Flux Belges et Lux

Many thanks to Andrew Savage and Nick Payne for flagging [2017] EWHC 1968 (Comm) Bestolov v Povarenkin a little while ago, and for sending me copy of the judgment at the time. Apologies for late reporting: frustratingly even at gavclaw we cannot always devote the amount of time to the blog we would wish. Dr Maganaris in the meantime also has summary here.

As readers no doubt are aware, the Brussels I Recast Regulation (Article 62) does not define ‘domicile’: it defers to national private international law on the issue. The Civil Jurisdiction and Judgments Order 2001 establishes that a person is domiciled in England for the purpose of the Brussels Regulation (recast) if: the person is “resident” in England; and (cumulatively) the person has a “substantial connection” to England. Bryan DJ takes us through the relevant (and often colourful) precedent and notes, importantly, at 28 that the consequence of the English rules is that the same person can be resident in two different jurisdictions at the same time. At 44, he summarises with a list of criteria, and decides on the facts of the case that Mr Povarenkin is indeed domiciled in England (the substantial connection test having been more easy to determine than that of residence).

Subsequently the High Court reviews at length whether there was a valid choice of court agreement under Article 25 of the Regulation – which at this jurisdictional stage of the proceedings Bryan DJ decides there was not (choice of law for the relevant contracts being English law, was justifiably not considered definitive in this respect), at least not clearly. Obiter, the judge reviews forum non conveniens, at lenght in fact (and in a very clear way with a keen eye on relevant precedent as well as court practice in England) however he holds both before and after the obiter that evidently given Owusu, forum non conveniens has no calling.

A well written judgment, the approach of which on domicile evidently goes beyond having relevance merely for the English courts: for under the Regulation, courts in other Member States, too, may have to consider whether parties are domiciled in an EU Member State other than their own including, for the time being, the United Kingdom.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.3, Heading 2.2.14.5.

[2018] EWHC 59 (Ch) International Bank of Azerbaijan is an excellent illustration of the practicality v the doctrine of modified universalism in international insolvency law, as well as of the binding force of precedent even in a changing world. Hildyard J first summarises at 2 the question raised as ‘whether the Court has power to grant a permanent moratorium or stay to prevent a creditor exercising its rights under a contract governed by English law in order to prevent that creditor enforcing its rights contrary to the terms of the foreign insolvency proceeding by which all creditors were, under the relevant foreign law, intended to be bound. If it does, the second question is whether in its discretion the Court should exercise that power.’

IBA has fallen into financial difficulties, obliging it to enter into a restructuring proceeding under Azeri law. The Foreign Representative, Ms Gunel Bakhshiyeva (hence also giving her name to the official case-name) had the High Court issue an order  recognising the Restructuring Proceeding as a foreign main proceeding. That recognition order imposes a wide-ranging moratorium preventing creditors from commencing or continuing any action against IBA or its property without the permission of the Court.  The plan proposed by IBA pursuant to the restructuring proceeding has been approved by a substantial majority at a meeting of creditors in Azerbaijan, sanctioned by the relevant Azeri court, and as a matter of Azeri law, the plan is now binding on all affected creditors, including those who did not vote and those who voted against the Plan: a classic cram-down.

Respondents in the case contend that the plan cannot bind them. In each case their relationship as creditor with IBA is governed by English law. They rely on the (1890) rule in Gibbs, which states that a debt governed by English law cannot be discharged by a foreign insolvency proceeding. Reformulating the essential issues at 19, Hildyard J summarises them as

(1) Whether the Court has jurisdiction to extend a moratorium imposed under the CBIR without limit as to time, and in particular, beyond the date on which the foreign proceeding will terminate; and

(2) If so, whether the Court should refuse to lift the continuing moratorium in favour of a creditor whose debt is governed by English law, so as to prevent that creditor from achieving a better return than that enjoyed by all of the company’s other creditors under a restructuring plan promulgated in the jurisdiction in which the company is registered and has its centre of main interests (“COMI”).

At 44 ff Hildyard J excellently summarises the rule, and the critical reception of it in recent scholarship, the latter suggesting it is not just out of touch with a less anglo-centric view of the world, but also inconsistent with the English courts themselves expecting foreign recognition of schemes of arrangement (SAs being of a corporate, not lex concursus nature but nevertheless fishing in the same waters as insolvency proceedings) conducted in the English courts with English law as the lex causae.

Having summed up all the arguments against the rule and yet recent continued application of it, Hildyard J at 58 dryly notes that his place in the hierarchy means that he cannot simply swipe the rule aside: he must apply it and simply assess whether it applies in the current circumstances. More particularly, whether at one and the same time the ‘rule’ may formally be observed by accepting the continuation of the rights which English law confers, and yet also the principles of modified universalism which the UNCITRAL Model Law gives effect to.

Lengthy discussion then follows of the pros and contras, with the High Court eventually finding no persuasive argument to set aside the rule, particularly not by the English application of the UNCITRAL model law. Counsel had argued that qualifying the model law as procedural as opposed to substantive law, would enable the Court effectively to sidestep Gibbs as precedent. However Hildyard J prefered to accept the full force of precedent rather than sweeping it aside by the procedural pretext.

The substantive rule clearly is ripe for reconsideration by the Court of Appeal.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 5, Heading 5.1.

I reported on Bobek AG’s Opinion in Schrems v Facebook when it came out last year. The CJEU held this morning (judgment so far in FR and DE only) and largely confirms the AG’s Opinion.

As I noted at the time, the long and the short of the case is whether the concept of ‘consumer’ under the protected categories of Brussels I (and Recast) is a dynamic or a static one; and what kind of impact assignment has on jurisdiction for protected categories.

On the first issue, Mr Schrems points to his history as a user, first having set up a personal account, subsequently, as he became the poster child for opposition to social media’s alleged infringement of privacy, a Facebook page. Each of those, he suggests, are the object of a separate contract with Facebook. FB suggests they are part of one and the same, initial contractual relationship. This one assumes, would assist FB with its line of argument that Herr Schrems’ initial use may have been covered by the forum consumentis, but that his subsequent professional use gazumps that initial qualification.

The Court suffices at 36 with the simple observation that the qualification as a single or dual contract is up to the national court (see inter alia the Gabriel, Engler and Ilsinger conundrum: Handbook, Chapter 2, Heading 2.2.11.1.a and generally the difficulties for the CJEU to force a harmonised notion of ‘contract’ upon the Member States), yet that nevertheless any such qualification needs to take into account the principles of interpretation of Brussels I’s protected categories: in particular, their restrictive interpretation. Whence it follows, the Court holds, that the interpretation needs to be dynamic, taking into account the subsequent (professional or not) use of the service: at 37-38: ‘il y a notamment lieu de tenir compte, s’agissant de services d’un réseau social numérique ayant vocation à être utilisés pendant une longue durée, de l’évolution ultérieure de l’usage qui est fait de ces services. Cette interprétation implique, notamment, qu’un requérant utilisateur de tels services pourrait invoquer la qualité de consommateur seulement si l’usage essentiellement non professionnel de ces services, pour lequel il a initialement conclu un contrat, n’a pas acquis, par la suite, un caractère essentiellement professionnel.’

The Court does add at 39-40 that acquired or existing knowledge of the sector or indeed the mere involvement in collective representation of the interests of the service’s users, has no impact on the qualification as a ‘consumer’: only professional use of the service does. (The Court in this respect refers to Article 169(1) TFEU’s objective to assist consumers with the representation of their collective interest).

On this point therefore the Court unlike the AG attaches more weight to restrictive interpretation than to predictability. (Bobek AG’s approach to the issue of dynamic /static was expressed more cautiously).

As for the assignment issue, the Court sides squarely with its AG: the assigned claims cannot be pursued in the jurisdiction which is the domicile of the assignee. That in my view de lega lata makes perfect sense.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

Perhaps it has been studied already. Perhaps it is more of a PhD chapter, short paper or indeed a case for public interest litigation. Stephanie Bijlmakers and I had a good moan about the lack of access to ISO standards when we wrote on ISO 26000. I now have encountered again how extraordinary it is that the public do not have free access to industry standards with such high societal relevance. The trigger this time round is one of our PhD students enquiring with me about recyclable content in packaging. This has sent me on a goose chase to gain access to a copy without having to fork out £170 each for 5 relevant CEN standards.

So here’s my research starter for two: could and if so under what circumstances can privately developed yet publicly approved standards be considered environmental information under relevant EU and international rules, access to which needs to be granted without charge?

Geert.

For background to the Microsoft  Ireland case under the Stored Communications Act (SCA), see here. The issue is essentially whether the US Justice Department may force Microsoft to grant access to e-mails stored on Irish servers.

With a group of EU data protection and conflicts lawyers, we have filed an amicus curiae brief last week, arguing that the Court should interpret the SCA to apply only to data stored within the United States, leaving to Congress the decision whether and under what circumstances to authorize the collection of data stored in other countries.

There is not much point in me rehashing the arguments here: happy reading.

Geert.

A concise note (I am currently tied up mostly in writing research grants. And and and… I hope to return to the blog in earnest later in the week) to signal prof Hess’ excellent short paper on Brexit and judicial co-operation. Prof Hess focuses on the possibility to use the Lugano Convention. (See here for a draft of Michiel Poesen’s overview). I agree that Lugano would not be a good route if one’s intention is to safeguard as much as possible co-ordination between the  UK’s common law approach to private international law, and the EU’s. Neither evidently if one aims to facilitate smooth cross-border proceedings.

Prof Hess has an interesting side consideration on schemes of arrangements. (Including reference to Apcoa). Again I agree that the English courts’ approach to same is not entirely without question marks (particularly jurisdictional issues in the event of opposing creditors: see here). I do not though believe that they would justify hesitation at the recognition and enforcement stage in continental Europe – even after Brexit. At least: not in all Member States. For of course post Brexit, UK judgments become those of a ‘third country’, for which, subject to progress at The Hague, we have no unified approach.

Geert.

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

Thank you Bob Wessels for again alerting us (with follow-up here and also reporting by Lukas Schmidt here) timely to a decision this time by the German courts in Niki, applying the Insolvency Regulation 2015, on the determination of COMI – Centre of Main Interests. Bob’s review is excellent per usual hence I am happy to refer for complete background.

Of particular note is the discussion on the extent of a court’s duty to review jurisdiction ex officio; the court’s correct assumption that in the event of foggy circumstances, the EIR’s presumption of COMI at the place of incorporation must have priority; and finally in my view the insufficient weight the court places on ascertainability by third parties.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.

Interestingly enough the issue of inclusion of foreign victims in class action suits came up in conversation around our dining room the other day. (Our youngest daughter, 15, is showing encouraging signs of an interest in a legal career). In 2017 ONCA 792 Airia Brands Inc v Air Canada is reviewed excellently by Dentons here and I am happy to refer.  (See also here for Norton Rose reporting on related cases – prior to the CA’s decision in Airia Brands).

The jurisdiction and ‘real and substantial connection’ analysis referred to Van Breda (which recently also featured mutatis mutandis in the forum necessitatis analysis in  Cook).

Certification of global classes was part of the classic analysis of developments in international class action suits, which hit us a few years back when many EU states started introducing it. Airia Brands shows that the concerns are far from settled.

Geert.

I reviewed the AG’s Opinion in Case C-372/16 here. The Court held late December. Like the AG, it held that  Rome III does not cover divorces which are declared without a constitutive decision of a court or other public authority: it squarely uses the Regulation itself to come tho this view, without any assessment of whether the foreign State’s courts in private sharia divorces, has any impact on that conclusion.

With the first question answered in the negative, the other, very interesting issues covered by AG, became without subject. A judgment not with a bang, but with a whimper.

Geert.

Welcome to this end of 2018.

Thank you Kate Wilford for flagging [2016] EWHC 3161 (Ch) The RBS Rights issue litigation. The litigation concerns a rights issue of shares in the Royal Bank of Scotland (“RBS”) which was taken up in 2008. By the various actions, shareholders in RBS seek to invoke statutory remedies against RBS under the Financial Services and Markets Act 2000 (“FSMA”) whereby to recover substantial investment losses incurred further to the collapse of RBS shares. The prospectus for the Rights Issue was argued not be to accurate or complete.

The case at issue was held December 2016 but has only now come to my attention. Of note to this blog is one of the three issues that were sub judice: whether RBS is entitled to rely on the federal law of the USA as the law applicable to the particular issue, and if so, whether under that law the claim of privilege is maintainable: Hildyard J referred to this as “the Applicable Law Point”. It is discussed under 129 ff.

As Kate notes, the issue was concerned with the availability of legal advice privilege over records of interviews conducted by US lawyers in a fact-gathering investigation. RBS contended that the English court should have applied US privilege rules, which would have afforded the interview records a much broader degree of protection against disclosure.

I reviewed privilege and applicable law in my post on  People of State of New York v. PriceWaterhouseCoopers, albeit that in that case the toss-up was between different States’ law, not federal law. Hildyard J discusses the English 1859 authority Lawrence v Campbell: lex fori applies. Particular attention is paid to the in my view rather convincing arguments of Adam Johnson (who has since taken silk) as to why this 1859 authority should no longer hold, see 145-147.  Yet his arguments were all rejected, fairly summarily. RBS’ lawyers proposed an alternative rule (at 137): “Save where to do so would be contrary to English public policy, the English court should apply the law of the jurisdiction with which the engagement or instructions, pursuant to which the documents came into existence or the communications arose, are most closely connected.”

Rome I or II did not feature at all in the analysis – wrongly I believe for there could have been some useful clues there and at any rate the applicable law rules of the Regulations certainly apply to the litigation at issue and should have been considered.

Now, there seems to have been consensus that the case was Supreme Court material – however RBS did not pursue the point. We’ll have to wait therefore until another suitable case comes along which I imagine should not be too long in the making.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 1.

A post suited to be this year’s last, given the religious context of the current holiday period: Wahl AG advised late November in C-426/16. See my previous posts on the issue. A European Regulation (1099/2009) provides for an unclear, and conditional,  exemption from a requirement of stunning animals for religious slaughter. (Regularly the practise is also called ‘ritual’; including in current Opinion. ‘Religious’ must be the preferred term).

Practised in particular by the Jewish (Shechita; leading to ‘kosher’ meat) and Muslim (Zabihah; with halal meat) faith, a core aspect of the practice is that animals are not stunned prior to slaughter. The science on the effect of stunned or unstunned slaughter is equivocal. What is certain is that neither stunned nor unstunned slaughter, when carried out incorrectly (well documented in the case of stunned slaughter) aids the welfare of the animal.

The Flemish Minister responsible for animal welfare announced that, from 2015 onwards, he would no longer issue approvals for temporary slaughter plants at which religious slaughtering could be practised during the Islamic Feast of the Sacrifice because such approvals in his view were contrary to EU legislation, in particular the provisions of Regulation 1099/2009. The muslim community objects to the discontinuation of temporary slaughter plants.

The Advocate-General’s Opinion is lengthy, and there is a lot to chew on.  There is little point in rehashing all the AG’s points: readers are best referred to the Opinion itself. Of note however is

• Firstly, the AG’s attempt strictly to delineate the issue.

The case he suggests is simply about what material conditions, in terms of equipment and operating obligations, must accompany unstunned slaughter in order for it to comply with the relevant EU rules. He suggests a rephrasing of the referring court’s questions in that direction. Along these lines he also in substance refuses to entertain the questions as to the validity of Regulation 1099/2009 itself, or the exemption from the duty to use approved slaughterhouses under the Regulation’s ‘cultural’ exception. (See footnote 13). In my view the Regulation is very vulnerable on this issue: sporting and cultural events are entirely excluded from its scope of application; religious rites are subject to a qualified exemption. That to me cannot survive a discrimination test.

The Brussels court had given the case a much wider scope: it suggested that the contested Flemish decision creates a limitation on the exercise of freedom of religion and undermines Belgian customs relating to religious rites, since it obliges Muslims to perform the ritual slaughter of the Islamic Feast of the Sacrifice in slaughterhouses that have been approved in accordance with Regulation No 853/2004. In the opinion of that court, this limitation is neither relevant nor proportionate in order to attain the legitimate objective of protecting the welfare of animals and human health (at 20). The AG however sees no limitation of freedom of religion at all, resulting from the general obligation to use approved slaughterhouses.

• Despite the attempt at delineation, the background to the case is undeniable and filters through in the Opinion.

If only because the AG has to complete the analysis should the CJEU disagree with his view that freedom of religion is not being limited, he does review the legality of a total ban on slaughtering other than in plants that have been approved in accordance with the rules established in Annex III to Regulation No 853/2004.

First of all he refers to European Commission audits of the previously approved temporary slaughterhouses to make the point that they protected animal welfare sufficiently. He directly criticises the Regulation for its arguably disproportionate criteria in this respect: see in particular at 127.

Religious slaughter falls squarely within the European Convention of Human Rights Article 9’s freedom of religious expression. It is clear that the AG believes that the ban on unstunned slaughter other than in approved abattoirs, in the name of animal welfare or otherwise,  offends freedom of religious expression to such a degree that it simply must not pass: para 133 and the preceding argumentation is very clear.

The AG’s reasoning holds all the more for a total ban un unstunned slaughter full stop. That is the clear implication of this Opinion and one which must be welcomed.

Guten Rutsch ins neue Jahr!

Geert.

Apologies for late reporting. Bot AG opined end of October in C‑210/16 Fansites. [The official name of the case is Unabhängiges Landeszentrum für Datenschutz Schleswig-Holstein v Wirtschaftsakademie Schleswig-Holstein GmbH, in the presence of Facebook Ireland Ltd, Vertreter des Bundesinteresses beim Bundesverwaltungsgericht. It’s obvious why one prefers calling it Fansites].

The Advocate-General summarises (para 2-3) the case as involving ‘proceedings between the Wirtschaftsakademie Schleswig-Holstein GmbH, a company governed by private law and specialising in the field of education (‘the Wirtschaftsakademie’), and the Unabhängiges Landeszentrum für Datenschutz Schleswig-Holstein, a regional data-protection authority in Schleswig-Holstein (‘ULD’) concerning the lawfulness of an order issued by the latter against the Wirtschaftsakademie requiring it to deactivate a ‘fan page’ hosted on the website of Facebook Ireland Ltd. The reason for that order was the alleged infringement of the provisions of German law transposing Directive 95/46. Specifically, visitors to the fan page were not warned that their personal data are collected by the social network Facebook (‘Facebook’) by means of cookies that are placed on the visitor’s hard disk, the purpose of that data collection being to compile viewing statistics for the administrator of the fan page and to enable Facebook to publish targeted advertisements.’

The case ought to clarify the extent of the powers of intervention of supervisory authorities such as ULD with regard to the processing of personal data which involves the participation of several parties (at 13). I had flagged earlier that this case is relevant to the jurisdictional and applicable law issues involving datr cookies.

Whatever the outcome of the case, its precedent value will be limited by the imminent entry into force of the new General Data Protection Regulation – GDPR. The GDPR clearly introduces a ‘one-stop principle’ with only one lead authority (in FB’s case, Ireland’s data protection agency) having the authority to act (see also the AG’s observation of same in para 103).

As prof Lorna Woods in excellent analysis observes, the issue comes down to the interpretation of the phrase from Art. 4(1)(a), ‘in the context of the activities of an establishment’. Dan Svantesson has most superb analysis of Article 4(1)(a) here, anyone interested in the issue will find his insight most helpful.

Now, the Advocate-General leans heavily on Weltimmo however I would suggest its precedent value for the Fanpages case is constrained. Weltimmo concerned a company set up in Slovakia but with no relevant activities at all in that Member State. Indeed as the Court itself observed (at 16-18) , the company was effectively male fide (my words, not the CJEU’s) moving its servers and creating fog as to its exact whereabouts. In other words a case of blatant abuse. There is no suggestion of abuse in Fanpages. Moreover according to the CJEU in C-230/14 Weltimmo the phrase ‘in the context of the activities of an establishment’ cannot be interpreted restrictively (AG’s reference in para 87), yet that CJEU holding in Weltimmo cross-refers to Google Spain in which the crucial issue was whether EU data protection laws apply at all. That is very different in Weltimmo and in Fanpages. That EU authorities have jurisdiction and that EU privacy law applies is not at issue.

There is sufficient argument to find in the Directive, even before its transformation into the GDPR, that in cases such as these the same processing operation ought to be governed by the laws of just one Member State. It would be good for the CJEU to recognise that even before the entry into force of the GDPR.

Geert.

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

I explained the issue in [2017] EWHC 3104 (Pat) Eli Lily v Genentech in my posting on Chugai v UCB. A defendant in a patent infringement case often tries to make the case that the suit is about patent infringement really: for this obliges the court per GAT v Luk to refer (only the) invalidity issue to the court with exclusive jurisdiction under Article 24(4) Brussels I Recast.

Here, Eli Lily seek a declaration of non infringement of a bundle of European patents held by Genentech, a US-incorporated firm.

Birss J in the case summarises all relevant precedent, including Chugai, to reach the conclusion that the suit can stay in the UK.

Of note is his holding on costs. The English courts do not just review whether the case is currently about validity but also what the likelihood is that it will become one on validity. For if it does later on, Birss J suggests ‘this entire exercise will have been something of a charade‘ (at 84). (Which is not quite the case: even if the validity issue needs to be temporarily outsourced to different courts, the infringement issue may later return to the courts of England).

On this point, Eli Lilly refuse to disclose whether they may seek a ruling on the validity of the patents: they would rather wait to see Genentech’s defence. Not an unacceptable position, but one, High Court does warn, which will have an impact on costs. At 87: ‘I am satisfied that these unusual circumstances mean that it would not be fair to pre-empt what each party may decide to do. There are sufficient uncertainties that the right thing to do is wait and see what happens. However in my firm but necessarily provisional view that wait should be at Lilly’s risk as to costs. If Genentech does counterclaim for infringement, and validity of the non-UK patents is put in issue (here or abroad) in response, then it is very likely that Lilly should bear the whole costs of this application even if they win it in its form today.‘

That latter point is interesting. It’s twice now this week that judgments come to my attention where jurisdictional considerations are clothed in costs implications.

Geert.

(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.7.

In [2017] EWHC 2541 (IPEC) Pablo Star Media v Richard Bowen the issue was one over copyright infringement relating to a photograph of Dylan Thomas. Of interest to this blog is not the copyright issue or the height of damages relating to same – I am not a specialist in that area. (As far as the jurisdictional issues are concerned, there is a slightly muddled reference to the Brussels I Recast and various other Regulations including Regulation 542/2014 which I discussed here).

What did trigger my interest, though, is the ruling on costs.

At 33-34 Hacon J quotes the District Judge’s reasoning for obliging claimant (Pablo Star) to pay part of the defendant’s cost, despite having won the case. In that cost award, the District Judge scolds claimant for having initiated proceedings in Ireland as well as the UK, and for considering (or threatening, as the case may be) litigation in the US. The High Court at 38 and 41 leaves aside the proceedings in Ireland as a factor to consider, and now limits the reasoning for the award on cost to the potential proceedings in the US.

Now, costs determination largely is within the realm of national rules of civil procedure. Sometimes, EU and /or international law has a direct impact on cost determination, such as for instance in the case of Aarhus and environmental litigation; or, importantly for the case at issue, Directive 2004/48 on intellectual property rights enforcement (the enforcement Directive). This Directive provides in Article 14 on legal costs

‘Member States shall ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity does not allow this.’

That Directive was applied in CJEU C-57/15 UVP v Telenet, expressly condemning Belgium’s restrictive regime on cost recovery in intellectual property cases. The High Court’s finding on cost may to my mind be at odds with that ruling.

More generally, the District Judge’s reference to claimant’s Irish proceedings contributing to the judge’s finding on cost, without a doubt is an infringement of the effet utile of the EU’s jurisdictional regimes. Claimant has a certain right to sue in Ireland and that possibility must in no way be disciplined.  Hacon J at the High Court, purposely or not, may have insulated himself from criticism at this point, by leaving the Irish proceedings outside the consideration and only referring to the threat of US proceedings as relevant for partially shifting costs to the plaintiff.

Absolute numbers in the case are not high. Yet the principle to my mind deserves right to appeal at the CA and, from there on, potentially to the CJEU.

Geert.

I was delighted to learn something I had not been aware of in Szpunar AG’s Opinion in C-467/16 Brigitte Schlömp: namely the slightly diverging approach to the notion of ‘court’ in Brussels cq Lugano.

The AG also opines on the question of lis alibi pendens, suggesting (at 48) that since the conciliation procedure before the Behörd constitutes an integral part of proceedings before a(n) (ordinary) court, the moment of seizure of the Schlichtungsbehörde is the determining moment under the lis alibi pendens provisions of Articles 27 and 30 of the Lugano II Convention. [He also refers to [2014] EWHC 2782 (Ch) Lehman Brothers Finance AG v Klaus Tschira Stiftung GmbH & Anor  which followed the same approach].

Is the Swiss ‘Schlichtungsbehörde’ or conciliation authority, intervening in disputes between local councils and relatives with respect to maintenance and social care payments, a ‘court’ under Lugano?

Ms Schlömp, who resides in Switzerland, is the daughter of Ms H.S., who receives supplementary social assistance from the Landratsamt Schwäbisch Hall (administrative authority of the district of Schwäbisch Hall) in Germany because of her care requirements. Under German law (indeed similarly in many a Member State), benefits handed out by social welfare bodies, are claim back from children of recipients, subject to ability to pay. To assert its claim for recovery, the German welfare body lodged an application for conciliation in regard to Ms Schlömp with the conciliation authority (‘Schlichtungsbehörde’), competent under Swiss law. What follows is a series of procedures left, right, even centre. Their exact order is outlined by the AG, they matter less for this post: what is relevant to my own insight, is whether a Schlichtungsbehörde under Swiss law is covered by the term ‘court’ within the scope of Articles 27 and 30 of the Lugano II Convention.

Here comes my moment of surprise: at 58: ‘the concept of ‘court’ in the Lugano II Convention differs from that in Regulations No 44/2001 and No 1215/2012, as that Convention contains an article which has no parallel in the latter two instruments: Article 62 of the Lugano II Convention states that the expression ‘court’ is to include any authorities designated by a State bound by that convention as having jurisdiction in the matters falling within the scope of that convention.’ Like in recent case-law under the Brussels I Recast, bodies which prima facie are outside the judicial system, may be considered ‘courts’. A confirmation of the functional as opposed to the formal classification approach.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.16.1.1.

Thank you Tom Whitton and Helen Kavanagh  for flagging Algeco Scotsman PIK SA [2017] EWHC 2236 (Ch). Algeco has COMI in Luxembourg.  This was clear when the relevant scheme of arrangement (‘SAR’) was being discussed. To manage potential problems at the jurisdictional stage, Hildyard J at 22 lists the precautions the company and the majority of the lenders took:

‘Accepted by the relevant 75 per cent or more, was first, the amendment of the governing law clause in the PIK Loan Agreement to change the governing law from New York law to English law; secondly, the amendment of the jurisdiction clause to submit the parties to the non-exclusive jurisdiction to the courts of England; and thirdly, a waiver of any restrictions under the PIK loan agreement so as to permit the company to take all steps necessary to confirm or establish sufficient connection with England including, if appropriate, to take steps to ensure that its COMI is in England.’

When the unsuspected reader sees ‘COMI’ of course (s)he is forgiven for immediately pondering application of the EU’s Insolvency Regulation – quod certe non: for it is clear (ia as a result of schemes of arrangement not being included in relevant Annex) that SARs fall under company law. Hildyard J’s jurisdictional kick-off at 43 is telling: ‘Dealing first with jurisdiction, the primary question is whether this Luxembourg company, the subject of the scheme, is a qualifying company so to be subject to section 895 of the Companies Act’. Idem at 45.

At 47 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) and under Article 25 (choice of court).

Yet this in my view is where recourse to SARS in the English courts continues to be exposed: loan agreements and facilities agreements now routinely adopt choice of court and law in favour of English courts and ditto law. Yet where they do not, or did not, the ‘willing’ creditors consent to a change in the agreement in favour of the English courts, with the unwilling creditors left behind. Whether this holds scrutiny under Rome I is far from certain. As for Article 8, its use here may be seen as a form of abuse, disciplined under the Regulation.

Hildyard J considers the case one of ‘good forum shopping’ (at 57-58), with reference to Apcoa which I review here. The concerns above continue in my view to highlight weaknesses in the construction, which so far have not led to any collapse of this restructuring tourism. At 58 the High Court emphasises that there are cases of inappropriate forum shopping in this context (one of that includes haste) yet the role of Rome I in this context has so far played little of a role.

It is noteworthy that in my view (and I so testified in re Apcoa) even a wrong view of the English courts on Rome I’s impact, would not suffice for jurisdictions outside of the UK to refuse to recognise the scheme under Brussels I – all with the huge Brexit caveat evidently.

Geert.

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

Appreciation of the title of this piece of course depends on how one as an individual likes Bauhaus, or not. A November 2017 European Parliament Study on looted works of art and cultural goods is something of  a treasure trove for public and private international lawyers alike. The study looks at substantive law on the issue in the Member States (not the cup of tea for this blog) but kicks off with good overview of the challenges of sovereign immunity; applicable law (particularly with respect to choice of law; with inspiration being sought in the Belgian Private International Law Act, Article 90 (lex furti as a principle – the place from which the object was removed, but with corrections), and the issue of the application of foreign public international law by the courts.

Parliament is quite active on this issue. In May 2016 it had already published a study with more focus on the specific issue of art looted in times of conflict, and alternatives to court litigation but nevertheless with a short forray into conflict of laws (and reference to one or two interesting national cases).

Together the two studies are a good exercise for the conflicts mind.

Geert.

Thank you Dan Svantesson for sharing preparatory work for a February 2018 conference on access to digital evidence in the cloud. The document, written by a group which comprises academia, relevant companies (including Apple, Google, Facebook and Microsoft) as well as regulators (including the EC and the USDJ), at this stage does not offer solutions. Rather, it sets out principles along which a future framework could be set out, including the concept of data control (not to be confused with data controller) and actual provision of service.

One of the issues to look out for is how a future international approach to access and jurisdiction in criminal matters may differ from courts’ and regulators’ approach in civil jurisdiction (including data protection and privacy).

Geert.

I have reported before on the relevance of lex curia /curial law and other lex causae decisions to be made in the arbitration context. I have also reported on the qualification of ‘international‘ for conflict of law /private international law purposes. And finally of course privity of choice of court and -law is no stranger in my postings either. All these considerations apply in the arbitration context, too.

Thank you Herbert Smith for flagging CS(COMM) 447/2017 GMR Energy, in which all these issues featured in the arbitration context. The judgment would not seem to add anything new (mostly applying precedent) however it is a usual reminder of the principles. As reported by HS (and with further factual background there), GMR Energy argued

• on the plain reading of the arbitration clauses, Singapore was not the seat of arbitration but only the chosen place or venue for hearings; Not so, the High Court found: reference to SIAC rules and to Singapore  points to Singapore as the curial seat;
• the parties being Indian, choice of a foreign seat for arbitration would be in contravention of Section 28 of the Indian Contract Act 1872 which provides that agreements which restrain parties’ rights to commence legal proceedings are void (save for those which do so by way of an arbitration agreement) – GMR Energy contended that an agreement between Indian parties to arbitrate offshore would fall foul of this provision. This, too, the High Court rejected: per precedent, offshore arbitration is compatible with the Act. (It is also particularly useful for Indian subsidiaries of foreign companies); and
• for two Indian parties to choose an overseas seat for their arbitration (thereby disapplying Part I of the Arbitration Act) would amount to a derogation from Indian substantive law, and therefore would not be permissible. This, the High Court ruled, is not a decision to make at the stage of jurisdictional disputes between the parties.

Further, on  the issue of privity, Doosan India ‘contended that GMR Energy should be party to the SIAC Arbitration proceedings by virtue of common family ownership and governance, lack of corporate formalities between the companies, common directorships, logos and letterheads, and GMR Energy’s past conduct in making payments towards GCEL’s debts’ (I am quoting HS’s briefing here). This is referred to as the alter ego doctrine and the High Court upheld it. Liability for affiliated undertakings’ actions is to be discussed on the merits (here: by the arbitral tribunal). But a the level of jurisdiction (including reference to arbitration), Doosan India’s arguments were upheld: the common ownership between the entities; the non-observance of separate corporate formalities and co-mingling of corporate funds; and GMR Energy’s undertaking to discharge liabilities of GCEL (and the fact that it had made part payments towards the same) all conspire to the conclusion that GMR Energy is bound by the arbitration agreement.

An interesting confirmation of precedent and ditto application of the alter ego doctrine.

Geert.

Thank you Bob Wessels for again alerting us timely to two recent decisions by the Dutch courts, applying the Insolvency Regulation 2015, on the determination of COMI – Centre of Main Interests. Bob’s review is excellent per usual hence I am happy to refer for complete background. In short, the decisions are

• in Powerstorm: textbook applications on the public expression (hence ascertainability by third parties, to use the CJEU’s phrase of words) of COMI, which third parties have to rely on. Here: to displace the presumption of COMI in the United States (place of incorporation; in re Powerstorm) in favour of Amsterdam.
• in Bezuijen BV against X, a natural person: with extensive reference to the recitals of the EIR 2015, that the Dutch courts have to consider jurisdiction proprio motu, evidently, and that they need serious evidence to uphold jurisdiction against a natural person who, both parties agree, no longer has his residence in The Netherlands (where it is, is in dispute but it is probably somewhere in the vicinity of Paris).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.