GAVC

In Various parties obo minors v Anglo-American South Africa Limited and Others (2020/32777) [2023] ZAGPJHC 1474, the High Court of South Africa has refused to certify two class actions against Anglo American South Africa Limited (‘Anglo’). The proposed class action seeks monetary compensation for two classes from the Kabwe district in Zambia, who have been injured by lead exposure: children and women of childbearing age.

Kabwe is the capital of the Zambian Central Province and home to 225 000 people. Members of the proposed classes are estimated to make up approximately 140 000 members of this population. Kabwe is one of the most lead-polluted locations on the planet.

If forum non conveniens is now a classic hurdle for these kinds of cases in England and Wales (watch this space however for Lugano developments), then class certification presents itself in this judgment as a hurdle to an issue that in my view certainly should go to trial.

Windell J sets the scene [12]: (all footnotes in the quotes from the judgment have been omitted)

The application is unique. The applicants, who are citizens of Zambia and peregrini of this court (i.e, people neither domiciled nor resident in South Africa), are seeking redress in a South African Court, for a wrong committed in Zambia. They seek to hold Anglo liable for lead pollution that occurred during its involvement in the Mine from 1925 to 1974, beginning and ending 97 and 47 years ago respectively (the relevant period). The applicants’ cause of action is based on the tort of negligence. The parties agree that Zambian law will govern the substantive issues (the lex causae) and procedural matters will be governed by South African Law — the lex fori (the domestic law of the country in which proceedings are instituted).

[13] the main points of enquiry under Zambian law are laid out (and agreed)

The Zambian law mirrors the relevant English common law principles, which is part of Zambian law by virtue of section 2(a) of the English Law (Extent of Application) (Amendment Act 2011, Chapter 11). This means that English common law principles form part of Zambian law and are binding on Zambian courts, whereas the decisions of English courts are highly persuasive, even though not absolutely binding. Mr Musa Mwenye SC, the former Attorney General of Zambia, and the applicants’ Zambian law expert, opines that in deserving cases, Zambian courts may depart from English decisions if there are good and compelling reasons to do so but will not depart from established principles. The elements of the tort of negligence are therefore well-established. The Zambian Supreme Court has held that it requires proof of a duty of care; a breach of that duty through negligent conduct; actionable harm; a causal connection between the negligent conduct and the harm, involving both factual and legal causation; and damages.

[15] the criteria for the class action enquiry under South African law are listed:

In determining whether a class action is the appropriate procedural vehicle for the claims, the overarching requirement is the interest of justice (See Mukkadam v Pioneer Foods (Pty) Ltd. In Trustees for the time being of Children’s Resource Centre Trust and Others v Pioneer Foods (Pty) Ltd and Others (CRC Trust) the Supreme Court of Appeal (SCA) identified certain factors to be considered. First, there is a class or classes which are identifiable by objective criteria; Second, a cause of action raising a triable issue; Third, the right to relief depends upon the determination of issues of fact, or law, or both, common to all members of the class; Fourth, the relief sought, or damages claimed, must flow from the cause of action and be determinable and ascertainable; Fifth, if the claim is for damages, there is a suitable procedure for allocating the damages to members of the class; Sixth, the proposed representatives of the classes are suitable to be permitted to conduct the action and represent the class; Seventh, a class action is the most appropriate means of determining the claims of class members, given the composition of the class and the nature of the proposed action.

[19] the conclusion is summarised:

Anglo opposes the application on various grounds. Some of the grounds are valid, while others are not. Hence, I will commence with the three issues that do not pose an insurmountable obstacle to the certification of the class action. They are:  Suitability of the class representatives; Commonality and the Funding Agreements. Following that, I will then determine whether there is a cause of action raising a triable issue, which aspect, in my view, is fatal to the application. Finally, I shall discuss ‘Anglo’s alternative case’ which includes the damages claims, the suitability of an opt-out procedure and the class definitions.

In this blog post, in line with the blog’s general interests (here: the business and human rights angle), I will focus on the ‘triable issue’ analysis seeing as it engages with quite a few cases previously reported on the blog.

I do however also want to draw readers’ attention to the discussion [44] ff of the funding arrangements in light of my research grant (and also here) (research now conducted by Charlotte de Meeûs), with as conclusion

[81] As remarked in the interlocutory application, this court, ‘as the guardian of the child’s best interests, has a heightened duty to scrutinise the funding arrangements. Because the purported claims of thousands of Zambian children may be rendered res judicata by an action in a foreign jurisdiction, it is the duty of the court to ensure that these claims are adequately pursued by way of funding arrangements that are not only sufficient, but that do not deliver extortionate profits for third party funders at the cost of the children and that insulates the classes and their lawyers from undue influence from Kabwe Finance.

[82] Anglo’s concerns are without merit because the necessary safeguards developed by our class action jurisprudence have been built into the proposed funding arrangements. First, the applicants have provided detailed disclosure of the funding arrangements, which is without a doubt among the most detailed and transparent disclosures of any class certification proceeding to date. Second, the terms of the relevant funding agreements are explicit that neither the funder nor LD will exercise control over the case, which is to be conducted by MM on the instructions of the class representatives. Third, the applicants are represented by experienced attorneys and independent advocates who are bound by ethical rules to represent the interests of their clients.

[83] Fourth, the funder is part of the Augusta Group, a leading third-party litigation funder with a well-established track record and reputation. That reputation creates its own safeguard. Abuses and underhanded dealings, of the kind that Anglo alleges, would be disastrous to its professional standing and credibility with the courts. Fifth, the funder is bound by the Association of Litigation Funders’ Code (ALF), which explicitly prohibits funder control of litigation and other abuses. AVL is a member of the ALF and the Code’s requirements have been explicitly incorporated in the Claim Funding Agreement, thereby making them contractually binding on the funder.

[84]       Anglo’s attempt to characterise the Code as inadequate protection ignores the history and significance of the Code, as well as the weight it has been given by courts in England and Wales. The significance of the Code was recently explained in Akhmedova:….

[85]       Sixth, the applicants are protected by the provisions of the CFA, particularly s 5 which gives them the right to seek the review of any terms of the contingency fee agreement and the fees. Seventh, in response to Anglo’s repeated claims that the settlement will be hijacked by funders and lawyers to the detriment of the class, applicants and prospective class members are afforded two critical layers of protection: If the class representatives object to any settlement proposal, they may refer a dispute to an independent senior counsel, in terms of the dispute resolution mechanisms in the Claim Funding Agreement. And the applicants and class members are further protected by the court, as the parties would have to seek judicial approval of any settlement, in terms of the procedures approved in the Nkala settlement judgment

On the applicants’ case for there being a ‘triable issue’, [86] ff

applicants seek redress in a South African court on the basis that Anglo was the parent company and head office of the Anglo group that oversaw, managed and/or advised the Mine from its headquarters in Johannesburg, within the jurisdiction of this court, during the relevant period. It is asserted that Anglo exercised control over the Mine through an ever-changing set of subsidiaries, and although its organisational structure is quite complex, the Mine was firmly a part of Anglo’s ‘group system’….

applicants contend that the question of whether and when a multinational parent company owes a duty of care in respect of the actions of a foreign subsidiary is well-settled in English law, and they are confident that there is sufficient evidence to prove that Anglo owed a duty of care to the members of the classes.

Applicants refer ia to Vedanta and Okpabi.

[89] even Anglo’s expert on English law is of the opinion that ‘an English court would likely determine that the duty of care alleged in the draft POC together with its supporting affidavit raises a real issue to be tried’. He further stated that ‘[I]t will be a question of fact and degree whether or not the evidence adduced demonstrates a sufficient level of knowledge, control, supervision and intervention for the purposes of attaching legal responsibility.’

[90] ff the case for the applicants is further explained: that over the course of its almost 50-year involvement in the Mine’s affairs, Anglo negligently breached its duty of care by, inter alia, failing to conduct the necessary investigations on the impact of lead pollution on the surrounding communities by taking common sense measures, such as long-term sampling of air, water, soil and vegetation and monitoring the health impacts on the local communities in Kabwe [91]; Anglo’s negligence therefore caused or materially contributed to the existing levels of lead pollution in Kabwe and the resulting actionable harm. It is alleged that Anglo acted negligently in at least five material respects: it failed to investigate; it failed to protect; it failed to cease and relocate; it failed to remediate; and it failed to warn [92].

The judge however sides with Anglo’s arguments, outlined [98] ff. In effect Anglo lays all blame with ZCCM, ‘the obvious culprit’ [100], a Zambian state-owned entity and its predecessors in title who it is said at all times from 1905 to 1994 owned and operated the Mine.

Anglo also refer to the Zambia state-controlled Nchanga Consolidated Copper Mines Ltd (NCCM), established January 1970. It argues [105] that following the closure of the Mine in 1994, and in accordance with Zambian legislation enacted in 2000, ZCCM retained all historical liabilities associated with the Mine. It held the legal responsibility to address the environmental and health impacts on Kabwe residents and became responsible for the remediation and rehabilitation of the Mine. In the 2000s, the World Bank and the Zambian government attempted on multiple occasions to assist ZCCM in remediating the Mine’s surroundings. These efforts it is said are ongoing, but they have been largely unsuccessful to date.

[106] Anglo argue that ZCCM’s negligence and omissions is an unforeseeable intervening event (novus actus interveniens), that absolves Anglo of all liability.

The test at certification stage is “not a difficult hurdle to cross” ([113], with reference to authority) yet Windell J concludes the case is both factually and legally hopeless.

“Factually hopeless” 

[117] ff the judge takes issue with applicants’ so-called ‘Broken Hill attitude’ in support of their argument against Anglo. In doing she, she focuses it seems on the much troubled history of Broken Hill, NSW. Australian readers and students of mine sadly will be very familiar with that name and with the 1893 report.

In essence, the judge dismisses relevance of the 1893 Report [120] referring to the unlikelihood, in her view, of Anglo’s knowledge of the report:

Anglo was only established in 1917. There is not any evidence that the Report came to the attention of Anglo at any point (including between 1925 and 1974). The applicants do not explain how an entity, established 24 years after the Report was published, located in a different country and on a different continent, and in an age of basic forms of communication technology, came to know of this Report. In these circumstances, it cannot be suggested that Anglo had knowledge of the harms set out in the Report.

And [121] the judge refers to alleged levels of nuance in the report.

Applicants’ suggestion [119] that Anglo knowing of the issues will be further established following discovery and further research is not further entertained. That would seem an extraordinary lack of engagement with the evidence. All the more so as it would seem that applicants’ reference to a ‘Broken Hill attitude’, which the judge dismisses, is not their shorthand for a particular safety attitude linked to the NSW mine and the 1890s reporting. Rather a reference to an internal Anglo document commissioned in the 1970s with the very title ‘Broken Hill attitude’, that is: Broken Hill, Kabwe. The ‘attitude’ of lack of regard, and of neglect, is one that is signalled in an internal Anglo document, not catch phrased by applicants.

Anglo’s novus actus interveniens argument referred to above, prima facie sits uneasy with the material contribution element of the law of causation and simply cannot be dealt with at this interlocutory stage.

The judge moreover arguably overlooks applicants ‘modicum of common sense’ [119]. It is, with respect, absurd to suggest there is no prima facie proof of Anglo’s historic knowledge of the harm of lead and more specifically knowledge of harm to the historical Kabwe community. Knowledge of the “adit to alloy” so to speak harm associated with all aspects of lead is historically exceedingly well established. Anglo’s approach to it at a mine in which it was clearly involved for a long period, cannot be readily dealt with at certification stage.

The judge concludes [128] that before the early 1970s, there is no evidence to imply that Anglo was specifically aware of the risks that lead pollution posed to the historical Kabwe community.

The contentions and counterarguments about what ought to have taken place from an engineering point of view to mitigate the risk, in my view are to be discussed at trial, not at certification stage, and the judge’s suggestions [134] ff that at trial applicants would not fair better would seem to exceed the prima facie level required at certification stage (as well as sitting uneasily with the Supreme Court finding in Okpabi).

“Legally hopeless”

[145] ff the applicants’ legal arguments, too, are held not to be sufficient in most succinct manner. In essence, the judge dismisses the relevance of ‘current’ authorities such as Vedanta etc. She distinguishes it as follows [148]

to establish that Anglo owed a duty of care 50 years and more ago to the proposed class members currently living in the Kabwe district, this court must be satisfied that there is prima facie evidence to find that between almost 100 and nearly 50 years ago, Anglo must have foreseen that the current community, not the historical community, would suffer harm from lead released into the environment by the Mine during the relevant period.

Relevant authority in the judge’s view is rather Cambridge Water [1994] 2 A.C. 264.

One imagines English tort lawyers will have a lot to say on the most concise (8 paras) discussion of the common law duty of care authority, that leads the judge to her finding that the case is legally untenable.

I understand permission to appeal is being sought, as it should.

Geert.

The judgment denying class certification in claim against Anglo American on behalf of Zambian claimants re lead pollution in Kabwe, Zambia is now here https://t.co/N9m9HEZZih

Appeal likely

Held [117] ff case is factually and legally flawed
More on the blog soon (eg re funding) pic.twitter.com/tF9kojek7A

— Geert Van Calster (@GAVClaw) January 31, 2024

I realise Lent has not even kicked off (it does next Wednesday, Valentine’s day) yet the judicial year already has seen a miraculous resurrection. In Skatteforvaltningen v MCML Ltd [2024] EWHC 148 (Comm) (MCML are formerly known as ED&F Man Capital Markets) SKAT did exactly what I suggested they do namely to amend their claim against these defendants to one for deceit.

(I dare say the did not do it upon the blog’s instruction; otherwise a charitable donation might be in order; note here btw for my review of the UKSC judgment in same.)

As Bright J summarises [5], SKAT’s claims at the start of current proceedings were advanced on the basis that the defendants had acted fraudulently. Such claims were, in general (and along with other causes of action), for the tort of deceit. However, in relation to ED&F Man, SKAT did not allege fraud/deceit but only negligent misrepresentation.

[7] On 5 December 2022, SKAT issued fresh proceedings in which ED&F Man was the sole Defendant. SKAT now alleged that ED&F Man knew that the representations in the Tax Vouchers were false or was reckless. SKAT’s claim in these fresh proceedings is for deceit, just as the initial claim against the other defendants which unlike that against ED&F Man, did survive Dicey Rule 3 /the foreign revenue rule.

In my review of the Court of Appeal judgment, under the title “Skat v Solo Capital Partners. When faced with Dicey rule 3, I’ll see your tax claim and raise it to a fraud one.”, I concluded

The title of this piece of course hints at the relevance of claim formulation. It is also exaggerated: SKAT cannot conjure up fraud elements out of nowhere to reinvent a tax claim as one in mere tortious and fraudulent misrepresentation. However it is clear that in cases that are somewhat murky, claim formulation will be crucial to navigate Dicey Rule 3.

I did not suggest that such claim reformulation ought to be tried in the current case for, well, SKAT it would have seemed have spent their powder. Yet this is exactly what SKAT now have done (and given the size of the claim, who can blame them for trying). Yet prima facie the hurdles for such new attempt seem quite formidable:

[33] ff issue estoppel: the arguable identical issue being tried formulated [43]  by defendant’s counsel as “… whether SKAT’s claims for compensation for making tax refunds it was not obliged to make was a foreign revenue claim for the purpose of Dicey Rule 3, now Dicey Rule 20.” That the claim is now in deceit and not negligence arguably does not change that (in light of claimant being the same, and having their cake and eating it).

The judge sees that differently: [48]: “mere similarity and/or a possible inference or deduction is not sufficient to bring into play the doctrine of issue estoppel.”

[50] Henderson v Henderson abuse of process: the fraud claim if it was to be brought at all, could and should have been brought earlier. The discussion on this is lengthy. For their to be abuse, it is necessary both (a) that the claimant could have raised the matter in the earlier proceedings and (b) that the claimant should have done so. A claimant is not lightly to be deprived of the possibility of a genuine claim. Some kind of harassment or serious prejudice is required, and the judge did not find that infringement of the Aldi joinder rule suffices.

The judge adds

1. 1. 1. In reaching this conclusion, I principally have in mind that the court must be cautious about shutting litigants out of their right to justice. The need for caution features prominently in several of the authorities in this area (see paragraph 55 above), and is also required by article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms.
      2. However, it also seems to me relevant that the case SKAT wishes to bring is one of fraud. The general interests of justice, and the wider interests of society as a whole, are not well served if serious financial fraud is not brought to light. If fraud has been committed, the fraudsters should be exposed.

These latter comments of course do not displace the more detailed analysis of the authorities in the previous paras.

The judge refused permission to appeal which the defendants may of course still seek direct from the Court of Appeal. I would have thought there are some unresolved issues of law at stake here.

Geert.

Surprising resurrection of claim earlier dismissed on jurisdictional grounds
New, requalified claim survives estoppel, Aldi, Henderson v Henderson arguments
Background https://t.co/B5DeTbSxqw

Skatteforvaltningen v MCML Ltd [2024] EWHC 148 (Comm)https://t.co/LPY8pd3wzt

— Geert Van Calster (@GAVClaw) February 2, 2024

First Advocate General Szpunar today opined in C‑633/22 Real Madrid Club  de Fútbol, AE v EE, Société Éditrice du Monde SA. The case was triggeredy a Le Monde article which claimed that Real Madrid Club de Fútbol had retained the services of Dr. Fuentès, the head of a blood-doping ring previously uncovered in the cycling world.

Le Monde later published Madrid’s reaction of denial but refused to retract the piece. Spanish courts imposed a damages and costs award of close to  €400,000, and a lower award on the journalists involved.

The Court of Appeal at Paris refused to recognise let alone enforce the judgment, referring to French ordre public. It concluded that the orders to pay an exceptional amount made against a journalist and a media organisation could not fail to have a deterrent effect on their involvement in the public discussion of matters of community interest such as to curtail the media’s ability to perform its information and monitoring role, meaning that the recognition or enforcement of the judgments pronouncing those penalties would be at variance to an unacceptable degree with French international public policy by interfering with freedom of expression.

Real Madrid submit, in essence, that a review of the proportionality of damages may only be undertaken where those damages are punitive in nature and not compensatory; that, by substituting its own assessment of the harm for that of the court of origin, the Court of Appeal had reviewed the foreign judgment, in breach of Articles 34(1) and 36 of the Brussels I Regulation; that it did not take account of the seriousness of the wrongs accepted by the Spanish court; that the economic situation of persons on whom a financial penalty is imposed is not a relevant criterion in assessing whether the penalty was disproportionate; that the assessment of proportionality should not be carried out by reference to national standards.

Colleagues with much greater authority on SLAPPs will no doubt have more impactful analysis soon: this post is a heads-up.

CJEU authority includes of course Krombach, Trade Agency, Meroni and Diageo, as well as Charles Taylor Adjusting aka Starlight Shipping, EcoSwiss and Renault. The AG (50) points out that the relevant authorities hitherto have engaged with procedural law ordre public exceptions, rather than substantive rules such as here fundamental rights.

(48) ff he discusses parties’ right under Article 6 ECHR and 47 of the Charter, to have a judgment enforced abroad. (60) ff follows discussion of the principle of mutual trust (which earlier today also featured in Inkreal).

(77) ff he discusses the authorities (see both blog posts referred to above and Handbook 4th ed. 2.619 ff) and highlights the existence of freedom of expression as a fundamental EU, as opposed ‘simply’ national right within the realm of EU ordre public. (142) ff discusses the issue of punitive awards and (159) ff the freezing effect of awards such as the one at issue. He comes to the conclusion that refusal of recognition not just can but must happen where the freezing effect of a libel award endangers participation in the public debate, linked to the financial absorption capacity of both the outlet and journalist concerned:

“un État membre dans lequel est demandée l’exécution d’une décision rendue dans un autre État membre, portant sur une condamnation d’une société éditrice d’un journal et d’un journaliste pour l’atteinte à la réputation d’un club sportif et d’un membre de son équipe médicale par une information publiée dans ce journal, doit refuser ou révoquer une déclaration constatant la force exécutoire de cette décision lorsque l’exécution de celle-ci conduirait à une violation manifeste de la liberté d’expression garantie à l’article 11 de la charte des droits fondamentaux.” (emphasis added)

“Une telle violation existe lorsque l’exécution de ladite décision engendre un effet dissuasif potentiel s’agissant de la participation au débat sur un sujet d’intérêt général tant des personnes visées par la condamnation que d’autres sociétés de presse et journalistes dans l’État membre requis. Un tel effet dissuasif potentiel se manifeste lorsque la somme globale dont le paiement est demandé est manifestement déraisonnable au regard de la nature et de la situation économique de la personne concernée. Dans le cas d’un journaliste, l’effet dissuasif potentiel se présente, en particulier, lorsque cette somme correspond à plusieurs dizaines de salaires minimums standard dans l’État membre requis. Dans le cas d’une société éditrice d’un journal, l’effet dissuasif potentiel doit s’entendre comme une mise en danger manifeste de l’équilibre financier de ce journal. Le juge de l’État membre requis peut tenir compte de la gravité de la faute et de l’étendue du préjudice uniquement pour déterminer si, en dépit du caractère a priori manifestement déraisonnable de la somme globale d’une condamnation, celle-ci est appropriée pour contrecarrer les effets des propos diffamatoires.”

Of much note in the context of the EU’s discussions on a SLAPP Directive.

Geert.

EU Private International Law, 4th ed, 2024, 2.619 ff.

Opinion now here https://t.co/jRgZ6ej23U
citing ia @ProfPech, @CunibertiGilles, @burkhard_hess, @Maxime_Barba https://t.co/KJgqOtk80R

— Geert Van Calster (@GAVClaw) February 8, 2024

As I had half hoped, half predicted, the CJEU today held differently than its AG had opined in C‑566/22 Inkreal aka Inkreal s. r.  v Dúha reality s. r. o..: 

an agreement conferring jurisdiction by which the parties to a contract who are established in the same Member State agree on the jurisdiction of the courts of another Member State to settle disputes arising out of that contract is covered under Article 25 Brussels Ia, even if that contract has no other connection with that other Member State.

The Court cites in support:

[15] ff: statutory wording: [17]: “the wording of [A25(1)] does not preclude an agreement conferring jurisdiction, by which the parties to a contract who are established in the same Member State agree on the jurisdiction of the courts of another Member State to settle disputes arising out of that contract, from being covered under that provision, even if that contract has no other connection with that other Member State.”

[18] ff: context: ‘civil matters having cross-border implications’ (recital 3) and ‘cross-border litigation’ (recital 26) are mentioned yet the ‘international element’ required is not defined. As the CJEU had already held in C-280/20, ZN v Generalno konsulstvo na Republika Bulgaria v grad Valensia, Kralstvo Ispania [the Bulgarian consulate], an equivalent concept must be used as in the order for payments Regulation. That defines the equivalent concept of ‘cross-border litigation’ as ‘one in which at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court seised’. In current case [23] the parties to that dispute are established in a Member State other than the Member State of the court which was seised on the basis of the agreement conferring jurisdiction at issue. Moreover, [24] a question relating to the determination of international jurisdiction clearly arises in the case, more specifically whether the courts having jurisdiction to settle this dispute are those of the Czech Republic, or those of the Slovak Republic as the Member State in which the two parties are established.

Further, [26], the interpretation of A25 must also be carried out in the light of the objectives of respecting the autonomy of the parties and enhancing the effectiveness of exclusive choice-of-court agreements, as referred to in recitals 15, 19 and 22 BIa.

Moreover, [27] ff, both predictability and legal certainty, core BIa objectives, are served by the inclusion of choice of court such as in the case at issue. [29] jurisdiction can readily be considered and [30] the possibility of concurrent proceedings is minimised. [31] should choice of court in these circumstances not be valid, BIa is likely not to apply and the application of residual national PIL is likely to lead to conflicting decisions. [32] ff for courts to have to consider additional elements capable of demonstrating the cross-border impact of the dispute concerned, would create uncertainty rather than remedy it.

[35] application of BIa here also demonstrates mutual trust and increased access to justice.

Finally [36] a parallel with the Hague Choice of Court Convention clearly was not sought, quite the contrary, BIa expressly not including a similar provision illistrates its diverging intention.

An excellent judgment echoing many of my earlier expressed sentiments on the issue and arguments.

Geert.

EU Private International Law, 4th ed. 2024, 2.30.

In line with my expectation (see https://t.co/rIoSYfk1qS), the CJEU has not followed its AG on the 'international' element required to enable choice of (foreign) court under A25 Brussels Ia
C-566/22 Inkreal https://t.co/k94JgtdT2G

— Geert Van Calster (@GAVClaw) February 8, 2024

I have frequently reported in the use of English restructuring and law, including Plans and Schemes of Arrangement, and the forum and applicable law shopping strategies for same. Readers will find the tag ‘restructuring’ or ‘scheme of arrangement’ useful.

My post on Apcoa  summarises many of the issues and cross-refers to many other postings. The same post in a later update reports on Codere, which has become standard reference, and to AGPS Bondco Plc, Re, where the Court’s jurisdiction was unsuccessfully challenged on the basis that the Issuer Substitution was ineffective or invalid as a matter of German law.

That latter judgment has now been successfully appealed in Strategic Value Capital Solutions Master Fund LP & Ors v AGPS BondCo PLC (Re AGPS BondCo PLC) [2024] EWCA Civ 24. The Court of Appeal held that the first instance judge had unjustifiably departed from the paru passi distribution of assets principle in sanctioning the cross-class cram down.

Of note for the blog however is Lord Justice Snowden’s obiter reference to the jurisdiction [29] ff as follows:

1. 1. 1. After the failure of the consent solicitation, the Group announced its intention to implement the proposed restructuring by an alternative route. This was to propose a restructuring plan under Part 26A and to ask the English court to exercise its cram down power to overcome the objections of the Appellants. To that end, the Plan Company was incorporated in England and Wales as a subsidiary of the Parent Company on 23 December 2022.

1. 1. 1. On 10 January 2023, the Appellants put forward an alternative restructuring proposal to the Group. That elicited no immediate response, but on 19 January 2023 the SteerCo informed the Company that the Appellants’ proposal was not acceptable.

1. 1. 1. On 11 January 2023 the Plan Company was substituted for the Parent Company as the issuer of the Notes, ostensibly pursuant to the substitution procedure under the Notes (the “Issuer Substitution”). In connection with that substitution, the Parent Company guaranteed the Plan Company’s obligations under the Notes, and the Parent Company issued back-to-back loan notes to the Plan Company on the same terms as the Notes.

1. 1. 1. It is self-evident, and the Plan Company accepted before the Judge, that the Issuer Substitution was carried out for the sole purpose of introducing an English company into the Group structure in order to persuade the English court to exercise its jurisdiction under Part 26A. Absent the Issuer Substitution, a proposal for the compromise of foreign law debts owed by a foreign company with no relevant connection with England would not have been entertained by the English court.

1. 1. 1. The technique of inserting a newly incorporated English company as a substitute obligor or co-obligor of debt owed by a foreign company in order to engage the jurisdiction of the English court under Part 26 or Part 26A has been used in a number of schemes and plans that have been sanctioned at first instance over the last few years: see e.g. Codere Finance (UK) Limited [2015] EWHC 3778 (Ch) and Gategroup Guarantee Limited [2021] EWHC 775 (Ch) at [12]-[23]. Mr. Bayfield KC told the Judge that it was “an established technique”. It has, however, not been the subject of consideration at an appellate level.

1. 1. 1. The Appellants did not oppose the Plan before the Judge on the basis that the Issuer Substitution was an artificial device that could not justify the exercise of discretion to sanction the Plan. The point did not, therefore, arise for consideration on this appeal. For the avoidance of doubt, and without expressing a view one way or the other, I would wish to make it clear that the fact that this judgment does not deal with this issue should not be taken as an endorsement of the technique for future cases.

1. 1. 1. The Appellants did, however, challenge the legality of the Issuer Substitution as a matter of German law, both before the Judge, and by proceedings in Germany itself. The Judge heard expert evidence and was satisfied that it complied with German law. The Appellants also indicated that irrespective of our decision on this point, they reserved the right to continue their challenge to the Issuer Substitution in Germany.

(emphasis added)

The point is clearly made obiter, seeing as the issue was not appealed (although it is being litigated in Germany, which evidently will raise interesting further issues); and of course it is possible that Snowden LJ simply mentions the issue for it was litigated at first instance. Yet often if that is the case, the Court of Appeal simply keeps schtum about it. Therefore just possibly it may be hinting that the often applied arguendo approach to jurisdiction for Schemes and Plans (“arguments put forward are not barmy and they are not really opposed by any party therefore we accept jurisdiction”) may not work at least across the board in restructuring cases.

An obiter hint of note.

Geert.

EU Private International Law, 4th ed. 2024, 5.35 ff.

Interesting, successful appeal against sanction of cross-class cram down
Held unjustified departure from pari passu distribution
Re jurisdiction [34] obiter Snowden LJ neither confirming nor rejecting technique of issuer substitution by EN corporation to justify E&W jurisdiction

— Geert Van Calster (@GAVClaw) January 24, 2024

I am much annoyed one has to refer to cases like these yet again as X v Y (see also here, also on Article 22 Rome II). I understand the need for anonymisation in this particular case, ECLI:NL:PHR:2023:1114, which concerns the liability of a Dutch mother, guardian of a (young) adult son with mild autism and ADHD and a number of mental health challenges, who stabbed and otherwise attacked a Russian (immaterial to the attack) boy living in Germany but holidaying with his family in Crete. Yet some kind of acronym might be helpful.

At any rate, the interest of this tragic case for the blog lies in Advocate General Vlas discussing Rome II particularly the evidence and procedure carve-out as qualified by Article 22 Rome II’s inclusion of the burden of proof in the lex causae:

Article 22 Rome II

Burden of proof

1.   The law governing a non-contractual obligation under this Regulation shall apply to the extent that, in matters of non-contractual obligations, it contains rules which raise presumptions of law or determine the burden of proof.

2.   Acts intended to have legal effect may be proved by any mode of proof recognised by the law of the forum or by any of the laws referred to in Article 21 under which that act is formally valid, provided that such mode of proof can be administered by the forum.

Parties agree Greek law is the lex causae. Dutch law applies procedurally as the lex fori, with the A22 Rome II caveat. (3.25) the AG cites the relevant burden of proof issue in the Greek Civil Code: Article 923:

 “Whoever has the supervision of a person under age or of a person placed under judicial assistance is liable for the damage that such persons unlawfully cause to a third party, unless he proves that he has exercised properly the duty of supervision or that the damage could not have been avoided. (…)”. (…)’

(3.26) the AG summarises the implications of A22 as follows (translated by me, and omitting his references (ia to prof Peters, Magnus/Mankowski/Queirolo, Kramer, and Bart-Jan van het Kaar) 

In brief, it follows from A22(1) Rome II that the lex causae applies to the burden of proof. A22 concerns substantive issues of the law of evidence, such as the distribution of the burden of proof. It does not concern issues relating to the formal elements of the burden of proof, such as admissibility and the appreciation of evidence. These issues are subject (see A10:3 Dutch Civil Code) to Dutch law as the lex fori.

A relevant consideration, one will have to wait and see whether the Supreme Court itself will engage with the A22 issue, which is only a small part of the appeal.

Geert.

EU Private International Law, 4th ed 2024, 4.79 ff.

X v Y (parental responsibility). Vlas AG (of the Supreme Court of The Netherlands) ia on the evidence and procedure carve-out and Article 22 Rome II.https://t.co/OGt1m04LPx

— Geert Van Calster (@GAVClaw) January 17, 2024

This is possibly the longest title of any of my posts and rightly so for the issues in current judment are extensive. Bourlakova & Ors v Bourlakov & Ors (Rev1) [2023] EWHC 2233 (Ch) is a follow-up to Bourlakova v Bourlakov [2022] EWHC 1269 (Ch) which I discuss here; in the meantime Mr Bourlakov has passed away, leaving the other defendants.

Claimants ask for permission to amend their PoC (Particulars of Claim) including the proposed joinder of an additional claimant. Some of the Defendants have themselves made three related applications, namely (a) to adjourn the hearing of the Claimants’ amendment applications (b) for permission to rely on further evidence and (c) for a stay under A33 or 34 Brussels Ia of such amended claims for which the Claimants may be given permission.

The case first of all raises an interesting discussion on applicable limitation periods (attached to Panama law as the lex causae under Rome II) as compared to carved-out procedural issues under Rome II (and English residual conflicts law), subject to English law as lex fori. It then discusses a number of jurisdictional issues.

First, on the limitation periods, discussed by Smith J [56] ff against the background of the Panamian Penal Code (‘PC’). Of note is that defendants only have to raise a reasonably arguable limitation defence in relation to these new damages claims (hence the discussion need not contain the Alfa and Omega of the issues) and it is worthwhile to see the competing arguments in full [64] ff (footnotes omitted):

Panamanian law admits of a civil claim in damages for those guilty of a criminal offence. The specific offences relied upon by the Claimants are those identified in Articles 220, 243 and/ or 253 PC. Although the route by which this is achieved is contentious, it is common ground that Panamanian law governs the question of any available limitation defence to claims brought under these articles. It is also common ground that the damages claims could be brought in Panama in different ways, namely

(i) within criminal proceedings;

(ii) before the civil courts without awaiting the outcome of any criminal trial; or

(iii) before the civil courts after the criminal court has issued its final liability ruling.

[Defendants] say that if, as here, a claim for civil damages arising from alleged criminal acts under Articles 128 and 129 PC is filed without a criminal conviction having first been obtained or in the absence of criminal proceedings, this would have to be submitted as an extra-contractual or tortious claim under Article 1644 of the Civil Code (CC) which provides that:-

“Whoever by act or omission causes damage to another, through fault or negligence, is bound to repair the damage caused. If the act or omission is attributable to two or more persons, each of them shall be jointly and severally liable for the damage caused.“

[Defendants] also say that the relevant limitation period for such a claim is one year by operation of Article 1706 CC which provides:-

“The civil action to claim indemnification for slander or insult or to demand civil responsibility for the obligations resulting from guilt or negligence to which Article 1644 refers, shall prescribe in the term of one (1) year, counted from the moment in which the victim knew.

If criminal or administrative action is timely initiated for the facts foreseen in the previous paragraph, the prescription of the civil action shall be counted from the moment when the criminal judgment or the administrative resolution became firm, as the case may be.

For the recognition of the civil claim, in no case is the intervention of the criminal jurisdiction essential.”

The Claimants disagree with this analysis. They say that a claim for civil damages for an alleged criminal act may be brought directly under Articles 128 and 129 PC (without regard to Article 1644 CC) by operation of Article 977 CC which provides that :-

“Civil obligations arising from crimes or offences shall be governed by the provisions of the Penal Code.”

The Claimants say that the applicable limitation period for a claim under Articles 128 and 129 PC is seven years by operation of Article 1701 CC which provides that:-

“Actions in personam for which there is no special limitation period shall prescribe in seven years.”

This is where the Rome II procedural carve-out becomes relevant, and I will limit the discussion here to the Rome element: [71]

Before which court in Panama any claim could be asserted is a matter of procedure (whether considered under Rome II or the common law). According to Dicey, Morris & Collins on the Conflict of Laws (16th ed., at [4-074]), this includes the question whether a civil action can be brought in respect of alleged criminal acts before criminal proceedings have been taken. Since the English court is only concerned with the relevant foreign law as it applies to matters of substance, the Claimants are entitled to rely on the limitation period which remains available under Article 116 PC even if criminal proceedings have not begun and may not yet eventuate.

[72 [Defendants] say that there is a world of difference between the English court ignoring as a bar to recovery a procedural requirement for criminal proceedings prior to the commencement of a civil action (a proposition from which they do not demur) and the broader proposition (from which they do) that, where multiple potential routes for bringing civil damages claims are available locally, it matters not which particular procedural route the claimant has, in fact, adopted. The Claimants have brought a claim where there has been no criminal conviction as they were entitled to do so under Panamanian law. Having done so, the limitation period is one year. No question of having or failing to comply with local procedural requirements arises.

[73]

I understand the logic of the Claimants’ position that, being a matter of procedure, it is irrelevant which particular course the Claimants may, in fact, have pursued in this case. However, it seems to me that the distinction between the position indicated in Dicey, where the need for a criminal conviction is a bar to the commencement of a civil action, and the position here, where multiple routes are potentially available, may, in fact, be more meaningful than the Claimants suggest. I am therefore unable to say, without more direct authority on the point at least, that the [defendants’] limitation defence falls short of the reasonably arguable threshold on this account.

yet on the point of the actual damages sought, and other elements of the claim, the defence does fall short and the eventual conclusion is that the limitation defence fails. The judgment is a bit dense to read on the factual elements of the various claims however its overall emphasis on procedure v lex causae is really quite relevant.

The judgement subsequently discusses the jurisdictional issues with given the amendment of the claims, a shift from the alternative Monegask forum before Trower J, to [107]Panama or Florida now the suggested alternative fora to England.

[108] The jurisdictional issues arising on these amendment applications are whether:-

(i) despite the UK’s withdrawal from the EU, the Brussels Recast (including Article 8(1)) applies to the proposed new claims against the Kazakovs and Mr Anufriev;

(ii) in relation to the Claimants’ proposed new claims subject to the common law regime, England, Panama or Florida is clearly and distinctly the appropriate forum;

(iii) the Claimants’ proposed new claims against the ‘anchor defendant’, Leo Holding, are artificial and abusive such that the amendment applications fail for lack of jurisdiction, whether through their inability to invoke Article 8(1) of the Brussels Recast or the relevant jurisdictional gateway at common law;

(iv) Gatiabe is a ‘necessary or proper’ party with respect to the proposed new claims concerning the ownership of that company; and

(v) if the EU jurisdictional regime does apply to the Kazakovs, whether a stay should be granted under Articles 33 and 34 of the Brussels Recast of any new claims the Claimants might be permitted to advance.

(i) Application of Brussels Ia at all following the UK-EU Withdrawal Agreement: “legal proceedings instituted before the end of the transition period”

Article 67.1(a) WA provides that “in respect of legal proceedings instituted before the end of the transition period and in respect of proceedings or actions related to such legal proceedings pursuant to Articles 29, 30 and 31 of [the Brussels Recast]”, the provisions of the Brussels Recast shall continue to apply. Are permitted amendments caught by ‘proceedings instituted’? [116-117] the judge, referring to Simon v Taché, that Article 67 WA preserves the applicability of Brussels Recast to “proceedings” and not to particular claims or, here, unamended claims in proceedings.

(ii) and (iii) Abuse of the anchor defendant mechanism

The judge [128] sees no reason under BIa to conclude that claimants’ claims against Leo Holding are artificial, abusive or do not reflect a genuine intention to sue the ‘anchor defendant’, and repeats that [134] conclusion under the obiter English gateway.

(iv) a lengthy and largely obiter forum non conveniens discussion ends [212] with both Florida and Panama being rejected  as a more appropriate forum, and (v) [213] the A33-34 stay was not discussed at hearing but, it seems, may be revived at a later stage (which would be highly relevant) and therefore [223] has been deferred.

Quite the judgment.

Geert.

Various EU law jurisdictional issues
Incl application of Brussels A ratione temporis given WA; abuse of anchor defendant mechanism; application of A33-34 'forum non light'
More on the blog soon

Bourlakova & Ors v Bourlakov & Ors [2023] EWHC 2233 (Ch)https://t.co/ixIzSCt20c

— Geert Van Calster (@GAVClaw) September 11, 2023

Vegesentials Ltd & Anor v Shanghai Commercial & Savings Bank Ltd [2024] EWHC 7 (Ch) is a judgment, as Matthew Hoyle also notes, without reference to authority, and it surprisingly succinctly deals with the applicable law issue for misrepresentation under the Rome II Regulation (readers will be aware that Rome II is what used to be called retained EU law and is now ‘assimilated’ law).

Claimants seek damages from the defendant bank for fraudulent misrepresentations set out in a letter signed and stamped by the bank’s former corporate banking relationship manager of the Chung-Li Branch in Taiwan, to the effect that potential investors had free funds to invest £20 million in a new product, ‘FibreWater’ (chicory inulin, with testified health effects; FibreWater does not need to be chilled, and has a longer shelf life, and higher margins, than fruit and vegetable drinks) which the first claimant was developing. The second claimant was incorporated for the purpose of this claim, and was assigned the first claimant’s rights in the product. Claimant also entered into a sponsorship agreement with the tennis player Sir Andy Murray for him to sponsor FibreWater.

It is now conceded by the defendants that those investors, companies incorporated in Hong Kong and Anguilla respectively, had no such funds and that the manager made the fraudulent misrepresentations knowing them to be false and intending that it should be relied upon by the claimant. No funds were forthcoming, and FibreWater did not proceed. The claimant says that had the misrepresentations not been made, it would have continued to engage with alternative investors, and there was a real chance that investment would have been secured so as to allow the product to be successfully produced, marketed and sold and to become profit making.

Fraudulent misrepresentations are conceded, liability is not. The bank raises issues as to the applicable law, whether the claimant in fact relied on the misrepresentation, whether the bank is vicariously liable, as to causation and as to quantum.

Article 4 Rome II reads

“1. Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.

2. However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.

3. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.”

Claimant submits that the damage it claims to have suffered occurred in E&W because the share purchase agreement was governed by the law of England and Wales and provided for the payment of monies into the claimant’s bank account with Barclays in E&W. Any monies paid by the investors would also have been paid into that account. The claimant is incorporated in E&W and conducted most of its business there. Most of the lost profits claimed arise from the supply to UK retailers. Finally the sponsorship agreement with Sir Andy Murray is governed by English law.

Claimant also submits that the default rule is not displaced by A4(3), because the fraud relied on is not “manifestly more closely connected” with Taiwan. The claimant had no pre-existing relationship with the bank.

The bank submits that the fraud was part of a larger scheme and was planned, orchestrated, and implemented in Taiwan, and there are indications of such a larger scheme in the subsequent criminal proceedings against the manager. Jarman J [32] dismisses the relevance of this, pointing out that “it is not clear precisely who was involved in planning the scheme or where they were located at the time. All that is clear is that [the manager’s] involvement was at a time when he was based in Taiwan.” The bank further submits that the core misrepresentative Letter was concerned with a bank account in Taiwan. The judge again dismisses this, saying [32] “However, the ultimate purpose of [the letter] was to confirm the ability of the investors, incorporated elsewhere, to transfer monies in Pounds and Euros for a shareholding in a company incorporated here to develop business in the UK and Europe.”

[33] the conclusion on applicable law is

In my judgment, the claimant’s submissions on this point are to be preferred. Under Article 4(1) the damage relied upon occurred in this jurisdiction. Although some of the facts relied upon arose in Taiwan, as indicated above, it is not the case that the fraud was manifestly more closely connected with Taiwan within the meaning of Article 4(3). Accordingly the applicable law is that of England and Wales.

Most cases concerning fraudulent misrepresentation concern subsequent acting upon the fraud: see eg Abu Dhabi Commercial Bank Pjsc v Shetty & Ors: In the case of a misrepresentation or fraud, the locus damni is held to be the place where that misrepresentation is acted upon; or Avonwick Holdings: not so much for the (poor) A4(1) analysis in that judgment but rather the A4(3) displacement, and to some degree the potential for the lex contractus (of the contract said to have been missed) to play a role.

I feel there is more to be said about both the A4(1) and 4(3) application than succinctly touched upon in the judgment, in cases where the misrepresentation leads to missed opportunities, rather than to regretted action.

Geert.

EU Private International Law, 4th ed, 2024, 2.443.

Ia applicable law in a claim of fraudulent misrepresentation
Article 4 Rome II

Vegesentials Ltd & Anor v Shanghai Commercial & Savings Bank Ltd [2024] EWHC 7 (Ch)https://t.co/VNEe3qGd95

— Geert Van Calster (@GAVClaw) January 8, 2024

My thoughts on the Court of Appeal’s finding in Zubaydah v FCO are here. I am pleased to have played a role for claimant’s lawyers, pro bono, in the proceedings before the UK Supreme Court, which held today in Zubaydah (Respondent) v Foreign, Commonwealth and Development Office and others (Appellants).

The issue in the appeal is whether the law applicable under sections 11 and 12 of the Private International Law (Miscellaneous Provisions) Act 1995 (“PILA”) to torts alleged to have been committed by two of the UK’s security agencies  is the law of England and Wales or the law of each of the six countries in which the claimant alleges he was unlawfully detained and tortured by the CIA. The High Court had held for the latter, which follows from the generally applicable lex loci damni rule. The Court of Appeal reversed, holding for the former on the basis of the small window to displace the general rule and this finding has now been confirmed by the Supreme Court.

The relevant PILA sections read as follows

“11. Choice of applicable law: the general rule.

(1) The general rule is that the applicable law is the law of the country in which the events constituting the tort or delict in question occur.

(2) Where elements of those events occur in different countries, the applicable law under the general rule is to be taken as being—

(a) for a cause of action in respect of personal injury caused to an individual or death resulting from personal injury, the law of the country where the individual was when he sustained the injury;

(b) for a cause of action in respect of damage to property, the law of the country where the property was when it was damaged; and

(c) in any other case, the law of the country in which the most significant element or elements of those events occurred.

(3) In this section “personal injury” includes disease or any impairment of physical or mental condition.”

“12. Choice of applicable law: displacement of general rule.

(1) If it appears, in all the circumstances, from a comparison of—

(a) the significance of the factors which connect a tort or delict with the country whose law would be the applicable law under the general rule; and

(b) the significance of any factors connecting the tort or delict with another country,

that it is substantially more appropriate for the applicable law for determining the issues arising in the case, or any of those issues, to be the law of the other country, the general rule is displaced and the applicable law for determining those issues or that issue (as the case may be) is the law of that other country.

(2) The factors that may be taken into account as connecting a tort or delict with a country for the purposes of this section include, in particular, factors relating to the parties, to any of the events which constitute the tort or delict in question or to any of the circumstances or consequences of those events.”

Two background documents are of particular relevance: ‘LCR’ = the Law Commission Report December 1990; and ‘JCP’ =  the Joint Consultation Paper 1984. The LCR [2.6] ff had justified its proposal for amendment to the English prior rule of double actionability for torts, by suggesting it does away with 3 main challenges of the double actionability rule:

• • • its anomalous character (it was said to give too much weight to English and Scots law as lex fori, contrary to the UK’s general happiness to apply foreign law);
    • its injustice in terms of giving an advantage to the wrongdoer (the victim’s burden of proof under the double actionability rule is particularly heavy); and
    • the uncertainty and speculative implication NOT in the rule but in a relevant exception, Boys v Chaplin [1971] AC 356.

[54] The approach to be adopted when considering whether the general rule is displaced pursuant to section 12 was considered by the Court of Appeal in VTB Capital plc v Nutritek International Corpn [2012] EWCA Civ 808 and in current case Lord Lloyd-Jones and Lord Stephens for the majority [54] ff summarise the four principles that follow from that case.

Note that [62] the Supreme Court criticises parties’ agreement that the determination of the defendants’ appeal did not require any consideration of the potential application of section 14 PILA (the ordre public correction):

We consider that there is an artificiality about deciding which law governs the liability in tort of the UK Services without considering public policy considerations under section 14 of the PILA. Although, we express no view on the matter, there is scope for suggesting, for example, that on the presumed facts of this case, it is a constitutional imperative that the applicable law in relation to the tort of misfeasance in public office in relation to the acts and omissions of the UK Services should be the law of England and Wales. However, we have been presented with a preliminary issue on sections 11 and 12 of the PILA and must seek to address it solely on that basis. We conclude this part of the judgment by observing that, depending on the outcome of the appeal, it may be necessary for a court to consider the impact, if any, of section 14 of the PILA at a later stage of these proceedings.

[73] the Court of Appel was held to have been correct in rebuking the first instance judge for focusing too much on the role of the CIA

The required focus is on the torts committed by the defendants or those for whom they are responsible. Instead, the Court of Appeal considered, the judge had focused on the overall conduct of the CIA. In our view, there is force in this criticism.

[74] ff discusses the treatment by the first instance judge of factors relevant in displacing the locus damni general rule: (1) First, the claimant had no control over his location and in all probability no knowledge of it. (2) So far as the UK Services were concerned, the claimant’s location from time to time was irrelevant and may well have been unknown. (3) The claimant had been rendered to the Six Countries precisely because this would enable him to be detained and tortured outside the laws and legal systems of those countries.  The Supreme Court agrees with the Court of Appeal’s finding that the judge had wrongly applied the relevance of these factors. Those finding fault with the Supreme Court’s approach may find this too much of a factual analysis rather than a point of law I imagine (as indeed Lord Sales does to some degree in his dissent).

[80] the Court of Appeal itself is then held to have fallen short of the proper exercise in applying s12:

It seems to us, however, that the Court of Appeal has also fallen into error in relation to the required focus under section 12 of the PILA on the torts committed by the defendants. Section 11(1) provides that the general rule is concerned with “the country in which the events constituting the tort … in question occur”. Similarly, section 12 refers to “the significance of the factors which connect a tort … with the country whose law would be the applicable law under the general rule” and with “another country”. In our view, the Court of Appeal, in approaching the section 12 exercise, interpreted the scope of the relevant torts too narrowly in that it equated the torts in question with the conduct of the UK Services which is alleged to be wrongful.

Rather than conflating the conduct of the UK Services with the torts,

The Court of Appeal should have focused on the torts alleged against the UK Services for which the defendants are said to be vicariously responsible

leading [82] ff the SC itself completing the s12 exercise.

The significance of the connection between the torts and each of the Six Countries arising from the claimant’s detention there and the infliction of his injuries there is held to be massively reduced by the factors discussed in [92] ff:

reasonable expectations and involuntary presence [93];

the security services’ indifference as to where the claimant was held and them never expecting or intending to have their conduct judged by reference to the laws of the places where he was held [94];

the insulated environments within which claimant was held and where he could be denied any access to the local law (alleged to apply in Moziak fashion by the defendants) or recourse to local courts [95], countries which in effect were insulated form the courts [97];

the sheer number of black sites in which the claimant was held diminishes the significance of the law of any one of them, and moreover it would be impossible for him to establish where he sustained which injury [96];

[98] ff conversely, the strong factors connecting the torts to the UK:

the alleged vicarious liability of the UK Government [99];

the relevant acts and omissions of the UK Services in requesting information from the CIA were more likely than not to have taken place in England, and were likely committed by the UK Services for the perceived benefit of the United Kingdom [100]; and

the actions were taken by UK executive agencies acting in their official capacity in the purported exercise of powers conferred under the law of England and Wales [101].

Lord Sales dissented, pointing also to the Court of Appeal and the High Court simply disagreeing on the weight to be given to the various factors, and in his own analysis of those factors he reaches the conclusion that the Mozaik of the 6 laws should apply.

It is rare for an applicable law issue in tort to be discussed to such extent by the Supreme Court and the judgment carries great relevance.

Geert.

Illegal rendition, applicable law, displacement of the ordinary lex loci damni rule
More soon (and background here https://t.co/dYdGJILOJ2)
Pleased to have played a small (pro bono) role in the appeal with the SC. https://t.co/szromMgIQp

— Geert Van Calster (@GAVClaw) December 20, 2023

Ugljesa Grusic has excellent and prompt analysis of Hugh Hall Campbell KC against James Finlay (Kenya) Ltd [2023] ScotCS  CSIH_39 here. I have background to the issues ia here and I reported on the now successfully appealed first instance judgment [2023] CSOH 45 here.

Dr Grusic first of all highlights the lack of engagement by the Court (as indeed at first instance level, too) with the impact of the employment section of the Civil Jurisdiction and Judgments Act 1982 on both the question of availability at all of choice of court in employment contracts to displace domicile jurisdiction, and of the overall availability of forum non conveniens in the same circumstances.

Next, unlike the first instance judge, the Inner House held that relevant Kenyan labour law protection (including compensation) does apply to the contracts at issue, [67] that the applicants have a working and affordable regime at their disposal in Kenya to try and obtain such compensation and [69] for the reason stayed the case at least until the Kenyan scheme will play its role (or not). [70] the court oddly adds that its stay is not one of forum non conveniens, which it says it is currently leaving undecided.

One assumes PTA with the UKSC will be sought for the points identified by Ugljesa are very much unresolved points of law.

Geert.

In Lott & Ors v PSA Automobiles SA & Ors [2023] EWHC 2568 (KB), Fontaine SM deals with an evidential /discovery issue in one of the dieselgate cases, where the car manufacturers intend to contest the extent of the binding nature of CJEU judgments finding relevant software to constitute cheating devices within the meaning of European standardisation laws.

[22] The French Defendants are found to have submitted to the jurisdiction of the E&W courts at least in relation to the Claimants’ application for further information and specific disclosure. [26] ff discusses the relevant French ‘blocking statute’ which prohibits French nationals and certain others from providing documents and information of an economic, commercial, industrial, financial or technical nature to foreign public authorities or for the purposes of establishing evidence for foreign judicial or administrative proceedings. Relevant authority on the effect of the French statute is listed [28], with [29] emphasis on

Orders for production and inspection are matters of procedural law, governed by the lex fori, here English law. Local rules apply; foreign law cannot be permitted to override this Court’s ability to conduct proceedings here in accordance with English procedures and law.

and [30] a proposal by the French defendants, asking that the application be provided only pursuant to a letter of request under the Hague Taking of Evidence Convention (as cover for the French statute, refused however [81]:

i) I have no real means of assessing how real is the risk of prosecution if the documents so ordered were provided directly by the French Defendants to the Claimants, even if protected by a confidentiality order or confidentiality ring. That might have been provided by expert evidence of French law, but I have given reasons why that was not permitted at this stage. However, I do take into account both the letter from SISSE which explains the French authority’s position, and the interests of international comity, which support the use of the Hague Convention route.

ii) The French Defendants were well aware of the difficulties caused by the FBS at the hearing on 9 February 2022, and assured the court that once their legal representatives and an engineer had been able to take instructions in France from their clients they would seek the relevant documents via the Hague Convention themselves, but that has not been done, and no explanation provided. If it had been done by the French Defendants solicitors within a reasonable time after that hearing the relevant information and documents would have been available some time ago. It was also not explained why the FBS would prohibit the French Defendants from providing information and documents to their own clients other than through the Hague Convention. It is not a reasonable approach for the French Defendants to come back to court some 17 months after that hearing and now insist that the Claimants make a Hague Convention request, without any explanation for the change of stance, and the substantial delay.

iii) The prejudice to the Claimants that will inevitably be caused to provision of information and documents by reason of that delay if these have to be provided via the Hague Convention, that is likely to impact their ability to provide a fully pleaded draft GPOC and/or GLO issues which in turn may cause delay to the hearing of the GLO application.

iv) I take account of the fact that this is group litigation where there is, as in Cavallari, “an asymmetry of information” between the parties, and the relevant technical information is held by the Defendants, primarily by the French Defendants.

An interesting judgment on evidential forum shopping.

Geert.

#Dieselgate class action, discovery
Impact of French 'blocking' statute (preventing FR defendants from handing over documents) and Hague Evidence Convention viz English lex fori as procedural law

Lott & Ors v PSA Automobiles SA & Ors [2023] EWHC 2568 (KB)https://t.co/FQken9cGG1

— Geert Van Calster (@GAVClaw) October 17, 2023

In Clifford Chance LLP v Societe Generale SA [2023] EWHC 2682 (Comm), Henshaw J has held on a jurisdiction challenge in a claim for professional negligence claim brought by SocGen against Clifford Chance alleging that they negligently handled a dispute between SocGen and Goldas Kuyumculuk Sanayi Ithalat Ihracat AS and other companies in the same group.

Clifford Chance’s claim is one for negative declaration of contractual liability: it seeks declarations that they are not liable to SocGen in professional negligence, and that CC Europe was not retained by SocGen at all. SocGen has subsequently commenced proceedings against CC LLP and CC Europe in the High Court of Paris, seeking damages in excess of €140 million. The first hearing in that court is due to take place in March 2024.

SocGen challenged the jurisdiction of the E&W courts with reference to its framework agreement with Clifford Chance, which includes French choice of court and French choice of law. As was to be expected, Clifford Chance argue that that agreement does not apply to the work at issue (given the interference of various Clifford Chance legal entities, it was inevitable that issues of privity would arise; see also the discussion [103] ff on agency). The judge, applying French principes of contractual interpretation, holds [90] ff that on the facts, the framework agreement does not apply to the retainer at issue. As a result of the Rome Convention (as discussed at [67], Rome I not applying ratione temporis), English law applies to that retainer as a result of E&W being the habitual residence of the service provider.

[112] ff deal succinctly with (and reject)  the subsidiary issue of forum non conveniens: [120] it is not shown

that the courts of France are clearly and distinctly the more appropriate forum. To the contrary, this court is that forum.

I wonder whether Clifford Chance in the French proceedings will now be arguing Article 33-34 lis pendens, seeing as the English proceedings were instituted first, however that would depend on the exact parties to the proceedings and the basis for jurisdiction against them: if the French courts find there is a legally binding choice of court in the claim, Articles 33-34 cannot apply and we will find ourselves in an interesting post-Brexit competition between courts.

Geert.

Judgment now here. Jurisdiction challenge fails, choice of court held not to apply to specific retainer. Interestingly, will CC argue A33, 34 in FR given the alleged invalidity of choice of court?
Clifford Chance v Societe Generale [2023] EWHC 2682 (Comm)https://t.co/YCRVwiE3hL https://t.co/v58xuSXo7C

— Geert Van Calster (@GAVClaw) October 29, 2023

Below in simple format and here in easier lay-out, is the program for our conference on the Tangier Statute Centenary Conference, 18 December next in Tanger.

We are very excited.

The Tangier Statute Centenary Conference, 18th December 2023

Colloque international à l’occasion du centenaire du Statut de Tanger, 18 décembre 2018

Programme

Local time/heure locale : UTC+1 (= Central European Time/Heure normale d’Europe Centrale)

Morning/Matinée: Faculté des Sciences Juridiques, Économiques et Sociales de Tanger

09:00-09:30:         Registration/Inscriptions

09:30-10:30:         Welcome speeches/Discours de bienvenue

• Welcoming words by the organizers/Mots de bienvenue des organisateurs
• Address by Mr Mounir Lymmouri, President of the Tangier City Council/Allocution de M. Mounir Lymmouri, Président du Conseil de la Ville de Tanger
• Address by a Representative of the Presidence of Abdelmalek Essaâdi University/Allocution d’un.e représentant.e de la présidence de l’Université Abdelmalek Essaâdi
• Address by Prof. Toufik Essaid, Dean of the Tangier Faculty of Legal, Economic, and Social Sciences/Allocution de M. le Professeur Toufik Essaid, Doyen de la Faculté des sciences juridiques, économiques et sociales de Tanger.

10:30-10:45: Keynote speech by Prof. Hamid Aboulas, Vice-Dean of the Tangier Faculty of Legal, Economic, and Social Sciences/Discours d’ouverture de M. le Professeur Hamid Aboulas, Vice-Doyen de la Faculté des sciences juridiques, économiques et sociales de Tanger

• Quelques aspects de la transformation de la ville de Tanger de 1923 à après l’indépendance

10:45-11:00:         Coffee break/Pause café

11:00-12:00:         Panel 1: Between Internationalism and Colonialism: Contextualizing the Tangier Statute/Entre internationalisme et colonialisme : le Statut de Tanger dans son contexte (Chair/Présidence: Fouzi Rherrousse)

• Ambivalences de la souveraineté, impérialisme et droit international : réflexion à partir du statut spécial de la Ville de Tanger (1923-1956) (Oumar Kourouma)
• La souveraineté marocaine à l’épreuve du statut international de Tanger de 1923 (Antoine Perrier)
• The International Situation of the City of Tangier During the Protectorate (Adil Rajaa)

12:00-13:00:         Panel 2: The International City as a Product and a Precedent: Connecting Tangier to Other International Spaces/La Ville internationale comme produit et comme précédent : les liens entre Tanger et d’autres espaces internationaux (Chair/Présidence: Michel Erpelding)

• The theory and practice of international administration: Comparison between Tangier and territories administered by the League of Nations (Philip Burton)
• The Statute of Tangier as the inspiration for the Draft Statute for the City of Jerusalem (Fulvio Bontempo and Alessia Tortolini)
• The International Zone of Tangier, 1924-1956: the European Union’s Accidental Incubator? (Willem Theus)

13:00-15:00:       Lunch break/Pause déjeuner

Afternoon/après-midi : Palace of Italian Institutions/Palais des Institutions Italiennes

15:00-15:20:       Welcome speeches/Discours de bienvenue

• Adress by Mr Marco Silvi, Consul General of Italy in Casablanca/Allocution par M. Marco Silvi, Consul général d’Italie à Casablanca
• Address by Mr Riccardo Finozzi, representative of the association Dimore Storiche del Mediterraneo/Allocution par M. Riccardo Finozzi, représentant de l’association Dimore Storiche del Mediterraneo

15:20-16:20:       Panel 3: Implementing the Tangier Statute: The Administration of the International City in Practice/La mise en œuvre du Statut de Tanger : Enjeux pratiques de l’administration de la Ville Internationale (Chair/Présidence: Rachid El Moussaoui)

• Tanger : la dimension méditerranéenne de l’économie marocaine (Sersar El Mahdi)
• Structuration et évolution de l’enseignement dans Ville de Tanger (Faiza El Alaoui)
• Les enjeux politiques et juridiques de la planification urbaine et architecturale de la zone internationale de Tanger (1925-1956) (Romain Micalef)

16:20-17:20:       Panel 4: Administering Justice in the International City: The Mixed Court of Tangier/Rendre la justice dans la Ville internationale : le Tribunal mixte de Tanger (Chair/Présidence : Geert van Calster)

• Capitalism as Juridical Creed: The Uneasy Relationship of the Tangier Mixed Court with Public International Law (Dimitrios A. Kourtis) (online/en ligne)
• Divergence et convergence juridiques: analyse de deux décisions des Tribunaux mixtes de Tanger et du Caire (Aya Bejermi and Adam Belkadi) (online/en ligne)
• Jewish Law in the Mixed Court of Tangier, 1925-1956 (Jessica M. Marglin)

17:20-17:40:       Coffee break/Pause café

17:40-18:20: Panel 5: Lawyering in the International City: Selected Portraits of ‘Mixed Lawyers’/Pratiquer le droit dans la Ville internationale : Portraits choisis de « juristes mixtes » (Chair/Présidence : Francesco Tamburini)

• Le fabuleux destin de deux bâtonniers tangérois : Alphonse Ménard et Daniel Saurin (Fouzi Rherrousse)
• Incunable d’Europe : Nicola Catalano et la Zone internationale de Tanger (Marco Fioravanti)

18:20-19:20:       Panel 6: Flooding the Airwaves from the International City: Tangier as a Broadcasting Platform/Remplir les ondes à partir de la Ville internationale : Tanger comme plate-forme de radiodiffusion (Chair/Présidence : Willem Theus)

• A Case of Strategic Litigation: the 1938-1939 ‘Radio-Tanger’ Case and the Liberalization of Tangier’s Airwaves (Michel Erpelding)
• The Italian Radiotelegraphic Service in the International Zone, 1931-1956: Shattered Dreams for a Mediterranean Power (Francesco Tamburini)
• Radio Frontier: Tangier as the Mediterranean’s Radio Hub, 1939-1963 (Arthur Asseraf) (online/en ligne)

19:20-19:30:       Closing remarks/Conclusions

In Case C-497/22 EM v Roompot Service BV, the CJEU has confirmed its strict reading of Article 24 Brussels Ia’s ‘tenancies of immovable properties’ provision, confirming Richard de la Tour AG’s convincing Opinion [ia his reasoning (35) ff].

Proceedings are between EM, domiciled in Germany, and Roompot Service BV, which has its registered office in the Netherlands and operates a holiday park there, comprising tourist accommodation.

[15] Per CJEU Rösler (241/83), Hacker (C‑280/90) and Dansommer (C‑8/98), contracts involving the letting of holiday accommodation abroad generally fall within the exclusive jurisdiction of the courts of the Member State in which the immovable property concerned is situated. An exception can be made to that principle only when the contract concerned is a contract of a complex nature, that is to say, a contract providing for the performance of a range of services in consideration for the lump sum paid by the customer.

[16] the additional services in the present case were the offer, on the internet page of the defendant in the main proceedings, of a variety of bungalows with different facilities, the booking of the bungalow chosen for the customer, reception of the customer at the destination and the handing over of the keys, the provision of bed linen and the carrying out of cleaning at the end of the stay – the question therefore is whether this qualifies the contract as being one of a ‘complex nature’, or [17] whether these are merely minor ancillary services, which arguably do not cancel out A24.

After recalling the restricted nature of A24 in general, the Court [27] repeats what it said most recently in Obala re the ratio legis for A24(1) exclusive jurisdiction:

as regards tenancies of immovable property in particular, it is clear from that case-law that that exclusive jurisdiction is justified by the complexity of the relationship of landlord and tenant, which comprises a series of rights and obligations in addition to that relating to rent. That relationship is governed by special legislative provisions, some of a mandatory nature, of the State in which the immovable property which is the subject of the lease is situated, for example, provisions determining who is responsible for maintaining the property and paying land taxes, provisions governing the duties of the occupier of the property as against the neighbours, and provisions controlling or restricting the landlord’s right to retake possession of the property on expiry of the lease

[29]  core consideration is whether the subject matter of that dispute relates directly to the rights and obligations arising from that tenancy (reference to CJEU Sharewood by analogy).

Two main lines of enquiry have to be pursued:

Firstly, the nature of the services at issue: 

[34] the categorisation of a contract relating to the performance of a range of services, in addition to the short-term letting of holiday accommodation, requires (reference to Richard de la Tour AG (28)) an assessment of the contractual relationship in question as a whole and in its context. [39] Where additional services are offered in return for a lump sum on the same terms as those offered to customers of a hotel complex, A24(1) is not engaged. By contrast, any additional service that is ancillary in nature to such a letting would not necessarily modify the categorisation of the contract concerned to that of tenancy, but would have to be examined in the context of that contract.

[40] neither cleaning at the end of the stay nor providing bed linen are sufficiently weighty services liable to distinguish, on their own, a tenancy from a complex holiday organisation contract. Although it is true that cleaning usually is the responsibility of the tenant at the end of a lease, it cannot be ruled out that, due to the particular nature of seasonal lettings of holiday homes, the lessor may take on that task, without that modifying the nature of the contract as a tenancy of immovable property. The same holds true for providing bed linen and handing over keys.

[41] On the other hand, information and advice, booking and reception services forming part of the offer proposed by a tourism professional, together with the letting, in return for a lump sum, constitute services which are generally provided as part of a complex holiday organisation contract.

Further, the capacity in which the travel organiser concerned intervenes in the contractual relationship at issue in the main proceedings.

[43] Per CJEU Hacker etc, the fact that the travel organiser is not the owner of the accommodation, but is subrogated in the owner’s rights, is not such on its own as to modify a possible categorisation of the contract concerned as a tenancy of immovable property. On the other hand if that travel organiser intervenes as a tourism professional and proposes, in the context of an organised stay, additional services in consideration of which the offer is accepted, that fact may be an indication of the complex nature of that contract.

In conclusion [44], while the national court will have to confirm, the circumstances suggest A24(1) is not engaged.

The judgment is a useful reminder of the A24(1) lines of enquiry.

Geert.

EU private international law, 4th ed. 2024, 2.182 ff.

CJEU confirms restrictive application of A24(1) Brussels Ia 'tenancy' agreements, in case concerning rental of bungalow park accommodation with additional (not merely 'ancillary') services

C‑497/22 EM v Roompot Service BVhttps://t.co/0lv8QdJAVI

— Geert Van Calster (@GAVClaw) November 16, 2023

A note on RM RENT A CAR v KFZ BRÜNING ECLI:NL:RBNHO:2023:7489 in which the Noord-Holland court of first instance much more readily accepts the escalation of a purely domestic (German) contract to the ‘international’ plain. Clearly in contrast with de la Tour AG in Inkreal.

RM Rent A car argues that the close links it has with The Netherlands, as a result of a number of its directors are domiciled in The Netherlands, as is its mother holding Network4Cars Trading B.V., explain Dutch choice of court and the Dutch governing law clause. It also refers to the Report Jenard, a contrario I assume (for that detail is not given) p.37 in fine (where the report argues that (now) A25 does not apply between to parties domiciled in the same State and designating a court of that State).

KFZ Brüning by contrast argue that the sale between two German corporations, of German registered vehicles, with delivery in Germany, lacks the international element required to trigger Brussels Ia.

The Court goes about the issue in a roundabout way. It says nothing about the ‘international character’ (arguably implicitly acknowledging it), instead merely finding 2.8 that there is no proof that in signing the purchase order, Brüning also consented to the GTCS.

As noted, an interesting judgment in light of the AG’s Opinion in Inkreal.

First instance Noord-Holland, A25 Brussels Ia choice of court
Lack of reference to general terms & conditions in Purchase Order = ineffectiveness of choice of court in those GTCs
Implicitly acknowledges 'international' element of prima facie German casehttps://t.co/v8TE2B9SpY

— Geert Van Calster (@GAVClaw) August 29, 2023

Still mopping up that blog queue….In Case C-393/22 EXTÉRIA s.r.o. v Spravime, s.r.o.  the CJEU has held that a contract to enter into a future services contract is not itself a services contract within the meaning of Article 7(1) Brussels Ia., rather, a contract whose forum contractus needs to be determined using CJEU 12/76 Tessili v Dunlop‘s ‘looking over the fence’ method.

The applicant in the main proceedings, which provides consultancy services in the field of occupational safety and health, and the defendant in the main proceedings concluded, on 28 June 2018, a contract to enter into a future contract relating to the future conclusion of a franchise agreement. The contract contained, in addition to the obligation to conclude that contract in the future, certain contractual terms and conditions and an undertaking on the part of the defendant in the main proceedings to pay an advance of EUR 20 400, exclusive of value added tax, and, in the event of failure to comply with that obligation, a contractual penalty equal to the amount of that advance.

The contract to enter into a future contract provided for the application of Czech law, without any agreement on jurisdiction having been concluded.

Alleging that the defendant in the main proceedings had failed to fulfil its obligation to pay the advance in question, the applicant in the main proceedings withdrew from the contract to enter into a future contract and claimed payment of the contractual penalty.

(34) The concept of ‘services’, within the meaning of the second indent of Article 7(1)(b), implies, at the very least, that the party providing them 1. carries out a specific activity 2. in return for remuneration (see ia CJEU Kareda).

Re 1, (35) the existence of an activity requires the performance of positive acts, to the exclusion of mere abstentions (see ia CJEU Corman-Collins and Granarolo). re 2, remuneration granted in return for an activity, (36) this cannot be understood in the strict sense of the payment of a sum of money, since the receipt of a package of benefits representing an economic value may be regarded as constituting remuneration (same case-law).

(37) a contract to enter into a future contract, the objective of which was to conclude a future franchise agreement and preserve the confidentiality of the information contained in that contract to enter into a future contract, is not an ‘activity’. Moreover, in the absence of any actual activity carried out by the co-contractor, the payment of the contractual penalty cannot be characterised as remuneration.

(39) that the obligation to pay the contractual penalty is closely linked to the franchise agreement which was to be concluded and under which it would be possible to determine the place where the services concerned should have been provided, does not rescue the issue. This is said (40) to follow from the need to interpret exceptions to A4 restrictively, and from the requirements of predictability.

A useful judgment.

Geert.

EU private international law, 3rd ed. 2021, para 2.412. 4th ed forthcoming January 2024.

New #CJEU judgment Jurisdiction Regulation Brussels Ia
Contract to enter into a future services contract is not itself a services contract; jurisdiction to be determined following 'looking over the fence' method, A7(1)(a)

C-393/22 Exteria https://t.co/yZNRz0f9ap

— Geert Van Calster (@GAVClaw) September 14, 2023

Butcher J as I noted in my Tweet on the judgment at the time, has largely granted immediate leave to appeal his ruling in London Steam-Ship Owners’ MIA v [Spain] (Re Prestige) [2023] EWHC 2473 (Comm), in which he entertains yet further litigation forming part of the protracted procedures arising from the sinking of the M/T Prestige in 2002. [Of note is that he did not allow appeal on the issue of the effect of the CJEU Judgment in Prestige, on the jurisdiction of Sir Peter Gross as arbitrator in a second set of arbitration proceedings; I imagine permission to appeal that point has been sought separately with the Court of Appeal itself).

I have reported repeatedly on the issues and the trigger for most of the discussions in the judgment is the CJEU Grand Chamber Judgment which I called a parallel universe here. I stand by my criticism in that post, not because I suggest the CJEU is some lawless band of brigands upending the rule of law. Clearly it is not. Rather, I find the CJEU’s lack of consistent treatment of arbitration whether commercial or investment, troubling. I also fail to understand its backdoor disciplining of arbitration procedures (via the res judicata and privity issues which I discuss in my previous posts) if these procedures are principally excluded from the scope of Brussels Ia.

The Prestige saga is an indictment first of all of the failure of environmental law (one of my other academic and practice hats) properly to address one of the most outrageous outcomes of the fossiel fuel area, which is to pollute twice over nature and human health alike in causing environmental catastrophe by spilling crude oil. As for international litigation, it is an indictment of the failure of international and European law alike to develop a systematic approach to the outcomes of litigation in ordinary, and arbitration.

Now to the case at hand. My discussion of same is greatly helped by professor Giles Cuniberti’s post over at EAPIL, and the comments on same, and I would suggest readers refer to Giles’ summary of the case and the issues.

Core to the appeal will be to what degree the English courts (pro memoria: the proceedings are subject to Brussels Ia and were introduced pre Brexit) are bound by all of the findings in the CJEU judgment, particularly those with an impact on what the arbitrator should have checked (the CJEU ordinarily practices judicial economy; in the case at hand some argue it answered questions that were not put to it). This provoked an interesting debate on the extent of the authority of those parts of the CJEU judgment which in a precedent system would likely be called obiter. The preliminary reference procedure however is not like a common law precedent or authority regime. What exactly it is will undoubtedly be discussed upon appeal and as professor Dickinson replies in comment to Giles’ post, there may be a way for the European Commission to use the Withdrawal Agreement’s dispute settlement provisions to clarify how CJEU authority is supposed to work.

Geert.

Unsuccessful appeal of #arbitration award following (and mostly ignoring) #CJEU Prestige judgment (see https://t.co/2ysTMGyzwT)
Permission to appeal largely granted instantly

London Steam-Ship Owners' MIA v [Spain] (Re Prestige) [2023] EWHC 2473 (Comm)https://t.co/VSBL2uQ9ip

— Geert Van Calster (@GAVClaw) October 6, 2023

X v Y (yep, annoying and entirely without reason, an anonymous judgment) ECLI:NL:RBLIM:2023:4342 is an interesting illustration of Brussels Ia’s Article 7(1)(a’)s ‘looking over the fence’ aka the conflicts method for determining forum contractus.

The method implies that beyond the standard contractual categories for which Article 7(1)(b) locks in forum contractus as a European ius commune, the ‘place of performance of the obligation in question’ needs to be determined by provisionally identifying the lex contractus and then using that lex contractus to determine place of performance, leading to a conclusion whether the judge seized has jurisdiction or not. See CJEU 12/76 Tessili v Dunlop.

In the case at issue, the contract is a loan and the applicable law is determined with reference to CJEU Kareda. This is where the court veers off course (my first categorisation by Tweet of the judgment being an excellent example therefore needs to be corrected): In Kareda the CJEU held that the credit agreement at issue was to be considered an ‘agreement for the provision of services’ per A7(1)(b), locking in forum contractus “in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided”. In such case, no more looking over the fence is required, let alone consideration of Article 4(3) Rome I etc.

Geert.

Students claxon
First instance Limburg, excellent example of 'looking over the fence' aka the conflicts method per CJEU Tessili v Dunlop to determine forum contractus per A7(1)a BIa, A4(2) Rome I (no A4(3) manifest closer connection
ECLI:NL:RBLIM:2023:4342https://t.co/g6EdSsEs2c

— Geert Van Calster (@GAVClaw) October 20, 2023

The UK Supreme Court has dismissed the appeal in Skatteforvaltningen (the Danish Customs and Tax Administration) v Solo Capital Partners LLP & Ors [2023] UKSC 40, confirming the Court of Appeal’s finding that the claim against the majority of the defendants may go ahead.

I reviewed the first instance judgment here and the Court of Appeal’s here and I shall not repeat all the issues. Readers should note that the issues discussed are of wider relevance to current developments in both public and private international law (business and human rights litigation, climate change litigation etc.).

[21] Lord Lloyd-Jones summarises the Dicey rules at play (and also notes the editors of the 16th d and those before them pointing out the inroads that in recent years have been made into the principle) and [22] he makes a delightfully concise reference to somewhat different US views on the rationale for the issue.

[39] after reviewing the authorities, it is held that

The Danish tax system undoubtedly provided the context and the opportunity for the alleged fraud and the operation of the fraud can be understood only by an examination of that system. It may well be that at the trial of this action it will be necessary to address that in detail. However, as we have seen [that’s a reference to Dicey as summarised above, GAVC], there is no objection to the recognition of foreign tax laws in that way. Because the present proceedings do not involve an unsatisfied claim to pay taxes due in Denmark, they fall outside the scope of the revenue rule.

[41] applies fraus and nemo auditur in dismissing appellants’ attempt to present themselves as taxpayers

The appellants seek to circumvent this difficulty by nevertheless portraying the refund applicants as taxpayers. It is said that by making applications for withholding tax refund applications the applicants brought themselves within the Danish tax system and became Danish taxpayers. It is also said that the respondent by paying “refunds” accepted them into the Danish tax system. It is further said that in rescinding the “refunds” the respondent was acting in the capacity of a taxing authority. The appellants therefore maintain that, in all the circumstances, the recipients of “refunds” and the respondent were in the relationship of taxpayer and taxing authority. As the Court of Appeal pointed out (at para 136) this submission is misconceived. The applications for “refunds” were all based on the lie that the applicants had paid tax in the first place which, on the respondent’s pleaded case, they had not. This attempt to portray the applicants as taxpayers cannot bind the respondent as the victim of their fraud and the applicants cannot take advantage of their own wrongdoing in order to bring themselves within the revenue rule.

[44] ff discusses the impact of (commentary on) CJEU C-49/12 Sunico, which was also discussed by the  first instance judge in current case and by Szpunar AG and the CJEU in Movic.

[53] ff then discusses the sovereign authority rule, essentially considering whether the claim is a simple money claim like thirteen to the dozen, and with reference (via Dr Mann) to Grotius’ ‘actus qui a rege sed ut a quovis alio fiant’.

[58] again substance is distinguished from context

appellants are undoubtedly able to point to prior exercises of sovereign power by Denmark in creating its laws relating to the taxation of dividends and in operating the tax system. This, however, merely provides the context for the present claims. The substance of the claims, as we have seen, does not involve any act of a sovereign character, any exercise or enforcement of a sovereign right, or any vindication of sovereign power. On the contrary, the respondent is simply bringing restitutionary claims to recover monies of which it has been defrauded, a course open to any private citizen who had been similarly defrauded.

Unlike in first instance, neither Lugano nor Brussels Ia feature substantially at the Court of Appeal or Supreme Court. That is a pity for how the Dicey rules and similar ones in the current EU Member States relate to Lugano and Brussels, is not clear-cut.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.28 ff. (4th edition forthcoming January 2024).

For background see https://t.co/B5DeTbT5g4
More on the blog soon.

via @bwmlindsay https://t.co/3tVcUeFyL7

— Geert Van Calster (@GAVClaw) November 8, 2023

In Limbu & Ors v Dyson Technology Ltd & Ors [2023] EWHC 2592 (KB) a jurisdictional challenge on forum non conveniens grounds in allegations of forced labour at Dyson’s Malaysian Supplier, was successful. The judgment shows the impact of neither Brussels Ia (with a forum non conveniens ultra light regime) or the Lugano Convention (no forum non conveniens at all) applying.

The case is said [18] to raise a number of novel questions: whether the unjust benefit in a claim for unjust enrichment has to flow directly from the claimant to the defendant; and whether a party can be liable in negligence for the treatment by a third party — a supplier — of that third party’s employees. I do not think nota bene that the latter is correct: IMHO undoubtedly it can (for similarish considerations, albeit at strike-out level, see the Court of Appeal in Begum v Maran). The question is under what conditions.

[16] the judgment lists the concessions made by the defendants:

(i) D1 and D2 will submit to the jurisdiction of the Malaysian courts if they are sued there;

(ii) The Dyson Defendants will not seek security for costs or an adverse costs order against the Claimants if and to the extent such costs would not be recoverable under the Qualified One Way Cost Shifting regime in England;

(iii) The Dyson Defendants will pay the reasonable costs necessary to enable the Claimants to give evidence in Malaysian proceedings including (if necessary) affidavit affirmation fees and other costs necessary for the Claimants to give remote evidence including travel and accommodation costs, costs associated with the provision/set-up of suitable videoconferencing technology and other costs associated with the logistics of giving evidence remotely;

(iv) The Dyson Defendants will not oppose an application by the Claimants for remote attendance at a hearing/the trial in Malaysian proceedings;

(v) The Dyson Defendants will pay for the Claimants’ share of the following disbursements to the extent reasonably incurred and necessary: (a) Court interpretation fees, (b) Transcription fees, and (c) Joint expert evidence; and

(vi) The Dyson Defendants will not seek to challenge the lawfulness of any success fee arrangement entered into between the Claimants and their Malaysian lawyers.

A further undertaking was given in the course of the hearing before me: that the Dyson Defendants would not oppose an application for a split trial.

Sheldon DJ, with reference to Spiliada, sets out the jurisdictional test as follows [28-29]

With respect to “service in” cases [defendants domiciled in England, served there ‘of right’, GAVC], the burden of proof rests on the defendant to show that England is not the natural or appropriate forum and that there is another available forum which is clearly and distinctly more appropriate: Stage 1. If so, then the burden shifts to the claimant to show that there are special circumstances such that justice requires the trial to take place in England: Stage 2.

With respect to “service out” cases [defendant in respect of whom permission to serve abroad has been obtained, GAVC], the burden of proof is on the claimant at Stage 1 to show that England is the appropriate forum for the trial of the action, and that it is “the proper place in which to bring the claim” (CPR rule 6.37(3)). According to Lord Goff in Spiliada … the claimant must show that this is “clearly so”. If the claimant fails to establish that England is the proper forum, then Stage 2 will apply.

[30] the judge refers to Briggs J in Vedanta emphasising a preference for  a single forum, so as not to run the risk of irreconcilable judgments, should there be bifurcation. [37] He refers to Lord Briggs’ reference [87] in Vedanta that when the E&W-domiciled anchor defendant)s) have agreed to submit to a foreign jurisdiction, but the claimant has made a deliberate choice to sue in this forum and has thereby engendered the risk of irreconcilable judgments, it “would offend the common sense of all reasonable observers to think that the proper place for this litigation to be conducted was England”.

That element of Lord Briggs’ speech was subject to a requirement that substantial justice can be obtained abroad, and I pointed out here that I found that a massive get out off jail free card.

The judge in current case [43ff] emphasises the caution that should be applied when considering whether “substantial justice” can be obtained in the foreign jurisdiction.

First, it has been observed that there have been “judicial warnings of undoubted authority that the English court should not in this context conclude, other than in exceptional cases, that the absence of a means of funding litigation in the foreign jurisdiction, where such means are available in England, will lead to a real risk of the non-availability of substantial justice”: see Lord Briggs JSC in Vedanta at §93 referring to Connelly v RTZ Corpn plc (No 2) [1998] AC 854 (“Connelly“), 873 per Lord Goff, and Lubbe and Others v Cape Plc [2000] 1 WLR 1545 (“Lubbe“), 1555 per Lord Bingham.

Second, as Lord Goff noted in Connelly at p874D, “seeking to take advantage of financial assistance available here to obtain a Rolls Royce presentation of his case, as opposed to a more rudimentary presentation in the appropriate forum” would not be sufficient to justify such a refusal.

Third, and more generally, Lord Briggs warned in Vedanta at §11 that the “conclusion that a foreign jurisdiction would not provide substantial justice risks offending international comity. Such a finding requires cogent evidence, which may properly be subjected to anxious scrutiny”.

Authorities discussed were then Connelly, Lubbe, Pike, Unilever, and of course Vedanta. [52] Claimants argue that from an access to justice perspective, where the English Court was seized of jurisdiction, and knows that a fair trial is possible here, it should not lightly relinquish that jurisdiction – I think they are right. Parties’ respective arguments are summarised [54] ff and the judge held as follows [83] ff.

On “Spiliada Stage 1. The key factors are said to be

(i) Neither England nor Malaysia are practically convenient for all of the parties and witnesses. This factor in essence is said to be neutral. 

(ii) There is no completely common language for each of the witnesses, and so this factor is neutral.

(iii) Lex causae will be Malaysian, and this it is [97] said “is a factor which clearly favours hearing the case in Malaysia.” This section I find does not properly represent the way in which English courts can and do apply foreign law even when that law may not be clear to the foreign country itself. (And by the way was it common ground that the unjust enrichment claim would be subject to Malaysian law?)

(iv) The issues in this case took place in both England and Malaysia, [102] “however, the place where the harm occurred was in Malaysia (even if there are ongoing injuries for the Claimants who live outside of Malaysia), and the underlying alleged mistreatment took place in Malaysia. In my judgment, the centre of gravity of this case is plainly Malaysia, and this is a strong factor pointing towards Malaysia as being the proper forum.”

I disagree. As the judge said himself, this claim raises new issues on unjust enrichment in the supply chain and the English outsourcing corporation’s liability for mistreatment in the supply chain. The main focus of the trial will in reality be concerned with the E&W defendants and the Dyson Defendants’ policies, activities and arguments about their liability, as claimant’s counsel argues [104].

(v) The documents relevant to the case are held in both England and Malaysia. Wherever a trial is held, it seems most likely that the relevant documents will be obtainable. This factor is said slightly to favour Malaysia.

(vi) There is a real risk of a multiplicity of proceedings, and of irreconcilable judgments, wherever this claim is heard. However [121] particularly in light of related defamation proceedings, this element is said to favour E&W.

In conclusion on Spiliada Stage 1, [122]:

England is not the natural or appropriate forum and that Malaysia is another available forum which is clearly and distinctly more appropriate. The centre of gravity in this case is Malaysia: that is where the primary underlying treatment about which the Claimants complain took place, and is therefore the forum with “the most real and substantial connection” per Lord Goff in Spiliada at 478A. Malaysian law is also the governing law, and there are good policy reasons for letting Malaysian judges consider the novel points of law that are being raised in this claim within the context of their jurisprudence, rather than letting an English Court second guess what they might decide. In my judgment, these factors are not “dwarfed” by countervailing factors (per Lord Mance in VTB). The risk of irreconcilable judgments resulting from the defamation proceedings is an important factor, but it does not tilt the balance in favour of the English Court being the proper forum to determine the Claimants’ claim.

On to Stage 2: are there special circumstances such that justice requires the trial to take place in England? Neither the

difficulties in obtaining justice for migrant workers,

that the claims were complicated and needed suitably qualified advocates, the lawyers who argued labour and migrant cases did not have the expertise necessary to deal with this kind of case, and teaming up was unlikely

that it was not possible to case manage out complexity, and although personal injury cases could easily be divided into liability and quantum this was not possible for a claim of unjust enrichment, where establishing the extent of enrichment was part of the question of liability. A very substantial part of the case would involve unjust enrichment, and an estimate of 6 months for the trial had been given

that there would be very significant disbursements, not least on expert fees; and there would be a need for forensic accounting for the unjust enrichment claim;

that the claims would involve considerable financial risk for the Claimants’ legal representatives. They would have to commit thousands of hours of work, and be at risk that they would not recover them. Among other things, there would also be translation costs, hundreds of hours for reviewing documents, setting up hearings in Bangladesh. The fact that there was one witness who had said he would do the case was not sufficient.

that the prospect of a small band of practitioners being willing to take the risk was reduced when considering that they would be opposed by Defendants without any effective limitation on resources, represented by one of the largest law firms in the world, and where aggressive and heavy-handed approach is likely to be taken in the defence of the proceedings

that it was inappropriate to rely on the undertakings given by the Dyson Defendants. Paying for the disbursements does not touch the size of the financial risk. There was also a conflict of interest here, as the Claimants’ legal representatives would be negotiating with the Defendants’ legal representatives over the reasonableness of the costs incurred;

that there was no cogent evidence that the gaps could be filled by NGOs; and

that the Claimants contended that partial CFAs were unlawful; and even if they were lawful, the basic fee to be paid cannot be nominal, and the fee that would have to be paid by the Claimants would be set at a level which was unrealistic.

was held [171] to be one of the “exceptional cases” in which “the absence of a means of funding litigation in the foreign jurisdiction, where such means are available in England, will lead to a real risk of the non-availability of substantial justice”, per Lord Briggs JSC in Vedanta at §93.

I do find the evident reliance in many of these factors, on defendants’ commitments troubling, including from an Article 6 ECHR point of view; I do not think the judge is right on the applicable law being Malaysian law issue-   and that element was really the only one favouring Malaysia; and the main focus of the trial on the claim argued will in reality be concerned with the E&W defendants and the Dyson Defendants’ policies, activities and arguments about their liability.

Geert.

EU private international law, 4th ed. 2024, Chapter 7.

A case which unfortunately illustrates the impact of Brexit on #bizhumanrights claims
Successful jurisdictional challenge on forum non conveniens grounds in allegations of forced labour at @Dyson Malaysian Supplier
Limbu ea v [Dyson] [2023] EWHC 2592 (KB)https://t.co/JWVryJDEzc pic.twitter.com/a3nYD478nw

— Geert Van Calster (@GAVClaw) October 20, 2023