Conflictoflaws

Written by Marco Farina, Italian lawyer, PhD in Civil Procedural Law at the University La Sapienza of Rome – Adjunct Professor of Civil Procedural Law at the University LUISS of Rome

In a judgment rendered on 16 September 2021, the Italian Supreme Court (Corte di Cassazione) reversed a decision from the Court of Appeal of Rome, which had denied recognition and enforcement of a monetary judgment issued by the Royal Court of Guernsey, due to a breach of the fundamental rights of defence allegedly occurred in the proceedings.

The Court of Appeal of Rome reasoned under Article 64 (b), of the Italian Act on Private International Law (Law 31 May 1995 no. 218), which provides, inter alia, that a foreign judgment may be not recognized and enforced if fundamental rights of defence have been breached in the foreign proceedings.

The Court of Appeal found that a relevant breach of the fundamental rights of defence had occurred because, at the outset of the proceedings, a worldwide freezing injunction (associated with a disclosure order) had been issued against the defendant. In the Court of Appeal’s opinion, the injunction and its effects altered the procedural equality of the parties before the foreign court, since it was a “highly coercive measure against the defendant who is not only severely affected in the free disposal of his assets, but is also exposed to the risk of even being deprived of his personal freedom, if he does not cooperate with his counterpart in the identification of his assets to be seized” (English translation).

This relevant alteration of the procedural equality of the parties existed, according to the Court of Appeal, because, whilst the defendant was impacted by this order, the plaintiff was not.

In the end, the Court of Appeal held that the injunction issued against the defendant had “the concrete ability – in the absence of any conduct of the defendant indicating that he intended to harm the claimant’s rights – to limit, restrict, diminish the defendant’s ability to defend itself, both in imposing significant limitations on the free disposal of his assets and in constraining him to collaborate with the claimant before of preparing its own defence. All this, while nothing of the same kind affected the assets or the defensive opportunities of the claimant. The defendant, therefore, found himself in a much weaker defensive position than his counterpart” (English translation).

The Supreme Court found several flaws in this reasoning.

Firstly, the Supreme Court held that if, in principle, it could not be denied that a relevant alteration of the procedural equality might amount to a breach of the fundamental rights of defence, the mere fact that the judgment to be recognized and enforced in Italy had been preceded by a provisional order – in the form of an injunction (associated with a disclosure order) – could not, in any case, lead to such a breach.

Regarding the functioning of a freezing injunction issued by a common law court, the Supreme Court asserted that (i) the injunction is sought to preserve the defendant’s assets until judgment can be obtained or satisfied, (ii) the injunction may be rendered when the claimant has shown a good arguable case and a risk of dissipation exists, (iii) it operates in personam; therefore, its effectiveness depends on the threat of punishment for contempt of court, and (iv) it is usually associated with other orders, which are aimed at rendering the freezing injunction more effective, thus constraining the affected party to identify its assets and their location (disclosure order) under the threat of being excluded (debarred) from the proceedings (unless order).

Having said that, the Supreme Court went on to state that, in the case at hand, the injunction was associated with a disclosure order but not with an unless order. So, even if the defendant were not to comply with the injunction and the disclosure order, he remained fully entitled to participate in the proceedings defending himself as no exclusion and/or debarring was pronounced against him.

In the light of the above, the Supreme Court had good reason to observe that the Court of Appeal should not have found any breach in the fundamental rights of defence (in terms of the alteration of the procedural equality of the parties) since – as the same Italian Supreme Court held in its previous judgment (judgment no. 11021 rendered on 9 May 2013 in the well-known Gambazzi case, following the decision from CJEU in Case C-394/07, 2 April 2009, Gambazzi) – the right to a fair trial should be considered breached in the event of “manifest and disproportionate infringement of the defendant’s right to be heard” (English translation).

Thus, the Supreme Court noted that, if a judgment rendered against a defendant who – due to his failure to comply with a disclosure order associated with a freezing injunction – had been excluded and/or debarred from the proceedings, must be recognized and enforced in Italy (see again judgment no. 11021 of 9 May 2013 in the Gambazzi case), a fortiori a monetary judgment rendered against the defendant whose participation in the proceedings had not been prevented notwithstanding its failure to comply with the disclosure order associated with the freezing injunction, ought to be recognized and enforced in Italy.

The validity of this line of reasoning must be inferred, according to the Supreme Court, from the injunction (and the disclosure order which was associated with it) being a provisional and protective measure aimed at preserving the claimant’s right to enforce the judgment which might be rendered in its favour at the end of the proceedings on the merits. Therefore, such measures are as much an essential part of the common law procedural system as the attachment and/or preservation orders are in Italy (sequestro conservativo, Article 671 of Italian Code of Civil Procedure).

Hence, asserting that – as the Court of Appeal did – the mere fact that a freezing injunction has been issued and enforced against a defendant (and not against the claimant) amounts to a breach of the right to a fair trial (in terms of the alteration of the procedural equality of the parties), would insinuate that a breach of the fundamental right of defence occurs in Italy every time a claimant succeeds in obtaining a protective measure against the defendant, when the former is not addressed with the same measure.

This is not an alteration of the procedural equality of the parties. On the contrary, this is the essence of litigation between two parties in an adversarial system.

It is natural in contentious civil proceedings that the party against whom a claim is brought may be affected by measures which result in finding itself in a different situation from that of the claimant. This cannot, by definition, give rise to any relevant breach of the fundamental rights of defence in terms of violation of the principle of the so-called ‘equality of arms’. For example, in the ordinary proceedings instituted by the debtor for opposing an enforceable order of payment obtained by the creditor, the debtor finds himself in different position from that of the creditor; a defendant, in ordinary civil proceedings, finds himself in a different situation from that of the claimant who has obtained – before or during the proceedings – an attachment order for the defendant’s assets.

Accordingly, provided that both parties are granted equal chances to obtain and enforce a protective and/or provisional measure, is part of the ordinary functioning of a civil proceeding that a party will succeed in obtaining it and the other will not.

In the case at hand – the Supreme Court noted – both parties were granted equal and fair chances of defence as, (i) the freezing injunction and the disclosure order were given ex parte but the defendant was given the right to apply to the court to vary or reverse the order, and (ii) the claimant had assumed the obligation of complying, under the same threat of the “contempt of court”, with any subsequent order of the Court condemning the claimant for any loss suffered by the defendant.

Moreover, the Supreme Court asserted that nothing to the contrary may be inferred from the fact that the injunction and the disclosure order operate in personam and that the infringement thereof triggered the consequences of a “contempt of court”. The Cassazione did not see any violation of the fundamental rights of defence, all the more because the Italian legal system features cases in which a failure to comply with a judicial order could amount to a criminal offence.

The judgment of the Italian Supreme Court can be read here (in Italian).

By Julian Henrique Dias Rodrigues

 

The Brazilian Superior Court of Justice reinforced the understanding that a foreign judgment that sets the amount of child support must be enforced even if the high economic-financial standard of the country of origin gives rise to an excessive amount, when compared to the national standards.

 

The case concerns the enforcement in Brazil of a decision from the District Court of Bludenz, in the Republic of Austria, against a debtor residing in Brazil.

The Austrian court set the monthly amount of maintenance at EUR 290.00 and determined that the amounts in arrears totaled EUR 35,090.00.

The debtor claimed that the decision could not be enforced since such amount would be totally unreasonable in relation to the economic reality of the defendant, characterizing the foreign decision as violating human dignity and the basic principles of the Brazilian legal system by ignoring the socioeconomic reality of Brazil and of the defendant in particular.

However, the Court emphasized that the enforcement of a foreign decision is a merely formal act, whereby is not possible to enter into the merits of the original dispute, nor investigating any injustice of the foreign decision. This enforcement, therefore, has the sole and exclusive purpose of transferring into the Brazilian legal system a decision handed down abroad, provided the formal requirements required by Brazilian law are met.

With this, the enforcement does not deprive the debtor of the possibility of filing a suit to review the amount of the child support, in view of the alleged disparity between the economic realities in Brazil and in the country where the amount was fixed.

The decision was rendered in Application HDE n.º 4.289 (Special Section of the STJ) and took into consideration the requirements under Brazilian law for enforcement of a foreign decision.

Brazilian legal framework on enforcement of foreign decisions

The Brazilian Federal Constitution states that the enforcement of foreign judgements is a competence of the Superior Court of Justice (STJ). The Brazilian legal instrument, therefore, for the recognition of foreign decisions is, in Portuguese, the Ação Especial de Homologação de Decisão Estrangeira (HDE).

The requirements for the enforcement of a foreign judgment through HDE are foreseen in Article 963 of Código de Processo Civil (CPC) and in Articles 216-C and 216-D of the Internal Rules of the STJ. In this regard, it is worth remembering that neither Brazil nor Austria ratified the Convention of 2 October 1973 on the Recognition and Enforcement of Decisions Relating to Maintenance Obligations.

The article 216-D states that the foreign decision must:

1. have been rendered by a competent authority,
2. contain evidence that the parties have been duly summoned or that a default judgement has been legally issued, and

• have become effective or res judicata in the country in which it was rendered.

According to Article 216-F a foreign decision shall not be enforced if that offends national sovereignty, human dignity and/or public order.

In short, the debtor argued that the economic disparity and the lack of analysis by the Austrian Court about his financial condition in particular would imply a violation of human dignity and the Brazilian legal order, but the Brazilian Court found that these issues would be a question of merit, and not of formal requirements. Whereas related to the merit of the suit filed before the foreign Court, these questions cannot be analyzed before the Court in the exercise of its competence merely to enforce the decision rendered abroad.

Click here to access the full decision (in Portuguese)

 

 

Thomas Pfeiffer/Quincy C. Lobach/Tobias Rapp (Eds.), “Facilitating Cross-Border Family Life – Towards a Common European Understanding”, Heidelberg University Publishing 2021 (link)

The EUFams II consortium has just released the project’s Final Study. The volume contains the papers presented at the project’s Final Conference. The contributors were invited to present historical developments, discuss the status quo, and draw the lines along which European family and succession law may develop. The authors hope to inspire the readership and the scientific community at large to engage in further research along and across these lines.

The book is available both online (open access) as well as in print (link). Its contributors are (in alphabetical order): Marlene Brosch, Laura Carballo Pineiro, Diletta Danieli, Rosario Espinosa Calabuig, Ivana Kunda, Quincy C. Lobach, Cristina M. Mariottini, Ulf Maunsbach, Nicolo Nisi, Cinzia Peraro, Thomas Pfeiffer, Paula Poretti, Tobias Rapp, Lenka Valkova, Ilaria Viarengo, Francesca Villata, Marcel Zühlsdorff, and Mirela Zupan.

The EUFams II project (2018-2020) was coordinated by the Institute for Comparative Law, Conflict of Laws and International Business Law of Heidelberg University. Project partners were the Universities of Lund, Milan, Osijek, Valencia, and Verona as well as the MPI Luxembourg. This blog has previously reported on some of the project’s research outputs, including the Final Conference.

This project was funded by the European Union’s Justice Programme (2014-2020). The content of this study represents the views of the authors only and is their sole responsibility. The European Commission does not accept any responsibility for use that may be made of the information it contains.

This week the European Union has given notice to all stakeholders that is preparing an initiative relating to justice and fundamental rights, the purpose of which is to enact the implementing acts establishing the decentralised IT system to be used for cross-border service of documents and cross-border taking of evidence. Click here and here.

This is in accordance with the Regulation (EU) 2020/1784 of the European Parliament and of the Council of 25 November 2020 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents) (recast) and the Regulation (EU) 2020/1783 of the European Parliament and of the Council of 25 November 2020 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters (taking of evidence) (recast).

As stated in the notifications, the implementing acts will set out the technical specifications of the methods of communication and communication protocols, security objectives and relevant technical measures, minimum availability objectives and the establishment of a steering committee.

It is planned for the first quarter of 2022.

The Private Side of Transforming our World
UN Sustainable Development Goals 2030and the Role of Private International Law

September 9-11, 2021, Hamburg, Germany,
Max Planck Institute for Comparative and Private International Law

By Madeleine Petersen Weiner and Mai-Lan Tran

The Max Planck Institute for Comparative and Private International Law hosted a hybrid conference on the Institute’s premises, and digitally via Zoom, under the above title from September 9-11, 2021, on the occasion of the publication of the nearly 600-page anthology “The Private Side of Transforming our World – UN Sustainable Development Goals 2030 and the Role of Private International Law”.

The Sustainable Development Goals (“SDGs”) include 17 goals for sustainable development. Formulated by the United Nations in 2015, they form the core of the 2030 Agenda and aim to enable people worldwide to live in dignity while respecting the earth’s ecological limit. Fighting poverty and other global ills, improving health and education, reducing inequality and boosting economic growth while combating climate change are the themes of this agenda, also referred to as a “contract for the future of the world”. In Public Law, including International Law, SGDs have already established themselves as a subject of research. This has not been the case for Private Law so far. The project “The Private Side of Transforming our World – UN Sustainable Development Goals 2030 and the Role of Private International Law” addresses this research gap identified by the editors and organizers of the conference, Ralf Michaels, Director of the Max Planck Institute for Comparative and International Private Law (D), Verónica Ruiz Abou-Nigm, Senior Lecturer at Edinburgh Law School , University of Edinburgh (UK) and Hans van Loon, former Secretary General of the Hague Conference on Private International Law (NL). The project‘s aim was to raise awareness that Private International Law („PIL“), with its institutions and methods, can also make a significant contribution to achieving these goals.

The conference was structured around the individual SDGs and was divided into six overarching thematic blocks. Renowned and emerging scholars from around the world presented excerpts from their research for the anthology on the relationship between PIL and each of the SDGs. Following the contributions of the individual speakers, discussants for each thematic block pointed out connecting lines and questions within the respective clusters and stimulated the discussion on the podium with initial questions and sometimes provocative theses. Afterwards, the floor was opened to questions from the audience. Next to the organizers, Maria Mercedes Albornoz, Centro de Investigación y Docencia Económicas (MEX), Duncan French, University of Lincoln (UK), and Marta Pertegás, Maastricht University (NL), took on the role of discussants.

The mix of speakers as well as the audience were very international, also thanks to the hybrid format. The English-language conference was translated simultaneously into Spanish for the audience dialed in via Zoom.

After a warm welcome by the organizers, the conference kicked off with the “Basic Socio-Economic-Rights” cluster. The first speaker, Benyam Dawit Mezmur, University of the Western Cape (ZAF), focused on SDG 1 “No Poverty”. He stated that this was a very ambitious goal and that the COVID-19 pandemic had actually increased poverty in the world. He went on to point out that it was the poverty of refugee children that needed to be addressed. PIL could contribute to this by simplifying the recognition of status.

Jeannette Tramhel, Organization of American States (USA), then commented on SDG 2 “No Hunger”. She talked about an “elephant in the room” in the goal of eliminating world hunger by 2030, referring to the discussion of whether the industrial agri-food system (“Big Ag“) was the solution to the puzzle, or rather its cause. This “elephant” then ran not only proverbially but also figuratively through her presentation. She then addressed harmonized regimes such as the Hague Conference on Private International Law 2005 Choice of Court Convention, which she believes provide an effective contribution to the goal. Avoiding parallel proceedings, she said, would also be beneficial for internationally operating companies in the agricultural and food sectors.

This first set of topics was concluded by the presentation of Anabela Susana de Sousa Gonçalves, University of Minho (PRT), on SDG 3 “Good health and well-being”. She first talked about telemedicine and e-health platforms with cross-border functions. With these resources, universal health coverage and healthcare as such – even in the poorest countries of the world – could be supported by PIL.

After a joint lunch break, the participants turned their attention to the second set of topics, “Energy, Work and Infrastructure.” Nikitas E. Hatzimihail, University of Cyprus (CYP), kicked off the session. He spoke on SDG 7 “Affordable and clean energy”. He advocated using the regulatory function of PIL to help achieve some harmonization of regulatory standards at the global level and thereby contribute to the efficient achievement of regulatory goals.

Ulla Liukkunen, University of Helsinki (FIN), then outlined the main findings from her chapter on SDG 8 “Decent Work and Economic Growth”. In her presentation, she spoke in favor of broadening the perspective on existing regulatory approaches in PIL. Workers’ rights should be placed at the center, and laws as well as legal practices should also be evaluated from this point of view.

In the third and last presentation on the topic, Vivienne Bath, University of Sydney (AUS), dealt with SDG 9 “Industry, Innovation and Infrastructure”. She elaborated on PIL’s fundamental role in infrastructure projects, starting with contractual issues and ending with dispute resolution. Summing up, she argued for an approach that was more concerned with sustainability than with enforcing the commercially based doctrines of choice of law autonomy and the importance of binding parties to their choice of forum.

A short coffee break refreshed the speakers and the audience for the final set of topics of the day, “Education, Gender and Socio-Economic Inequality.” Here, first Klaus D. Beiter, North-West University, Potchefstroom (ZAF), gave an insight into his findings on SDG 4 “Quality Education”. At the outset, he emphasized his difficulties in even recognizing a link to PIL, since education is a central task of the state. However, according to Beiter, the link becomes clear when one observes the progressive privatization of the education sector. He identified as a problem that shortcomings in the education sector on the part of the state in the Global South were being systematically exploited by companies in the global North. PIL thus must be further developed in order to offer more protection to the “weaker” actors in the education sector.

Gülüm Bayraktaro?lu-Özçelik, Bilkent University, Ankara (TUR), followed by highlighting the role of PIL in achieving SGD 5 “Gender Equality”. She showed that gender equality issues can play a role in all traditional areas of PIL (such as applicable law or jurisdiction) as well as specifically in the recognition of marriages. On the one hand, a one-size-fits-all approach would not do justice to all areas. On the other hand, the opportunities of cross-cutting soft law instruments, such as the guiding principles for the realization of gender equality, also in cross-border matters, should not be negated but further explored.

Lastly, Thalia Kruger, University of Antwerp (BEL), spoke on SDG 10 “Reduced inequalities”. Inequality exists on many levels and plays a role in many different places in PIL. In her presentation, she focused on tort law. Inequality could be countered by adequate compensation of the injured parties by the damaging parties. She also expressed her disappointment at the failed attempt to create a new conflict of laws provision in the Rome II Regulation for human rights violations. A draft by the European Parliament’s Legal Affairs Committee had envisaged giving injured parties the right to choose between four possible applicable legal systems. Criticism was voiced that the right of choice would create too much legal uncertainty for companies. Kruger countered that companies would simply have to comply with all and thus the highest standard of the four possible applicable laws.

The first day culminated in the live book launch of the anthology at Intersentia. In order to make it available to as many people as possible worldwide, it was made freely accessible online (open access) at www.intersentiaonline.com – the current preliminary version soon to be replaced by the final text.  A PDF version of the book will also be available for free download on the website, as will print versions of the book.

The second day of the conference began with a presentation by Eduardo Álvarez-Armas, Brunel University of London (UK) and Université catholique de Louvain (BEL), on SDG 13 “Action on Climate Change”. Using the example of the recent lawsuit of the environmental organization Milieudefensie and other environmental associations against Royal Dutch Shell before the District Court of The Hague, which was successful in the first instance, and the lawsuit of the Peruvian farmer Lliuya against RWE AG, which has been pending in the second instance at the Higher Regional Court of Hamm since 2017, Álvarez-Armas attested to the ability of PIL in the form of Private International Law Climate Change Litigation to contribute to the realization of SDG 13.

Tajudeen Sanni, Nelson Mandela University (ZAF), also attested to the discipline’s potential in the context of transnational claims by local communities dependent on the sea and its resources, in light of SDG 14, “Life Below Water”. He advocated further development of PIL principles in light of the SDGs; the choice of applicable law should be made on the basis of which of the possible ones called upon to apply (better) promotes sustainable development.

To conclude this fourth Cluster, “Climate and Planet,” Drossos Stamboulakis, University of the Sunshine Coast (AUS), presented his insights on SDG 15, “Life on Land”. In his view, the necessary redesign of PIL to make it fruitful for sustainable development should avoid stripping PIL of its legitimacy based on technical and dogmatic answers.

Finally, the organizers were able to secure Anita Ramasastry, University of Washington, Member of the U.N. Working Group on Business and Human Rights, as keynote speaker. She was able to identify overarching leitmotifs in the debate and at the same time set her own impulses. PIL could provide guidelines for promoting responsible corporate conduct. However, transnational corporations have so far been understood by the discipline predominantly as a problem but not as (positive) actors. Against this backdrop, her recommendation was to delve deeper into what kind of positive roles business could play in the future.

The remainder of the morning was devoted to the somewhat broader topic „Living Conditions”. Klaas Hendrik Eller, University of Amsterdam (NL), kicked it off with SDG 11 “Sustainable Cities and Communities”. He was guided by the question of how PIL’s rich experience in identifying, delineating, and addressing conflicts could help create an appropriate forum for spatial justice issues in a global city.

Geneviève Saumier, McGill University (CAN), then addressed SDG 12 “Sustainable consumption and production”. In her view, PIL has so far fallen short of its potential. Provisions that ensure access to justice, especially in the case of lawsuits against transnational corporations, as well as choice-of-law rules that provide ex ante incentives for producers to comply with higher standards of potentially applicable laws could change this.

The third presentation of this set of topics was given by Richard Frimpong Oppong, California Western School of Law, San Diego (USA), considering SDG 6 “Clean Water and Sanitation”. He did not deny PIL’s supporting role in the management of water and sanitation resources. Ultimately, however, the problems associated with achieving SDG 6 were too complex and multifaceted to be solved by the traditional methods of PIL and adversarial litigation (alone).

After the lunch break, Sabine Corneloup, University Paris II Panthéon-Assas (FRA), and Jinske Verhellen, Ghent University (BEL), commented on SDG 16 “Peace, Justice and Strong Institutions” in the last Cluster “Rights, Law and Cooperation”. They put their focus on target 16.9 – legal identity in the context of migration. They showed that restrictive migration policies of the Global North counteract one of the fundamental goals of PIL, cross-border continuity. Only when issues of legal identity are separated from migration policy decisions does PIL have the potential to ensure that identity across borders has real value and enable migrants to exercise their rights.

For Fabricio B. Pasquot Polido, Federal University of Minas Gerais (BRA), who was scheduled to be the last speaker of the afternoon on SDG 17 “Partnerships to Achieve the Goals”, but was unfortunately unable to attend at short notice, Hans van Loon stepped in. In light of SDG 17, he shared his practical experience regarding cross-border cooperation between administrations and courts as former Secretary General of the Hague Conference on Private International Law. He reported on the remarkable developments in the organization’s relations with Latin America, and incrementally with the Asia-Pacific region. Looking to the future, he looked at efforts to build appropriate partnerships to Africa as well, and a possible Hague Conference convention on private international law aspects of   environmental and climate change issues.

With heartfelt thanks to all participants, the organizers finally closed the public part of this extremely diverse and inspiring conference, which sees itself rather as the beginning than the end of the joint project under the hashtag #SDG2030_PIL.

On the morning of the last day of the conference, the organizers and speakers met internally to pick up on the impulses of the two previous days, to continue the threads of discussion from bilateral talks in a large group and to develop the future of the project.

The conference set itself ambitious goals in terms of both organization and content. The hybrid format, up till now untested, was a complete success and, as Ralf Michaels already pointed out in his introductory remarks to the conference, excellently reflected the nature of PIL; it united international and local levels.

In terms of content, the conference was in no way inferior to this (technical) success. On the contrary, it not only convinced speakers and discussants, who had shared their initial reservations about the PIL’s power of impact for sustainable development in the sense of the SDGs, but also convinced the audience to acknowledge the private side of the transformation of our world through the diversity and substantive precision of the contributions. It was a great pleasure and honor for the two authors of this summary to witness the contagious commitment of the project’s participants to the discipline’s assumption of responsibility for the realization of the SDGs in beautiful, late-summer Hamburg.

 

Madeleine Petersen Weiner and Mai-Lan Tran are doctoral candidates at the Chair of Prof. Dr. Marc-Philippe Weller at the Institute for Private International Law and International Business Law at Heidelberg University. Madeleine Petersen Weiner also works as a Research Assistant at this institute.

Vacating the interim injunction that was granted earlier this year to prevent CG Corp. Global – a Nepal-based company, registered in India from manufacturing and selling its instant noodles under the name of Wai Wai X-Press Noodles Majedar Masala in a passing-off action by ITC Ltd, the Karnataka High Court formulated detailed guidelines to ascertain the circumstances in which there will be a passing-off of a trademark and an infringement of copyright under Indian law.[1] The Karnataka High Court was exercising its appellate jurisdiction under Section 13(1A) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 (CCA) that authorizes the creation of commercial courts in India. These courts are equally competent to adjudicate domestic and international disputes on matters that fall within the purview of the Act. The scope of the legislation is vast and includes, inter alia, disputes concerning intellectual property rights such as trademarks, copyright, patents, designs or geographical indications – which will be considered of a commercial nature if the value of the subject matter is more than INR 3,00,000. The Act confers jurisdiction over the Commercial Division of the High Courts – as a court of the first instance – whenever the dispute arises within the local limits of Delhi, Bombay, Calcutta, Madras or Himachal Pradesh. In all other States of India, the commercial courts created at the district level will be competent to adjudicate such matters. The legislation has been promulgated to promote trade and commerce in India by fast-tracking the settlement of such disputes. In matters of intellectual property such as these, the Act confers the Commercial Court or the Commercial Division of the High Court in some states with the exclusive jurisdiction to adjudicate such matters, which were initially within the domain of the District Courts.

The Commercial Appellate Division of the Karnataka High Court was faced with the predicament of whether the defendant, CG Corp, had damaged ITC’s goodwill and reputation by incorporating a similar colour scheme of red and orange in packaging its Wai Wai X-Press Noodles Majedar Masala. As a result, ITC claimed that the defendant’s product was deceptively similar to its Sunfeast Yipee! Magic Masala Noodles and, thus, CG Corp’s act constituted passing-off and an infringement of ITC’s copyright under Indian law.

Rejecting ITC’s contentions, the court formulated a two-pronged formula to ascertain the circumstances in which a defendant could be considered to have passed off a product as that of the claimant – to have violated the latter’s registered trademark. In doing so, the court placed emphasis on the position under English law as emphasized in Payton v Snelling,[2] Lampard; Reckitt & Colman v Borden;[3] and Pasquali Cigarette Co Ltd v Diaconicolas & Capsopolus.[4]

The first and foremost factor, as the court stressed, would be to identify the features in the plaintiff’s product that are distinctive to him or her. As the court elaborated, distinctiveness in this context refers to distinctiveness in law as opposed to distinctiveness in fact. Distinctiveness in fact, as the court clarified, are the features of the mark that are distinctive according to the claimant’s perspective. Instead, the claimant must clearly demonstrate whether the hypothetic person or the class of persons constructed and identified by the court are likely to be deceived by the similarities in the product. The identification of the hypothetical persons would essentially depend on a variety of factors and, in particular, the nature of the goods sold, the circumstances of the sale and the class of persons to whom the product is targeted. Drawing an analogy with surgical and pharmaceutical products, the court elaborated that in a product such as this, the hypothetical person would be an ordinary purchaser and one of average intelligence – who being neither too careful nor too careless and knowing more or less the peculiar characteristics of the product, accepts what he or she is given after examining the general appearance of the article. It is unlikely, as the court further substantiated, for the ordinary consumer to mentally capture every minute detail of the packaging of the product – including the colour scheme.

Having regard to the circumstances of the case, the court asserted that the dominating feature in the claimant’s product remains the verbal as opposed to the visual marks because the ‘striking and most distinguishing feature of the defendant’s wrapper was its-brand name Sunfeast Yipee! Therefore, CG’s act cannot constitute passing-off under Indian law unless ITC can demonstrate that the deception was likely to occur even if the expression Sunfeast Yippee! was missing from the CG’s product which, instead, had its own brand name (Wai Wai X-Press Noodles Majedar Masala). The court’s observation was substantiated on a variety of factors – including the claimant’s marketing strategy and central arguments in past litigation. Consequently, the court took note of a previous dispute that was initiated by the claimant against Nestle on a similar ground, where the plaintiff argued that the latter had led the customers to believe that the Maggi’s Magic Masala Noodles (sold by Nestle) and the plaintiff’s Sunfeast Yippee! Magic Masala Noodles were one and the same. In that case, the claimant, ITC, had argued that the expression ‘Magic Masala’ as distinctive to its mark.

Further, the court noted that the claimant had adopted a similar strategy in its advertising campaigns -whether the striking feature remained its brand name – Sunfeast Yippee! as opposed to the colour combination. Referring to the decisions of the English courts in Payton v Snelling, Lampard and Pasquali Cigarette Co. Ltd. v Diaconicolas & Capsopolus, the court stated that regardless of how ‘novel, original or striking’ the colour scheme may be, it was not a feature that was relied upon by the ordinary purchaser to identify the source of the product. As the court further asserted, the chief question invariably remains: what is the function that the get-up of the product actually serves and not how well that get-up has been designed to serve that purpose.

The second factor would be to discern whether the products being manufactured and sold by the defendant are ‘deceptively similar’ to the one’s being manufactured by the claimant. However, whether the goods were in fact deceptively similar would be assessed only after it has been ascertained whether the goods bearing the mark were distinctive in law according to the criterion indicated above. In order to assess whether the defendant’s product was deceptively similar to the plaintiff’s, not merely the features that bear a resemblance with the plaintiff’s product would be considered – but also the measures that were undertaken by the defendant to eliminate the possibility of confusion would be considered.

Therefore, in situations (such as these) where there has been no direct misrepresentation, whether there has been passing-off as a result of deceptive similarity would, in turn, depend on two factors –

1. a) that the name, mark or distinctive feature had acquired a reputation among a class of persons and
2. b) that the mark or feature, being the same or sufficiently similar, had led those persons to believe that the goods are from the same or a connected source.

The comparison of the marks or features discern whether they are the same or sufficiently similar, must be done by looking at all the surrounding circumstances – and whether it is likely to cause confusion in the minds of the hypothetical customer that has been identified based on the principles to ascertain whether the mark/feature is distinctive in law. Consequently, the manner in which the goods or services were supplied would bear a strong influence in ascertaining whether the consumer is likely to be deceived. Here, the role of the mark or the feature and the various ways in which the product is being sold so as to influence the decisions of the consumers in purchasing the product will play a predominant role. In the present case, the court evaluated the significance and the role that the red and orange colour scheme had to play in the various ways in which the product has been sold – but also the way in which the ordinary hypothetical consumer is likely to behave in its ‘noodle-purchasing decisions’. Consequently, the court concluded that the fact that the defendant’s product similarly incorporated the red and orange colour scheme was of little relevance in confusing the hypothetical consumer – regardless of the way in which the product is being purchased. In digital shopping, the search words ‘Red-Orange Noodles’ did not even result in the display of the products of either of the parties – in turn demonstrating how unlikely it was for the consumers to be deceived merely by the similarities in the colour scheme. Likewise, in brick and mortar stores, it was unlikely for the consumer to ask for red and orange packet noodles instead of providing the shopkeeper with the brand name. Even if, in the very improbable situation, the consumer did ask for red and orange packet noodles, it was unlikely for the shopkeeper to directly reach out for the claimant’s product.

Having regard to the aforementioned factors, the court further noted that ITC’s copyright had not been violated, either chiefly because CG Corp has not copied the essential features of the former’s product. Merely showing some similarity in the non-essential features would not suffice and would not constitute a copyright violation under Section 51 of the Copyright Act, 1957.[5]

Despite being of persuasive value to courts outside Karnataka, by being a judgment of the High Court, the judgment is likely to have far-reaching consequences by providing the much-needed clarity under Indian law and, in particular, the provisions of the Trade Marks Act, 1999, which presently does not substantiate the circumstances that constitute ‘passing off’ under Indian law. Instead, the Act merely indicates the right to relief to the aggrieved party in the form of an injunction when its trademark has been passed off by the defendant. The judgment could also shape the decision of the mediation panel in a suit of a similar nature that was recently initiated by Nestle against the same defendant (CG Corp. Global) on the ground that the latter’s Wai Wai Noodles were deceptively similar to the Swiss-based corporation’s Maggi Noodles. As per the provisions of the CCA, the mediation proceedings would have to be concluded within ten days – failing which the matter would be transferred to the Delhi High Court under Section 7 of the CCA for further hearing.

 

 

[1] See, ITC Ltd v CG Goods (India) Private Limited, Commercial Appeal No. 105/2021 (dated 28 September 2021).

[2] 1901 AC 308.

[3] [1990] 1 All E.R. 873.

[4] 1905 TS 472.

[5] Act No. 14 of 1957.

Published by Hart/Bloomsbury as a part of their Asia-Private International Law Series, this provides an authoritative account of the evolution and application of private international law principles in India in civil, commercial and family matters. Through a structured evaluation of the legislative and judicial decisions, the authors examine the private international law in the Republic and whether it conforms to international standards and best practices as adopted in major jurisdictions such as the European Union, the United Kingdom, the United States, India’s BRICS partners – Brazil, Russia, China and South Africa and other common law systems such as Australia, Canada, New Zealand, and Nepal.

Divided into 13 chapters, the book provides a contextualised understanding of legal transformation on key aspects of the Indian conflict-of-law rules on jurisdiction, applicable law and the recognition and enforcement of foreign judgments or arbitral awards. Particularly fascinating in this regard is the discussion and focus on both traditional and contemporary areas of private international law, including marriage, divorce, contractual concerns, the fourth industrial revolution, product liability, e-commerce, intellectual property, child custody, surrogacy and the complicated interface of ‘Sharia’ in the conflict-of-law framework.

The book deliberates the nuanced perspective of endorsing the Hague Conference on Private International Law instruments favouring enhanced uniformity and predictability in matters of choice of court, applicable law and the recognition and enforcement of foreign judgments.

The book’s international and comparative focus makes it eminently resourceful for legislators, the judges of Indian courts and other interested parties such as lawyers and litigants when they are confronted with cross-border disputes that involve an examination of India’s private international law. The book also provides a comprehensive understanding of Indian private international law, which will be useful for academics and researchers looking for an in-depth discussion on the subject.

 

Dr Stellina Jolly is a Senior Assistant Professor at the Faculty of Legal Studies, South Asian University (SAU), an international organisation established by the regional group of the South Asian nations (SAARC). A Fulbright Scholar with the University of San Francisco and a recipient of the International Visitors Leadership Program (IVLP), she researches on International Environmental Law and Conflict of Laws. Dr Saloni Khanderia is presently a Professor of Law at the Jindal Global Law School, India and an Alexander von Humboldt Fellow (Experienced Researcher) at the Chair for Civil Law, International Private Law and Comparative Law, Ludwig Maximilians Universität, München.

 

Back in September, AG Rantos presented his Opinion in the case TOTO, C-581/20. As reported previously, at the request of the Court, the Opinion confined itself solely to the second preliminary question on the interpretation of Article 35 of the Brussels I bis Regulation.

In its judgment delivered today, the Court addresses all three preliminary questions of the referring court. These questions concern the concept of “civil and commercial matters” in the sense of Article 1(1) of the Brussels I bis Regulation (first preliminary question), subsequent application for provision/protective measures lodged before a court not having jurisdiction as to the substance of the matter (second preliminary question) and EU law- or purely national law- dependent modalities for ordering such measures (third preliminary question).

 

Factual background and context of preliminary questions

The questions referred for a preliminary ruling are raised in the context of a contract concluded between two Italian companies and the Director of a Polish central authority for road management/construction, acting in the name and on the behalf of the Polish State Treasury (in essence, the State itself; hereinafter referred to as “the public authority”). Under the said contract, concluded following a public procurement procedure, the companies are supposed to construct a public road in Poland.

The contract itself provides for some contractual penalties, in particular for its late performance by the companies. Guarantees are provided by a Bulgarian insurance company in order to cover the potential (non-)fulfillment of the obligations assumed by these companies.

Before a Polish court, the companies bring an action against the public authority for a negative declaration that, in substance, aims to oblige the defendant not to make use of the guarantees. The companies also request provisional/protective measures. Their request is rejected.

In parallel with the procedures pending before the Polish court, they apply for analogous measures before a Bulgarian court. The first instance court rejects the application. The second instance court orders the measures and the public authority brings an administrative appeal before the referring court, the Supreme Court of Cassation of Bulgaria.

In its administrative appeal, the public authority contests, in particular, the applicability of the Brussels I bis Regulation in the interim proceedings pending in Bulgaria. It argues that these proceedings do not fall within the scope of the concept of “civil and commercial matters” in the sense of Article 1(1) of the Regulation (first preliminary question). In its request for a preliminary ruling, the referring court also asks the Court to provide guidance as to the interpretation of Article 35 (second and third preliminary questions).

 

Concept of “civil and commercial matters” and its interplay with immunity from jurisdiction

Echoing the inquires of the public authority, by its first question the referring court seeks to establish whether the proceedings pending before the Bulgarian courts fall within the scope of the concept of “civil and commercial matters” and, as a consequence, within the scope of the Brussels I bis Regulation.

The Court answers this question in the affirmative: in particular, the Court reaffirms the finding made in its judgments in Rina, C-641/18 and Supreme Site, C-186/19, according to which a public purpose of certain activities (here, it seems: the conclusion of the contract for a construction of a public road and potentially its performance) does not, in itself, suffice to exclude a case from the scope of application of the Brussels I bis Regulation (paragraphs 39 and 41).

In its answer to the first preliminary question, the Court also clarifies further the interplay between that concept of “civil and commercial matters” and the immunity from jurisdiction.

In fact, under Article 393 of the Bulgarian Code of Civil Procedure (BCCP), the interim measures for securing a pecuniary claim brought against, inter alia, the State and public bodies are not permissible. For the Court, that provision seems to establish an immunity from jurisdiction in favour of some defendants: States and public authorities. However, referring the judgment in Supreme Site, C-186/19 on the immunity from execution (more precisely, its point 62, which refers to point 72 of the Opinion in that case), the Court indicates, in essence, that the immunity from jurisdiction does not automatically exclude an action brought before a national court from the scope of the concept of “civil and commercial matters” (paragraph 44).

(on a side note: conversely, if this is not the case and the Bulgarian provision does not provide for an immunity from jurisdiction, the provision in question may be potentially read as providing for a material immunity, on the level of substantive law; see also the third preliminary question outlined below; other residual interpretation could view the Bulgarian provision as providing for an immunity from jurisdiction departing from what is required under public international law, nothing, however, supports that reading of the provision at hand).

 

Subsequent application for provisional/protective measures

By its second preliminary question, the referring court seeks to establish whether a Bulgarian court not having jurisdiction as to the substance of the matter is precluded from pronouncing provisional/protective measures under Article 35 of the Brussels I bis Regulation in a situation where a Polish court having jurisdiction as to the substance of the matter has already given a ruling on an application for identical provisional/protective measures and rejected the application.

In his Opinion, AG Rantos argued that in a situation described in the preliminary question the court not having jurisdiction as to the substance of the matter should not pronounce the provisional/protective measures and must decline jurisdiction.

By contrast, for the Court, a court of a Member State not having jurisdiction as to the substance of the matter, seized with a subsequent application for provisional/protective measures, is not obliged to declare that it lacks jurisdiction to rule on the application for the measures in question (paragraph 60).

 

Provisional/protective measures as a matter of procedural autonomy ?

By its third preliminary question the referring court seeks to establish whether the application for provisional/protective measures has to be examined in the light of EU law or purely in the light of the national law of the court seized with the application.

Interestingly, also this question is inspired by Article 393 of the BCCP, under which interim measures for securing a pecuniary claim brought against, inter alia, the State and public bodies are not permissible. Thus, applied in the proceedings before the Bulgarian courts, this provision has the potential of barring any application for interim measures against the public authority.

However, the referring court considers that examining the application for provisional/protective measures in the light of EU law would mandate it to benchmark the national provisions on such measures against the principle of effectiveness and, potentially, to disapply Article 393 of the BCCP (paragraph 25).

In other terms, the referring court seems to frame the question as one on the procedural autonomy and its limitations. If this assumption is correct, the provisions of the BCCP would govern the exercise of the right provided for in Article 35 of the Brussels I bis Regulation. Logically, it seems that the assumption is based on a consideration that the role of Article 35 of the Regulation goes beyond providing for an alternative forum before which an application for provisional/protective measures can be made: it provides an alternative “effective” forum or, if one would wish to go even further, it provides a right to request (and obtain) some minimal provisional/protective measures before a court not having jurisdiction as to the substance of the matter.

For the Court, this does not seem to be the case. Under Article 35 of the Regulation a court of a Member State not having jurisdiction as to the substance of the matter may order measures “available under the law of that Member State”. This provision ensures the availability of an alternative forum to the applicant, without guarantying that provisional/protective measures themselves will be also available to him/her (paragraph 64).

Before drawing a final conclusion on the merits of the aforementioned assumptions/consideration: while the issue pertaining to the principle of effectiveness (“principe d’effectivité”) has been directly invoked by the referring court, it is true that in the present case the Court has not been expressly called to pronounce itself on the effectiveness (“effet utile”) of Article 35 or on the right to effective judicial protection guaranteed under Article 47 of the Charter. Thus, at least for some it may be still a question of debate whether “effet utile” of Article 35 confines itself to the pure availability of an alternative forum. Either way, that debate could benefit from taking into account point 20 of the judgment in Bier, C-21/76 and point 49 of the judgment in AMS Neve e.a., where the Court considered that the effectiveness (“effet utile”) of these provision calls for their interpretation under which they do provide the alternative fora, that do not coincide with those available for the claimants under general rules of jurisdiction.

 

The judgment is available here (no English version so far).

 Comparative Procedural Law and Justice (CPLJ) is a global project of the Max Planck Institute Luxembourg for Procedural Law, with the support of the Luxembourg National Research Fund (019/13946847), involving more than one hundred scholars from all over the world.

CPLJ is envisioned as a comprehensive study of comparative civil procedural law and civil dispute resolution schemes in the contemporary world. It aims at understanding procedural rules in their cultural context, as well as at highlighting workable approaches to the resolution of civil disputes.

In this framework, the Max Planck Institute Luxembourg for Procedural Law will host its 7th CPLJ Webinar on 21 October 2021, 3:00 – 5:30 pm (CEST)

The programme reads as follows:

Chair, Enrique Vallines (Max Planck Institute Luxembourg)

3:00 pm Shahla Ali (University of Hong Kong)

Transcending Generalisations in Comparative Law Research – East Asian Perspectives in a Global Context

3:30 pm Discussion

4:00 pm Intermission

4:15 pm Eduardo Oteiza (National University of La Plata)

Who knew only his Bible knew not his Bible: Thoughts from Latin America

4:45 pm Discussion

5:30 pm Closing of the event

The full programme is available here.

For more information and to register, see here.

(Image credits:  Rijksmuseum, Amsterdam)

 

The long-awaited Rome II Study commissioned by the European Commission, evaluating the first ten years of the application of the Rome II Regulation on the applicable law to non-contractual obligations, has been published. It is available here. The Study was coordinated by BIICL and Civic and relies on legal analysis, data collection, a consultation of academics and practitioners, and national reports by rapporteurs from the Member States. The extensive study which also includes the national reports, discusses the scope of the Regulation and the functioning of the main rules, including the location of damages under Art. 4 Rome II, which is problematic in particular in cases of prospectus liability and financial market torts. As many of our readers will know, one of the issues that triggered debate when the Rome II Regulation was negotiated was the infringement of privacy and personality rights, including defamation, which topic was eventually excluded from the Regulation. While it has been simmering in the background and caught the attention of the Parliament earlier on, this topic is definitely back on the agenda with the majority opinion being that an EU conflict of laws rule is necessary.

Three topics that the European Commission had singled out as areas of special interest are: (1) the application of Rome II in cases involving Artificial Intelligence; (2) business and human rights infringements and the application of Art. 4 and – for environmental cases – Art 7; and (3) Strategic Lawsuits against Public Participation (SLAPPs). For the latter topic, which is currently also studied by an expert group installed by the European Commission, the inclusion of a rule on privacy and personality rights is also pivotal.

The ball is now in the court of the Commission.

To be continued.

The federal courts of appeal are split over whether state or federal law governs claims brought under the Foreign Sovereign Immunities Act, which waives sovereign immunity for foreign entities in certain cases. Sometimes, this is an outcome-determinative question.

In the case of Cassirer v. Thyssen-Bornemisza Collection Foundation, the heirs of a Holocaust survivor are seeking to recover a painting by French impressionist Camille Pissarro that was stolen by the Nazis in 1939. The 1897 painting is currently on display in the Thyssen-Bornemisza Museum, a Spanish state museum in Madrid. The U.S. Court of Appeals for the Ninth Circuit ruled against the heirs, saying that federal law called for the application of Spanish law, which allows the holder of stolen property to obtain title through the doctrine of adverse possession. The heirs claim California law, which never allows the holder of stolen property to obtain good title, applies. 

Last week, the U.S. Supreme Court agreed to resolve the question. The pleadings are available on SCOTUSBlog here; more coverage of this interesting issue will follow.

On Tuesday, Oct 5, 2021, the Hamburg Max Planck Institute will host its 14th  monthly virtual workshop Current Research in Private International Law at 11:00-12:30. Jürgen Basedow (Max Planck Institute for Comparative and International Private Law) will speak, in German, about the topic Aufgabe und Methodenvielfalt des Internationalen Privatrechts im Wandel der Gesellschaft

 

The presentation will be followed by open discussion. 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.

Against the background of “One Belt, One Road” initiative and the construction of Guangdong-Hong Kong-Macau Great Bay Area, after being elevated to be a national free trade zone a few years ago, Henqin Island located in Zhuhai City of Guangdong Province and neighboring Macau was re-labelled as the deeper integration (cooperation) area between Guangdong and Macau days before. To keep up with this political pace, the Zhuhai Court of International Arbitration (ZCIA) now regularly running its business in Henqing Island was established by the Zhuhai Arbitration Commission with the hope that international business people especially those pursuing Sino-Portuguese speaking countries trade could choose Henqin as the seat for their arbitration. In honor of the National Day of the People’s Republic of China, Oct 1st, ZCIA publicized its updated arbitration rules yesterday. However, this time three versions of different languages were provided simultaneously ie Chinese, Portuguese and English, the last of which was translated by myself. For its latest arbitration rules, please see http://www.zhac.org.cn/?cat=3.

Membership

On 9 September 2021, Honduras deposited its instrument of acceptance of the Statute, becoming the 90th Member of the HCCH. More information is available here.

Conventions & Instruments

On 1 September 2021, the HCCH 1993 Adoption Convention entered into force for Niger. The Convention currently has 104 Contracting Parties. More information is available here.

On 16 September 2021, Costa Rica signed the HCCH 2019 Judgments Convention. Although the 2019 Judgments Convention is not yet in force, Costa Rica is its fourth signatory. More information is available here.

On 16 September 2021, the HCCH 1961 Apostille Convention entered into force for Singapore. The Convention currently has 120 Contracting Parties. More information is available here.

Meetings & Events

On 14 and 15 September 2021, the Experts’ Group on Family Agreements met for the fifth time, via videoconference. The Group discussed the most recent revision of the draft Practical Guide on cross-border recognition and enforcement of agreements reached in the course of family matters involving children. More information is available here.

From 28 to 30 September 2021, the Working Group on Preventing and Addressing Illicit Practices in Intercountry Adoption met via videoconference. The Group continued to work on the development of a Toolkit aimed at preventing and addressing illicit practices in intercountry adoptions made under the HCCH 1993 Adoption Convention.

On 28 September 2021, the HCCH Regional Office for Asia and the Pacific hosted the webinar “HCCH|Approach: Twenty-Five Years of the HCCH 1996 Child Protection Convention in the Asia and Pacific Region: Present, Development and Future”. More information is available here.

Publications & Documentation

On 23 September 2021, the Permanent Bureau announced the publication of translations of 19 new translations of the Guide to Good Practice under the Child Abduction Convention: Part VI – Article 13(1)(b). With these new translations, the Guide to Good Practice is now available in 23 European Union (EU) languages. More information is available here.

Other

On 22 September 2021, the Permanent Bureau announced the successful outcome of a new EU Action Grant application for iSupport. This new project will be called iSupport ITMF (International Transfer of Maintenance Funds), as it will aim at establishing a link between the iSupport software and bank accounts held by Central Authorities. More information is available here.

 

These monthly updates are published by the Permanent Bureau of the Hague Conference on Private International Law (HCCH), providing an overview of the latest developments. More information and materials are available on the HCCH website.

The HCCH is pleased to announce that registration for the HCCH|Approach Global Event is now open!

Join us online on Tuesday, 19 October for a day of panel discussions and talks by global experts on occasion of the 25th anniversary of the HCCH 1996 Child Protection Convention.

How does the Convention impact children on the move? What is its significance to the implementation of the UN Convention on the Rights of the Child? How does it apply to matters of relocation, custody and contact? Hear more about these and other topics on 19 October!

For more information, please visit the HCCH|Approach webpage.

To attend, please fill out the registration form.

Is the international (foreign) element required at the outset, at the time of conclusion of the contract, in order to trigger the applicability of the rules on jurisdiction of the Lugano II Convention on jurisdiction over consumer contracts and to protect the consumer from being sued outside of the State of his (her) domicile?

This is the question that the Court of Justice addresses in its judgments delivered this Thursday in the case Commerzbank, C-296/20.

Factual background

A consumer domiciled in Germany concludes a contract, through a branch in the same State, with a company whose head office is also situated in the said State.

Fast-forward a few years, the consumer relocates to Switzerland. Few months later, the professional brings an action against the consumer before a German court.

The first instance court declares the action inadmissible on the ground that it lacks jurisdiction. The appeal brought by the professional before the second instance court is unsuccessful. Ultimately, the case is brought before the Bundesgerichtshof, which refers the case to the Court of Justice.

 

Outline of the preliminary questions…

In its request for a preliminary ruling, the Bundesgerichtshof acknowledges that the sole possible basis for the international jurisdiction of the German courts lies within Article 5(1) of the Lugano II Convention (jurisdiction in matters relating to contract: place of performance of the contractual obligation; supposedly in Germany). In fact, the consumer was domiciled in Switzerland at the time when proceedings were brought and thus the German courts have no international jurisdiction either under Article 2(1) of the Convention (domicile of the defendant) or under its Article 16(2) (jurisdiction for the proceedings brought against a consumer: domicile of the defendant).

However, in the light of Articles 15(1)(c) and 16(2) of the Lugano II Convention, the consumer can be sued before the courts of the State in which he or she is domiciled, if – as the former provision puts it – “the contract has been concluded with a person who pursues commercial or professional activities in the State bound by this Convention of the consumer’s domicile or, by any means, directs such activities to that State or to several States including that State, and the contract falls within the scope of such activities”.

It may seem that, for the Bundesgerichtshof, Article 15(1)(c) presupposes that the other party to the contract is a person who pursues commercial or professional activities abroad, in the State bound by the Convention of the consumer’s domicile or, by any means, directs such activities to that State and the contract comes within the scope of such activities.

Thus, a doubt arises: a contract concluded in a purely national situation, with no international (foreign) element present, is capable of falling within the scope of Article 15(1)(c) of the Lugano II Convention due to the subsequent relocation of one of the parties to the contract to a different State?

In substance, this is the legal issue that lies at the heart of the preliminary questions referred to the Court.

The first preliminary question boils down to the following point: does Article 15(1)(c) of the Lugano II Convention apply also in the situation where the parties were domiciled in the same State bound by the Convention at the time when the contract was concluded and a foreign element to the legal relationship arose only subsequently because the consumer relocated at a later date to another State bound by the Convention.

In the affirmative, by its second question, the Bundesgerichtshof asks whether it also necessary for the activities of the professional to be pursued in or directed to the new State of domicile of the consumer and for the contract to come within the scope of such activities.

 

… and of the Court’s answer

Earlier this month, AG Campos Sánchez-Bordona delivered his Opinion in the case at hand. Geert Van Calster provided a comprehensive summary of its findings and I am happy to refer to his contribution. For some further interesting remarks see also the editors’ post at the EAPIL blog.

As for the judgment itself, the reasoning of the Court is straightforward: referring to the order in mBANK on the Brussels I bis Regulation, the Court hold that also under the Lugano II Convention the concept of “consumer’s domicile” must be interpreted as designating the consumer’s domicile at the date on which the court action is brought (paragraph 36).

The Court observes then, in particular, that Article 15(1)(c) of the Lugano II Convention does not require, neither explicitly nor implicitly, for the activities of the professional to be directed to a State other than the State in which the professional is established (paragraph 42).

Concerning the predictability of the forum for the professional, the Cour observes that actor sequitur forum rei is a principle central for the Convention itself, pursuant to its Article 2(1) (paragraph 54).

In the light of the above, the Court provides an answer according to which a contract falls within the scope of Article 15(1)(c) of the Lugano II Convention also in the event of a  subsequent appearance of the international (foreign) element, due to the relocation of the consumer’s domicile.

The judgment is available here (in French and German, no English version at the time of posting).

The Supreme Court’s so-called “Long Conference” was held on Monday. At this meeting of the Justices to start the Court’s new Term, they decide among the thousands of petitions that have piled up over the summer recess which ones warrant the Court’s review. Looking at the petitions discussed in this conference can be a bellwether for the types of issues percolating through the U.S. courts. Here, I will provide a summary of a few that might be interesting to readers of this site.

First and foremost, regular court-watchers will see a rerun from last term, when the Court decided to resolve a stubborn split of authority regarding discovery pursuant to 28 U.S.C. 1782 and whether it can be invoked in support of a private, commercial arbitration. The case granted from last term (Servotronics, Inc. v. Rolls-Royce PLC) settled before it could be argued and decided, but the same issue has come forward again. The petition in ZF Automotive US v. Luxshare Ltd., from the Sixth Circuit, again asks “[w]hether 28 U.S.C. § 1782(a), which permits litigants to invoke the authority of United States courts to render assistance in gathering evidence for use in ‘a foreign or international tribunal,’ encompasses private commercial arbitral tribunals, as the U.S. Courts of Appeals for the 4th and 6th Circuits have held, or excludes such tribunals, as the U.S. Courts of Appeals for the 2nd, 5th and 7th Circuits have held.”

Another common component of nearly every Supreme Court term are cases involving the Foreign Sovereign Immunities Act. This year is no different—and it is another case of World War II-era stolen artwork. This year, the petition in Cassirer v. Thyssen-Bornemisza Collection Foundation asks “[w]hether a federal court hearing state law claims brought under the Foreign Sovereign Immunities Act must apply the forum state’s choice-of-law rules to determine what substantive law governs the claims at issue, or whether it may apply federal common law.” This issue presents another split of authority on federal statutory interpretation, with the Ninth Circuit in conflict with the Scond, Fifth, Sixth and D.C. Circuits.

The Federal Arbitration Act is another frequent flyer on the Supreme Court docket. Among several petitions regarding this Act is an interesting decision from the highest court in Delaware, which seemingly split from the decisions of two federal appellate courts and failed to apply the Supreme Court’s increasingly stringent guidance to enforce arbitration agreements. The question presented in Eni USA Gas Marketing LLC v. Gulf LNG Energy, LLC is, in essence, whether the Federal Arbitration Act allows a court to disregard a broadly-written arbitration clause—which vests the question of arbitrability to the arbitrators—simply because one party asserts that the claim to be arbitrated constitutes a “collateral attack” on a prior award.

Some of these petitions may be granted—statistically, most will not. But even if they are denied, their inclusion here demonstrates the discord that exists among the U.S. court on issues that touch upon international litigation, arbitration, and foreign sovereign relations.

For a full accounting of the most promising cases discussed at the “long conference,” and links to the pleadings in the cases discussed above, see the exhaustive treatment done here by SCOTUSBlog.

Join us on Friday, 8 October 2021 for the HCCH webinar “Birth of an International Treaty: The 2019 Judgments Convention”! 

In this lecture, the HCCH will take you behind the scenes of the negotiation of its newest treaty. Adopted in July 2019, the Judgments Convention establishes a common framework for the global circulation of judgments in civil or commercial matters, overcoming the complexities arising from differences in legal systems. Once it enters into force, it will increase legal certainty and predictability, essential elements for international trade and business. 

Join us to discover how the Judgments Convention was negotiated and adopted!  

More information, including the registration form, is available here.   

 

On Thursday 7 and Friday 8 October 2021, the University of Strasbourg will host a symposium on mutual trust in the Area of freedom, security and justice. The purpose of the symposium is to explore the current crises affecting mutual trust between EU Member States, and to draw perspectives for the future of judicial cooperation in the EU. The full program is available here Registration is open at jnyobe@unistra.fr.

The event is organised by Emanuel Castellarin, Etienne Farnoux and Samuel Fulli-Lemaire, professors at the University of Strasbourg.

 

The call for abstracts for the ‘Transnational Dispute Resolution in an Increasingly Digitalized World’ conference is now open until 1 December 2021. This online conference will be hosted by the Center for the Future of Dispute Resolution at Ghent University on Thursday 24 March 2022.

The increased digitalization in the field dispute resolution, which received a boost from the Covid-19 pandemic, raises a number of important questions in terms of privacy, cybersecurity, data protection and artificial intelligence, going from rather practical concerns (how to protect the information exchanged, how to organize the taking of evidence, how to comply with the various obligations, etc.) to more fundamental inquiries (does it scare litigants off, does it foster or rather compromise efficiency, etc.).

The goal of the conference is to bring together academics, practitioners and policy makers with expertise in the field of dispute resolution (arbitration, transnational litigation, mediation, other ADR mechanisms) and technology law. That is why we are particularly (but not exclusively) interested in contributions that focus on

• Obligations of the actors of justice
• Challenges and opportunities of (partial) online proceedings
• Evidentiary issues related to cybersecurity and data protection
• The (ab)use of these instruments as a dispute resolution strategy

and discuss these forward-looking dispute resolution topics in light of the various privacy, data protection, cybersecurity and AI regulations.

Ph.D. candidates, senior researchers and legal practitioners are invited to submit an abstract (on one of the topics above or on a topic of their own choice relating to the general theme) by 1 December 2021 to Maud.Piers@ugent.be and Wannes.Vandenbussche@ugent.be. Abstracts should be no longer than 1000 words. Authors of selected abstracts will be notified by 10 January 2022.

All contributions should be in English. This online conference is intended to serve as a first opportunity to present and discuss the authors’ ideas. Publication venues for the final papers will also be explored.

Should you have any questions please do not hesitate to contact the two members of the organizing committee.

Maud Piers

Wannes Vandenbussche