I promised a post on C-560/16 E.ON v Dědouch sooner than I have been able to deliver – I have reviewed Wathelet AG’s Opinion here. I do not evidently hold the magic key to the optimal interpretation of Article 24(2) Brussels I Recast’s. Yet regular readers of the blog indeed my students will know I am not much of a fan of Article 24 full stop – let alone its extensive interpretation.
Briefly, the facts. By a resolution of 8 December 2006, the general meeting of the company incorporated under Czech law, Jihočeská plynárenská, established in the Czech Republic, decided on the compulsory transfer of all the participating securities in that company to its principal shareholder E.ON, established in Munich (Germany). A group of minority shareholders contest not the validity of the sale, but purely the price paid. Czech law moreover holds that any finding on the reasonableness of the price paid cannot have an impact on the very validity of the transfer.
Lower Czech courts consecutively entertained and accepted cq rejected jurisdiction on the basis of Article 6(1) [no details are given but presumably with Jihočeská plynárenská as the anchor defendant, 24(2) (but then presumably with , 7(1) [again no details given but presumably a consequence of the purchase of shares by the minority shareholders]. Both Wathelet AG suggests, and the CJEU holds that the action for review of the reasonableness of the consideration that the principal shareholder of a company is required to pay to the minority shareholders of that company in the event of the compulsory transfer of their shares to that principal shareholder, comes within the scope of application of (now) Article 24(2). Both refer extensively to C‑372/07 Hassett and Doherty, among others.
The general line of interpretation is: secure Article 24’s effet utile, but apply restrictively (like all other exceptions to the actor sequitur forum rei rule). I do not think that the CJEU honours restrictive interpretation in E.ON. Readers best consult the (fairly succinct – ditto for the Opinion) judgment in full. A few observations.
In the majority (not quite all) of the cases of exclusive jurisdictional rules, Gleichlauf is part of the intention. That generally is a proposition which goes against the very nature of private international law and should not in my view be encouraged. Particularly within the EU there is not much reason not to trust fellow courts with the application of one’s laws – indeed quite regularly these laws may be better applied by others.
Generally at least three of Article 24 Jurisdictional rules (rights in rem; the corporate exception; and IPR) refer at least in part to the issue of publicity (of public records) and their availability in the Member States whose courts haven been given exclusive jurisdiction. That argument in my view is sooo 1968 (which indeed it is). I see little reason to apply it in 2018.
Further, in accordance with the Jenard report, the principal reason for Article 24(2) is to avoid conflicting decisions of EU courts on the existence of the company or the validity of the decisions of its organs. This goal of course may be equally met by the lis alibi pendens rule – Article 24 does not play a unique role here.
Finally the CJEU remarks at 34 ‘In the present case, while it is true that, under Czech law, proceedings such as those at issue in the main proceedings may not lead formally to a decision which has the effect of invalidating a resolution of the general assembly of a company concerning the compulsory transfer of the minority shareholders’ shares in that company to the majority shareholder, the fact nonetheless remains that, in accordance with the requirements of the autonomous interpretation and uniform application of the provisions of Regulation No 44/2001, the scope of Article 22(2) thereof cannot depend on the choices made in national law by Member States or vary depending on them.’ To cross-refer to the aforementioned Jenard Report: if Article 24(2)’s goal is to avoid conflicting decisions on life and death etc. And if that life and death of a national company depends on the applicable national law as the Court acknowledges here and ditto in Daily Mail and Cartesio/Polbud), then of course the lex causae must have an impact on the application of Article 24(2) .
The Court’s finding on 24(2) meant it did not get to the Article 7 analysis – which I did review in my post on the AG’s Opinion.
Geert.
(Handbook of) EU Private international law, 2nd ed. 2016. Heading 2.2.6.5.
Even Advocate-General Bobek has not managed to turn jurisdictional issues re prospectus liability into the prosaic type of analysis which many of us have become fond of. His Opinion in C-307/17 Löber v Barclays is a lucid, systematic and pedagogic review of the CJEU’s case-law on (now) Article 7(2)’s jurisdiction for tort in the context of ‘prospectus liability’ aka investment misrepresentation. Starting with the direct /indirect damage distinction; and focusing of course on the determination of pure economic loss.
Ms Helga Löber invested in certificates in the form of bearer bonds issued by Barclays Bank Plc. In order to acquire those certificates, the corresponding amounts were transferred from her current (personal) bank account located in Vienna, Austria to two securities accounts in Graz and Salzburg. Payment was then made from those securities accounts for the certificates at issue.
Note immediately that the jurisdictional discussion is a result of Article 7(2) not just identifying a Member State: it identifies specific courts within that Member State. Here: claimant brought her claim before a court in Vienna, the place of her domicile. This is also where her current bank account is located, from which she made the first transfer in order to make the investment. The first- and second-instance courts in Vienna however decided that they did not have jurisdiction to hear the case. The case is now pending before the Oberster Gerichtshof (Supreme Court, Austria). That court is asking, in essence, which of the bank accounts used, if any, is relevant to determine which court has jurisdiction to hear the claim at issue.
Close reference is made to Kolassa. In my posting on that case at the time, I noted that the many factual references which the Court built in in its decision, gave it dubious precedent value. Bobek AG in Löber necessarily therefore distinguishes many factual situations. The almost sole focus lies on 7(2): unlike in Kolassa, contracts neither consumer contracts are an issue.
Here are a few things of note:
First, in his review of the existing case-law the AG at 38 points out like I did at the time of the judgment, that the CJEU’s finding in CDC that locus damni for a pure economic loss, in the case of a corporation, is the place of its registered office, is at odds with precedent (he made the same remark in flyLAL).
Next, on locus delicti commissi, the AG suggests that despite Article 7(2)’s instruction, a single ldc within the Member State cannot be determined. The relevant point in his view is the moment from which the prospectus can, by operation of law, start influencing the investment behaviour of the relevant group of investors. In the present case, and considering the national segmentation of the capital market regulation at issue, that relevant group is made up of investors on secondary markets in Austria. At 65: once it became possible to offer the certificates on the Austrian secondary market, that possibility was immediately available for the whole territory of Austria. ‘The nature of the tort of misrepresentation at issue does not allow for the identification of a location within the national territory because once the author of the tort is allowed to influence the given national territory, that influence immediately covers the whole territory, irrespective of the actual means used for the publication of a specific prospectus.’ As we know from CDC, the Court does not readily accept that a single ldc cannot be determined.
Further, for locus damni, the AG suggests (at 78) ‘The place where…a legally binding investment obligation is factually assumed… The exact location of such a place is a matter for the national law considered in the light of available factual evidence. It is likely to be the premises of a branch of the bank where the respective investment contract was signed, which may correspond, as in the Kolassa case, to the place where the bank account is held.‘ That in my view first of all is not a warranted outcome. The investor in Löber is not a consumer within the protected categories of the Regulation. Suggesting the place of conclusion of the obligation leaves room for the claimant to manipulate the forum of any future suit in tort. This is exactly what the Court objected to in Universal Music. Moreover, note the reference to ‘the national law’. It is quite unusual to suggest such a role for lex fori in light of the principle of autonomous interpretation. Unless the AG in fact means the ‘lex contractus’, presumably to be determined applying Rome I.
In summary there are quite a few open questions here – not something of course which I would necessarily object to.
Geert.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.7
In Chevron Corp v Yaiguaje, the Canadian Supreme Court as I reported at the time confirmed the country’s flexible approach to the jurisdictional stage of recognition and enforcement actions. Following that ruling both parties files for summary judgment, evidently advocating a different outcome.
The Ontario Court of Appeal have now held in 2018 ONCA 472 Yaiguaje v. Chevron Corporation that there are stringent requirements for piercing the corporate veil (i.e. by execution on Chevron Canada’s shares and assets to satisfy the Ecuadorian judgment) and that these are not met in casu.
Of particular note is Hourigan JA’s argument at 61 that ‘the appellants’ proposed interpretation of the [Canadian Corporation’s] Act would also have a significant policy impact on how corporations carry on business in Canada. Corporations have stakeholders. Creditors, shareholders, and employees, among others, rely on the corporate separateness doctrine that is long-established in our jurisprudence and that is a deliberate policy choice made in the [Act]. Those stakeholders have a reasonable expectation that when they do business with a Canadian corporation, they need only consider the liabilities of that corporation and not the liabilities of some related corporation.’
Blake, Cassels and Graydon have further review here. Note that the issue is one of a specific technical nature: it only relates to veil piercing once the recognition and enforcement of a foreign ruling is sought.
Geert.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 8.
In Platinum Partners, Chapman J held that foreign discovery laws should be considered
for comity concerns, yet they are not determinative of whether discovery should be
permitted under United States law.
Foreign Representatives sought access to documents from US audit firms concerning investment funds that were debtors in Cayman Islands liquidation proceedings recognized under Chapter 15 as foreign main proceedings. Jacob Frumkin has excellent insight and I am happy to refer.
Section 1521(a) of the Bankruptcy Code provides that, upon recognition of a foreign main proceeding, a bankruptcy court may, “at the request of a foreign representative, grant any appropriate relief” … “where necessary to effectuate the purpose of [chapter 15] and to protect the assets of the debtor or the interests of the creditors.” The first main argument of the auditors was that Cayman law does not permit the discovery of audit work papers or materials that are not a debtor’s property and, if the Court were to grant the motion, its interests and the interests of comity would not be protected.
The Court dismissed this argument, noting that
“it is well-established that comity does not require that the relief available in the United States be identical to the relief sought in the foreign bankruptcy proceeding; it is sufficient if the result is comparable and that the foreign laws are not repugnant to our laws and policies.” and that
“requiring this Court to ensure compliance with foreign law prior to granting relief sought pursuant to chapter 15 would require the Court to engage in a full-blown analysis of foreign law each and every time a foreign representative seeks additional relief in the United States, which may result in differing interpretations of U.S. law depending on where the foreign main proceeding was pending.”
Comity considerations surface in the most technical of corners.
Geert.
In 4A_417/2017 (litigants’ names per usual unnecessarily anonimysed; Ganzoni reveal it to be Swatch AG) the Swiss Federal Supreme Court (at 2) first of all correctly reminds us that neither the Lugano Convention nor Brussels I (or indeed the Recast) capture the procedural interest required for a party to request a negative declaration (of liability; in tort, contract or otherwise). In C-113/11 Folien Fischer the CJEU held that negative declarations are covered by Article 7(2); the national court can, indeed must examine its jurisdiction under that provision (and the corresponding one in Lugano) but that does not say anything about standing requirements vis-a-vis interest. (As far as I am aware there is no similar judgment viz 7(1) but the rule must be the same).
Such negative declarations are often part of the race to court; via the lis alibi pendens rules they undercut the forum which the counterparty might have preferred.
As Walderwyss summarise, Hitherto the Swiss Supreme Court had a rather strict approach to the interest required for a negative declaration. Race to court (or ‘forum running’ as the SC calls it) alone was not a sufficient reason. With the March 2018 judgment, that has now been relaxed: Swatch Group AG’s interest in securing a Swiss forum in a dispute against an English counterparty, was considered sufficient to grant it interest: at 5.4: ‘Zusammenfassend ist festzustellen, dass jedenfalls im internationalen Verhältnis das Interesse einer Partei, bei einem bevorstehenden Gerichtsverfahren einen ihr genehmen Gerichtsstand zu sichern, als genügendes Feststellungsinteresse zu qualifizieren ist.‘
With race to court following Swatch no longer hindered by a restrictive approach to standing, the Swiss surely must have an advantage in this time-sensitive part of international litigation. (Not a great pun, I realise. But I am nearing the end of yet another long working week).
Geert.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.6.
In [2018] EWHC 1230 (Comm) St Vincent v Bruce Roberston et al Males J set aside a worldwide freezing order in summary judgment but that is not the trigger for this blog post. Rather, consider paras 33 and 34:
I have tried to locate the Polish judgment but have failed to do so (which is where assistance from Polish readers would be appreciated). Presumably however the Polish courts argued that Article 24(2) Brussels I Recast was engaged, and then either per Weber ignored lis alibi pendens (were it to have found the case was still pending in Cyprus), or applied Article 45(1) e ii to ignore the Cypriot findings. In either case, the relevant point is how widely the Polish courts seem to have interpreted Article 24(2).
Come to think of it this would have been good exam material and I have one or two of those coming up (although there is plenty in the ‘exam material’ ledger).
Geert.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.5, Heading 2.2.16.
In [2018] EWHC 1041 (Ch) MX1 and SES v Fardad Farahzad (defendant’s appeal for summary judgment) claimants are domiciled in Israel and Luxembourg respectively. Their action results from some 57 tweets published by a Twitter account going under the title “@MX1 Leaker”. The Tweets make various allegations of bribery and corruption against the First Claimant. Claimants suggest a conspiracy between the defendant and former employees (for the Tweet seemed furnished with internal information which the defendant would not have had access to).
Defendant’s domicile is not specified but for the purposes of the litigation is not relevant: for jurisdiction is seemingly undisputed and even if this were not based on the Brussels I Recast, the English courts have to apply Rome II to determine applicable law.
Defendant’s request for summary dismissal is based inter alia on the argument that if and to the extent the Claimants or either of them have suffered loss or damage as a result of the Conspiracy, the place of that loss or damage was not England. The applicable law identified by the Rome II Regulation – according to the Defendant: Israeli law – did not recognize the ‘lawful means conspiracy’ pleaded by the Claimants as a cause of action.
Arguments centred around Article 4(1) Rome II: neither 4(2) or (3) were engaged by counsel. Damage pleaded by the Claimants is as follows: (paras refer to the Particulars of Claim)
“23. Unless restrained by the court, the Defendant will cause damage to the business of the Claimants in England and Wales and elsewhere by publishing or facilitating the publication of harmful tweets pursuant to the Conspiracy.
24. Further, unless the Defendant is ordered by the court to delete the Tweets, the Claimants will suffer damage to its business in the future by reason of the continued public existence of the Tweets.
25. By reason of the matters aforesaid, the Claimants have suffered loss and damage. The best particulars which the Claimants can currently give are that: (a) The Claimants have incurred the costs of investigating the Conspiracy in approximately the sum of US$350,000 including costs of at least £100,000 incurred in England in respect of the services of Kroll and of the Claimants’ lawyers which are not recoverable as part of the costs of this claim; (b) The Claimants have also incurred additional costs investigating the allegations made in the Tweets.”
It is the £100K which Smith J at 39 ff applies Article 4(1) to, and he does so with harmonious interpretation (‘resonance’) between Brussels I Recast’s Article 7(2) and Rome II in mind.
Smith J held that the costs of investigating the conspiracy were incurred when the claimants entered into the agreements with investigators and lawyers to have the conspiracy investigated, and therefore in England. It is irrelevant that those costs were not the claimants’ predominant loss (paras 40, 46). The case will undoubtedly lead to Mozaik (‘fragmentation’), but that too is resonant with Brussels I Recast (Shevill).
A good starter introduction to Rome II.
Geert.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 4, Heading 4.4.
Ross Denton at Baker & McKenzie has a gem of a briefing on the EU’s ‘blocking Regulation’ and what it would mean in light of the US’ mooted sanctions on Iran. Steptoe had earlier also pondered the impact of the US withdrawal from the ‘Joint Comprehensive Plan of Action’ or JCPOA, on the Regulation.
Regulation 2271/96 provides essentially for protection against, and counteracts the effects of the extra-territorial application of the laws of third States. WTO lawyers will remember it mostly from the days of Helms-Burton. As Ross points out, the European Commission now have delegated power to populate the Annex to the list (which details the sanctions the Regulation acts against).
Potentially extra-territorial are in particular US ‘secondary’ sanctions: i.e. those against non-US individuals (or companies) for actions undertaken outside the US.
Of particular interest to readers of the blog – including researchers I would imagine, are Articles 4, 5 and 6, which I have copy-pasted in full below. They deal with recognition and enforcement, co-operation with foreign courts, and recovery of expenses. These Articles are a rare instance where the EU adopt a harmonised approach to recognition and enforcement of judgments originating ex-EU (awaiting the potential Hague Judgments project). [Update 22 May 11:30 AM. As Enio Piovezani comments below, the GDPR, too, includes a relevant rule: See Article 48: ‘Transfers or disclosures not authorised by Union law. Any judgment of a court or tribunal and any decision of an administrative authority of a third country requiring a controller or processor to transfer or disclose personal data may only be recognised or enforceable in any manner if based on an international agreement, such as a mutual legal assistance treaty, in force between the requesting third country and the Union or a Member State, without prejudice to other grounds for transfer pursuant to this Chapter.’]
As Ross points out, however, the proverbial US rock is harder than the equally proverbial EU stone, hence in practice many companies choose to abide by the US sanctions, anyways.
My fingers are itching to launch yet another interesting PhD topic on this issue…Takers?
Geert.
Article 4
No judgment of a court or tribunal and no decision of an administrative authority located outside the Community giving effect, directly or indirectly, to the laws specified in the Annex or to actions based thereon or resulting there from, shall be recognized or be enforceable in any manner.
Article 5
No person referred to in Article 11 shall comply, whether directly or through a subsidiary or other intermediary person, actively or by deliberate omission, with any requirement or prohibition, including requests of foreign courts, based on or resulting, directly or indirectly, from the laws specified in the Annex or from actions based thereon or resulting therefrom.
Persons may be authorized, in accordance with the procedures provided in Articles 7 and 8, to comply fully or partially to the extent that non-compliance would seriously damage their interests or those of the Community. The criteria for the application of this provision shall be established in accordance with the procedure set out in Article 8. When there is sufficient evidence that non-compliance would cause serious damage to a natural or legal person, the Commission shall expeditiously submit to the committee referred to in Article 8 a draft of the appropriate measures to be taken under the terms of the Regulation.
Article 6
Any person referred to in Article 11, who is engaging in an activity referred to in Article 1 shall be entitled to recover any damages, including legal costs, caused to that person by the application of the laws specified in the Annex or by actions based thereon or resulting therefrom.
Such recovery may be obtained from the natural or legal person or any other entity causing the damages or from any person acting on its behalf or intermediary.
The Brussels Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters shall apply to proceedings brought and judgments given under this Article. Recovery may be obtained on the basis of the provisions of Sections 2 to 6 of Title II of that Convention, as well as, in accordance with Article 57 (3) of that Convention, through judicial proceedings instituted in the Courts of any Member State where that person, entity, person acting on its behalf or intermediary holds assets.
Without prejudice to other means available and in accordance with applicable law, the recovery could take the form of seizure and sale of assets held by those persons, entities, persons acting on their behalf or intermediaries within the Community, including shares held in a legal person incorporated within the Community.
Not just my blog posts on both cases follow each other closely. Tanchev AG in his Opinion in C-88/17 Zurich Insurance v Metso, takes inspiration from the Court’s findings in flightright (which I reported this morning). He emphasises the objective of predictability of the Brussels I Recast Regulation.
The case concerns multimodal transport of goods from one Member State to another. Pursuant to an agreement entered into with a Finnish undertaking, a British haulier undertook to carry goods from Finland to the United Kingdom. After the goods concerned were lost while being transported in the United Kingdom, the Finnish undertaking and the insurer of the goods sued for damages before a Finnish court. Does that court have jurisdiction per Article 7(1)b, second indent ?: in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided.
ALS concluded a contract for the carriage of goods with Metso Minerals Oy (‘Metso’), a Finnish manufacturer of equipment for the mining and construction industries. A cylindroconical crusher was to be transported from Pori in Finland to Sheffield in the United Kingdom. The crusher was insured by Zurich Insurance plc (‘Zurich’). Both Metso and Zurich are the plaintiffs in the main proceedings.
ALS, with the help of subcontractors, transported the crusher as follows. It was first transported from Pori to Rauma in Finland by a lorry with a low loader. At Rauma, it was unloaded from the lorry and driven on to a ship under its own power. After transport by sea to the United Kingdom, the crusher was again driven under its own power off the ship in the port of Hull and loaded onto another lorry. As Metso’s consignee did not have sufficient or adequate storage capacity, it asked a sub-contractor of ALS to drive the crusher to its own warehouse and keep it there temporarily for a couple of days. However, the crusher was stored there for a longer period, and disappeared before it could be delivered to the consignee in Sheffield.
ALS argues that only the place of unloading may be deemed to be the place of performance, claiming that the place of performance can only be one single place and that the place of final destination is of considerably greater importance than the place of dispatch. This, according to ALS, is consistent with the determination of the applicable law in respect of contracts for the carriage of goods under Rome I, which gives a degree of preference to the place of delivery and is to be interpreted taking into account the Brussels I Regulation.
The Commission, referring to CJEU predecent Rehder, Wood Floor Solutions Andreas Domberger and Color Drack, acknowledges that, in any event, the place of arrival is a place of performance, as it is the final place in the chain of transportation. The Commission further argues, however, that, bearing in mind the requirements of proximity, foreseeability and legal certainty, it would be appropriate to recognise in addition the place of dispatch as a place of performance.
The question of international jurisdiction arises in the main proceedings because the case has connections not only with Finland but also with other countries: Finland is the country in which the goods were dispatched and the consignor has its seat, whereas the destination of the goods being carried and the location of the haulier’s seat is in the United Kingdom, where, moreover, the goods were ultimately lost. Finally, in order to convey the crusher from Finland to the United Kingdom, it had to be transported through the waters of other Member States or waters under the sovereignty of no State. In ordinary language, the AG suggests (at 28) all these territories and waters are places where the contract was performed.
According to their wording, both sections (a) and (b) of Article 5(1) of the Brussels I Regulation refer to ‘the place of performance’ and, in the case of section (b), additionally to ‘the place in a Member State’. In consideration of the singular form employed, it seems, the AG suggests at 30, that only one single place can be regarded as having special jurisdiction in respect of contractual matters. However, this conclusion is not borne out by the case-law.
In color Drack the Court ruled that, if it is not possible to determine one single principal place of performance, each of the places of performance has a sufficiently close link of proximity to the material elements of the dispute and, accordingly, a significant link as regards jurisdiction. In a dispute concerning the sale of goods, the Court has held that, in such a case, the plaintiff may sue the defendant at one of the places of performance — at his choice.
In flightright, as far as delayed flights are concerned, the Court considers both the place of departure and the place of the final destination to be equally significant under the contract, thereby establishing a sufficient territorial link between these places and any proceedings arising from the contractual situation.
(At 59) In the present situation, where the means used to transport the goods change as the journey progresses, particularly in harbours, the fact that the goods are carried in a number of different stages is also an inevitable feature of such transport. In the AG’s view, however, even the fact that it was necessary to unload heavy and bulky goods such as the crusher in question and transfer it across land under its own power, with the dangers in terms of loss or damage inherent in a procedure of that kind (including the possibility of theft), does not alter the situation in such a way as to give the places of reloading or transhipping an importance equal to that of the place of dispatch. Therefore, recognising the latter place, along with the place of destination, as one of two ‘places of performance’ does not enhance the number of available fora in a way as to give reason for concerns of forum shopping.
The AG clearly struggles between limiting forum shopping and enhancing predictability, and suitability of various places to assess the litigation at issue. The AG (at 60) finds support for his view that the intermediate stages should not so be given jurisdiction, in the fact that it is common practice not to mention the places of reloading or reshipping in contracts of the kind in issue in the main proceedings.
The AG concludes therefore that the place of dispatch and the place of destination are thus both ‘main places of performance’ under the second indent of Article 7(1)(b), whereas the loading places in general are not.
A good case to further complete analysis under Article 7(1).
Geert.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1
One of my PhD students, Michiel Poesen, has an extensive case-note coming up on C-274/16 flightright – when it is out I shall include a link here. For the time being therefore I shall be very brief. In summary, the Court held
Geert.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1.
Clearing up my backlog.
In [2017] EWCH 2208 (Comm) Zavod Ekran v Magneco the Blair J held in September 2017 that a company must not hide behind documents initiating arbitration being drafted in Russian, when a properly observant litigant should have known that arbitration proceedings were being commenced. The most important point from a practical perspective was found to be that the heading of a letter, in English, states that it comes from the Moscow arbitration body—the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation. From that alone it should have been obvious that an arbitration was being commenced. There was no other reason for ICAC to be writing to the company.
An utterly practical approach.
Geert.
I reported earlier on the Aldi abuse of process principle: a party who intends to bring a subsequent action against existing parties or their privies must raise the issue with the court, which on case-management grounds may hold that all claims must be brought simultaneously.
Chivers J has now held that the principle applies in the British Virgin Islands. Harneys have the report here. I have pondered before whether there ought not to be an Aldi rule in EU conflicts law, however one can see the difficulty particularly as in the EU context an Aldi principle might favour the actor sequitur forum rei rule to the detriment of special jurisdictional rules: not an outcome supported by the current rules.
Geert.
The UK Supreme Court held in [2018] UKSC 19 JSC BTA Bank v Khrapunov late March. Defendant is based in Switzerland, hence triggering the Lugano Convention. Addleshaw Goddard have the history of the case and I am happy to refer for those facts. Suffice to say that at the core is a claim in tort of conspiracy, alleging that Mr Khrapunov and his father in-law Mr Ablyazov conspired to injure the Bank by preventing it from enforcing its judgments against Mr Ablyazov’s assets.
First let’s have a look at was not discussed at the SC: domicile and locus damni. As for the former, domicile once held but now fleed from was correctly rejected by Teare J as establishing domicile under Lugano (or indeed Brussels). The argument that jurisdiction should, nevertheless, be taken still to be domiciled in England because defendant was in breach of an obligation under the worldwide freezing order prohibiting him from leaving the jurisdiction, was likewise rejected. An interesting proposition though.
Now, for the location of the locus damni. At 29 the SC refers to the Bank’s argument at the High Court and Court of Appeal stage. The Bank’s argument was that the damage occurred in England. This was based on the contention that its worldwide freezing order and its judgments against Mr Ablyazov were located here and had been reduced in value by the alleged conduct in relation to assets in other jurisdictions. The High Court and Court of Appeal considered that the element of damage proximate to the harmful event was the Bank’s inability or reduced ability to execute against those assets in the places where they were located. Another fine example of the difficult implications of Bier and not one which the CJEU has hitherto had the occasion to review. (But current case will not reach it).
As for locus delicti commissi, the Bank submit that the event giving rise to the damage was the conspiracy itself, which was hatched in England. At the High Court Teare J rejected this submission, because he considered that the cause of the damage was not the conspiracy but its implementation: a suggestion I like in the context of competition law, as readers of the blog will be aware. Teare J was not followed by the Court of Appeal though, which identified the place where the conspiratorial agreement was made as the place of the event which gives rise to and is at the origin of the damage.
The SC refers to CJEU authority to conclude with CDC and at 41 it reiterates the CA’s core reasoning: ‘As Sales LJ explained (at para 76), in entering into the agreement Mr Khrapunov would have encouraged and procured the commission of unlawful acts by agreeing to help Mr Ablyazov to carry the scheme into effect. Thereafter, Mr Khrapunov’s alleged dealing with assets the subject of the freezing and receivership orders would have been undertaken pursuant to and in implementation of that agreement, whether or not he was acting on instructions from Mr Ablyazov.’
The Supreme Court concludes that the making of the agreement in England should be regarded as the harmful event which set the tort in motion.
The judgment keeps open many issues, however. For starters, to have a sole birthplace of conspiratorial agreement is handy in the case at issue however it is likely not often to be so clearly the case (as Dan and Tom point out, particularly not in a digital context). Moreover, for those instances where Mr Khrapunov were not to be acting on instructions from Mr Ablyazov, questions of ultra vires so to speak and hence of a separate tort would arise.
Geert.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2
A flag simply to lead readers to a recent textbook application of Spiliada forum non conveniens authority: Moulder J in [2018] EWHC 1078 (Comm) KMG v Chipper.
Geert.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.14.5
In [2018] EWHC 380 (Comm) UCP Plc v Nectrus Limited Cockerill J takes the same conclusion on the new lis alibi pendens rule ex-EU in the Brussels I Recast, which I had suggested in the Handbook (p.182). A court in a Member State seized of an action other than those based on Articles 4, 7, 8 or 9 cannot refuse jurisdiction in favour of a court based ex-EU.
From Herbert Smith’s summary of the case: Nectrus, a Cypriot company, commenced proceedings in the Isle of Man seeking payment of sums withheld by UCP, an Isle of Man company, on the sale of a company, Candor. UCP then commenced proceedings in England claiming that Nectrus was in breach of an Investment Management Agreement (IMA), the loss being the amount by which the sale consideration of Candor had been reduced, hence the amount withheld on its sale.
The IMA contained a non-exclusive jurisdiction agreement in favour of the English courts. UCP disputed the jurisdiction of the Manx court, but in the event the proceedings continued, indicated they would raise the cause of action relied on in the English proceedings by way of equitable set off. Nectrus disputed their right to do so.
Nectrus disputed the jurisdiction of the English court on the basis that the Manx courts were the most appropriate forum to determine the dispute and were first in time.
Other than for the articles listed above, the CJEU’s findings in Owusu continue to apply. That includes English jurisdiction on the basis of non-exclusive choice of court, covered by Article 25 of the Recast Regulation. Justice Cockerill is entirely correct in unhesitatingly (at 39) rejecting forum non conveniens.
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.
Bobek AG opined about a little while ago in C-27/17 flyLAL. (Readers may also find my recent posting on NBK useful, re Article 7(5)).
AB flyLAL — Lithuanian Airlines (‘flyLAL’) operated flights from Vilnius airport in Lithuania until it was put into liquidation. According to flyLAL, its demise was caused by predatory (that is, below cost) pricing by the Latvian airline Air Baltic Corporation A/S (‘Air Baltic’). That predatory pricing was, it is alleged, part of an anticompetitive strategy agreed between Air Baltic and the operator of Starptautiskā lidosta Rīga (Riga international airport in Latvia, ‘Riga Airport’). Thus, Riga Airport and Air Baltic agreed to drastically reduce the prices paid by Air Baltic for services at Riga airport. The savings were then used by Air Baltic to finance the predatory pricing that drove flyLAL out of the market in Vilnius, Lithuania.
Can Air Baltic and Riga Airport for damages before the courts in Vilnius? The national court and parties refer to three alleged infringements of competition law: (i) abuse of dominance consisting in the system of reductions implemented by Riga Airport; (ii) an anticompetitive agreement between Riga Airport and Air Baltic; and (iii) abuse of dominance in the form of predatory pricing by Air Baltic. Those infringements, it is argued, were interrelated, forming part of a strategy to oust flyLAL from the market in Vilnius and move passengers to Riga airport to the benefit of both Riga Airport and Air Baltic.
There is a lot in the Opinion – among others because as the AG points out, the referring court’s description of the alleged infringement of competition law is not entirely clear. Bobek therefore sets out a set of variables. The Court itself is bound not to distinguish among quite so many. Of note are the AG’s suggestions
A lengthy opinion. And it all started with the fairly straightforward facts of Bier…
Geert.
(Handbook of) EU private international law), 2nd ed. 2016, Chapter 2, Heading 2.2.11.2
Once in a while I post on State Immunity, one of my favourites sub-themes in same being waiver of immunity, whether by contractual provision or following submission. [2018] EWHC 385 (Comm) certain underwriters at Lloyds et al v Syrian Arabic Republic et al is a good illustration of the latter. How does one serve a state which is evidently in times of political unrest? And has that State submitted to jurisdiction hence waived immunity?
Claimants’ claim in the United States District Court arose from the 1985 hijacking of EgyptAir flight 648 and the loss to which that gave rise. Adam Johnson and colleagues at Herbert Smith alerted me to the case and their review is excellent. Henshaw J held the former issue (service) very practically: DHL evidence of documents having been delivered to the relevant ministry suffices, even if acceptance of the documents is refused.
Assessment of submission was relevant for there is no Treaty between the US and the UK on recognition and enforcement – hence common law applies. In the absence of any Convention or other instrument for mutual recognition of judgments, a foreign judgment in personam can be recognised only if it was delivered by a court which had jurisdiction according to English private international law. That means that the defendant must either have (i) been present in the foreign jurisdiction when proceedings were commenced, (ii) claimed or counterclaimed in those proceedings, (iii) previously agreed to submit to the jurisdiction, or (iv) voluntarily have submitted himself to the overseas court’s jurisdiction (see Rubin and another v Eurofinance SA [2013] 1 AC 236 § 7).
In the present case (i)-(iii) do not apply, so Claimants must show that the Defendants submitted to the US court’s jurisdiction. Which Henshaw J held they had. Of particular note for this blog is that he (at 59) rejects much authority for CJEU precedent, particularly C-150/80 Elefanten Schuh, held under the Brussels Convention. Even if Elefanten Schuh were to apply, Henshaw J does not believe it would have led to a different outcome. At 66 follows an extensive list of arguments leading to a conclusion of submission, with particular emphasis on Notices of Appeal, each of which included a merit-based objection to the judgment appealed from but contained no assertion that the US courts lacked jurisdiction by reason of, or that the claims were barred by, sovereign immunity. The simple fact is that Syria at no stage made any such challenge, save very late in the process.
The judgment therefore is interesting firstly for its discussion of CJEU weight in residual conflict of laws; secondly for the Court’s view on submission and sovereign immunity – in my view very much the right one.
Geert.
In [2018] EWHC 887 (Comm) Bankas Snoras v Antonov et al, Eggers DJ considers the extent of the typical undertaking by party having obtained a worldwide freezing order, to seek permission from the English court before enforcing the order outside England and Wales or seeking an order “of a similar nature”. The need for permission underlines the appreciation of the English courts that worldwide freezing orders require some careful handling viz third States.
I am happy to refer to RPC‘s analysis for the general issues. I just wanted to turn the attention of readers of this blog to para 65 of the judgment, which considers lis alibi pendens. The claims in England (based on Article 4 Brussels I Recast – domicile of the defendants) are not the only ones that have been introduced: Lithuanian courts are engaged, too. ‘The English Civil Claim is for the in personam remedy of compensation against Mr Antonov and Mr Baranauskas arising out of an alleged breach of their duties as directors, officers or shareholders of Snoras. By contrast, the Lithuanian Civil Claim is not based on alleged breaches of directors’ duties. Instead, there are two bases of claim in the Lithuanian Civil Claim, namely (1) a claim for in personam relief under the law of unjust enrichment because there was no commercial justification for the various transactions, seeking the reversal of that unjust enrichment; and (2) a claim for a declaration that the various transfer instructions were null and void and that Snoras remains the beneficial owner of the relevant assets; this is said to be a claim for an in rem (or proprietorial) remedy.’ (at 25)
There is partial overlap, nevertheless; it is also clear that the different formulation of the Lithuanian claims is to make them lis alibi pendens-proof. Nevertheless, Eggers DJ holds that the fact remains that there are differences in the formulation of the causes of action underlying the two sets of proceedings and, in addition, the Lithuanian Civil Claim seeks proprietary relief, as well as in personam relief. Article 29 Brussels I Recast is not mentioned but it is this article and analysis of same which is engaged.
Geert.
(Handbook of) EU private international law, 2nd ed. 2016, Heading 2.2.14.
In BDO Cayman v Argyle Funds, reported by Harneys, the Grand Court of the Cayman Islands followed English and Australian authority in having an anti-suit injunction followed by a cost order against the party that had infringed choice of court. Costs including not just the domestic proceedings (that would be obvious) but also the foreign proceedings (here: in the US).
It is this type of measure which makes jurisdictions stand out and be noticed in civil procedure regulatory competition – not, as I flagged earlier, half-baked attempts to add some gloss via international business courts.
Geert.
I have flagged once or twice that the blog is a touch behind on reporting – I hope to be on top soon.
I blogged a little while ago that the Brussels Court of Appeal had sided with Facebook in their appeal against the Court of first instance’s finding of Belgian jurisdiction. I had earlier argued that the latter was wrong. These earlier skirmishes were in interim proceedings. Then, in February, the Court of First instance, unsurprisingly, reinstated its earlier finding, this time with a bit more substantial flesh to the bone.
First, a bit of Belgian surrealism. In an interlocutory ruling the court had requested FB to produce full copy of the Court of Appeal’s judgment upon which it relied for some of its arguments. Perhaps given the appalling state of reporting of Belgian case-law, this finding should not surprise. Yet it remains an absurd notion that parties should produce copies at all of Belgian judgments, not in the least copies of a Court of Appeal which is literally one floor up from the Court of first instance.
Now to the judgment. The court first of all confirms that the case does not relate to private international law for the privacy commission acts iure imperii (I summarise). Then follows a very lengthy and exhaustive analysis of Belgium’s jurisdiction on the basis of public international law. Particularly given the excellent input of a number of my public international law colleagues, this part of the judgment is academically interesting nay exciting – but also entirely superfluous. For any Belgian jurisdiction grounded in public international law surely is now exhausted regulated by European law, Directive 95/46 in particular.
In finally reviewing the application of that Directive, and inevitably of course with reference to Weltimmo etc. the Court essentially assesses whether Facebook Belgium (the jurisdictional anchor) carries out activities beyond mere representation vis-a-vis the EU institutions, and finds that it does carry out commercial activities directed at Belgian users. That of course is a factual finding which requires au faitness which the employees’ activities.
Judgment is being appealed by Facebook – rightly so I believe. Of note is also that once the GDPR applies, exclusive Irish jurisdiction is clear.
Geert.
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