the principle of equivalence. This principle, already known from the Vale decision (see above), was generally considered as obliging only the target Member State in cross-border conversion cases to legally treat domestic and foreign companies equally. By contrast, the State of origin was only thought to be bound by the general prohibition of restrictions (i.e. the prohibition of rules hampering or rendering less attractive the exercise of fundamental freedoms, see CJEU in Kraus, C-19/92, para. 32). In Polbud, the CJEU, without being explicit on this point, extends the scope of application of the principle of equivalence to the Member State of origin by stating that “the imposition, with respect to such a cross-border conversion, of conditions that are more restrictive than those that apply to the conversion of a company within that Member State itself” is not acceptable (para. 43).

Finally, recapitulating its jurisdiction in Daily Mail and National Grid Indus (C-371/10), the CJEU points out that exercising the freedom of establishment for the purpose of enjoying the benefit of the most favourable legislation, does not, in itself, amount to an abuse of rights (para. 62). The Court further explains its position saying that “the mere fact that a company transfers its registered office from one Member State to another cannot be the basis for a general presumption of fraud and cannot justify a measure that adversely affects the exercise of a fundamental freedom guaranteed by the Treaty” (para. 63).

Assessment

As already observed, Polbud encouragingly facilitates the cross-border mobility of companies but, on the other hand, leaves the reader with open questions.

It was high time to free cross-border conversions from the requirement of a genuine economic link with the Member State of destination. The legal situation before Polbud, that allowed letterbox companies to conduct their business in other Member States (which can be compared to initial choice of law) but prevented the formation of letterbox companies through the transfer of an existing company’s registered office to another Member State (which can be compared to subsequent choice of law), was somewhat arbitrary from a legal and economic point of view.

On the other hand, the extension of the scope of application of the principle of equivalence to the Member State of origin can only be seen as inconsistent with the legal doctrine of the freedom of establishment provided for in Articles 49 and 54 TFEU. Heretofore, only EU-foreigners could enjoy the right to non-discrimination, whereas, in regard to EU law, Member States were free to impose (relatively) stricter rules to its own citizens. This principle finds its expression, for example, in the above-mentioned treatment of companies as creatures of their state of origin that the CJEU established in its Cartesio judgment. As the principle of equivalence corresponds to the prohibition of discrimination, it is even more astonishing that the CJEU permits exemptions for overriding reasons in the public interest. These unwritten exemptions generally apply only in cases of restrictions of the freedom of movement (see Kraus, para. 32 and Gebhard, para. 37). On the contrary, discriminations require the strict observance of the catalogue of justifications set out in Article 52 TFEU. In future decisions, the CJEU should recall this clear distinction and cease to further the linguistic ambiguity.

Aspen Underwriting v Kairos Shipping et al [2017] EWHC 1904 illustrates the splintering of claims which may well occur when plaintiff chooses to ignore Brussels I’s core jurisdictional rule of domicile of the defendant. Evidently such splintering often is the strategic intention of a plaintiff and even if it does inconvenience them, having part of the claims settled by one court rather than another may still be its overall preference. The case however also highlights important crossed wires between the common law and EU law on the qualification of ‘tort’, and the relation between Rome II and Brussels I (Recast).

The vessel ATLANTIK CONFIDENCE  sank in the Gulf of Aden in 2013. It had earlier been held in a limitation Action commenced by her Owners, the First Defendant, that the Vessel was deliberately sunk by the master and chief engineer at the request of Mr. Agaoglu, the alter ego of the Owners. In the current action the Hull Underwriters of the Vessel, who paid out on the hull and machinery policy (“the Policy”) in August 2013 but who now consider, on further investigation, that the Vessel was deliberately cast away by her Owners, claim recovery of the insurance proceeds which were paid to Owners and the Vessel’s mortgagees, Credit Europe Bank NV, the Third Defendant (“the Bank”).

The Bank is domiciled in the Netherlands. and maintains that under the Brussels Regulation this court has no jurisdiction to hear and determine the claim against the Bank. It must be sued in the courts of the Netherlands where it is domiciled. The Hull Underwriters maintain that this court has such jurisdiction for three reasons. First, it is said that Bank is bound by a Settlement Agreement which confers exclusive jurisdiction on this court. Second, it is said that the Bank is bound by the exclusive jurisdiction clause in the Policy. Third, it is said that the claims brought against the Bank are matters which relate to tort, delict or quasi-delict and the harmful event occurred in England. This is the judgment of the court upon the Bank’s challenge to the jurisdiction.

Teare J rejected the first and second argument on the basis of analysis of the settlement. He then looks into Article 7(2) Brussels I Recast. The insurance heading of the Regulation does not apply as the relations concern those between two professional parties (at 72 the High Court refers to C-347/08 Voralberger; the CJEU confirmed later in C-521/14 Sovag).

Whether the claim of misrepresentation leading to the settlement, is one in tort or one in contract depends on how closely one finds it to be connected to the contract at issue (the Settlement). Plaintiff suggests that where such misrepresentations induce a contract, in this case the Settlement Agreement, the resulting claims are not matters relating to tort within the autonomous meaning of Article 7(2) but are matters relating to a contract within Article 7(1).

Teare J settles on the basis of the following convincing argument, at 76: ‘The court is concerned with a claim between the Hull Underwriters and the Bank. The Hull Underwriters allege that misrepresentations made by the Bank induced the Hull Underwriters to enter into the Settlement Agreement with the Owners. They seek to recover damages suffered by the Hull Underwriters as a result of the Bank’s misrepresentations. Whilst there is a factual connection between the claim and the Settlement Agreement I do not consider that that is enough to make the claim a matter relating to a contract and so within Article 7(1). Where there is a claim against the contracting party and it is alleged that the contract should be rescinded on the grounds of misrepresentations made by that party because such misrepresentations induced the contract it can sensibly be said that the subject-matter of the claim is the contract. But in the case of the claim against the Bank I do not consider that it can be fairly said that the subject-matter of the claim is the Settlement Agreement.‘

Oddly no reference here is made to relevant CJEU precedent including recently Granarolo and Kareda.

Now, the claim for damages based upon misrepresentation can be brought in England so long as the “harmful event” occurred in England (at 79; with reference to Bier /Mines de Potasse split into locus delicti commissi and locus damni). Jurisdiction for the claim based on misrepresentation can be brought fully in England because (at 79) ‘either the damage occurred in England (where Norton Rose Fulbright signed the Settlement Agreement and/or where the $22m. was paid to Willis’ bank account in London) or the event giving rise to the damage occurred in London (being the place where the misrepresentations were made and/or the place where the Hull Underwriters were induced).’

At 78 the High Court highlights the difficulty of the qualification viz conflict of laws of restitution based on unjust enrichment. The common law has the precedent of the House of Lords in Kleinwort Benson v Glasgow [1999] 1 AC 153.  Teare J summarises ‘In that case Lord Goff, with whom the other members of the court agreed on this point, said that a claim in restitution based upon unjust enrichment does not, save in exceptional circumstance, presuppose a harmful event and so is impossible to reconcile with the words of Article 7(2). He was not deterred from reaching this conclusion by the decision in Kalfelis. The claim for restitution in this case is based upon a mistake; it does not require a harmful event, though there might in fact be one as suggested by [plaintiff]. I consider that I am bound to follow the decision of the House of Lords and to hold that the claim in restitution based upon mistake is not within Article 7(2). It must follow that this court has no jurisdiction over that claim and that if it is to be pursued it must be pursued in the Netherlands where the Bank is domiciled.‘

The claim for unjust enrichment cannot be brought in England. Teare J observes the consequence of the Brussels I Regulation (at 80): ‘On case management grounds it is unsatisfactory to reach the conclusion that the tort claim may be brought in England but that the restitution claim may not be brought in England. However, this is the consequence of the Brussels Regulation as was accepted in Kalfelis. Of course, the entirety of the Hull Underwriters’ case against the Bank could be brought in the Netherlands but in circumstances where the Hull Underwriters’ case against the Owners and Managers is being brought in England that also is not satisfactory. The court cannot however base its jurisdictional decisions when applying the Brussels Regulation on considerations of forum conveniens.’

Of note finally is that Kleinwort Benson was issued post Kalfelis but prior to Rome II, which contains a specific heading on unjust enrichment. Notwithstanding its clear non-contractual nature (‘non-contractual’ being the generic title of Rome II which therefore encompasses more than just torts), it is not generally considered a tort: this continues to create issues in the application of Rome II.

A good case to illustrate the lasting challenges in distinguishing contracts from torts.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2.

It is our pleasure to announce the third edition of the International Association of Procedural Law (IAPL) – Max Planck Institute Luxembourg Summer-School, which will take place in Luxembourg from the 1st to the 4th of July 2018.

The 3rd edition of the Summer School has chosen to explore the topic of “Privatizing Dispute Resolution and its Limits”, where “privatizing” is understood in a broad sense. Different avenues can be envisaged thereto related. The first one focuses on the defense of public interests by means of private litigation; a second comprises the mechanisms for dispute resolution alternative to State justice; the third one deals with the commercialization of the judicial system. Applications under the first prong shall address the case of litigation in the interest of the broader (public) interest of the law: a regulatory approach that in Europe has been adopted in the context of competition law, intellectual property law, consumer protection, data protection and to some extent, also for the defense of the environment, in the search of avenues for the extraterritorial application of mandatory law. Under the second prong applications shall refer to commercial and investment arbitration, sports arbitration, consumer ADR, online dispute resolution for domain names controversies and the like. The third prong candidates shall focus on the development of private access to justice (litigation insurance, third party funding, etc), ”marketization” of the bar activity, emergence of new private actors with the legaltech, etc. Proposals must take into account that for different reasons all the  phenomena alluded to are subject to limits: to be feasible, the extraterritorial application of mandatory national or regional law requires procedural and substantial preconditions such as international jurisdiction over the defendant, or the support of an appropriately designed choice of law rule. As for alternative mechanisms of dispute resolution, in spite of their detachment from the control of State courts important interfaces remain, as demonstrated by the possibilities to apply for the annulment of the arbitral award or its non-recognition; or by the on-going contestation of CAS decisions before the ECHR. Finally, although schemes of third party funding and the like facilitate access to justice for single claims that wouldn’t be brought individually to the court, they raise many controversies and challenges while remaining unregulated.

All papers submitted to the 2018 Summer School should delve into one or several of these issues.

Up to 20 places will be available for applicants having procedural law and/or dispute resolution mechanisms as their main field of academic interest and meeting the conditions explained in the dedicated website.

Please follow this link for the online application.

Thank you Ben Zielinski for flagging Bank Leumi (UK) Plc v Screw Conveyor Ltd [2017] CSOH 129. I believe Ben is right in writing that this is the first formal acknowledgement that Scottish judicial authorities have no insolvency business in respect of an English registered company, and the same applies to English courts and Scottish companies,  in spite of the EU’s Insolvency Regulation.

Even if a company carries out its main activities in Scotland, internal UK jurisdictional rules will assign insolvency jurisdiction to the English judicial authorities. That is a result of, as Lord Doherty writes, the Insolvency Regulations designating the ‘Member State the courts of which may open insolvency proceedings’ however ‘territorial jurisdiction within that Member State is established by the Member State’s national law’ (at 9).

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.

When I reviewed Kokott AG’s Opinion in C-106/16 Polbud, I flagged that Ms Kokott concluded that the freedom of establishment provided for in Articles 49 and 54 TFEU only applies to an operation whereby a company incorporated under the law of one Member State transfers its statutory seat to another Member State with the aim of converting itself into a company governed by the law of the latter Member State, in so far as that company actually establishes itself in the other Member State, or intends to do so, for the purpose of pursuing genuine economic activity there. In other words she proposed a test along the lines suggested by Darmon AG in Daily Mail, but rejected by La Pergola AG in Centros.

The CJEU today held along La Pergola lines. It thus indeed facilitates forum /applicable (lex societatis) shopping for companies. The writing was very clearly on the wall when the Court (in Grand Chamber nota bene) started citing the old chestnuts of Daily Mail, Centros and Inspire Art. That no business is actually being conducted by Polbud in the host Member State is viewed by the court as irrelevant (at 37 ff). In the absence of harmonisation of EU law, the definition of the connecting factor that determines the national law applicable to a company or firm falls, in accordance with Article 54 TFEU, within the powers of each Member State (at 34).

Freedom of establishment is applicable (third question);  that freedom has been restricted (first question); and that restriction (transfer of the registered office of a company incorporated under the law of one Member State to the territory of another Member State, for the purposes of its conversion into a company incorporated under the law of the latter Member State, in accordance with the conditions imposed by the legislation of that Member State, is subject to the liquidation of the first company) is not justifiable (second question).

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 7.

The 15th edition of the leading text on private international law, Cheshire, North & Fawcett: Private International Law, has been released.

This new edition is edited by Paul Torremans, Uglješa Gruši?, Christian Heinze, Louise Merrett, Alex Mills, Carmen Otero García-Castrillón, Zheng Sophia Tang, Katarina Trimmings, and Lara Walker, with James J. Fawcett as the Consultant Editor. It provides comprehensive coverage of the full range of private international law topics; offers not only in-depth academic treatment of the principles, but also an examination of important commercial topics within the subject, such as the private international law treatment of contracts, jurisdiction and enforcement of judgments; and written by an expert team with a wealth of both academic and practical experience.

The new edition of this well-established and highly regarded work has been fully updated to encompass the major changes and developments in the law, including coverage of the Recast Brussels I Regulation which came into force in 2015. The book is invaluable for the practitioner as well as being one of the leading students’ textbooks in the field, giving comprehensive and accessible coverage of the basic principles of private international law.

It offers students, teachers and practitioners not only a rigorous academic examination of the subject, but also a practical guide to the complex subject of private international law. Written by an expert team of academics, there is extensive coverage of commercial topics such as the jurisdiction of various courts and their limitations, stays of proceedings and restraining foreign proceedings, the recognition and enforcement of judgments, the law of obligations with respect to contractual and non-contractual obligations. There are also sections on the various aspects of family law in private international law, and the law of property, including the transfer of property, administration of estates, succession and trusts.

The latest issue of the „Praxis des Internationalen Privat- und Verfahrensrechts (IPRax)“ features the following articles:

P. Mankowski: The German Act on Same-Sex Marriages, its consequences and its European vicinity in private international law

Finally, Germany has promulgated its Act on Same-Sex Marriages. In the arena of private international law the Act calls for equal treatment of same-sex marriages and registered partnerships whereas in German substantive law it aligns same-sex marriages with traditional marriages and institutionally abandons registered partnerships pro futuro. In private international law the Act falls short of addressing all issues it should have addressed in light of its purpose. In particular, it lacks provisions on the PIL of kinship and adoption – and does not utter a single word on jurisdiction or recognition and enforcement of foreign judgments. In other respects it is worthwhile to have a closer look at its surroundings and ramifications in European PIL (Brussels IIbis, Rome III, Matrimonial Property, and Partnership Property Regulations), i.e. at the coverage which European PIL exacts to same-sex marriages.

P.F. Schlosser: Brussels I and applications for a pre-litigation preservation of evidence

The judgement is revealing a rather narrow finding. An application for a pre-litigation preservation of evidence is within the meaning of Art. 32 Brussels Ia Regulation not tantamount to “the document instituting the proceedings or an equivalent document”. The commentator is emphasizing that this solution cannot be subject to any reasonable doubt. He further explains, however, that the Regulation is applicable to such applications and the ensuing proceedings to the effect that the outcome of such a preservation of evidence must be recognized to the same degree as a domestic preservation is producing effects in the main proceedings. In particular is it clear for him, that such recognition must not be restricted by the German numerus clausus of legally recognized means of evidence.

T. Lutzi: Jurisdiction at the Place of the Damage and Mosaic Approach for Online Acts of Unfair Competition

Once again, the Court of Justice was asked to determine the place of the damage under Art. 5 No. 3 Brussels I (now Art. 7(2) Brussels Ia) for a tort committed online. The decision can be criticised both for its uncritical reception of the mosaic approach and for the way in which it applied the latter to the present case of an infringement of competition law through offers for sale on websites operated in other member states. Regardless, the decision confirms the mosaic approach as the general rule to identify the place of the damage for torts committed through the internet.

K. Hilbig-Lugani: The scope of the Brussels IIa Regulation and actions for annulment of marriage brought by a third party after the death of one of the spouses

The ECJ has decided that an action for annulment of marriage brought by a third party after the death of one of the spouses falls within the scope of Regulation (EC) No 2201/2003. But the third party who brings an action for annulment of marriage may not rely on the grounds of jurisdiction set out in the fifth and sixth indents of Art. 3(1)(a) of Regulation No 2201/2003. The ECJ does not differentiate between actions for annulment brought after the death of one of the spouses and an action for annulment brought by a third party. The decision raises several questions with regard to the application of Art. 3 of Regulation No 2201/2003.

J. Pirrung: Forum (non) conveniens – Application of Article 15 of the Brussels IIbis Regulation in Proceedings Before the Supreme Courts of Ireland and the UK

On a reference submitted by the Irish Supreme Court, the ECJ ruled that Art. 15 of Council Regulation (EC) No 2201/2003 (Brussels IIa) is applicable where a child protection application brought under public law concerns the adoption of measures relating to parental responsibility, (even) if it is a necessary consequence of a court of another Member State assuming jurisdiction that an authority of that other State thereafter commence proceedings separate from those brought in the first State, pursuant to its own domestic law and possibly relating to different factual circumstances. In order to determine that a court of another Member State with which the child has a particular connection is better placed, the court having jurisdiction must be satisfied that the transfer of the case to the other court is such as to provide genuine and specific added value to the examination of the case, taking into account the rules of procedure applicable in the other State. In order to determine that such a transfer is in the best interests of the child, the court having jurisdiction must be satisfied that the transfer is not liable to be detrimental to the situation of the child, and must not take into account, in a given case relating to parental responsibility, the effect of a possible transfer of the case to a court of another State on the right of freedom of movement of persons concerned other than the child, or the reason why the mother exercised that right, prior to the court being seised, unless those considerations are such that there may be adverse repercussions on the situation of the child. The judgment is juxtaposed to the decision of the UK Supreme Court – pronounced some months before that of the ECJ – in re N, an Art. 15 case concerning a different situation without freedom of movement questions. Both jurisdictions have found acceptable results, the UKSC, though happily much faster than the ECJ, perhaps not entirely without one or the other risk concerning its treatment of procedural questions

A.-R. Börner: News on the competence-competence of arbitral panels under German law – Simultaneously a note on the Federal High Court decision of August 9, 2016, I ZB 1/15

The Federal Court of Justice of Germany has decided that the arbitration clause even survives the insolvency of a party (severability), unless stipulated to the contrary or in case of the existence of reasons for the nullity or termination of the arbitral agreement, such reasons either existing separately or resulting from the main contract. Under the German Law of Civil Procedure, the challenge to the state court that – contrary to an early decision of the arbitration panel affirming its competency – the panel has no competency, must be raised within the very short timeframe of one month, otherwise the judicial review will be forfeited. The Federal Court of Justice had held until now that in case of a (supervening) final award the state court procedure ended and that the arguments against the competency had to be raised anew in the procedure on the enforceability of the award. The Court has now accepted the criticism by the scientific literature that this places an undue burden on the challenging party. So it now holds that the second procedure (on enforceability) will be stayed until the first procedure (on competency) is terminated, as its result takes precedence.

B. Köhler: Dual-use contracts as consumer contracts and no attribution of consumer status of a third party to the proceedings under Brussels-I Regulation

The determination of the scope of the provisions on jurisdiction over consumer contracts in Art. 15 to 17 Brussels I Regulation is one of the most controversial problems in international procedural law. The German Federal Supreme Court’s decision raises two interesting questions in this respect. The first controversial issue concerns the classification of contracts for both professional and private purposes as consumer contracts. In its judgment Gruber, the European Court of Justice had held that such a dual-purpose contract can only be considered a consumer contract if the role of the professional purpose is marginal. However, the European legislator adopted the criterion of predominant purpose in recital 17 to the Consumer Rights Directive (2011/83/EU). Regrettably, the German Federal Supreme Court missed an opportunity to clarify the classification of dual-purpose contracts within the Brussels I Regulation. The Court applied the criterion laid down by the ECJ in Gruber without further discussion. In a second step, the Court held – convincingly – that Art. 16 (2) Brussels I Regulation presupposes that the consumer is a party to the proceedings. The capacity of consumer of a third party cannot be attributed to a defendant who, him- or herself, is not a consumer.

L. Hübner: The residual company of the deregistered limited

The following article deals with the consequences of the dissolution of companies from a common law background having residual assets in Germany. The prevailing case law makes use of the so-called “Restgesellschaft” in these cases. By means of three judgments of the BGH and the Higher Regional Court of Brandenburg, this article considers the conflicts of laws solutions of these courts and articulates its preference for the application of German company law on the “Restgesellschaft”. It further analyses the subsequent questions as regards the legal form and the representation of the “Restgesellschaft“, and the implications of the restoration of the foreign company.

D. Looschelders: Temporal Scope of the European Succession Regulation and Characterization of the Rules on the Invalidity of Joint Wills in Polish Law

Joint wills are not recognized in many foreign legal systems. Therefore, in cross-border disputes the use of joint wills often raises legal problems. The decision of the Schleswig-Holstein Higher Regional Court concerns the succession of a Polish citizen, who died on 15 October 2014 and had drawn up a joint will along with his German wife shortly before his death. The problem was that joint wills are invalid under Polish law of succession. First, the court dealt with the question whether the case had to be judged according to the European Succession Regulation or according to the former German and Polish private international law. The court rightly considered that in Germany the new version of Art. 25 EGBGB does not extend the temporal scope of the European Succession Regulation. Hereafter the court states that the invalidity of joint wills under Polish law is not based on a content-related reason but is a matter of form. Therefore, the joint will would be valid under the Hague Convention on the Form of Testamentary Dispositions. This decision is indeed correct, but the court’s reasoning is not convincing in all respects.

C. Thomale: The anticipated best interest of the child – Strasburgian thoughts of season on mother surrogacy

The ECtHR has reversed its opinion on Art. 8 ECHR. The protection of private and family life as stipulated therein is subject to a margin of appreciation far wider than hitherto expected. In stating this view, the ECtHR also takes a critical stand towards mother surrogacy: Restricting the human right to procreate, national legislators are given room to protect the child’s best interest inter alia through deterrence against surrogacy. The article investigates some implications of this new landmark decision, which is being put into the context of ongoing debates on international surrogacy.

K. Thorn/P. Paffhausen: The Qualification of Same-sex Marriages in Germany under Old and New Conflict-of-law Rules

In its decision in case XII ZB 15/15 (20th April 2016) the German Federal Court of Justice recognized the co-motherhood of a female same-sex couple, registered in South Africa, for a child born by one of the women. While underlining that the result of the decision – the legal recognition of the parenthood – is right, the authors point out the methodological weaknesses of the reasoning. In their opinion, a same-sex marriage celebrated abroad had to be qualified as a “marriage” in Art. 13 EGBGB and not – as the Court held – as a “registered life partnership” in Art. 17b EGBGB (old version). Also, they demonstrate that the Court’s interpretation of Art. 17b para. 4 EGBGB (old version) as well as the reasoning for the application of Art. 19 para. 1 s. 1 EGBGB are not convincing. Following the authors’ opinion, the right way to solve the case would have been the legal recognition of the parenthood (as an individual case) because of Art. 8 ECHR. As Germany recently legalized same-sex marriage, the authors also show which impacts the new law will have on Germany’s international matrimonial law. In particular, they point out the new (constitutional) questions risen by the new conflict-of-law-rule for same-sex marriages in Art. 17b EGBGB (new version).

D. Martiny: Modification and binding effect of Polish maintenance orders

The two decisions of the German Courts of Appeal concern everyday problems in modifying maintenance orders given in the context of Polish divorce decrees. In both cases the Polish district courts ordered the fathers to pay child maintenance. At that point in time, the children already lived in Germany. The foreign orders did not state the grounds for the decision in respect of either the conflict-of-law issue or the substantive law issue. The recognition of the orders under the Maintenance Regulation in the framework of the German modification proceedings (§ 238 Family Proceedings Act – Familienverfahrensgesetz; FamFG) did not pose any difficulty. However, according to established German practice, foreign decisions have a binding effect as to their factual and legal basis. Whereas the Frankfurt court’s interpretation of the Polish decision concluded that it was based on German law, the Bremen court assumed in its proceedings that the foreign decision was based on Polish law. The Bremen court stated a binding effect existed even if the foreign decision applied the incorrect law. The Bremen court then gave some hints as to how the assessment of maintenance should be made in the German proceedings under Polish substantive law.

Thank you Peter Smith over at Tamimi for flagging [2017] DIFC ARB 003 Pearl v Kurdistan. Peter summarises as follows:

‘In 2007, Crescent Petroleum, the oldest privately-owned oil and gas company in the Middle East, agreed with Dana Gas, one the leading publicly-listed natural gas companies in the region, to create a joint venture called Pearl Petroleum (together, “the Consortium”). The Consortium entered into an agreement with the Kurdistan Regional Government (“KRG”) for the development of the Khor Mor and Chemchemal petrochemical fields in the Kurdistan region of Iraq. The KRG were and remain engaged in a political dispute with the Federal Government of Iraq, meaning that the Consortium were unable to export gas produced by the developed fields. As a result, the KRG became liable under its contract with the Consortium to pay a minimum guaranteed price, but it failed to make the required payments in full.’

Arbitration in London under LCIA rules ensued. The contract between the Consortium and the KRG was governed by English law and provided explicitly that “the KRG waives on its own behalf and that of [The Kurdistan Region of Iraq] any claim to immunity for itself and its assets”.

Cooke J held that whilst the UAE’s recognition of other states was a matter of foreign policy which the DIFC Courts could not rule on, construing the KRG’s waiver of immunity was a question of law and not public policy. In agreeing to arbitrate, a party agrees that the arbitration shall be effective in determining the rights of the parties (at 26). The waiver of any claim to immunity for itself and its assets must mean waiver of immunity from execution (at 28): any argument on that is blocked by issue estoppel (at 36).

Sovereign immunity therefore was not a trump which could be played at the time of enforcement: whatever immunity there might or might not have been had been contractually signed away.

An interesting and well argued judgment.

Geert.

The XXIII Annual Conference of the Italian Society of International and EU Law (SIDI-ISIL) will take place at the University of Ferrara on 7 and 8 June 2018.

The conference’s theme is Codification in International and EU Law.

One session of the Conference will deal with The coordination between different codification instruments (8 June 2018, 9 am – 1 pm). Speakers will be selected through a call for papers.

Scholars of any affiliation and at any stage of their career are invited to submit proposals relevant to the session topic, including (but not limited to) the following:

• Relationship between codification instruments covering the same topics and promoted by different organizations or entities (e.g., the ECHR and the EU Charter of Fundamental Rights; uniform private international law instruments promoted by the Hague Conference on Private International Law and by the European Union; international environmental law and transnational criminal law instruments promoted at UN and regional levels)
• Relationship between codification instruments covering different fields (eg, human rights and other areas of international or EU law; law of international responsibility and other areas of international law)
• Succession of codification instruments in the same field.

The deadline for submitting proposals is 10 January 2018.

By Stephan Walter, Research Fellow at the Research Center for Transnational Commercial Dispute Resolution (TCDR), EBS Law School, Wiesbaden, Germany, and attendee of the 2017 Summer Courses on Private International Law at the Hague Academy of International Law

On 13 October 2017, the Alumni of the Hague Academy of International Law/Hamburg, the German section of Attenders and Alumni of the Hague Academy of International Law, A.A.A., hosted their annual meeting. At the invitation of Professor Karsten Thorn (Bucerius Law School, Hamburg), who lectured a Special Course on “The Protection of Small and Medium Enterprises in Private International Law” at the Academy during the 2016 Summer Courses, the meeting was held at Bucerius Law School, Hamburg. The academic programme consisted of four presentations, two of them dealt with issues of Private International Law after Brexit.

Professor Karsten Thorn’s presentation on “European Private International Law after Brexit” was divided into two parts. In the first part he discussed direct legal consequences of Brexit on Private International Law in relations between the United Kingdom (in particular England) and Germany. He highlighted the importance of Union Law and especially the duties to recognise derived from the fundamental freedoms for the rise of England as a legal hub. Therefore, Brexit would have grave consequences for the attractiveness of England in a number of legal areas. This would apply, for example, to company law. Whereas under Union Law the recognition of a company established in accordance with the law of one Member State must not be refused by another Member State, each Member State would apply its own rules on this issue post-Brexit. This could also impact companies established before Brexit, although it was disputed whether this would infringe their legitimate expectations and if so, whether this protection was subject to a certain time limit. In any event, the companies should act rather sooner than later to avoid any legal uncertainty. Comparable issues would arise in insolvency law. First and foremost, there would be – in contrast to the current legal situation – no duty for a Member State’s court to recognise a decision of an English court on the existence of the centre of the debtor’s main interests (COMI) in England anymore. Again, each Member State would apply its national rules on the recognition of foreign insolvency proceedings. Secondly, an English scheme of arrangement, a court-approved private debt restructuring solution, would likely not be recognised by the Member States after Brexit. By contrast, fewer negative consequences would arise with regard to the right to a name because even now Article 21 TFEU only guaranteed the recognition of a name rightfully obtained in the EU citizen’s State of nationality or residence and this freedom is further limited by the Constitution of the recognising Member State. Finally, he highlighted the negative impact of Brexit on procedural law. Post-Brexit, English decisions will no longer benefit from mutual trust in the EU Member States. A revival of bilateral treaties with Member States or instruments of the Hague Conference could only serve as sectoral solutions. Under these conditions, he presumed an increased usage of arbitration in the UK post-Brexit, not least because the United Kingdom is a Contracting State to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Moreover, he pointed out that English courts would return to traditional instruments of the English procedural law such as anti-suit injunctions. The second part of his presentation dealt with indirect consequences of Brexit on the European Private International Law. Firstly, he submitted that a number of provisions in EU legislation can be regarded as legal transplants from English law. This applies, e.g., to Article 9 paragraph 3 Rome I Regulation and Article 6 lit. a EU Succession Regulation. In his opinion, post-Brexit at least the former provision will be discarded after a revision of the respective EU legislation. Secondly, he turned to the question of the usage of English as working language of the EU bodies. He stated that most EU legislation was drafted in English.  Because legal English was very different to the legal language used in all other Member States this was still noticeable in the official translations. Therefore, English shaped the spirit of the EU legislation. Although he believed that English would still be the dominant language in the EU bodies after Brexit, he argued that the continental legal thinking could gain more significance.

In her presentation on “Pluralism of Legal Sources with regard to International Choice of Court Agreements”, Caroline Lasthaus (Bucerius Law School, Hamburg) examined – after a brief overview of the interplay between the German autonomous national rules on jurisdiction, the Brussels I Regulation Recast, the 2007 Lugano Convention and the 2005 Hague Choice of Court Convention –options of the United Kingdom to foster the enforcement of choice of court agreements in favour of UK courts post-Brexit. An accession to the 2007 Lugano Convention would require either the membership of the United Kingdom in the European Free Trade Association or a unanimous agreement of the Contracting Parties. However, both options were, in her opinion, unlikely. Furthermore, the rules of the 2007 Lugano Convention would be outdated and the United Kingdom would have to accept the CJEU’s jurisdiction over questions of interpretation of the Convention. Therefore, she scrutinised whether an accession to the 2005 Hague Choice of Court Convention could be a suitable solution. The accession itself would not raise any difficulties, since the United Kingdom could accede to the Convention unilaterally. Hence, the decisive question was whether the Convention would serve the needs of the United Kingdom. Lasthaus argued that neither the applicability of the Convention only to international exclusive choice of court agreements nor the exclusion of agreements with a consumer would make the Convention less attractive for the United Kingdom. Moreover, both the Brussels I Regulation Recast and the 2005 Hague Choice of Court Convention would allow the choice of a neutral forum. However, she stressed that the Convention was rather strict with regard to the formal requirements of an agreement, whereas the Brussels I Regulation Recast followed a much more flexible approach. Even though a violation of formal requirements would not lead to the agreement to be null and void by virtue of the Convention, the Convention’s rules on recognition and enforcement would not apply to judgements rendered based on such an agreement. Finally, one crucial downside of the Convention would be the necessity of an exequatur procedure with regard to the judgements rendered based on a choice of court agreement. This would lead to higher costs for the litigants and to a longer procedure. As a result, she conceded that an accession to the 2005 Hague Choice of Court Convention could not mend all the consequences of the non-applicability of the Brussels I Regulation Recast post-Brexit. Nonetheless, an accession would still make sense for the United Kingdom and could also boost the conclusion of a worldwide Convention on the recognition and enforcement of foreign judgements.

Both presentations were followed by lively discussions among the speakers and participants. It was agreed that the implementation of existing EU legislation into domestic law could not cushion the consequences of Brexit, especially because the fundamental freedoms would no longer apply to the United Kingdom. Additionally, it became clear once more that the final outcome of Brexit is still uncertain. In this vein, it is noteworthy from a Private International Law point of view that there was some disagreement on whether the United Kingdom would need to accede to the Convention at all or if it would still be a Contracting State of the Convention after Brexit by way of a succession of State.

I was recently asked to shortly analyse the key issues of the UK government’s policy paper on providing a cross-border civil judicial cooperation framework with the EU after Brexit from a dispute resolution perspective. The text of the inteview is available here.

In [2017] EWHC 2401 (Comm) Team Y&R v Ghossoub, Laurence Rabinowitz QC discussed a number of issues, most particularly anti-suit in the context of an exclusive jurisdictional clause (anti-suit not granted). He summarised the applications as follows:

‘The first application, brought by the claimants to the anti-suit claim, is for an interim injunction seeking to restrain Mr Ghossoub, the defendant to those proceedings, from pursuing related proceedings commenced by him in Hong Kong against four of those claimants until the trial of the anti-suit claim. The second application, brought by Mr Ghossoub as defendant to the anti-suit claim, seeks to set aside two orders made by the Court related to service on him of the anti-suit claim. The first, made by Phillips J dated 20 May 2015, granted permission to serve the anti-suit claim out of the jurisdiction. The second, made by HHJ Waksman QC sitting as a High Court judge dated 8 September 2016, granted permission to serve the claim form and other documents by an alternative method of service. The third application, brought by Mr Ghossoub as defendant to the defaulting shareholder claim, in effect mirrors his application in the anti-suit claim to set aside the service out and service by an alternative method orders.’

Anti-suit would be aimed at courts ex-EU hence the Brussels I antimony against them (per Gasser, among others) does not apply. Incidentally, I do not think that necessarily needs to exclude any EU /CJEU grip on the substantive issue at all: in the current, Recast Regulation, neither party needs to be domiciled in the EU for choice of court to be made in favour of a court established in the EU. This does create an EU interest in the issue of third-party impact of choice of court, and consequently on the use of anti-suit to support or reject such impact.

Now, at para 78 ff Mr Rabinowitz considers the issue of third parties. Not at issue is whether choice of court is binding upon, or may be invoked by such parties (in EU law considered eg in Refcomp, Profit Sim, Assens Havn, Leventis). Rather, whether an exclusive jurisdiction clause should be understood to oblige a contractual party to bring claims relating to the contract in the chosen forum even if the claim is one against a non-contracting party. This would support the idea of ‘one-stop shopping’ which is prevalent eg in English law albeit mostly vis-a-vis the various litigious relations between two and the same parties.

One can see merit in obliging parties bound by choice of court, to bring all related claims to one and the same court. Except of course, as Mr Rabinowitz points out, third parties are quite likely to be in a position to be able to bring the case before a different court, thus putting the contractual party at a disadvantage; moreover, even if the contractual party does bring the claim to the courts at England, these may not in fact have jurisdiction: in such circumstances, insisting on third-party proceedings to be brought before the English courts becomes silly. (My words, not Mr Rabinowitz’).

Taking these and also the entire contractual context into account, the High Court holds that choice of court in the contract at issue does not extend to claims against non-contracting third parties, and dismisses anti-suit.

Take your time to read the judgment: it gives very good context to what to some might seem like a very awkward starting point.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.

King’s College School of Law is organising a conference on Unity and Diversity in the Law of the International Sale of Goods. This conference will bring together prominent academics and practitioners from all over the world to discuss pressing issues pertaining to international sales transactions.The focus will be on the UN Convention on Contracts for the International Sale of Goods. The speakers will explore the current state of the law of sale of goods by examining how sales contracts, particularly those used in international trade, are governed in the modern world. The central theme concerns two competing forces within the sale of goods law:

• Those leading to disintegration,
• Those pushing towards uniformity, consolidation and standardisation.

The conference will take place on 16-17th of April 2018 at King’s College London.

For more information and the programme, please click here.

For the registration page, please click here.

On 30 October 2017 the Jean Monnet Module on European Civil Procedure will host its annual conference on ‘Corti europee e giudici nazionali’ in Milan. The conference language is Italian. For further information see here.

On 3-4 November 2017 the LUISS «Guido Carli» University School of Law, with the support of the International Law Association (Italian Branch) and the auspices of the International Insolvency Institute, will host in Rome a conference on «Cross-Border Business Crisis: International and European Horizons».

Three bilingual (English/Italian) sessions are scheduled: I) International and European Policies on Business Crisis (Chairperson: Luciano Panzani); II) Regulation 2015/848 within the European System of Private International Law (Chairperson: Stefania Bariatti); III) Cross-Border Insolvency and Italian Legal Order: Old and New Challenges (Chairperson: Sergio M. Carbone).

Speakers include academics and practitioners (Massimo V. Benedettelli, Giorgio Corno, Domenico Damascelli, Luigi Fumagalli, Anna Gardella, Lucio Ghia, Francisco J. Garcimartín Alférez, Antonio Leandro, Maria Chiara Malaguti, Fabrizio Marongiu Buonaiuti, Alberto Mazzoni, Paul Omar, Antonio Tullio, Robert van Galen, Francesca Villata, Ivo-Meinert Willrodt).

Most of them are members of the ILA-Italy Study Group on «Cross-Border Insolvency and National Legal Orders» and will discuss the findings of their research during the conference.

Program and details on registration are available here

 

I reviewed the High Court’s decision in Lungowe here. The Court of Appeal has now confirmed jurisdiction against the non-UK based defendants on largely the same, if slightly more structured and expanded arguments as the High Court.  (Per Owusu, jurisdiction against the UK-based defendant is undeniable; the non-UK defendants need to be joined on the basis of residual English conflicts law).

Ekaterina Aristova has analysis of Simon LJ’s leading judgment here – I am happy to refer. Of particular note is the much more reserved approach of the Court of Appeal on the merits issue of the claim. As I noted in my review of Okpabi v Shell at the High Court, in that case Fraser J looked in serious detail into the issue of merits: not, I believe, justified at the jurisdictional stage. Appeal against Fraser J’s finding will be heard by the Court of Appeal.

Geert.

European private international law, second ed. 2016, Chapter 8, Headings 8.3.1.1., 8.3.2

Hard to believe, but true: The Encyclopedia of Private International Law, published by Edward Elgar and edited by Jürgen Basedow (Max Planck Institute Hamburg), Franco Ferrari (NYU Law School), Pedro de Miguel Asensio (Universidad Complutense de Madrid) and me, has finally been released end of September. Bringing together more than 180 authors from 57 countries the Encyclopedia sheds light on the current state of Private International Law around the globe and provides insights into how the discipline has been affected by globalization and increased regional integration over the last decades.

The Encyclopedia  is available both in print and via Elgaronline and consists of four volumes. The first two volumes describe topical aspects of Private International Law in form of 247 alphabetically sorted entries. The third volume describes the Private International Law regimes of 80 countries in form of national reports. The fourth volume contains a collection of national codifications and provisions of Private International Law in English translation. More information is available here and here.

I take the opportunity to thank everybody who has helped  to make the Encyclopedia come true, notably the authors and translators (many of them editors or readers of this blog), my fellow editors, my team at the University of Jena and last but not least the team over at Edward Elgar!

Should you be interested in receiving a review copy please send an email to reviews@e-elgar.co.uk.

When the ‘Bolkestein’ Directive on the free movement of services was eventually adopted some years back, some of us referred to it as the ‘hairdressers’ Directive (no disrespect): the scope of application was so narrowed down that few professions seemed still to be covered by it. Similarly, the EU’s Succession Regulation Member States wanted to ensure that the recognition and enforcement of rules on succession /estate would not upset national property law on rules held dear, such as numerus clausus. The Regulation to that effect excludes from its scope of application ‘the nature of rights in rem; and any recording in a register of rights in immoveable or moveable property, including the legal requirements for such recording, and the effects of recording or failing to record such rights in a register.’

In C-218/16 Kubicka the Court of Justice held last week. Ms Kubicka wishes to include in her will a legacy ‘by vindication’, which is allowed by Polish law, in favour of her husband, concerning her share of ownership of the jointly-owned immovable property in Frankfurt an der Oder. She wishes to leave the remainder of the assets that comprise her estate in accordance with the statutory order of inheritance, whereby her husband and children would inherit it in equal shares.  She expressly ruled out recourse to an ordinary legacy (legacy ‘by damnation’), as provided for by Article 968 of the Civil Code, since such a legacy would entail difficulties in relation to the representation of her minor children, who will inherit, as well as additional costs. A notary’s assistant refused to draw up a will containing the legacy ‘by vindication’ stipulated by Aleksandra Kubicka on the ground that creation of a will containing such a legacy is contrary to German legislation and case-law relating to rights in rem and land registration.

In the present case, both the legacy ‘by vindication’, provided for by Polish law and the legacy ‘by damnation’, provided for by German law, constitute methods of transfer of ownership of an asset, namely a right in rem that is recognised in both of the legal systems concerned. Therefore, the direct transfer of a property right by means of a legacy ‘by vindication’ concerns only the arrangement by which that right in rem is transferred at the time of the testator’s death. It is not covered by the exception.

Member States and practitioners who suggested an interpretation of the exception beyond its limited scope, were therefore rebuffed. That is a good thing. Property law often for no apparent reason is considered immune from conflict of laws, both in terms of jurisdiction and applicable law. The CJEU’s judgment in Kubicka puts a hold to too wide an interpretation of the rei sitae exception.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 6, Heading 6.2.2.1.