Conflictoflaws

The appeal of alternative dispute resolution (ADR) mechanisms is on the rise and so is also the pull to prevent international disputes from arising altogether. In the area of cross-border commercial and investment disputes, the renewed interest in the interface between dispute prevention and alternative dispute resolution springs from a growing awareness of the need to overcome the shortcomings of arbitration. This is shown by the recent setting up of a series of new ‘global labs’ in international commercial resolution provided with new diversified and integrated commercial dispute resolution mechanisms linking ‘mediation, arbitration and litigation’ in recent years. Equally indicative of this trend is the entering into force of the UN Convention on International Settlement Agreements Resulting from Mediation (The Singapore Convention) in September 2020 and that ‘dispute prevention and mitigation’ has become one of the most dynamic focal points for UNCITRAL Working Group III mandated with examining the reform of investor-state dispute settlement.

However, the contemporary move towards devising more effective preventive ‘cooling off’ mechanisms, increasing the transnational appeal of mediation and, when feasible, sidestepping altogether the need to resort to third-party judicialized processes is not unique to international commercial and investor-state dispute resolution. At a time of backlash against international courts and tribunals, prevention and alternative dispute settlement mechanisms are gaining momentum across both established and emerging areas of public, private and economic international law.

Against this background, the inaugural issue of the Chinese Journal of Transnational Law to be published in 2024 invites submissions that engage critically with the on-going transformation of the transnational dispute settlement system in an increasingly multipolar international legal order in which a paradigm shift away from the Western-model of international adversarial legalism and towards de facto de-judicialization is arguably gaining hold.

Topics on which the contributions could focus on include, but are not limited to:
*Transnational Dispute Prevention and Settlement in international trade law
*Transnational Dispute Prevention and Settlement in emerging areas: cyberspace, outerspace etc.
* Transnational Dispute Prevention and Settlement in international environmental law
* Transnational Dispute Prevention and Settlement in international commercial disputes
*Transnational Dispute Prevention and Settlement in Investor-State dispute settlement
*Transnational Inter-State Dispute Prevention and Settlement in inter-state disputes under general public international law

Contributors may choose between: Research articles (up to 11,000 words inclusive of footnotes) or short articles (up to 6,000s inclusive of footnotes). Those interested, please submit your contribution before 31 Aug 2023 through the journal homepage.

Written by Zuzanna Nowicka, lawyer at the Helsinki Foundation for Human Rights and lecturer at Department of Logic and Legal Argumentation at University of Warsaw

In the aftermath of the judgment of the ICJ of 2012 in the case of the Jurisdictional Immunities of the State (Germany v. Italy: Greece intervening) that needs no presentation here (for details see, in particular, the post by Burkhard Hess), by its judgment of 2014, the Italian Constitutional Court recognized the duty of Italy to comply with the ICJ judgment of 2012 but subjected that duty to the “fundamental principle of judicial protection of fundamental rights” under Italian constitutional law (for a more detailed account of those developments see this post on EAPIL by Pietro Franzina and further references detailed there). In a nutshell, according to the Italian Constitutional Court, the fundamental human rights cannot be automatically and unconditionally sacrificed in each and every case in order to uphold the jurisdiction immunity of a foreign State allegedly responsible for serious international crimes.

Since then, the Italian courts have reasserted their jurisdiction in such cases, in some even going so far as to decide on the substance and award compensation from Germany. The saga continues, as Germany took Italy to the ICJ again in 2022 (for the status of the case pending before the ICJ see here). It even seems not to end there as it can be provocatively argued that this saga has its spin-off currently taking place before the Polish courts.

A.   Setting the scene…

In 2020, a group of members of the Sejm, lower chamber of the Polish Parliament, brought a request for a constitutional review that, in essence, concerns the application of the jurisdictional immunity of the State in the cases pertaining to liability for war crimes, genocide and crimes against humanity. The request has been registered under the case number K 25/20 (for details of the, in Polish, see here; the request is available here). This application is identical to an application previously brought by a group of members of the lower chamber of the Parliament in the case K 12/17. This request led to no outcome due to the principle according to which the proceedings not finalized during a given term of the Sejm shall be closed upon the expiration of that term.

This time, however, the Polish Constitutional Court has even set the date of the hearing in the case K 25/20. It is supposed to take place on May 23, 2023.

The present post is not drafted with the ambition of comprehensively evaluating the request for a constitutional review brought before the Polish Constitutional Court. Nor it is intended to speculate on the future decision of that Court and its ramifications. By contrast, while the case is still pending, it seems interesting to provide a brief overview of the request for a constitutional review and present the arguments put forward by the applicants.

Under Polish law, a request for a constitutional review, such as the one in the case K 25/20, can be brought before the Polish Constitutional Court by selected privileged applicants, with no connection to a case pending before Polish courts.

Such a request has to identify the legislation that raise concerns as to its conformity with the Polish constitutional law (“subject of the review”, see point B below) and the relevant provisions of the Polish Constitution of 1997 against which that legislation is to be benchmarked against (“standard of constitutional review”, see point C). Furthermore, the applicant shall identify the issues of constitutional concern that are raised by the said legislation and substantiate its objections by arguments and/or evidence (see point D).

 

B.   Subject of constitutional review in question

By the request for a constitutional review of 2020, the Polish Constitutional Court is asked to benchmark two provisions of Polish Code of Civil Procedure (hereinafter: “PL CCP”) against the Polish constitutional law, namely Article 1103[7](2) PL CCP and Article 1113 PL CCP.

i) Article 1103[7](2) PL CCP

The first provision, Article 1103[7] PL CCP lays down rules of direct jurisdiction that, in practice, can be of application solely in the cases not falling within the ambit of the rules of direct jurisdiction of the Brussels I bis Regulation. In particular, pursuant to Article 1103[7](2) PL CCP, the Polish courts have jurisdiction with regard to the cases pertaining to the extra-contractual obligations that arose in Poland.

In the request for a constitutional review of 2020, the applicants argue that, according to the settled case law of the Polish Supreme Court, Article 1103[7](2) PL CCP does not cover the torts committed by a foreign State to the detriment of Poland and its nationals. For the purposes of their request, the applicants do focus on the non-contractual liability of a foreign State resulting from war crimes, genocide and crimes against humanity. The applicants claim that, according to the case law of the Polish Supreme Court, such a liability is excluded from the scope of Article 1103[7](2) PL CCP.

Against this background, it has to be noted that the account of the case law of the Polish Supreme Court is not too faithful to its original spirit. Contrary to its reading proposed by the applicants, the Polish Supreme Court does not claim that the scope of application of the rule of direct jurisdiction provided for in Article 1103[7](2) PL CPP is, de lege lata, circumscribed and does not cover the liability of a foreign State for international crimes. In actuality, this can be only seen as the practical effect of the case law of the Polish Supreme Court quoted in the request for a constitutional review. Pursuant to this case law, also with regard to liability for international crimes, the foreign States enjoy jurisdiction immunity resulting from international customary law, which prevents claimants from suing those States before the Polish courts.

ii) Article 1113 PL CPP

The second provision subject to constitutional review is Article 1113 PL CPP, according to which jurisdictional immunity shall be considered by the court ex officio in every phase of the proceedings. If the defendant can rely on the jurisdictional immunity, the court shall reject the claim. According to the applicants, the Polish courts infer from this provision of the PL CPP the right of the foreign States to rely on the jurisdictional immunity with regard to the cases on liability resulting from war crimes, genocide and crimes against humanity.

 

C.   Standard of constitutional review (relevant provisions of Polish constitutional law)

In the request for a constitutional review of 2020, four provisions of Polish constitutional law are referred to as the standard of constitutional review, namely:

i) Article 9 of the Polish Constitution of 1997 (“Poland shall respect international law binding upon it”);

according to the applicants, due to the general nature of Article 9, it cannot be deduced thereof that the rules of international customary law are directly binding in Polish domestic legal order. The applicants contend that the Polish Constitution of 1997 lists the sources of law that are binding in Poland. In particular, Article 87 of the Constitution indicates that the sources of law in Poland are the Constitution, statutes, ratified international agreements, and regulations. No mention is made there to the international customary law. Thus, international customary law does not constitute a binding part of the domestic legal order and is not directly applicable in Poland. Rather, Article 9 of the Polish Constitution of 1997 must be understood as providing for the obligation to respect international customary law exclusively “in the sphere of international law”;

ii) Article 21(1) of the Polish Constitution of 1997: “Poland shall protect ownership and the right of succession”,

here, the applicants contend that Article 21(1) covers not only the property currently owned by the individuals, but also property that was lost as a result of the international crimes committed by a foreign State, which, had it not been lost, would have been the subject of inheritance by Polish nationals;

iii) Article 30 of the Polish Constitution of 1997: “The inherent and inalienable dignity of the person shall constitute a source of freedoms and rights of persons and citizens. It shall be inviolable. The respect and protection thereof shall be the obligation of public authorities”,

the applicants infer from Article 30 that the respect and protection of dignity is the duty of public authorities. Such a protection can be guaranteed by creating an institutional and procedural framework, which enables the pursuit of justice against the wrongdoers who have taken actions against human dignity. For the applicants, this is particularly relevant in the case of liability for war crimes, genocide and crimes against humanity;

iv) Article 45(1) of the Polish Constitution of 1997: “Everyone shall have the right to a fair and public hearing of his case, without undue delay, before a competent, impartial and independent court”,

in short, Article 45(1) enshrines to the right to access to a court; this provision conceptualizes this right as a mean by which the protection of other freedoms and rights guaranteed by the Constitution can be realized; the applicants argue that the jurisdictional immunity of a foreign State is a procedural rule that, in its essence, limits the right to a court. They acknowledge that the right to a court is not an absolute right and it can be subject to some limitations. However, the Constitutional Court should examine whether the limitation resulting from the operation of jurisdiction immunity is proportionate.

 

D.   Issues and arguments raised by the request for a constitutional review

After having presented the subject of the request and the relevant provisions of Polish constitutional law, the applicants identify the issues of constitutional concern that, in their view, are raised by the jurisdictional immunity of a foreign State upheld via the operation of Article 1103[7](2) PL CCP and Article 1113 PL CCP in the cases on the liability resulting from international crimes. The applicants then set out their arguments to substantiate the objection of non-constitutionality directed at Article 1103[7](2) PL CCP and Article 1113 PL CCP.

The main issue and arguments put forward boil down to the objection that the upholding of the jurisdictional immunity results in the lack of access to a court and infringes the right guaranteed in the Polish Constitution of 1997, as well as enshrined in the international agreements on human rights, ratified by Poland,

• in this context, first, the applicants reiterate the contention that while ratified international agreements constitute a part of the domestic legal order, this is not the case of the rules of international customary law; furthermore, in order to “reinforce” this contention, a recurring statement appears in the request for a constitutional review, according to which the international customary law is not consistently applied with regard to the jurisdictional immunity of a foreign State;

• second, a foreign State cannot claim immunity from the jurisdiction of a court of another State in proceedings which relate to the liability for war crimes, genocide or crimes against humanity, if the facts which occasioned damage occurred in the territory of that another State; there is a link between those international crimes and the territory of the State of the forum and the latter must be authorised to adjudicate on the liability for those acts;

• third, the applicant claim that a foreign State does not enjoy jurisdictional immunity in the cases involving clear violations of universally accepted rules of international law – a State committing such a violation implicitly waives its immunity;

• fourth, the applicants acknowledge the ICJ judgment of 2012 but claim that it (i) failed to take into account all the relevant precedent on the scope of jurisdictional immunity; (ii) held that the illegal acts constituted acta iure imperii, disregarding the conflict between the jurisdictional immunity and the acts violating fundamental human rights; (iii) preferred not to explicitly address the question as to whether the jurisdictional immunity should be enjoyed by a State that violated human dignity or not – doing so, the ICJ left space for the national courts to step in; (iv)  the ICJ judgments are biding only to the parties to the proceedings; with regard to the non-parties they have the same binding force as national decisions; (v) due to the evolving nature of the doctrine of jurisdictional immunity and its scope, a national court can settle the matter differently than the ICJ did in 2012.

Subsequent issues of constitutional concern seem to rely on the same or similar arguments and concern:

• violation of international law binding Poland due to the recognition of jurisdictional immunity of a State with regard to the cases on liability for war crimes, genocide or crimes against humanity;

• violation of the human dignity as there is no procedural pathway for claiming the reparation of damages resulting from those international crimes;

• violation of the protection of ownership and other proprietary rights by barring the actions for damages resulting from those international crimes.

E.   The controversies regarding the Constitutional Court

The overview of the request for a constitutional review in the case K 25/20 would not be complete without a brief mention of the current state of affairs in the Polish Constitutional Court itself.

In the 2021 judgement in Xero Flor v. Poland, the European Court of Human Rights held, in essence, that the Constitutional Court panel composed in violation of the national constitution (i.e. election of one of the adjudicating judges “vitiated by grave irregularities that impaired the very essence of the right at issue”) does not meet the requirements allowing it to be considered a “tribunal established by law” within the meaning of the Article 6(1) of the European Convention.

One of the judges sitting on the panel adjudicating the case K 25/20 was elected under the same conditions as those considered by the ECHR in its 2021 judgment. The other four were elected during the various stages of the constitutional crisis ongoing since 2015. In practice, and most regretfully, the case K 25/20 that revolves around the alleged violation of the right to a court provided for in Polish constitutional law risks to be deliberated in the circumstances that, on their own, raise concerns as to the respect of an equivalent right enshrined in the European Convention.

The UNCITRAL National Coordination Committee for Australia (UNCCA) is an organisation comprised of members of the Australian legal community, dedicated to promoting the work of The United Nations Commission on International Trade Law (UNCITRAL) in Australia.

UNCCA invites you to our 8th annual May Seminar in Canberra celebrating the 75th anniversary of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Join us for a full day conference to celebrate this anniversary whilst learning about the work of UNCITRAL and its Working Groups. We welcome Justice Kevin Lyons KC (Supreme Court of Victoria) as our keynote speaker. Our panels will include presentations by Bronwyn Lincoln (Partner, , Thomson Geer), Romesh Weeramantry (Special Counsel, Clifford Chance), Drossos Stamboulakis (Barrister, Senior Lecturer, Monash University), Dr. Benjamin Hayward (Senior Lecturer, Monash Business School). The Attorney General’s Department will also provide a presentation on their work on international trade law.

This seminar promises to be an exciting full-day event hosted at the Ann Harding Centre, located at 24 University Drive South, Bruce ACT 2617 on the 26th of May 2023. The event will likely run from 8:30am until 4pm, with lunch included. Online attendance will also be available for our May Seminar, however, in-person participation is strongly encouraged.

You can register for tickets using this link.

Online event

When making decisions, adults should think about how their decisions will affect children. Recent years have witnessed, in private international law cases and legislation, the protection of children is increasingly mingled with gender, indigenous issues, refugees, violence, war, surrogacy technology, etc. This is evidenced by the US Supreme Court 2022 judgment Golan v. Saada, the Australian case Secretary, Department of Communities & Justice v Bamfield, the 2023 German Constitutional Court decision, the Chinese Civil Code, the Australia Family Law (Child Abduction Convention) Amendment (Family Violence) Regulations 2022, and developments at the Hague Conference on Private International Law (HCCH Children Conventions) and the United Nations (Convention on the Rights of the Child and its additional Protocols).

On this International Children’s Day, let us join this CAPLUS webinar in cooperation with conflictoflaws.net and American Society of International Law Private International Law Interest Group to hear voices of children in private international law.

Speakers

• Ms. Anna Mary Coburn

After 22-years of public service as a U.S. Department of State Attorney-Advisor for Children’s Issues as well as a USAID Regional Legal Advisor/Senior Advisor for Children/Youth in Conflict, Anna has transitioned to practicing international family law with a focus on child rights cases and issues.

• Mr. Philippe Lortie

Philippe is co-head of the International Family and Child Protection Law Division at the Hague Conference on Private International Law Permanent Bureau and has more than 30 years’ experience in the field of child protection.

• Dr. Miranda Kaye

Dr Miranda Kaye is an academic at the Faculty of Law in the University of Technology Sydney in Australia and a member of Hague Mothers, a project aiming to end the injustices created by the Hague Child Abduction Convention. She also has experience in the public service (Law Commission of England and Wales) and as a practicing solicitor (family law in the UK).

• Professor Lukas Rademacher

Lukas is a Professor of Private Law, Private International Law, and Comparative Law in Kiel, Germany. He studied law at the Universities of Düsseldorf and Oxford, and received his PhD at the University of Münster. He wrote his postdoctoral thesis at the University of Cologne.

• Ms. Haitao Ye

Haitao is a lawyer at the Shanghai Office of the Beijing Dacheng Law LLP specializing in marriage and family dispute resolution, family wealth inheritance and management. She is a former experienced judge in civil and commercial trials at the Shanghai Pudong New District People’s Court in China.

Moderators/commentators

• Dr. Jie (Jeanne) Huang (Associate Professor at Sydney Law School, University of Sydney)

 

Thursday 1 June, 6-7.30pm AEST

(4-5.30am Washington D.C./9-10:30am London/10-11.30am the Hague/4-5.30pm Beijing)

This event is proudly co-presented by the Centre for Asian and Pacific Law at the University of Sydney, conflictoflaws.net and the American Society of International Law Private International Law Interest Group.

The Peter Nygh Round (2023) of the Pax Moot court was held in Antwerp from 3 to 5 May – the preliminary days at the University of Antwerp and the semi-finals and finals at the Antwerp court.

This year saw the highest number of registered teams yet for the PAX Competition (37 teams). 28 teams made it to the oral rounds. 48 judges, lawyers and academics invited took up the role as judge in the competition.

The winner of the oral rounds was the University of Ljubljana, with the University of Vienna as runner-up. The teams of the University of Maastricht and Singapore Management University made it up to the semi-finals.

The University of Vienna won the prize for the best written memorials, with the University of Ghent in second place and the University of Sofia third.

Best pleader was Matej Iglicar (University of Ljubljana), followed by Maximilian Murtinger and in third place Gustav Kirchauer (both of the University of Vienna).

The European Commission co-funds the competition.

Next year’s Pax Moot court competition will take place from 24 to 26 April in Ljubljana.

On May 17th, 2023, the Department of Law  of the University of Urbino (Italy), will host an event titled “The Digital Services Act (DSA): International Aspects – Aspects Internationaux” co-organized with the Centre de recherche de droit international privé et du commerce international de l’Université Paris-Panthéon-Assas and the University of Malaga.

The DSA (Regulation (EU) 2022/2065), submitted along with the Digital Markets Act (DMA), has been approved on October 19th, 2022, and shall apply from February 17th, 2024. It will amend the Directive 2000/31/EC (Directive on Electronic Commerce) and introduce a wide-ranging set of new obligations on digital platforms regarding illegal content, transparent advertising and disinformation.

Confirmed speakers include Marie-Elodie ANCEL (Université Paris-Panthéon-Assas, CRDI), Maria Isabel TORRES CAZORLA (University of Malaga), Basile DARMOIS (Université de Brest), Federico FERRI (Université de Bologne); Valère NDIOR (Université de Brest, IUF), Edoardo Alberto ROSSI (University of Urbino), Massimo RUBECHI (University of Urbino).

The main topics that will be discussed include the European legal framework within the DSA has been adopted, the conflict of laws methods, online content moderation, the cooperation between relevant national and European authorities and the available remedies in case of violation of the rights of users.

The event can be followed both face-to-face and remotely, on the Zoom platform.

See here for information about the program and how to register

Sarah McKibbin and Anthony Kennedy (editors) recently published a book with Hart titled: Common Law Jurisprudence in Conflict of Laws. The blurb reads as follows:

This book presents a collection of leading common law cases in private international law ranging from the 18th to the 21st century. The cases traverse issues of jurisdiction, choice of law and the recognition and enforcement of foreign judgments. Questions of marital validity, domicile, foreign immovable property and choice of law in contract are just some of the topics that this collection examines. The ‘unusual factual situations’ of some 18th- and 19th-century English cases also reveal compelling human interest stories and political controversies worthy of further exploration.

Drawing on a diverse team of contributors, this edited collection showcases the research of eminent conflicts scholars together with emerging scholars from the United Kingdom, Australia, Canada, Ireland and South Africa.

A groundbreaking judgment was rendered last October by the Greek Supreme Court. Relatives of two Greek crew members killed in Los Llanos Air Base, Spain, initiated proceedings before Athens courts for pain and suffering damages (solatium). Although the action was dismissed by the Athens court of first instance, and the latter decision was confirmed by the Athens court of appeal, the cassation was successful: The Supreme Court held that both the Brussels I bis Regulation and the Lugano Convention are establishing international jurisdiction in the country where the relatives of persons killed are domiciled, because they must be considered as direct victims.

 

THE FACTS

On 26 January 2015, an F-16D Fighting Falcon jet fighter of the Hellenic Air Force crashed into the flight line at Los Llanos Air Base in Albacete, Spain, killing 11 people: the two crew members and nine on the ground.

The relatives of the Greek crew members filed actions for pain and suffering damages before the Athens court of first instance against a US (manufacturer of the aircraft) and a Swiss (subsidiary of the manufacturer) company. The action was dismissed in 2019 for lack of international jurisdiction. The appeals lodged by the relatives before had the same luck: the Athens court of appeal confirmed in 2020 the first instance ruling. The relatives filed a cassation, which led to the judgment nr. 1658/5.10.2022 of the Supreme Court.

 

THE JUDGMENT OF THE SUPREME COURT

Out of a number of cassation grounds, the Supreme Court prioritized the examination of the ground referring to the international jurisdiction deriving from Articles 7(2) Brussels I bis Regulation and 5(3) Lugano Convention 2007. Whereas the analysis of the court was initially following the usual path, established by the CJEU and pertinent legal scholarship, namely, that third persons suffering moral (immaterial) damages are classified as indirect victims of torts committed against their relative, when the accident results in the death of the relative, they have to be considered as direct victims, which leads to their right to file a claim for damages (solatium) in the courts of their domicile.

In particular, the analysis of the Supreme Court is the following:

1. Articles 7(2) Brussels I bis Regulation and 5(3) Lugano Convention 2007

‘With regard to the mental suffering caused by the incident as a result of the tort, after his death, the relative can no longer be subject to rights (and obligations) and, therefore, have claims against the wrongdoer.

In this case, the relatives of the deceased have by law a personal claim against the defendants, since the infliction of mental suffering is a primary and direct damage to their person; therefore, the place of its occurrence is important for the establishment of the court’s international jurisdiction in the court which this place is located, for the adjudication of their respective claim.

In other words, the infliction of mental suffering is a direct injury to the persons close to the deceased; it is separate and independent from the primary injury suffered by the latter, without this mental suffering being considered, due to the previous injury of the deceased, as indirect damage. The wrongdoer’s behavior, considered independently, also constitutes an independent reason for an obligation towards them for monetary satisfaction (and compensation), without the mental suffering caused presupposing any other damage to the above persons, so that it could be characterized as a consequence of it, and, consequently , as indirect with respect to this damage.

The place where the mental suffering comes from is not the place, where by chance the person was informed of the death of his relative and felt the mental pain, but the place of his main residence, where he mainly and permanently suffers this pain, which certainly has a duration of time and, therefore, burdens him not all at once, but for a long, as a rule, period of time.

It should be noted that, according to Greek law, in the case of tortious acts, a claim for compensation and monetary satisfaction due to moral damage is only available to the person immediately harmed by the act or omission, and not by the third party indirectly injured. Hence, where Article 932 of the Civil Code states that, in the event of the death of a person, monetary compensation may be awarded to the victim’s family due to mental distress, it clearly considers the relatives of the deceased as immediately damaged and, in any case, fully equates them with their primary affected relative.

In view of the above, articles 7(2) of Regulation 1215/2012 and 5(3) of the Lugano Convention, have the meaning that the mental suffering, which is connected to the death of a person as a result of a tort committed in a member state, and which is suffered by the relatives of this victim, who reside in another member state, constitutes direct damage in the place of their main residence. Therefore, the court, in whose district the person, who suffered mental anguish due to the death of his relative, has his residence, has territorial competence and international jurisdiction to adjudicate the claim arising from the mental suffering caused for the payment of damages.

The above conclusion also results from the grammatical interpretation of the above provisions, given that they do not make any distinction as to whether the damage concerns the primary sufferer or other persons, but only require that the damage caused to the plaintiff may be characterized as direct.

An opposite opinion would necessarily lead in this case to the international jurisdiction only of the court of the place where the damaging event occurred, a solution, however, that is not in accordance with the interpretation of the above rules by the CJEU, which accepts, without distinction or limitation, equally and simultaneously, the international jurisdiction of the place where the direct damage occurred.

 

2. The interdependence of Brussels I bis Regulation and Rome II Regulation

It is true that in the interpretation of Article 4(1) Regulation 864/2007 on the law applicable to non-contractual obligations, the CJEU ruled that, damages connected with the death of a person due to such an accident within the Member State of the trial court, suffered by the victim’s relatives residing in another Member State, must be characterized as “indirect results” of the said accident, under the meaning of the provision in question (case Florin Lazar v Allianz SpA, C-350/14).

However, in addition to the fact that this judgment concerned the choice of applicable law, the same court has accepted that, according to recital 7 Regulation 864/2007, the intention of the EU legislator was to ensure consistency between Regulation 44/2001 (already 1215/2012), and the material scope as well as the provisions of Regulation 864/2007; however, “it does not follow in any way that the provisions of Regulation 44/2001 must, for this reason, be interpreted in the light of the provisions of Regulation 864/2007. In no case can the intended consequence result in an interpretation of the provisions of Regulation 44/2001, inconsistent with the system and its purposes.

And the Supreme Court concluded:

According to all of the above, pursuant to the provision of article 35 of the Civil Code, as interpreted in the light of articles 7(2) Regulation 1215/2012 and 5(3) Lugano Convention, the Greek courts have international and local jurisdiction to adjudicate claims for payment of reasonable monetary satisfaction due to mental anguish, as a result of the death of a relative of the claimants, committed in another Member State, if the claimants reside in the court’s district.

 

THE MINORITY OPINION

One member of the Supreme Court distanced himself from the panel, and submitted a minority opinion, which was founded on the prevailing opinion followed by the CJEU and legal scholarship. In particular, according to the minority report, the damage caused to the claimants due to the death of their relative remains an indirect one, given that the damage caused was of a reflective and not of a direct nature. The minority opinion emphasized also on the predictability factor, which was not elaborated by the panel.

 

COMMENTS

The judgment of the Supreme Court opens the Pandora’s box in a matter well settled so far. An earlier judgment rendered by the Italian Supreme Court followed the prevailing view [see Corte di Cassazione (IT) 11.02.2003 – 2060 – Staltari e altre ./. GAN IA Compagnie française SA ed altri, available in: unalex Case law Case IT-19].

In matters where national courts wish to deviate from the prevalent, if not unanimous view taken by the CJEU and European legal scholarship, the most prudent solution would be to address the matter to the Court, by filing a request for a preliminary ruling. The latter applies to both international jurisdiction, and interdependence between the Brussels I bis and the Rome II Regulation.

We are delighted to announce a lecture hosted by Matthias Weller at the University of Bonn in cooperation with ConflictofLaws.net. Professor Amnon Lehavi (Harry Radzyner Law School, Reichman University, Israel) is going to speak on ‘Globalization through the re-codification of property law?’.

The globalization of markets, technology, and interpersonal networks poses a growing challenge for national legal systems. Property law is traditionally considered a “domestic” field of law, not only because of its structural features (such as the in rem or numerus clausus principles), but also because it promotes cultural, economic, and social values. The decision if property law should be globalized also requires a choice among potential globalization strategies (how to do so). This lecture examines four globalization strategies: (1) soft law / private ordering; (2) conflict of laws; (3) approximation; and (4) supranationalism. It does so by comparing three types of assets: land, digital assets, and cultural property – which have all been dramatically affected by current processes of globalization, albeit in diverging ways. It is argued that different strategies of globalization, and corresponding forms of re-codification of national property laws, should be adopted for land, digital assets, and cultural property.

The event will take place on 17 May at 6.30pm at the Senate Hall of the University of Bonn; it can also be joined via Zoom. The flyer can be found here.

As the series of webinars organised under the title The Future of Cross-Border Parenthood in the EU – Analysing the EU Parenthood Proposal starts this week (Wednesday!), we are pleased to share, for your convenience, the updated and final version of the program.

In the flyer attached you will also find the links for the registration, still open, and also accessible here.

by Claudia Madrid Martínez

 

On 17 March 2023, the Civil Chamber of the Supreme Court of Justice issued a decision whereby it annulled a judgment on appeal and decided the merits of the case, which concerned a bill of exchange issued in Curaçao, binding Venezuelan citizens domiciled in Venezuela.

The interesting thing about this judgment is that the Civil Chamber set aside the reasoning of the court of appeals according to which, since there are no international treaties in force between Venezuela and Curaçao, and there are no rules on bills of exchange in the Venezuelan Act on Private International Law, the Inter-American Convention on Conflicts of Laws concerning Bills of Exchange, Promissory Notes and Invoices should be applied by analogy and, consequently, “the Law of the place where the obligation was contracted” (art. 1), i.e., the Law of Curaçao, should be applied to the bill of exchange.

It should be noted that, on the one hand, the only Conventions in force for Venezuela regarding bills of exchange are the Inter-American Convention on Conflicts of Laws regarding Bills of Exchange, Promissory Notes and Invoices, and the Bustamante Code. On the other hand, the Act on Private International Law does not establish rules on International Commercial Law, since —as stated in the Explanatory Memorandum— this matter must be developed within the Commercial Law itself in accordance with the general principles set forth in the Act on Private International Law.

In addition, Article 1 of the Act on Private International Law provides two tools to integrate the gaps in the Act and, in general, the gaps in the Venezuelan Private International Law system. This rule refers to analogy and to the generally accepted principles of Private International Law.

In the past, case law has admitted the application of treaties in force for Venezuela, but not for the other States involved in a specific case, either by analogy (Supreme Court of Justice, Political Administrative Chamber, judgment of 23 February 1981), or on the understanding that their solutions can be characterized as generally accepted principles of Private International Law (Second Court of First Instance in Commercial Matters of the Federal District and Miranda State, judgments of 29 February  1968 and 12 March 1970). Therefore, in this case, the arguments used by the court of appeal in analogically applying the Inter-American Convention were not erroneous.

The Civil Cassation Chamber, however, had another idea when it understood that the judge of appeal erred in the application of the Law of Curaçao to settle the case. Thus, the Chamber began by reaffirming the existence of “relevant foreign elements, such as the place of issuance of the bill of exchange, i.e., Curaçao, and the domicile of the parties involved in Venezuela”. The latter criterion, in fact, is not a foreign element, since it is located in the forum.

The Chamber then cites Article 1 of the Act on Private International Law, and concludes that there are no treaties in force, applicable to the case since Curaçao has not ratified any of the aforementioned treaties, and proceeds to the application of the domestic rules of Private International Law.

In particular, the Civil Chamber intends to determine, in the first place, the Law applicable to the form of the bill of exchange, which is why it resorts, rightly, to Article 37 of the Act on Private International Law, a rule that governs the form of all kinds of legal acts, which is perfectly applicable to bills of exchange, and also, as is well known, it establishes the locus regit actum principle in an alternative manner. Indeed, the rule allows the judge to choose between the Law of the place of conclusion of the act, which governs the substance of the act, and the Law of the domicile of the person doing the act, or of the common domicile of the persons doing the act.

Under Article 37, the choice of the connecting factor applicable to the specific case will depend on the favor validitatisprinciple, i.e., the judge must determine the Law applicable in order to favor the formal validity of the act. In this case, the Civil Chamber decided to apply the domicile criterion, without explaining why, although, basically, the reason can be intuited from the fact that the judge ended up applying Venezuelan law.

The Civil Chamber then begins its examination of the Law applicable to the merits and, in this regard, “finds it pertinent to bring up the provisions of Article 30 of the Act on Private International Law”, a rule that establishes the Law applicable to international contracts in cases where the parties have not chosen it. The nature of a bill of exchange can certainly be discussed, but it is not a contract.

In any case, the Civil Chamber does not justify its action, that is to say, it does not indicate the reason why a rule governing contracts should be applied to a bill of exchange. However, I do not know if this was consciously done, but it did leave out a series of points that are of great interest in the field of international contracts. Let us see.

The first thing the Chamber does is to identify, in accordance with Article 30 of the Law, the objective and subjective elements of the relationship, in order to determine with which Law the bill of exchange is more closely related and assumes for this purpose —although it does not quote it— the opinion expressed by Professor Fabiola Romero in her work “Derecho aplicable al contrato internacional” (in: Liber Amicorum, Homenaje a la Obra Científica y Académica de la profesora Tatiana B. de Maekelt, Caracas, Facultad de Ciencias Jurídicas y Políticas, UCV, Fundación Roberto Goldschmidt, 2001, Volume I, pp. 203 ss.), understanding that the subjective elements refer to the parties and the objective ones to the relationship itself.

Thus, the Civil Chamber includes in the subjective elements the nationality and domicile of the parties —all located in Venezuela—; and, within the objective elements, the place of subscription of the bill of exchange —Curaçao—, the place of payment —understanding as such the place indicated next to the name of the drawee and located in Curaçao—, and the fact that the bill is intended to be enforced and performed in Venezuela.

Then, in accordance with the last part of Article 30 of the Act on Private International Law, according to which the judge “shall also take into account the general principles of International Commercial Law recognized by international organizations”, the Civil Chamber analyzes such principles. And it does so considering their so-called conflictual function, since in this case they will be used, not to settle the merits, but to search for the Law applicable.

However, the principles sought by the Civil Chamber are contained in international treaties. Firstly, the 1980 Rome Convention on the Law Applicable to International Contracts —now absorbed by the 2008 Rome I Regulation—, which refers to the closest links, but based rather on the questioned criterion of the characteristic performance. Secondly, Article 9 of the Inter-American Convention on the Law Applicable to International Contracts, rule that inspired the solution of Article 30 of the Act on Private International Law.

After reaffirming the application of the Law with which the bill of exchange is most closely connected, the Civil Chamber refers Article 31 of the Act on Private International Law, and understands that “in the event of a dispute regarding the Law to be applied, in the case of a contract or obligation of international origin, in the absence of a choice of Law by the parties or when it is ineffective, the judge shall apply ‘…when appropriate…’, that is, according to the specific case, the Lex mercatoria, which includes the usages, customs and commercial practices of general international acceptance”.

This rule leads the Chamber to consider the UNIDROIT Principles and it decides to apply them on the basis of the so-called negative choice —a discussed solution in the world of arbitration—, admitted by the Preamble of the Principles. Indeed, the Principles may be applied “when the parties have not chosen any law to govern their contract”.

Thus, the Civil Chamber ends up understanding that, in the absence of indication by the parties, in case of a monetary obligation, the place of performance will be “at the obligee’s place of business” (art. 6.1.6[1][a]).

“Now, considering the objective and subjective elements that are directly linked to the referred bill of exchange, as well as the general principles of International Commercial Law accepted by international organizations, the customs and manners of international trade, known as Lex mercatoria, according to Articles 30 and 31 of the Act on Private International Law, it is concluded that the Law applicable to the performance of the bill of exchange shall be the Law of the place of performance, it is concluded that the Law applicable to resolve the merits of the case is Venezuelan Law, given that the parties are Venezuelans, their domicile is in the Bolivarian Republic of Venezuela and the commercial instrument, although signed in Curaçao, is intended to be enforceable in the Bolivarian Republic of Venezuela. It is hereby declared”.

The Civil Chamber applied Venezuelan Law to both the form and the substance of the bill of exchange. But there is more, when deciding on the merits, instead of following the solution of the UNIDROIT Principles and calculating interest according to the Law of the State of the currency of payment (art. 7.4.9), it did so instead “at the rate of five percent (5%) per annum, according to Article 456, ordinal 2° of the Venezuelan Commercial Code… for which the conversion into bolivars must be made at the rate established by the Central Bank of Venezuela for the day of payment, all this through a complementary expert opinion, in accordance with Article 249 of the Code of Civil Procedure and not as erroneously requested by the plaintiff, that is to say, calculated at the legal interest rates that have been fixed for each semester by the Central Bank for Curaçao and St. Martin (Centrale Bank Curaçao en Sint Maarten)” (bold in the original).

There are undoubtedly some noteworthy aspects of this decision that hopefully will be taken into account in the future in cases related to international contracting. Others, such as the characterization of a bill of exchange as a contract, the disregard of the possibility of applying international treaties by analogy or as general principles, and the calculation of interest on an international obligation, denominated in foreign currency, in accordance with Venezuelan Law, could rather be forgotten.

 

Translated by the author from her original post in Spanish.

 

Courts are often required to determine the existence or validity of jurisdiction agreements. This can raise the question of the applicable standard of proof. In common law jurisdictions, the question is not free from controversy.  In particular, Stephen Pitel has argued on this very blog that jurisdiction clauses should be assessed on the balance of probabilities, as opposed to the “good arguable case” standard that is commonly applied (see, in more detail, Stephen Pitel and Jonathan de Vries “The Standard of Proof for Jurisdiction Clauses” (2008) 46 Canadian Business Law Journal 66). That is because the court’s determination on this question will ordinarily be final – it will not be revisited at trial.

In this post, I do not wish to contribute to the general debate about whether the “good arguable case” standard is appropriate when determining the existence and validity of jurisdiction agreements. Rather, I want to draw attention to a particular feature of the English “good arguable case” standard that can cause problems when applied to jurisdiction agreements. The feature is that, in cases where the court is unable to say who has “the better argument”, it will proceed on the basis of plausibility (Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA Civ 10, [2019] WLR 3514 at [79]-[80]). Application of this lower standard may lead to unfairness in the treatment of jurisdiction agreements. The party who bears the burden of proof will get the benefit of the doubt that is inherent in the test. However, there is no principled way to allocate the burden. Should it be the party seeking to rely on the agreement, with the result that there is a kind of bias in favour of upholding jurisdiction agreements, or should it be the plaintiff, as was the approach taken recently by the New Zealand High Court in Kea Investments Ltd v Wikeley Family Trustee Limited [2023] NZHC 466?

The High Court in that case had granted an interim anti-enforcement injunction in relation to a default judgment from Kentucky (see Kea Investments Ltd v Wikeley Family Trustee Limited [2022] NZHC 2881, and my earlier post here). Kea Investments Ltd (Kea), a British Virgin Islands company, alleged that the US default judgment was based on fabricated claims intended to defraud Kea. It claimed that the defendants – a New Zealand company, an Australian resident with a long business history in New Zealand, and a New Zealand citizen – had committed a tortious conspiracy against it and sought a declaration that the Kentucky judgment would not be recognised or enforceable in New Zealand. Two of the defendants – Wikeley Family Trustee Limited and Mr Wikeley – protested the Court’s jurisdiction.

The Court set aside the protest to jurisdiction, dismissing an argument that Kea was bound by a US jurisdiction clause. One of the reasons for this was that the jurisdiction clause was unenforceable by virtue of Kea’s allegations of fraud and conspiracy (see here for a more extensive case note). The Court applied the “good arguable case” standard to determine the relevance of the allegations. It relied on the test in Four Seasons Holding Inc v Brownlie [2017] UKSC 80, which sets out the good arguable case standard applicable to “jurisdictional facts” that form the basis for an application to serve proceedings outside of the forum. Gault J considered that, even though the test in Four Seasons was concerned with the different scenario of a plaintiff seeking to establish jurisdictional facts to support an assumption of jurisdiction by the forum court, it was appropriate to apply the test by analogy to the defendants’ application for a stay or dismissal of the New Zealand proceeding by virtue of the US jurisdiction clause (at [44]).

However, the good arguable case test is especially difficult to apply in cases where the court is unable “to form a decided conclusion on the evidence before it and is therefore unable to say who has the better argument” (at Kaefer Aislamientos SA de CV v AMS Drilling Mexico SA de CV [2019] EWCA Civ 10, [2019] WLR 3514 at [79]). In such cases, the good arguable case inquiry is no longer a relative inquiry, and all that is needed is a plausible (albeit contested) evidential basis. It follows that the question of the burden of proof may become determinative.

Gault J considered that it was the plaintiff, Kea, that had to show a plausible evidential basis here. Thus, the Judge considered that Kea had to show “a plausible evidential basis” for its argument that there was no jurisdiction clause: “[t]he test is whether there is a plausible (albeit contested) evidential basis for the claimant’s case in relation to the jurisdiction clause (by analogy with the application of the relevant gateway). It is not whether the defendants have a plausible (albeit contested) evidential basis for their position that the Coal Agreement was executed by Kea” (at [60], see also [63]). In other words, it was Kea who was given the benefit of the doubt inherent in the test, and not the defendants.

It is likely that Gault J’s approach can at least to some extent be explained by reference to the peculiar facts of the case. However, if his approach were adopted more generally, the result would be that in cases of evidential uncertainty that cannot be resolved, the good arguable case inquiry necessarily favours plaintiffs over defendants, and New Zealand jurisdiction agreements over foreign jurisdiction agreements.  This would not be a desirable outcome.

The alternative is that the burden is on the party seeking to enforce the jurisdiction agreement. This seems to be the view adopted by Dicey, Morris and Collins on the Conflict of Laws (16th ed, at [12-093]). However, this approach is problematic too, because it introduces a bias in favour of upholding jurisdiction agreements. In Kaefer, the plaintiffs sought to rely on an English jurisdiction agreement under Art 25 of the recast Brussels Regulation. Commenting on the case, Andrew Dickinson argued that the application of the test of plausibility was not consistent with the scheme of the Regulation, which requires that “the defendant, not the claimant, … be given the benefit of the doubt” (“Lax Standards” 135 (2019) LQR 369). Dickinson pointed to the “significant unfairness to the defendant of being required to defend proceedings before a court other than that of his domicile in the absence of conclusive and relevant evidence that the court has jurisdiction under the Regulation”. I think that the concern is valid more generally. Why should any party – whether it is the defendant or the claimant – be held to a jurisdiction agreement even though there is only a plausible basis for its existence?

It follows that courts should always try to engage in a relative inquiry when determining the existence and validity of jurisdiction agreements. It is likely that this is already occurring in practice, and so perhaps the concerns raised in this post are more theoretical than real. If so, it is in the interest of legal certainty and accessibility that the test be clarified.

Further to my  post on first view articles for the second issue of ICLQ 2023, the second issue for ICLQ for 2023 was just published. It contains the following conflict of laws article that was not included in the first view articles:

S Camilleri, “Sense and Separability”:

This article explores the doctrine of separability, as understood in particular in the English legal tradition. It does so by reference to the decisions in Sulamérica Cia Nacional de Seguros SA and others v Enesa Engelharia SA and others and ENKA ?n?aat ve Sanayi A.?. v OOO ‘Insurance Company Chubb’ & Ors that explore the relevance of the concept when determining the law applicable to the arbitration agreement. These decisions largely treat the doctrine as irrelevant to the determination of the law governing the arbitration agreement. They do so because of the way in which English law views separability as tied inimically to the concept of enforcement of the arbitration agreement. This is unsurprising given the content of section 7 of the Arbitration Act 1996 and the position of the doctrine of separability as a legal fiction that must be restricted to its defined purpose. Viewed against the potential reform of the Arbitration Act 1996, the author asks whether a broader view of separability can be adopted. The author’s view is that there are cogent and compelling reasons for adopting a broader view, that would promote certainty and consistency in a way that is not best served by the current approach.

 

 

 

Written by Bill Dodge, the John D. Ayer Chair in Business Law and Martin Luther King Jr. Professor of Law at UC Davis School of Law.

In December 2022, Chinese lawmakers published a draft law on foreign state immunity, an English translation of which is now available. In a prior post, I looked at the draft law’s provisions on immunity from suit. I explained that the law would adopt the restrictive theory of foreign state immunity, bringing China’s position into alignment with most other countries.

In this post, I examine other important provisions of the draft law, including immunity from attachment and execution, service of process, default judgments, and foreign official immunity. These provisions generally follow the U.N. Convention on Jurisdictional Immunities of States and Their Property, which China signed in 2005 but has not yet ratified.

China’s draft provisions on immunity from attachment and execution, service of process, and default judgments make sense. Applying the draft law to foreign officials, however, may have the effect of limiting the immunity that such officials would otherwise enjoy under customary international law. This is probably not what China intends, and lawmakers may wish to revisit those provisions before the law is finally adopted.

Immunity from Attachment and Execution

Articles 13 and 14 of China’s draft law cover the immunity of foreign state property from “judicial compulsory measures,” which the U.N. Convention calls “measures of constraint” and the U.S. Foreign Sovereign Immunities Act (FSIA) refers to as measures of attachment and execution. They include both pre-judgment measures to preserve assets and post-judgment measures to enforce judgments. Under customary international law, immunity from attachment and execution is separate from and generally broader than immunity from suit. It protects foreign state property located in the forum state, in this case the property of foreign states located in China.

Article 13 provides that the property of a foreign state shall be immune from judicial compulsory measures with three exceptions: (1) when the foreign state has expressly waived such immunity; (2) when the foreign state has specifically designated property for the enforcement of such measures; and (3) to enforce Chinese court judgments when the property is used for commercial activities, relates to the proceedings, and is located in China. Article 13 further states that a waiver of immunity from jurisdiction shall not be deemed a waiver of immunity from judicial compulsory measures.

Article 14 goes on to identify types of property that shall not be regarded as used for commercial activities for the purpose of Article 13(3). These include the bank accounts of diplomatic missions, property of a military character, central bank assets, property that is part of the state’s cultural heritage, property of scientific, cultural, or historical value used for exhibition, and any other property that a Chinese court thinks should not be regarded as being in commercial use.

Articles 13 and 14 of China’s draft law closely parallel Articles 19-21 of the U.N. Convention. The main difference appears in Article 13(3)’s exception for enforcing court judgments, which is expressly limited to Chinese court judgments and requires that the property “relates to the proceedings.” Article 19(c) of the U.N. Convention, by contrast, is not limited to judgments of the state where enforcement is sought and does not require that the property relate to the proceedings. On first glance, China’s draft law appears to resemble more nearly § 1610(a)(2) of the U.S. FSIA, which is expressly limited to U.S. judgments and requires that the property be used for the commercial activity on which the claim was based.

Upon reflection, however, it appears that China’s limitation of draft Article 13(3) to Chinese court judgments sets it apart from the U.S. practice as well as the U.N. Convention. In the United States, a party holding a foreign judgment may seek recognition of that judgment in U.S. courts, thereby converting it into a U.S. judgment. Because the U.S. judgment recognizing the foreign judgment falls within the scope of § 1610(a), it is possible to attach the property of a foreign state in the United States to enforce a non-U.S. judgment.

It seems that the same is not true in China, which is to say that Article 13(3) cannot be used to enforce foreign judgments. Under Article 289 of China’s Civil Procedure Law (numbered Article 282 in this translation of the law prior to its 2022 amendment), the recognition of a foreign judgment results in a “ruling” (??). The text of Article 13(3), however, is limited to “judgments on the merits” (??), which appears to exclude Chinese decisions recognizing foreign judgments. (I am grateful to my students Li Jiayu and Li Yadi for explaining the distinction to me.) In short, Article 13(3) appears really to be limited to Chinese court judgments, as neither the U.N. Convention nor the U.S. FSIA are in practice.

There are other differences between the U.S. FSIA and China’s draft law. With respect to the property of a foreign state itself, the FSIA requires that the property be used for a commercial activity in the United States by the foreign state—even when the foreign state has waived its immunity—which can be a difficult set of conditions to satisfy. Articles 13(1) and (2) of China’s draft law, by contrast, impose no similar conditions. The U.S. FSIA has separate and looser rules for attaching the property of agencies or instrumentalities of foreign states in § 1610(b), rules that do not require the property to be used for a commercial activity in the United States as long as the agency or instrumentality is engaged in a commercial activity in the United States. And § 1611(b) of the FSIA singles out only central bank and military assets as exceptions to the rules allowing post-judgment attachment and execution, whereas the draft law’s Article 14 additionally mentions bank accounts of diplomatic missions, property that is part of the state’s cultural heritage, and property of scientific, cultural, or historical value used for exhibition.

Service of Process

China’s draft law also provides for service of process on a foreign state. Article 16 states that service may be made as provided in treaties between China and the foreign state or “by other means acceptable to the foreign state and not prohibited by the laws of the People’s Republic of China.” (The United States and China are both parties to the Hague Service Convention, which provides for service through the receiving state’s Central Authority.) If neither of these means is possible, then service may be made by sending a diplomatic note. A foreign state may not object to improper service after it has made a pleading on the merits. Again, this provision closely follows the U.N. Convention, specifically Article 22.

Section 1608 of the FSIA is the U.S. counterpart. It distinguishes between service on a foreign state and service on an agency or instrumentality of a foreign state. For service on a foreign state, § 1608 provides four options that, if applicable, must be attempted in order: (1) in accordance with any special arrangement between the plaintiff and the foreign state; (2) in accordance with an international convention; (3) by mail from the clerk of the court to the ministry of foreign affairs; (4) through diplomatic channels. For service on an agency or instrumentality, § 1608 provides a separate list of means.

Default Judgment

If the foreign state does not appear, Article 17 of China’s draft law requires a Chinese court to “take the initiative to ascertain whether the foreign state is immune from … jurisdiction.” The court may not enter a default judgment until at least six months after the foreign state has been served. The judgment must then be served on the foreign state, which shall have six months in which to appeal. Article 23 of the U.N. Convention is similar, except that it provides periods of four months between service and default judgment and four months in which to appeal.

U.S. federal courts must similarly ensure that a defaulting foreign state is not entitled to immunity, because the FSIA makes foreign state immunity a question of subject matter jurisdiction, and federal courts must address questions of subject matter jurisdiction even if they are not raised by the parties. Section 1608(e) goes on to state that “[n]o judgment by default shall be entered by a court of the United States or of a State against a foreign state … unless the claimant establishes his claim or right to relief by evidence satisfactory to the court.” In other words, courts in the United States are additionally obligated to examine the substance of the claim before granting a default judgment. China’s draft law does not appear to impose any similar obligation.

Foreign Officials

Article 2 of China’s draft law defines “foreign state” to include “natural persons … authorized … to exercise sovereign powers.” Thus, unlike the U.S. FSIA, China’s draft law may cover the immunity of some foreign officials.

The impact of the draft law on foreign official immunity is mitigated by Article 19, which says that the law shall not affect diplomatic immunity, consular immunity, special missions immunity, or head of state immunity. Article 3 of the U.N. Convention similarly specifies that these immunities are not affected by the Convention. What is missing from these lists of course, is conduct-based immunity. Under customary international law, foreign officials are entitled to immunity from suit based on acts taken in their official capacities, and such immunity continues after the official leaves office.

It appears that China’s draft law would govern the conduct-based immunity of foreign officials in Chinese courts and would give them less immunity than customary international law requires. By including “natural persons” within the definition of “foreign state,” the draft law makes the exceptions to immunity for foreign states discussed in my prior post applicable to foreign officials as well. Thus, foreign officials who engage in commercial activity on behalf of a state might be subject to suit in their personal capacities and not just as representatives of the state. This does not make much sense.

Although it appears that China simply copied this quirk from the U.N. Convention, it makes no more sense in Chinese domestic law than it makes in the Convention. Chinese authorities would be wise to reconsider this issue before the law is finalized. They could address the problem by adding conduct-based immunity to Article 19’s list of immunities not affected. Or, better still, they could omit “natural persons” from the definition of “foreign state” in Article 2.

Conclusion

Adoption of China’s draft law on foreign state immunity would be a major step in the modernization of China’s laws affecting transnational litigation. As described in this post and my previous one, the draft law generally follows the provisions of the U.N. Convention and would apply those rules to all states including states that chose not to join the Convention. The provisions of the U.N. Convention are generally sensible, but they are not perfect. In those instances where the U.N. Convention rules are defective—for example, with respect to the conduct-based immunity of foreign officials—China should not follow them blindly.

[This post is cross-posted at Transnational Litigation Blog.]

Save the date

On 19-20 October 2023 a conference on ‘Sustaining Access to Justice: Developments and Views on Costs and Funding’ will be held at Erasmus University Rotterdam. The conference is organised by the project team Affordable Access to Justice, financed by the Dutch Research Council. Confirmed keynote speakers include Rachael Mulheron (Queen Mary University London) and Andreas Stein (European Commission, DG Justice and Consumers, head of unit). More information on the program and registration will follow soon.

Call for papers

For this conference we invite submissions of abstracts from early career researchers and young practitioners.

The conference’s theme: Access to civil justice is of paramount importance for enforcing citizens’ rights. At the heart access to civil justice lies litigation funding and cost management. Yet, over the past decades, access to justice has been increasingly put under pressure due to retrenching governments, high costs of procedure, and inefficiency of courts and justice systems. Within this context, the funding of litigation in Europe seems to be shifting from public to private. Private actors and innovative business models emerged to provide new solutions to the old problem of financial barriers of access to justice. With the participation of policymakers, practitioners, academics and civil society representatives from all over Europe, the conference seeks to delve deeper into the financial implications of access to justice and the different ways to achieve sustainable civil justice systems in Europe. The topics addressed will include the different methods of financing dispute adjudication, particularly in the context of group litigation (third-party funding, crowdfunding, blockchain technologies), public interest litigation, developments in ADR/ODR, and the new business models of legal professionals.

Call for Papers: During the second day of the Conference (20 October) a panel will be organised which is intended to function as a forum for young scholars and young practitioners to present their work in front of a distinguished and broad audience. We particularly invite Early Career Researchers, PhD candidates (at an advanced stage of their PhD), and young practitioners to participate and present their research on the conference’s topics and beyond. While the contributions should fall within the Conference broader topic (costs and funding of civil justice), authors are free to include matters they deem interesting to explore within this context. Proposals can be theoretical, empirical as well as policy oriented. Interdisciplinary approaches and/or a Law & Economics approach are especially encouraged.

Submissions and deadline: Please submit an extended abstract (max 1000 words) in English to dori@law.eur.nl and cordina@law.eur.nl on 7 July 2023 at the latest. Please include your name, affiliation, and a link to your research profile. Submissions will be selected based on quality, originality, interdisciplinarity and the capacity to incite fruitful debates. Accepted submissions will be notified on 30 July 2023 at the latest. The selected participants will be asked to submit their final manuscript in early 2024.

The organisers aim to include the best papers in the conference proceedings, to be published as an edited volume with a reputable publisher. Further details in this regard will be communicated in due time.

Funding for travel and accommodation is available for the selected authors.

The conference venue will be @ Erasmus University Rotterdam – Woudestein Campus. The conference is organised by Erasmus School of Law in the context of the VICI Project ‘Affordable Access to Justice’. More information at: http://www.euciviljustice.eu/.

 

On Monday, May 8, 2023, the Hamburg Max Planck Institute will host its 33th monthly virtual workshop Current Research in Private International Law at 3:00 p.m. – 5:00 p.m. (CEST). Deviating from the usual format there will be an online panel on

Fundamental Rights and PIL after the decision of the German Constitutional Court on the Act to Combat Child Marriages*

The panelist are Henning Radtke (Judge at the Constitutional Court),  Dagmar Coester-Waltjen (Professor emeritus for PIL at University of Göttingen), Susanne Gössl (Professor for PIL at University of Bonn) and Lars Viellechner (Professor for Constitutional Law at University of Bremen). The discussion  discussion will be in German.

After opening statements from the panelists, the discussion will be opened to the audience. All are welcome. More information and sign-up here.

If you want to be invited to these events in the future, please write to veranstaltungen@mpipriv.de.

* Information on the decision here.

Less than half a year after the CJEU’s decision in Case C-646/20 Senatsverwaltung für Inneres (discussed here by Krzysztof Pacula), the Court had to engage again with the question of what constitutes a “judgment” in the sense of an EU instrument in Case C-291/21 Starkinvest.

This time, the question arose in the context of Regulation 655/2014 establishing a European Account Preservation Order procedure to facilitate cross-border debt recovery in civil and commercial matters. The regulation envisages two kinds of situation:

1. The creditor has already obtained a “judgment” (Art. 7(1)): In this case, the creditor only needs to show that there is an urgent need for a protective measure to ensure that the judgment can be effectively enforced against the debtor.
2. The creditor has not yet obtained a “judgment” (Art. 7(2)): In this case, the creditor also needs to show “that he is likely to succeed on the substance of his claim against the debtor”.

In Starkinvest, the claimant had obtained a decision from the Tribunal de commerce de Liège, Belgium, that ordered the debtor to cease seeling certain goods, subject to a penalty payment of EUR 2 500 per breach. On the basis of that decision, they later sought payment of EUR 85 000 in penalties, which they requested the referring court to secure through a European Account Preservation Order. Confronted with the question of how to characterise the initial decision in the context of the above dichotomie, the court referred the case to the CJEU.

The CJEU followed the advice of Advocate General Szpunar, holding that

Article 7(2) of [the Regulation] must be interpreted as meaning that a judgment that orders a debtor to make a penalty payment in the event of a future breach of a prohibitory order and that therefore does not definitively set the amount of that penalty payment does not constitute a judgment requiring the debtor to pay the creditor’s claim, within the meaning of that provision, such that the creditor who requests a European Account Preservation Order is not exempt from the obligation to provide sufficient evidence to satisfy the court before which an application for that order is brought that he or she is likely to succeed on the substance of his or her claim against the debtor.

In reaching that decision, the court emphasised the fact that in a case like this, the precise amount of the debt had not yet been established by a court (see paras. 51–52, 55); accordingly, there was no sufficient justification for exempting the claimant from the requirement to satisfy the court that they are likely to succeed on the merits.

This post is also available via the EAPIL blog.

 

On 25 April 2023 the German Federal Ministry of Justice (Bundesministerium der Justiz – BMJ) has published a bill relating to the establishment of (international) commercial courts in Germany. It sets out to strengthen the German civil justice system for (international) commercial disputes and aims to offer parties an attractive package for the conduct of civil proceedings in Germany. At the same time, it is the aim of the bill to improve Germany’s position vis-à-vis recognized litigation and arbitration venues – notably London, Amsterdam, Paris and Singapore. Does this mean that foreign courts and international commercial arbitration tribunals will soon face serious competition from German courts?

English-language proceedings in all instances

Proposals to improve the settlement of international commercial disputes before German courts have been discussed for many years. In 2010, 2014, 2018 and 2021, the upper house of the German Federal Parliament (Bundesrat) introduced bills to strengthen German courts in (international) commercial disputes. However, while these bills met with little interest and were not even discussed in the lower house of Parliament (Bundestag) things look much brighter this time: The coalition agreement of the current Federal Government, in office since 2021, promises to introduce English-speaking special chambers for international commercial disputes. The now published bill of the Federal Ministry of Justice can, therefore, be seen as a first step towards realizing this promise. It heavily builds on the various draft laws of the Bundesrat including a slightly expanded version that was submitted to the Bundestag in 2022.

The bill allows the federal states (Bundesländer) to establish special commercial chambers at selected regional courts (Landgerichte) which shall, if the parties so wish, conduct the proceedings comprehensively in English. Appeals and complaints against decisions of these chambers shall be heard in English before English-language senates at the higher regional courts (Oberlandesgerichte). If the value in dispute exceeds a threshold value of 1 million Euros and if the parties so wish, these special senates may also hear cases in first instance. Finally, the Federal Supreme Court (Bundesgerichtshof) shall be allowed to conduct proceedings in English. Should the bill be adopted – which seems more likely than not in light of the coalition agreement – it will, thus, be possible to conduct English-language proceedings in at least two, maybe even three instances. Compared to the status quo, which limits the use of English to the oral hearing (cf. Section 185(2) of the Court Constitution Act) and the presentation of English-language documents (cf. Section 142(3) of the Code of Civil Procedure) this will be a huge step forward. Nonetheless, it seems unlikely that adoption of the bill will make Germany a much more popular forum for the settlement of international commercial disputes.

Remaining disadvantages vis-à-vis international commercial arbitration

To begin with, the bill – like previous draft laws – is still heavily focused on English as the language of the court. Admittedly, the bill – following the draft law of the Bundesrat of March 2022 – also proposes changes that go beyond the language of the proceedings. For example, the parties are to be given the opportunity to request a verbatim record of the oral proceedings. In addition, business secrets are to be better protected. However, these proposals cannot outweigh the numerous disadvantages of German courts vis-à-vis arbitration. For example, unlike in arbitration, the parties have no influence on the personal composition of the court. As a consequence, they have to live with the fact that their – international – legal dispute is decided exclusively by German (national) judges, who rarely have the degree of specialization that parties find before international arbitration courts. In addition, the digital communication and technical equipment of German courts is far behind what has been standard in arbitration for many years. And finally, one must not forget that there is no uniform legal framework for state judgments that would ensure their uncomplicated worldwide recognition and enforcement.

Weak reputation of German substantive law

However, the bill will also fail to be a resounding success because it ignores the fact that the attractiveness of German courts largely depends on the attractiveness of German law. To be sure, German courts may also apply foreign law. However, their real expertise – and thus their real competitive advantage especially vis-à-vis foreign courts – lies in the application of German law, which, however, enjoys only a moderate reputation in (international) practice. Among the disadvantages repeatedly cited by practitioners are, on the one hand, the numerous general clauses (e.g. §§ 138, 242 of the German Civil Code), which give the courts a great deal of room for interpretation, and, on the other hand, the strict control of general terms and conditions in B2B transactions. In addition – and irrespective of the quality of its content – German law is also not particularly accessible to foreigners. Laws, decisions and literature are only occasionally available in English (or in official English translation).

Disappointing numbers in Amsterdam, Paris and Singapore

Finally, it is also a look at other countries that have set up international commercial courts in recent years that shows that the adoption of the bill will not make German courts a blockbuster. Although some of these courts are procedurally much closer to international commercial arbitration or to the internationally leading London Commercial Court, their track record is – at least so far – rather disappointing.

This applies first and foremost to the Netherlands Commercial Court (NCC), which began its work in Amsterdam in 2019 and offers much more than German courts will after the adoption and implementation of the bill: full English proceedings both in first and second instance, special rules of procedure inspired by English law on the one hand and international commercial arbitration law on the other, a court building equipped with all technical amenities, and its own internet-based communication platform. The advertising drum has also been sufficiently beaten. And yet, the NCC has not been too popular so far: in fact, only 14 judgments have been rendered in the first four years of its existence (which is significantly less than the 50 to 100 annual cases expected when the court was set up).

The situation in Paris is similar. Here, a new chamber for international commercial matters (chambre commerciale internationale) was established at the Cour d’appel in 2018, which hears cases (at least in parts) in English and which applies procedural rules that are inspired by English law and international arbitration. To be sure, the latter cannot complain about a lack of incoming cases. In fact, more than 180 cases have been brought before the new chamber since 2018. However, the majority of these proceedings are due to the objective competence of the Chamber for international arbitration, which is independent of the intention of the parties. In contrast, it is not known in how many cases the Chamber was independently chosen by the parties. Insiders, however, assume that the numbers are “negligible” and do not exceed the single-digit range.

Finally, the Singapore International Commercial Court (SICC), which was set up in 2015 with similarly great effort and ambitions as the Netherlands Commercial Court, is equally little in demand. Since its establishment, it has been called upon only ten times by the parties themselves. In all other cases in which it has been involved, this has been at the instigation of the Singapore High Court, which can refer international cases to the SICC under certain conditions.

No leading role for German courts in the future

In the light of all this, there is little to suggest that the bill, which is rather cautious in its substance and focuses on the introduction of English as the language of proceedings, will lead to an explosion – or even only to a substantial increase – in international proceedings before German courts. While it will improve – even though only slightly – the framework conditions for the settlement of international disputes, expectations regarding the effect of the bill should not be too high.

 

Note: Together with Yip Man from Singapore Management University Giesela Rühl is the author of a comparative study on new specialized commercial courts and their role in cross-border litigation. Conducted under the auspices of the International Academy of Comparative Law (IACL) the study will be published with Intersentia in the course of 2023.

It is with great sadness that we have learned of the untimely passing of Oliver Remien, Professor at the University of Würzburg, Germany, on Monday, 24 April 2023.

Oliver Remien, born in 1957, wrote his doctoral and habilitation theses at the Hamburg Max Planck Institute, where he worked as an assistant to Ulrich Drobnig. He joined the University of Würzburg in 2001. An area of perpetual interest for him was the comparison of European private law(s), with a particular focus on the “Four Freedoms” of primary EU law, the growing impact of secondary EU law, and the practilities of the increasingly frequent application of foreign law in the domestic courts of the Member States.

Our thoughts are with his family.

Good news for the University of Bonn|HCCH Conference on “The HCCH 2019 Judgments Convention: Cornerstones – Prospects – Outlook“, taking place in Bonn on 9 and 10 June 2023:

As of 1 April 2023, the German Federal Government as well as the local authorities have lifted all Covid-related restrictions. Therefore, registration is now possible without submitting any documents of vaccination. As it appears, there has never been a better time to register…

We are looking forward to welcoming a truly international audience at the beautiful premises of the University Club, located just a stone’s throw away from the river Rhine.

For all of you who have already registered and received a confirmation from our office, please be assured that there is nothing more to be done at the moment.