Conflictoflaws

The first issue of Lloyd’s Maritime and Commercial Law Quarterly for 2021 features the following private international law articles:

Adrian Briggs, “A Conflict of Comity in the Enforcement of Judgments”

Patrick Dunn-Walsh “Insurance Litigation under the Recast Brussels Regulation”

Anthony Kennedy “A Place to Start”

Myron Phua and Serena Seo Yeon Lee “Taxonomising “Quasi-Contractual” Anti-suit Injunctions” 

Steve Peers (University of Essex) has just published a series of Brexit-related documents on Twitter, two of which appear to confirm that by leaving the European Union, the UK also (believes to have) ceased to be a party to the 1968 Brussels Convention and the 1980 Rome Convention – which many have argued might revive between the UK and those EU Member States who are parties to them.

The two letters, sent by the UK Government to the Council of the EU, both contain the following paragraph:

The Government of the United Kingdom hereby notifies the Secretary-General of the Council of the European Union that it considers that the [Brussels Convention] / [Rome Convention] ceased to apply to the United Kingdom and Gibraltar from 1 January 2021, as a consequence of the United Kingdom to be a Member State of the European Union and of the end of the Transition Period.

Gustavo Cerqueira, Nicolas Nord (dir.), La connaissance du droit étranger: À la recherche d’instruments de coopération adaptés. Études de droit international privé comparé, Préface : Hélène Gaudemet-Tallon, Paris : Société de législation comparée, coll. “Colloques”, vol. 46, 2020, 268 p. Click here.

The authors’ foreword reads as follows (English translation):

“On November 28, 2019, jurists from various backgrounds met at the french Cour de cassation in Paris to reflect on suitable instruments for international cooperation in establishing the content of foreign law.

This conference is in line with the work previously carried out within the Société de législation comparée on the subject of foreign law. In particular, it continues the reflections started at the conference concerning the controls on constitutionality and conventionality of foreign law, which was held on September 23, 2016 at the Cour de cassation. This event brought together academics and practitioners from several European, North and South American countries and resulted in the publication of a book in 2017 by the Society.

This approach is also part of the continuity of research carried out in other learned societies at the global or regional level.

The conference of November 28, 2019 confirmed the need for such reflection. On the one hand, all of the contributors affirmed the important place now given to foreign law in the settlement of disputes. This is due, among other things, to the growth of international family and business relationships, the growing demand for recognition of situations established abroad and the possibilities for those concerned to choose the applicable law. On the other hand, the participants attested to the increased role of different legal professions in the application of foreign law. While judges and civil registrars were more traditionally exposed to such a burden, notaries and lawyers in their dual mission of advice and drafting of acts are currently called upon to take into account or implement foreign law.

In this context, while it appears that European Union law is often at the origin of the involvement of these different actors in the application of foreign law, another, more recent phenomenon seems to increase occurrences of dealing with such a law: the extensive jurisdictional competition to which the European States are engaged because of Brexit. Indeed, Paris, Amsterdam, Brussels and other capitals are establishing courts and chambers specialized in international litigation and in the application of foreign law. This phenomenon is also spreading to major cities, either international, such as Frankfurt am Main or Hamburg, or regional, such as Saarbrücken, in Germany.

The stakes are crucial. The search for suitable instruments for a good knowledge of foreign law is essential for national laws in full legislative and jurisprudential evolution. Indeed, these changes specific to each system reinforce the need for access to reliable content of foreign law in order to guarantee the legal certainty of litigants, as well as to avoid civil liability of legal service providers or even fraud in manipulation of foreign solutions.

The research envisaged in this colloquium is unfolding, of course, in an environment in which there are formal and informal cooperation mechanisms, the effectiveness of which is only partial in the face of the complexity of the phenomena that cover the application of foreign law. Indeed, they were conceived to deal with a foreign law that supposed to be stable and simple and not shifting and plural in its sources. These mechanisms, not very visible, are also unknown to the practitioners themselves. Current discussions at European (EU) and international (Hague Conference) level attest to the urgency of thinking about responses in this area, using one or more relevant and effective instruments.

This is what the conference on knowledge of foreign law: in search of suitable cooperation instruments meant to answer. To this end, based on an indicative and non-exhaustive questionnaire, the issue of establishing an inventory was first raised, and then discussions ensued on the solutions adapted to the various requirements revealed both by the type of situation to be treated and by the category of professional involved. In this last respect, the needs of the judge and the notary were different, as were those of the registrar and the lawyer.

The adaptation was also considered in the light of the various questions specific to the original system. While the objective may a priori be to achieve the adoption of a general instrument with the widest possible geographical scope, it quickly appeared vain to try to favor such an approach at present. On the one hand, each profession has different needs, on the other hand, the level of development of the different systems compared is not the same. While some countries lag behind and struggle to adopt satisfactory rules in this area, others are at the forefront and therefore are not really in demand for a cooperation instrument whose usefulness does not seem obvious to them.

In this perspective, different paths for reflection have been explored. They range from the revitalization of old instruments to the creation of specialized institutions at internal, international or European level, including the establishment of specific mechanisms or the use of artificial intelligence. Such abundance shows the crucial nature of the issue and the vitality of the reflections carried out, but also the relevance of having debated it and the need to continue doing so.

In this sense, the next stage of this debate could be that of the opportunity of adopting a European regulation on the matter. In addition to the interest of such an instrument at the European level, it could serve as an impetus for other regional groups, such as Mercosur.” (our emphasis)

Prefaced by Professor emeritus Hélène Gaudemet-Tallon (Paris II Panthéon Assas), the book contains the following contributions (most of them in French).

Préface

Hélène GAUDEMET-TALLON

Avant-propos

Gustavo CERQUEIRA and Nicolas NORD

Introduction

Cyril NOURISSAT, Connaissance du droit étranger et coopération internationale : entre nécessité impérieuse et difficultés à surmonter

 I. État des lieux

En France

La magistrature

François ANCEL, La connaissance du droit étranger. État des lieux – La magistrature

Cyril ROTH, Le droit étranger, irréductiblement inconnaissable : leçons tirées de la création d’une collection de lois exotiques

L’avocature

Dominique FOUSSARD, Le point de vue d’un avocat au Conseil d’État et à la Cour de cassation

Olivier BERG, L’avocat et le droit étranger : entre connaissance et représentation

L’état civil

Nicolas NORD, Le droit étranger devant l’officier de l’état civil. État des lieux

Dans le voisinage

Jochen BAUERREIS, La connaissance du droit étranger en Allemagne

Guillermo PALAO MORENO, La connaissance du droit étranger en Espagne

Pietro FRANZINA, La connaissance du droit étranger : cadre juridique et moyens disponibles en Italie

Lukas HECKENDORN URSCHELER, La connaissance du droit étranger en Suisse. Une multitude de moyens

En Amérique Latine

Gustavo Ferraz DE CAMPOS MONACO, La connaissance du droit étranger en Amérique

 II. Solutions envisageables

Du point de vue des universitaires

Patrick KINSCH, La preuve de la loi étrangère par renvoi préjudiciel

Gustavo CERQUEIRA, Fondamentalisation du droit et justice prédictive. Deux phénomènes à prendre en compte pour la connaissance du droit étranger

Guillermo PALAO MORENO, La connaissance du droit étranger : évaluation de la situation en Espagne et propositions dans une perspective européenne

Maria Rosa LOULA, The challenges in accessing applicable foreign law and international cooperation in Brazil

Du point de vue des praticiens

Le magistrat

Jean-Noël ACQUAVIVA, Connaissance du droit étranger et coopération internationale. Solutions prospectives : l’opinion d’un juge

Le notaire

Jean-Louis VAN BOXSTAEL, La connaissance du droit étranger. Le point de vue d’un notaire

Du point de vue des institutions

Marie VAUTRAVERS, Le point de vue du Bureau du droit de l’Union, du droit international privé et de l’entraide civile, direction des affaires civiles et du Sceau, France

Rodrigo RODRIGUEZ, Knowledge of Foreign Law and the London Convention of 1968 – Council of Europe’s CDCJ

Wolfgang ROSCH, La connaissance du droit étranger et la Cour de justice de l’Union européenne

Nicolas NORD, La Commission Internationale de l’État Civil

Propos conclusifs

Françoise Monéger

Annexes

Questionnaire envoyé aux contributeurs

Programme du Colloque

Liste des contributeurs (auteurs, orateurs, et présidents des séances)

The full table of contents, the preface and the forewords are available here (in French).

More information: https://legiscompare.fr/ecommerce/fr/197-la-connaissance-du-droit-etranger-a-la-recherche-d-instruments-de-cooperation-adaptes

As has now become tradition, the Annual Conference of the Society of Legal Scholars (SLS) will feature a section dedicated to Conflict of Laws. In 2021, the conference will take place between 31 August and 3 September at the University of Durham and virtually (further information on the conference can be found here). The new conveners of the Conflict of Laws section, Lauren Clayton-Helm and Bobby Lindsay, have kindly provided the following Call for Papers.

SLS Conflict of Laws Section: Call for Papers/Panels for 2021 SLS Annual Conference at Durham University and virtually

This is a call for papers and panels for the Conflict of Laws section of the 2021 Society of Legal Scholars Annual Conference to be held at the University of Durham, from Tuesday 31st August – Friday 3rd September.  The Conflict of Laws section will meet in the first half of the conference on 31st August – 1st September and will have four sessions, each lasting 90 minutes.

If you are interested in delivering a paper or organising a panel, please submit your paper abstract or panel details by 11:59pm UK time on Friday 26th March 2021.  All abstracts and panel details must be submitted through the Oxford Abstracts conference system which can be accessed using the following link – https://app.oxfordabstracts.com/stages/2483/submitter – and following the instructions (select ‘Track’ for the relevant subject section). If you registered for Oxford Abstracts for last year’s conference, please ensure that you use the same e-mail address this year if that address remains current. For those whose papers are accepted, the original submission offers the facility to upload a full paper nearer the time. If you experience any issues in using Oxford Abstracts, please contact http://slsconference@mosaicevents.co.uk.

We intend to host the 2021 conference in person, with an online option for those who would prefer to participate virtually. The precise format of the conference will be confirmed by the end of April. When submitting an abstract you will be asked to indicate whether you would wish to present in person or virtually. Please note that this indication is not binding and it is merely to assist with conference planning.

Decisions will be communicated by the end of April.

We welcome proposals for papers and panels on any issue relating to the conflict of laws/private international law. We welcome proposals representing a full range of intellectual perspectives and methodological approaches in the subject section, and from those at all stages of their careers.

Those wishing to present a paper should submit a title and abstract of around 300 words. Those wishing to propose a panel should submit a document outlining the theme and rationale for the panel and the names of the proposed speakers (who must have agreed to participate) and their abstracts.  Sessions are 90 minutes in length and so we recommend panels of three to four speakers, though the conference organisers reserve the right to add speakers to panels in the interests of balance and diversity.

As the SLS is keen to ensure that as many members with good quality papers as possible are able to present, we discourage speakers from presenting more than one paper at the conference.  With this in mind, when you submit an abstract via Oxford Abstracts you will be asked to note if you are also responding to calls for papers or panels from other sections.

Please also note that the SLS offers two prizes. First, The Best Paper Prize, which can be awarded to academics at any stage of their career and which is open to those presenting papers individually or within a panel.  The Prize carries a £300 monetary award and the winning paper will, subject to the usual process of review and publisher’s conditions, appear in Legal Studies.  To be eligible:

• speakers must be fully paid-up members of the SLS (Where a paper has more than one author, all authors eligible for membership of the Society under its rule 3 must be members. The decision as to eligibility of any co-authors will be taken by the Membership Secretary, whose decision will be final.)
• papers must not exceed 12,000 words including footnotes (as counted in Word);
• papers must be uploaded to the paperbank by 11:59pm UK time on Monday 23rd August;
• papers must not have been published previously or have been accepted or be under consideration for publication; and
• papers must have been accepted by a convenor in a subject section and an oral version of the paper must be presented at the Annual Conference.

Last year the Society launched the Best Paper by a Doctoral Student Prize, which is open to currently registered doctoral students who are members of the Society. The Prize is £300. There is no link to publication in Legal Studies arising from this award, but any winner would be welcome to submit their paper for consideration by the Society’s journal. To be eligible:

• speakers must be fully paid-up members of the SLS who are Doctoral students. (Where a paper has more than one author, all authors eligible for membership of the Society under its rule 3 must be members and all authors must be Doctoral students, whatever their discipline). The decision as to eligibility of any co-authors will be taken by the Membership Secretary, whose decision will be final;
• papers must not exceed 12,000 words including footnotes (as counted in Word);
• papers must be uploaded to the paperbank by 11:59pm UK time on Monday 23rd August;
• papers must not have been published previously or have been accepted or be under consideration for publication; and
• papers must have been accepted by a convenor in a subject section and an oral version of the paper must be presented at the Annual Conference.

We have also been asked to remind you that all speakers will need to book and pay to attend the conference and that they will need to register for the conference by Friday 18th June 2021 in order to secure their place within the programme, though please do let us know if this deadline is likely to pose any problems for you. Booking information will be circulated in due course, and will open after the decisions on the response to the calls are made.

With best wishes,

Dr Lauren Clayton-Helm (l.clayton-helm@northumbria.ac.uk)

Dr Bobby Lindsay (bobby.lindsay@glasgow.ac.uk)

Co-convenors, Conflict of Laws Section

Issues relating to succession and administration of estate of a deceased person raise significant issues in Nigerian private international law (or conflict of laws), whether a person dies testate or intestate. In the very recent case of Sarki v Sarki & Ors,[1] the Nigerian Court of Appeal considered the issue of what court had territorial jurisdiction in a matter of succession and administration of estate of a deceased person’s property under Nigerian conflict of laws dealing with inter-state matters. While this comment agrees with the conclusion reached by the Court of Appeal, it submits that the rationale for the Court’s decision on the issue of territorial jurisdiction for succession and administration of estates under Nigerian private international law in inter-state matters is open to question.

In Sarki, the claimants/respondents were the parents of the deceased person, while the defendant/appellant was the wife of the deceased person. The defendant/appellant and her late husband were resident in Kano State till the time of his death. The deceased was intestate, childless, and left inter alia immovable properties in some States within Nigeria – Bauchi State, Gombe State, Plateau State, Kano State, Jigawa State and the Federal Capital Territory, Abuja. The deceased’s family purported to distribute his property in accordance with Awak custom (the deceased’s personal law) with an appreciable proportion to the defendant/appellant. The defendant/appellant was apparently not pleased with the distribution and did not cooperate with the deceased’s family, who tried to gain access to the deceased’s properties. The claimants/respondents brought an action against the defendant/appellant before the Gombe State High Court. The claimants/respondents claimed inter alia that under Awak custom, which was the personal law of the deceased person, they are legitimate heirs of his property, who died childless and intestate; a declaration that the distribution made on 22 August 2015 by the deceased’s family in accordance with Awak custom, giving an appreciable sum of the property to the defendant/appellant is fair and just; an order compelling the defendant/appellant to produce and hand over all the original title documents of the landed properties and boxer bus distributed by the deceased family on 22 August 2015; and cost of the action. In response, the defendant/appellant made a statement of defense and counter-claim to the effect that she and the deceased are joint owners of all assets and properties acquired during their marriage; a declaration that the estate of the deceased is subject to rules of inheritance as envisaged by marriage under the Marriage Act[2] and not native law and custom; a declaration that as court appointed Administratrix, she is entitled to administer the estate of the deceased person; an order of injunction restraining the claimants/respondents to any or all of the assets forming part of the estate of the deceased person based on custom and tradition; and costs of the action.

The Gombe State High Court held that the Marriage Act was applicable in distributing the estate of the deceased person and not native law and custom. However, he distributed the property evenly between the claimants/respondents and defendant/appellants evenly on the basis that it will be unfair for the claimants/respondents as parents of the deceased not to have access to the deceased property. The defendant/appellant successfully appealed this ruling and won on the substantive aspect of the case. The private international law issue was whether the Gombe State High Court had territorial jurisdiction in this case, rather than the Kano State High Court where the defendant/appellant alleged the cause of action arose? The defendant/appellant argued that the cause of action arose exclusively in Kano State because that is where the deceased lived and died, and the defendant/appellant had obtained letters of administration issued by the Kano State High Court. The defendant/appellant lost on this private international law issue.

The Court of Appeal began on the premise that the issue of whether Gombe State or Kano State had jurisdiction was a matter of private international law, and not an issue of that was governed by a States’ civil procedures rules that governs dispute within a judicial division.[3] It also held that it is the plaintiff’s statement of claim that determines jurisdiction.[4] The Court of Appeal then approved its previous decisions that in inter-state matters of a private international law matter, a State High Court is confined to the location of the cause of action.[5] In this connection, the Court of Appeal rejected the argument of counsel for the defendant/appellant and held that the cause of action arose both in Kano and Gombe State – the latter State being the place where the dispute arose with the deceased’s family on the distribution of the deceased’s estate. Thus, both the Kano State High Court and Gombe State High Court could assume jurisdiction over the matter.[6] The Court of Appeal further held that other States such as Kano, Bauchi and Plateau could also assume jurisdiction because letters of administration were granted by the State High Courts of these jurisdictions.[7] In the final analysis, the Court of Appeal held that the claimants/respondents could either institute its action in either Gombe, Kano, Bauchi and Plateau – being the place where the cause of action arose, but procedural economy (which leads to convenience, saving time, saving costs, and obviates the risk of conflicting orders) encouraged the claimants/respondents to concentrate its proceedings in one of these courts – Gombe State High Court in this case.[8] Accordingly, this private international law issue was resolved in favour of the claimants/respondents.

There are three comments that could be made about the Court of Appeal’s judgments. First, it appears the issue of territorial jurisdiction was raised for the first time on appeal. It does not appear that this issue was raised at the lower court. If this is the case, it is submitted that the defendant/appellant should have been deemed to have waived its procedural right on jurisdiction on the basis that it submitted to the jurisdiction of the Gombe State High Court. Matters of procedural jurisdiction can be waived by the parties but not substantive jurisdiction such as jurisdiction mandatorily prescribed by the constitution or enabling statutes in Nigeria.[9] The issue of territorial jurisdiction among various State High Courts was a procedural matter and should have been raised promptly by the defendant/appellant or it would be deemed to have waived its right to do so by submitting to the jurisdiction of the Gombe State High Court.

Second, the Court of Appeal appeared to miss the point that there are Nigerian Supreme Court authorities that addressed the issue before it. According to the Supreme Court of Nigeria, in matters of succession and administration of states, the lex situs is given a predominant role for matters of jurisdiction purposes so that a Nigerian court would ordinarily not assume jurisdiction over foreign property, whether in an international or inter-state matter. Nigerian courts, as an exception, apply the rule to the effect that, where the Court has jurisdiction to administer an estate or trust, and the property includes movables or immovables situated in Nigeria and immovables situated abroad, the court has jurisdiction to determine questions of title to the foreign immovables for the purpose of administration. Again Nigerian courts apply this rule both in inter-State and international matters.[10] This rule established by the Nigerian Supreme Court in accordance with the English common law doctrine should have guided the Court of Appeal to hold that since it had jurisdiction over the deceased immovable properties in Gombe State, it also had jurisdiction over other immovable properties constituting the deceased’s estate in other States in Nigeria. The issue of where the cause of action arose was clearly irrelevant.

This brings me to the third and final comment – the issue of territorial jurisdiction. The Nigerian Supreme Court has held in some decided cases that in inter-state matters, a State High Court cannot assume jurisdiction over a matter where the cause of action is exclusively located in another State, irrespective of whether the defendant is resident and willing to submit to the court’s jurisdiction.[11] This current approach by the Supreme Court may have influenced the Court of Appeal to be fixated on the issue of territorial jurisdiction and confining itself to where the cause of action arose. Looking at the bigger picture, the current approach of the Nigerian Supreme Court in relation to matters of action in personam demonstrates a clear misunderstanding of applying common law private international law matters of jurisdiction in inter-state matters.[12] If a defendant is resident in a State and/or willing to submit, it shouldn’t matter where the cause of action arose in inter-state and international matters. Indeed, there is no provision of the Nigerian 1999 Constitution or enabling statute that prohibits a State High Court from establishing extra-territorial jurisdiction in inter-state or international matters, provided the defendant is resident and/or wiling to submit to the Court’s jurisdiction. The approach of the Nigerian court also risks making Nigerian courts inaccessible in matters of international commercial litigation in matters that occur exclusively outside Nigeria, thereby making the Nigerian court commercially unattractive for litigation.[13] Therefore it is time for the Supreme Court to overrule itself and revert to its earlier approach that held that in inter-state or international matters a Nigerian court can establish jurisdiction, irrespective of where the cause of action arose, where the defendant is resident and/or submits to the jurisdiction of the Nigerian court.[14]

In my final analysis, I would state that the Court of Appeal in Sarki reached the right conclusion on the issue of private international law, but the rationale for its decision is open to question. Moreover, though this private international law issue was resolved against the defendant/appellant, it substantially won on the substantive issues in the case. If this case goes on appeal to the Supreme Court, it should be an opportunity for the Supreme Court to set the law right again on the concept of jurisdiction in matters of succession and administration and estates, and overrule itself where it held that in inter-state matters, a State High Court is restricted to the place where the cause of action arose, irrespective of whether the defendant is resident and/or willing to submit to its jurisdiction.

[1] (2021) LPELR – 52659 (CA).

[2] Cap 218 LFN 1990.

[3]Sarki (n 1) 13-14.

[4] Ibid  14.

[5] Ibid  14-18, approving Lemit Engineering Ltd v RCC Ltd (2007) LPELR-42550 (CA).

[6] Sarki (n 1) 21.

[7]Ibid 21-3.

[8] Ibid 23-5, approving Onyiaorah v Onyiaorah (2019) LPELR-47092 (CA).

[9] See generally Odua Investment Co Ltd v Talabi ( 1997 ) 10 NWLR (Pt. 523) 1 ; Jikantoro v Alhaji Dantoro ( 2004 ) 5 SC (Pt. II) 1, 21 . This is a point that has been stressed by Abiru JCA in recent cases such as Khalid v Ismail ( 2013 ) LPELR-22325 (CA ); Alhaji Hassan Khalid v Al-Nasim Travels & Tours Ltd ( 2014 ) LPELR-22331 (CA) 23 – 25 ; Nigerian National Petroleum Corporation v Zaria ( 2014 ) LPELR-22362 (CA) 58 – 60; Obasanjo Farms (Nig) Ltd v Muhammad ( 2016 ) LPELR-40199 (CA). See also The Vessel MT. Sea Tiger & Anor v Accord Ship Management (HK) Ltd (2020) 14 NWLR (Pt. 1745) 418.

[10] Ogunro v Ogedengbe (1960) 5 SC 137; Salubi v Nwariaku (2003) 7 NWLR 426.

[11] Capital Bancorp Ltd v Shelter Savings and Loans Ltd (2007) 3 NWLR 148; Dairo v Union Bank of Nigeria Plc (2007) 16 NWLR (Pt 1059) 99. See also Mailantarki v Tongo & Ors (2017) LPELR-42467.

[12]See generally Abiru JCA in Muhammed v Ajingi LPELR-20372 (CA) 23 – 25, 25 – 26;  CSA Okoli and RF Oppong, Private International Law in Nigeria (1st edition, Hart, Oxford, 2020) 95-103; AO Yekini, “Comparative Choice of Jurisdiction Rules in Cases having a Foreign Element: are there any Lessons for Nigerian Courts?” (2013) 39 Commonwealth Law Bulletin 333; Bamodu O., “In Personam Jurisdiction: An Overlooked Concept in Recent Nigerian Jurisprudence” (2011) 7 Journal of Private International Law 273.

[13] See for example First Bank of Nigeria Plc v Kayode Abraham (2003) 2 NWLR 31 where the Court of Appeal held the lower court did not have jurisdiction because the cause of action arose exclusively outside Nigeria. This decision was however overturned by the Supreme Court in First Bank of Nigeria Plc v Kayode Abraham (2008) 18 NWLR (Pt 1118) 172.

[14] See generally Nigerian Ports Authority v Panalpina World Transport (Nig) Ltd (1973) 1 ALR Comm 146.

Invitation by Pietro Franzina

The Catholic University of the Sacred Heart in Milan will host a webinar on The Fundamental Rights of Persons with Cognitive Disabilities in Cross-border Situations – Time for Italy and Spain to Join the Hague Adults Convention, on 22 February 2021, from 5 pm to 7 pm CET.

The speakers – Philippe Lortie (First Secretary of The Hague Conference on Private International Law), Salomé Adroher Biosca (Comillas Pontifical University), Pietro Franzina (Catholic University of the Sacred Heart) and Geraldo Maciel Rocha Mendes Ribeiro (University of Coimbra) – will analyse the Hague Convention of 13 January 2000 on the International Protection of Adults and the prospect that Italy and Spain might join the thirteen States which are currently bound by that regime.

Attendance is free. No prior registration is required.

For more information, including the link to access the webinar, see here.

Written by Dr Ben Köhler, MPI Hamburg

Last week, following severe criticisms of its procurement strategy and a dispute with AstraZeneca over the delays in delivery of the vaccine, the EU Commission has published the Advance Purchase Agreement for the Production, Purchase and Supply of a Covid-19 Vaccine in the European Union (APA) it had concluded with AstraZeneca in August 2020. Although some important clauses were blackened at the request of AstraZeneca, the document gives interesting insights into the procurement practice of the EU and has incited a plethora of comments by the legal experts. Despite the broad coverage in legal and non-legal press, the issue of applicable law has received comparably little attention (but see Till Maier-Lohmann on the CISG’s potential applicability). In its first part, this post will argue that, as far as one can tell by the published document, the CISG is likely to be the applicable law to the contract, before outlining some of the consequences of the CISG’s potential application in the second part.

1. The CISG as the applicable law to the APA?

The issue of the applicable law would be considered by Belgian courts that are exclusively competent under the APA’s forum selection clause (§ 18.5 (b) APA). Since Belgium is a Contracting State to the CISG, Belgian courts are bound to apply the CISG’s provisions on its sphere of application that take precedence over the conflict rules in the Rome I-Regulation (Article 25 Rome I-Regulation). Pursuant to Article 1 (1) (a) CISG, the Convention applies to contracts of sale of goods between parties that have their places of business in different Contracting States.

1. Vaccine procurement as a (private) contract for the sale of goods?

The CISG does not distinguish between private law and public law entities and is not limited to contracts between private parties.[1] It is therefore applicable to sales contracts concluded by public law entities such as States if these entities do not act in exercise of their sovereign powers but iure gestionis like a private person could act as well,[2] irrespective of whether a public law tender procedure has preceded the conclusion of the contract.[3] The tender process that precedes the conclusion of the contract also does not fall under the exclusion of sales by auction in Art. 2 (b) CISG.[4]

A more nuanced question is whether the APA is a contract for the sale of goods. The question may seem moot since the parties themselves have labelled the agreement Advance Purchase Agreement and the contract provides for the delivery of vaccines against payment. However, it also contains some other elements that may be relevant for the qualification as a sales contract under Articles 1, 3 CISG. The first question is whether the buyers’ involvement in the manufacturing process is relevant. Pursuant to Article 3 (1) CISG, the Convention applies to the sale of goods to be manufactured unless the party ordering the goods undertakes to supply a substantial part of the materials. Indeed, the APA contains an obligation of the buyers to “use Best Reasonable Efforts to assist AstraZeneca in securing the supply” of drug substances and other materials (§ 6.1 APA) as well as an obligation to provide funding to AstraZeneca in order to enable it to procure the necessary materials (§ 7.1 APA). However, this assistance and funding does not seem to amount to an undertaking to supply a substantial part of the materials, particularly as the contract stipulates that “AstraZeneca shall secure the supply of all drug substances […] and drug product capacity […] as well as components critical to the development, manufacture and supply of the Initial Europe Doses” (§6.1). The second question is whether the obligation to deliver vaccines is “the preponderant part of the obligations” of the seller under Article 3 (2) CISG. Here, it seems clear that the core of the contract is the delivery of the vaccines, not the provision of a service of any kind. Other obligations, such as the reporting obligations (§§ 6.3, 10.2 APA), only seem to serve a complementary purpose to ensure the successful delivery of effective vaccines.

Finally, the APA purports to be merely an advance agreement.[5] The decisive factor is, however, not the designation of the agreement but whether it already contains the essential features of a sales contract.[6] The APA contains obligations to produce and deliver the vaccine for AstraZeneca (using their ‘best reasonable efforts’ in the manufacturing) and obliges the Commission and the Participating Member States to acquire vaccines. The APA is thus a sales contract for the purposes of Article 1 (1) (a) CISG.[7]

1. Parties having their places of business in different Contracting States?

Pursuant to Article 1 (1) (a) CISG, the parties to the APA need to have places of business in different Contracting States. The first difficulty is thus to identify the parties to the APA.[8] According the APA, the parties are AstraZeneca AB and the European Commission “acting on behalf and in the name of the member states of the European Union”. The APA goes on to state that “[t]he Commission, the Participating Member States and AstraZeneca may each be referred to herein individually as a ‘Party’ and collectively as the ‘Parties’.” Taken at face value, this would mean that, on the side of the buyers, both the European Commission and the Participating Member States are the parties to the contract in terms of Article 1 (1) (a) CISG. This understanding is in line with the APA’s provisions that not only contain obligations of the Participating Member States but also of the Commission (see e.g. § 9.1 APA).

The parties to the APA need to have their respective places of business in different Contracting States, irrespective of where the goods are manufactured or whereto they are delivered.[9] As per the APA, AstraZeneca AB has its place of business in Sweden while the Commission has its place of business in Brussels. Both Belgium and Sweden are Contracting States. Questions arise only in relation to some of the 27 Participating Member States.[10] While most Participating Member States are Contracting States to the CISG, Ireland and Malta are not. Portugal recently acceded to the CISG but the Convention has not yet entered into force. Amongst the other Participating Member States, Sweden has its place of business in the same Contracting State as AstraZeneca, ie in Sweden,[11] and Finland and Denmark are Contracting States in general but have declared a reservation under Article 94 CISG that exempts sales contracts between parties with their places of business in different Scandinavian States from the CISG’s sphere of application.[12]According to the prevailing view, however, in cases of multiparty contracts, it is sufficient that one party on either side of the transaction have their respective places of business in different Contracting States for the whole contract to be governed by the CISG.[13] Given that the Commission and most of the Participating Member States have their respective places of business in Contracting States other than Sweden, Finland or Denmark, the CISG would be applicable. I have argued elsewhere that the prevailing view is too expansive and that, in cases of multiparty contracts, courts should apply Article 10 (a) CISG by analogy to the different parties (rather than merely to different places of business) on either side of the transaction.[14] Even if one were to follow this approach, the APA would arguably still fall within the sphere of application of the CISG, since the most closely connected place of business on the side of the buyers seems to be the place of business of the Commission that is acting on behalf and in the name of the Participating Member States. The Parties to the APA thus have their respective places of business in different Contracting States pursuant to Article 1 (1) (a) CISG.

However, even if one of the parties were considered to have its place of business in a non-Contracting State,[15] the Convention would still apply by virtue of Article 1 (1) (b) CISG since the Belgian conflict of laws rules, most notably Article 3 (1) Rome I-Regulation, would point to the law of Belgium as a Contracting State to the CISG.

1. Exclusion of the CISG by the Parties in the APA?

The Parties are free to exclude the CISG pursuant to Article 6 CISG. In their choice of law clause, the Parties have chosen the “laws of Belgium” to govern the APA. Although the question of whether the parties wished to exclude the Convention is to be decided on a case-by-case basis, it seems firmly established that, as a general matter, the choice of the law of a Contracting State does not amount to an exclusion of the Convention as the CISG forms part of the Contracting State’s law.[16] Importantly, Belgian courts have repeatedly held that the choice of Belgian law includes the Convention. The choice of law clause would thus in principle not impede the application of the Convention by Belgian courts.

An analysis of the publicly available documents seems to suggest that Belgian courts would indeed apply the CISG to the APA if a claim was brought.[17]

1. Some of the consequences of the CISG’s application

The question one might ask now is: does it matter at all whether the CISG is applicable? After all, there are a lot of detailed provisions in the contract, for instance on force majeure (§ 18.7 APA) and termination for cause (§ 12.3 APA), that take precedence over the default rules laid down in the Convention (Article 6 CISG). I will briefly outline two of the many consequences of the application of the CISG to the APA.

1. Interpretation of contract

Many of the issues that are currently debated with respect to the contract are ultimately issues of interpretation of contract. For instance, the questions of whether AstraZeneca is only obliged to deliver vaccines that are produced in the EU or of how to apply the notion of ‘best reasonable efforts’ will turn on how different sections of the APA are interpreted. The relevant CISG provision here is Article 8 CISG, although the Convention’s rules on interpretation may, to a certain extent, be modified by the APA’s provisions, most notably by the clause on interpretation of the agreement (§ 18.1 APA) and the Entire Agreement-Clause (§ 18.9 APA). Pursuant to Article 8 (1), (2) CISG, the interpretation of the contract is controlled by a common intention of the parties and, lacking such intention, by the understanding of a reasonable third party.

2. Allocation of vaccines amongst several buyers in cases of shortage of supply

It was reported that AstraZeneca limited its delivery to the EU while fulfilling its obligations towards other third-party buyers such as the United Kingdom. The allocation of scarce goods amongst competing buyers has been debated in CISG scholarship and the prevailing opinion seems to point to a pro rata delivery to the different buyers in proportion to their respective contractual entitlements.[18] Of course, this default position may need to be reconsidered in light of the provisions of the APA, eg the default allocation between Participating Member States on a pro rata basis reflecting the size of their respective populations (§ 8.3 (b)) or AstraZeneca’s warranties (§ 13 APA).

Conclusion

The above analysis may be surprising: Why should a Convention that is unknown even to many lawyers govern the arguably most important procurement contracts in recent European history? Conversely, however, one might ask which legal instrument should be more appropriate to govern an international sales contract between 29 Parties from 27 different States? More than forty years after its adoption, the CISG may face its first test on global centre stage – it will be up to the test!

[1] Peter Mankowski in: Mankowski (ed.), Commercial Law (C.H. Beck Hart Nomos, 2019), CISG, Art. 1, para. 31; Ulrich G. Schroeter, „Grenzfragen des Anwendungsbereichs und international einheitliche Auslegung des UN-Kaufrechts (CISG)“, IHR 2019, 133, 134.

[2] Mankowski (n 1) Art. 1, para. 31.

[3] Schroeter (n 1) 134.

[4] Ulrich Magnus in: Staudinger-BGB, CISG, [2018], Art.2, para. 34; Schroeter (n 1) 134; Frank Spohnheimer in: Kröll, Mistelis & Perales Viscasillas (eds), UN Convention on Contracts for the International Sale of Goods (CISG) (2nd edn, C.H. Beck Hart Nomos 2018), Art. 2, para. 30.

[5] Till Maier-Lohmann, “EU-AstraZeneca contract – applicability of the CISG?”.

[6] See Magnus (n 4) Art. 1, para. 13; Ingeborg Schwenzer & Pascal Hachem in: Schwenzer (ed.), Schlechtriem & Schwenzer Commentary on the UN Convention on the International Sale of Goods (CISG) (4th edn, C.H. Beck Oxford University Press 2016) Art. 1, para. 8.

[7] Maier-Lohmann (n 5); see, on the application of the CISG to purchase options, Magnus (n 4) Art. 1, para. 41; Schwenzer & Hachem (n 6) Art. 1, para. 10.

[8] Maier-Lohmann (n 5).

[9] See Clayton P. Gillette & Stephen D. Walt, The UN Convention on Contracts for the International Sale of Goods – Theory and Practice (2nd edn, Cambridge University Press 2016) 27; Magnus (n 4) Art. 1, para. 11, with further references.

[10] See APA, Schedule B.

[11] Maier-Lohmann (n 5), with the question of how this may affect the CISG’s applicability.

[12] According to the prevailing opinion, the reservation is also to be applied in other Contracting States such as Belgium, Johnny Herre in: Kröll et al. (n 4) Art. 94, para. 5; Schwenzer & Hachem (n 6) Art. 94, para. 7.

[13] Schweizerisches Bundesgericht, Entscheid vom 28.5.2019 – 4A_543/2018, CISG-online no. 4463, IHR 2019, 236; Ulrich G. Schroeter, „Irrtumsanfechtung nach nationalem Recht und Anforderungen an Ausschlussvereinbarungen bei Anwendbarkeit des UN-Kaufrechts (CISG)“, IHR 2019, 231, 232.

[14] Claude Witz & Ben Köhler, “Panorama Droit uniforme de la vente internationale de marchandises“, Recueil Dalloz 2020, 1074, 1077.

[15] See, the question of Maier-Lohmann (n 5), hinting at AstraZeneca’s presence in the UK.

[16] Maier-Lohmann (n 5); see, with further references, CISG Advisory Council Opinion no. 16: “Exclusion of the CISG under Article 6, Rapporteur: Lisa Spagnolo, Comment 4 (b) (i); Mankowski (n 5) Art. 6, para. 8.

[17] See also Maier-Lohmann (n 5): „the Convention’s applicability cannot be excluded from the outset”.

[18] Christoph Brunner in: Brunner & Gottlieb (eds), Commentary on the UN Sales Law (CISG) (Kluwer 2019) Art. 79, para. 12; Schwenzer in: Schwenzer (ed.) (n 6) Art. 79, para. 28; Ben Köhler, Die Vorteils- und Gewinnherausgabe im CISG (MohrSiebeck, forthcoming 2021) 225.

Carlos Santaló Goris, Researcher at the Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law and Ph.D. candidate at the University of Luxembourg, offers a summary and a compelling analysis of the Czech domestic legislation regarding the EAPO Regulation.

Introduction

On 22 January 2021, the Czech Chamber of Deputies approved “the government act amending Act No. 6/2002 Coll., on courts, judges, lay judges and the state administration of courts and amending certain other acts (the Courts and Judges Act), the wording of later regulations, and other related laws, according to the Chamber of Deputies 630 as amended by the Chamber of Deputies”. The reform is now pending before the Czech Senate.

The first legislative implementation of the EAPO Regulation in the Czech national law

This act introduces the very first amendment of the Czech domestic legislation regarding Regulation No 655/2014, establishing a European Account Preservation Order (“EAPO Regulation”).

The act foresees the concentration of all the applications for EAPOs in one single court, and namely the Prague 1 District Court (Obvodní soud pro Prahu 1). Nowadays, based on the information available in the e-justice portal, the competent court corresponds to the territorially competent court in the debtor’s domicile. However, if the debtor lives outside the Czech Republic, the competent court is the one of the district where the debtor is domiciled.

The upcoming reform envisaged with the act will also affect the application mechanism to gather information on the bank accounts established in Article 14 of the EAPO Regulation. Creditors can also request to investigate if debtors hold bank accounts in the other Member States. Each Member State has an information authority which is charge of searching for the information on the bank accounts. Member States had to notify the Commission with the names of the information authorities by 16 July 2016.

Currently, there is no central information authority in the Czech Republic. Any district court with territorial competence over the debtor’s domicile is an information authority for the purposes of the EAPO Regulation. When the debtor is not domiciled in the Czech Republic, the information authority is the competent court in the district where the bank, which holds the accounts, is located. This can result in challenges for the courts of other Member States searching the information. In case the creditor even ignores the name of the debtor’s bank, how can the competent authority to provide the information on the bank accounts be identified? One Luxemburgish judge has experienced this very dilemma.

The information on the bank accounts is obtained directly from the banks. Czech courts submit a request to “all banks in its territory to disclose, upon request by the information authority, whether the debtor holds an account with them” (Article 14(5)(b) of the EAPO Regulation).

Eventually, if the reform is approved by the Czech Senate, the information authority will also be centralized in the Prague 1 District Court.

The reasons behind the implementation

According to Dr. Katerina Valachová, the member of the Czech Chamber of Deputies who sponsored the amendments concerning the EAPO Regulation, the reform is due to “the complexity of the legislation on the EAPO, as well as the short deadlines set by the EAPO Regulation”. Having a single court for all the EAPO applications will help in terms of specialization. Furthermore, since most of the headquarters of the banks that operate in the Czech Republic are located within the area of the Prague 1 District Court when the court acts as an information mechanism, it can obtain the information on the bank accounts from the banks faster.

The Czech reform in the European context

Establishing a central authority to gather information on the bank accounts is the most common solution followed among those Member States in which the EAPO Regulation applies. Only four out of the twenty-six Member States (France, Finland, Latvia, and the Netherlands), have opted for a complete decentralized information authority. Two other Member States, Austria, and Italy adopted a hybrid approach: they have a central authority when the debtor is domiciled abroad and a decentralized authority when the debtor is domiciled in the country.

However, establishing a centralized court to handle all EAPO applications is a less common choice among other Member States. Only three countries have appointed centralized courts to issue EAPOs: Austria, Slovakia, and Finland.

The Czech Republic’s two neighbouring Member States, Slovakia and Austria, introduced a partial centralization of the EAPOs applications. In Slovakia, the Banská Bystrica District Court (Okresný súd Banská Bystrica) handles all the EAPO applications when the debtor’s “general territorial affiliation cannot be determined” within the Slovakian territory. In Austria, the Vienna Inner City District Court (Bezirksgericht Innere Stadt Wien) is responsible for issuing all the EAPOs when requested before initiation of the proceedings on the merits and before the enforcement of the judgment on the merits of the claim.

Finland has gone a step further than Austria and Slovakia. Similarly, to the ongoing Czech reform, it appointed one sole court – the district court of Helsinki – responsible for issuing all EAPOs.

Outside the EAPO Regulation scheme, we can also find examples of domestic “centralized courts” responsible for other European civil proceedings. For instance, in Germany the European Payment Order (“EPO”) was centralized in the Local Court in Wedding, Berlin. In 2019, France the French legislator approved the creation of a centralized court, which will handle all the EPO applications.

A more efficient application of the EAPO Regulation

Establishing a centralized court for the EAPO Regulation in Czechia is very welcome among those of us who want the EAPO Regulation to become a successful instrument. The future central court will become specialized with the EAPO Regulation, an instrument that can result too complex and requires a certain amount time for its adequate understanding. The centralization will also assure a coherent and uniform application of the EAPO Regulation at the Czech national level. Moreover, in case an issue on the interpretation of the text of that Regulation arises, that centralized court might be more willing to make a preliminary reference to the European Court of Justice (“ECJ”) than regular judges who might not encounter many applications for EAPOs. The ECJ has itself expressly acknowledged the benefits of the centralization in the context of the Maintenance Regulation. In fact, in C-400/13, Sanders and Huber, the ECJ affirmed that “a centralization of jurisdiction, such as that at issue in the main proceedings, promotes the development of specific expertise, of such a kind as to improve the effectiveness of recovery of maintenance claims, while ensuring the proper administration of justice and serving the interests of the parties to the dispute” (C-400/13, Sanders and Huber, 18 December 2014, ECLI:EU:C:2014:2461, para. 45).

Hopefully, in the future more Member States will follow the example of Czechia or Finland and will concentrate the application of the EAPO in a sole court in their territories.

The Mexican Academy of Private International and Comparative Law (AMEDIP) is holding a webinar on 11 February 2021 at 8:00 am (Mexico City time – CST), 3:00 pm CET time. The topic of the webinar is the HCCH Convention of 19 October 1996 on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in Respect of Parental Responsibility and Measures for the Protection of Children – a perspective from Europe and will be presented by Professor Beatriz Campuzano Díaz (in Spanish).

The details of the webinar are:

Link: https://us02web.zoom.us/j/82362628717?pwd=QWNSdTRVWHY0dllhNzlINEthTUZnQT09

Meeting ID: 823 6262 8717

Password: BMAAMEDIP

Participation is free of charge.

This event will also be streamed live: https://www.facebook.com/AmedipMX/about

The U.S. Supreme Court issued its decision yesterday in Federal Republic of Germany v. Philipp. This is the case we previewed here concerning the Guelph treasure, allegedly taken by Nazis from its Jewish owners via a coerced sale for a fraction of its value prior to World War II. The heirs of the rightful owners and the government had agreed to conciliate the claim before a German Commission, which found that the taking had not been coerced. Dissatisfied with the decision, the heirs sued in Washington under the expropriation exception to the Foreign Sovereign Immunities Act, which provides that a foreign state is not immune from jurisdiction of the U.S. courts in cases “in which rights in property taken in violation of international law are in issue.” The District Court and the DC Circuit held that Germany was not immune, and the Supreme Court granted Germany’s petition for review. There were a number of issues at play in this case, but Germany’s primary argument was that a state does not violate international law by expropriating the property of its own nationals.

The Court, in a unanimous decision by Chief Justice Roberts, sided with Germany. When the FSIA was enacted in 1976, Roberts said, it was “clear” that a taking of property violated international law only when a state took an alien’s property. The text of the statute also “places repeated emphasis on property and property-related rights, while injuries and acts we might associate with genocide are notably lacking.” Put simply, the Court viewed the statute as linked to direct expropriation of alien property, and not as a way for U.S. courts to hear any claims arising under international law. Repeating a theme against asserting U.S. jurisdiction to acts occurring abroad, Justice Roberts stressed that “United States law . . . does not rule the world,” and noted that the Court will interpret our laws to “to avoid, where possible, “producing friction in our relations with [other] nations.”

Due to its decision on the expropriation exception, the Court did not need to decide whether comity provided an independent basis for dismissal. The court also issued a one-sentence opinion vacating a lower-court ruling in Republic of Hungary v. Simon, a similar lawsuit brought by Holocaust survivors seeking compensation for Hungary’s confiscation of Jewish property.

We have previously reported on this case here. This is a collective redress action to seek damages resulting from the Volkswagen emission scandal (also known as Dieselgate).  Proceedings were commenced in the Netherlands against Volkswagen (Group) and involve other related parties such as Audi, Seat, Skoda, Porsche, Robert Bosch, importer(s) and dealers in the Netherlands and abroad. This action is made pursuant to the Dutch Collective Redress of Mass Damages Act (Wet afwikkeling massaschade in collectieve actie, WAMCA).

On 18 January 2021, a case management -pre-trial- hearing (regiezitting in Dutch) was held before the Amsterdam District Court. The purpose of this meeting was for all the parties involved to exchange views on “the desired sequence of subjects to be addressed in the initial phases of the WAMCA procedure”. This includes issues such as the jurisdiction of the Dutch court over the claims, the law that would be applicable to the case, the appointment of an Exclusive Representative Party, etc. For more information, click here.

As indicated before, one of the institutes / organisations seeking to be the exclusive representative in this collective redress action is Diesel Emissions Justice Foundation (DEJF).  The DEJF has stated that: “The [Amsterdam District Court] has indicated that a decision on the order of handling of [these] points can be expected on March 3.”

See also our previous posts: Mass Litigation in Times of Corona and Developments in the Netherlands, Jurisdiction over financial damages – the A-G Opinion in the Volkswagen Case before the CJEU (CJEU) and The VW NOx Emissions Group Litigation, [2019] EWHC 783(QB), and (some aspects of) CoL (UK).

Interestingly, the DEJF has reported about a recent case where a Spanish court ordered damages against Volkswagen. I transcribe the summary of the case provided on the DEFJ website: “25 January 2021 – A Madrid court has found Volkswagen guilty of the use of manipulated software, or “cheating software”. In proceedings brought by a Spanish consumer association against Volkswagen on behalf of 5,400 affiliated consumers, the judge awarded damages totalling € 16.3million for unfair commercial practices, amounting to an average of € 3,000 per consumer. The judge used a pragmatic method to determine this amount; half to compensate for the depreciation of the affected cars and the inconvenience of use of having to have the cars repaired, and the other half for “moral damage” as breach of confidence due to the advertised “green” image of these cars, the environmental damages and the impact on society.” The judgment is available here (in Spanish).

And let us not forget the significant judgment of the Court of Justice of the European Union (CJEU) of 17 December 2020 (Second Chamber): Criminal proceedings against X, Request for a preliminary ruling from the Juge d’instruction du tribunal de grande instance de Paris Case C-693/18 (in French, which was the language of the proceedings). See also here (in other languages but not yet in English). Although this case arises in the context of criminal proceedings, it provides support to the claims above and in establishing liability.

More information is available here.

By Magdalena Lagiewska, University of Gdansk

This post reviews the symposium issue of the American Journal of International Law Unbound on “Global Labs of International Commercial Dispute Resolution”. This issue includes an introduction and six essays explaining the current changes and developments in the global landscape for settling international commercial disputes. The multifarious perspectives have been discussed to show tendencies and challenges ahead.

Overall, the AJIL Unbound special issue is, without doubt, one of the most impactful contributions on changes in international commercial dispute resolution landscape. It is a successful attempt and a fascinating analysis of recent developments in this field. This is certainly a must-read for anyone interested in reshaping the landscape of dispute resolution worldwide. Beyond the theoretical context, it includes many practical aspects and provides new insight into the prospects of its development and potential challenges for the future. I highly recommend it not only to the researchers on international commercial dispute resolution, but also to legal practitioners—lawyers, arbitrators, and mediators among others. Below, I have outlined each of the symposium’s contributions.

As mentioned in the introduction by Anthea Roberts [1], instead of the previous bipolarity and centralization around New York and London, international commercial dispute resolution is facing a new process of decentralization and rebalancing. Today, we are all witnessing the adaptation to a new reality and the COVID-19 pandemic is speeding up the entire process. “New legal hubs” and “one-stop shops” for dispute resolution are springing up like mushrooms in Eurasia and beyond. Therefore, due to the competitiveness between the “old” and “new” dispute resolution institutions, these new bodies are more innovative and thus are expected to attract more and more interested parties.

The main aim of this symposium was to outline the new challenges of the international commercial dispute resolution mechanism around the world. New dispute resolution centres not only influence on the current landscape, but also they offer “fresh insight” in this field.

The first essay by Pamela K. Bookman and Matthew S. Erie, entitled “Experimenting with International Commercial Dispute Resolution” [2], pays attention to the new phenomena on emerging “new legal hubs” (NLHs), international commercial courts and arbitral courts worldwide. This new tendency has recently appeared in China, Singapore, Dubai, Kazakhstan and Hong Kong. All of these initiatives affect the international commercial dispute settlement landscape and increase the competitiveness among these centres. Those centres bravely take advantage of “lawtech” and challenge themselves. As a result, they are experimenting with legal reforms and some institutional design to attract more interested parties and to become well-known platforms providing high-quality dispute resolution services. The Authors set forth the challenges and threats that may exist in this respect. They also provide an insightful analysis of the impact of these new initiatives on the international commercial dispute resolution, international commercial law, and the geopolitics of disputes.

Further, Giesela Rühl’s contribution focuses on “The Resolution of International Commercial Disputes – What Role (if any) for Continental Europe?” [3]. The author pays attention to the Netherlands, which took the initiative to establish a new court exclusively devoted to international cases, and Germany and France, which took more skeptical efforts to establish international commercial chambers both before and after the Brexit referendum in 2016. Rühl believes that the far-reaching reform should be implemented at the European level. Therefore, she advocates the establishment of a common European Commercial Court. This seems to be an interesting approach that would certainly strengthen Europe’s position in the global dispute resolution landscape.

Julien Chaisse and Xu Qian outline the importance and key features of the recently established China International Commercial Court (CICC) [4]. Given its foundation, this court should operate as a “one-stop shop” combining litigation, arbitration, and mediation. It is dedicated to solving Belt and Road Initiative (BRI) related disputes. The Authors point out that this court is much more akin to a national court than a genuine international court. Therefore, they challenge its importance with respect to BRI-related disputes and attempt to determine whether the Court will play a significant role in the international dispute settlement landscape. These considerations are especially important given the primary sources in Chinese which bring the reader closer to Chinese legislation.

The following essay, by Wang Guiguo and Rajesh Sharma, addresses the International Commercial Dispute Prevention and Settlement Organization (ICDPASO) established in 2019 [5]. It is another global legal hub that offers “one-stop” services in China. At first glance, the ICDPASO seems to be an interesting body with an Asian flavour, however, the Authors shine a spotlight on some practical challenges ahead and its limited jurisdiction. This body differs significantly from the aforementioned CICC. Whether the ICDPASO will be a game-changer in the BRI-related disputes and will influence importantly on international dispute resolution landscape seems to be a melody of the future. It is ultimately too soon to answer those questions now, but it is certainly worthwhile to watch this institution.

Further, S.I. Strong brings attention to the actual changes in international commercial courts in the US and Australia [6]. Although Continental Europe, the Middle East, and Asia try to reshape the current international dispute resolution landscape, common law jurisdictions, such as the United States and Australia, are less inclined to changes in establishing international courts specialized in cross-border disputes. Compared to the US, Strong believes that Australia has made more advanced efforts to establish such courts. Nevertheless, aside from the traditional international commercial courts, the newly emerging international commercial mediation services are gaining popularity, most notably due to the entry into force of the UN Convention on International Settlement Agreements Resulting from Mediation (the Singapore Convention).

Last but not least, Victoria Sahani contribution’s outlines third-party funding regulation [7]. While third-party funding remains a controversial issue in litigation or arbitration, whether domestic or international, it is becoming much more popular globally. There are already over sixty countries experimenting with regulatory questions about third-party funding. In this case, we also deal with some “laboratories” that try out different methods of regulation.

The entire symposium is available here.

The fourth issue of 2020 of the Dutch PIL journal Nederlands Internationaal Privaatrecht is dedicated to Arbitration and conflicts of laws.

Some of the papers are in English, others in Dutch.

Editorial

Peters & B. van Zelst (guest editors), Arbitration and conflicts of laws / p. 631-633

A.J. B?lohlávek, Determining the law governing obligations in arbitration and the applicability of the Rome I Regulation / p. 634-651

Factors specific to arbitration, and particularly the fact that the place of arbitration is often chosen as a neutral venue with no links to the domicile of the parties or to the subject of the dispute, also influence the procedures followed to determine the substantive law governing obligations. Even so, it is essential to employ a method for determining this law that is transparent, that excludes arbitrariness on the part of arbitrators, and that allows the parties to rely on a certain degree of predictability. Considering the growing importance of the seat of arbitration, which has seen the relevance of the theory of the anationality of arbitration decline in most cases, it is always necessary to assess the importance of the lex fori arbitri in determining the applicable substantive law. Unless the application of EU legislation, and hence also the Rome I Regulation, on the law applicable to obligations stems, as a matter of necessity, from the mandatory lex fori arbitri (which tends to be the exception), the application of the Rome I Regulation must always be kept to a minimum. There is therefore no reason why the Rome I Regulation cannot also be used in arbitral proceedings to determine the applicable law. Arguments such as the fact that this is a regulation applicable exclusively to civil litigation must be rejected.

Meški? & A. Gagula, Lex mercatoria and its limits in international arbitration / p. 652-668

This contribution aims to provide guidance on the usual steps an arbitrator undertakes when using lex mercatoria in international arbitration. The first step is the identification of rules that represent lex mercatoria and deserve such a qualification. It involves a discussion on the private international law analysis, especially absent a choice of law by the parties and its relationship to (potentially) applicable national law. The statistics presented in this paper show that parties in an overwhelming majority of cases choose national law as the applicable law and that lex mercatoria needs to co-exist with national law. Here, the joint use of national law and lex mercatoria is discussed in the context of the example of construction arbitration as the most common area of international arbitration practice. The growing popularity of certain legal solutions of lex mercatoria in procedural or substantive matters followed by a codification trend contribute to an effect of a rebuttable presumption in the fields of its application. This triggers the question as to how the right to be heard can be preserved, especially when the initiative for the use of lex mercatoria does not come from the parties, but from the arbitral panel. The lack of a strict judicial review of the applicable law used in arbitration gives the arbitrators the power to find the right balance between the guidance offered by lex mercatoria and parties’ expectations.

Shehata, Overriding mandatory rules and international commercial arbitration: the Swiss and French perspectives / p. 669-686

The treatment of overriding mandatory rules has always been the subject of multiple studies, especially in the field of international commercial arbitration. The fact that most arbitration jurists agree that arbitration does not have a lex fori is an essential reason for making this discussion a captivating one. Further, if we couple this lack of a lex fori in commercial arbitration with the arbitrators’ duty to render enforceable awards, then we face an extremely intriguing dilemma in this regard.

Instead of reviewing how arbitral tribunals deal with this conundrum, I try to explore this issue through the lens of selected national reviewing courts (i.e., Swiss and French Courts). In my opinion, the review by the national courts represents the end game and should prove critical in guiding future arbitral tribunals in how they should treat overriding mandatory rules at the earlier stage of issuing their arbitral awards.

Ernste, Het toepasselijke bewijsrecht in arbitrage / p. 687-698

This article focuses on the applicable law of evidence, including the law that is applicable to the allocation of the burden of proof in the case of (international) arbitration with the seat of arbitration being in the Netherlands. In international arbitration, the applicable arbitration law, including the applicable law of evidence, shall be determined by the lex arbitri. The Dutch Arbitration Act is applicable if the seat of arbitration is in the Netherlands. An arbitral tribunal has to decide with respect to the allocation of the burden of proof whether it applies the law of the arbitral seat (based on the theory that the burden of proof is procedural) or the law governing the underlying substantive issues (based on the theory that the burden of proof is substantive). According to Dutch Arbitration law, the allocation of the burden of proof is procedural. As a result, an arbitral tribunal is not bound by rules regarding the allocation of the burden of proof laid down in the law governing the underlying substantive issues.

Zilinsky, Toepasselijk recht op de bindende kracht en de rechtsgevolgen van arbitrale uitspraken / p. 699-714

This contribution focuses on the res judicata of arbitral awards. What is actually the purpose of the res judicata of an arbitral award? Should an arbitrator or a court verify ex officio whether an arbitral award had become res judicata or should this be invoked by the parties? As the parties are free to determine the manner in which and by whom dispute resolution takes place, the question arises as to which applicable law should determine the issue of an arbitral award becoming res judicata. Although the existing instruments, such as the 1958 New York Convention, deal with the recognition and enforcement of arbitral awards, these instruments leave this question unanswered. These instruments are based on the principle that the Contracting States recognize the arbitral awards and that a recognized arbitral decision is binding. This contribution discusses the different approaches to determining the res judicata effect of an arbitral award.

Peters, Enkele gedachten over de toepasselijkheid van het beginsel van ius curia novit in gerechtelijke procedures in verband met arbitrage en de gevolgen daarvan voor arbitrage / p. 715-730

It is often assumed that arbitrators are not obliged to apply conflict of laws rules or to add to the legal grounds ex officio, but this is not necessarily true. In this publication the author sets out that arbitrators, under specific circumstances, should have regard to the rules that the national courts should apply in annulment proceedings and should not consider themselves to be bound by the parties’ submissions. In this respect, the arbitrators should have an understanding of the scope of annulment proceedings and the application of the principle of ius curia novit in these proceedings, which are also discussed in this publication.

Van Zelst, Het recht van toepassing op de aansprakelijkheid van arbiters / p. 731-747

This article investigates and challenges existing notions of private international law aspects of the liability of arbitrators. The starting point of the inquiry is a succinct comparative analysis of how the role of the arbitrator is viewed and which standards apply to arbitrator liability in various jurisdictions. The article proceeds with an analysis of the applicability of the Rome I Convention, finding that Rome I applies to the contractual liability of an arbitrator. Subsequently, the article assesses how Rome I’s substantive provisions – Article 4 more specifically – should be applied. It concludes that the law of the habitual residence (of each) of the arbitrator(s) applies to contractual claims vis-a-vis the arbitrator(s).

In addition the issue contains a case note

X.P.A. van Heesch, Samenloopperikelen bij het aannemen van bevoegdheid o.g.v. Verordening Brussel I-bis. Hoge Raad 17 juli 2020, ECLI:NL:HR:2020:1280, NIPR 2020, 487 (V Marine Fuels/Dexhon c.s.) / p. 748-759

This article discusses the judgment of the Dutch Supreme Court dated 17 July 2020, ECLI:NL:HR:2020:1280. In this case, the Dutch Supreme Court answered the question of whether the Dutch Court had jurisdiction based on Article 5 of the Arrest Convention when the Court of Casablanca had arrested the ship in question. Even though Article 5 of the Arrest Convention does not grant explicit exclusive jurisdiction to the court of the forum arresti, exclusive jurisdiction can be assumed based on the interpretation of the Arrest Convention. The author then explains the relation between the Brussels I-bis Regulation and Conventions which, in relation to particular matters, govern jurisdiction or the recognition or enforcement of judgments (specialized Conventions). The general rule regarding this relation is laid down in Article 71 Brussels I-bis Regulation and entails that the Brussels I-bis Regulation does not affect any specialized Conventions to which the Member States are parties. The Court of Justice of the European Union has provided two restrictions to this rule. These two restrictions entail that Article 71 Brussel I-bis Regulation (i) only applies to aspects that the specialized Convention governs and not to aspects that the specialized Convention does not govern and (ii) can only apply if the specialized Convention does not compromise the principles which underline judicial cooperation in the European Union (such as the free movement of judgments, predictability as to the courts having jurisdiction and legal certainty for litigants). In the legal literature, ideas differ on how to interpret this last restriction, which is set out by the author as well. Finally, the author construes whether the Dutch Supreme Court should have applied the two restrictions on Article 71 Brussels I-bis Regulation before it ruled that the Dutch Court did not have jurisdiction in this case.

The Hague Court of Appeal on January 29, 2021 held that Shell’s parent and subsidiary company in Nigeria were liable for oil spillage in Bayelsa State – an oil producing area in Nigeria. The Court held that Shell had failed to prove beyond reasonable doubt that the oil spillage was caused by sabotage by a third party.

The full details on the above important case can be found here

From 15 to 20 February 2021, Università degli Studi di Milano and the European Court of Arbitration, in cooperation with the Law Firms BonelliErede and DLA Piper Italy, organize the first edition of the “Milan Investment Arbitration Week” (MIAW), a series of different events (conferences, round-table debates, legal competitions), held in streaming and related to international investment law and arbitration. Renowned Italian and foreign experts from academia, legal profession and arbitral institutions will address from different angles some of the most relevant topics related to the field. In addition, MIAW will include two legal competitions: the second edition of the Milan Investment Arbitration Pre-Moot and the first edition of the Construction Arbitration Moot, with the participation of several Universities from all around the world. Detailed information available here.

Michiel Posen appropriated a currently popular meme and went (almost) viral. Is his observation right? Comments very welcome.

by Jingru Wang, Wuhan University Institute of International Law

1. Background

A blocking statute is adopted by a country to hinder the extraterritorial application of foreign legislation.[1] For example, the EU adopted Council Regulation No 2271/96 (hereinafter “EU Blocking Statute”) in 1996 to protest the US’s extraterritorial sanctions legislation concerning Cuba, Iran and Libya.[2] Since Donald Trump became the US president, the US government officially defined China as its competitor.[3] Consequently, China has been increasingly targeted by US sanctions. For example, in 2018, the US imposed broad sanctions on China’s Equipment Development Department (EDD), the branch of the military responsible for weapons procurement and its director for violating the US law on sanctions against Russia.[4] In 2020, the US announced new sanctions on Chinese firms for aiding North Korea’s nuclear weapons program.[5] A number of “Belt and Road” countries are targeted by US primary sanctions, which means that Chinese entities may face a high risk of secondary sanctions for trading with these countries. In these contexts, Chinese scholars and policy makers explore the feasibility to enact blocking law to counter foreign sanctions.[6] On 9 January 2021, China’s Ministry of Commerce (hereinafter “MOFCOM”) issued “Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures” (hereinafter “Chinese Blocking Rules”), which entered into force on the date of the promulgation.[7]

2. Analysis of the Main Content

Competent Authority: Chinese government will establish a “Working Mechanism” led by the MOFCOM and composed of relevant central departments, such as the National Development and Reform Commission. The Working Mechanism will take charge of counteracting unjustified extraterritorial application of foreign legislation and other measures (Art. 4).

Targeted extraterritorial measures: The Chinese Blocking Rules target foreign legislation and other measures unjustifiably prohibit or restrict Chinese parties from engaging in normal economic, trade and related activities with third state’s parties (Art. 2), which is the so-called “secondary sanction”. Namely, if China considers sanctions unilaterally imposed by the US against a third country unjustified and violating international law, it may nullify such sanctions and allow Chinese companies to continue to transact with the third country. These Rules do not impact restrictions on business activities between China and the sanctioning country.

Unlike the EU Blocking Statute, the Chinese Blocking Rules do not provide an annex listing the legislation subject to the blocking but grant the Working Mechanism discretion. To determine whether foreign legislation or other measures fall within the application scope of the Chinese Blocking Rules, the Working Mechanism shall consider (1) the international law and fundamental principle of international relations; (2) potential impact on China’s national sovereignty, security and development interests; (3) potential impact on the legitimate interest of the Chinese party and (4) all other factors (Art. 6). On the one hand, the non-exhaustive list grants the Working Mechanism broad flexibility to analyse on a case-by-case basis. China has repeatedly become the target of US secondary sanctions. An exhaustive list of foreign legislation and other measures is insufficient to deal with the changing situations. On the other hand, China is prudent in confrontation with other countries. In a press conference, the MOFCOM spokesman stated that “the working mechanism will closely follow the inappropriate extraterritorial application of relevant national laws and measures.”[8] Therefore, the response of other countries will influence the enforcement of the Chinese Blocking Rules.

It is noteworthy the Chinese Blocking Rules will not affect China’s performance of its international obligations. These Rules shall not apply to such extraterritorial application of foreign legislation and measures as provided for in treaties or international agreements to which China is a party (Art. 15).

Information reporting system: A Chinese party prohibited or restricted by foreign legislation and other measures from engaging in normal economic, trade and related activities with a third state’s party shall report such matters to the MOFCOM within 30 days (Art. 5). Otherwise, the Chinese party may be warned, ordered to rectify or fined (Art. 13). To encourage the information report, Art. 5 of the Chinese Blocking Rules also provides that the competent authority shall keep such report confidential at the request of the Chinese party. The staff of the competent authority may undertake administrative penalties if they fail with such obligation (Art. 14).

Concerning the Information reporting system, when the report obligation is triggered is unclear. Should the Chinese party report within 30 days after the foreign legislation is published or other measures are taken or after its actual operation is restricted? Moreover, since the Chinese Blocking Rules do not list targeted foreign legislation and other measures, the Chinese party should rely on their judgment to report. Finally, who should report on behalf of the legal person remains to be answered.

Prohibition order: Once the unjustified extraterritorial application of foreign legislation and other measures is confirmed, the Working Mechanism may decide that the MOFCOM shall issue a prohibition order to ban the effect of relevant foreign legislation and other measures (Art. 7). A Chinese party that fails to observe the prohibition order will be punished (Art. 13). Therefore, Chinese parties are forced to comply with either Chinese or foreign laws. In other words, they will be punished by one or the other. To free the party from the dilemma, a Chinese party may apply for exemption from compliance with a prohibition order (Art. 8). China-based subsidiaries of foreign companies are formed under Chinese law. They are considered to be Chinese entities. Therefore, unless otherwise provided by law, they are subject to the prohibition order issued under the Chinese Blocking Rules and can apply for the exemption.

One major uncertainty is whether third state’s parties are subject to the prohibition order. These Rules do not stipulate that foreign entities will be punished by violating the prohibition order or can apply for the exemption. However, it is suggested that the prohibition order may bind the third state’s party for two reasons. Firstly, the US may issue secondary sanctions to prohibit Chinese parties from trading with third state’s parties (Iran as an example), or to prohibit third state’s parties (EU as an example) from trading with Chinese parties. According to Art. 2 of the Chinese Blocking Rules, both situations may obstruct the normal economic, trade and related activities between the Chinese party and the third state’s party. If the prohibition order merely applies to the Chinese party, it cannot protect Chinese businesses from being prejudiced by the US secondary sanctions in the latter situation. Secondly, a Chinese party can bring a lawsuit before the People’s Court against the party who infringes the legitimate interest of such Chinese party by complying with the foreign legislation and other measures covered by the prohibition order (Art. 9). This article does not limit the defendant to “a Chinese party.” Thus it shall include the third state’s party. If the prohibition order does not bind the third state’s party, it is doubtful that such third state’s party is liable for not complying with the prohibition order.

The prohibition order refrains relevant parties from complying with specific foreign legislation and other measures. A question is how should the prohibition order be observed. According to the European Commission’s Guidance Note, the purpose of the EU Blocking Statute is to ensure that business decisions on trading with third States remain free. It does not oblige EU operators to do business with Iran or Cuba. Also, the Chinese Blocking Rules cannot and should not oblige the Chinese party and the third state’s party to engage with each other. Therefore, it raises the worry that these Rules may apply better for breach of existing contract but be more difficult to “force” someone to enter into a contract or in terms of the pre-contractual obligation.

Judicial Remedy: A Chinese party can bring a lawsuit before the People’s Court of PRC against the party who infringes its legitimate interest by complying with the foreign legislation or measures covered by the prohibition order. A Chinese party may also suit the party who benefits from the judgment or ruling made under such foreign legislation or other measures before the People’s Court (Art. 9). Problems may arise if the losing party has no asset in China seized for enforcement by the Chinese court. Other countries may be reluctant to recognize and enforce such judgment.

Government support: Members of the Working Mechanism shall provide guidance and service to Chinese parties to deal with unjustified extraterritorial application of foreign legislation and other measures (Art. 10). Suppose a Chinese party that observes the prohibition suffers significant losses resulting from non-compliance with the relevant foreign legislation and measures. In that case, relevant government departments may provide necessary support based on specific circumstances (Art. 11). Which government department is responsible for these matters? Does “Necessary support” include financial compensation or support on litigation in the sanctioning country? These questions remain to be answered.

3. Impact of the Blocking Statute

Considering that China has long suffered from secondary sanctions issued by the US government, promulgating the Chinese Blocking Rules is not a surprise. Overall, the Chinese Blocking Rules attempt to establish three core institutions anticipated by Chinese scholars: (1) blocking the effect and enforcement of specific foreign legislation in China; (2) prohibiting relevant parties from complying with specific foreign legislation and other measures; (3) enabling relevant parties to recover the damage from the party who complies with the foreign legislation and measures covered by the prohibition order. Therefore, a blocking statute serves as both shield and sword to fight against foreign sanctions.

But the function of blocking statute shall not be overemphasized. The same as the EU Blocking Statute, the Chinese Blocking Rules create a quandary for relevant parties.

For Chinese parties, if they comply with the Chinese prohibition order, they have to deal with US penalties. Chinese parties may invoke “foreign sovereign compulsion”[9] as a defence to insulate themselves from certain US sanctions penalties. In determining whether to buy such argument, US courts often consider whether foreign states actively enforce them.[10] The Chinese Blocking Rules can provide a legal basis for Chinese parties to exempt from the US sanctions by strategic enforcement actions. If so, Chinese parties will be relieved to transact with third state’s parties. But the Chinese government may not be willing to provide the same exemption. Out of self-interest, Chinese parties may be more likely to comply with the Chinese Blocking Rules.

These Rules have not yet stipulated the legal result if third states’ parties violate the Chinese prohibition order. In principle, prescriptive jurisdiction can be extraterritorial, but enforcement jurisdiction must be territorial. Therefore, China cannot always extend the effect of Blocking Rules to a third state’s party even if it has the will. However, it is reasonable to assume that third state’s parties may be added to the “unreliable entities list”[11] for disregarding the Chinese prohibition order. It may prompt third state’s parties to observe the Chinese prohibition order voluntarily to preserve their assets and reputation in China. But even if third state’s parties value the Chinese market, it is uneasy for them to choose China over the US.

China has become more active in exploring countermeasures against the US. On 19 September 2020, MOFCOM released provisions on establishing “unreliable entity list.”[12] Promulgation of the Chinese Blocking Rules is another proactive attempt. However, both are departmental rules, which are at a relatively low-level in the Chinese legal system. Predictably, higher-level legislation concerning the extraterritorial effect of foreign legislation and other measures will be enacted in the future. It may prompt China and the US back to the negotiating table.

[1] Menno T. Kamminga, “Extraterritoriality”, Max Planck Encyclopedia of Public International Law, November 2012, para. 26.

[2] COUNCIL REGULATION (EC) No 2271/96, available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:01996R2271-20140220.

[3] White House, National Security Strategy of the United States of America, December 2017.

[4] CAATSA – Russia-related Designations, available at: https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20180920_33. aspx.

[5] North Korea Designations, available at: https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20201208.

[6] Ye Yan, “On the EU Blocking Statute”, Pacific Journal, Vol. 28, No. 3, Mar. 2020, pp. 50-66; Huo Zhengxin, “Extraterritoriality of Domestic Law: American Model, Jurisprudential Deconstruction and Chinese Approach”, Tribune of Political Science and Law, Vol. 38, No. 2, Mar. 2020, pp. 173-191.

[7] Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures, available at: http://www.mofcom.gov.cn/article/i/jyjl/e/202101/20210103032421.shtml.

[8] The Head of the Department of Treaty of Law of Ministry of Commerce answers press on “Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures”, available at:  http://www.mofcom.gov.cn/article/news/202101/20210103029779.shtml.

[9] “Foreign Sovereign Compulsion” means that if a party is obliged to do or not to do an act by a state, it may constitute a defence for not complying with the obligation specified by the US law before the US court. See American Law Institute, Restatement of the Law, Third, The Foreign Relations Law of the United States, American Law Institute Publishers, 1990, p. 341.

[10] M. J. Hoda, “The Aerospatiale Dilemma: Why U.S. Courts Ignore Blocking Statutes and What Foreign States Can Do About It”, California Law Review, Vol. 106, No. 1, 2018.

[11] The entity added to the list will be restricted on China-related trade, investment in China and travel or work permits. See “MOFCOM Order No. 4 of 2020 on Provisions on the Unreliable Entity List”, available at:

http://www.mofcom.gov.cn/article/b/fwzl/202009/20200903002593.shtml.

[12] Ibid.

On 19 January 2021, Namibia deposited its instrument of acceptance of the Statute, becoming the 87th Member of the HCCH. More information is available here. 

On 1 January 2021, the HCCH 2000 Protection of Adults Convention entered into force for Belgium. The Convention currently has 13 Contracting Parties. More information is available here. 

On 1 January 2021, the United Kingdom’s new instrument of accession to the HCCH 2005 Choice of Court Convention and new instrument of ratification to the HCCH 2007 Child Support Convention entered into force. The United Kingdom has already been bound by the Choice of Court Convention since 2015 and by the Child Support Convention since 2014, by virtue of the European Union’s approval. To ensure continuity in their application following its withdrawal from the EU, the United Kingdom deposited these new instruments of accession and ratification on 28 September 2020. More information is available here. 

On 18 January 2020, Singapore deposited its instrument of accession to the HCCH 1961 Apostille Convention. With the accession of Singapore, the Apostille Convention now has 120 Contracting Parties. Singapore is the third ASEAN Member State to join the Apostille Convention. It will enter into force for Singapore on 16 September 2021. More information is available here. 

From 22 to 27 January, the Applicable Law Working Group on the HCCH 2007 Maintenance Obligations Protocol met via videoconference. The Group provided guidance in relation to issues of applicable law arising from certain family relationships, the law applicable to preliminary / incidental questions, as well as the interpretation and scope of certain articles of the Protocol. More information is available here. 

On 29 January, the Permanent Bureau announced the publication of translations, in all European Union languages, of the Practical Handbook for Competent Authorities on the 2007 Child Support Convention, the 2007 Maintenance Obligations Protocol, and the 2009 EU Maintenance Regulation. The translations were made possible with the support of the Directorate-General for Justice and Consumers of the European Commission. The Handbook, originally published in English, French, and Romanian, was jointly developed by the HCCH, the Ministry of Justice of Romania, and the French National School for the Judiciary (ENM). 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. 

Introduction

Cross border relations is bound to generate non-contractual disputes such as personal injury cases. In such situations, the law that applies is very important in determining the rights and obligations of the parties. The difference between two or more potentially applicable laws is of considerable significance for the parties involved in the case. For example a particular law may easily hold one party liable and/or provide a higher quantum of damages compared to another law. Thus, a preliminary decision on the applicable law could easily facilitate the settlement of the dispute between the parties without even going to trial.

Rome II Regulation[1] governs matters of non-contractual obligations. Article 4 of Rome II applies to general torts/delicts such as personal injury cases. It provides that:

1. Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.
2. However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.
3. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.

In the recent case of Owen v Galgey & Ors.,[2] the English High Court was faced with the issue of applying Article 4 of Rome II to a personal injury case. This comment disagrees with the conclusion reached by the High Court Judge in displacing English law under Article 4(2) of Rome II, and applying French law under Article 4(3) of Rome II.

Facts

The Claimant is a British citizen domiciled and habitually resident in England who brought a claim for damages for personal injury sustained by him as result of an accident in France on the night of April 3rd 2018, when he fell into an empty swimming pool which was undergoing works at a villa in France – a holiday home owned by the First Defendant, whose wife is the Second Defendant. The First and Second Defendants are also British citizens who are domiciled and habitually resident in England. The Third Defendant is a company domiciled in France, and the insurer of the First and Second Defendants in respect of any claims brought against them in connection with the Villa. The Fourth Defendant is a contractor which was carrying out renovation works on the swimming pool at the time of the accident, and the Fifth Defendant is the insurer of the Fourth Defendant. The Fourth and Fifth Defendants are both companies which are domiciled in France.

It was common ground between the parties that French law applied to the Claimant’s claims against the Fourth and Fifth Defendants. But there was a dispute at to the applicable law in relation to his claims against the First to Third Defendants. These Defendants contended that, by operation of Article 4(2) of Rome II, English law applies because the Claimant and the First and Second Defendants are habitually resident in England. However, the Claimant contended that French law applied by operation of Article 4(3) the Rome II because, he says, it is clear that the tort in this case is manifestly more closely connected with France than it is with England.

It was common ground that French law applied under Article 4(1) of Rome II because the direct damage occurred in France in this case; and English law applied under Article 4(2) of Rome II because the Claimant and First and Second Defendants were all habitually resident in England. The legal issue to be resolved was therefore whether under Article 4(3) the tort/delict was manifestly more closely connected to France than it is with England.

Decision

In a nutshell, Linden J held that French law applied under Article 4(3) of Rome II. The Court considered Article 4 of Rome II as a whole and read it in conjunction with both the Explanatory Memorandum[3] and Recitals to Rome II.[4]

Linden J held that Article 4(2) created a special rule which automatically displaced Article 4(1), and Article 4(2) was intended to satisfy the legitimate expectation of the parties.[5] On this basis, he observed that Article 4(2) could only apply in two party cases (only one victim and one tortfeasor), and not multi-party situations.[6] Linden J explicitly disagreed with an earlier decision of Dingemans J in Marshall v Motor Insurers’ Bureau & Ors[7] that held that Article 4(2) applied in multi-party situations.[8]

Linden J considered the relevant circumstances that could give rise to applying Article 4(3) in this case in the following chronological order:

1. the desire for a single law to govern the whole case involving the Claimant and the First to Fifth Defendants;[9]
2. the circumstances relating to all the parties in the case;[10]
3. the place of direct damage under Article 4(1);[11]
4. the habitual residences of the parties, including where any insurer defendants are registered at the time of the tortious incident and when the damage occurs;[12]
5. the habitual residence of the Claimant at the time of the consequences of the tort, including any consequential losses;[13]
6. the nationalities of the parties; [14] and
7. the fact that the parties have a pre-existing relationship in or with a particular country.[15]

Linden J held, following previous English decisions,[16] that the burden of proof was on the party that seeks to apply Article 4(3).[17] He held that Article 4(3) could only be applied as an exceptional remedy where a clear preponderance of factors supports its application.[18] However he observed that the facts of the case do not have to be unusual for Article 4(3) to apply, though Article 4(3) was intended to operate in a clear and obvious case.[19]

After considering the submission of the parties in the case, Linden J preferred the Claimant’s submission that Article 4(3) applied in this case. In his words: “France is where the centre of gravity of the situation is located and the preponderance of factors clearly points to this conclusion. This conclusion also accords with the legitimate expectations of the parties.”[20]

Linden J gave great weight to the place of direct damage. In his words:

“The tort/delict occurred in France, as I have noted. This is also where the injury or direct damage occurred. The dispute centres on a property in France and it concerns structural features of that property and how the First, Second and Fourth Defendants dealt with works on a swimming pool there. Although these defendants deny that there was fault on the part of any of them, the First and Second Defendants say that the Fourth Defendant was responsible if the pool presented a danger and the Fourth Defendant says that they were. The allegations of contributory negligence/fault also centre on the Claimant’s conduct whilst at the Villa in France.

The First and Second Defendants also had a significant and long-standing connection to France, the accident occurred on their property…

…the situation in relation to the swimming pool which is said to have been the cause of the accident was firmly rooted in France and it resulted from works which were being carried out by the Fourth Defendant as a result of it being contracted to do so by the First and Second Defendants. The liability of the First and Second Defendants, if any, will be affected by how they dealt with that situation, including by evidence about their dealings with the Fourth Defendant. That situation had no significant connections with England other than the nationality and habitual place of residence of the First and Second Defendants.”[21]

Linden J also gave great weight to the desire to apply a single law to govern the whole case against the First to Fifth Defendants.[22] In his words:

“…the works were carried out by a French company pursuant to a contract with them which is governed by French law. Their insurer, the Third Defendant, is a French company and they are insured under a contract which is governed by French law… It is also common ground that the claim against the Fourth Defendant, and therefore against the Fifth Defendant, also a French company, is entirely governed by French law and will require the court to decide whether the Fourth Defendant or, at least by implication, the First and Second Defendants were “custodians” of the property for the purposes of French law.”[23]

On the other hand Linden J did not give great weight to the common habitual residence, common nationalities and common domiciles of the Claimant and First and Second Defendants, and the place of consequential loss which pointed to England. Linden J did not consider the pre-existing relationship between the Claimant and First and Second Defendants to be a strong connecting factor in favour of English law applying in this case. He did not regard their relationship as contractual but one that appears to be “the agreement resulted from a casual conversation between social acquaintances in the context of mutual favours having been done in the past.”[24] He considered that if there was a contract between the parties, he would have held that French law applied under Article 4(3) of Rome I Regulation[25] because the parties mutually performed their obligations in France.

In the final analysis, Linden J held as follows:

“To my mind the tort/delict in this case is much more closely connected to the state of the swimming pool which, as I have said, was part of a property in France and resulted from the French law contract between the First and Second Defendants and the Fourth Defendant. If any of the Defendants is liable, that liability will be closely connected with this contract. This point, taken in combination with the other points to which I have referred, in my view clearly outweighs the existence of any contract with the Claimant relating to the Villa, even if I had found there to be a contractual relationship and even if it was governed by English law.

Similarly, although I have taken into account the nationality and habitual place of residence of the Claimant and the First and Second Defendants, these do not seem to me to alter the conclusion to which I have come. I have also taken into account the fact that the consequences of the accident have to a significant extent been suffered by the Claimant whilst he was in England, but in my view the other factors to which I have referred clearly outweigh this consideration.

I therefore propose to declare that the law applicable to the claims brought by the Claimant against the First, Second and Third Defendants is French law.”[26]

Comment

Owen is the second English case to utilise Article 4(3) as a displacement tool.[27] Interestingly, Owen and Marshall are both cases where Article 4(3) was used to trump Article 4(2) in order to restore the application of Article 4(1). These judicial decisions put to rest any contrary view that Article 4(3) cannot be used to restore the application of Article 4(1), when Article 4(2) automatically displaces Article 4(1). In this connection, I agree with the judges’ conclusion on the basis that Article 4(3) operates as an escape clause to both Article 4(1)&(2). Such an approach also honours the requirement of reconciling certainty and flexibility in Recital 14 to Rome II. A contrary approach will unduly circumscribe the application of Article 4(3) of Rome II.

I do not agree with Linden J that Article 4(2) of Rome II only applies in two party cases (one victim and one tortfeasor) and does not apply in multi-party cases. I prefer the contrary decision of Dingemans J in Marshall. Interpreting Article 4(2) as being only applicable to two party cases is a very narrow interpretation. Moreover, the fact that Article 4(2) is a strong exception to Article 4(1) does not mean that Article 4(2) should be unduly circumscribed. Article 4(2) should not be applied mechanically or without thought. It must be given some common sense interpretation that suits the realities of cross-border relations in torts.

Moving to the crux of the case, I disagree with the conclusion reached by Linden J that French law applied in this case. Applying the test of Article 4(3), the tort was not manifestly more closely connected with France. In other words, it was not obvious that Article 4(3) outweighed the application of Article 4(2). To my mind, the arguments between the opposing parties were evenly balanced as to whether the tort was manifestly more closely connected with France. Article 4(2) in this case, which pointed to English law, was also corroborated by the common domiciles and common nationalities of the Claimant and First and Second Defendants which should have been regarded as a strong connecting factor in this case. In addition, the non-contractual pre-existing relationship between the Claimant and First and Second Defendants, and consequential loss pointed to England, though I concede that these factors are not very strong in this case.

It is important to stress that Article 4(2) of Rome II is a fixed rule and not a presumption of closest connection as it was under Article 4(2) of the Rome Convention.[28] Once Article 4(2) of Rome II applies, it automatically displaces Article 4(1), except Article 4(3) regards the place of damage as manifestly more closely connected with another country. Linden J appeared to give decisive weight to the place of damage and the desire to apply a single law to all the parties in the case, but did not pay due regard to the fixed rule in Article 4(2) and the fact that it was corroborated by other factors such as the common nationalities and domiciles of the Claimant and First and Second Defendants involved in the case.

Conclusion

Owen presents another interesting case on the application of Article 4 of Rome II to personal injury cases. It is the second case an English judge would be satisfied that Article 4(3) should be utilised as a displacement tool. The use of the escape clause is by no means an easy exercise. It involves a degree of evaluation and discretion on the part of the judge. Indeed, Article 4(3) is very fact dependent. In this case, Linden J preferred the argument of the Claimant that French law applied in this case under Article 4(3). From my reading of the case, I am not convinced that this was a case where Article 4(3) manifestly outweighed Article 4(2). It remains to be seen whether the First, Second and Third Defendants will appeal the case, proceed to trial or settle out of court.

[1]Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations [2007] OJ L199/40 (“Rome II”). It takes effect in courts of Member States only for events giving rise to damage occurring after 11 January 2009, as decided by the Court of Justice of the European Union (CJEU) in Case C-412/10 Homawoo EU:C:2011:747 [37].

[2] [2020] EWHC 3546 (QB)

[3]Explanatory memorandum from the Commission, accompanying the Proposal for Rome II, COM(2003) 427final (Explanatory Memorandum).

[4] Ibid [15] – [24].

[5] Ibid [26] – [27].

[6] Ibid [27] – [29], [35]. However, the argument as to whether Article 4(2) applied only in two party situations was not put forward before Linden J.

[7] [2015] EWHC 3421 (QB) [17].

[8] Owen (n 2) [35].

[9] Ibid [36] – [38]. In this connection, Linden J considered and followed the decision in of Dingemans J in Marshall (n 7) [18].

[10]Owen (n 2) [39] – [45]. In this connection, Linden J considered and followed the decision of Cranston J in Pickard v Marshall & Ors [2017] EWCA Civ 17 [14] – [15].

[11]Owen (n 2) [46]. Linden J followed Winrow v Hemphhill & Anor. [2014] EWHC 3164 [43], and Dingemans J in Marshall (n 7) [19].

[12] Owen (n 2) [48]

[13] Ibid [49]. Linden J followed Winrow (n 11) [39]&[43] and  Stylianou v Toyoshima [2013] EWHC 2188 (QB). At paragraph 50 Linden J stated that less weight was to be given to this factor.

[14] Ibid [51]. Linden J followed Winrow (n 11) [54]&[55] and Marshall (n 7) [22].

[15] Ibid [52] – [[56]

[16] Winrow (n 11) [16] and Marshall (n 7) [20].

[17] Owen (n 2) [57].

[18]Ibid [58]

[19] Ibid [61].

[20] Ibid [74].

[21]Ibid [75]-[77]

[22] Indeed, it was common ground in this case that the contract of insurance between the First, Second and Third Defendants was governed by French law; the contract between the First Defendant and the Fourth Defendant was governed by French law; the contract of insurance between the Fourth and Fifth Defendants was governed by French law; and the Claimant’s claims against the Fourth and Fifth Defendants are governed by French law. Ibid [12]

[23]Ibid [76].

[24] Ibid [78].

[25]Regulation (Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations [2008] OJ L177/6 (“Rome I”).

[26] Ibid [81] – [83].

[27] Marshall (n 7) was the first case to successfully utilise escape clause as a displacement tool.

[28][1980] OJ L266.