Flux Belges et Lux

Tobias Gosch has excellent overview of T v O (why o why do States feel the need the hide the identity of companies in commercial litigation) in which the Austrian Supreme Court (Oberster Gerichtshof) ruled on whether potential claims under the Austrian Commercial Agents Act (Handelsvertretergesetz) can be brought before an Austrian court even if the underlying agency agreement contains an arbitration clause and is governed by the laws of New York.

The contested part of the litigation, as Tobias writes, concerns the following: the Agent conducted the procurement of sea freight business in Austria and other countries of the European Union for the Principal. Whilst the territorial scope of the Agent’s activities complies with the conditions for the international overriding mandatory applicability of the compensation provisions of the Directive as set out by the ECJ in Ingmar, the procurement of business is not covered by the relevant definition in the Directive, which only refers to the sale or purchase of goods. Including the procurement of business therefore is a form of gold-plating and the national law’s decision to do so does not uncontestedly fall under the protection of overriding mandatory law. In other words it does not necessarily override parties’ choice of law and ensuing choice of court.

The judgment refers inter alia to Unamar to justify its direction. Rather like, as I reported at the time, the Belgian Supreme Court, the Austrian Supreme Court, too, fails properly to assess whether the Austrian legislator intended the Austrian provisions to be of overriding mandatory law character per Rome I: “1. Overriding mandatory provisions are provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organisation, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under this Regulation.

The European Court of Justice’s general statement in Unamar that gold-plated provisions may fall under overriding mandatory law, looks set by national courts to be turned into a matter of fact priority.  That surely at some point ought to be disciplined by the CJEU.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.8.3.

Bobek AG opined mid July in C-194/16 Bolagsupplysningen OÜ on the application of the Shevill rule, as supplemented by e-Date advertising, to infringements of a company’s personality rights over the internet.  This is one of those Opinions where summaries fall much, much short of the contents of the original document and I should urge readers to consult the Opinion in full.

An Estonian company operating in Sweden was blacklisted for its allegedly questionable business practices on the website of a Swedish employers’ federation. The Advocate General dryly notes ‘(a)s inevitably happens in the era of anonymous internet bravery, universally known for its genteel style, subtle understanding, and moderation, the website attracted a number of hostile comments from its readers. The Estonian company brought an action before the Estonian courts against the Swedish federation. It complained that the published information has negatively affected its honour, reputation and good name. It asked the Estonian courts to order that the Swedish federation rectify the information and remove the comments from its website. It also requested damages for harm allegedly suffered as a result of the information and comments having been published online.

Can the Estonian courts assert jurisdiction to hear this action on the basis of the claimant’s ‘centre of interests’, a special ground of jurisdiction that the Court previously applied to natural persons, but so far not legal persons? If they can, then second, how should the centre of interests of a legal person be determined? Third, if the jurisdiction of the Estonian courts were to be limited to situations in which the damage occurred in Estonia, the referring court wonders whether it can order the Swedish federation to rectify and remove the information at issue.

The Advocate General suggests there are two novelties in the questions referred: a legal person (not a natural one) is primarily asking for rectification and removal of information made accessible on the internet (and only secondarily for damages for the alleged harm to its reputation). This factual setting, the AG suggests, leads to the question of how far the seemingly quite generous rules on international jurisdiction previously established in Shevill with regard to libel by printed media, and then further extended in eDate to the harm caused to the reputation of a natural person by information published on the internet, may be in need of an update. At the real root of course of the generous rules on jurisdiction for tort, lies the Court’s judgment in Bier. Bobek AG joins Szpunar AG in severely questioning the wisdom of the Bier rule in the age of internet publications.

Now, human rights scholars will enjoy the Advocate General’s tour d’horizon on whether and to what extend companies may enjoy human rights. On the whole I believe he is absolutely right in suggesting that there ought to be no difference between legal persons and natural persons when it comes to the very possession of personality rights (such as the right not to be libelled) and that neither is there any ground to distinguish between natural persons and legal persons when it comes to the jurisdictional consequences of upholding these rights.

Then, to the jurisdictional consequences (para 73 onwards): the AG suggests that ‘putting Shevill online’ (the AGs words) essentially means granting the forum to a large number of jurisdictions simultaneously, 28 within the European Union. That is because allegedly false or libelous information on the internet is instantly accessible in all Member States. Bobek AG suggests such multiplicity of fora stemming from the distribution criterion is very difficult to reconcile with the objective of predictability of jurisdictional rules and sound administration of justice enshrined in recital 15 of the Brussels I Recast Regulation, and does not serve the interests of claimant (although the AG concedes that in litigation practice, sending the defendant on a goose chase throughout the EU may be an attractive proposition). Now, in Bier the CJEU upheld jurisdiction for both locus damni and for locus delicti commissi on the grounds that this was attractive from the point of view of evidence and conduct of proceedings: this gives both the ‘special link’ which the special jurisdictional rules require. Whether the Court will be swayed by the argument that in the internet context, neither is of relevance, remains to be seen. It is true that number of clicks, which presumably is the relevant criteria to establish ‘damage’ in the context of Article 7(2), can be established just as well outside the jurisdiction as inside it (Google Analytics being used in a variety of national proceedings). It is also true however that Bier and Shevill are dogma for the Court and it is unlikely that it will simply abandon or even vary them.

Variation is all the more unlikely in the direction of the alternative suggested by the AG: locus delicti commissi relates to whoever is in charge of publishing and altering the content of the online information. So far so good: this is a useful clarification of Shevill in the internet age and one that has as such been so applied by national courts. Harm then would in the AG’s view have to be defined as where the reputation of the claimant was most strongly affected. That is the place of his centre of interests. The AG further suggests (at 104 ff) that in the case of a profit-making legal person, that is, a company, the jurisdiction is likely to correspond to the Member State where it attains the highest turnover. In the case of non-profit organisations, it is likely to be the place where most of its ‘clients’ (in the broadest sense of the word) are located. In both cases, such a Member State is likely to be the one where the damage to reputation and therefore to its professional existence is going to be felt the most. However in all cases, assessments needs to be fact-specific, and moreover, more than one centre of interests could potentially be established (at 116); that latter concession of course is not likely to endear the AG to the Court, given the requirement of predictability.

Answering then the query re injunctions (under the assumption that is an injunction sought by way of final remedy, not an interim measure), the AG employs the possibility of conflicting directions issued by courts with jurisdiction as to the merits of the case, as further argument to support his view on locus damni. This issue could raise interesting discussions on the usefulness of directions to remove internet content from particular websites only.

All in all, there is an awful lot of to the point analysis by the AG in this opinion. However the Court’s repeated reluctance to vary Bier and Shevill, a formidable obstacle.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.

Thank you Francesca Petronio, Fabio Cozzi & Francesco Falco for flagging the Italian Supreme Court’s judgment no. 16601/2017 of 5 July last. I have tried to locate the judgment in relevant databases but failed – however Francesca et al’s posting gives great overview.

In what is suggested to be a Copernican revolution, the Supreme Court has dropped the Italian legal order’s fundamental objection to punitive damages, which made it near-impossible to obtain recognition and enforcement of in particular US judgments containing such damages. The judgment not surprisingly contains a number of conditions in particular on the excessive nature of such damages.

The judges seem to have been swayed by developments both in Italy (statutory law in places allowing for more than simple compensation of material loss) and US law (truly excessive punitive damages having been reigned in).

Punitive damages are the one example always identified as one of the core applications of ordre public in European recognition and enforcement law. After the Italian example surely this may now be less obvious in many jurisdictions.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.16.

A short post mostly for the sake of completeness. In its second recent judgment on insureds as ‘protected category’ under the Brussels I Regulation, the CJEU held last week in C-340/16 Kabeg. Where an employee is injured and the employer is  statutory assignee of the rights of its employee, the employer is subrograted into the rights of the victim and can directly act against the insurer of the vehicle involved.

The Court’s less cautious approach to subrogation than it generally adopts, is influenced by Directive 2009/103, which obliges Member States to put in place such direct action. Article 18: ‘Member States shall ensure that any party injured as a result of an accident caused by a vehicle covered by insurance as referred to in Article 3 enjoys a direct right of action against the insurance undertaking covering the person responsible against civil liability.’

Geert.

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

Another one from the exam queue. I reported earlier on Szpunar AG’s Opinion in C-54/16 Vinyls Italia – readers may want to refer to that post before reading on. The case concerns the extent to which a bona fide creditor may insulate payments made to it by the insolvent debtor, to the detriment of the collectivity of the creditors, using choice of law for its contract with the debtor away from the lex concursus. The Court held on 8 June, much along the lines of its AG and earlier precedent especially Nike with respect to anti-avoidance actions. The judgment therefore is not of great novelty for this part of the insolvency Regulation. It is on the other hand of crucial importance for the interpretation of ‘international’ in European private international law.

Firstly, whether the court hearing the insolvency proceedings can or must raise the Article 13 (now 16) even if the party profiting from the insulation of its payments from the insolvency, has failed expressly to do so in its submissions: this, the CJEU held, is a matter of procedure, not harmonised in the Insolvency Regulation and lex fori therefore, subject to the usual condition that effet utile is guaranteed and that EU law is equally applied as national law.

The Court had already held in Nike that the defendant in an anti-avoidance (Pauliana) action has to prove both the facts from which the conclusion can be drawn that the act is unchallengeable and the absence of any evidence that would militate against that conclusion (at 25). The Court in Vinyls Italia qualifies that statement: the party bearing the burden of proof must show that, where the lex causae makes it possible to challenge an act regarded as being detrimental, the conditions to be met in order for that challenge to be upheld, which differ from those of the lex fori concursus, have not actually been fulfilled. However defendant does not have to show that the lex causae does not provide, in general or in the abstract, any means to challenge the act in question: such means of challenging the act almost always exist, at least in the abstract, and such strict interpretation would therefore deprive Article 13 (now 16) of its effectiveness (at 38). Of course how wide exactly the net of voidness needs to be cast, is not entirely clear from the judgment.

The final question then deals with the possibility of relying on (now) Article 16 in the situation provided for in Article 3(3) of the Rome I Regulation, that is to say, where all the elements relevant to the situation in question between the parties to a contract are located in a country other than the country whose law is chosen by those parties. Now, the Rome I Regulation does not ratione temporis apply to the facts at issue and on the similar provisions of the Rome Convention, the referring court is not entitled to ask questions. The CJEU therefore decides to simply reply to the question of thins being a purely domestic contract, by reference to Article 16 of the insolvency Regulation only. It nevertheless however uses both Regulation and Convention a contrario: both existed at the time of adoption of the Insolvency Regulation. The latter does not include an Article 3(3) type provision. That it does not, must, the Court held, mean that the Insolvency Regulation so no need at all ao limit the use of lex contractus for insulation reasons, even in the case of purely domestic contracts.

There is however one limit: Fraus (omnia corrumpit) aka abuse of (EU) law. Here, the Court refers to its findings last summer in C‑423/15 Kratzer. EU law cannot be relied on for abusive or fraudulent ends. A finding of abuse requires a combination of objective and subjective elements. First, with regard to the objective element, that finding requires that it must be apparent from a combination of objective circumstances that, despite formal observance of the conditions laid down by Community rules, the purpose of those rules has not been achieved. Second, such a finding requires a subjective element, namely that it must be apparent from a number of objective factors that the essential aim of the transactions concerned is to obtain an undue advantage.

Here, Article 16 may be disregarded only in a situation where it would appear objectively that the objective pursued by that application, in this context, of ensuring the legitimate expectation of the parties in the applicability of specific legislation, has not been achieved (a tough condition of the lex contractus is wisely chosen), and that the contract was made subject to the law of a specific Member State artificially, that is to say, with the primary aim, not of actually making that contract subject to the legislation of the chosen Member State, but of relying on the law of that Member State in order to exempt the contract, or the acts which took place in the performance of the contract, from the application of the lex fori concursus. In this respect, (at 55) choice of law of a Member State other than the Member State in which parties are established does not create any presumption regarding an intention to circumvent the rules on insolvency for abusive or fraudulent ends.

The findings on fraus amount to strong support for a wide interpretation of the concept ‘international’ in EU private international law. A development to be applauded. They also make it very difficult within the context of Article 13 (now 16) successfully to mount a challenge of payments detrimental to the collectivity. This aspect of the case is what i.a. Gilles Lindemans objects to in the judgment. However the CJEU logic I suppose lies in what the it sees firmly as the object and purpose of Article 16: it protects the legitimate expectations of the party who has benefited from an act detrimental to all the creditors. In some way it prevents contractual sclerosis for parties suspected of being close to payment issues. Securitisation is facilitated if the lex causae is fixed, independent of the lex concursus. Not just fraus (a very improbable route now) but probably more importantly the burden of proof per C-310/14 Nike, protects the collectivity.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.7.1. Chapter 3, Heading 3.2.8.1.

C-433/16 BMW v Acacia follows a similar pattern as yesterday’s post on the Trademark Regulation. In Community designs, too, intellectual-property specific secondary law varies the overall jurisdictional regime of Brussels I (Recast), here: Regulation 6/2002 on Community designs. Reference is best made to the judgment itself for readers to appreciate how exactly the general regime is part-incorporated.

In general, the jurisdictional rule for Community designs incorporates less of the general regime of the Brussels I (Recast) than its Trademark Regulation. (Current) Article 24(4)’s exclusive jurisdictional rule for instance is made inapplicable for designs. So too is (now) Article 7(2)’s rule on tort.

Acacia brought a proactive action against BMW before the Tribunale di Napoli (District Court of Naples (Italy)) seeking a declaration of non-infringement of Community designs, of which BMW is the proprietor, for alloy rims for automobile wheels, as well as a declaration of abuse of a dominant market position and unfair competition by BMW. The action clearly anticipated counter action by BMW. Acacia also sought an injunction to prevent BMW from taking any action hindering the marketing of the replica rims. (Of note generally is that not all Member States allow for actions in non-infringement. See here for a review of the implications of same).

Regulation 6/2002 however provides that actions for declaration of non-infringement (Article 81(b) of that regulation) may be brought, where the defendant is domiciled in an EU Member State, before the Community design courts of that Member State alone. These courts are specifically assigned by the Member States. Article 7(2)’s rule on tort as noted does not apply and the CJEU does not take long to hold exactly that. Declaration of abuse of a dominant position and of unfair competition that are connected to actions for declaration of non-infringement of Community design, likewise cannot be based on Article 7(2) Brussels I Recast.

A declaration of non-infringement under Article 81(b) of the Community design Regulation must, when the defendant is domiciled in an EU Member State, be brought before the Community design courts of that Member State, except where there is choice of court or voluntary appearance (Article 25 cq 26 of the Recast), or within the rules of lis pendens and related actions. As for Article 26, voluntary appearance cannot be deduced from the fact that the defendant appears to contest jurisdiction, even if at the same time they also argue to the merits: this is held again by the CJEU in line with earlier case-law.

The Court’s judgment is neither shocking nor surprising. It is good however to be reminded of the jurisdictional rules on intellectual property.

Geert.

Jurisdiction in intellectual property cases is notoriously complex and frankly opaque, in the case of the EU exacerbated by the impact of secondary law. My colleague Marie-Christine Janssens has a great overview in the Belgian reports at the Congress of Washington of the International Academy of Comparative Law. Brussels: Bruylant, 611-652.

At stake in C-617/15 Hummel v Nike was Regulation 207/2009, in the meantime superseded by Regulation 2015/2424.  Article 94 of the former, entitled ‘Application of Regulation … No 44/2001’, contains rules on jurisdiction and procedure in legal actions relating to EU trade marks. It states that ‘Unless otherwise specified in this Regulation, Regulation … No 44/2001 shall apply to proceedings relating to [EU] trade marks and applications for [EU] trade marks, as well as to proceedings relating to simultaneous and successive actions on the basis of [EU] trade marks and national trade marks.’ Article 94 essentially varies, to some degree, the jurisdictional rules of the Brussels I (now Recast) Regulation.

Now, what needed specific interpretation was Article 97’s

‘1.      Subject to the provisions of this Regulation as well as to any provisions of Regulation … No 44/2001 applicable by virtue of Article 94, proceedings in respect of the actions and claims referred to in Article 96 shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment. 

2.       If the defendant is neither domiciled nor has an establishment in any of the Member States, such proceedings shall be brought in the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.

3.      If neither the defendant nor the plaintiff is so domiciled or has such an establishment, such proceedings shall be brought in the courts of the Member State where [EUIPO] has its seat.

More specifically, the notion of ‘establishment’: Under which circumstances is a legally distinct second-tier subsidiary, with its seat in an EU Member State, of an undertaking that itself has no seat in the EU to be considered as an “establishment” of that undertaking.

Nike, which has its seat in the US, is the ultimate holding company of the Nike Group, which sells sports goods across the world. Nike Retail, which has its seat in the Netherlands, also belongs to that group. Nike Retail operates the website on which Nike goods are advertised and offered for sale, in Germany in particular. In addition to online sales on that website, Nike goods are sold in Germany through independent dealers supplied by Nike Retail. Wholesale or retail sales in Germany are not directly conducted by the companies in the Nike Group.

Nike Deutschland GmbH, which has its seat in Frankfurt am Main and is not a party to the main proceedings, is a subsidiary of Nike Retail. Nike Deutschland does not have its own website and does not sell goods to end consumers or intermediaries. However, it negotiates contracts between intermediaries and Nike Retail, and supports Nike Retail in connection with advertising and the performance of contracts. Nike Deutschland also provides aftersales service for end consumers.  Hummel Holding claims that some Nike products, in particular basketball shorts, infringe its trade mark and that most of the infringements took place in Germany. It brought an action against Nike and Nike Retail before the Landgericht Düsseldorf (Regional Court, Düsseldorf, Germany), which ruled that it had jurisdiction on the ground that Nike Deutschland was an establishment of Nike, but dismissed the action on the merits. This judgment is now being appealed.

The CJEU first of all (at 22 ff) warns for caution in the conjoined application of concepts used in both the Trademark Regulation and the Brussels I (Recast). The Trademark Regulation is, so the Court says specifically, lex specialis and one cannot therefore assume the same words mean the same thing. Readers of this blog are aware that I always give the CJEU thumbs-up when it mentions this (such as in Kainz), however the Court itself very regularly ignores its own instruction when the discussion involves the application of Brussels and Rome.

The point of Article 97, the Court notes (at 37) is to ensure that a court within the EU always has jurisdiction to hear and determine cases concerning the infringement and validity of an EU trade mark. In line with the AG’s suggestion the Court consequently opts for a broad interpretation of the concept, holding that the concept requires (1) a certain real and stable presence, from which commercial activity is pursued, as manifested by the presence of personnel and material equipment. (2) In addition, that establishment must have the appearance of permanency to the outside world, such as the extension of a parent body. However what is not required is for that establishment to have legal personality. Third parties must thus be able to rely on the appearance created by an establishment acting as an extension of the parent body. Furthermore and importantly, it is, in principle, irrelevant for the purposes of Article 97(1) of Regulation No 207/2009 whether the establishment thereby determined has participated in the alleged infringement.

A word of warning evidently: given the Court’s emphasis on the context of Article 97, with a view to its wide application, readers must not be tempted to read the judgment’s view on the concept of ‘establishment’ as applying across the board in EU conflicts law, let alone EU law as a whole.

Geert.

…

Expect a series of blog postings in the next few weeks on developments which occurred a few weeks or even months back. I have been squirreling away a series of judgments and other developments, with a view to exam season. Some of them I did use in my exam papers – some of them I did not.

Cooper v. Tokyo Electric Power [plaintiffs in the case are a group of service members in the U.S. Navy who were deployed to Operation Tomodachi, a relief effort in the immediate aftermath of the massive earthquake and tsunami; they allege they were exposed to radiation during the deployment] by the US Court of Appeals, ninth circuit, is a direct (and rare in its directness) example of how jurisdictional rules are used to help co-ordinate a country’s diplomatic efforts. In this particular case, the Court gives direct support to the State Department’s view that in order for others to be encouraged to accede to the Convention on Supplementary Compensation for Nuclear Damage (“CSC”), its main jurisdictional rule (granting exclusive jurisdiction to the country of the locus delicti commissi) must not be achievable via an application of comity in the US courts. For further background and overview see  Elina Teplinsky, and Meghan Claire Hammond here.

That plaintiffs are US citisens plays a major role in the court ruling out forum non conveniens.

In some of the corporate social responsibility /alien tort statute cases that I have reported on in the blog (particularly, Rio Tinto), foreign policy openly plays a role, too, and in Kiobel itself, in the lower courts, the impact of jurisdiction on US foreign policy was debated, too. It is always refreshing to see courts highlight the issue openly. For in many jurisdictions, such obvious impacts are brushed under the carpet.

Geert.

The European Court of Justice held last week in C‑368/16, Assens Havn. It confirmed privity of choice of court in the event of subrogation of the victim in the rights of the insured. The victim is not bound by choice of court between insurer and tortfeasor:

At 41: ‘The extension to victims of the constraints of agreements on jurisdiction based on the combined provisions of Articles 13 and 14 of Regulation No 44/2001 could compromise the objective pursued by Chapter II, Section 3, thereof, namely to protect the economically and legally weaker party.

That the CJEU confirms privity of contractual choice of court is no surprise: see most recently Leventis. In the case of insurance contracts the issue is slightly less obvious for unlike in the case of consumers and employees, the legal presumption of weakness often does not represent commercial reality.

Whether the subrogated party can make use of the choice of court clause in the underlying contract was not sub judice in the judgment.

Geert.

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

The Belgian Council of State (the highest administrative court) has annulled the Flemish waste agency’s export permit in the so-called ‘Slufter’ case, involving large quantities of toxic dredging spoil (for the aficionados: classified as EURAL 17 05 05*; ia with heavy doses of tributyltin – TBT) dredged from the port of Antwerp. The case made by applicants was that the waste would be disposed of in the port of Rotterdam’s ‘slufter’ by way of mere dumping, as opposed to processing ‘at home’ in the Flemish region.

At issue was Article 11 of the Waste shipments Regulation 1013/2006, which allows Member States of export to object to planned shipments of waste destined for disposal. Applicants’ case was that the Flemish waste agency – OVAM should have disallowed the shipment on the basis of the proximity and the self-sufficiency principles. OVAM however pointed out that even if in optimal circumstances, processing in Flanders could lead to higher rates of recovery of the waste, much of it would still simply have to be landfilled. Importantly, it preferred disposal in the Slufter on the basis that the logistics chain was much shorter: load up, transport, dump. As opposed to load up, transport to processing facility for partial recovery (involving three separate processes); load-up of the solid waste left; transport and dump.

The Council of State ruled at the end of May that this decision by OVAM, in particular the reliance of the extent of the logistics chain, lacks proper assessment of the Best Available Technologies for dredging spoil, hence leading to insufficient assessment of the proximity and self-sufficiency principles. The ruling is relevant also with a view to the remainder of the spoil that will continue to be dredged.

For easy of reference (for those wishing to locate copy of the ruling): case numbers are 238220 -238224 included).

Geert.

Thank you to both Patrick Wauthelet and Arie van Hoe for forwarding a copy of the judgment of the Brussels commercial court in Parfip. Please pop me an e-mail should you like a copy. The judgment is textbook application of CJEU precedent, including of course Eurofood and Interedil. Fully respecting the presumption of individual COMI in the case of a group of companies, the judgment refers to ia German and French precedent in rebuking the presumption. Not only were the companies effectively run from Brussels, notwithstanding non-Belgian seat for some of them; to third parties it was also clear that this was the case.

The judgment also confirms a narrow interpretation of the exception for ‘credit institutions’.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.2.Heading 5.6.1.2.4.

Aarhus, Access to Environmental Information Directive. Review of Henney [2017] EWCA Civ 844 .

UK Human Rights Blog

Department for Business, Energy and Industry Strategy v. Information Commissioner and Henney [2017] EWCA Civ 844 , 29 June 2017 – read judgment

As many will know, there are two different systems of freedom of information, the first and better known, the Freedom for Information Act 2000, and the second, the Environmental Information Regulations 2009. From the perspective of the inquirer (Mr Henney, here), the EIRs are the more favourable, and it was the differences between the systems which gave rise to this long-running dispute to do with energy Smart Meters.

The appeal went in favour of Mr Henney, and the Information Commissioner who had ruled in his favour. But the ultimate case is not resolved, as I shall explain.

View original post 1,171 more words

Yesterday in Case C-436/16 Leventis the Court of Justice summarily confirmed the principle of privity of choice of court under the Brussels I Recast. I have looked at this issue before e.g. when I discussed Refcomp and Profit Sim. The tos and fros between the various parties in the case meant they were acquainted with each other in the courtroom and in arbitration panels. It also meant that actions, settlements etc. between one of them and a third party necessarily impacted commercially on the other.

However the Court of Justice essentially held that such a close, voluntary or not, relationship between the two parties does not mean that a jurisdiction clause in a contract between two companies can be relied upon by the representatives of one of them to dispute the jurisdiction of a court over an action for damages which aims to render them jointly and severally liable for supposedly tortious acts carried out in the performance of their duties. The Court simply noted that the referring national court had given no indication of choice of court made between the parties as to the latter issue, employing the classic (now) Article 25 set of criteria.

Of note is that unlike other cases such as Goldman Sachs v Novo Banco, there did not seem to be any kind of theory in relevant national law which would have led to imputability (or potential to call upon) choice of court to a third party under the given circumstances.

Geert.

(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.7.

End of exam season (sadly not yet of marking marathon). In the next few weeks I shall be posting on judgments issued a little or longer while ago, which I was pondering to use in exams. (I did for some of them).

In [2017] EWHC 1216 (Pat) Chugai Pharmaceutical v UCB the issue at stake was to what degree a suit seeking to establish absence of liability under a patent license, in reality provokes argument on the validity of the patent. Carr J has excellent overview of review of precedent, much of which has passed in one way or another on this blog. Please do refer to judgment for proper reading.

Claimant (“Chugai”) seeks a declaration against the Defendants (collectively “UCB”) that it is not obliged to continue to pay royalties under a patent licence (“the Licence”) granted by the First Defendant (“UCB Pharma”).  UCB Pharma is a Belgian company with an English branch which entered into the Licence with Chugai in respect of a portfolio of patents. Chugai claims that its products, which are, in part, manufactured and sold in the USA, fall outside the scope of the claims of the Patent concerned. Accordingly, Chugai seeks a declaration that it owes no royalties for the manufacture and sale of these drugs manufactured after a certain date.

UCB alleges that, although framed as a claim for a declaration relating to a contract, a part of these proceedings, in substance, concerns not only the scope but also the validity of the Patent. UCB submits that the validity of a US patent is non-justiciable, since the English court has no power to determine the validity of a foreign patent. Accordingly, it submits that those parts of Chugai’s pleading which are said to raise issues of invalidity fall outside the subject matter jurisdiction of the English court.

European private international law as readers will know lays greats emphasis on exclusive jurisdiction in the case of validity of patents. The CJEU’s holding in C-4/03 Gat v Luk that nullity actions against a national part of a certain European patent can only be conducted in the jurisdiction for which that patent was registered, regardless of whether the nullity argument is raised in the suit or by way of defence, is now included verbatim in Article 24(4) Brussels I Recast. The EU’s take is rooted in the idea that the grant of a national patent is “an exercise of national sovereignty” (Jenard Report on the Brussels Convention (OJ 1979 C59, pp 1, 36)). The rule therefore engages the Act of State doctrine, and suggests that comity requires the courts of States other than the State of issue, to keep their hands off the case.

Particularly in cases where defendant is accused of having infringed a patent, this rule gives it a great possibility to stall proceedings. Where the action is ‘passive’, with plaintiff aiming to establish no infringement, the argument that the suit really involves validity of patent is less easily made.

The possibility of ‘torpedo’ abuse, coupled with less deference to the jurisdictional consequences of the Act of State doctrine [particularly its contested extension to intellectual property rights], means the English courts in particular are becoming less impressed with the exclusivity. Where the EU Regulation applies, they do not have much choice. Carr J refers to [2016] EWHC 1722 (Pat) Anan where claimant sought to carve out issues of validity by seeking a declaration that the defendant’s acts infringed a German patent “if the German designation is invalid (which is to be determined by the German courts)“.  EU law meant this attempt could not be honoured. Carr J however suggests that EU rules have no direct application in the present case because the Patent at stake is a United States patent. That is not quite spot on, for under the amended lis alibi pendens rule of the Brussels I Recast, reflexive effect is suggested for the Regulation’s exclusive jurisdictional rules, leaving a Member State court in a position (not: under an obligation) to give way to pending litigation in third countries. (In the case at hand there was no such litigation pending elsewhere).

Allow me to lean on 20 Essex Street’s conclusion in their review of the case: Carr J held that the case before him was not a direct challenge to validity. He accepted Chugai’s submissions that its claim was contractual. Disputed parts of the patent were incidental to the essential nature of its claim, which was a claim for determination of its royalty obligations. In his view, this claim fell within the exclusive jurisdiction clause, in favour of the English courts, which parties had agreed.

Essential reading for IP litigators.

Geert.

Perhaps it’s the warm weather or the balmy number of exams I am having to compile this term, but my imagination was running dry. One more exam to compose and it is for my American University summer law school students. A course on EU integration. Scratching my head on trying to find yet another variation on the direct effect theme, Advocate General Sharpston came to the rescue. So far I have only seen the press release (the Opinion itself is not on Curia yet) in C-413/15 Farrell which considers the C-188/89 Foster criteria on what constitutes an ’emanation from the state’. From the press release:

‘Ever since the Court developed the doctrine of the direct effect of directives and rendered it applicable to ‘vertical’ disputes between the individual and the State, but declined to extend that doctrine ‘horizontally’ to cover disputes between private parties, it has been essential to know what are the boundaries of ‘the State’ for the purposes of applying that doctrine. In its judgment in Foster, the Court set out a series of tests for determining the types of bodies that might be treated as ‘the State’ or, although it did not use that expression in its judgment, ‘an emanation of the State’ in that context. It did so by reference to existing case-law, which included a reference to the body in question having ‘special powers’.’

The focus of the Opinion is on those ‘special powers’.

In C-365/05, the Court had already held that Ireland had not properly implemented Directive 90/232. the question now before the court si whether the Motor Insurers’ Bureau of Ireland (MIBI) is an emanation of the State, engaging therefore vertical direct effect. The Irish High Court held it does. The Irish Supreme Court now asks whether the Foster criteria need to be applied cumulatively. Sharpston AG clearly suggests they do not, indeed that they are not limitative either: see the text for more detail of the criteria examined by Ms Sharpston.

Now, once the full text is out, one can of course chew over this a bit more. But for an introductory course, the press release suffices.

Geert.

A short post to flag a paper which I co-authored with Virginia Sanfelice and Dr Leonie Reins. We look at how international environmental law principles have been applied in Latin-American courts. The aim of this paper is first and foremost to open up these cases for wider scholarly analysis (which is why we e.g. use an Annexed overview of the cases), with preliminary analysis thrown in.

Springer Nature have provided us (much gracias) with the following Open Access link which I am happy to share. Happy analysing.

Geert.

Less than two months after the AG Opined (see my report here), the Court of Justice has already held in C-249/16 Kareda v Stefan Benkö. The judgment follows Opinion to a tee albeit with a slightly more cautious link between Brussels I (jurisdiction) and Rome I /II (applicable law): at 32, with reference to the similarly cautious approach of the Court in Kainz.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9 .

I have reported before (search tag ‘CSR’ or ‘ATS) on the personal jurisdiction cases in US litigation. The United State Supreme Court this morning held in Bristol-Meyers Squibb, BMS for short. For background see earlier reporting in this post. California was held not to have jurisdiction for claims brought by non-residents. In her dissenting Opinion justice Sotomayor notes the important impact of the ruling, suggesting that a corporation that engages in a nationwide course of conduct cannot now be held accountable in a state court by a group of injured people unless all of those people were injured in the forum State.  Precedent evidently includes Bauman.

Judgment and opinion include many interesting takes on personal jurisdiction and how it should be managed.

Geert.

Comparative conflict of laws is often a useful source for exam (essay) questions. I used People of State of New York v. PriceWaterhouseCoopers, LLP, No. 3685N (N.Y. App. Div. May 23, 2017) to ask my students to surmise how an EU-base court would judge the issue raised.

Keith Goldberg over at LAw360 has the following great summary:

A New York appellate court [.. ] upheld a decision to force ExxonMobil’s outside auditor PricewaterhouseCoopers LLP to comply with New York Attorney General Eric Schneiderman’s demand for documents in his probe of whether the oil giant lied to investors about the climate change risks to its business.
The Appellate Division backed state Supreme Court Judge Barry Ostrager’s Nov. 26 order that PwC turn over documents related to its audit of Exxon subpoenaed by Schneiderman, saying the judge correctly held that New York law, not the law of Texas, where Exxon is headquartered, applies to questions of evidentiary privilege and that the Empire State doesn’t recognize accountant-client privilege.

Mr Ostrager’s decision is here – it has more choice of law considerations than the appelate court’s order. Eversheds have excellent analysis here of the overall issue of considering applicable law for privilege under the first and second restatement of the law. In the case at issue, ExxonMobil as well as the documents disclosure of which is sought (such as projected carbon costs and their application to Exxon’s capital allocation decisions, as well as documents provided to Exxon by PwC concerning the auditor’s role in compiling Exxon’s submissions about greenhouse gas emissions for the Carbon Disclosure Project, a nonprofit that collects information on greenhouse gas emissions) are based at Texas. But the trial is underway in New York.

Now, to the essay Q: how would an EU-based court hold on the issue? (For the purpose of last week’s exam I had a Belgian court rule on the issue, with the oil company based at Belgium, and the accountant at England, with the agreement between company and accountants subject to English law.

I am marking these exams later this week and hope to read some or all of the following: reference to overall principle that procedure is subject to lex fori; that statement being of little use in a system (like the EU) that thrives on predictability: for what is procedure to one, is substantive law to another; arguments existing both pro this being procedure (closely tied up with evidence, clear links with public policy) as well as substantive (privilege despite its public nature also protecting private, including commercial interest; parties wishing to manage the issue of sensitive information and forum); need for autonomous interpretation and tendency within the EU to define the ‘scope of the law applicable’ (eg both in Rome I and II);  no trace in said Regulations of privilege being included in the scope of law applicable.

As always, I am hoping for students to surprise me. Undoubtedly they will.

Geert.

The CJEU held in C-185/15 Kostanjevec in October: I reported on the Opinion and the judgment then went under my radar.

On the issue of temporal applicability, the Court sides with the AG entirely, and I agree it should.

The Court then takes a firmly wide approach to the notion of ‘counterclaim’ in (now) Article  8(3): it is in the interests of the sound administration of justice that the special jurisdiction for counterclaims enables the parties, in the same proceedings and before the same court, to litigate all their claims against each other that have a common origin (at 37). In circumstances such as those of the main proceedings, the counterclaim for reimbursement on the ground of unjust enrichment must be regarded as arising from the leasing contract from which the lessor’s original action originated. The alleged enrichment in the amount of the sum paid in enforcement of the judgment that has since been set aside would not have taken place without that contract. (at 38).

‘Common origin’ of course is a notion which is difficult to decide in abstracto: despite the Court’s attempts to harmonise Article 8(3)’s approach, the potential for national courts to insert local approaches remain. Even the discussion of (now) Article 8(3) in the Jenard Report hinted at the provision being a difficult marriage between local civil procedure rules on the one hand and the need for European harmonisation on the other.

Geert.

(Handbook of) European Private International law, 2nd ed. 2016, chapter 2, Heading 2.2.11.1.a, Heading 2.2.21.3, Heading 2.1.1