GAVC

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

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

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

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

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

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

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

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

Essential reading for IP litigators.

Geert.

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

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

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

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

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

Geert.

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

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

Geert.

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

Geert.

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

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

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

Geert.

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

Keith Goldberg over at LAw360 has the following great summary:

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

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

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

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

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

Geert.

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

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

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

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

Geert.

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

It does not happen all that often: this is a call for assistance. Following a student’s Q re ‘habitual residence’ in Rome I, I have now noticed something I had not before (I more often than not use the English version of the Regulation in my teaching and practice): Article 6(1) on ‘consumer contracts’ uses the term ‘habitual residence’ ‘gewone verblijfplaats’ (defined, or not, for natural persons, in Article 19) in the introductory para (which identifies applicable law). However in littera a it then uses ‘domicile’ ‘woonplaats’: a term which is not otherwise used in Rome I and which is not defined by it.

A quick scan of other language versions (French, English, German) reveals no such error: they all use the equivalent of ‘habitual residence’ in both instances. Now, evidently the error must be pushed aside given the other language versions however: is any reader of the blog aware of a corrigendum ever published? For if it has, I cannot locate it.

Geert.

(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.5.

Thank you very much indeed Sarah Venn and Emma Hynes both for flagging Garcia v BIH, Total Gabon and Sigma, [2017] EWHC 739 (Admlty), and (Emma) for providing me with copy (Bailii are not yet running it). This case is extremely suited to an oral exam of conflict of laws: in a written exam to many issues would have to be discussed. (Mine this term are mostly written. Hence I’ll run this piece early).

Claimant is a French national who worked as a professional diver offshore Gabon, West Africa, and suffered catastrophic brain injury which he blames on poor working practices on the second defendant’s site (Total Gabon), which is where he was working. He was employed by first defendant BIH, a UK based company, with choice of court and governing law made for English courts cq English law. First defendant is clearly domiciled in the UK and the Brussels I Regulation clearly applies to it. The third defendant Sigma, was contracted by Total Gabon. Claimant’s position is that he was deployed by BIH to work under the control of Sigma on the site which was, or should have been, supervised by Total Gabon. Total Gabon claim the contractual relationships between it and Sigma prevent a claim against the former.

BIH is small fish which may even have been struck off the company register. It is clear that plaintiff will not receive from BIH the amounts he needs for his constant medical care.

A default judgment was issued against BIG who did not engage with proceedings – at any rate jurisdiction against BIG per Owusu (with which readers of this blog are now ad nauseam familiar) could not be dismissed; . Total Gabon contest jurisdiction on the basis that England and Wales is not the appropriate forum.

This is not said in so many words in the Judgment however the presence of an anchor defendant per Article 4 Brussels I Recast, is of no relevance where the co-defendants are not domiciled in the EU. The regulation cannot be used to justify such anchor, residual conflicts rules take over.

Jervis Kay QC AR considers many cases which I have reported on before: VTB, Owusu, Lungowe, Spiliada. Lungowe in particular is considered by Mr Kay, including the issue of abuse of the use of anchor defendants and (at 23 in fine) the acknowledgment, implicitly (I wrote it explicitly in my review of the case) that of course EU precedent in this respect is pro inspiratio only.  Applying English residual conflicts rules, the judge then reviews whether there is a serious case (‘a real prospect of succeeding’) that could be made against Total Gabon, either one in tort or one in contractual liability. He found there is such real prospect, for both, but especially for tort.

However the case eventually (access to justice issues in Gabon were not flagged neither discussed) stumbles on the question whether the English courts would be the most appropriate forum: it is found they are not. Inspiration is found especially in Erste Group Bank [2015] EWCA Civ 379, a case in which forum non conveniens was applied even against an England-domiciled defendant because there had already been submission to Russian jurisdiction. In Garcia, the Court applies Erste per analogiam: the parallel, Mr Kay suggests, is that the case against the first defendant has effectively been wrapped up. The spectre of competing judgments therefore, Mr Kay holds, does not arise (at 36) and England is therefore not the appropriate forum. If the case is appealed I would imagine this altogether brief consideration of appropriateness and the parallel seen with Erste, I would imagine would be its Achiless heel.

(One of the considerations which defendant, per VTB, considers, is that as a rule of thumb, Gleichlauf is to be preferred (I have often found this a less attractive part of the Supreme Court’s ruling). Which is why defendant considers Rome II: if the English courts were to hear the case, they would have to apply Rome II even if their jurisdiction is a result of residual English conflicts rules).

An alternative action for Mr Garcia, one imagines, would have been (or perhaps it still is) to use Total France SA as anchor in France, to try and have the subsidiary’s actions assigned to it: a more classic CSR case.

Anyways, I think you will agree that one could have a good chinwag on this judgment at oral exam.

Geert.

This post could have also carried the title ‘Pro real seat theory. Bud is it?’ [Polbud, Probud, you see…], but with all the Brexit shenanigans going on on Twitter I am somewhat running dry of pun headlines.

I do indeed wonder the following: Kokott AG Opined in C-106/16 Polbud on 4 May, Gillis Lindemans pondered the Opinion (in Dutch) early May – I’have had the Opinion and one or two other things on my mind since.

As Ms Kokott summarises, the present request for a preliminary ruling concerns Polbud’s plan to change its legal form to that of a private limited liability company governed by Luxembourg law. Since Luxembourg, like all other Member States, requires as a condition of incorporation and continued existence under national law that companies have a statutory seat in national territory, such a plan necessarily entails the transfer of Polbud’s statutory seat. Indeed, this appears to have been achieved inasmuch as Consoil was entered in the Luxembourg Companies Register. It must now be clarified, in essence, whether the freedom of establishment precludes that arrangement. What sets the situation in this case apart is the fact that, according to the information contained in the request for a preliminary ruling, the cross-border conversion is not accompanied by a change to the centre of the company’s commercial activities. The referring court asks whether, in that context, the freedom of establishment is applicable (third question), whether that freedom has been restricted (first question) and, if so, whether that restriction is justifiable (second question).

The AG takes us through relevant precedent (readers of the blog will have seen my reviews at the time of judgment): one is best left to simply read her Opinion.  Ms Kokott concludes that the freedom of establishment provided for in Articles 49 and 54 TFEU only applies to an operation whereby a company incorporated under the law of one Member State transfers its statutory seat to another Member State with the aim of converting itself into a company governed by the law of the latter Member State, in so far as that company actually establishes itself in the other Member State, or intends to do so, for the purpose of pursuing genuine economic activity there.

In other words she most  definitely proposes a test along the lines suggested by Darmon AG in Daily Mail, but rejected by La Pergola AG in Centros. So far, so good: AG’s often propose a change of tack, most famously Poiares Maduro in Cartesio. Except, Ms Kokott suggests the Opinion is a simple confirmation of the CJEU’s case-law on the issue: no change of tack. Simply confirmation ex multi. That now does leave me puzzled: the Opinion walks and talks like confirming old precedent; but it does not, surely?

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 7.

The CJEU held yesterday in Case C-296/16P Dextro Energy (text of judgment available in French and German only at the time of posting), an appeal against the General Court’s ruling in T-100/15. The General Court had declined to annul the European Commission Regulation which refused to authorise certain health claims made on foods, other than those referring to the reduction of disease risk and to children’s development and health. Dextro Energy had wanted to include health claims such as  ‘glucose supports normal physical activity’ and ‘glucose contributes to normal muscle function’. The EC had refused: citing (in Regulation 1215/8)

‘Pursuant to Articles 6(1) and 13(1) of Regulation … No 1924/2006 health claims need to be based on generally accepted scientific evidence. Authorisation may also legitimately be withheld if health claims do not comply with other general and specific requirements of Regulation … No 1924/2006, even in the case of a favourable scientific assessment by [EFSA]. Health claims inconsistent with generally accepted nutrition and health principles should not be made. [EFSA] concluded that a cause and effect relationship has been established between the consumption of glucose and contribution to energy-yielding metabolism. However, the use of such a health claim would convey a conflicting and confusing message to consumers, because it would encourage consumption of sugars for which, on the basis of generally accepted scientific advance, national and international authorities inform the consumer that their intake should be reduced. Therefore, such a health claim does not comply with point (a) of the second paragraph of Article 3 of Regulation … No 1924/2006 which foresees that the use of claims should not be ambiguous or misleading. Furthermore, even if the concerned health claim was to be authorised only under specific conditions of use and/or accompanied by additional statements or warnings, it would not be sufficient to alleviate the confusion of the consumer, and consequently the claim should not be authorised.’

The General Court performed its standard review in the face of a wide discretionary room for manoeuvre for the EC, and decided the EC had not exceeded its authority in holding as it did – even in the face of more lenient EFSA recommendations. The Court of Justice has now entirely sided with the General Court. The Judgment is a good reminder of aforementioned standard test (no de novo or merits review; annulment in the event of manifest transgression of power or error in judgment only), and readers best refer to reading the judgment itself.

10One consideration however, I should like to highlight: Dextro Energy had suggested the health claims needed to be assessed in light of the target group (determined in the product’s advertising), which, it was suggested, were physically active people for whom consumption of the glucose tablets in question is not harmless. The Court rejected this approach: the population as a whole, for whom the product is available, are the group which the EC justifiably seeks to protect. The manufacturer’s target group is not the relevant group to consider (do bear in mind that this is a product which is widely available and not restricted in any way at points of sale):

At 76-77: si les allégations de santé en cause étaient autorisées, elles s’adresseraient à la population en général, pouvant ainsi encourager la consommation de sucres par les personnes autres que les hommes et les femmes bien entraînés. Dans ces conditions, le Tribunal n’a pas commis d’erreur de droit lorsqu’il a rejeté, au point 57 de l’arrêt attaqué, l’argument de Dextro Energy, selon lequel c’était le groupe cible qui importait aux fins de l’appréciation des allégations de santé en cause.

Geert.

Another posting for the ‘comparative conflicts /dispute resolution’ binder. In order not to be found to have voluntary appeared (‘submitted to jurisdiction’), civil procedure rules worldwide require defendants to flag their opposition to jurisdiction early on in the proceedings. Indeed at the threshold of the litigation: in limine litis.

In EU law, the Court of Justice ruled in Elefanten Schuh that where civil procedure of the Member States requires a defence on the merits at the very earliest opportunity, such defence does not jeopardise objection to jurisdiction made at the same occasion. (Case-law now reflected in the wording of the Brussels I Regulation and its Recast successor).

There is as yet however no CJEU case-law on what level of interaction with the courts leads to submission.

In England, Zumaz Nigeria v First City [2016] EWCA Civ 567 recently held that application for disclosure does not entail submission: for one may need those very documents to contest jurisdiction.

Thank you RPC for now flagging Shenzhen CTS International Logistics Co Ltd v Dajiang International Investment Co Ltd. The court found that by applying to strike out the claim and seeking security for costs (to include the period after the hearing of the stay application), defendant had invoked the jurisdiction of the Hong Kong courts. As always of course the decision was based on factual merit which RPC’s David Smyth and Hannah Fletcher  summarise very well in the posting hyperlinked above.

Beware before you engage with the courts, if you do not wish to be seen as having submitted.

Geert.

(Handbook of) European Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.7.

I have reported earlier on the action of MNL Capital against the Belgian Vulture Fund Act of 12 July 2015 (Offical Gazette here, my EN translation here), on which I have a paper here.

Thank you Quentin Declève for alerting me to the Constitutional Court’s judgment on a related action (where MNL were joined by Yukos) namely against the act of 23 August 2015 which introduced Article 1412quinquies in the Belgian Judicial Code. It is noteworthy that the action against the Act of July has not yet been decided by the Court (that case number, for the aficionados, is 6371), at the least I have not been able to locate any judgment).

As Quentin summarises, as a general rule, Article 1412 quinquies of the Belgian Judicial Code provides that assets located in Belgium that belong to a foreign State are immune from execution and cannot be subject to enforcement proceedings by creditors. Exceptions to that rule are possible if very strict conditions are met: a party wishing to seize the assets belonging to a State needs to obtain a prior authorisation from a judge. This judge will only authorise the seizure if (i) the foreign State has “expressively” and “specifically” consented to the seizure of the assets; (ii) the foreign State has specifically allocated those assets to the enforcement of the claim which gives rise to the seizure; and (iii) the assets are located in Belgium and are allocated to an economic or commercial activity.

The Court has now annulled the word ‘specifically’ but has otherwise left the Act intact. Quentin summarises how the Court found that this proviso is not part of international law on State immunity.

Now, picking up where Quentin left: part of applicants’ arguments relate to Brussels I Recast. The argument is made that Belgium with its Act re-introduces exequatur, now that is has been abolished by the Recast. Belgium’s Government seems to argue that the law relating to seizure has public order character and hence is covered by the ordre public exception of the Brussels I Recast Regulation, and that seizure in Belgium which would go against public international customary law on State immunity, along the same lines would be covered by the ordre public exception of the Recast (para A.5.2, p.6).

The Court (at B.29.1 ff, .34 ff) deals with the Brussels I arguments very very succinctly: it refers to Article 41(1) which other than the substantive requirements of title III, makes recognition and enforcement subject to the law of the State of enforcement. The Court also says enforcement is not entirely obstructed: some of the foreign entities’ assets remain subject to seizure; and there are other ways of enforcement other than seizure. Finally the Court suggests that the Brussels I Recast surely must not be applied in a way which would be incompatible with international customary law. By rejecting the suggestion for a prelimary reference to Luxembourg (suggestion made by the Belgian State, unusually), the Court clearly believes that call is not one that has to be made by Luxembourg. Pitty: that would have been an interesting reference.

Again, NML Capital’s action against the Vulture Fund Act is still ongoing, lest I have missed withdrawal. As I noted in my paper, this Act I believe is wanting on various grounds, including some related to the New York Convention and the Brussels I Recast.

Geert.

(Handbook of) EU Private International Law, Chapter 2, Heading 2.2.16, Heading 2.2.16.1.4.

Ergo, Brogsitter, Granarolo...There is a long list of cases in which the CJEU is asked to decide whether a relationship between parties is contractual, with special jurisdiction determined by Article 7(1) of the Brussels I Recast Regulation, or one in tort, subject to Article 7(2) of same.

In C-249/16 Saale Kareda v Stefan Benkö Bot AG opined end of April. The Court is asked to rule on whether a recourse claim brought between jointly and severally liable debtors under a credit agreement constitutes a contractual claim. And if it is, the Court will have to examine whether such an agreement may be classified as an agreement for the provision of services, which will, as the case may be, lead it to determine the place of performance of its characteristic obligation.

I still think that what I dubbed the ancestry or pedigree test of Sharpston AG in Ergo, is a most useful litmus test to distinguish between 7(1) and 7(2):  what is the ancestry of the action, without which the parties concerned would not be finding themselves pleading in a court of law?: she uses ‘centre of gravity’ (‘the centre of gravity of the obligation to indemnify is in the contractual obligation’); ‘rooted in’ (‘the recourse action by one insurer against the other…is rooted in the contracts of insurance’); and ‘intimately bound up’ (‘[the action] is intimately bound up with the two insurers’ contractual obligation‘). (at 62 of her Opinion in Ergo). I am not sure though whether the Court itself follows the test.

Before the Austrian courts, Stefan Benkö, an Austrian national, is bringing a recourse claim against Saale Kareda, an Estonian national and his former partner, seeking payment of EUR 17 145.41 plus interest and costs. While they were living together in Austria, the applicant and the defendant bought a house in 2007 and for that purpose took out three loans totalling EUR 300 000 (‘the loan’) from an Austrian bank. They were both borrowers and the referring court states that they were both jointly and severally liable debtors. Ms Kareda broke up with Mr Benkö, moved back to Estonia, and ceased her loan payments. Being sued for the arrear payments by MR Benko, she now claims that the Landesgericht St. Pölten (Regional Court, St. Pölten), the court seised by the applicant, lacked territorial jurisdiction in so far as the loan was made by an Austrian bank and the place of performance for that loan, the bank’s registered office, is not located in the judicial district of that court.

Is it possible to ‘detach’ from the credit agreement the legal relationships arising between jointly and severally liable debtors following the conclusion of that agreement, or does this form an inseparable whole? (at 28) Bot AG suggests it is the latter and I believe he is right. I agree that it would be artificial, for the purposes of the application of the Brussels I Recast. to separate those legal relationships from the agreement which gave rise to them and on which they are based.

I am less convinced by the reference, at 32 and 33, to the need for consistency between Brussels I Recast and Rome I: regular readers of this blog will not be surprised by this. (But I believe I am fighting a losing battle there). The AG refers to Article 16 of Rome I, entitled ‘Multiple liability’, which provides inter alia that, ‘[i]f a creditor has a claim against several debtors who are liable for the same claim, and one of the debtors has already satisfied the claim in whole or in part, the law governing the debtor’s obligation towards the creditor also governs the debtor’s right to claim recourse from the other debtors’.

Having decided that the issue is contractual, the AG suggests the credit agreement is an agreement for the provision of services, and that in the context of a credit agreement, the characteristic obligation leading to jurisdiction is the actual granting of the sum loaned. The other obligation entailed by such an agreement, namely the borrower’s obligation to repay the sum loaned, exists only through the performance of the service by the lender, as repayment is merely its consequence.

The final element to consider is then the actual place of performance of the characteristic obligation. In the AG’s view, only the place where the creditor has its place of business is capable of ensuring that the rules are highly predictable and of satisfying the objectives of proximity and standardisation pursued by the second indent of Article 7(1)(b) of Regulation No 1215/2012.  That place will be known by the parties from the time of the conclusion of the agreement and will also be the place of the court having the closest connection with that agreement. (at 46).

Geert.

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

Many thanks to Jan von Hein for flagging the ultimate judgment (the link is to a press release) of the Bundesarbeitsgericht in Nikiforidis. I had of course reported earlier my serious misgivings about the CJEU’s judgment in same, upon preliminary review.

The judgment eventually declined to employ the opening left by the CJEU, to take Greek law into account ‘as a matter of fact’. Thank you, but no thank you: there was no suitable point of entry in German law to take account of the Greek austerity laws. Still, as Jan points out, the judgment in Luxembourg undoubtedly will feature as precedent in future cases.

Geert.

Many thanks to KU Leuven law student Dzsenifer Orosz (she is writing a paper on the issues for one of my conflict of laws courses) for alerting me to the French Conseil D’Etat having referred ‘right to be forgotten’ issues to the European Court of Justice.  I have of course on occasion reported the application of data protection laws /privacy issues on this blog (try ‘Google’ as a search on the blog’s search function). I also have a paper out on the case against applying the right to be forgotten to the .com domain, and with co-authors, one where we catalogue the application of RTBF until December 2016. See also my post on the Koln courts refusing application to .com.

The Conseil d’Etat has referred one or two specific Qs but also, just to be sure, has also asked the Court of Justice for general insight into how data protection laws apply to the internet. The Court is unlikely to offer such tutorial (not that it would not be useful). However any Advocate General’s opinion of course will offer 360 insight.

One to look forward to.

Geert.

This is one for the conflict of laws anoraks. In C-29/16 HanseYachts the Court of Justice held (on 4 May) that an application for proceedings to preserve or establish, prior to any legal proceedings, evidence of facts on which a subsequent action could be based, does not constitute a proceeding within the meaning of (now) Article 32(1) Brussels I. If it had, it would trigger the lis alibi pendens regime of that Article, impacting therefore on any future substantive proceedings.

At 33 the Court defers to the insight into the relevant provisions of French judicial procedure, offered by the French Government: Although there may indeed be a connection between the court seised on the basis of that article and the court having jurisdiction to hear the substance of the case with a view to which the measure of inquiry was ordered, the fact remains that such proceedings for the taking of evidence are independent in relation to the substantive procedure which may, if necessary, be brought subsequently. The Court’s ruling however is dependent (at 34) upon the French courts confirming this interpretation of French civil procedure: for the CJEU does not offer final interpretations on internal State law.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.14.1.

I reported at the time on the General Court‘s decision in Dyson. The CJEU yesterday in Case -44/16P agreed, albeit in less prosaic terms than my earlier post, that the Court’s reasoning was wanting. The case now goes back to the General Court to reconsider those pleas made by Dyson which the Court considers to have been insufficiently answered.

Of most interest to readers of this blog is the argument re proof, science and procedure (at 72 ff): According to the Commission, Dyson does not explain in what way the development of a test with a loaded receptacle would have been more proportionate. The Commission submits that it was not obliged to show that no better test method could be developed, and that it was on the contrary for Dyson to prove that a more appropriate test method existed, which in the view of the General Court it failed to do.

The Court of Justice agrees that the General Court’s entertainment of this question is wanting – the particular parameter was required under the delegating Directive, alleged absence of a reliable test is not enough to ignore it. That is not to say, that upon reconsideration the eventual General Court’s answer may not be the same.

Geert.

Thank you Dentons for flagging 2016 ONCA 836 Cook v 1293037 Alberta Ltd, on the application of the forum of necessity or forum necessitatis doctrine in the Canadian courts. A doctrine which in some way or another allows a court to be used as court of last resort, should no other court be reasonably be available to plaintiff. Those States which do have it (Belgium, for instance: In Article 11 of its Statute; readers of the blog will also remember the EC suggested its introduction in the Brussels I Recast (Article 26 of COM(2010)748), but failed) all insist the jurisdictional trigger can only be exercised in the most exceptional of circumstance.

Cook v 129…Alberta is a good illustration of this exceptional nature. The Canadian Supreme Court set out the conditions in 2012 SCC 17 Van Breda v Village Resorts Ltd. Appellants had made a tactical decision not to bring their action in Alberta, the natural forum of the case. The limitation period for bringing the action in Alberta has now expired. They should under the circumstance not be allowed to bring the action in Ontario.

Does someone somewhere have an (undoubtedly slim) catalogue of those forum necessitatis actions which did succeed?

Geert.

(Handbook of) European private international law, 2nd ed.2016, Chapter 2, Heading 2.2.4 (p.68.)

It is one of the pinnacle theories of conflict of laws and when first introducing students to it, they almost invariably respond glassy-eyed. Renvoi has an unlimited ability to surprise parties and courts alike. It is best excluded, either by Statute, or by the parties, but frankly to be on the safe side: always and everywhere best by both. (Lest there are well considered arguments not to do so in a specific instance. As readers of my book now, the Brussels I Recast provisions on renvoi for choice of court (complicating less fori prorogati) is not such an instance: Handbook 2016, p.128-129, Heading 2.2.9.4.2).

At issue in Dankor [Dancor Construction, Inc. v. FXR Construction, Inc., 2016 IL App (2d) 150839] was the choice of court and governing law clause cited by the court at 44:

“The parties agree that this agreement was executed in Kane County, Illinois and shall be governed by the law of the State of Illinois. Any claims, lawsuits, disputes or claims arising out of or relating to this agreement shall be litigated in Kane County, Illinois.”

This clause could be a boilerplate or midnight clause except those routinely do exclude renvoi. ‘The law of the State of Illinois’ in the clause would then be followed by ‘excluding its choice of law rules’ or something of the kind. Why it was dropped here is entirely unclear. As Clifford Shapiro writes ‘So what happens when an Illinois general contractor fires a New York subcontractor who was working on a New York project under a subcontract that required Illinois law to apply and litigation to take place in Illinois? Unfortunately for litigants, what can happen is nearly three years of jurisdictional litigation in both New York and Illinois, and then dismissal of the Illinois case less than 60 days before trial with an order directing the case to be re-filed in New York.’

As the court notes (at 69) choice of court and choice of governing law are separate issues (for that reason they are als best deal with in clearly separated contractual clauses). Relevant precedent for the validity of the former is Rieker 378 Ill. App. 3d 77, 86 (2007). Applying Rieker, and following Section 187(2) of the Restatement (Second) of Conflict of Laws, the Court held (reference is best made to Clifford’s summary or to the judgment itself) that New York law applied to the validity of the clause, leading to its being void: New York law mandatorily prohibits application of another State’s law or litigation outside of the State for New York construction projects (Illinois incidentally has a mirror provision).

Need one say more? Renvoi is always best excluded. It would not necessarily have made this clause enforceable: ordre public discussions could always still be raised. However it sure as anything would have made the validity of the clause much more likely.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 1, Heading 1.4).