Flux des sites DIP

End of exam season (sadly not yet of marking marathon). In the next few weeks I shall be posting on judgments issued a little or longer while ago, which I was pondering to use in exams. (I did for some of them).

In [2017] EWHC 1216 (Pat) Chugai Pharmaceutical v UCB the issue at stake was to what degree a suit seeking to establish absence of liability under a patent license, in reality provokes argument on the validity of the patent. Carr J has excellent overview of review of precedent, much of which has passed in one way or another on this blog. Please do refer to judgment for proper reading.

Claimant (“Chugai”) seeks a declaration against the Defendants (collectively “UCB”) that it is not obliged to continue to pay royalties under a patent licence (“the Licence”) granted by the First Defendant (“UCB Pharma”).  UCB Pharma is a Belgian company with an English branch which entered into the Licence with Chugai in respect of a portfolio of patents. Chugai claims that its products, which are, in part, manufactured and sold in the USA, fall outside the scope of the claims of the Patent concerned. Accordingly, Chugai seeks a declaration that it owes no royalties for the manufacture and sale of these drugs manufactured after a certain date.

UCB alleges that, although framed as a claim for a declaration relating to a contract, a part of these proceedings, in substance, concerns not only the scope but also the validity of the Patent. UCB submits that the validity of a US patent is non-justiciable, since the English court has no power to determine the validity of a foreign patent. Accordingly, it submits that those parts of Chugai’s pleading which are said to raise issues of invalidity fall outside the subject matter jurisdiction of the English court.

European private international law as readers will know lays greats emphasis on exclusive jurisdiction in the case of validity of patents. The CJEU’s holding in C-4/03 Gat v Luk that nullity actions against a national part of a certain European patent can only be conducted in the jurisdiction for which that patent was registered, regardless of whether the nullity argument is raised in the suit or by way of defence, is now included verbatim in Article 24(4) Brussels I Recast. The EU’s take is rooted in the idea that the grant of a national patent is “an exercise of national sovereignty” (Jenard Report on the Brussels Convention (OJ 1979 C59, pp 1, 36)). The rule therefore engages the Act of State doctrine, and suggests that comity requires the courts of States other than the State of issue, to keep their hands off the case.

Particularly in cases where defendant is accused of having infringed a patent, this rule gives it a great possibility to stall proceedings. Where the action is ‘passive’, with plaintiff aiming to establish no infringement, the argument that the suit really involves validity of patent is less easily made.

The possibility of ‘torpedo’ abuse, coupled with less deference to the jurisdictional consequences of the Act of State doctrine [particularly its contested extension to intellectual property rights], means the English courts in particular are becoming less impressed with the exclusivity. Where the EU Regulation applies, they do not have much choice. Carr J refers to [2016] EWHC 1722 (Pat) Anan where claimant sought to carve out issues of validity by seeking a declaration that the defendant’s acts infringed a German patent “if the German designation is invalid (which is to be determined by the German courts)“.  EU law meant this attempt could not be honoured. Carr J however suggests that EU rules have no direct application in the present case because the Patent at stake is a United States patent. That is not quite spot on, for under the amended lis alibi pendens rule of the Brussels I Recast, reflexive effect is suggested for the Regulation’s exclusive jurisdictional rules, leaving a Member State court in a position (not: under an obligation) to give way to pending litigation in third countries. (In the case at hand there was no such litigation pending elsewhere).

Allow me to lean on 20 Essex Street’s conclusion in their review of the case: Carr J held that the case before him was not a direct challenge to validity. He accepted Chugai’s submissions that its claim was contractual. Disputed parts of the patent were incidental to the essential nature of its claim, which was a claim for determination of its royalty obligations. In his view, this claim fell within the exclusive jurisdiction clause, in favour of the English courts, which parties had agreed.

Essential reading for IP litigators.

Geert.

… is applicable from today on (see art. 92).

See here as well the Commission Implementing Regulation (EU) 2017/1105 of 12 June 2017 establishing the forms referred to in Regulation (EU) 2015/848 of the European Parliament and of the Council on insolvency proceedings, OJ L 160, 22.6.2017.

In 2011 Facebook, Inc. used the name and picture of certain Facebook.com members as part of an advertising product.  In response, a class action was started in British Columbia on behalf of roughly 1.8 million British Columbia residents whose name and picture had been used.  The claim was based on section 3(2) of the province’s Privacy Act.  In response, Facebook, Inc. sought a stay of proceedings based on an exclusive jurisdiction clause in favour of California contained in the contracts of use for all Facebook.com members.

Canadian courts had repeatedly held that “strong cause” must be shown to displace an exclusive jurisdiction clause.  In addition, while there was some ambiguity, the leading view had become that the analysis about whether to stay proceedings due to such a clause is separate and distinct from the general forum non conveniens analysis (para 18).  The clause is not simply an important part of the forum non conveniens analysis – rather, it triggers a separate analysis.

In Douez v Facebook, Inc., 2017 SCC 33 (available here) the Supreme Court of Canada confirms the second of these points: the analysis is indeed separate.  However, by a slim majority of 4-3 the court holds that the “strong cause” test operates differently in a consumer context than in the commercial context in which it was originally formulated.  The court overturns the decision of the British Columbia Court of Appeal and rejects a stay of proceedings, paving the way for the class action to proceed in British Columbia.

The Separate Analysis

All of the judges support the separation from forum non conveniens (paras 17, 20 and 131).  I have found this approach troubling as it has developed and so, while not a surprise, I am disappointed to see it confirmed by the court.  As I understand it, the core reason for the separate analysis is to make sure that the clause is not overcome by a series of less important factors aggregated under the forum non conveniens analysis.  So the separate analysis requires that the “strong cause” to overcome the clause has to involve something closely related or intrinsic to the clause itself.  The best explanation of this view is in Expedition Helicopters Inc. v Honeywell Inc., 2010 ONCA 351 (available here; see in particular para 24).  The problem is that courts, in their search for strong cause, frequently go beyond this and refer to factors that are well established under the forum non conveniens approach.

In its analysis, the court puts almost no emphasis on (and does not really even explain, in the way Expedition Helicopters does) how the separate approach differs from forum non conveniens in terms of how the clause gets displaced.  In places, it appears to actually be discussing forum non conveniens (see paras 29-30 and 155), in part perhaps due to its quite direct reliance on The Eleftheria, an English decision I think is more consistent with a unitary framework rather than a separate approach (a point noted in Expedition Helicopters at para 11).  In Douez, the plurality finds strong cause for two reasons: public policy and secondary factors (para 64).  Leaving public policy aside for the moment, it is telling that the secondary factors are “the interests of justice” and “comparative convenience and expense”.  These are the most conventional of forum non conveniens factors.  If this analysis is followed by lower courts, rather than that as explained in Expedition Helicopters, the separate analysis might end up not being very separate.

The Consumer Context

The majority (which is comprised of two decisions: a plurality by three judges and a separate solo concurrence) considers the unequal bargaining power and potential for the relinquishing of rights in the consumer context to warrant a different approach to the “strong cause” test (para 33).  In part, public policy must be considered to determine whether the clause is to be given effect.  As a matter of law, this may well be acceptable.  But one of the key features of the plurality decision is the basis on which it concludes that strong cause has been shown on the facts.  It reaches this conclusion because the contract is one of adhesion with notable inequality of bargaining power and because the claim being brought relates to “quasi-constitutional rights” (para 58), namely privacy.  If these factors are sufficient, then a great many exclusive jurisdiction clauses in standard form contracts with consumers are subject to being defeated on a similar basis.  Lots of consumer contracts involve unequal bargaining strength and are in essence “take it or leave it” contracts.  And it may well not be that difficult for claims to be advanced, alongside other claims, that involve some form of quasi-constitutional rights (the breadth of this is untested).  This possibility that many other clauses do not provide the protection once thought is likely the most notable dimension of the decision.

The Dissent

The dissent would not modify the “strong cause” test (paras 125 and 171).  It stresses the need for certainty and predictability, which are furthered by exclusive jurisdiction clauses (paras 124 and 159).  The dissent concludes the clause became part of the contract, is clear and is not unconscionable.  It reviews possible factors which could amount to strong cause and finds none of them present.  It is critical of the majority for its use of public policy as a factor in the strong cause analysis.  If the clause is enforceable – and in its view it is, even with the inequality of bargaining power – then it is wrong to rely on the factors used by the plurality to find strong cause (para 173).  In the immediate aftermath of the decision I think the dissent has the better of the argument on whether strong cause has been shown in this particular case.

Territorial versus Subject Matter Jurisdiction

The proposed class action relies on a statutory provision.  That statute contains a provision (section 4) that provides that the British Columbia Supreme Court must hear and determine claims under the statute.  The British Columbia Court of Appeal concluded that this provision addresses subject matter jurisdiction and not territorial jurisdiction (para 14).  The dissent agrees with that view (para 142).  In contrast, the plurality conflates the two types of jurisdiction.  While it accepts that the provision is not one which overrides jurisdiction clauses (para 41), in the public policy analysis it is concerned that in litigation in California the plaintiff class would have no claim (para 59).  But as the dissent points out, it is open to the California courts to apply the statute under its choice of law analysis (paras 165-66).  No evidence was adduced to the contrary.  Section 4, properly interpreted, does not prevent that.  Even more worrying is the analysis of Justice Abella in her solo concurring decision.  She concludes that section 4 deals with territorial jurisdiction and so overrides any jurisdiction clause to the contrary (paras 107-08).  This is a remarkable interpretation of section 4, one which would see many other provisions about subject matter jurisdiction instead read as though they addressed territorial jurisdiction (which she does in footnote 1 in para 109).

Conclusion

The split between the judges as to what amounts to strong cause sufficient to set aside an exclusive jurisdiction clause is the most dramatic aspect of the decision.  They see what is at stake very differently.  On one view, this is a case in which consumers should not be deprived of important statutory rights by a clause to which they did not truly agree.  On another view, this is a case in which contracting parties should be held to their agreement as to the forum in which any disputes which arise should be resolved because, even though the contract involves consumers, the agreement is not unfair and has not been shown to deprive them of any substantive rights.  This debate will now play out across a wide range of consumer contracts.

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

C. Kohler: Limits of mutual trust in the European judicial area: the judgment of the ECtHR in Avotin?š v. Latvia

In Avoti?š v. Latvia the European Court of Human Rights opposes the consequences of the principle of mutual trust between EU Member States which the Court of Justice of the European Union highlighted in Opinion 2/13. The ECtHR sees the risk that the principle of mutual trust in EU law may run counter to the obligations of the Member States flowing from the ECHR. In the context of judgment recognition the State addressed must be empowered to review any serious allegation of a violation of Convention rights in the State of origin in order to assess whether the protection of such rights has been manifestly deficient. Such a review must be conducted even if opposed by EU law. The author evaluates the Avoti?š judgment in the light of the recent case-law of the CJEU which gives increased importance to the effective protection of fundamental rights. In view of that case-law the opposition between the two European courts seems less dramatic as their competing approach towards the protection of fundamental rights shows new elements of convergence.

S. L. Gössl: The Proposed Article 10a EGBGB: A Conflict of Laws Rule Supplementing the Proposed Gender Diversity Act (Geschlechtervielfaltsgesetz)

In 2017 the German Institute for Human Rights published an expertise for the Federal Ministry of Family Affairs, Senior Citizens, Women and Youth on the topic of “Gender Diversity in Law”. The expertise proposed several legal changes and amendments, including a conflict of laws rule regarding the determination of the legal sex of a person (art. 10a EGBGB). The proposal follows the current practise to use the citizenship of the person in question as the central connecting factor. In case of a foreigner having the habitual residence in Germany, or a minor having a parent with a habitual residence in Germany, a choice of German law is possible, instead. The rule reflects the change of substantive law regarding the legal sex determination from a binary biological-medical to a more open autonomy-based approach.

R. Geimer: Vertragsbruch durch Hoheitsakt: „Once a trader, not always a trader?“ – Immunitätsrechtlicher Manövrierspielraum für Schuldnerstaaten?

A debtor state’s inability to invoke state immunity: The issuance of bonds constitutes an actus gestionis, which cannot be altered to an actus imperii by legislative changes that unilaterally amend the terms of the bonds.

P. Mankowski: Occupied and annected territories in private international law

Private international law and international law are two different cups of tea. Private international law is not bound in the strict sense by the revelations of international law. An important point of divergence is as to whether occupied territories should be regarded as territories reigned by the occupying State or not. Private international law answers this in the affirmative if that State exerts effective power in the said territory. Private parties simply have to obey its rules and must adapt to them, with emigration being the only feasible exit. The State to whom the territory belonged before the occupation has lost its sway. This applies regardless whether UNO or EU have for whichever reasons uttered a different point of view. For instance, East Jerusalem should be regarded as part of Israel for the purposes of private international law, contrary to a recent decision of the Oberlandesgericht München.

F. Eichel: Cross-border service of claim forms and priority of proceedings in case of missing or poor translations

In recent times, there has been a growing number of inner-European multifora disputes where the claimant first lodged the claim with the court, but has lost his priority over the opponent’s claim because of trouble with the service of the claim forms. Although Art. 32 (1) (a) Brussels Ibis Regulation states that the time when the document is lodged with the courts is decisive on which court is “the court first seised” in terms of Art. 29 Brussels Ibis Regulation, there has been dissent among German Courts whether the same is true when the service has failed due to a missing or poor translation under the EU Service Regulation (Regulation EC No 1393/2007; cf. also the French Cour de Cassation, 28.10.2008, 98 Rev. Crit. DIP, 93 [2009]). Although the claimant is responsible for deciding whether the claim forms have to be translated, the author argues that Art. 32 (1) (a) Brussels Ibis Regulation is applicable so that the claimant can initiate a second service of the document after the addressee has refused to accept the documents pursuant to Art. 8 para. 1 EU Service Regulation. The claimant does not loose priority as long as he applies for a second service accompanied by a due translation as soon as possible after the refusal. In this regard, following the Leffler decision of the ECJ (ECLI:EU:C:2005:665), a period of one month from receipt by the transmitting agency of the information relating to the refusal may be regarded as appropriate unless special circumstances indicate otherwise.

P. Huber: A new judgment on a well-known issue: contract and tort in European Private International Law

The article discusses the judgment of the ECJ in the Granarolo case. The core issue of the judgment is whether an action for damages founded on an abrupt termination of a long-standing business relationship qualifies as contractual or as a matter of tort for the purposes of the Brussels I Regulation. The court held that a contract need not be in writing and that it can also be concluded tacitly. It stated further that if on that basis a contract was concluded, the contractual head of jurisdiction in Art. 5 Nr. 1 Brussels I Regulation will apply, even if the respective provision is classified as a matter of tort in the relevant national law. The author supports this finding and suggests that it should also be applied to the distinction between the Rome I Regulation and the Rome II Regulation.

D. Martiny: Compensation claims by motor vehicle liability insurers in tractor-trailer accidents having German and Lithuanian connections

The judgment of the ECJ of 21/1/2016 deals with multiple accidents in Germany caused by a tractor unit coupled with a trailer, each of the damage-causing vehicles being insured by different Lithuanian insurers. Since in contrast to Lithuanian law under German law also the insurer of the trailer is liable, after having paid full compensation the Lithuanian insurer of the tractor unit brought an indemnity action against the Lithuanian insurer of the trailer. On requests for a preliminary ruling from Lithuanian courts, the ECJ held that Art. 14 of the Directive 2009/103/EC of 16/9/2009 relating to insurance against civil liability in respect of the use of motor vehicles deals only with the principle of a “single premium” and does not contain a conflict rule. According to the ECJ there was no contractual undertaking between the two insurers. Therefore, there exists a “non-contractual obligation” in the sense of the Rome II Regulation. Pursuant to Art. 19 Rome II, the issue of any subrogation of the victim’s rights is governed by the law applicable to the obligation of the third party – namely the civil liability insurer – to compensate that victim. That is the law applicable to the insurance contract (Art. 7 Rome I). However, the law applicable to the non-contractual obligation of the tortfeasor also governs the basis, the extent of liability and any division of his liability (Art. 15 [a] [b] Rome II). Without mentioning Art. 20 Rome II, the ECJ ruled that this division of liability was also decisive for the compensation claim of the insurer of the tractor unit. A judgment of the Supreme Court of Lithuania of 6/5/2016 has complied with the ruling of the ECJ. It grants compensation and applies also the rule of German law on the common liability of the insurers of the tractor unit and trailer.

P.-A. Brand: Jurisdiction and Applicable Law in Cartel Damages Claims

It can be expected that the number of cartel damages suits in the courts of the EU member states will substantially increase in the light of the EU Cartel Damages Directive and its incorporation in the national laws of the EU member states. Quite often the issues of jurisdiction and the applicable law play a major role in those cases, obviously in addition to the issues of competition law. The District Court Düsseldorf in its judgement on the so-called “Autoglas-cartel” has made significant remarks in particular with regard to international jurisdiction for claims against jointly and severally liable cartelists and on the issue of the applicable law before and after the 7th amendment of the German Act against Restraints of Competition (GWB) on 1 July 2005. The judgement contributes substantially to the clarification of some highly disputed issues of the law of International Civil Procedure and the Conflict of Law Rules. This applies in particular to the definition of the term “Closely Connected” according to article 6 para 1 of the Brussels I Regulation (now article 8 para 1 Brussels I recast) in the context of international jurisdiction for law suits against a number of defendants from different member states and the law applicable to cartel damages claims in cross-border cartels and the rebuttal of the so-called “mosaic-principle”.

A. Schreiber: Granting of reciprocity within the German-Russian recognition practice

Germany and the Russian Federation have not concluded an international treaty which would regulate the mutual recognition of court decisions. The recognition according to the German autonomous right requires the granting of reciprocity pursuant to Sec. 328 para. 1 No. 1 of the German Code of Civil Procedure. The Higher Regional Court of Hamburg has denied the fulfilment of this requirement by (not final) judgement of 13 July 2016 in case 6 U 152/11. The comment on this decision shows that the estimation of the court is questionable considering the – for the relevant examination – only decisive Russian recognition practice.

K. Siehr: Marry in haste, repent at leisure. International Jurisdiction and Choice of the Applicable Law for Divorce of a Mixed Italian-American Marriage

An Italian wife and an American husband married in Philadelphia/Pennsylvania in November 2010. After two months of matrimonial community the spouses separated and moved to Italy (the wife) and to Texas (the husband). The wife asked for divorce in Italy and presented a document in which the spouses agreed to have the divorce law of Pennsylvania to be applied. The Tribunale di Pordenone accepted jurisdiction under Art. 3 (1) (a) last indent Brussels II-Regulation and determined the applicable law according to Rome III-Regulation which is applicable in Italy since 21 June 2012. The choice of the applicable law as valid under Art. 5 (1) (d) Rome III-Regulation in combination with Art. 14 lit. c Rome III-Regulation concerning states with more than one territory with different legal systems. The law of Pennsylvania was correctly applied and a violation of the Italian ordre public was denied because Italy applies foreign law even if foreign law does not require a legal separation by court decree. There were no effects of divorce which raised any problem.

M. Wietzorek: Concerning the Recognition and Enforcement of German Decisions in the Republic of Zimbabwe

The present contribution is dedicated to the question of whether decisions of German courts – in particular, decisions ordering the payment of money – may be recognized and declared enforceable in the Republic of Zimbabwe. An overview of the rules under Zimbabwean statutory law and common law (including a report on the interpretation of the applicable conditions, respectively grounds for refusal, in Zimbabwean case law) is followed by an assessment of whether reciprocity, as required by section 328 subsection 1 number 5 of the German Civil Procedure Code, may be considered as established with respect to Zimbabwe.

A. Anthimos: Winds of change in the recognition of foreign adult adoption decrees in Greece

On September 22, 2016, the Plenum of the Greek Supreme Court published a groundbreaking ruling on the issue of the recognition of foreign adult adoption decrees. The decision demonstrates the respect shown to the judgments of the European Court of Human Rights, especially in the aftermath of the notorious Negrepontis case, and symbolizes the Supreme Court’s shift from previous rulings.

Perhaps it’s the warm weather or the balmy number of exams I am having to compile this term, but my imagination was running dry. One more exam to compose and it is for my American University summer law school students. A course on EU integration. Scratching my head on trying to find yet another variation on the direct effect theme, Advocate General Sharpston came to the rescue. So far I have only seen the press release (the Opinion itself is not on Curia yet) in C-413/15 Farrell which considers the C-188/89 Foster criteria on what constitutes an ’emanation from the state’. From the press release:

‘Ever since the Court developed the doctrine of the direct effect of directives and rendered it applicable to ‘vertical’ disputes between the individual and the State, but declined to extend that doctrine ‘horizontally’ to cover disputes between private parties, it has been essential to know what are the boundaries of ‘the State’ for the purposes of applying that doctrine. In its judgment in Foster, the Court set out a series of tests for determining the types of bodies that might be treated as ‘the State’ or, although it did not use that expression in its judgment, ‘an emanation of the State’ in that context. It did so by reference to existing case-law, which included a reference to the body in question having ‘special powers’.’

The focus of the Opinion is on those ‘special powers’.

In C-365/05, the Court had already held that Ireland had not properly implemented Directive 90/232. the question now before the court si whether the Motor Insurers’ Bureau of Ireland (MIBI) is an emanation of the State, engaging therefore vertical direct effect. The Irish High Court held it does. The Irish Supreme Court now asks whether the Foster criteria need to be applied cumulatively. Sharpston AG clearly suggests they do not, indeed that they are not limitative either: see the text for more detail of the criteria examined by Ms Sharpston.

Now, once the full text is out, one can of course chew over this a bit more. But for an introductory course, the press release suffices.

Geert.

A book by Jean- Sylvestre Bergé and Geneviève Helleringer, Elgar Publishing 2017, just published.

Lawyers have to adapt their reasoning to the increasingly global nature of the situations with which they deal. Often, rules formulated in a national, international or European environment have all to be jointly applied to a given case. In a single situation, several laws must be mobilised, alternatively, cumulatively, at the same time or at different moments, in or on one or several spaces or levels, by one or by multiple actors. The book seeks to make explicit the analysis the lawyer engages in every time he is confronted by the operation of several laws in different contexts.

The subject matter of the book is not the definition or description of a so-called ‘global law’. The book focuses on the needs of a global lawyer who is required to reach conclusions in a pluralistic context. It makes explicit the required global reasoning. Readers are presented with concrete cases involving more than one legal rule and different levels as well as a modus operandi that the authors found to be invariant in global contexts. Legal reasoning in a global context has to be organised according to a basic three-step approach, consisting of the comparison (Part I), then the combination (Part II) and, finally, the ordering or ‘prioritisation’ (Part III) of the methods and solutions of national, international and European law to be used to solve the case. The book conveys in detail how the law is operated through a wide range of situations and concrete examples cutting across domains, including criminal law, contract law, fundamental rights, internal market, international trade, procedure.

The book is aimed at an international audience. Illustrations of how lawyers have to combine different contexts are taken in various domestic case law including the UK, Germany, Belgium, Italy, Spain, the US, as well as France. The book is adapted from an analytical framework that was developed in a book written in French by Jean-Sylvestre Bergé, L’application du droit national, international et européen, Paris: Dalloz, Méthodes du droit, 2013.

Academic lawyers as well as practitioners often realise that some cases trigger uncertainty as to the applicable legal reasoning. For example, in cases presented before an international court, lawyers may wonder whether the effects produced by a law applied at a national or European level may be considered. In a European context, lawyers need to be able to determine precisely whether the methods and solutions that have been developed over the last 60 years substitute or add to the legal constructions defined at other levels which came before: national or international.

The difficulty facing lawyers increases even more when a case might fall to be decided under a series of different legal environments. Thus, a case presented before a national judge can sometimes give rise to proceedings before a European court, for example, a preliminary ruling on the interpretation or validity of EU law brought before the Court of Justice of the European Union or an application made to the European Court of Human Rights after the exhaustion of all national remedies. More rarely, a national conflict may become an interstate conflict brought before the International Court of Justice. In the same way, a situation addressed by a public or private international court may have consequences for European and/or national courts (for example, a sanction announced by the United Nations and executed at a European and national level or an international arbitral award presented to a national judge who decides to apply European Union law and to consult, in that capacity, the Court of Justice of the European Union).

Lawyers may therefore be worried that in spite of all their efforts to put into operation the legal methods and solutions applied in a given context, their analysis could be challenged on the occasion of the re-examination of the case in another national, international or European context. To prevent a new examination from entirely escaping, or weakening, their expertise, what can lawyers (including students training to practice in a global environment) do? Should they open themselves up to other legal environments beyond the one in which they are used to? Or should they revert to the one context that they know best and will therefore provide for a solution with a maximum degree of foreseeability? The book provides a method for tackling these questions.

Jean-Sylvestre Bergé is Professor at Lyon University – Fellow of the University Institute of France – France; Geneviève Helleringer is Professor in Essec Business School, Paris – Fellow of the Institute of European and Comparative Law, Oxford – UK.

A short post to flag a paper which I co-authored with Virginia Sanfelice and Dr Leonie Reins. We look at how international environmental law principles have been applied in Latin-American courts. The aim of this paper is first and foremost to open up these cases for wider scholarly analysis (which is why we e.g. use an Annexed overview of the cases), with preliminary analysis thrown in.

Springer Nature have provided us (much gracias) with the following Open Access link which I am happy to share. Happy analysing.

Geert.

by Lukas Schmidt, Research Fellow at the Center for Transnational Commercial Dispute Resolution (TCDR) of the EBS Law School, Wiesbaden, Germany.

On 8 and 9 June 2017 the Academy of European Law (ERA), in co-operation with the Academic Forum of INSOL Europe hosted a conference in Trier on the latest developments of insolvency proceedings within the EU. The conference aimed not only at giving an in-depth analysis of the Recast EIR (EU Regulation No 2015/848), but also at discussing post-Brexit implications for insolvency and restructuring as well as examining the new Commission proposal for a Directive on insolvency, restructuring and second chance, published late 2016.

After opening and welcoming remarks by Dr. Angelika Fuchs (Head of Section – Private Law, ERA, Trier) and Prof. Michael Veder (Adviser at RESOR, Amsterdam; Professor of Insolvency Law at Radbound University Nijmegen; Chair of INSOL Europe Academic Forum), the first session of the conference dealt with recent CJEU case law on cross-border insolvency proceedings. Stefania Bariatti (Professor at the University of Milan; Of Counsel, Chiometi Studio Legale, Milan) presented the most important cases on the EIR decided in 2016 by the CJEU, as well as some cases still pending. As it was shown by Prof. Bariatti the CJEU decided on various open questions relating to Art. 3 EIR and the COMI concept in the case of Leonmobili (case C-353/15) in 2016. Another question regarding the interpretation of Art. 3 EIR is still pending before the CJEU in the case of Tünkers (C-641/16).  The treatment of rights in rem, and the interpretation of Art. 5 EIR, was object of SCI Senior Home and Private Equity Insurance Group “SIA” (C-156/15). After the CJEU decided the first two cases dealing with Art. 13 EIR and detrimental acts in 2015 – Lutz (C-557/13) and Nike (C-310/14) – an Italian case (Vynils Italia SpA, C-54/16) concerning Art. 13 is still pending before the CJEU. Other cross-border insolvency issues that went to the CJEU in 2016 concerned the Dutch prepack proceeding (Federatie Netherlandse Vakvereiniging, C-126/16) and the interplay between the Regulation No 800/2008 and the EIR (Nerea SpA/Regione Marche, C-245/16).

Subsequently, Michal Barlowski (Senior Counsel, Wardynsky & Partners, Warsaw) gave an introduction about the new EIR focusing on its scope of application especially regarding pre-insolvency and hybrid proceedings. Mr. Barlowski identified the following six changes in the Recast Regulation as most important: 1.) the revisited and expanded COMI concept, 2.) the expansion of the scope of applicability, 3.) the synchronization (coordination) of main and secondary proceedings, 4.) the introduction of group coordination proceedings, 5.) the extension of authority and duties of IP’s and 6.) the ease of access to insolvency registers. Analyzing the positive and negative prerequisites of the scope of applicability as laid down in Art. 1 EIR Recast, Barlowski emphasized that it might be problematic to include certain pre-insolvency or hybrid proceedings under the scope of the EIR Recast. This is due to the fact, that Art. 1 EIR Recast requires “public“ proceedings, although especially pre-insolvency proceedings more commonly seek a solution of the debtors situation rather in “private“. Furthermore, Barlowski pointed out that the widened scope of application, the synchronisation of main and secondary proceedings as well as of proceedings within a group, the rising role of IPs and the higher availability of legal instruments lead to greater complexity of processes and thereby create new opportunities as well as challenges. Barlowski concluded with stating that the new EIR is characterized by “complexity vs. simplicity”.

Gabriel Moss QC (Barrister, 3-4 South Square, Gray’s Inn, London; Visiting Professor at Oxford University) dealt with the definition of COMI and the “Head Office Functions“ test, as well as COMI shifts. There are now express provisions confirming the previous case law such as Interedil (Case C-396/09), although the concept of COMI remains the same under the Recast Regulation. Therefore, the “Head Office Function” test is still valid for determining the COMI. In regards to COMI shifting the EIR Recast now contains several new provisions dealing with fraudulent or abusive moves of COMI or with “bad“ forum shopping. Whereas “good” forum shopping, usually done by a legal person, tends to benefit the general body of creditors, “bad“ forum shopping, usually done by a natural person, tends to escape the creditors or  generally disadvantages them. Especially Art. 3 (1) EIR Recast now states that the registered office presumption will be disapplied, if the debtor’s registered office is moved to another Member State within three months prior to the request for opening of proceedings, respectively six months if the debtor is an individual and moves his or her habitual residence. Furthermore, Art. 4 EIR Recast now requires a court considering a request to open insolvency proceedings to examine whether it has jurisdiction under Art. 3 EIR Recast whereas Art. 5 EIR Recast gives any creditor the right to challenge the opening of main proceedings on the grounds of international jurisdiction. However, the new presumptions designed to prevent “bad” forum shopping may not be effective as cases are usually decided based on facts not presumptions. Moss concludes that both, the court’s duty to check jurisdiction and the ability of creditors to challenge an opening of a main proceeding, are powerful tools against fraudulent COMI shifts. In Moss’ view the codification of the case law relating to COMI is welcome and useful, especially in jurisdiction, that rely rather on the relevant statute than case law.

Reinhard Dammann (Avocat à la Cour, Partner, Clifford Chance Europe LLP, Paris) analysed the coordination of main and secondary proceedings as well as tools to prevent secondary proceedings. Dammann started out with assessing that secondary proceedings are not weakened in the Regulation Recast, but rather strengthened. On the one hand, the Member States understand secondary proceedings as a defence against the universal main proceedings, on the other hand secondary proceedings might prove useful in ensuring an effective administration, especially in cases of a complicated estate or an intended eradication of the protection of rights in rem through Art. 8 EIR Recast. But, the EIR Recast includes two new tools to prevent secondary proceedings: the giving of an undertaking pursuant to Art. 36 EIR Recast and a stay of the opening of secondary proceedings pursuant to Art. 38 III EIR Recast. However, Dammann heavily criticized both tools. Although the Regulation of the undertaking in Art. 36 EIR recast may be used to facilitate a sale of the assets in a combined set allowing for going concern of the insolvent company, it shows several inconsistencies and flaws: it might be difficult to identify the “known” local creditors in terms of Art. 36 EIR Recast; Art. 36 EIR Recast is discriminating the non-local creditors; pursuant to Art. 36 (5) EIR Recast the rules on majority and voting that apply to the adoption of restructuring plans shall also apply to the approval of the undertaking, whereas the matter of subject is not a restructuring, but an asset sale, and lastly the relationship between the undertaking and Art. 8 EIR Recast is unclear. Therefore, if an asset sale is intended in the main proceeding, it should be more effective to execute an asset sale in the main proceeding and subsequently open secondary proceedings and distribute the proceeds in the single proceedings. If a debt restructuring is intended in the main proceeding, the opening of a secondary proceeding, as well as an undertaking would frustrate the debt restructuring. In such cases a stay of the opening of secondary proceedings pursuant to Art. 38 (3) EIR Recast might prove helpful. However, the scope of applicability of Art. 38 (3) EIR Recast is unclear as it is specifically designed after the Spanish pre-insolvency proceeding pursuant to Art. 5bis Ley Concursal.

Bob Wessels (Independent Legal Counsel, Adviser and Arbitrator; Professor emeritus at University of Leiden) continued with practical concerns surrounding the publication of insolvency proceedings. Whereas the publicity of proceedings and the lodging of claims was one of the major shortcomings of the EIR, the Regulation Recast now requires the Member States to publish all relevant court decisions in cross-border insolvency cases in a publicly accessible electronic register and provides for the interconnection of national insolvency registers, as well as introduces standard forms for the lodging of claims. Wessels then gave a detailed analysis of Art. 24 to 27 concerning the establishment of insolvency registers and the interconnection between insolvency registers. Both Art. 24 (1) EIR Recast (establishment of insolvency registers) as well as Art. 25 (1) EIR Recast (interconnection between insolvency registers) will not apply from 26 June 2017, but from June 2018 and 26 June 2019. The wording of recital 76 of the EIR Recast, as well as the requirements of Art. 24 (2) EIR Recast seem to indicate that only proceedings found in Annex A will be taken into the register that have extra-territorial effect. Whereas Art. 24 (2) EIR Recast provides for mandatory information, Member states are not precluded to include additional information (see Art. 24 (3) EIR Recast). The information that has to be taken into the registers differs depending on whether the debtor is an individual exercising an independent business or a professional activity, a legal person, or a consumer (Art. 24 (4) EIR Recast intends to protect the privacy of consumers). Pursuant to Art. 24 (5) EIR Recast, the publication of information in the registers has only the legal effects laid down in Art. 55 (6) EIR Recast and in national law. However, it is unclear whether this applies only to the mandatory information or to optional information as well. After all the access to EU-wide insolvency registers through the European e-Justice Portal should improve the efficiency and effectiveness of cross-border insolvency proceedings with benefits such as a quicker, real-time access to information crucial for business decisions, the free availability of key insolvency information and clear explanations on the insolvency terminology and the systems of the different Member States facilitating a better understanding of the content. As a last point Wessels presented the requirements for lodging claims as laid down in Art. 53 to 55 EIR Recast.

After lunch Alexander Bornemann (Head of Division, Federal Ministry of Justice and Consumer Protection, Berlin) scrutinized the treatment of corporate groups under the EIR Recast. The Recast’s approach to corporate groups rests on two pillars. The first pillar may be described as the centralization of venue, in cases where there is a common COMI or an undertaking pursuant to Art. 36 EIR Recast is given. The centralization of venue avoids costs, delays and frictions associated with coordination of proceedings across borders. The second pillar may be described as the coordination of decentralized main proceedings, either through “centralized” coordination with coordination proceedings pursuant to Art. 61 to 77, or through “decentralized” coordination with cooperation and coordination between courts and IPs pursuant to Art. 56 to 59 or participation and invention rights pursuant to Art. 60. However, the EIR Recast still lacks the next logical step in the treatment of corporate groups, namely the consolidation of proceedings. The new group coordination proceeding is inspired by the German Koordinationsverfahren as laid down in §§ 269d et seqq. of the German Insolvency Code and provides a procedural framework for the centralization of some of the functions of coordination such as the development of a plan, recommendations and mediation. However, the coordinated proceedings remain autonomous and thus combines centralized coordination with decentralized implementation. Ultimately the new coordination proceeding provokes significant difficulties in the practical administration of the proceeding and the complex system of procedural requirements and safeguards may offset the aspired advantages. The new regime should therefore be viewed as a field trial and a first modest step towards a “real” framework for groups. New perspectives may be opened for private autonomous (synthetic) replications by way of agreements and protocols as laid down in Art. 56 (2) EIR Recast. Other further developments will be based upon the experiences made or not made under the EIR Recast (see evaluation clause Art. 90 (2) EIR Recast).

During the next panel Nicolaes Tollenaar (RESOR, Amsterdam) presented a case study dealing with the restructuring of a group of companies based on real facts. The concerned group consisted of a holding company incorporated in the Netherlands, where it has its COMI as well, and two subsidiaries one based in Delaware (USA) and one based in Germany. The financial debt is mainly located at the level of the holding company, but the subsidiaries are guarantors of such debt and some obligations are secured by pledges over the shares or participations in those subsidiaries. Due to financial difficulties suffered by the group, the Dutch Company obtained a court moratorium in the Netherlands in order to be able to conduct negotiations with its creditors. However, the Dutch Company has a significant portion of its assets outside the Netherlands. The conference audience then had to discuss the cross-border effects of the Dutch moratorium. The case was a perfect example of how easily cross-border insolvency issues might get very complicated, but with the help of experts such as Michael Veder, Gabriel Moss, Jenny Clift, Bob Wessels and many other present, probably no case is too complicated. However, the lesson to be learned was that the scope of applicability of the EIR Recast regarding pre-insolvency or hybrid proceedings might turn out to be problematic, due to its requirements as laid down in Art. 1 EIR Recast. Additionally, the case showed that the protection of rights in rem through Art. 8 EIR Recast and the new provisions in Art. 2 EIR Recast about the location of assets might lead to difficulties in cases where assets are situated in another Member State and the debtor does not possess an establishment in this Member State and therefore the opening of a secondary proceeding is not possible.

Jenny Clift (Senior Legal Officer, International Trade Law Division, UNCITRAL Secretariat, Vienna) reported on harmonisation trends on security rights and insolvency law at an international level. Topics considered for harmonization efforts, include both current and future work and national law reform efforts on insolvency and secured transactions. Currently, work is being undertaken on a model law on recognition and enforcement of insolvency-related judgments, and it is hoped that it can be finalised for adoption, together with a guide to enactment, at the 2018 Commission session. UNCITRAL is as well working on a set of draft legislative provisions on facilitating the cross-border insolvency of enterprise groups. However, areas still requiring further discussion include the use of “synthetic” proceedings to minimise the commencement of both main and non-main proceedings, the powers of the group representative appointed in a planning proceeding to coordinate the development of a group insolvency solution and the approval of a group insolvency solution. Furthermore, part four of Legislative Guide will be extended to include obligations of directors of enterprise group companies in the period approaching insolvency. Moreover, the Commission has agreed that work should be undertaken on the insolvency of micro, small and medium-sized enterprises (MSMEs). Possible future topics include choice of law in insolvency, a review of the Legislative Guide in regard to insolvency treatment of financial contracts and netting, the treatment of intellectual property contracts in cross-border insolvency cases, the use of arbitration in cross-border insolvency cases and sovereign insolvency. On a national level, there are now 43 states that enacted the UNCITRAL Model Law on Cross-Border Insolvency. Topics being considered for harmonization efforts regarding secured transactions include the Guide to Enactment of the UNCITRAL Model Law on Secured Transactions. Possible future topics entail contractual issues, transactional and regulatory issues, finance for MSMEs, warehouse receipt financing, intellectual property licensing, as well as alternative dispute resolution in secured transactions. On a national level, there has been significant activity in secured transactions law reform and in the establishment of collateral registries, as well as interest in the enactment of the Model Law on Secured Transactions.

The conference day ended with a “Brexit Dialogue” between Gabriel Moss and Bob Wessels, discussing potential effects of Brexit on European cross-border insolvency law and possible solutions to caused problems. Moss argued that from a rational point of view the EU Regulations and Directives are a “win-win” for all parties, and should therefore be kept. However, some EU politicians refuse “cherry-picking” and consider that the UK must be seen worst off outside the EU. Currently, the UK intends a “Great Reform Bill” which will keep all EU law as domestic UK law. Nevertheless, this will only be temporary and subject to change and the Regulations and Directives then cannot be applied on a unilateral basis, so reciprocity will no longer exist, unless otherwise agreed between the UK and the EU. If the UK loses the EU legislation it may fall back to s. 426 UK Insolvency Act 1986, the Model Law and the Common Law. However, the 27 Member States do not have s. 426 UK Insolvency Act 1986 or common law (except Ireland) and only some have adopted the Model Law. This would result in a “win” for the EU Member States and a “lose” for the UK. Wessels (see also) then proposed three solutions including only the Member States and three solutions including the EU. One could be a revival of existing treaties such as listed in Art. 85 EIR Recast. Another option is that the UK is treated as a third country making it subject to the national legislation of each Member State. However, the Member States then might enact the Model Law. Last, but not least one could think about reviving the Istanbul Convention. As an EU oriented solution, one could consider a transitional rule similar to Art. 84 (2) EIR Recast, i.e. that the EIR Recast continues to apply up to certain date in the future. Another solution could be found in a new multiparty initiative by academics and practitioners. It also seems possible to strengthen the role of courts, relying much stronger on court-to-court cooperation and communication.

The first conference day ended with a guided tour of the Karl-Marx-Haus and a joint dinner at the “Weinhaus”.

The second conference day dealt with the new Commission proposal for a Directive on insolvency, restructuring and second chance and pre-insolvency restructuring in general.

Alexander Stein (Head of Unit, Civil Justice Policy, DG Justice and Consumers, European Commission, Brussels) began with a presentation of the new Commission proposal for a Directive on insolvency, restructuring and second chance. Its main objectives are reducing the barriers for cross-border investment, increasing investment and job opportunities in the internal market (Capital Markets Union Action Plan), decreasing the cost and improving the opportunities for honest entrepreneurs to be given a fresh start (Single Market Strategy) and supporting efforts to reduce future levels of non-performing loans (ECOFIN Council Conclusions of July 2016). The proposal provides for the harmonisation of preventive restructuring procedures and contains seven main elements to ensure efficient and fast proceedings with low cost: Early access to the procedure, strong position of the debtor, a stay of individual enforcement actions, the adoption of restructuring plans, encouraging new financing and interim financing, court involvement and rights of shareholders. Other efficiency elements include early warning tools. The proposal touches upon discharge periods for over-indebted entrepreneurs, the training and specialisation of judges and IPs, the appointment, remuneration and supervision of IPs and the digitalisation of procedures. It also contains provisions about data collection to allow a better assessment of how Member States are implementing the directive, how it is performing, and how it would need to be improved in the future. Stein reported that on 8 June the Council already discussed the role of courts and the debtor-in-possession principle. The next step is a hearing on 20 June before the European Parliament. Points that will be discussed once more include the role of the IP and the court involvement. However, the Commission plays a constructive role and intends a quick adoption of the proposal.

Nicolaes Tollenaar then took over again and presented the procedural steps of preventive restructuring proceedings with a view to the new Commission proposal. Although, Tollenaar welcomed the proposal as such, he has some significant critique as well. Firstly, the proposal only provides the debtor with the right to propose a restructuring plan. Thus, the debtor might use the right to propose a plan in an abusive manner. Secondly, it is unclear what exactly is meant with a minimum harmonisation in regard to pre-insolvency proceeding: May Member States grant creditors the right to propose a plan as well? Thirdly, the “likelihood of insolvency” is sufficient to open a pre-insolvency proceeding and use a cross-class cram down to adopt a restructuring plan. However, it is questionable if the “likelihood of insolvency” justifies a cross-class cram down. Tollenaar therefore recommends giving creditors the right to propose a plan and to distinguish between two phases: The “likelihood of insolvency”, where only the debtor has the right to propose a plan and no cram down is available and “Insolvency or inevitable insolvency”, where creditors have the right to propose a plan and cram down is available. Furthermore, he recommends giving a wide right to seek early (non-public) court directions on issues such as jurisdiction, admittance of claims or permissible content of the plan and confirmation criteria and to established specialized courts.

Next, Florian Bruder (Rechtsanwalt, Counsel, DLA Piper, Munich) spoke about creditor’s rights and the protection of new and interim finance in the restructuring process in the proposal. From a creditor’s point of view the proposal provides a framework procedure allowing the debtor to pursue a quasi-consensual (financial) restructuring, addressing creditor hold outs and shareholder opposition as the most practical issues. Creditors and the debtor may prepare and lead the restructuring process supported by new finance. However, there is a substantial risk of deterioration of the value of the business and therefore recovery for the creditors due to the stay. The suspension of creditor’s rights to file for insolvency and to accelerate, terminate or in any other way modify executory contracts to the detriment of the debtor severely restricts the creditor’s rights to control the procedure. Therefore, adequate protection is crucial. Eventually safeguards for the creditors mostly rely on active intervention of the creditors and are available quite late. Hence, the adequate protection of the creditor’s interests depends even more on the access to commercially-minded and experienced courts.

Michael Barlowski then focused on the interplay between the proposed Directive and the Recast Insolvency Regulation. Both instruments will overlap regarding cross-border aspects of restructuring proceedings. Practical problems which need to be further examined include rights in rem (1), territorial proceedings (2) and the effectiveness in third-countries (3): 1.) While Art. 6 (2) of the proposal provides for a stay of individual enforcement actions in respect of secured creditors as well, Art. 8 (1) EIR Recast exempts the rights in rem of creditors from the effects of the opening of proceedings, resulting in a paradox situation. 2.) Admittedly, Art. 7 of the proposal provides for a general stay covering all creditors that shall prevent the opening of insolvency procedures at the request of one or more creditors, however this covers only “principle” proceedings, but not “territorial proceedings”, which therefore may frustrate the negotiations between the creditors and the debtor. Art. 38 (3) EIR Recast is no help either, as its scope of applicability is unclear. 3.) If the debtor has assets outside the EU, it may be essential to ensure that the effects of the stay and the restructuring plan cover those assets as well. However, there is no EU agreement, and therefore the domestic law of the concerned third country applies.

Finally, a round table consisting of Michal Barlowski, Florian Bruder, Andreas Stein, Michael Veder and Alexander Bornemann discussed the question of how the insolvency landscape in the EU is changing. It was agreed upon that the Commission proposal tries to strike a balance between cost-efficiency and the protection of the involved parties’ interests. The proposal is flexible as well, and covers not only one proceeding but a variety of different proceedings. It was proposed that the Member States should provide for different types of proceedings for different situations, i.e. proceedings for small and medium enterprises and proceedings for bigger companies, similar to the UK regime of the Company Voluntary Arrangement and the Scheme of Arrangement.

The event ended with warm words of thanks and respect to the organizers and speakers for an outstanding conference.

 
Gabriel Moss
Reinhard Dammann
Michal Barlowski
Bob Wessels

Gabriel Moss and Bob Wessels

Less than two months after the AG Opined (see my report here), the Court of Justice has already held in C-249/16 Kareda v Stefan Benkö. The judgment follows Opinion to a tee albeit with a slightly more cautious link between Brussels I (jurisdiction) and Rome I /II (applicable law): at 32, with reference to the similarly cautious approach of the Court in Kainz.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9 .

I have reported before (search tag ‘CSR’ or ‘ATS) on the personal jurisdiction cases in US litigation. The United State Supreme Court this morning held in Bristol-Meyers Squibb, BMS for short. For background see earlier reporting in this post. California was held not to have jurisdiction for claims brought by non-residents. In her dissenting Opinion justice Sotomayor notes the important impact of the ruling, suggesting that a corporation that engages in a nationwide course of conduct cannot now be held accountable in a state court by a group of injured people unless all of those people were injured in the forum State.  Precedent evidently includes Bauman.

Judgment and opinion include many interesting takes on personal jurisdiction and how it should be managed.

Geert.

Si terrà a San Ginesio (Macerata), il 29 e il 30 settembre 2017, il tradizionale incontro dei dottorandi di ricerca in diritto internazionale, diritto internazionale privato e diritto dell’Unione europea, organizzato dalla Società Italiana di Diritto internazionale e dell’Unione europea e dal Centro italiano di studi gentiliani.

Ulteriori informazioni sono disponibili qui.

Professor Gilles Cuniberti (University of Luxembourg) has just published a new monograph on default arbitration in the Rethinking Law series of Edward Elgar Publishing.

The official abstract kindly provided by the publisher reads as follows:

This innovative book proposes a fundamental rethink of the consensual foundation of arbitration and argues that it should become the default mode of resolution in international commercial disputes.

The book first discusses the most important arguments against this proposal and responds to them. In particular, it addresses the issue of the legitimacy of arbitrators and the compatibility of the idea with guarantees afforded by European human rights law and US constitutional law. The book then presents several models of non-consensual arbitration that could be implemented to afford neutral adjudication in disputes between parties originating from different jurisdictions, to offer an additional alternative forum in the doctrine of forum non conveniens or to save judicial costs.

The first dedicated exploration into the groundbreaking concept of default arbitration, Rethinking International Commercial Arbitration will appeal to scholars, students and practitioners in arbitration and international litigation.

Further information, including a table of contents and some extracts, is available on the publisher’s website.

Comparative conflict of laws is often a useful source for exam (essay) questions. I used People of State of New York v. PriceWaterhouseCoopers, LLP, No. 3685N (N.Y. App. Div. May 23, 2017) to ask my students to surmise how an EU-base court would judge the issue raised.

Keith Goldberg over at LAw360 has the following great summary:

A New York appellate court [.. ] upheld a decision to force ExxonMobil’s outside auditor PricewaterhouseCoopers LLP to comply with New York Attorney General Eric Schneiderman’s demand for documents in his probe of whether the oil giant lied to investors about the climate change risks to its business.
The Appellate Division backed state Supreme Court Judge Barry Ostrager’s Nov. 26 order that PwC turn over documents related to its audit of Exxon subpoenaed by Schneiderman, saying the judge correctly held that New York law, not the law of Texas, where Exxon is headquartered, applies to questions of evidentiary privilege and that the Empire State doesn’t recognize accountant-client privilege.

Mr Ostrager’s decision is here – it has more choice of law considerations than the appelate court’s order. Eversheds have excellent analysis here of the overall issue of considering applicable law for privilege under the first and second restatement of the law. In the case at issue, ExxonMobil as well as the documents disclosure of which is sought (such as projected carbon costs and their application to Exxon’s capital allocation decisions, as well as documents provided to Exxon by PwC concerning the auditor’s role in compiling Exxon’s submissions about greenhouse gas emissions for the Carbon Disclosure Project, a nonprofit that collects information on greenhouse gas emissions) are based at Texas. But the trial is underway in New York.

Now, to the essay Q: how would an EU-based court hold on the issue? (For the purpose of last week’s exam I had a Belgian court rule on the issue, with the oil company based at Belgium, and the accountant at England, with the agreement between company and accountants subject to English law.

I am marking these exams later this week and hope to read some or all of the following: reference to overall principle that procedure is subject to lex fori; that statement being of little use in a system (like the EU) that thrives on predictability: for what is procedure to one, is substantive law to another; arguments existing both pro this being procedure (closely tied up with evidence, clear links with public policy) as well as substantive (privilege despite its public nature also protecting private, including commercial interest; parties wishing to manage the issue of sensitive information and forum); need for autonomous interpretation and tendency within the EU to define the ‘scope of the law applicable’ (eg both in Rome I and II);  no trace in said Regulations of privilege being included in the scope of law applicable.

As always, I am hoping for students to surprise me. Undoubtedly they will.

Geert.

The CJEU held in C-185/15 Kostanjevec in October: I reported on the Opinion and the judgment then went under my radar.

On the issue of temporal applicability, the Court sides with the AG entirely, and I agree it should.

The Court then takes a firmly wide approach to the notion of ‘counterclaim’ in (now) Article  8(3): it is in the interests of the sound administration of justice that the special jurisdiction for counterclaims enables the parties, in the same proceedings and before the same court, to litigate all their claims against each other that have a common origin (at 37). In circumstances such as those of the main proceedings, the counterclaim for reimbursement on the ground of unjust enrichment must be regarded as arising from the leasing contract from which the lessor’s original action originated. The alleged enrichment in the amount of the sum paid in enforcement of the judgment that has since been set aside would not have taken place without that contract. (at 38).

‘Common origin’ of course is a notion which is difficult to decide in abstracto: despite the Court’s attempts to harmonise Article 8(3)’s approach, the potential for national courts to insert local approaches remain. Even the discussion of (now) Article 8(3) in the Jenard Report hinted at the provision being a difficult marriage between local civil procedure rules on the one hand and the need for European harmonisation on the other.

Geert.

(Handbook of) European Private International law, 2nd ed. 2016, chapter 2, Heading 2.2.11.1.a, Heading 2.2.21.3, Heading 2.1.1

It does not happen all that often: this is a call for assistance. Following a student’s Q re ‘habitual residence’ in Rome I, I have now noticed something I had not before (I more often than not use the English version of the Regulation in my teaching and practice): Article 6(1) on ‘consumer contracts’ uses the term ‘habitual residence’ ‘gewone verblijfplaats’ (defined, or not, for natural persons, in Article 19) in the introductory para (which identifies applicable law). However in littera a it then uses ‘domicile’ ‘woonplaats’: a term which is not otherwise used in Rome I and which is not defined by it.

A quick scan of other language versions (French, English, German) reveals no such error: they all use the equivalent of ‘habitual residence’ in both instances. Now, evidently the error must be pushed aside given the other language versions however: is any reader of the blog aware of a corrigendum ever published? For if it has, I cannot locate it.

Geert.

(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.5.

The European Parliament’s Policy Department for Citizens Rights and Constitutional Affairs of the is organising a workshop on Potential and challenges of private international law in the current migratory context on 20 June 2017 from 3 to 6.30 p.m.

The reason behind the initiative for this workshop is the tensions and overlaps between the areas of private international law and migration law. These overlaps have become more visible in the context of recent increases of migration. Issues  include jurisdiction, cooperation between authorities, recognition of personal status, family tracing, child marriages, guardianship, kafala, the application of foreign law.

At the workshop two studies will be presented:

• Private international law in a context of increasing international mobility: challenges and potential, and
• Protecting children on the move: a private international law perspective.

For those readers unable to come to Brussels, the studies are available here and the event will be livestreamed here.

Florian Heindler and Bea Verschraegen have just published the proceedings of the IACPIL conference which took place in October 2016 in Vienna:  Internationale Bankgeschäfte mit Verbrauchern, Florian Heindler, Bea Verschraegen (Eds.), IACPIL (Interdisciplinary Association for Comparative and Private International Law) Series 5, Jan Sramek, 2017, 201 pp. ISBN 978-3-7097-0140-9

English translation of the Table of Contents:

• Preface (Bea Verschraegen & Florian Heindler)
• Choice of Court Clauses in Banking Contracts with Consumers (Peter Mankowski, Hamburg)
• Choice of Law Clauses in Banking Contracts with Consumers (Dietmar Czernich, Innsbruck)
• International Jurisdiction and the Law Applicable to Outsourced Distribution of Financial Products (Georg Kodek, Vienna)
• The Law Applicable to Prospectus Liability (Judith Schacherreiter, Vienna)
• Crowdfunding and Crowdinvesting and Conflict of Laws (Gerald Spindler, Göttingen)
• International Jurisdiction and the Law Applicable to Distance Selling of Financial Products and Services (Florian Heindler, Vienna)

See: http://www.jan-sramek-verlag.at/Buchdetails.411.0.html?buchID=278&cHash=299ec37e58

La Rivista Freedom, Security & Justice: European Legal Studies (su cui si veda questo post) e l’Osservatorio sullo Spazio europeo di libertà, sicurezza e giustizia presso il Dipartimento di Scienze Giuridiche dell’Università di Salerno organizzano un convegno dal titolo Il processo di integrazione europea tra limiti e antinomie: cittadinanza, immigrazione e identità nazionali. L’evento, realizzato in collaborazione con il Gruppo di interesse sui Diritti fondamentali e sulla cittadinanza nello spazio di libertà, sicurezza e giustizia della Società italiana di diritto internazionale e diritto dell’Unione europea (SIDI), è programmato per il mese di novembre 2017.

Gli organizzatori hanno indetto un call for papers per ricevere e selezionare i contributi riguardanti il tema del convegno, da destinare in seguito al terzo fascicolo della Rivista. Gli interessati sono invitati ad inviare l’abstract del proprio contributo all’indirizzo slsg@unisa.it entro il 30 giugno 2017. L’abstract, in lingua italiana, inglese o spagnola, non dovrà superare i 9.000 caratteri (spazi inclusi).

Maggiori informazioni disponibili consultando la locandina della call for papers, reperibile qui.

The periodical Freedom, Security & Justice: European Legal Studies (also mentioned in this post) and the Observatory on the European area of freedom, security and justice of the Department of legal science of the University of Salerno organizes a conference called Il processo di integrazione europea tra limiti e antinomie: cittadinanza, immigrazione e identità nazionali (the process of European integration between limits and antinomies: citizenship, immigration and national identities). The event, achieved in collaboration with the Group of interest on fundamental rights and on immigration in the area of freedom, security and justice of the Italian society of International Law (SIDI-ISIL), is scheduled for November 2017.

The organizers have announced a call for papers in order to receive and select the papers regarding the topic of the conference, which will be later published in the third issue of the periodical. Whoever is interested in participating in the call for papers is invited to send the abstract of his or her paper to the address slsg@unisa.it within 30 June 2017. The abstract may be written in Italian, English or Spanish and must not exceed 9.000 characters (spaces included).

Further information may be found on the poster of the call for papers, available here.

From 18 September to 22 September 2017, the Department of Law of the University of Pavia, in cooperation with the Almo Collegio Borromeo and with the support of ELSA Pavia (European Law Students Association – Pavia Chapter), will host a Summer School in English on Dispute Resolution: A Multifaceted Approach. Further information can be found here.

Dal 18 al 22 settembre 2017, il Dipartimento di Giurisprudenza dell’Università di Pavia organizza insieme all’Almo Collegio Borromeo e con il supporto dell’associazione ELSA – Pavia (European Law Students Association – Pavia Chapter) una Summer School in inglese dal titolo Dispute Resolution: A Multifaceted Approach. Per maggiori informazioni consultare questa pagina.

Thank you very much indeed Sarah Venn and Emma Hynes both for flagging Garcia v BIH, Total Gabon and Sigma, [2017] EWHC 739 (Admlty), and (Emma) for providing me with copy (Bailii are not yet running it). This case is extremely suited to an oral exam of conflict of laws: in a written exam to many issues would have to be discussed. (Mine this term are mostly written. Hence I’ll run this piece early).

Claimant is a French national who worked as a professional diver offshore Gabon, West Africa, and suffered catastrophic brain injury which he blames on poor working practices on the second defendant’s site (Total Gabon), which is where he was working. He was employed by first defendant BIH, a UK based company, with choice of court and governing law made for English courts cq English law. First defendant is clearly domiciled in the UK and the Brussels I Regulation clearly applies to it. The third defendant Sigma, was contracted by Total Gabon. Claimant’s position is that he was deployed by BIH to work under the control of Sigma on the site which was, or should have been, supervised by Total Gabon. Total Gabon claim the contractual relationships between it and Sigma prevent a claim against the former.

BIH is small fish which may even have been struck off the company register. It is clear that plaintiff will not receive from BIH the amounts he needs for his constant medical care.

A default judgment was issued against BIG who did not engage with proceedings – at any rate jurisdiction against BIG per Owusu (with which readers of this blog are now ad nauseam familiar) could not be dismissed; . Total Gabon contest jurisdiction on the basis that England and Wales is not the appropriate forum.

This is not said in so many words in the Judgment however the presence of an anchor defendant per Article 4 Brussels I Recast, is of no relevance where the co-defendants are not domiciled in the EU. The regulation cannot be used to justify such anchor, residual conflicts rules take over.

Jervis Kay QC AR considers many cases which I have reported on before: VTB, Owusu, Lungowe, Spiliada. Lungowe in particular is considered by Mr Kay, including the issue of abuse of the use of anchor defendants and (at 23 in fine) the acknowledgment, implicitly (I wrote it explicitly in my review of the case) that of course EU precedent in this respect is pro inspiratio only.  Applying English residual conflicts rules, the judge then reviews whether there is a serious case (‘a real prospect of succeeding’) that could be made against Total Gabon, either one in tort or one in contractual liability. He found there is such real prospect, for both, but especially for tort.

However the case eventually (access to justice issues in Gabon were not flagged neither discussed) stumbles on the question whether the English courts would be the most appropriate forum: it is found they are not. Inspiration is found especially in Erste Group Bank [2015] EWCA Civ 379, a case in which forum non conveniens was applied even against an England-domiciled defendant because there had already been submission to Russian jurisdiction. In Garcia, the Court applies Erste per analogiam: the parallel, Mr Kay suggests, is that the case against the first defendant has effectively been wrapped up. The spectre of competing judgments therefore, Mr Kay holds, does not arise (at 36) and England is therefore not the appropriate forum. If the case is appealed I would imagine this altogether brief consideration of appropriateness and the parallel seen with Erste, I would imagine would be its Achiless heel.

(One of the considerations which defendant, per VTB, considers, is that as a rule of thumb, Gleichlauf is to be preferred (I have often found this a less attractive part of the Supreme Court’s ruling). Which is why defendant considers Rome II: if the English courts were to hear the case, they would have to apply Rome II even if their jurisdiction is a result of residual English conflicts rules).

An alternative action for Mr Garcia, one imagines, would have been (or perhaps it still is) to use Total France SA as anchor in France, to try and have the subsidiary’s actions assigned to it: a more classic CSR case.

Anyways, I think you will agree that one could have a good chinwag on this judgment at oral exam.

Geert.