One cannot have one’s cake and eat it. Meaning once the cake has been eaten, it is gone and you no longer have it. (Apologies but this saying is so often misunderstood I thought I should clarify).
Anyways, the Flemish tax administration had something along these lines in mind when it recently ruled in a case involving a Liechtenstein Stiftung. Many thanks to De Broeck & Van Laere for bringing the ruling to my attention. The Inland Revenue generally employ quite a lot of deference towards trusts and Stiftungs of all kind. In the case at hand however it requalified the transfer of means from the Stiftung to the heirs of the deceased, as being of a contractual nature. That is because the deceased, upon creation of the Stiftung, had issued such precise instructions in the Stiftung’s by-laws, that the hands of the trustees (or equivalent thereof) had been tied. This essentially takes away a crucial part of the Stiftung’s nature, and no longer shields the assets from the (Flemish) taxman. The cake has been eaten.
Geert.
C-191/15 Verein für Konsumenteninformation v Amazon SarL is one of those spaghetti bowl cases, with plenty of secondary law having a say on the outcome. In the EU purchasing from Amazon (on whichever of its extensions) generally implies contracting with the Luxembourg company (Amazon EU) and agreeing to Luxembourg law as applicable law. Amazon has no registered office or establishment in Austria. VKI is a consumer organisation which acted on behalf of Austrian consumers, seeking an injunction prohibiting terms in Amazon’s GTCs (general terms and conditions), specifically those which did not comply with Austrian data protection law and which identified Luxembourg law as applicable law.
Rather than untangle the bowl for you here myself, I am happy to refer to masterchef Lorna Woods who can take you through the Court’s decision (with plenty of reference to Saugmandsgaard Øe’s Opinion of early June). After readers have consulted Lorna’s piece, let me point out that digital economy and applicable EU law is fast becoming a quagmire. Those among you who read Dutch can read a piece of mine on it here. Depending on whether one deals with customs legislation, data protection, or intellectual property, different triggers apply. And even in a pure data protection context, as prof Woods points out, there now seems to be a different trigger depending on whether one looks intra-EU (Weltimmo; Amazon) or extra-EU (Google Spain).
The divide between the many issues addressed by the Advocate General and the more narrow analysis by the CJEU, undoubtedly indeed announces further referral.
Geert.
(Handbook of) European Private International Law, 2016, Chapter 2, Heading 2.2.8.2.5.
As a practising lawyer registered to the Belgian Bar I had more than a passing interest in C‑543/14 Orde van Vlaamse Balies v Ministerraad. The case was held on 28 July. At issue is the reversal of the Belgian exemption of legal services from value-added tax (VAT). Of interest for this blog was the Bar Council’s argument that making legal services subject to VAT endangers access to court for individuals. Corporations recover said VAT from the tax their own sales incur. For them, making legal services subject to VAT has zero impact on their books.
The Bar Council sought support among others in the Aarhus Convention, particularly Article 9(4) and (5) on access to court:
‘3. In addition and without prejudice to the review procedures referred to in paragraphs 1 and 2 above, each Party shall ensure that, where they meet the criteria, if any, laid down in its national law, members of the public have access to administrative or judicial procedures to challenge acts and omissions by private persons and public authorities which contravene provisions of its national law relating to the environment.
4. In addition and without prejudice to paragraph 1 above, the procedures referred to in paragraphs 1, 2 and 3 above shall provide adequate and effective remedies, including injunctive relief as appropriate, and be fair, equitable, timely and not prohibitively expensive. Decisions under this article shall be given or recorded in writing. Decisions of courts, and whenever possible of other bodies, shall be publicly accessible.
5. In order to further the effectiveness of the provisions of this article, each Party shall ensure that information is provided to the public on access to administrative and judicial review procedures and shall consider the establishment of appropriate assistance mechanisms to remove or reduce financial and other barriers to access to justice.’
Perhaps taking inspiration from the Grand Chamber’s approach in Vereniging Milieudefensie, and consistent with the suggestion of Sharpston AG, the five judges Chamber dismissed direct effect for Articles 9(4) and (5) of Aarhus, mostly because of the Conventions deference in Article 9(3) to ‘national law’.
Given the increasing (but as noted recently qualified; see also here) cloud the CJEU’s Grand Chamber had been given Aarhus, this finding by a five judge chamber that Aarhus Articles 9(4) and (5) do not have direct effect is a little awkward. It also puts the Grand Chamber itself in an awkward position. There are quite a number of Aarhus-related cases pending. Will this chamber’s view on 9(4) and (5) be followed by the assembled top dogs?
Geert.
Thank you Alison Frankel at Reuters for bringing to my attention Gutierrez-Brizuela v. Lynch. An immigration case which triggered a delightfully written judgment by Gorsuch CJ on the delegation of power to agencies. In particular the founding fathers’ intention, against the background of separation of powers, with agencies room for statutory interpretation.
Both Ms Frankel’s article and judge Gorsuch’s pieces do much more justice to the debate than I can do in a blog post so I will leave readers first of all to read both. Judge Gorsuch, referring to precedent (Chevron in particular), notes
‘There’s an elephant in the room with us today. We have studiously attempted to work our way around it and even left it unremarked. But the fact is Chevron and Brand X permit executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers’ design. Maybe the time has come to face the behemoth.’
Ms Frankel notes that Chevron directed courts defer to executive-branch agencies in the interpretation of ambiguous statutes. Justice Gorsuch reviews what exactly was intended by Chevron and points to the difficulty in excessive deferring to agencies’ interpretation of statutes.
I would summarise his views as ‘Congress meant trias, not quattuor politica.’
My knowledge of US civil procedure does not stretch to understanding what impact Gorsuch CJ’s views have on current US administrative /public law. Anyone out there who can tell me please do. At any rate, the judgment is great material for comparative constitutional law classes, the CJEU’s ECB (C-270/12) case being an obvious port of call.
Geert.
In C-195/15 Mulhaupt, the question referred reads
Does the term ‘right in rem’ in Article 5(1) of (…) Regulation (…) 1346/2000 (…) on insolvency proceedings include a national rule such as that contained in Paragraph 12 of the Grundsteuergesetz (Law on real property tax, ‘GrStG’) in conjunction with the first sentence of Paragraph 77(2) of the Abgabenordnung (Tax Code, ‘AO’), pursuant to which real property tax debts are by operation of law a public charge on real property and the property owner must accept enforcement against the property in that respect?
Applicant is the trustee in bankruptcy of Société civile immobilière Senior Home, a French registered company. Gemeinde Wedemark is forcing the sale of rel estate belonging to Senior home, linked to arrays in real estate tax. It is suggested by the referring court that the qualification under German law, of real property tax (also known as ‘stamp duties’ or ‘estate taxes’), owed to public authorities, as rights in rem, mean that the forced sale of the site at issue, as a result of Article 5(1) of Regulation 1346/2000, is covered by German law and is therefore not subject to French law, which in the case at issue is the lex concursus of the insolvency proceedings that have been opened. Regulation 1346/2000 in the meantime has been replaced by Regulation 2015/848 however the provisions at issue have not materially changed.
Szpunar AG Opined end May (other than a Tweet I have kept schtum about the Opinion so far, for exam reasons).The Opinion is as yet not available in English.
In terms of applicable law, Article 4 of the Regulation is the general rule: unless otherwise stated by the Regulation, the law of the State of the opening of proceedings is applicable.
The general rule of Article 4 inevitably had to be softened for quite a number of instances. As noted in the introduction, insolvency proceedings involve a wide array of interests. The expediency, efficiency and effectiveness craved inter alia by recital 2 (old; now 3) of the Regulation, has led in particular to the automatic extension of all the effects of the application of the lex concursus by the courts in the State of opening of the proceedings. That could not be done without there being exceptions to the general rule:
In certain cases, the Regulation excludes some rights over assets located abroad from the effects of the insolvency proceedings (as in Articles 5, 6 and 7). In other cases, it ensures that certain effects of the insolvency proceedings are governed not by the law of the State of the opening, but by the law of another State, defined in the abstract by Articles 8, 9, 10, 11, 14 and 15. In such cases, the effects to be given to the proceedings opened in other States are the same effects attributed to a domestic proceedings of equivalent nature (liquidation, composition, or reorganization proceedings) by the law of the State concerned. Of particular note are precisely Article 5 on third parties’ rights in rem, but also Article 10 on employment contracts, and Article 13 on ‘detrimental acts’.
The precise demarcation of rights in rem hovers between the classic interpretative rule of EU private international law, namely the principle of autonomous interpretation, and the lack of a European Ius Commune on what rights in rem are. The Advocate General completes his already extensive analysis in Lutz, with a combined reference to the recitals of the Regulation, and the Virgós/Schmit Report.
In particular, Article 5(2) does serve as something of a straightjacket, leading to the conclusion that rights in rem require restrictive interpretation: once the first hurdle of qualification using national law (of the rei sitae) is passed, the right also needs to meet with the fundamentals of what the Virgos-Schmit report defines as rights in rem (at 41-45 of the Opinion): these are (at 103 of the Report): a right in rem basically has two characteristics
(a)its direct and immediate relationship with the asset it covers, which remains linked to its satisfaction, without depending on the asset belonging to a person’s estate or on the relationship between the holder of the right in rem and another person;
(b)the absolute nature of the allocation of the right to the holder. This means that the person who holds a right in rem can enforce it against anyone who breaches or harms his right without his assent (e.g. such rights are typically protected by actions to recover); that the right can resist the alienation of the asset to a third party (it can be claimed erga omnes, with the restrictions characteristic of the protection of the bona fide purchaser); and that the right can thus resist individual enforcement by third parties and in collective insolvency proceedings (by its separation or individual satisfaction).
The Virgos-Schmit report in this respect cross-refers to the 1968 Brussels Convention however it is noteworthy that the CJEU, in defining rights in rem under the now Brussels I recast Regulation, does not in turn refer to the Virgos-Schmit report.
In conclusion therefore the AG suggests that the right at issue is indeed a right in rem under Article 5. Finally, that it benefits a public authority (the inland revenue) rather than a private individual or legal person, does not impact upon that qualification: Szpunar AG correctly highlights that the public character of the creditor is not a determining criteria in either the recitals of the Regulation or the Virgos-Schmit report.
A prima facie straightforward question met by complete analysis of the AG which in passing solves more issues than those raised by the referring court: this Opinion may well become an important part of authoritative sources in applying the Insolvency Regulation..
Geert.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.7.1 ).
I have included Article 15 of the Brussels IIa or IIbis Regulation, 2201/2003, in full below. It allows a court to relinquish a case to another court, if that is in the best interest of the child. I once referred to it in an exam, asking students to discuss Zwiefka MEP’s proposal at the time to introduce an Article 15-type exception in what is now the Brussels I Recast Regulation. Those discussions in the meantime have led in particular to Articles 33-34 of the Recast, on lis alibi pendens with courts in third States and the potential for EU courts to relinquish their jurisdiction.
The question I asked students was how they would rate Article 15 (which incidentally does not require the case to be pending in the alternative court to which the case is being deferred) against classic forum non conveniens provisions. The point being that the former puts courts very much in a straightjacket, which the CJEU was bound to have to untangle. That is exactly what is at stake in C-428/15 Child and Family Agency v JD in which Wathelet AG opined Mid June.
Agne Limante has full listing of the AG’s arguments in CJEL, I should like to add that the Irish courts were particularly concerned with forum shopping: at 22:
In that regard, it (the referring court, GAvC) considers that the settling in Ireland of United Kingdom nationals who wish to conceal their children from the competent child protection authorities must not be encouraged and, more broadly, that opportunities for forum shopping must not be created or tolerated. However, it asks to what extent such considerations may be taken into account in the implementation of Article 15 of Regulation No 2201/2003.
Interesting case and ditto Opinion.
Geert.
Article 15
Transfer to a court better placed to hear the case
1. By way of exception, the courts of a Member State having jurisdiction as to the substance of the matter may, if they consider that a court of another Member State, with which the child has a particular connection, would be better placed to hear the case, or a specific part thereof, and where this is in the best interests of the child:
(a) stay the case or the part thereof in question and invite the parties to introduce a request before the court of that other Member State in accordance with paragraph 4; or
(b) request a court of another Member State to assume jurisdiction in accordance with paragraph 5.
2. Paragraph 1 shall apply:
(a) upon application from a party; or
(b) of the court’s own motion; or
(c) upon application from a court of another Member State with which the child has a particular connection, in accordance with paragraph 3.
A transfer made of the court’s own motion or by application of a court of another Member State must be accepted by at least one of the parties.
3. The child shall be considered to have a particular connection to a Member State as mentioned in paragraph 1, if that Member State:
(a) has become the habitual residence of the child after the court referred to in paragraph 1 was seised; or
(b) is the former habitual residence of the child; or
(c) is the place of the child’s nationality; or
(d) is the habitual residence of a holder of parental responsibility; or
(e) is the place where property of the child is located and the case concerns measures for the protection of the child relating to the administration, conservation or disposal of this property.
4. The court of the Member State having jurisdiction as to the substance of the matter shall set a time limit by which the courts of that other Member State shall be seised in accordance with paragraph 1.
If the courts are not seised by that time, the court which has been seised shall continue to exercise jurisdiction in accordance with Articles 8 to 14.
5. The courts of that other Member State may, where due to the specific circumstances of the case, this is in the best interests of the child, accept jurisdiction within six weeks of their seisure in accordance with paragraph 1(a) or 1(b). In this case, the court first seised shall decline jurisdiction. Otherwise, the court first seised shall continue to exercise jurisdiction in accordance with Articles 8 to 14.
6. The courts shall cooperate for the purposes of this Article, either directly or through the central authorities designated pursuant to Article 53.
Most of the political attention to the panel’s award on the South East China Sea issue has gone to the implications for Chinese sovereignty in the area. That is in itself neither surprising nor problematic. It is worth highlighting however that 2 out of 6 of the Panel’s conclusions, as listed by Herbert Smith Freehills, relate to environmental protection:
If one includes a third one, ‘interfered with the traditional fishing activities of Philippine fishermen at Scarborough Shoal;’ as being part of the principle of sustainable development, then half of the Chinese infringements relate to environmental protection in the wide sense. These findings highlight how closely linked environmental protection is to natural resources and to territory generally, and how environmental protection has come of age and is now part of core debates in public international law. Sadly also, of course, how in their search for scarce resources plenty of nations continue to trample freely on values which the 1992 Rio Declaration already found to essentially be part of customary international law.
A Monash student of mine is writing on the Panel report from the environmental angle and I shall share as and when that analysis is available.
Geert.
Here’s the recipe for Lungowe v Vedanta at the High Court.
Obtain one lb of C-291/02 Owusu: European authority: forum non conveniens has no place in the Brussels jurisdictional regime; particularly now in Article 4 of the Brussels I Recast for as Coulson J points out at 57 in his judgment in Lungowe, Articles 33-34 of the Recast Regulation do foresee consideration in the event of parallel proceedings outside of the EU.
Mix with one lb of Chandler v Cape : English authority: parent companies may in circumstances be held liable for the actions of their foreign subsidiaries; referred to with approval by the Dutch Courts in Shell.
Have Zambian claimants in a case of environmental pollution employ Article 4 to establish jurisdiction against a holding company established in England. The company is a holding company for a diverse group of base metal and mining companies, including the second defendant, Konkola.
The fact that Vedanta are domiciled in the United Kingdom is, evidently, one of the principal reasons why they have been pursued in these proceedings (see Coulson J’s acknowledgment of same at 76). This is a manifestation of forum shopping which the CJEU has certainly encouraged. Moreover, as Coulson J suggests at 77-78, claimants also wish to pursue Vedanta because they are seen as the real architects of the environmental pollution in this part of Zambia. The argument is that, since it is Vedanta who are making millions of pounds out of the mine, it is Vedanta who should be called to account. On balance, the use of Vedanta as an anchor defendant can hardly be seen as a malicious ‘device’ or an abuse of the anchor defendant mechanism.
On that issue of abuse, reference is made by the High Court to Freeport and to CDC at the CJEU. There is no suggestion of course that either are direct precedent for the anchor defendant mechanism in residual national private international law. (Which is the case here: for the Brussels Recast joinder mechanism in Article 7 most certainly does not apply to defendants domiciled outside of the EU). It is telling therefore that the Court does refer to them here. (And inevitably raises the question whether English Court will continue to do so after Brexit).
Both 20 Essex Street and RPC have further discussion. All in all an uplifting day in the English Courts for corporal social responsibility campaigners.
European private international law, second ed. 2016, Chapter 8, Headings 8.3.1.1., 8.3.2
In C-196/15 Granarolo, extensive reference is made to Brogsitter, in which the CJEU held that the fact that one contracting party brings a civil liability claim against the other is not sufficient to consider that the claim concerns ‘matters relating to a contract’ within the meaning of Article 7(1) Brussels I Recast. That is the case only where the conduct complained of may be considered a breach of contract, which may be established by taking into account the purpose of the contract, which will in principle be the case only where the interpretation of the contract which links the defendant to the applicant is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter.
Kokott AG Opined that there was no such contractual relationship in the case at hand: see my review of the Opinion. The Court held last week and was less categorical. It suggests a contractual relationship between the parties (which did not have a framework agreement in place: rather a long series of one-off contracts) should not be excluded: the long-standing business relationship which existed between the parties is characterised by the existence of obligations tacitly agreed between them, so that a relationship existed between them that can be classified as contractual (at 25).
What follows can be considered a CJEU addition to the rather byzantine double negative C-26/91 Handte formula: ‘matters relating to a contract is not to be understood as covering a situation in which there is no obligation freely assumed by one party towards another’. In Granarolo at 26 the Court notes
The existence of a tacit relationship of that kind cannot, however, be presumed and must, therefore, be demonstrated. Furthermore, that demonstration must be based on a body of consistent evidence, which may include in particular the existence of a long-standing business relationship, the good faith between the parties, the regularity of the transactions and their development over time expressed in terms of quantity and value, any agreements as to prices charged and/or discounts granted, and the correspondence exchanged.
These criteria obviously are quite specific to the question at hand yet it is the first time the Court, carefully, ventures to give indications of some kind of a European ius commune on the existence of ‘a contract’.
Whether any such contract then is a contract for the sale of goods or one for services, is not a call the Court wishes to make. It lists the various criteria it has hitherto deployed, with extensive reference in particular to C-9/12 Corman-Collins, and leaves the decision up to the national court.
Make a mental note of Granarolo. It may turn out to have been quite pivotal. Geert.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9
The CJEU has confirmed the views of Szpunar AG in C-222/15 Hőszig /Hoszig, without (much as expected) entertaining the lex fori prorogati rule of the Brussels I Recast.
Can choice of court made in underlying documentation in the context of a tender, for which Hőszig entered a winning bid, be considered valid under Article 23 of the Brussels I Regulation (now: Article 25 Brussels I Recast)? Yes, the Court said, with explicit reference to the AG. Crucial point in the consideration is whether per Case 24/76 Colzani an explicit reference to the choice has been made, reference which can be controlled by a party applying normal diligence and where it is established that the general conditions containing the jurisdiction clause was actually communicated to the other contracting party (at 40 in Hoszig). This was so in the case at issue. The court points out that Article 23 (and now Article 25) includes mostly formal requirements (expression of consent, see the references in my posting on the AG’s Opinion) and only one substantial requirement (choice of court needs to relate to an identified legal relationship between the parties). The remainder of discussion on the substantive requirements with respect to the choice of court agreement, is subject to the lex causae of that separate choice of court agreement (exactly why the current Regulation now includes the lex fori prorogati rule; Szpunar AG’s discussion of this clause however was not required to settle the issue and therefore the Court does not look into it).
‘(T)he Paris Courts [have exclusive and final jurisdiction]’ is sufficient for the CJEU to determine the choice of court with precision: it is perfectly acceptable that it will subsequently be French civil procedure laws that will determine precisely which court will have jurisdiction.
A sensible judgment following clear Opinion of the Advocate General, together further completing the choice of court provisions of Brussels I.
Geert.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9 Heading 2.2.9.4. Chapter 3, Heading 3.2.2 .
An unusually high proportion of cases under Article 22 (old) or 24 (Recast) Brussels I relate to family disputes on property. Webb v Webb, Weber v Weber, Komu v Komu, and now, C-417/15 Schmidt v Schmidt. It’s all about keeping up with the Joneses.
Kokott AG opined in Schmidt last week – the Opinion is not available in English. Mr Schmidt had gifted a (otherwise unspecified) piece of Vienna real estate to his daughter, who lives in Germany. Ms Schmidt is included in the land register as the owner. Mr Schmidt subsequently sues in Austria for the annulment of the gift due to alleged incapacity at the time of the gift, and for removal of the registration. Is the action caught by Article 24? (in which case Ms Schmidt’s claim of lack of jurisdiction fails).
The Advocate General first of all suggests that the referring court’s request should not be turned down simply because it did not specify the time of seizure: in other words it is not clear whether the case is covered by the old or the Recast Brussels I Regulation. Ms Kokott however suggests the Court should not be pedantic about this and answer the question regardless, seeing as the rule has not changed.
Next up and potentially trickier, is the exclusion of capacity from the scope of application of the Regulation. However the Advocate General is right when she suggest that the exclusions should only be relevant where they concern the main object of the litigation. Not, as here, when they are raised incidentally. (She discusses in some detail the linguistic implications given different wording in the different language versions of the Regulation).
Then to the real question. With respect to the annulment of the (gift) agreement, the object and purpose of plaintiff’s action is not the establishment or confirmation of an erga omnes right in rem. Rather, the confirmation of voidness of an agreement transferring such right, due to incapacity. That this will have erga omnes consequences if successful, is not to the point given the long-established need to apply Article 24 restrictively. In this respect this case is akin to C-294/92 Webb and Webb.
The analysis is different however, the AG suggests, for the request to delete the entry in the land register. This does aim directly at erga omnes consequences under Austrian law.
Ms Kokott subsequently rejects the notion that as a result of part of the suit being subject to Article 24, this should drag the remainder into the exclusive bath with it: at 48: if only because if one were to accept this, forum shopping would be facilitated. Including in its suit a procedure covered by Article 24 would enable plaintiff to draw in a whole range of other issues between the parties.
Finally, the AG suggests joinder of the contractual claim (the nullity of the gift) to the right in rem claim, is possible under Article 8(4) and rejects that national rules of civil procedure should or even can play a role in this respect. This part of the Opinion may be optimistically short. For if the joinder route of Article 8(4) may lead to the same result as the one the AG had just rejected, one assumes there ought to be discretion for the national courts to reject it. Not, as the AG rightly suggests, by reference to national civil procedure rules (that would lead to unequal application) but rather by reference to the (probably) EU inspired rule that abuse of Article 8 be avoided.
The Court will probably not answer all the questions the case raises, particularly on Article 8. Expect this to return.
Geert.
The Brussels Court of Appeal has sided with Facebook on 29 June. This post I am going to keep very, very simple: told you so. Geert.
The Belgian Council of State, chamber of legislation (in the title I call it a ‘parliamentary watchdog: for that is what it is. By issuing prior opinions on the legality of legislative initiative it guards against illegal Statute) has opined that a private members bill banning unstunned slaughter, does not pass the ECHR test.
A European Regulation (1099/2009) provides for an unclear, and conditional, exemption for religious (regularly rather offendingly called ‘ritual’) slaughter. 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 slaugther is unequivocal, and most certainly neither stunned nor unstunned slaughter, when carried out incorrectly (well documented in the case of stunned slaughter) does not aid the welfare of the animal.
Religious slaughter falls squarely within the European Convention of Human Rights Article 9’s freedom of religious expression. Hence the Council of State summarily (its conciseness is rather attractive) reviews the ECtHR’s case-law and concludes that the proposed ban would be both unconstitutional and clearly against the provisions of the ECHR. On the EU Regulation front, I believe the EU rules are more problematic than the Opinion suggests (I have analysis on it forthcoming) however on the ECHR side of things, the Opinion could not be more correct. An outright ban on unstunned slaughter in the name of animal welfare or otherwise would offend freedom of religious expression to such a degree that it simply must not pass.
Geert.
For the facts of the case, and the reasoning of the AG in C-559/14 Meroni, I refer to my earlier posting. At the end of May (I am indeed still hoovering up the queue) the Court held very much alongside Kokott AG’s Opinion, I shall therefore not repeat its reasoning here. The CJEU does insist that if third parties rights are directly affected with the intensity as in the case at issue, that third person must be entitled to assert his rights before the court of origin (which English courts provide for), lest one runs the risk of the injunction being refused recognition under ordre public. As I had feared, the Court does not address the AG’s concern whether Mareva orders actually constitute a ‘judgment’ for the purposes of the Regulation.
Post Brexit, this considerable attraction of English courts in interlocutory proceedings might become a lot less real. (Like many of us, I am working on a short review of Brexit consequences for European private international law).
Geert.
(Handbook of) European private international law, second ed. 2016, Chapter 2, 2.2.16.1.1, 2.2.16.1.4
Szpunar AG’s Opinion in C-135/15 Hellenic Republic v Grigorios Nikiforidis has travelled half the world with me in my briefcase. Time to tackle the blog queue…
As I had reported earlier, the Bundesarbeitsgericht has given the CJEU an opportunity to provide much needed clarity on the application of Rome I to continuing (employment) contracts, and on the Regulation (or as the case may be, the Rome convention)’s provisions on overriding mandatory law.
The Opinion (not available in English) first of all clarifies the temporal scope of Rome I. Article 28 Rome I provides that it applies to contracts concluded ‘as from 17 December 2009’ (this is the corrected format; initially Article 28 read ‘after’). When exactly a contract is ‘concluded’ needs to be determined in accordance with the putative lex causae as identified by the Regulation (an extension of Article 10(1), suggested by most if not all of relevant scholarship). What, however, about ‘continuing’ contracts’: those concluded before the temporal scope of the Regulation, continuing after, however renewed, renegotiated, amended…: do these continue to be covered by the Rome convention ad infinitum, or is there a cut-off point at which these continuing contracts become newly concluded?
I had suggested in my earlier posting that one’s intuitive assumption may be to prefer autonomous interpretation of the concept ‘concluded’. That, after all, is the standard approach of the Court. However I argued that in the current state of (lack of) harmonisation of contractual law, it is more likely that the Court will prefer an Article 10(1) type solution. Szpunar AG is of the same opinion. He first of all points out (at 33) that secondary EU law need not necessarily include verbatim transitionary measures. In the absence of a specific regime, the general rule is that the new provisions immediately apply to future effects of situations that arose under the old regime. Rome I’s transitory regime therefore, with its reference to date of ‘conclusion’ is an exception to that general principle. Can that moment of conclusion be autonomously defined? Szpunar AG shares my intuition (at 35 ff): along the lines of Article 10’s regime (the van Munchausen or the ‘bootstrap’ principle) the lex causae has to determine the moment of conclusion. For long-term contracts, this will inevitably lead to uncertainty (at 49). Yet that does not take away the soundness of the rule.
Next up is the application of Article 9’s provision on overriding mandatory provisions. This is the first time the CJEU will rule on that Article (Unamar was held under the Rome Convention). The Regulation quite deliberately limited the room for manoeuvre for the court seized to apply overriding mandatory law other than that of the forum: only such laws of the country where the obligations arising out of the contract ‘have to be performed’ can come into calling. That place is likely to be Germany in the case at issue (the Regulation does not define ‘place of performance’ under Article 9(3)) – however the AG suggests differently: there are a variety of reasons to assume that Greece, too, can be that place (at 95).
Szpunar AG first of all, in his very first para, remarks that scholarly attention to ‘lois de police’ far exceeds its featuring in practice. He also notes that von Savigny himself discussed ordre public (at 68 with references) and succinctly discusses the difference between the two (at 69-70). He repeats (at 78) that scholarly attention to overriding mandatory law has been excessive. He then rejects the suggestion that Article 9(3) needs to be applied restrictively to such a degree that its application becomes pretty much near-impossible. Importantly, he rejects in the process (a la Kainz) a strict parallel between ‘performance’ in Article 9(3) Rome I and Article 7(1) Brussels I Recast, and suggest that while the latter needs strict interpretation in line with the overall interpretative rules of that Regulation, there is no such need for Article 9(3) (at 92).
I wonder whether the Court will still hold before the recess (professor Szpunar Opined in April: I did flag there is a queue of cases waiting to be reviewed…
Geert.
As I had feared /as was to be expected, the CJEU did not follow Szpunar AG’s lead in formally letting go of Case 21/76 Bier‘s Erfolgort /Handlungsort distinction, even if it did accept the AG’s rejection in the case at issue, of the mere presence of a bank account triggering jurisdiction for tort under (now) Article 7(2) Brussels I Recast.
Kolassa upheld jurisdiction in favour of the courts for the place of domicile of the applicant by virtue of where the damage occurred, if that damage materialises directly in the applicant’s bank account held with a bank established within the area of jurisdiction of those courts. The case was distinguished however, for in that case there where ‘circumstances contributing to attributing jurisdiction to those courts.’ In general, the Court held, ‘purely financial damage which occurs directly in the applicant’s bank account cannot, in itself, be qualified as a ‘relevant connecting factor’‘ (at 38) . ‘ It is only where the other circumstances specific to the case also contribute to attributing jurisdiction to the courts for the place where a purely financial damage occurred, that such damage could, justifiably, entitle the applicant to bring the proceedings before the courts for that place.‘ (at 39).
The Court at 38 flags a rather interesting and relevant argument for dismissing pure presence of a bank account as a determining connecting factor: a company such as Universal Music may have had the choice of several bank accounts from which to pay the settlement amount, so that the place where that account is situated does not necessarily constitute a reliable connecting factor. What the Court is essentially saying is that in such circumstance the applicant can manipulate jurisdiction and hence shop for a forum: which is not part of the jurisdictional rule for tort.
Crucially of course we are left having to ponder what exactly ‘other circumstances’ than location of bank account may imply.
Geert.
(Handbook of) European private international law, second ed. 2016, Chapter 2, Headings 2.2.11.2, 2.2.11.2.7
Others have reported in some detail, and I am happy to refer, on Arlewin v Sweden at the ECtHR – the second Strasbourg conflicts ruling I report on in more or less one week. Epra have a short and sweet review, based mostly on the Court’s press release but useful nevertheless: they for instance suggest that Strasbourg have extended e-Date Advertising’s centre of interests rule for infringement of personality rights via the internet, to transmission by satellite. Dirk Voorhoof takes the media regulation angle. Dr Takis has the most extensive review over at Profs Peers and Barnard’s EU law analysis.
The case is a good illustration of an important port of entry for the ECHR into EU conflicts law in commercial litigation at least (I am not talking here of family law): Article 6’s right to fair trial. (See here for more extensive review of the Convention’s impact on European private international law). Strasbourg and Luxemburg are playing combination football here: the ECtHR approving of the CJEU’s application of the Brussels I Regulation in the case of libel and defamation. Especially with the EC’s recent shift of focus to the plaintiff’s position rather than the defendant’s , nothing guarantees of course that in the future EU law at this point might not be at odds with human rights law.
Geert.
(Handbook of) EU private international law, 2nd ed, 2016, Chapter 2, Heading 2.2.11.2.4 .
In Case C-185/15 Kostanjevec, Kokott AG (not available in English at the time of writing) advised on a number of issues in relation to a counterclaim under Article 6(3) Brussels I (now 8(3) of the Recast). At the core of the dispute lies a leasing contract and the consumer counterclaiming for restitution per unjust enrichment, of the sums she had transferred to counterparty. The counterclaim follows the annulment of the contract between the two, even though Marjan Kostanjevec had initially been ordered to pay.
The first relates to the temporal scope not of the Recast Brussels I Regulation viz Brussels I, but rather simply of Regulation 44/2001, in particular with respect to a Member State (Slovenia) which joined the EU on 1 May 2004. The Brussels Convention had never applied to Slovenia. The proceedings between parties go back to 1995, prompting the EC among others to suggest that per Article 66 of the Regulation (This Regulation shall apply only to legal proceedings instituted…after the entry into force thereof) it simply does not apply. Kokott AG however suggests first of all that the new claim in restitution, followed the use of a separate means of redress under Slovenian law, instituted after the initial claim by the leasing company had been wrapped up in its entirety. Moreover, other language versions refer not to ‘proceedings’ but rather to a claim (defined in C-341/93 Danvaern Production as claims by defendants which seek the pronouncement of a separate judgment or decree. It does not apply to the situation where a defendant raises, as a pure defence, a claim which he allegedly has against the plaintiff (at 18).
Regulation 44/2001 applies therefore, in the view of the AG. I would agree that it should: this is particularly relevant where parties have a long and complex history of litigation. (Similarities here may exist with Nikiforidis, which is in my blog pile). Applying Danvaern Production however for the interpretation of Article 66 I think may be problematic. The raison d’être of Article 6(3) is to help avoid conflicting decisions in cases that are closely related. Even if, per Danvaern, they seek a separate pronouncement, they do essentially relate to reciprocal commitments which are part of the same bundle of facts. (See also Kokott AG herself, in para 44 of her Opinion with reference to the Jenard Report and to Léger AG in Danvaern). It feels a little inconsistent to call upon arguments developed viz inseparable claims (under Art.6(3): Danvaern) to support a thesis of separability (viz the application ratione temporis: they are separate claims even if they have a common history in fact and in contractual liaison).
With reference to C-297/14 Hobohm, the AG subsequently also advises that the counterclaim is covered by the Regulation’s consumer contracts title as having a ‘close link’ with the consumer contract, and, for the sake of completeness, and with reference to Profit SIM, that claims for restitution are covered by (now) Article 7(1) ‘s forum contractus even if they are grounded in the contract at issue not actually having existed.
I am curious how the Court will approach the temporal application issue.
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
In AVOTIŅŠ v Latvia, the Grand Chamber of the ECtHR at Strasbourg held late May that Article 6 ECHR (right to fair trial) was engaged but not infringed by the Latvian’s Supreme Court’s application of Article 34(2( Brussel I (now Article 45(1) b Brussels I Recast).
The Article reads ‘A judgment shall not be recognised: (…) 2. where it was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so;…
In the case at issue applicant sought refusal by the Latvian court of recognition of a Cypriot judgment issued against him. After review of the Regulation’s core pedigree of mutual recognition and mutual trust, burden of proof particularly exercised the Court: at 121:
‘The fact that the applicant relied on that Article (34(2), GAVC) without having challenged the judgment as required necessarily raised the question of the availability of that legal remedy in Cyprus in the circumstances of the present case. In such a situation the Senate was not entitled simply to criticise the applicant, as it did in its judgment of 31 January 2007, for not appealing against the judgment concerned, and to remain silent on the issue of the burden of proof with regard to the existence and availability of a remedy in the State of origin; Article 6 § 1 of the Convention, like Article 34(2) in fine of the Brussels I Regulation, required it to verify that this condition was satisfied, in the absence of which it could not refuse to examine the applicant’s complaint. The Court considers that the determination of the burden of proof, which, as the European Commission stressed (see paragraph 92 above), is not governed by European Union law, was therefore decisive in the present case. Hence, that point should have been examined in adversarial proceedings leading to reasoned findings. However, the Supreme Court tacitly presumed either that the burden of proof lay with the defendant or that such a remedy had in fact been available to the applicant. This approach, which reflects a literal and automatic application of Article 34(2) of the Brussels I Regulation, could in theory lead to a finding that the protection afforded was manifestly deficient such that the presumption of equivalent protection of the rights of the defence guaranteed by Article 6 § 1 is rebutted. Nevertheless, in the specific circumstances of the present application the Court does not consider this to be the case, although this shortcoming is regrettable.’
Those ‘specific circumstances’ include in particular the applicant’s professional background: at 124:
‘the applicant, who was an investment consultant, should have been aware of the legal consequences of the acknowledgment of debt deed which he had signed. That deed was governed by Cypriot law, concerned a sum of money borrowed by the applicant from a Cypriot company and contained a clause conferring jurisdiction on the Cypriot courts. Accordingly, the applicant should have ensured that he was familiar with the manner in which possible proceedings would be conducted before the Cypriot courts (…). Having omitted to obtain information on the subject he contributed to a large extent, as a result of his inaction and lack of diligence, to bringing about the situation of which he complained before the Court and which he could have prevented so as to avoid incurring any damage’.
I am not convinced by the Court’s view on the burden of proof ad on the national court’s duty to assess the law in the State of origin sua sponte. Judges Lemmens and Briede, jointly concurring but for different reasons as the court, in my view have the better argument where they say
‘If the applicant wanted to argue that no remedy had in fact been available to him in Cyprus, in our opinion it would have been for him to raise this issue explicitly before the Supreme Court. We question whether he could expect the Supreme Court to raise that issue of its own motion. And we definitely consider that he cannot complain under Article 6 § 1 of the Convention about the lack of an explicit response to an argument that was not explicitly made.’
The end result is the same at the ECtHR. For future application of the Brussels I (Recast) Regulation however it makes a big difference.
Geert.
Does Article 21 TEU on EU citisenship, facilitate one’s acquiring names bearing the tokens of nobility, acquired in one Member State (here: the flexible ‘deed poll’ regime available to citisens of the United Kingdom), for subsequent use in another Member State less keen on such (token or real) titles? In Case C-438/14 Bogendorff the CJEU held that it does not.
Applicant at issue had acquired UK nationality over and above German nationality (which he held by birth). Subsequent adoption but especially vanity had led to a change in first name and surname by deed poll, a very flexible name change regime available to UK citisens. German authorities however refused to recognise the name change upon the occasion of registration of applicant’s daughter, citing public order considerations in particular Germany’s long-standing objection against aristocratic titles, real or vanity, so as to emphasise equality before the law. The court’s approach on free movement and names in my view has taken a better turn since Vardyn, Case C-391/09, where it left its insistence that only copy /paste recognition of names by authorities in other Member States can safeguard citisens free movement rights.
In the case of aristocratic titles, however, the court has always recognised in particular Austria’s and Germany’s right to extend domestic policies to incoming citisens, on the basis of public policy considerations. Current case differs from Sayn-Wittgenstein, C‑208/09. The latter concerned Austrian law, which has a strict prohibition on the use and transmission of titles of nobility. Under German law by contrast all privileges and inequalities connected with birth or position have been abolished in Germany. Titles of nobility which were actually borne when the Weimar Constitution entered into force may continue as elements of a name and may be transmitted as a fact of personal status. The creation of new titles of nobility and the grant of such titles are prohibited.
Hence for Germany to refuse to recognise such titles where they have been accidentally obtained abroad (by birth, marriage or adoption) would run counter EU citisenhip. By contrast, it would run counter to the intention of the German legislature for German nationals, using the law of another Member State, to adopt afresh abolished titles of nobility. Systematic recognition of changes of name such as that at issue in the main proceedings could lead to that result.
Name dropping undoubtedly will continue. Name shopping has been halted.
Geert.
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