Flux européens

Statistiques judiciaires 2021 : en dépit de la pandémie, l’institution judiciaire de l’Union a pu garantir pleinement la continuité de ses activités

I reviewed the first instance judgment in Skat v Solo Capital Partners here and concluded that it endangered the effet utile of Brussels Ia (and Lugano). Justice Baker had concluded that all SKAT’s claims were inadmissible as a consequence of Dicey Rule 3. The Court of Appeal has now largely reversed, [Skatteforvaltningen v Solo Capital Partners Llp [2022] EWCA Civ 234] thereby resurrecting a £1,4 billion claim.

SKAT (Danish customs and excise) seeks the return of amounts it says it was wrongly induced to pay out as tax refunds. SKAT is not seeking to recover due and unpaid dividend tax or indeed any tax, because the foundation of its argument is that in the case of the alleged fraud defendants there was no liability to pay tax, no shares, no dividends, no tax and no withholding tax. There was never a taxpayer/tax authority relationship between the Solo etc Applicants or the alleged fraud defendants and SKAT. The mere fact that the alleged fraud is committed in the context of taxation or against a foreign tax authority is insufficient to bring the matter within the rule [SKAT’s counsel arguments, [30]-[31]). To allow the defendants to escape their liability, not in a tax fraud but in a general conspiracy, would also run counter the fraus omnia corrumpit principle [ditto, 62], a point which Flaux C agrees with obiter [146] in a case of a major international fraud..

Flaux C is much less verbose than the submissions before him. Yet again a jurisdictional point was allowed to be litigated to great length – albeit one may appreciate counsel and clients’ energy on those issues given the value of the claim.

[127] the basis of the claim is fraudulent misrepresentation. It is not a claim to unpaid tax or a claim to recover tax at all. It is a claim to recover monies which had been abstracted from SKAT’s general funds by fraud [128]. Even though SKAT may be an emanation of the Danish state, the Dicey revenue rule does not apply [128], neither does the wider sovereign powers rule within Dicey Rule 3:

‘In bringing a claim to recover the monies of which it was defrauded, SKAT is not doing an act of a sovereign character or enforcing a sovereign right, nor is it seeking to vindicate a sovereign power. Rather it is making a claim as the victim of fraud for the restitution of monies of which it has been defrauded, in the same way as if it were a private citizen.’ [129]

This latter reasoning falls short I find of proper criteria to guide its future application, although more is said at [130]: the claim to recover the money is at the core of the Chancellor’s reasoning here and that claim is a straightforward money claim, and [133] ‘the claims are ones which could just as well be brought by a private citizen’. That is the kind of argument which echoes CJEU authority on civil and commercial and to my mind the Court of Appeal could have helped us all by pointing out more specifically to what degree Dicey Rule 3 be informed by CJEU authority on ‘civil and commercial’, regardless of Brexit.

That there would be a detailed examination of the Danish tax regime and possible criticism of it and of SKAT’s systems and control, does not somehow convert the claim into one to enforce that tax regime. Recognition of foreign revenue laws is permissible under Dicey Rule 3 [138].

The position of one of the defendants, ED&F Man, is different in the sense that there is no allegation that they were implicated in a fraud. Although it is alleged that misrepresentations were made by them, the misrepresentations are said to have been negligent.

SKAT has to accept that as against those defendants the claim is inadmissible by virtue of Dicey Rule 3 unless it can satisfy the Court: (i) that the claim is a “civil and commercial matter” not a “revenue matter” for the purposes of Article 1(1) of the Brussels Recast Regulation; and (ii) that the operation of Dicey Rule 3 is precluded because, contrary to the judge’s analysis, it would impair the effectiveness of the Brussels Recast Regulation.

Contrary to the conclusion the judge reached the Court of Appeal finds that the claim against ED&F Man is a “revenue matter” falling outside the Brussels Recast Regulation. Here the Court of Appeals applies parity of reasoning with its assessment of the other claims: [150]:

Whilst the test for the application of Dicey Rule 3 may not be identical to that for determining what is a “revenue etc matter” for Article 1(1) of the Brussels Recast Regulation, it can be seen that its application leads to the same answer. If Dicey Rule 3 applies (as SKAT has to accept it does in relation to the claim against ED&F Man) then by the same reasoning, the basis for the claim by SKAT against those defendants is either a right which arises from an exercise of public powers or a legal relationship characterised by an exercise of public powers, from which it necessarily follows that the claim is a revenue matter outside the Brussels Recast Regulation.

Unfortunately therefore the effet utile argument (that application of Dicey rule 3 impairs the effectiveness of BIa /Lugano, as I had argued in my earlier post) is not discussed [153].

The title of this piece of course hints at the relevance of claim formulation. It is also exaggerated: SKAT cannot conjure up fraud elements out of nowhere to reinvent a tax claim as one in mere tortious and fraudulent misrepresentation. However it is clear that in cases that are somewhat murky, claim formulation will be crucial to navigate Dicey Rule 3.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.28 ff.

Thank you Ali Malek QC (successful for defendants) for bringing this AM's CA's judgment in SKAT to my attention.
Dicey rule 3, foreign public law, revenue matters
Appeal only partially succeedshttps://t.co/UQwg8caiGf
Review of the first instance judgmenthttps://t.co/r7WXwAoaXl

— Geert Van Calster (@GAVClaw) February 25, 2022

Hill v Generali Zrt [2021] EWHC 3381 (QB) is an appeal from the County Court and discussed whether a subrogated claim by an insurer (Admiral) can be brought in the name of an English motorist in an English court together with his claim for uninsured losses against a Hungarian insurer (Generali) in respect of a pre-Brexit accident in Germany. The county court judge held that it could not but acknowledged that the question was not free from doubt and granted the motorist permission to appeal. Upon appeal the opposite conclusion was reached.

The case once again therefore concerns Brussels Ia’s insurance title which was recently at play at the CJEU in Betty Tattersal aka Seguros Catalana Occidente. Pepperall J summarises the ordinary application of the insurance title as follows [8]

Re the insured losses (the repair costs): __Generali can be sued in Hungary, being its place of domicile, or Germany, being the place of the accident: A4(1), 7(2), 11(1)(a) and 12 BIa___As the insured, Mr Hill can also sue Generali in England & Wales, being his place of domicile: A11(1)(b).___ As the insurer, and subject to being permitted to join an action already proceeding in another jurisdiction, Admiral cannot take advantage of the more favourable rules as to jurisdiction available to the policyholder, the insured and beneficiaries. 

There is therefore no dispute as to Mr Hill’s right to sue for his uninsured losses (the devaluation of the car) in England & Wales. The issue is whether Admiral’s subrogated claim:  is a claim brought by the insured such that it may be pursued in England & Wales under Article 11(1)(b); or is a claim that must be treated as brought by the insurer such that it cannot, subject to questions of joinder, be pursued in E&W.

Relevant recitals echo the general principles with which the CJEU approaches the issue: [10]:

“15 The rules of jurisdiction should be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile. Jurisdiction should always be available on this ground save in a few well-defined situations in which the subject-matter of the dispute or the autonomy of the parties warrants a different connecting factor …

16 In addition to the defendant’s domicile, there should be alternative grounds of jurisdiction based on a close connection between the court and the action or in order to facilitate the sound administration of justice. The existence of a close connection should ensure legal certainty and avoid the possibility of the defendant being sued in a court of a Member State which he could not reasonably have foreseen …

18 In relation to insurance, consumer and employment contracts, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules.

21 In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in different Member States. There should be a clear and effective mechanism for resolving cases of lis pendens and related actions …”

Part of the challenge is the different way in which claims are assigned /and or subrogated across jurisdictions [23]. In many European legal systems insurers take an assignment of the insured’s claim and sue to recover their outlay in their own names. In the common law’s approach the claim for insured losses remains vested in the insured.

CJEU Sovag is discussed for the joinder elements of the case and CJEU Kabeg is said not to be a right fit for in that case the insurer was the assignee of the claim for insured losses and able to sue in its own name.

The judge reaches his conclusion that the subrogated claim may be brought in E&W on the echo of SOVAG, hence underlining [34] the policy of minimising multiple proceedings and ensuring that irreconcilable judgments are not given but also in demonstrating practicality. The CJEU arguably in Betty Tattersal (the judge did not have the benefit of that judgment) took a different direction  on related issues and I find them both equally persuasive. It is time the insurance section be sorted out and the current EC evaluation of BIa would be a good trigger for same.

Geert.

1/2 Hill v Generali Zrt [2021] EWHC 3381 (QB)#travellaw, Brussels Ia, insurance
Subrogated claim by insurer can be brought in name of EN motorist in E&W court together with his claim for uninsured losses against a Hungarian insurer in respect of pre-Brexit accident in Germany

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

Préfet du Gers et Institut National de la Statistique et des Études Économiques
DGEN
Selon l’avocat général Collins, les ressortissants britanniques qui ont joui des droits de la citoyenneté européenne ne conservent pas ces avantages après le retrait du Royaume-Uni de l’Union européenne

TGSS (Chômage des employés de maison)
SOPO
La législation espagnole qui exclut les employés de maison des prestations de chômage alors qu’il s’agit presque exclusivement de femmes est contraire au droit de l’Union

A (Contrats d’assurance « unit-linked »)
Liberté d'établissement
La Cour précise la portée de l’obligation d’information précontractuelle en matière de contrats collectifs d’assurance-vie « unit-linked »

Agenzia delle dogane e dei monopoli et Ministero dell'Economia e delle Finanze
Liberté d'établissement
Lutte contre la consommation de tabac chez les jeunes : les États membres peuvent imposer des sanctions administratives aux opérateurs économiques violant l’interdiction de vente aux mineurs, telles que la suspension de leur licence d’exploitation pour 15 jours

Govern d'Andorra / EUIPO (Andorra)
Propriété intellectuelle et industrielle
Le Tribunal confirme que le signe figuratif ANDORRA ne peut faire l’objet d’un enregistrement en tant que marque de l’Union européenne pour plusieurs produits et services

United Parcel Service / Commission, ASL Aviation Holdings, ASL Airlines (Ireland)/Commission
Droit institutionnel
Le Tribunal rejette deux recours indemnitaires introduits par UPS et ASL Aviation Holdings

Sea Watch
Transport
Selon l’avocat général Rantos, les navires privés exerçant une activité régulière de recherche et de sauvetage en mer peuvent faire l’objet d’un contrôle de conformité aux normes internationales assuré par l’État du port

Commissaire général aux réfugiés et aux apatrides (Unité familiale - Protection déjà accordée)
Espace de liberté, sécurité et justice
Un État membre peut exercer sa faculté de déclarer une demande de protection internationale irrecevable au motif que le demandeur s’est déjà vu accorder le statut de réfugié par un autre État membre

Stichting Rookpreventie Jeugd e.a.
Liberté d'établissement
Cigarettes à filtre : la méthode établie par l’ISO pour déterminer les niveaux d’émission maximaux de goudron, de nicotine et de monoxyde de carbone, à laquelle renvoie le droit de l’Union, est valide et opposable aux producteurs de cigarettes

Openbaar Ministerie (Tribunal établi par la loi dans l’État membre d’émission)
DFON
Refus d’exécution d’un mandat d’arrêt européen : la Cour précise les critères permettant à une autorité judiciaire d’exécution d’apprécier le risque éventuel de violation du droit fondamental de la personne recherchée à un procès équitable

RS (Effet des arrêts d’une cour constitutionnelle)
Droit institutionnel
Le droit de l’Union s’oppose à une règle nationale en vertu de laquelle les juridictions nationales ne sont pas habilitées à examiner la conformité avec le droit de l’Union d’une législation nationale qui a été jugée constitutionnelle par un arrêt de la cour constitutionnelle de l’État membre

Many thanks Bruno Hardy, counsel at Liedekerke, for reconnecting me with a case I had seen in passing and then lost track off. Bruno also reports on the issues here; there is also a mainstream media report and a more specialised report.

On 18 January the Lithuanian Supreme Court held that the France-Lithuania BIT is no obstacle to Lithuania seizing the Lithuanian courts of a claim that Veolia and consorts unlawfully took over control of heating businesses in a dozen Lithuanian municipalities in 1993-2003, and excessively profited from same. The claim was initially formulated as a counterclaim in ongoing ICSID proceedings (note there are also ongoing commercial arbitration proceedings relating to the case under Stockholm Chamber of Commerce rules) and is now pursued in the courts in ordinary, using Article 7(2)’s locus damni gateway.

The SC first of all rejected Veolia’s claim that the case should at the least be stayed until the ICSID ruling has been issued. For the SC, CJEU Achmea (which declared dispute settlement via ISDS in intra-EU BITs incompatible with EU law) implies that the arbitration procedure under the BIT has now lapsed (and this ab initio, hence making the later entry into force of the EU Member States’ BIT termination agreement irrelevant) meaning Lithuania not merely may but indeed it must drop its claims in the ISDS procedure.

From what I understand, the SC did not hold on whether A7(2) BIa is a possible gateway, focusing instead on the fate of Lithuania’s involvement in the ISDS procedure. In a perhaps unexpected ruling, as Bruno reports, the Vilnius Regional Court subsequently found that it lacked international jurisdiction seeing as in its (prima facie unconvincing) view the Lithuanian claim falls under acta iure imperii, hence cancelling out Brussels Ia, instead making the claim subject to residual Lithuanian private international law rules. These seem to direct the suit to France, the domicile of the defendant.

This is where there is a final twist in the tail. What I assume to be the reason for the court to find acta iure imperii (that the claim’s origin and DNA are actions taken by a state in its sovereign capacity) may well result in the French court refusing to entertain the claim as well (potentially leading to the need for a Lithuanian forum necessitatis). Indeed as Bruno points out, under the French SC Guatemala rule, French courts do not rule on cases necessarily involving the application of foreign public law (this echoes some of the issues in Skatteforvaltningen, currently under appeal). The 1975 Institute of International Law’s Resolution on same comes to mind.

The judgment shows very clearly the urgency for a proper debate on the relationship between EU law, the CJEU, ISDS and other forms of international dispute settlement. I fear the rather unnuanced CJEU statements in cases like Komstroy do little to resolve many of the underlying issues.

Geert.

In Soriano v Forensic News LLC & Ors [2021] EWCA Civ 1952 the Court of Appeal end of December allowed the claimant’s cross-appeal on the territorial reach of the GDPR. I reported the decision at the time but had not yet gotten round to post on it. I reviewed the High Court’s judgment here and readers may want to refer to that post to help them appreciate the issues. Like in my review of the first instance judgment I focus here on the GDPR’s jurisdictional gateway ([75] ff), not the libel issue.

Claimant’s case on A3 (2)(a) GDPR is set out as arguing that Defendants, to the extent that they are data controllers, offer services to readers in the UK irrespective of payment. As for A3.2(b), it is contended that the website places cookies on readers’ devices and processes their personal data using Facebook and Google analytics for the purpose of targeting advertisements, with Facebook Ireland Ltd and Google Ireland Ltd operating as the registered joint data controller. Further, it is submitted that Defendants were collecting and obtaining data about the Claimant and were monitoring his behaviour within the UK and the EU with a view to making publishing decisions.

CJEU authority discussed, on the meaning of ‘establishment’, is Weltimmo, Google Spain and Verein fur Konsumerenteninformation. At [78] ff Warby LJ relies to my taste somewhat excessively on the European Data Protection Board’s Guidelines 3/2018 on the Territorial Scope of the GDPR, holding [97] that defendants’ offer and acceptance of subscriptions in local currencies (Sterling cq Euros) is a “real and effective” activity that is “oriented” towards the UK and EU – that the effort only yielded 6 UK and EU subscriptions in total is irrelevant: defendants did more than merely making their journalism accessible over the world wide web. 

The result is that jurisdiction in E&W under the GDPR gateway is upheld – as is therefore, the potential which I predicted for extensive splintering of private GDPR enforcement, in contrast with the EU’s stated intent to have one-stop shop public GDPR enforcement.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.9.2.5, para 2.258 ff.

Service out, 'establishment' and 'services', territorial reach of the #GDPR https://t.co/iyVsTQcUvo
For review of the High Court judgment see https://t.co/KBZ4s4VHVz https://t.co/cLi12uuFk7

— Geert Van Calster (@GAVClaw) December 21, 2021

In Kwok & Ors v UBS AG (London Branch) [2022] EWHC 245 (Comm) Cockerill J holds on forum damni (Article 5(3) for purely economic loss, and branch jurisdiction (Article 5(5) for the English courts under the Lugano Convention. Defendant is Switserland based and the proceedings clearly were initiated prior to Brexit.

On A5(3) locus damni, all parties and the judge agree that CJEU authority is not easy to disentangle and does not unequivocally point into one direction: see eg [84] ‘the authorities are not entirely pellucid on what they do say.’

The bank, defending, argues ia that a rule of thumb under (limited) English authority is that in a case of negligent misstatement the damage will occur where the misstatement is received and relied upon. Cockerill J distinguishes the authority from current case and also points out [82] that all cases concerned predate the CJEU authority particularly in Lober and Vereniging van Effectenbezitters, and that ‘the tide of authority is against the proposition that loss is suffered wherever a claimant ultimately feels it’ [85]. Having summarised the lines of interpretation following from CJEU authority, she concludes [113]

Once the focus is on actual manifestation (of damage, GAVC) the most natural analysis is to view the damage as occurring where and when the Acquired Shares were liquidated.

here, London, where the shares claimants had invested in were held and where the funds they had invested were depleted; the loss crystallises, manifests, becomes certain and irreversible with the sale of shares and that loss of claimants’ Monetary Contribution which had merged into the shares  [115].

The account, where the damage was first “registered” or “recorded” was in London with the defendant itself (as in CJEU Kronhofer) [117]. The Universal Music-instructed ‘special circumstances’ cross-check also points to London: [118]

London was the place at which it had been agreed by all parties that the Acquired Shares would be held, and all of the contractual documents UBS entered into (albeit for a transaction at one remove from the Claimants) were to be in English and governed by English law. It was therefore entirely predictable and foreseeable from November 2014 that the parties might sue or be sued in London in relation to the Investment and dealings with the Acquired Shares.

Branch jurisdiction under Article 5(5) is dealt with obiter [120] ff. Cockerill J holds [138] that was is needed inter alia per CJEU flyLAL is ‘sufficient nexus’, sufficiently significant connection does not require involvement in the tortious acts [140]. This is supported, Cockerill J holds [148] by the fact that UBS London’s thoughts and actions will be relevant to the trial. There will be a need to investigate UBS London’s conduct and intentions both (i) at the time of the representations and advice given by UBS and (ii) late events and the loss resulting therefrom.

A good judgment to assist with the economic loss jigsaw.

Geert,

Tort jurisdiction (purely economic loss) and branch jurisdiction, A5(3) and (5) #Lugano Convention, both upheld

Kwok & Ors v UBS AG (London Branch) [2022] EWHC 245 (Comm) https://t.co/ev68gReQzx

— Geert Van Calster (@GAVClaw) February 9, 2022

Hongrie / Parlement et Conseil, C-157/21 Pologne/Parlement et Conseil
Principes du droit communautaire
Mesures de protection du budget de l’Union : l’assemblée plénière de la Cour de justice rejette les recours formés par la Hongrie et la Pologne contre le mécanisme de conditionnalité qui subordonne le bénéfice de financements issus du budget de l’Union au respect par les États membres des principes de l’État de droit

In C-595/20 Sharewood, the CJEU last week held on the extent of Rome I’s rei sitae exception to consumer contracts. In essence, as a result of Article 6 Rome I, for consumer contracts, choice of law is free (in the case at issue this lex voluntatis was Swiss law) except the consumer may always fall back on the mandatory laws of his habitual residence (here, Austrian law).

For a limited selection of contracts, including (A6(4)c) ‘a contract relating to a right in rem in immovable property or a tenancy of immovable property other than a contract relating to (timeshares)’, party  autonomy is restored in full under the terms of Articles 3 and 4 Rome I, hence the consumer loses his protection.

The contract at issue is a tree purchase, lease and service agreement. The trees at issue are grown in Brasil. The ground rent for the lease agreement, which granted the right to grow the trees in question, was included in the purchase price of those trees. The service agreement provided that ShareWood would manage, administer, harvest and sell the trees and would remit the net return on the timber to UE, the (anonymised) consumer. The difference compared to the gross return, expressed as a percentage of the return, was retained by ShareWood as its fee for the provision of those services.

The question in the case at issue is essentially how intensive the link to (foreign) soil needs to be for it to fall under the rei sitae carve-out for consumer contracts. The CJEU does refer to some of its Brussels Ia case-law, including Klein and Kerr, for the ‘tenancy’ element of the question, but not for the ‘rights in rem’ part of the discussion, where it more straightforwardly concludes on the basis of the contractual arrangements that the trees [28]

must be regarded as being the proceeds of the use of the land on which they are planted. Although such proceeds will, as a general rule, share the same legal status as the land on which the trees concerned are planted, the proceeds may nevertheless, by agreement, be the subject of personal rights of which the owner or occupier of that land may dispose separately without affecting the right of ownership or other rights in rem appertaining to that land. A contract which relates to the disposal of the proceeds of the use of land cannot be treated in the same way as a contract which relates to a ‘right in rem in immovable property’, within the meaning of Article 6(4)(c) of the Rome I Regulation

and [37]

the main purpose of the contract at issue in the main proceedings is not the use, in the context of a lease, of the land on which the trees concerned are planted, but… to generate income from the sale of the timber obtained following the harvest of those trees. As is apparent from the order for reference, the lease provided for in that agreement, which includes only the right to allow those trees to grow and has no purpose other than the acquisition of those trees, is intended merely to enable the sales and services elements provided for in the contract to be carried out.

Not caught therefore by the rei sitae exception.

I often refer my students to Harry, in A Bug’s Life, to make the point that both for jurisdictional and for applicable law purposes, the mere presence of real estate does not lead to the rei sitae jurisdictional and governing law implications being triggered. CJEU Sharewood is a good illustration of same.

Geert.

 

CJEU last week In Share Wood on lex rei sitae, applicable law A6 Rome I.
Contract of sale, including lease and service agreement, re trees planted on leased land for sole purpose of being harvested for profit, is not a contract relating to a right in remhttps://t.co/tlKVHl2xYX

— Geert Van Calster (@GAVClaw) February 14, 2022

The CJEU delivered yesterday its judgment in case C‑595/20 (UE v ShareWood Switzerland AG, VF), which is about Rome I :

« Article 6(4)(c) of Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (‘Rome I’) must be interpreted as meaning that a contract of sale, including a lease agreement and a service agreement, relating to trees planted on leased land for the sole purpose of being harvested for profit, does not constitute a ‘contract relating to a right in rem in immovable property or a tenancy of immovable property’ within the meaning of that provision ».

Source : https://curia.europa.eu/juris/document/document.jsf?text=&docid=253728&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=2334998