In GDE LLC & Anor v Anglia Autoflow Ltd [2020] EWHC 105 (Comm) (31) the Rome I Regulation does not apply ratione temporis; the Agency Agreement was concluded on about 9 April 2009 which is a few months before the kick-off date of the Regulation (note there is no default rule for agency in Article 4 Rome I in the event of lack of lex voluntatis). Dias DJ therefore turns to the 1980 Rome Convention.
Parties are in dispute as to the governing law of the Agency Agreement by which the claims should be determined. AAL alleges that the governing law is that of Ontario while the Claimants allege that the Agency Agreement is governed by English law. The point is of critical importance because the Claimants concede that, if AAL is correct, their claim is time-barred under Ontario law: although this, as readers know, assumes statutes of limitation are subject to the governing law – which is far from certain: see Jabir v KIK and Spring v MOD.
Parties’ arguments are at 10 and 11 and of course they reverse engineer. In essence (at 20) claimants say that there was an implied choice of English law. Alternatively, if that is not correct, the presumption in Article 4(2) of the Rome Convention, which would otherwise point to Georgia law, falls to be disapplied in favour of English law. The Defendant says that there was no implied choice and that application of Article 4(2) leads to Ontario law. Alternatively, if (which it denies) the presumption in Article 4(2) leads to any other governing law, the presumption is to be disapplied in favour of Ontario.
At 21 ff follows a rather creative (somewhat linked to the discussion of ex officio Rome Convention application in The Alexandros), certainly unexpected (yet clearly counsel will do what counsel must do) argument that essentially puts forward that under the common law approach of foreign law = fact hence must be proven, any discussion of a law as governing law, not suggested by the parties (here: the laws of (the US State of) Georgia) that is not English law (which clearly the English curia does ‘novit’), cannot go ahead. At 22 Dias DJ already signals that ‘once the wheels of the Convention had been put in motion, they could not be stopped short of their ultimate destination. The idea that the process dictated by the Convention should be hijacked halfway, as it were, on the basis of a pleading point was, to my mind, deeply unattractive.’
At 31 she sinks the argument. I think she is right.
Having at length considered the facts relevant to the contract formation, discussion then turns again to the Rome Convention with at 105 ff a debate on the role to be played by factors intervening after contract formation with a view to establishing [implicit, but certain: see at 117 with reference to the various language versions of the Convention and the Regulation essentially confirming the French version] choice of law or closest connection. (Dias J refers to the Court of Appeal in Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Ltd, [2013] EWCA Civ 365; [2013] 2 Lloyd’s Rep 98 where, at paragraphs 21-27, it pointed out that the common law approach frequently blurred the distinction between the search for the parties’ inferred intention and the search for the system of law with which the contract had its closest and most real connection).
At 120: the hurdle is high: choice of law implicitly made must have nevertheless been made: ‘The court is not looking for the choice that the parties probably would have made if they had turned their minds to the question.’ at 122: In the present case the evidence established that there was no reference by the parties to the question of governing law at all. Choice of court for England does not change that. At 160 ff therefore follows the discussion of Article 4 of the Rome Convention, leading to a finding of the laws of Ontario as the lex contractus under Article 4(1). Article 4(5) does not displace it.
Geert.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.4, Heading 3.2.6.
I seem to be having my environment cap firmly on this week so I am happy to thank Le Monde for flagging the judgment of the French Constitutional Court 2019-823 of 31 January in which it sanctioned (against the wishes of applicants, the Union des industries de la protection des plantes, essentially Bayer, Syngenta, BASF) the Government’s ban on the manufacturing of and exportation of pesticides banned for use in France but hitherto available for export, mostly to Africa.
The case I would suggest is one that is also very suited to a business ethics class. Interestingly the Act also mentions that it applies to the degree it is not incompatible with WTO rules – the WTO is not addressed in the judgment.
Applicants’ case is grounded on the freedom of ‘enterprise’ or ‘commerce’, as expressed in the 1789 Déclaration des droits de l’homme et du citoyen – but also the Decret d’Allarde 1791. To the mix of objectives to be balanced, the Court adds the protection of public health (Constitutional recital, 1946) and the Environment Charter 2004, from which the court deduces that environmental protection, as common heritage of mankind, is a Constitutionally ringfenced objective.
At 6 the Court without much ado posits that the French Government in pursuing environmental policy, justifiably may take into account the extraterritorial environmental consequences of activities on French soil.
Having referred to the EU ban on the use of the substances at issue, based on scientific considerations discussed at length in the run-up to the EU law at issue, the Court at 9-10 refers to the principle that it should not overzealous in second-guessing the exercise by Parliament of its balancing exercise. At 11, it notes that the 3-year transitionary period gives corporations ample transitionary time in line with their freedom of commerce.
To the Court, it’s all very much self-evident. For environmental policy and extraterritoriality, its findings are quite relevant.
Geert.
Environment, territoriality.
French Constitutional court upholds ban on manufacturing and exportation of pesticides banned for use in France but hitherto available for export, mostly to Africa.
Rejects Bayer, Syngenta, BASF action aimed particularly at herbicide atrazine. https://t.co/KMH0QuKpL7
— Geert Van Calster (@GAVClaw) January 31, 2020
In C-654/18 Interseroh Sharpston AG opined on 30 January, in answer to a German court wishing to ascertain whether a waste stream composed principally of paper products should be categorised as so-called ‘green’ waste and therefore subject to the flexible control procedure provided in the EU’s Waste Shipment Regulation 1013/2016. The referring court also asks whether such waste can still be categorised as ‘green’ if it contains up to 10% impurities.
The Regulation combines rules of purely EU origin, with a sometimes complex combination of OECD and 1989 Basel Convention rules. It generally employs a listing system with corresponding light signals (green and amber, previously also red) with the green list being the most desirable to exporters: these only require compliance with the same rules as ordinary commercial transactions.
Regardless of whether or not wastes are included on the list of wastes subject to the Green Control Procedure (Appendix 3 of the EU Regulation), they may not be subject to the Green control procedure if they are contaminated by other materials to an extent which (a) increases the risks associated with the wastes sufficiently to render them appropriate for submission to the amber control procedure, when taking into account the criteria in Appendix 6 to this Decision, or (b) prevents the recovery of the wastes in an environmentally sound manner’.
In the dispute at issue Interseroh collects used sales packaging (lightweight packaging) from private final consumers throughout Germany which it then consigns to recovery. It ships the prepared waste paper across the border for recycling in a paper factory in Hoogezand (Netherlands). New paper and new paperboard is produced from the waste paper. The Netherlands purchaser, ESKA stipulates that the waste paper must meet the following specifications. It should be composed of at least 90% used, residue-drained, system-compatible paper, paperboard or cardboard (PPC) articles and PPC-based combinations, with the exception of liquid packaging board including packaging parts such as labels etc. Also, the waste stream must contain no more than 10% impurities (‘the mixture of wastes at issue’).
The Dutch and German import cq export authorities differ as to the inclusion or not of the transported wastes at issue, with the Dutch taking a more relaxed approach on the basis of the Dutch version of the relevant Basel entry B3020.
According to the wording of the German-language version, point 2 of the fourth indent covers ‘nicht sortierten Ausschuss’ (‘unsorted scrap’) and not ‘nicht sortierte Abfälle’
(‘unsorted waste’), as the Dutch Supreme Court held on the basis of the Dutch language version (‘ongesorteerd afval’). The term ‘scrap’ is not synonymous with the terms ‘waste’ or ‘mixture’. In addition, a distinction is drawn in the French language version between ‘mélange de déchets’ and ‘rebuts non triés’, just as in the English-language version between ‘mixture of wastes’ and ‘unsorted scrap’. The terms ‘scrap’ and ‘waste’ are therefore not synonymous. Since, in the Dutch language version of the heading of Basel Code B3020, the term ‘waste’ is not used, but it instead reads ‘papier, karton en papierproducten’, the term ‘afval’ in point 2 of the fourth indent in the Dutch-language version does not cover the entire entry, but only what does not come under the first three indents.
Specifically, on 20 May 2015, the Raad van State (Council of State, Netherlands) ruled in proceedings involving ESKA that a waste paper mixture, regardless of the presence of impurities, comes under Basel Code B3020. Accordingly, any such mixture of wastes constituted ‘Green’ listed waste and came within the list of wastes subject to the Green control procedure under Article 18 of Regulation No 1013/2006. It did so on the basis of the Dutch language version of Basel Code B3020. ESKA had previously been employing the stricter prior notification procedure under Article 4 of the Regulation.
Interseroh then brought an action before the referring German court seeking a declaration that it is entitled to ship the mixture of wastes at issue to other EU Member States in accordance with the Green control procedure.
Sharpston AG at 27 starts by pointing out that the shipments at issue are kosher commercial and regulatory transactions: at least 90% of the mixture is made up of what can be described generically as paper, paperboard and paper product wastes. The waste also includes a maximum of 10% impurities. This, in other words, is not a cowboyesque trafficking practice. She then explores the legislative history of the amended Annexes, paying less attention to the linguistic analysis perhaps than one might expect – object and purpose is, after all, a guiding principle in the interpretation of texts with seemingly diverging language versions. She concludes from that assessment (please refer to her Opinion itself; there is little point in me paraphrasing it here) that the lighter, green list procedure can only apply if the notifier shows with scientific evidence that the level of impurities does not prevent the recovery of the wastes in question in an environmentally sound manner. She also acknowledges at 72 (as the EC already did in its 2009 FAQs) that clarity on the issue is wanting: ‘establishing what is a tolerable level of contamination is a matter that is due (perhaps, overdue) for examination’. However given the lack of formal regulatory guidance on the issue, the Article 28 procedure of Regulation applies: where the competent authorities of the Member State of dispatch and the Member State of destination cannot agree on the classification of a particular consignment of wastes (and hence on whether the more flexible Green control procedure in Article 18 may be used), the Annex IV amber list procedure must be applied.
Geert.
(Handbook of) EU Waste Law, 2nd ed 2015, Chapter 4.
(Opinion earlier signalled here)
[2020] EWHC 98 (Ch) Wilson and Maloney (bankruptcy trustees of Michael McNamara), concerns mostly Article 49 TFEU (freedom of establishment) and Article 24(1) of the Citizens’ Rights Directive 2004/38 (equal treatment). (At 114) the critical question is whether the exclusion of pension rights on bankruptcy is something that can impact on the right of establishment, or is otherwise within the scope of Art 49 TFEU.
The substantive case at issue concerns the inclusion or not of in investment in a certain pension scheme, into the bankruptcy. My interest in the judgment lies in the succinct reference to forum shopping under insolvency regimes.
Mr McNamara was made bankrupt on 2 November 2012 on his own petition, presented that day. Prior to his bankruptcy Mr McNamara had been a high profile property developer operating primarily, if not exclusively, in the Republic of Ireland. But he and his wife had moved to London in July 2011, and the Court accepted that he had moved his centre of main interests (or COMI) from Ireland to England by the date of presentation of the petition.
Nugee J decided to refer to the CJEU for preliminary review (this having happened on 23 January, clearly one of the last if not the last UK reference to go up to the CJEU). Whether COMI was moved for forum shopping purposes is not likely to feature in the eventual judgment – for there does not seem to be any suggestion that the move of COMI to England had been properly established.
Geert.
In C-15/19 A.m.a. – Azienda Municipale Ambiente SpA v Consorzio Laziale Rifiuti, Kokott AG opined mid-January. Her opinion relies heavily on the specific provisions which the Landfill Directive 1999/31 includes for what one could effectively call legacy issues in waste management: how does one roll-out stricter requirements, including with respect to polluter pays, unto landfill sites that were already in existence?
I shall not repeat said provisions for the Advocate General does so extensively. Suffice to say that her reasoned roll-out of the polluter pays principle (she puts the onus on the landfill sites’ operators; principles of legal certainty do not allow to charge those having deposited the waste at the site retroactively to pay for longer aftercare) is based to a large degree on the window which the Directive foresaw for Member States to close down sites whom they did not think could be expected to meet the new Directive’s stricter obligations before its lenghthy implementation periods; and on the fact that the operators of these sites, unlike the depositors of waste, can be expected to be properly au fait with its aftercare requirements and hence also of the proper amount of charges to be invoiced to users of the site.
Another good example of EU environmental /waste law not quite being the environmental zealot which its critics often try to make of it.
Geert.
Kokott AG #CJEU C-15/19 https://t.co/ktkeQlqP6X.#Waste, landfill Directive, polluter pays
Application of aftercare provisions to landfill sites in use before Dir entered into force (EIF & passing on increased costs for same to waste holders who used the site before that same EIF
— Geert Van Calster (@GAVClaw) January 16, 2020
In [2020] EWHC 75 (QB) Lenkor Energy Trading v Irfan Iqbal Puri, Davison M rejected the ordre public arguments made by claimant against recognition of a money judgment of the Dubai First Instance Court.
Reflecting global understanding of ordre public, it is the judgment and not the underlying transaction upon which the judgment is based which must offend (here: English) public policy. That English law would or might have arrived at a different conclusion is not the point (Walker J in Omnium De Traitement Et De Valorisation v Hilmarton [1999] 2 Lloyd’s Rep 222).
The ordre public arguments made, were (1) illegality, (2) impermissible piercing of the corporate veil and (3) penalty.
Re (1), the argument is that the underlying transaction is illegal. Master Davison acknowledged there are circumstances where an English court might enquire into the underlying transactions which gave rise to the judgment. However such court must do so with extreme caution and in the case at issue, defendant’s familiarity with Dubai and its laws argued against much intervention by the English courts.
On (2), the veil issue, submission was that defendant was being made personally liable for the debts of IPC Dubai, which was the relevant party (as guarantor) to the Tripartite Agreement and the holder of the account upon which the cheques were drawn. The cheques had not been presented or had been presented out of time – or there was at least an issue about that. The combination of these matters was, it was suggested, to impose an exorbitant liability on Mr Puri for sums which he had not agreed to guarantee – in contravention of established principles of English law.
Here, too, Davison M emphasised defendant’s familiarity with Dubai law. The case against Mr Puri in Dubai was resolved according to the rules which the laws of Dubai apply to Dubai companies and to individuals who write cheques on Dubai accounts. Dubai law may be different than English law on this point, but not repugnantly so.
Finally on (3) the sums in particular the interest charged were suggested to be exorbitant hence a form of unenforceable punitive damages. However, 9% interest is only 1% higher than the judgment debt rate in England and only ¼% higher than the current rate under the Late Payment of Commercial Debts (Interest) Act 1998. (At 31) ‘In the light of this, to characterise the interest rate of 9% as amounting to a penalty is unrealistic.’
Geert.
Thank you Pailler Ludovic for signalling the French Supreme Court’s judgment in 18-24.261 A and X v et al B and Y et al. The Court annulled the Court of Appeal’s (Versailles) decision which had accepted for recognition and enforcement a Cameroonian judgment in a Cameroonian-French adoption case.
Legal basis for the refusal is Article 34 of the relevant 1974 FR- Cam Treaty. Specically, the classic ordre public international hurdle to recognition and enforcement: ‘Elle ne contient rien de contraire à l’ordre public de l’Etat où elle est invoquée ou aux principes de droit public applicables dans cet Etat.’
The Supreme Court held that absence of Agrément does not infringe French ordre public international (Agrément is required by French adoption law and needs to be sought by the prospective adoptant). Yet fraus (fraude à la loi) might and needs to be properly examined, which the Court of Appeal had failed to do. Suggestion is made in the case that the adoption was engineered with the sole purpose of facilitating the French rights of residence of the adopting father’s partner, who is the mother of the children.
The case emphasises the relevance of fraus omnia corrumpit. Whether of course fraus will be proven in the new proceedings before the Paris Court of Appeal remains to be seen.
Geert.
In Hong Ziyun v Chan Kwan Ming [2019] HKCFI 2125, Chan J at the end of August summed up the Hong Kong approach (as it is that of the common law) to consolidation of jurisdiction at 31: ‘the approach of the courts should be to favor resolution of all disputes associated with a transaction in one jurisdiction.’ That is the so-called one stop shop or one stop principle (whether or not hyphenated).
As Herbert Smith Freehills note, in a host of related loan documents only one of the documents contained an express jurisdiction clause (in favour of the court of Xiamen in Mainland China). The defendants applied for and obtained a stay of proceedings in Hong Kong in favour of Mainland China. HSF summarise the reasoning (the judgment itself is not too long and logically structured) helpfully as follows:
Geert.
I am no expert in all things insolvency and restructuring. I have an interest in it because of the conflict of laws issues (see the Insolvency Regulation) and the relationship with Brussels Ia. I am also interested in the labour law implications of corporate restructuring. These trigger highly relevant ethical, economic, and legal concerns.
Directive 2001/23 protects employees’ rights in the event of transfer of undertakings. The position of employees of course may be seen by potential investors as a hurdle to get onboard. Employees are inevitably on their cost cutting horizon. (For emperical Dutch research see Aalbers et al here and review in NL of same on Corporate Finance Lab).
The Directive exempts (Member States may provide otherwise) bankruptcies ‘proper’ and analogous insolvency proceedings. (They have to be under the management of what the Insolvency Regulation now calls an insolvency practitioner: an insolvency trustee, in other words). In C-126/16 Smallsteps, the Court held that pre-packs also known as ‘hushed bankruptcies’ do not qualify: since such a procedure is not ultimately aimed at liquidating the undertaking, the economic and social objectives it pursues are no explanation of, or justification for, the employees of the undertaking concerned losing the rights conferred on them by Directive 2001/23 (at 50).
Frederik De Leo reported here more extensively and with more knowledge of the issues, on the implications of Smallsteps, including implications for both the Dutch and the Belgian Statutes and proposals on pre-packs and corporate restructuring. On the Dutch implications, Robert van Moorsel had interesting insight here (in Dutch).
In Heiploeg, which was initiated before judgment in Smallsteps but is still being litigated (by Trade Unions), the Dutch Supreme Court /Hoge Raad is now essentially asked to apply the various conditions which the Court of Justice imposed for the bankruptcy exception of Directive 2001/13 to apply. Its procureur-generaal (essentially here fulfilling the role of an Advocate-General at the CJEU) opined in a well-documented Opinion on 1 November 2019 (apologies for late reporting: the Opinion traveled all sorts of corners in my briefcase) and proposes that the Supreme Court annul the lower court’s application of Smallsteps (which had found that the conditions for exception from the employees’ rights Directive did apply).
The Opinion is not I fear accessible to non-Dutch speakers – I am hoping proper experts will report more extensively once the Hoge Raad’s judgment is out.
Geert.
A flag on anti anti-suit. Steve Ross reports here on the Paris Court of First Instance (Tribunal de Grande Instance) judgment in RG 19/59311 IPCom v Lenovo /Motorola granting a preliminary injunction. IPCOM GmbH & Co. KG is an intellectual property rights licensing and technology R&D company. Lenovo/Motorola a telecommunications company. As Steve writes, the French Court held that it had jurisdiction over the case with regard to a patent infringement claim and ordered Lenovo to withdraw the motion for an anti-suit injunction which that company had brought before the US District Court of the Northern District of California in so far as it concerns the French part of the patent.
Steve notes (I have not read the actual judgment) that ‘according to the French Court, the international French public order (ordre public) does not recognise the validity of an anti-suit injunction, except where its purpose is to enforce a contractual jurisdiction clause or an arbitral clause. Under all other circumstances, anti-suit injunction proceedings have the effect of indirectly disregarding the exclusive power of each sovereign state to freely determine the international jurisdictional competence of their courts.’
Peter Bert also reports last week a German anti anti-suit injunction at the Courts in Munchen, also for IPR cases.
For progress in the US anti-suit (one ‘anti’ only) application see order here.
Juve Patent report (as does Peter) that the High Court, too, has issued a (partial) anti anti-suit in the case however I have not been able to locate the judgment.
Note that continental courts (see in the French case) finding that anti-suit in general infringes ordre public is an important instruction viz future relationships with UK court orders following Brexit (should the UK not follow EU civil procedure).
Geert.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.1.
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