Flux Belges et Lux

Case C-60/18 AS Tallinna Vesi could have been, as Advocate General Kokott noted yesterday, about much more. In particular about the exact scope of the Waste Framework Directive’s exclusion for sewage sludge and the relation between the WFD, the waste water Directive and the sewage sludge Directive. However the referring court at least for the time being sees no issue there (the AG’s comments may trigger the applicant into making it an issue, one imagines) and the AG therefore does not entertain it.

Instead the case focusses on whether waste may no longer be regarded as such only if and after it has been recovered as a product which complies with the general standards laid down as being applicable to it? And on whether, alternatively, a waste holder be permitted to request that the competent authorities decide, on a case-by-case basis and irrespective of whether any product standards are in place, whether waste is no longer to be regarded as such.

Ms Kokott emphasises the wide margin of discretion which the Member States have in implementing the Directive. End of waste criteria at the national level (in the absence of EU criteria) may not always be warranted particularly in the context of sewage sludge which is often hazardous. However precisely that need for ad hoc assessment should be mirrored by the existence of a procedure for waste operators to apply ad hoc for clarification on end of waste status.

Geert.

Handbook of EU Waste law, 2nd ed. 2015, OUP, 1.166 ff and 1.189 ff.

GDPR (General Data Protection Regulation) aficionados will have already seen the draft guidelines published by the EDPB – the European data protection board – on the territorial scope of the Regulation.

Of particular interest to conflicts lawyers is the Heading on the application of the ‘targeting’ criterion of GDPR’s Article 3(2). There are clear overlaps here between Brussels I, Rome I, and the GDPR and indeed the EDPB refers to relevant case-law in the ‘directed at’ criterion in Brussels and Rome.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.3, Heading 2.2.8.2.5.

Thank you MPI’s Veerle Van Den Eeckhout for pointing out a highly relevant reference to the CJEU by the Dutch Supreme Court /Hoge Raad. The link between the posted workers Directive and conflict of laws is clear, as I have also explained here. The most interesting part of the reference for conflicts lawyers, ae the questions relating to ‘cabotage’, particularly where a driver carries out work in a country where (s)he is not habitually employed (international trade lawyers will recognise the issue from i.a. NAFTA).

One to keep an eye on.

Geert.

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

In [2018] EWHC 3098 (Ch) Stripes US, Smith J deals with jurisdiction for schemes of arrangement in the now well established way (see my last report on same in Algeco):

The EU’s Insolvency Regulation is clearly not engaged: the schemes fall under company law. The High Court then applies the jurisdictional test viz the Brussels I Recast Regulation arguendo: if it were to apply (which the English Courts have taken no definitive stance on), would an English court have jurisdiction? Yes, it is held: under Article 8 (anchor defendants).

The issue in fact splits in two: so far as the question of jurisdiction in relation to a foreign (non-EU or Lugano States based) company is concerned (Stripes US is incorporated in Delaware), the law is clear. It is well-established that the court has jurisdiction to sanction a Scheme in relation to a company provided that company is liable to be wound up under the Insolvency Act 1986.

Turning next to the Scheme Creditors, of the 31 Scheme Creditors, 19.4% by number (26.35% by value) of the ‘defendants’ (an odd notion perhaps in the context of a Scheme sanction) are domiciled in the UK, plenty Smith J holds to suggest enough reason for anchoring: not taking jurisdiction vis-a-vis the defendants domiciled in other Member States, would carry with it a serious risk of irreconcilable judgments.

Finally the case for forum non conveniens (and comity) is considered (vis-a-vis the US defendant), and rejection of jurisdiction summarily dismissed: in this case the relevant agreement which is the subject of the Scheme has a governing law which is (and, I understand, always has been) English law: at 63: ‘Generally speaking, that is enough to establish a sufficient connection. The view is that under generally accepted principles of private international law, a variation or discharge of contractual rights in accordance with the governing law of the contract should be done by the court of that law and will be given effect to in other third-party countries.’ US experts moreover advised any judgment would most probably have no difficulty being enforced in the US

Geert.

(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 5.

I am working on rather intricate conflicts issues this week (which I am enjoying) so I am turning to the blog for a little cerebral relief (equally pleasing). In [2018] EWHC 1544 (Ch) Deutsche Apotheker- und Arztebank EG v Leitzbach , reported with thanks by Ashfords, Hodge J correctly applied the COMI test of Regulation 1346/2000 to dismiss jurisdiction for the courts in England and Wales.

Dr Leitzbach had obtained a bankruptcy order after a previous attempt in which he had failed to testify to COMI in England and Wales. His, successful, second attempt, it now became clear, was obtained after misrepresentation. Dr Leitzbach’s arguments pro COMI it seems were mostly based on residence in the UK, proof for which he sought to obtain from (in fact non-existing) supermarket loyalty cards, as well as receipts of purchases made hundreds of miles apart within a short time-frame.

Note at 27 Hodge J’s in my view entirely correct sympathy for forum shopping in insolvency: as long as COMI can be correctly ascertained in the jurisdiction, this is an entirely justifiable phenomenon. Except indeed COMI was not in the UK as the High Court equally found:

at 71: ‘I simply cannot accept the evidence of Dr Leitzbach as to the fact that he was living and working …as a consultant in England and Wales at the relevant time. I simply do not accept his evidence to that effect. Secondly, however, I would in, any event, have found that, as a professional dentist who had been practising as such in Germany, Dr Leitzbach had never acquired a COMI in England and Wales…’

at 74: ‘so far as his visibility as a dentist is concerned, third parties would clearly have formed the view that he was continuing to practise with his brother in Germany until the end of 2012. He remained on the appropriate public dental register until the end of 2012. He secured a certificate that he was unfit for dental work at the end of 2011; but even that document was addressed to the former practice address in Hochheim, and it operated simply to relieve the debtor from making contributions to his official German dental pension scheme only until 30 June 2012…Dr Leitzbach accepted..that he was representing to third parties that he remained in practice as a dentist in the Hessen dental register until the end of December 2012. It was that dental practice address that was used by Dr Leitzbach to register himself on the postgraduate dental course that he undertook. He accepted that others on the course would all have assumed that he was continuing to practise as a dentist in Germany. His CV, written for the purpose of a published article in a dental journal, gave the impression that he had worked as a dentist in Germany until the end of 2012, and that, thereafter, his only professional activity was attending the postgraduate dental course.’

COMI never have been in the UK, the carpet was pulled from underneath the previous Bankruptcy order and this had to be annulled.

Geert.

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

I have an ever-updated post on Google’s efforts to pinpoint the exact territorial dimension of the EU’s data protection regime, GDPR etc. Now, Facebook are reportedly appealing a fine imposed by the UK’s data protection authority in the wake of the Cambridge Analytica scandal. Facebook’s point at least as reported is that the breach did not impact UK users.

The issue I am sure exposes Facebook in the immediate term to PR challenges. However in the longer term it highlights the need to clarify the proper territorial reach of both data protection laws and their enforcement.

One to look out for.

Geert.

Thank you Quentin Declève and co-authors for reporting a short while back the Brussels Court of Appeal judgment in RFC Seraing and Doyen Sports v Belgian FA /FIFA /UEFA. (Judgment may be consulted here – I also have a copy). The case in substance concerns FIFA /UEFA’s TPO, Third Party Ownership rules.

Quentin first of all reports on the reasons for the Court to find the arbitration clause between the club and UEFA /FIFA not to be binding. The judgment does not contain copy of the clause (lest I have entirely missed it – but I don’t think so). The clause would not seem to have had a specific lex causae identified: the Court of Appeal uses a mix of Belgian law and New York Convention arguments to rule it invalid.

As we are on the subject of validity of arbitration clauses: please refer to Quentin’s reporting of the Belgian Court’s Supreme Court’s confirmation of validity of NATO’s arbitration clause.

For current blog however I would like to report the findings on the anchor defendant mechanism (19 ff): the Court of Appeal applies Article 6(1) Lugano (UEFA and FIFA are Swiss domiciled), which is the same anchor mechanism as Article 8(1) Brussels I Recast: the anchor defendant being the Belgian Football Association. Freeport and Reisch Montage as well as CDC feature heavily in the Court’s analysis. FIFA and UEFA’s claim is that the Belgian FA is abusively being used as an anchor defendant. The court disagrees: FIFA and the Belgian FA share regulatory powers; the FA is empowered by FIFA statute to impose additional regulations.  The FA’s presence in the proceedings is entirely justified and not artificially constructed.

Geert.

(Handbook of) European Private International Law. 2nd ed. 2016, Chapter 2, Heading 2.2.12, Heading 2.2.12.1.

Another interesting waste-case at the CJEU last week, although unfortunately one in which Wahl AG proposes inadmissibility. In C-399/17 EC v Czech Republic, the question is whether the Czech Republic has infringed the waste shipments Regulation 1013/2006 by refusing to take back a substance known as TPS-NOLO (or Geobal) that had been shipped to Poland without respecting the requisite formalities of the Waste Shipment Regulation.

Approximately 20 000 tonnes of TPS-NOLO (Geobal) and composed of tar acid, a remnant after refining oil (code 05 01 07* of the European waste catalogue), of carbon dust and of calcium oxide. Poland considered the substance to be hazardous waste classified in Annex IV to the Waste Shipment Regulation (‘Waste tarry residues (excluding asphalt cements) arising from refining, distillation and any pyrolitic treatment of organic materials’).  The Czech citizen responsible for the shipment to Poland presented the standards adopted by the company as well as proof that the substance in question was registered under the REACH Regulation and that it was used as fuel.

The case raises interesting issues therefore on the relationship between REACH and Waste, on which I have written briefly inter alia here and, more extensively and with Dr Thomas de Romph, here. At 3 already, Wahl signals that his Opinion will not however lead to findings on the merits of the case: ‘ Finding that there was no infringement in the present case could potentially weaken the effectiveness and enforceability of the Waste Shipment Regulation, whose main and predominant object and component is protection of the environment. However, courts are guided, first and foremost, by procedural principles that ensure a due process in each individual case. Those principles cannot be sacrificed in order to further a greater cause, as noble as it might be.’

The due process issues essentially relate to the European Commission’s handling of the infringement procedure, in which, the AG suggests proprio motu,  it did not formulate a proper statement of claim. Details are in the Opinion and readers are best referred to it.

Now, there is no such thing as double jeopardy when it comes to infringement proceedings hence one can only hope that the Commission services will reinitiate the proceedings (lest of course the CJEU disagree with the AG’s Opinion).

Geert.

Handbook of EU Waste law, 2nd ed. 2015, OUP, i.a.at para 1.201.

A short update on the Court of Justice’s ruling in C-151/17 Swedish Match, in which yesterday it upheld the legality of Directive 2014/40’s ban on ‘snus’ and generally on tobacco products for oral consumption. (Sweden is exempt: Article 15(1) of the 1994 Act of Accession).

The Court reaffirms the bite of the precautionary principle; emphasises the ‘gateway effect’ of snus for the young, including intern alia because consumption of snus can be done very discreetly and hence enforcement of an age ban (a suggested alternative) not effective; and the importance of giving precedence to public health over economic profit.

It also, yet again, shows that measures like these do not fall out of thin air because, as proponents of the precautionary principle would suggest, anti-innovation zealots dream up restrictive measures to kill enterprise. Rather, following extensive scientific advice, the ban is a sensible and proportionate measure to take.

Geert.

EU Environmental Law, with Dr Leonie Reins, 2017, Chapter 2, Heading IV.

Joined Cases C-487/C-489/17 Alfonso Verlezza et al, in which Campos Sánchez-Bordona AG opined  last week, (no version in English available) is one of those rather technical EU environmental law cases which for that reason risks being overlooked by many. This is even more the case in EU waste law. Many of its provisions are subject to criminal law sanctions, hence encouraging defendants to take its application to the most intricate of corners so as to avoid a criminal conviction.

Verlezza et al concerns the implementation by Italy of a notoriously tricky part of EU waste law: the determination of wastes as being ‘hazardous’. Clearly, these wastes are subject to a range of stricter measures than ordinary wastes. Interestingly, while these wastes are more dangerous than ordinary wastes, they are often also more attractive to waste industries: for as secondary raw materials they may have high value (one can think of cartridges, batteries, heavy metals).

Protracted to and fro at the time between the European Commission and the Member States plus Parliament (which I explain in relevant chapter of my Handbook of EU Waste law; which I am pleased to note the AG refers to), eventually led to a regime with two or if one likes three categories: wastes considered per se hazardous; and wastes which may be considered hazardous or not, depending on whether or not they display hazardous properties in the case at issue (hence three categories: hazardous per se; non-hazardous and hazardous in concreto). This latter category are the so-called ‘mirror entries’: wastes originating from the same source which depending on the specifics of the case, may be hazardous or not.

Wastes produced by households (‘domestic waste’) are not considered hazardous. However the AG emphasises correctly that this exemption from the hazardous waste regime (via Article 20 of the waste framework Directive, 2008/98) does not apply to the case at issue, given that the ‘domestic’ wastes concerned have already been mechanically sorted. It is the qualification of the waste residues following sorting that needs to be resolved.

The mirror entries are the result of heated debate between the Institutions. The EC was hesitant to provide a binding list given the need for individual assessment; Council and EP were looking for regulatory certainty. In the end, Member States may (indeed have to)  consider waste as hazardous when the material displays one or more of the hazardous properties listed in Annex to the EU list of waste. This also requires the Member States to issue a procedure which guides this assessment.  It is the specifics of the Italian procedure (producers have to classify specific streams of waste as either hazardous or not; they have to carry out the necessary scientific tests; they are bound by the precautionary principle) which have triggered the case at issue.

At 19 the AG refers to the discussion in Italian scholarship: one part among others on the basis of the precautionary principle defends a reversal of the burden of proof: waste in the mirror entries is considered hazardous unless industry proves its non-hazardous characteristics; the other part proposes that scientific analysis needs to determine hazardousness in each specific case (quoting the sustainable development of the sector in support).

The AG opines that the Italian modus operandi needs to be given the green light, among others referring to the recent April 2018 EC guidance on wastes classification and the criteria defined in the Directive, which render a waste hazardous: producers of waste are perfectly capable indeed in the Directive’s set-up have to assess the hazardous character of the waste and the Italian regulations are a capable way of ensuring this.

The defendants’ ultimate argument that the precautionary principle should allow them to consider waste as hazardous even without such assessment, also fails: scientific assessment is able to determine a substance’s hazardous characteristics.  Defendants’ approach would lead to all mirror entries being defined as hazardous. The Directive’s principle of cost benefit analysis ensures this does not lead to excessive testing-  proportionate testing for properties will do the job. (It may be surprising that the defendants make this argument; but remember: in a criminal procedure all arguments are useful to try and torpedo national law or practice upon which a prosecution is based; without a valid law,, no prosecution).

This latter part of the Opinion, related to the precautionary principle, is a useful reminder to its opponents (who came out in force following this summer’s mutagenesis ruling; for excellent review of which see KJ Garnett here), of the principle’ true meaning.

Geert.

Handbook of EU Waste law, 2nd ed. 2015, OUP, Chapter 2, Heading 2. ff (to which the AG refers).

My reporting on [2018] EWHC 965 (Comm) Republic of Angola v Perfectbit et al is a bit overdue – the case came to my attention again recently in the context of a non-EU brief and I am grateful to Allen & Overy having reported it at the time: please refer to their summary for an overview of the issues and decision (concise summary reads ‘Despite an exclusive jurisdiction clause in favour of the Angolan courts, the High Court was satisfied that England was the appropriate forum to hear a claim by the Republic of Angola and Angola’s central bank against several English and non-EU defendants.’).

In short, the EU’s anchor defendants mechanism (Brussel I Recast, Article 8(1) cannot be used to establish jurisdiction against a non-EU defendant: residual conflicts rules apply. However Bryan J at 124 re-emphasises the extended effect of Owusu in cases such as these at issue:

‘The passages I have quoted were quoted by the Court of Appeal in Lungowe v Vedanta Resources plc [2017] EWCA Civ 1528; [2017] BCC 787 at paragraphs [114] and [115] with approval. Simon LJ (with whom Jackson and Asplin LJJ agreed) at paragraph [113] also referred to the following observations made by the editors of Dicey and Morris:

“113. At paragraph 12-033, the editors of Dicey note the classic exposition of Lord Goff’s forum non conveniens test in the Spiliada case, but add: Lord Goff could not have foreseen, however, the subsequent distortion which would be brought about by the decision of the European Court in Owusu v Jackson. The direct effect of that case is that where proceedings in a civil or commercial matter are brought against a defendant who is domiciled in the United Kingdom, the court has no power to stay those proceedings on the ground of forum non conveniens. Its indirect effect is felt in a case in which there are multiple defendants, some of whom are not domiciled in a Member State and to whom the plea of forum non conveniens remains open: it is inevitable that the ability of those co-defendants to obtain a stay (or to resist service out of the jurisdiction) by pointing to the courts of a non-Member State which would otherwise represent the forum conveniens, will be reduced, for to grant jurisdictional relief to some but not to others will fragment what ought to be conducted as a single trial … There is no doubt, however, that the Owusu factor will have made things worse for a defendant who wishes to rely on the principle of forum non conveniens when a co-defendant cannot.” ‘

In short, against non-EU defendants whose case is anchored with an EU (England and Wales) defendant, forum non conveniens remains open but has become more unlikely. One issue perhaps under-considered by the English courts is Brussels Recast Article 34’s juncto recital 24 impact of exclusive choice of court in favour of a third State (neutralising Owusu for those specific circumstances) – not powerful enough perhaps in the case of a multitude of defendants.

Case goes to trial.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.4 (International impact of the Brussels I Recast Regulation), Heading 2.2.14.5.2.

I had earlier reviewed Bot AG’s Opinion in C-308/17 Leo Kuhn, in which the Court held on Thursday. The case concerns the retrofit introduction of CACs – Collective Action Clauses, in Greek bonds, allowing the amendment to the initial borrowing terms by decisions adopted by a qualified majority, of the remaining capital owed and applying also to the minority.

Along the lines suggested by the AG, the Court finds the litigation not to relate to civil and commercial matters (likely also leading to a finding on the basis of national law, of sovereign immunity).

Extensive reference is made of course to Fahnenbrock , among others. Yet the Court pays lip service only to Fahnenbrock: in that judgment, it launched the ‘direct and immediate’ formula: in that case it found it was the bondholders’ vote, which led directly and immediately to changes to the financial conditions of the securities in question, not the public authorities’ actions essentially dictating it: therefore that litigation was held not to be actum iure imperii, and it was found to be subject to the service of documents Regulation.

In Kuhn, Brussels I Recast is engaged and here the Court would seem to be inclined to follow (also) Bot AG’s Opinion in Fahenbrock (where he was not so followed): there, Bot AG had opined that the Greek State’s intervention in the contracts was direct and not at a distance from the contract. His focus was more on the circumstances of the case than on the legal nitty-gritty. There are certainly many similarities between Fahnenbrock and Kuhn: in the latter, the crammed-down haircut was formally the result of a majority decision of bondholders to accept the restructuring offer made by the Greek State. Not unlike Fahnenbrock were as noted it was also a bondholders’ vote which was the formal trigger.

In Kuhn, the Court emphasises the context, like Bot to no avail had done in Fahnenbrock: after a succinct tour d’horizon of the debt crisis leading to the CACs, the Court concludes ‘It follows that, having regard to the exceptional character of the conditions and the circumstances surrounding the adoption of Law 4050/2012, according to which the initial borrowing terms of the sovereign bonds at issue in the main proceedings were unilaterally and retroactively amended by the introduction of a CAC, and to the public interest objective that it pursues, the origin of the dispute in the main proceeding stems from the manifestation of public authority and results from the acts of the Greek State in the exercise of that public authority, in such a way that that dispute does not fall within ‘civil and commercial matters’ within the meaning of Article 1(1) of Regulation No 1215/2012.’

I suggested at the time that ‘direct and immediate effect’ is not a criterion which is easy to handle. Yet in solely emphasising context, the Court now casts the net too wide in my view, and at the very least leads to more speculation (pun intended) in the litigation context of sovereign debt.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Heading 2, Heading 2.2, Heading 2.2.9.

The pauliana rings extensively at Kirchberg these days and months.

Two days ago the Court held in C‑296/17 Wiemer & Trachte. Following Wahl AG’s Opinion (which is not available in English), the Court has confirmed exclusive jurisdiction for set aside (pauliana) actions, of the courts of the Member State within the territory of which insolvency proceedings have been opened (COMI or secondary proceedings). Not therefore jurisdiction under the Brussels I Recast for the State of domicile of the defendant.

The need to avoid forum shopping (a strong leading principle in the insolvency Regulation) in particular, led Wahl AG and now the Court to insist on exclusive jurisdiction. The alternative reading (defended, I understand, inter alia by the Commission) relied on the altogether limiting wording of the relevant articles in the Regulation (both the previous and current versions), and also on an efficiency argument: particularly the insolvency practitioner ought to be able to forum shop so as to ensure the best outcome for the collective creditors (particularly by pursuing parties who have benefitted from avoidance actions, in their domicile). Wahl AG confessed sympathy for that practical reason (not unlike some of the arguments in the common law against say Owusu or West Tankers), yet emphasised the CJEU’s direction on vis attractiva concursus: rather a magnetic direction.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5 Heading 5.4.1. Chapter 2 Heading 2.2.2.10.1

I earlier posted a guest blog on the qualification of the Dutch Peeters /Gatzen suit, a damages claim based on tort, brought by a liquidator against a third party having acted wrongfully towards the creditors. Bobek AG opined two weeks back in C-535/17 NK (insolvency practitioner for a baillif practice) v BNP Paribas Fortis.

His Opinion is of relevance not just for the consideration of jurisdiction, but perhaps even more so (for less litigated so far) for the analysis of applicable law.

Roel Verheyden has commented on the Opinion in Dutch here, and Sandrine Piet had earlier contextualised the issues (also in Dutch) here. She clarifies that the suit was introduced by the Dutch Supreme Court in 1983, allowing the insolvency practitioner (as EU insolvency law now calls them) to claim in tort against third parties whose actions have diminished the collective rights of the creditors, even if the insolvency person or company at issue was not entitled to such suit. The Advocate General himself, in his trademark lucid style, summarises the suit excellently.

Importantly, the Peeters /Gatzen is not a classic pauliana (avoidance) suit: Bobek AG at 16: ‘The power of the liquidator to bring a Peeters-Gatzen action is not limited to cases where the third party belongs to the circle of persons who, based on a Paulian (bankruptcy) claim .. would be liable for involvement in allegedly detrimental acts. The liquidator’s competence relates more generally to the damage caused to the general body of creditors by the wrongful act of a third party involved in causing that damage. The third party need not have caused the damage or have profited from it: it is sufficient that that third party could have prevented the damage but cooperated instead.’

In the case at issue, the third party is BNP Paribas Fortis, who had allowed the sole director of the company to withdraw large amounts of cash from the company’s account.

Firstly, on the jurisdictional issue, Nickel /Goeldner and Nortel had intervened after the interim judgments of the Dutch courts, creating doubt in their minds as to the correct delineation between the Insolvency and Brussels I Recast Regulation. The Advocate-General’s approach in my view is the correct one, and I refer to his Opinion for the solid arguments he deploys. In essence, the DNA of the suit are the ordinary rules of civil law (re: tort). That it be introduced by the insolvency practitioner (here, the liquidator) and that it is the case-law on liquidation proceedings which has granted that right to the liquidator, is not materially relevant. Note that the AG correctly adds in footnote 40 that even if the suit is not subject to the Insolvency Regulation, that Regulation does not disappear from the litigation. In particular, given that liquidation proceedings are underway, the lex concursus determines the ius agendi of the liquidator to bring the suit in tort, in another Member State (Belgium, on the basis of Article 7(2) or 4 Brussels I Recast).

Now, for applicable law, the AG first of all completes the analysis on the basis of the Insolvency Regulation, in the unlikely event the CJEU were not to follow him on the jurisdictional issue. Here (para 85 ff) the referring court wishes to know whether, if the Peeters-Gatzen action is covered by the Insolvency Regulation, such a claim would be governed, pursuant to Article 4(1) of that Regulation, by the law of the Member State where the insolvency proceedings were opened as regards both the power of the liquidator to bring that claim and the substantive law applicable to that claim. This question seeks to determine whether it is possible to follow the approach of the second-instance court in the main proceedings, and separate the law governing the powers of the liquidator (ius agendi) from the law applicable to the merits of the claim. The powers of the liquidator would then be governed by the lex fori concursus (Dutch law, per Article 4(2)(c) Insolvency Regulation). That article states that ‘the law of the State of the opening of proceedings … shall determine in particular … the respective powers of the debtor and the liquidator’. However, the merits of the claim would then be governed by the law applicable by virtue of the general (non-insolvency) conflict of law rules. In the present case that would lead to application of residual Dutch conflict of law rules, because the Rome II Regulation does not apply ratione temporis as the AG further explains. These rules lead to Belgian law being the lex causae.

Within the assumption of the Insolvency Regulation determining jurisdiction (for see footnote 40 as reported above, re ius agendi) the AG emphasises the Regulation’s goal of Gleichlauf: at 89: If the Peeters-Gatzen action were covered by the Insolvency Regulation, all its elements would be governed exclusively by the conflict of law rules of that regulation.

(Current) Article 16’s exception such as in Nike and Lutz does not come into play for as Bobek AG notes at 94, ‘It is difficult to see how the Peeters-Gatzen action at issue in the main proceedings could be qualified as a rule ‘relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors’, in the sense of Article 4(2)(m) [old, GAVC] of the Insolvency Regulation. The purpose of such an action is not a declaration of the voidness, voidability or unenforceability of an act of the third party, but the recovery of damages based on the wrongful behaviour of that third party towards the creditors. Therefore, as Article 4(2)(m) [old, GAVC] of the regulation would not apply in the main proceedings, the exception in Article 13 [old, GAVC] could not apply either.’

The AG finally discusses the referring court’s question whether if the Peeters-Gatzen action is exclusively subject to the lex fori concursus, it would be possible to take into account, whether directly or at least by analogy, and on the basis of Article 17 Rome II read in conjunction with Article 13 (now 16) of the Insolvency Regulation, the security regulations and codes of conduct applicable at the place of the alleged wrongful act (that is to say, in Belgium), such as financial rules of conduct for banks. Article 17 Rome II reads ‘In assessing the conduct of the person claimed to be liable, account shall be taken, as a matter of fact and in so far as is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability.‘

I have argued before that Article 17 Rome II does not have the rather extensive impact which some attribute to it. The AG, after signalling that the Article is yet to be applied by the CJEU, notes that Rome II does not apply here ratione temporis. He then concludes with an aside (it is not articulated as a proper argument – which is just as well for it is circular I suppose): at 104: ‘the more pertinent question is… whether it is really necessary to have recourse to a cumbersome legal construction, in this case the application of rules by analogy, outside of their material and temporal scope, in order to reach a solution (the application of Belgian law) which solves a problem (the applicability of Netherlands law by virtue of the Insolvency Regulation) that should not have been created in the first place (since the Peeters-Gatzen claim at hand should fall within the scope of the Brussels I Regulation). In any event, I am of the view, also in this regard, that these questions by the referring court rather confirm that there is no close connection between that action and the insolvency proceedings.’

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.4.1, Heading 5.7.

I have reported twice before on the BIBC – once viz the initial version and a second time with my short report for the Parliamentary Hearing. I have now had a minute to review the Council of State’s comments on the amended version – among others with a view to preparing for next week’s conference on hybrid courts in Doha. Note that the Council of State here acts in its advisory function: essentially its opinions aim to improve draft statute so as to avoid future litigation.

What is clear from these recent comments is that the Council does not at all embrace the regulatory competition incentives which lie at the heart of the proposal, in particular in its view on how a matter may be made ‘international’ so as to justify engagement of the BIBC. Its view (let alone the Justice Council’s fear for forum shopping?!: encouraging such shopping being the very raison d’etre of the Act) contradicts the CJEU’s flexible stance on the issue as apparent eg in Vinyls Italia. As I noted in my comments before the Committee, it is a rather odd indeed parochial requirement to insist on parties having used English in their correspondence, before they can validly engage the BIBC. Even the suggested amendment that the use of languages other than Belgium’s three official ones (French, Dutch, German) should suffice, is not convincing to the Council. One hopes the drafters will ignore the Council’s hesitation at this point.

The Council does not of course engage in the political discussions surrounding the proposal: in particular, whether in a country in which the court system arguably does not operate to satisfaction, the creation of an international commercial court may compound, rather than remedy issues.

Geert.

Thank you Nicolas Contis and Leonardo Pinto for reporting  judgments by the French Supreme Court (Cour de Cassation) 16-19-731 Ergo Versicherung v Volker and 16-27.913, Haras des Coudrettes v X, both held on 14 March 2018.

The judgments concern the interpretation of Article 35 Brussels I Recast c.q. Article 31 of the Lugano Convention (the second case concerned a defendant domiciled in Switzerland) on provisional measures.

Please refer to Nicolas and Leonardo for a summary of the facts the judicial proceedings in the case. In neither cases do the French courts have subject-matter jurisdiction: in Ergo, the German courts do by virtue of choice of court; in Haras des Coudrettes, the Swiss courts do by virtue of Article 5(3) Lugano (locus delicti commissi being there; and direct damage also having occurred there hence leaving only indirect, financial damage with the French owner of the horse at issue, even if the exact nature and size of those direct injuries could only be later established in France).

In Ergo, the Supreme Court held that ‘la juridiction française (est) compétente pour ordonner, avant tout procès, une mesure d’expertise devant être exécutée en France et destinée à conserver ou établir la preuve de faits dont pourrait dépendre la solution du litige. Appointing an expert to assess any damages caused to a solar plant, and to explore liabilities for such damage, falls within Article 35 Brussels I Recast. I would agree with such a wide reading as I have discussed before in my review of the Belo Horizonte case. The Supreme Court does not consider relevant to the outcome claimants’ argument, that under Article 2 Brussels I Recast, provisional measures only enjoy free movement under the Regulation when ordered by a court with subject-matter jurisdiction. Indeed in view of the Supreme Court the Court of Appeal need not even consider whether it has such jurisdiction. Given that the form Annexed to the Regulation includes a box requiring exactly that, this may seem odd. One assumes the Court held so given that the forensic measures ordered, can be rolled out entirely in France: no need for any travel at all.

In Haras des Coudrettes, the Supreme Court annulled because the Court of Appeal had established subject-matter jurisdiction for the Swiss courts, and had subsequently not entertained the possibility of provisional measures, even though the object at issue (the mare: ‘la jument’) is in France: ‘Qu’en statuant ainsi, alors qu’elle relevait que la mesure sollicitée avait pour objet notamment d’examiner la jument située en France, la cour d’appel, qui n’a pas tiré les conséquences légales de ses propres constatations, a violé les textes susvisés.‘

and  ‘une mesure d’expertise destinée à conserver ou établir la preuve de faits dont pourrait dépendre la solution du litige, ordonnée en référé avant tout procès sur le fondement du second de ces textes, constitue une mesure provisoire au sens du premier, qui peut être demandée même si, en vertu de cette Convention, une juridiction d’un autre Etat lié par celle-ci est compétente pour connaître du fond’:

expert findings which aim at maintaining or establishing facts upon which the eventual solution of the litigation may depend, fall within the scope of provisional measures and may be ordered even before any entertainment of subject-matter jurisdiction. Again, the fact that for the effective roll-out of the provisional measures no other State need be engaged, must have relevance in this assessment.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.15.

When is a court ‘seized’ under EU civil procedure /private international law? The question is highly relevant in light of the application of the lis alibi pendens principle: the court seized second in principle has to cede to the court seized first. Williams J in [2018] EWHC 2035 (Fam) MB v TB notes the limited attempt at harmonisation under EU law and hence the need for the lex fori to complete the procedural jigsaw.

On 8 July 2016 MB (the wife) issued a divorce petition seeking a divorce from TB (the husband). On 16 August 2016 the husband issued a divorce petition against the wife out of the Munich Family Court. On the 22 August 2016 the husband filed an acknowledgement of service to the wife’s petition asserting that the German court was first seized because it was ‘not accepted England is first seized, owing to failures to comply with art. 16 and 19 of Council Regulation (EC 2201/2003) and relevant articles of the EC Service Regulation (EC 1393/2007).

At issue were two considerations: whether seizure of the English courts had been effected; and whether the wife’s issuing of the petition on 8 July 2016 is an abuse of process on the basis that the wife did not at that time consider the marriage to have irretrievably broken down but was issuing a petition simply to secure the English jurisdiction in the event that a divorce was needed? This latter element amounts to disciplining a form of fraus, on which I have reported before – eg here that there is very little EU law.

In Regulation ‘Brussels IIa’ (2201/2003) – concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, as in the other Regulations, ‘seising of a Court’ is defined as:

1. A court shall be deemed to be seised: 

(a) at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the applicant has not subsequently failed to take the steps he was required to take to have service effected on the respondent;

or

(b) if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the applicant has not subsequently failed to take the steps he was required to take to have the document lodged with the court.

These ‘steps required’ are not further defined under EU law and hence rest with national law. Under relevant English law, Williams J held that the husband was aware of the wife’s petition before it was validly served on him, and that this was enough for the English courts to have been validly seized.

Geert.

Thank you 20 Essex Street for flagging (and analysing)  [2018] EWHC 3009 (Comm) Qingdao Huiquan, granting anti-suit against a foreign litigant who is not a party to an exclusive choice of forum agreement (in particular: arbitration agreed in a settlement agreement). The third party, SDHX, is engaging in proceedings in China, and is related to one of the parties to the settlement agreement.

SDHX appeal to privity of contract is tainted by its invoking elements of the settlement agreement in the Chinese proceedings. Under relevant authority, this was ground for Bryan J to issue aint-suit against it.

A classic cake and eating it scenario, one could say: at 36: ‘I have had particular regard to the fact that it is clear from the Settlement Agreement that SDHX is indeed seeking to rely upon the terms of the Settlement Agreement in advancing its claims in the Chinese proceedings and that, in doing so, therefore, it has to take the burden of the arbitration clause, if an arbitration clause be a burden,..as well as the benefits that it seeks to derive from that agreement.’

Evidently Brussels I Recast is not engaged.

Geert.

European private international law, second ed. 2016, Chapter 2, Heading 2.2.2.10.

The media have been reporting on a considerable class action lawsuit, underway in the English courts, in the Corporate Social Responsibility /mass torts category.

The class action case was filed against Anglo-Australian company BHP Billiton on behalf of 240,000 individuals, 24 municipal governments, 11,000 businesses, a Catholic archdiocese and about 200 members of the Krenak indigenous community. It concerns victims of the Samarco dam collapse in Mariana three years ago.

I am reporting the case simply to ensure complete overview of the CSR /jurisdiction /applicable law issues reported on the blog. For as I am co-counsel acting for the applicants, I am not in a position to comment on the case until and if legal analysis will be in the public domain.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.

Another case in my backlog for some time, and thank you Sarah McKibbing for flagging, some time back, [2017] VSC 810 Liu v Ma,

A recent VSC decision, Liu v Ma, held that nationality is sufficient to found international jurisdiction for the recognition of a Chinese judgment at common law. A highly doubtful conclusion… See Liu v Ma here: https://t.co/7cMMtjnYQY #conflictoflaws #privateinternationallaw

At 6 Mukhtar AJS notes ‘There is sufficient authority for the view that Australian Courts will enforce a foreign judgment where the defendant is a subject of the foreign country in which the judgment was obtained.  That view has its critics (footnote omitted, GAVC) and it may have its difficulties especially if the citizenship is inactive.  Nevertheless, it is founded on a line of English authority exemplified by the statement of Buckley LJ in Emanuel v Symon‘.

Many would argue that at the very jurisdictional level nationality as a ground is parochial /exorbitant. At the same time that at the level of recognition, one should show restraint in refusing to recognise judgments based on such flimsy jurisdictional grounds.

For those wanting to dig deeper, prof Andrew Dickinson has critical review of the relevant case-law in (2018) 134(July) LQR 426-449 (‘Schibsby v Westenholz and the recognition and enforcement of judgments in England’).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.4. for a discussion of ‘parochial’ jurisdiction in the EU context).