EAPIL blog

This post was written by Mathilde Codazzi, who is a doctoral student at the University Paris II Panthéon-Assas.

In a judgment of 11 May 2023, the French Supreme Court For private and criminal matters (Cour de cassation) ruled that the requirement in the French civil code that the legal representatives of a child give their consent to his/her adoption, and which applies irrespective of the law governing otherwise adoption, is no ground for denying exequatur to a foreign adoption judgment.

Background

Two decisions rendered by the Nottingham Family Court on 17 March 2009 and two other decisions rendered by the London Family Court on 22 November  2012 granted the adoption of four children to an English national and a French and English national who entered into a civil partnership in 2003 and married in 2017. By a judgment of 17 December 2020, the French first instance court (Tribunal judiciaire de Nantes) granted exequatur to the four English decisions.

Court of Appeal

By a judgment of 25 October 2021, the Rennes Court of Appeal overturned the first instance decision on the ground that the legal representatives of the children, namely their biological parents, had not given their consent to the adoption.

Article 370-3 of the French Civil Code reads

The requirements for an adoption are governed by the national law of the adoptive parent or, in case of adoption by two spouses, by the law which governs the effects of their union. An adoption however may not be declared when it is prohibited by the national laws of both spouses.
Adoption of a foreign minor may not be declared when his personal law prohibits such an institution, unless the minor was born and resides usually in France.
Whatever the applicable law may be, adoption requires the consent of the legal representative of the child. The consent must be free, obtained without any compensation, subsequent to the birth of the child and informed as to the consequences of adoption, especially when it is given for the purpose of a plenary adoption, as to the full and irrevocable character of the breaking off of the pre-existing kinship bond.

According to the Court of Appeal, the requirement contained in Article 370-3 of the French Civil Code that they give their free and informed consent, notably regarding the irrevocability of adoption since the pre-existing bond of filiation is dissolved by a full adoption (“adoption plénière”), is a substantive provision of private international law which must be applied whatever the law applicable to the adoption may be and an essential principle of the French law of adoption. Hence the court concluded that the English decisions were not in conformity with French international public policy and should not be enforced, as their enforcement would deprive the French international public policy of its substance.

Supreme Court

The issue was thus to determine whether Article 370-3 of the French Civil Code, which requires that the legal representative of the child give their free and informed consent to the adoption of the child, can be opposed to the enforcement of a foreign adoption judgment if such consent was not obtained.

By a judgment of 11 May 2023, the French Supreme Court overruled the decision of the Court of Appeal on the ground that Article 370-3 of the French Civil Code may not be invoked against a foreign adoption judgment to prevent its exequatur.

In other words, the fact that the children’s legal representatives did not give their consent to the adoption ordered by a foreign judgment cannot be invoked against the enforcement of this judgment. This judgment confirms the already established solution according to which the violation of the requirement that the free and informed consent of the child’s legal representative is necessary for the adoption to be ordered pursuant to Article 370-3 of the French Civil Code cannot amount to a ground of refusal of enforcement of the foreign adoption judgment. The French Supreme Court had indeed ruled so in a judgment of 7 December 2016 about an Ivorian judgment. Article 370-3 only applies in French adoption proceedings.

On 16 November 2023 the Lyon 3 University will host a colloquium on the French Draft Code of Private international Law, organised by Ludovic Pailler.

The presentation of the colloquium reads as follows:

Following a mission statement, the working group charged with considering the codification of private international law, chaired by Mr. Ancel, submitted its report to the Minister of Justice on 31 March 2022. This was followed by a public consultation and the announcement, by the Minister of Justice, that the project would come to fruition. This codification has already been the subject of two scientific events at our establishment (i.e. Lyon 3 University). One was devoted to the code’s construction model, the other to its content (see here). The third event, to be held on 16 November 2023 in Lyon, concerns a comparative law analysis of the draft code. 

The colloquium is divided into two parts. The first examines codification from the point of view of European Union member states. Both the value of this exercise and the practical ways in which it is carried out will be explored. Does French codification differ from its foreign equivalents? Is it expected? Doesn’t it run counter to European Union law? The second part of the presentation will be devoted to the point of views from outside the EU, with a view to testing the stated ambition of enhancing the attractiveness of French PIL, and analysing it in the light of experiences or initiatives undertaken in contexts where the subject is in decline (United States) or less integrated (Brazil).

The list of speakers and chairpersons includes : Olivier Gout, Cyril Nourissat, Ludovic Pailler, Frédérique Ferrand, Patrick Wautelet, Eva-Maria Kieninger, Pietro Franzina, Daniel Petrache, Hugues Fulchiron, Gian Paolo Romano, Yoko Nishitani, Chris Whytock, Gustavo Ferraz De Campos Monaco and Sabine Corneloup.

The event will be held in French and in English.

For registration see here. The full programme is available here.

That London is a global capital for dispute resolution is well known. But even by London standards, Corinna zu Sayn-Wittgenstein-Sayn v His Majesty Juan Carlos Alfonso Victor Maria De Borbón Y Borbón is a spectacular litigation. Like in all complex international litigation, private international law has a role to play in this case. This is the aspect of the case that the High Court (Rice J) addressed in its judgment of 6 October 2023.

This case is complex, as is the High Court judgment, which spans 307 paragraphs or 92 pages. This post will present the key facts of the case, before addressing the four issues of relevance for private international law that the court addressed, namely submission to the court’s jurisdiction, Article 7(2) of the Brussels I bis Regulation, immunity under the State Immunity Act 1978, and the territorial scope of the Protection from Harassment Act 1997.

Facts

The defendant was King of Spain between 1975 and 2014, when he abdicated the throne. The claimant is an international businesswoman. Both parties have a cosmopolitan lifestyle and maintain homes around the world. The parties agreed that the defendant was domiciled in Spain for the purposes of the proceedings, even though he had been living in Abu Dhabi since August 2020. The claimant is a Danish national with a residence in Monaco and a home in England.

The parties were in an intimate relationship between 2004 and 2009. Their relationship came to public attention in April 2012 in the aftermath of an elephant-hunting trip to Botswana. In June 2012, the defendant paid €65m to the claimant, the purpose of which is a matter of dispute and controversy. Shortly thereafter the defendant allegedly started to harass the claimant. Harassment allegedly continued after the defendant’s abdication.

The facts pleaded by the claimant are complex, but are conveniently summarised at [259]:

the Defendant (a) intimidated and pressured the Claimant over the use of the June 2012 payment, (b) threatened and intimidated her more generally, (c) made allegations of stealing, untrustworthiness and disloyalty with a view to disrupting her relations with friends and family, (d) made similar defamatory statements to her clients and business associates, (e) supplied false information to the media, with a view to publication, relating to her financial probity and alleging she was a threat to the Spanish national interest and/or was trying to blackmail the royal family, and (f) placed her and her advisers under surveillance, trespassed onto and damaged her Shropshire property and intercepted or monitored the mobile and internet accounts of herself and her advisors.

These acts of harassment were alleged to have occurred in different countries, including Austria, the Bahamas, England, Monaco, Saudi Arabia, Spain, Switzerland, Tahiti, United Arab Emirates, and the United States.

It is on the basis of these facts that the claimant brought a claim in England under the Protection from Harassment Act 1997 on 16 October 2020, two and a half months before the expiry of the Brexit transition period on 31 December 2020. This, coupled with the fact that the defendant was domiciled in Spain, meant that Brussels I bis applied.

The defendant’s first line of defence was sovereign immunity. On 6 December 2022, the Court of Appeal held that the defendant enjoyed immunity from the jurisdiction of the English courts under the State Immunity Act 1978 with respect to the allegations about his pre-abdication, but not post-abdication conduct. This paved the way for the issues that the High Court addressed in its judgment of 6 October 2023.

Submission

Submission is a recognised basis of jurisdiction under Article 26 of Brussels I bis. As a matter of High Court procedure, jurisdictional challenge and submission to jurisdiction are dealt with generally by Civil Procedure Rule 11. CPR 11(4)(a) provides that an application under this rule must be made within 14 days after filing an acknowledgment of service. Otherwise, the defendant is to be treated as having accepted that the court has jurisdiction to try the claim pursuant to CPR 11(5)(b).

The defendant filed an acknowledgment of service on 4 June 2021 and ticked the box ‘I intend to contest jurisdiction’. The claimant argued that the defendant should have disputed the court’s jurisdiction under Brussels I bis within 14 days. Instead, the defendant made a general challenge to the court’s personal jurisdiction in his application notice of 18 June 2021 ‘on grounds that England is not the appropriate forum’ and sought ‘to set aside the service on the Defendant out of the jurisdiction, which was improperly effected’. On 21 February 2023, the defendant abandoned his objection to the service of the claim. A specific challenge to the court’s jurisdiction under Brussels I bis was not made until 22 March 2023. This specific challenge was made pursuant to case management directions that followed the Court of Appeal’s judgment on the immunity issue.

The court held that the defendant did not submit on the basis that his jurisdictional challenge was not abusive, that his general challenge to the court’s personal jurisdiction of 18 June 2021 was sufficient at that stage, and that extension of time and relief from sanctions should be granted to cure any deemed submission that might have arisen by virtue of CPR 11(5)(b) from the lapse of a month between the abandonment of the service challenge and its replacement by the Brussels I bis challenge.

Article 7(2) of Brussels I bis

The heart of the judgment concerns the interpretation and application of Article 7(2) of Brussels I bis to a harassment claim and is found at [51]-[134]. This part of the judgment deals with four key points: the relationship between an autonomous interpretation of Article 7(2) and the domestic law under which the claim is pleaded; the elements of the tort of harassment under English law; whether the event giving rise to the damage occurred in England; and whether the damage occurred in England.

Relationship between Autonomous Interpretation and Domestic Law

It is undisputed that the concept of the ‘place of the harmful event’ in Article 7(2) requires an autonomous interpretation. But the question arose whether the domestic law under which the claim was pleaded had a role to play in this respect. The court provided a positive answer to this question. It quoted with approval [32]-[33] of the Supreme Court judgment in JSC BTA Bank v Ablyazov:

However, the requirement of an autonomous interpretation does not mean that the component elements of the cause of action in domestic law are irrelevant. On the contrary, they have a vital role in defining the legally relevant conduct and thus identifying the acts which fall to be located… In particular, whether an event is harmful is determined by national law.

This led the court to conclude that, for the purposes of determining whether the event giving rise to the damage occurred in England and whether the damage occurred in England, ‘the relevant “event” and “damage” are determined by English tort law, [which] requires consideration of whether the relevant components of an actionable tort, occurring in England, have been made out’ to the standard of a good arguable case ([63]-[64]).

Elements of the Tort of Harassment

This brought the Protection from Harassment Act 1997, which introduced the tort of harassment into English law, to the spotlight. According to the court, the essence of the tort of harassment is that

it as ‘a persistent and deliberate course of unreasonable and oppressive conduct, targeted at another person, which is calculated to and does cause that person alarm, fear or distress’. The conduct ‘must cross the boundary between that which is unattractive, even unreasonable, and conduct which is oppressive and unacceptable. To cross the border from the regrettable to the objectionable, the gravity of the misconduct must be of an order which would sustain criminal liability’. ([69], referring to [40] of the High Court judgment in Hayden v Dickinson)

Importantly:

a course of conduct is something more than a series of events attributed to the same person. A ‘course of conduct’ is more than the additive sum of its parts. A nexus between the activities complained of is required; a court must assess whether the acts complained of are separate or linked together to form a specific and coherent whole. ([72])

Armed with this insight, the court proceeded to determine whether the event giving rise to the damage occurred in England and whether the damage occurred in England.

Event Giving Rise to the Damage

The parties clearly had a deep and multifaceted relationship that went spectacularly sour. It was also clear that the parties’ relationship, including its most unpleasant aspects and their consequences, spanned multiple jurisdictions. Two issues of relevance concerning the interpretation of the ‘event giving rise to the damage’ limb of Article 7(2), however, were not clear.

The first issue concerns the fact that acts of harassment can be done by a defendant directly or by another person on the defendant’s behalf. The question arose whether the acts of another person acting on the defendant’s behalf in England could amount to an act of the defendant in England for the purposes of Article 7(2). To answer this question, the court relied on the Melzer judgment of the Court of Justice:

I do not, and do not need to, take from this any clear principle that the acts of an agent cannot constitute the acts of a principal for the purposes of the ‘cause’ limb of the jurisdictional test where the agent acts in one jurisdiction on the authority of a principal in another. But I was shown no clear authority for the contrary principle either. And I do take from Melzer at least the thoughts that (a) the BRR concerns itself in principle with the issue of a causal act by one person being attributed to another under national law for the purposes of determining jurisdiction, because that tends against the fundamental principles of certainty, predictability and the proximity of a defendant’s conduct to the courts of another country and (b) great care needs to be taken with appeals to intuition as to the ‘right’ outcome in such matters, when the starting point is the fundamental principle of a defendant’s entitlement to be sued in his place of domicile, subject only to limited exceptions of a predictable nature made in the interests of the effective administration of justice. ([104])

The second issue is whether Article 7(2) required an English course of conduct to confer jurisdiction on the English courts, or whether an international course of conduct with acts of harassment in England sufficed. The court held that the former approach was right:

The jurisdictional test cannot be satisfied by doing no more than identifying a collection of English acts featuring in a pleaded international course of conduct and inviting an inference that they themselves add up to an actionable course of conduct in their own right… The right approach works the other way around. It has to start with the pleaded identification of an English course of conduct and then establish that, through pleaded constituent acts of the Defendant in England. Whether any ‘English subset’ of a pleaded international course of conduct amounts to an actionable tort in its own right must itself be pleaded and evidenced. It cannot be assumed as matter of logic to have that quality: harassment is a distinctively cumulative tort, and pleading a whole course of conduct as harassment does not imply pleading that any subset of it must itself constitute harassment (even though it may). ([106])

The court ultimately held that the claimant failed to identify and evidence a tortious course of conduct by the defendant with the necessary coherence, connectivity, persistence, and gravity constituting harassment that occurred in England.

Damage

The question of whether the relevant damage occurred in England raised related issues. Does Article 7(2) require that the claimant became aware of harassing events and experienced alarm, fear, and distress in England, that the proximate and direct damage occurred in England, or perhaps that something else occurred in England?

The court held that:

The impact of any individual constituent episode of that course of conduct is simply not the legally relevant ‘damage’ as defined by English tort law. Any individual episode need have no particular effect at all – it is the cumulative, oppressive effect of the total course of conduct which is of the essence of the tort. ([109])

In other words, the legally relevant damage is ‘just “being harassed”’ ([111]).

The claimant failed to identify and plead any specific experience of harassment in England. Instead, she pleaded an indivisible, ambulatory, and international experience of being harassed, which was not recognisable as distinctively English. Consequently, no relevant damage occurred in England. The court suggested that had the claimant had an English domicile, habitual residence, or physical presence in England throughout, she might have satisfied the requirements of the ‘damage’ limb of Article 7(2) ([118]).

Immunity

As mentioned, the Court of Appeal held on 6 December 2022 that the defendant enjoyed immunity from the jurisdiction of the English courts under the State Immunity Act 1978 with respect to the allegations about his pre-abdication, but not post-abdication conduct. Before the High Court, the claimant had another go at this by seeking permission to amend her pleadings to include pre-abdication matters on two bases: that these matters concerned the defendant’s motives for his post-abdication course of conduct; and these matters were part of the relevant background. The court refused permission because these matters were covered by immunity.

Extraterritoriality

Finally, the court addressed the issue of territorial scope of the Protection from Harassment Act 1997. As is well-known, common law courts apply the presumption against the extraterritorial application of domestic statutes. Since the case contained international elements, the question arose whether it fell outside the territorial scope of the Act.

The court indicated briefly that the Act had territorial limits and that the case fell outside those limits:

It is one thing to say that regard may arguably be had to an extraterritorial ‘act of a defendant’ in an otherwise securely pleaded and evidenced ‘course of conduct’ within the jurisdiction. It may also be right that ultimately…some sort of test of preponderance or ‘significant proportion’ might conceivably evolve to meet the facts of a particular case. But there is no authority at present which comes close to giving any basis for concluding that fully ‘international harassment’ is comprehended within the geographical scope of the Act and I was given no contextual basis for inferring a Parliamentary intention to achieve that as a matter of public policy. ([291])

Comment

This is a complex and rich case and it is impossible to examine it fully within the confines of a blog post that is already too long. I want, nevertheless, to mention three points by way of commentary.

The first point concerns Brexit and the civil law/common law divide in international civil litigation. Civil law jurisdiction rules, epitomised by Brussels I bis, allocate jurisdiction in a rigid way. Jurisdictional bases are limited in number and relatively narrow. Common law jurisdiction rules are flexible, and jurisdictional bases are more numerous and relatively broad. These two approaches to jurisdiction, and how they play out in tort disputes, were recently discussed by the UK Supreme Court in Brownlie 2. Mrs zu Sayn-Wittgenstein-Sayn was in a unique position in that she could choose the jurisdictional system under which to bring her claim. By commencing her proceedings in October 2020, she effectively opted for Brussels I bis. Had she waited a few months and commenced her proceedings after the expiry of the Brexit transition period on 31 December 2020, she could have sued the defendant under the common law rules. It is possible that the claim would have passed the tortious jurisdictional gateway, but the forum conveniens doctrine would have presented a significant challenge. That is probably why the claimant chose to sue the defendant under Brussels I bis.

The second point concerns the court’s interpretation and application of Article 7(2) of Brussels I bis. In Shevill, the Court of Justice confirmed that the domestic law under which the claim is pleaded is of relevance for the application of Article 7(2):

The criteria for assessing whether the event in question is harmful and the evidence required of the existence and extent of the harm alleged by the victim of the defamation are not governed by the Convention but by the substantive law determined by the national conflict of laws rules of the court seised, provided that the effectiveness of the Convention is not thereby impaired. ([41])

The court seised on the opportunity created by Shevill to limit the jurisdiction of English courts over harassment claims. Through section 9 of the Defamation Act 2013, Parliament sought to end London’s position as the global libel litigation capital. The High Court judgment in Corinna zu Sayn-Wittgenstein-Sayn v His Majesty Juan Carlos Alfonso Victor Maria De Borbón Y Borbón can be seen as a related development in the field of harassment.

Finally, the third point concerns the choice-of-law aspect of the case. Even though this was a jurisdictional dispute, the court nevertheless opined on the issue of extraterritoriality. It is interesting, however, that the court approached the issue of application of the Protection from Harassment Act 1997 purely as an issue of statutory construction. There was no mention of the possibility that the choice-of-law rules of the Rome II Regulation (which is retained EU law) might have a role to play in this respect. I think that Rome II, at least if it is applied as directly applicable EU law, requires a different approach. The court should have started its analysis by applying the choice-of-law rules of Rome II. If English law applied, the court could have checked whether the case fell within the territorial scope of the Act. If English law did not apply, the court could have checked whether the Act should nevertheless apply on an overriding basis. A further question could then be asked, namely whether Rome II effects in any way the process of statutory construction.

The parties are in a bitter dispute. The claimant is likely to appeal the High Court judgment. The next chapter in this litigation is keenly awaited.

The eighth meeting of the Special Commission set up in the framework of the Hague Conference on Private International Law to discuss the practical operation of the 1980 Child Abduction Convention and the 1996 Child Protection Convention kicked off on 10 October 2023.

As reported by Mayela Celis on Conflict of Laws, a broad range of issues will be addressed during the meeting, such as delays in return process under the 1980 Convention, the relationship of the 1980 Convention with other international instruments, in particular the 1989 UN Convention on the Rights of the Child, exceptions to the return of the child under the 1980 Convention and protective measures upon return, including with respect to domestic and family violence, child abduction and asylum claims, mediation as relevant to the 1980 and 1996 Conventions, and transfer of jurisdiction under the 1996 Convention, to name just a few (the draft agenda of the meeting can be found here).

The European Association of Private International Law was invited to take part in the meeting as an observer, as it occurred on the occasion of the first meeting of the Special Commission on the practical operation of the 2007 Child Support Convention and on the 2007 Maintenance Obligations Protocol, and the first meeting of the Special Commission on the practical operation of the 2000 Adults Convention.

An EAPIL Working Group was set up for the purposes of contributing to the meeting on the 1980 and 1996 Conventions. The Group, chaired by Costanza Honorati and consisting of Sabine Corneloup, Mónica Herranz Ballesteros, Katarina Trimmings, and Mirela Zupan, prepared a position paper focused on protective measures, which the Scientific Council of the Association endorsed on 10 October 2023.

The conclusions reached by the Working Group are as follows:

I. Protective measures amount to a fundamental tool to achieve compliance with the Convention’s obligation, while guaranteeing physical and psychological safety of the child and thus ensuring respect of the child’s fundamental rights. 

II. The Treaty’s main obligation to return the child is only discharged when such court is convinced that the return is safe and that the return shall not cause any harm, either physical or psychological, to the child. 

III. Ensuring the child’s safe return must be construed as a treaty obligation set on all Contracting States. This requires that all States, i.e. the State of the child’s habitual residence and the State of refuge, shall cooperate one with each other to ensure the physical and psychological safety of the child when implementing the main obligation of returning the child. 

IV. In the context of abduction proceedings the best interests of the child implies that, when pursuing the aim of returning the abducted child to the place of his/her habitual residence, the court in the State of refuge should pay particular attention to safeguarding the overall physical and psychological safety of the child. 

V. A protection measure in the light of the above is only a court order which is capable of being enforced in the State of habitual residence. The requirement of enforceability in the State where protection is sought, i.e. in the State of habitual residence, thus becomes a constitutive element of any measure which aims to effectively protect the child’s on his or her return. 

VI. Even where protective measures are enforceable in the State of habitual residence, caution is needed when determining whether a civil protection order would be appropriate in an individual child abduction case. In the light of concerns over the effectiveness of protective measures, protective measures should not be employed where credible allegations of severe violence have been made and there is a future risk of violence of such severity.

VII. There are several ways which can guarantee the enforceability of a protective measure. It is for the court in the State of refuge, in cooperation with the court in the State of habitual residence, to choose and implement the most appropriate measures.

VIII. Protective measures, if not triggered ex parte, should be considered by the court on its own motion, ex officio. 

IX. A genuine consideration of adopting or requiring protective measures should be strongly encouraged every time the court is satisfied there is a grave risk of harm, and provide an explanation on facts, risks and measures that were considered should be provided. 

A report on the conclusions and recommendations of the eighth meeting of the Special Commission will appear on this blog in due course.

Anabela Susana de Sousa Gonçalves (University of Minho) has posted The material limits of the European Succession Regulation on SSRN.

The abstract reads:

Cross-border successions have their legal framework in the European Union (EU) in Regulation No 650/2012 of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession (European Succession Regulation). About this Regulation, there are sometimes some expectations, not always realistic, about the answers that it can provide, in an area where there are many divergences between the substantive law of the Member States. It is therefore important to know the limits that circumscribe the material scope of application of the Regulation, bringing to the discussion the jurisprudence of the European Union Court of Justice (ECJ).

On 20 June 2022, the CJEU rendered its judgment in London Steam-Ship Owners’ Mutual Assistance Association Ltd v Spain. The judgment, which dramatically altered the understanding of the arbitration exception under the Brussels instruments, gave rise to heated comments and debates, including an on-line symposium on this blog.

On 6 October 2023, the English High Court rendered a new judgment in the case where Justice Butcher discussed, inter alia, the meaning of the CJEU jugdment and the extent to which he was bound by it.

Interestingly, the insurers had initiated a second arbitration in 2019 which was still in progress when the CJEU delivered its judgment. As a result, the arbitrator, Sir Peter Gross, also had to express views on the meaning of the CJEU judgment in the two partial awards he made on 6 January 2023 and 27 March 2023.

The English proceedings are highly complex, with a number of challenges initiated by each of the parties against the various arbitral awards and application to enforce the Spanish judgment. Without getting into all these details, I focus below on the issues addressed by the CJEU and how they were perceived and addressed by the English court.

Concept of Judgment in Article 34(3) Brussels I

A first argument made by Spain before the English court was that the English judgments on the arbitral awards were no relevant ‘local’ judgments for the purposes of Article 34(3), as they were not judgments of ‘a judicial body of a Contracting State deciding on its own authority on the issues between the parties’. (Solo Kleinmotoren GmbH v Emilio Boch [1994] ECR I-2237).

Justice Butcher ruled that the CJEU confirmed that the argument based on Solo Kleinmotoren was incorrect.

123. In the judgment of the CJEU, at paras. [48-50], the CJEU said that a judgment entered in terms of an arbitral award was capable of being regarded as a ‘judgment’ within the meaning of Article 34(3). In that regard, the CJEU pointed out at para. [49] that the concept of a ‘judgment’ set out in Article 32 was a broad one and ‘covers any judgment given by a court of a Member State, without its being necessary to draw a distinction according to the content of the judgment in question, provided that it has been, or has been capable of being, the subject, in the Member State of origin and under various procedures, of an inquiry in adversarial proceedings’. At para. [50] the CJEU said that this interpretation of the concept of ‘judgment’ in Article 34(3) was supported by the purpose of the provision, which was to protect the integrity of a Member State’s internal legal order. At para. [53] the CJEU said that, ‘a judgment entered into in the terms of an arbitral award is capable of constituting a ‘judgment’ within the meaning of Article 34(3) …’.

A second argument made by Spain before the English Court was that the whole of the English proceedings, and the resulting English s. 66 Judgments (declaring the first arbitral awards enforceable in England), fell within the arbitration exception to the applicability of the Brussels Regulation enshrined in Article 1(2)(d). Spain’s contention was that a non-Regulation judgment, or at least a judgment which is a non-Regulation judgment because it falls within the arbitration exception, did not count as a relevant ‘home’ judgment for the purposes of Article 34(3).

Again, Justice Butcher ruled that the CJEU confirmed that the argument, that he labelled ‘the material scope point’, was incorrect.

142. (…) the Court’s reference, at para. [50], to the purpose of Article 34(3) as being the protection of the integrity of a Member State’s legal order is relevant to this point as it is to the ‘Solo’ point. Further at paras [51-52], the CJEU said that it was ‘apparent from the Court’s case-law that the exclusion of a matter from the scope of Regulation No.44/2001 does not preclude a judgment relating to that matter from coming within the scope of Article 34(3) of that regulation and, accordingly, preventing the recognition of a judgment given in another Member State with which it is irreconcilable’, and made reference to Hoffmann v Krieg. 

Jurisdictional Qualifications of the CJEU

The most novel, far reaching and debatable aspects of the ruling of the CJEU were, however, the introduction of new requirements relating to lis pendens and the privity of jurisdiction clauses.

Readers will recall that the CJEU ruled that where a judicial decision resulting in an outcome equivalent to the outcome of an arbitral award could not have been adopted by a court of the Member State of enforcement without infringing the provisions and the fundamental objectives of the Brussels I regulation, in particular as regards the relative effect of an arbitration clause included in the insurance contract in question and the rules on lis pendens contained in Article 27 of that regulation, the judgment on the arbitral award cannot prevent the recognition of a judgment given by a court in another Member State.

The issue before both the arbitrator and the English court was whether this part of ruling had deprived the arbitrator from its jurisdiction and thus prevented the operation of Art. 34(3), as the relevant arbitral awards should be set aside for lack of jurisdiction.

Both of them rejected the argument on the ground that they were not bound by answers to questions not referred to the CJEU.

209. I have also reached the conclusion (as did Sir Peter Gross at paragraph [122(3)] of the Gross First Award) that, if the CJEU purported to answer a question not or falling outside those referred to it, the national court would not be bound to follow any such purported answer, though it would not lightly so hold. This appears to me to be the corollary of the limited jurisdiction established by Article 267 of the TFEU. (Reference to precedents omitted)

Justice Butcher then concluded:

214. Applying the principles set out above, in my judgment the CJEU, in paragraphs [54] to [73] of its Judgment, gave answers to questions which had not been referred to it, and which this Court had refused to refer. In doing so, it trespassed on the facts of the case.

215. Thus, the first two questions referred to the CJEU in relation to Article 34(3) raised clearly defined issues of EU law. They asked whether a s. 66 judgment was capable of falling within Article 34(3) in light of two specific points, the ‘Solo point’, and the material scope point. The nature of the questions and the reasons why they were asked were set out both in the Reference Judgment, and very clearly in the Reasons for the Reference section of the Order for Reference.

216. There was no question aimed at whether there were other reasons why Article 34(3) might be inapplicable, and specifically no question directed at whether Article 34(3) might be inapplicable because the English s. 66 Judgments had been entered in circumstances where the English Court could not have entertained the claim which was the subject of the Spanish proceedings. That, in my view, raised different questions (including but certainly not limited to different questions of EU law).

Justice Butcher then wondered whether, although he was not bound, he would still want to follow the CJEU. He ruled he would not.

236. Further, while I am clearly entitled to have regard to the reasoning of the CJEU in those paragraphs, if I am not bound by them I would not follow them. In my judgment they fail to give effect to the exclusion of arbitration from the Regulation, and they fail to have regard to the jurisprudence of the ECJ/CJEU which has recognised that the arbitration exception is effective to exclude arbitration in its entirety, including proceedings in national courts the subject matter of which is arbitration, in particular the decisions in Marc Rich & Co AG v Società Italiana Impianti PA (The ‘Atlantic Emperor’) (Case C-190/89), and Proceedings Concerning Gazprom OAO (Case C-536/13).

237. Instead I would follow, and may be bound by, the reasoning of the Court of Appeal in The Prestige (Nos. 3 and 4), in relation to an argument which was raised there with reference to Assens Havn, to the effect that an analogy with that case indicated that the Award Claims there under consideration did not fall within the ‘arbitration exception’ to the Regulation. The argument of the States was that the reasoning in Assens Havn, which was to do with an exclusive jurisdiction clause in a liability insurance policy, was ‘equally applicable to an arbitration clause’. At [79]-[84] the Court of Appeal said this:

(…)

[84] For these reasons we hold that the reasoning in Assens Havn cannot apply to an arbitration clause. We note that this is also the view of Professor Briggs (Civil Jurisdiction and Judgments, 7th ed (2021), para. 9.05). Accordingly the “arbitration” exception applies to the Award Claims and jurisdiction must be determined in accordance with domestic law principles.’

Res Judicata as English Public Policy

The English judgment also addressed the argument of whether res judicata was a principle of English public policy, and whether the Spanish judgment could be denied recognition under the public policy exception in Article 34(1), on the ground that the English judgments declaring enforceable the first arbitral awards were res judicata.

Justice Butcher found that the Spanish judgments would also be contrary to public policy on that ground, but the argument was subsidiary, given that he had already found that the Spanish judgments should be denied recognition on the ground of Article 34(3).

Assessment

The most interesting part of the English judgment is its interpretation and treatment of the most controversial aspects of the CJEU judgment, namely the jurisdictional qualifications.

The debates before the English court show how far reaching the CJEU judgment might be and raise the issue of whether the CJEU has indeed laid down jurisdictional requirements for arbitrators.

On the one hand, a narrow reading of the CJEU judgment could be that nowhere does it expressly say that it has a bearing on the jurisdiction of arbitrators. And that, in the case at hand, it had not ruled on the issue of whether Spain was bound to arbitrate. This, I understand, was the position of the arbitrator. Justice Butcher reported:

77. At [126] Sir Peter Gross considered whether the CJEU Judgment had any bearing on his jurisdiction as an arbitrator. He concluded that, whatever its ambit in other respects, the CJEU Judgment said nothing at all about his jurisdiction; and that he entertained no doubt at all about his having jurisdiction.

78. At [127]-[132] Sir Peter Gross considered whether the CJEU Judgment had decided that Spain had not been obliged to arbitrate its dispute with the Club and hence was not in breach of any equitable obligation by pursuing its Article 117 claims and seeking to enforce the Spanish Judgment. The Arbitrator found that the CJEU Judgment did not contain any such decision. He said (at [130]) that ‘Part 2’ of the CJEU Judgment went to the status of English court judgments, not whether Spain was in breach of its obligation to arbitrate. He said (at [131]) that the CJEU Judgment had said nothing about whether Spain had been obliged to pursue its dispute in arbitration, and that he could see no proper basis for reading in any such decision.

On the other hand, a less cautious reading of the CJEU judgment is that it has indeed laid down jurisdictional requirements for arbitrators. Spain made the argument repeatedly (which is fair enough).

Justice Butcher avoided addressing the issue by ruling that he was not bound by that part of the CJEU judgment. But the views he expressed when he declined to consider the CJEU judgment persuasive enough to follow it may well reveal that he did think that the CJEU has indeed laid down jurisdictional requirements.

Debate to be continued, on the Continent.

European Law Institute (ELI) has recently launched a new project devoted to the proposal of the EU Regulation on the Recognition of Foreign Filiations.

The ELI Project Team wants to scrutinise the rules of the proposal  from four specific perspectives: children’s, LGBTI persons’ and women’s fundamental rights, and the underlying EU primary law, especially concerning the free movement of citizens.

The works within the project will be conducted under the accelerated procedure, with the aim of having results by February 2024. Based on its analysis, the Project Team wants to develop a Position Paper, in which provisions of the proposal will be scrutinized and alternative formulations proposed. Additionally, the Position Paper will be supplemented with explanations and comments. Model Rules in the form of desirable amendments to the proposal will also be drafted.

The ELI Project Team consists of Claire Fenton-Glynn, Cristina Gonzalez Beilfuss, Fabienne Jault-Seseke, Martina Melcher, Sharon Shakargy, Patrick Wautelet, Laima Vaige with Susanne Gössl and Ilaria Pretelli acting as Reporters.

On 2 October 2023 the Kick-Off Webinar of the Project was held. Here is a summary of discussions and a recording of the whole meeting.

Posts on this blog devoted to the same proposal and academia’s reactions to it may be found here, here and here.

The judgment by the CJEU in Club la Costa (decision of 14 September 2023, Case C-821/21), has already been analysed from a jurisdictional perspective in a previous post. In the same decision, the court also addresses an important issue regarding the applicable law under the Rome I Regulation.

Facts

Remember that a British resident had entered for private purposes into a timeshare contract with a British company (Club La Costa) through the latter’s Spanish branch. This contract concerned tourist accommodation in Spain. Subsequently, the British resident had brought a suit in Spain.

The standard terms of the contract stipulated that it shall be governed by English law. However, Spanish law, as the law of the place of the immovable, was more favourable for the British resident than English law. (In particular, Spanish law requires the contract to be entered into the land registry as well as to specify the accommodation and the precise duration of the time-share, see the parallel decision rendered on a similar contract on the same day in Case C-632/21, JF and NS v Diamond Resorts Europe et al.)

Legal Issues

In essence, the Spanish court wanted to know whether it could apply Spanish law to the dispute. For this, it had to overcome the choice of law in the contract as well as the consumer protection provisions, which both pointed to English law. If the choice of law was incompatible with Article 3, and Article 6 Rome I did not apply because it was unfavourable to the consumer, the application of Spanish law might have been justified, e.g. under Article 4(1)(c) Rome I (for a discussion whether this provision governs timeshare contracts, see Case C-632/21, JF and NS v Diamond Resorts Europe et al.).

The Spanish court therefore asked the CJEU (1) whether it would be compatible with Article 3 Rome I to consider a choice-of-law clause in standard terms as valid, (2) whether the business partner could also rely on the consumer protection provision of Article 6 Rome I, and (3) whether it could ignore the law of the consumer’s habitual residence where the law that would normally govern the contract (in the absence of consumer protection) is more favourable to the consumer in the particular case.

The Validity of the Choice of Law in Standard Terms

For the first question, concerning the validity of a choice-of-law clause in a standard contract term, the CJEU could refer to its precedent in VKI v Amazon (Case C-191/15). There, it had held that such a clause is valid only if it does not lead the consumer into error about the continued application of the mandatory rules of the law of its habitual residence.

In the present case, the law of the habitual residence of the consumer was selected in the standard term. Hence, there was no risk of any error of the consumer. The CJEU thus deemed the clause to be valid.

Can Businesses Rely on Consumer Protection and can the Consumer Waive such Protection?

The second and third question were answered together by the CJEU. In this regard, it held that the consumer protection provision of Article 6 Rome I is

not only specific, but also exhaustive, so that the conflict-of-law rules laid down in that article cannot be amended or supplemented by other conflict-of-law rules laid down in that regulation, unless they are expressly referred to in that article” (para 78).

This is an important ruling with potential relevance for many disputes (e.g. it was also applied in the parallel case in Case C-632/21, JF and NS v Diamond Resorts Europe et al.). From a theoretical perspective, this ruling means that the law designated by Article 6 Rome I is an objective conflict-of-laws rule and not merely a unilateral defence by the consumer.

Assessment

This decision has two consequences.

First, the consumer protection provision can also be relied upon by the business party to the contract. This makes a lot of sense. If it were otherwise, the business would have to wait for the consumer to choose her preferred law before it could assess the legal situation.

Second, the ruling means that the consumer cannot waive the protection of Article 6 Rome I. Indeed, this is just the mirror image of the first consequence, because if the consumer could waive the protection, then  it would be impossible for the business to rely on the provision. Therefore, this consequence must be applauded too.

It should be noted, however, that the situation in the law of jurisdiction is different on the latter point. According to the CJEU, the consumer can waive the protection by Article 18(1) Brussels I bis Regulation (see decision in Wurth Automotive, Case C-177/22 and the comment by Marion Ho-Dac). This can be easily explained, though, because already the wording of this provision makes it clear that it benefits exclusively the consumer and that the business cannot rely on this protective head of jurisdiction. It is different with Article 6 Rome I, which determines the law governing consumer contracts objectively, and thus for both parties.

— Thanks to Verena Wodniansky-Wildenfeld, Felix Krysa and Paul Eichmüller for reviewing this post.

The group-of-companies doctrine allows attributing obligations of one group member to another. It may also be used to justify a head of jurisdiction to sue all members of one group at the same place.

Yet this doctrine does not apply under the Brussels I bis Regulation, at least not in the consumer contract context, as the CJEU has held in Club la Costa (judgment of 14 September 2023, Case C-821/21). In the same decision, the Court also clarified the burden of proof regarding the domicile of a corporation. The points of the judgment addressing the applicable law under the Rome I Regulation will be commented in a subsequent post.

Facts

A British resident had entered for private purposes into a timeshare contract through the Spanish branch of a British company (Club La Costa). The contract stipulated the exclusive jurisdiction of the courts of England and Wales.

The consumer then brought a claim in a Spanish court against Club La Costa, which apparently went into liquidation subsequently, and various other British companies belonging to the same group.

Legal Issues

The Spanish court asked the CJEU whether the term ‘other party to the contract’ in Article 18(1) Brussels I bis Regulation could also refer to other group members. It furthermore wanted to know how the group members would have to prove that they are not domiciled in Spain but abroad.

Ruling on the Group-of-Companies Doctrine

The CJEU first underlines that the application of Article 18(1) Brussels I bis Regulation presupposes the existences of a contract, and that it is decisive “that the parties to the dispute are also the parties to the contract in question” (para 48) (on the wider scope of Article 7(1) Brussels I bis in this respect, see CJEU, Joined Cases C-274/16, C-447/16 and C-448/16, flightright v Air Nostrum, paras 62-65). Therefore, a consumer’s action under this head of jurisdiction must be brought against the other party to the contract (para 50). Consequently, it cannot be brought against other members of the group, with whom the consumer had been contractually linked as well, but not by the timeshare contract.

The Court of Justice distinguishes this case from its decision in Maletic (Case C-478/12). In the latter, a consumer couple had booked a vacation trip with an internet platform and a travel agency. The CJEU had ruled at the time that the contractual relationship with the platform operator was ‘inseparably linked’ to that with the travel agency and that both would therefore fall under the consumer heads of jurisdiction of the Brussels I Regulation. This is, however, not the case with the contracts between the consumer and the members of the group in Club La Costa, which can be neatly separated from each other.

Ruling on the Proof of Corporate Domicile

The second question requires a little more explanation. The domicile of corporations is determined by Article 63(1) Brussels I bis in a three-fold manner (statutory seat, central administration and principal place of business), with a special definition of the statutory seat of British companies in Article 63(2). The burden of proof for these places is a procedural question, thus falling outside the scope of the Brussels I bis Regulation.

Yet the reference for a preliminary ruling reported the opinion of some Spanish courts which interpret Article 63(2) Brussels I bis Regulation as merely creating a ‘presumption of fact’. If it were ascertained that a defendant company carries out activities in Spain, the international jurisdiction of the Spanish courts would be justified. Hence, it would be for the defendants to show that their domicile is located outside of Spain (para 31).

The CJEU gives this interpretation short shrift. It underlines that Article 63 Brussels I bis must be subject to autonomous interpretation under EU law (para 60). The provision gives the consumer the right to choose between the three locations set out there (para 63). Hence, it does not limit the consumer’s choice (para 64), but on the contrary expands it. The provision of Article 63(2) Brussels I bis, in turn, provides a clarifying definition of the statutory seat of English companies (para 65). It can therefore not be accepted that these provisions would merely create presumptions that could be rebutted (para 66).

Assessment

On both points, the ruling of the CJEU is clear, straight-forward, and firmly anchored in the text of the Regulation. The binding wording must be upheld against the tendency to disregard it when this suits the consumer in the individual case. As important as the goal of consumer protection is, it does not justify bending the rule of law.

— Thanks to Paul Eichmüller for reviewing this post.

 

Lydia Lundstedt, Senior Lecturer in Private International Law at the Stockholm University and in Intellectual Property Law at the Linköping University, has accepted the invitation of the editors of the blog to present her recent book, titled ‘Cross-Border Trade Secret Disputes in the European Union: Jurisdiction and Applicable Law’, published by Edward Elgar.

In today’s knowledge-based and data-driven economy, information is a company’s most valuable asset. The most common form of legal protection for information are laws that protect trade secrets. In contrast to patents, copyright, and trademarks, whose importance for protecting intangible assets is well-recognised, trade secret protection has often come in their shadow as the less important form of protection. The importance of legal protection for trade secrets is however gaining acceptance and many states have sharpened their laws on trade secret protection. In determining the form and level of trade secret protection, states consider (often constitutional) rules on the freedom of information, the freedom to compete and operate a business, employee mobility, and privacy. Depending on the social, political, and economic environment of the state, the form and level of protection may vary considerably.

To ensure a ‘sufficient and consistent level’ of protection under the laws of all the Member States, the European Union (EU) enacted Directive 2016/943 on the Protection of Undisclosed Know-how and Business Information (Trade Secrets) against their Unlawful Acquisition, Use and Disclosure. The Directive is in the form of a minimum directive, so Member States may provide for more far-reaching protection. Complicating matters is the fact that trade secret protection is a bit of a ‘strange bird’, which is reflected in the diverging doctrinal basis for trade secret protection. This divergence continues even after the implementation of the Trade Secret Directive, where some Member States continue to provide protection under unfair competition law, others have introduced a sui generis form of protection, and one Member State protects trade secrets as an intellectual property (IP) right. In addition, all Member States continue to protect trade secrets under contract law, and under the legal systems of some Member States, a trade secret holder may raise concurrent claims based on contractual and non-contractual grounds.

Trade secret protection is even more diverse on the international level. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) guarantees only a minimum level of protection for ‘undisclosed information’ and leaves a wide margin of discretion with respect to how Members can afford protection. The inclusion of trade secret protection in a treaty on intellectual property adds to the confusion about the correct classification of trade secrets.

With the ease of digital communications, employee migration, and international trade, trade secret violations can easily have a cross-border, and even a global dimension.  Unlike physical assets, information can move at the speed of light and become ubiquitous instantaneously.  In this respect, trade secrets are like (traditional) IP rights in that trade secrets and IP rights consist of commercially valuable information that are often exploited over national borders in order to take full advantage of their economic potential. In another respect, however, trade secrets differ from IP rights, which pursuant to the territoriality principle, may be in the public domain in some states without affecting their protection in others. This is not the case for trade secret protection because if the information becomes freely accessible, it will no longer fulfil the criterium of secrecy that is required for its continued protection.

Within the EU, one would expect that the environment would be conducive for the litigation of cross-border trade secret disputes because the rules on private international law are harmonised at the EU level. Despite this, cross-border litigation and enforcement of trade secrets is considered to be extremely difficult and is also rare. This may be due to the varying doctrinal bases for trade secret protection and the fact that trade secret violations can take place in contractual and non-contractual contexts. Moreover, if the trader secret holder brings proceedings against a former employee, weaker party rules will affect the choice of forum and applicable law. Another complicating factor is that in some cases, jurisdiction and the applicable law is based on the location of damage, which is difficult to localise as trade secrets are intangible and can be acquired, disclosed, and used everywhere. What is more, there may be a number of potential defendants located in different countries that allegedly violated the trade secrets, and it may be difficult to join them all in one proceeding and under one law.

The book investigates how the EU private international law rules can be interpreted to facilitate the objectives of the EU Trade Secret Directive when trade secrets are litigated and enforced over national borders. A basic assumption for this study is that effective and consistent protection of trade secrets in cross-border situations is facilitated when the parties can resolve their dispute before one court that has jurisdiction over the entire dispute and under one law, resulting in a judgment capable of being enforced in all Member States. When analysing which Member States have jurisdiction and which law or laws are applicable as well as the scope of the jurisdiction and of the applicable law, the book considers the competing interests of the parties and the EU public interest in general.

The book concentrates on three common categories of defendants, namely, contractual partners, employees, and competitors, and describes and analyses where each respective category of defendant can be sued and what law(s) is(are) applicable from an EU private international law perspective. The book also considers whether any of the rules in the Trade Secret Directive might be overriding mandatory rules, public policy (ordre public), or non-excludable rules that displace corresponding rule in the lex causae.

A webinar on early marriages, organised by the Interest Group on Private International Law of SIDI, the Italian Society of international Law, will take place on 5 October 2023 at 4 pm CET.

The event will specifically concern the decision of the German Federal Constitutional Court, of 2023, on the constitutionality of the German law combating child marriages of 2017, and aims to provide comparative reflections on early marriages and their regulation in national and international law.

The main speaker will be Nadjma Yassari (Max Planck Institute for Comparative and International Private Law), while Giacomo Biagioni (University of Cagliari) will act as a discussant.

The webinar, in English, will be broadcast through Microsoft Teams. Those interested in attending are invited to use this link to connect as the webinar begins. No registration is required.

I have already reported that the UK Supreme Court ruled on the meaning of a “matter” in Article II(3) of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC) in its judgment of 20 September 2023 in Republic of Mozambique v Privinvest Shipbuilding SAL (Holding) [2023] UKSC 32.

On the very same day, the Privy Council, speaking through Lord Hodge (other judges were Lord Reed (President), Lord Lloyd-Jones, Lord Briggs, and Lord Kitchin), gave a judgment on Article II(3) NYC in FamilyMart China Holding Co Ltd v Ting Chuan (Cayman Islands) Holding Corporation [2023] UKPC 33. This case was decided on appeal from the Court of Appeal of the Cayman Islands.

While there is a degree of overlap between the two judgments, the facts of the two cases are different and FamilyMart raised a broader range of issues.

Facts

A traveller to the Far East can be surprised by the number of convenience stores and the range of goods and services they offer. This case concerns a dispute between FamilyMart China Holding Co Ltd (“FMCH”) and Ting Chuan (Cayman Islands) Holding Corporation (“Ting Chuan”), the shareholders of China CVS (Cayman Islands) Holding Corp (“Company”), a Cayman Islands company that operates some 2,400 convenience stores in China under the “FamilyMart” brand.

The relationship between the shareholders is governed by a shareholders’ agreement, which contains a clause providing that “any and all disputes in connection with or arising out of this Agreement [shall be] submitted for arbitration” in Beijing.

In 2018, FMCH presented a petition in a Cayman Islands court to wind up the Company on the just and equitable ground under the Companies Law (2018 Revision). The petition was based on alleged misconduct by Ting Chuan in connection with the management of the Company. Ting Chuan applied to strike out or stay the petition under section 4 of the Foreign Arbitral Awards Enforcement Act, which applies to foreign arbitrations and implements Article II(3) NYC into Cayman Islands law. It provides as follows:

Staying of certain court proceedings — If any party to an arbitration agreement, or any person claiming through or under him, commences any legal proceedings in any court against any other party to the agreement, or any person claiming through or under him, in respect of any matter agreed to be referred, any party to the proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to the court to stay the proceedings; and the court, unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings.

Kawaley J in the Grand Court struck out a part of the petition and granted a stay of the remainder. The Court of Appeal overturned this decision on the basis that no part of the winding up petition was arbitrable and that, consequently, the arbitration agreement was “inoperative”. The parties agreed that the dispute fell within the scope of the arbitration clause. The central dispute was whether the FMCH’s petition had made the matters raised in that petition non-arbitrable.

Judgment

To decide the appeal, the UKPC had to rule on the meaning of a “matter” and “inoperative” in section 4 of the Foreign Arbitral Awards Enforcement Act/Article II(3) NYC.

Regarding the first issue, the UKPC essentially set out, albeit in more detail, and relied on the same principles that the UKSC set out and applied in Mozambique. Since I addressed this issue in a previous post, here I want to focus on the second issue, namely the meaning of “inoperative” and the arbitrability of the subject matter and the remedies sought in the court proceedings.

The UKPC stated that there are two broad circumstances in which an arbitration agreement may be inoperative: (1) where certain types of dispute are excluded by statute or public policy from determination by an arbitral tribunal; and (2) where the award of certain remedies is beyond the jurisdiction which the parties can confer through their agreement on an arbitral tribunal. The UKPC referred to the first type as “subject matter non-arbitrability” and to the second as “remedial non-arbitrability” ([70]).

The underlying concept of subject matter non-arbitrability is that there are certain matters which in the public interest should be reserved to the courts or other public tribunals for determination ([72]). For example, by preventing parties by agreement from contracting out of an employee’s right to have access to an employment tribunal and the courts, section 203 of the UK Employment Rights Act 1996 and section 144(1) of the UK Equality Act 2010 preserve a right of access to the courts ([71]). Similarly, a subject matter will be non-arbitrable if “there is an inherent conflict between arbitration and the public policy considerations involved in that particular type of dispute” ([71], referring to [44] of the SGCA case of Larsen]. While there is no agreement internationally as to the kinds of subject matter or dispute which fall within subject matter non-arbitrability ([72]), the court can refer to the jurisprudence of the courts of other common law jurisdictions ([74]).

Remedial non-arbitrability is concerned with the circumstance in which the parties have the power to refer matters to arbitration but cannot confer on the arbitral tribunal the power to give certain remedies. There is a general consensus in the common law world that the power to wind up a company lies within the exclusive jurisdiction of the courts ([75]). There is also a general consensus that an arbitral tribunal can grant inter partes remedies, such as ordering a share buy-out in proceedings for relief for unfairly prejudicial conduct in the management of a company under section 994 of the UK Companies Act 2006. This is because no third party has a legal interest and there is no public element in the dispute ([76]).

That is why even in an application to wind up a company there may be matters in dispute, such as allegations of breaches of a shareholders’ agreement or of equitable duties arising out of the parties’ relationship, which can be referred to an arbitral tribunal, notwithstanding that only a court can make a winding up order ([77], [78]).

Following these principles, the UKPC decided that some matters were arbitrable, while others were non-arbitrable. Arbitrable matters were: whether FMCH had lost trust and confidence in Ting Chuan and the management of the Company; and whether the parties’ relationship had irretrievably broken down. A stay was granted and the parties were referred to arbitration in relation to these matters. Non-arbitrable matters were: whether it was just and equitable to wind up the company; whether an order should be made requiring Ting Chuan to sell its shares to FMCH; or whether a winding up order should be made. The parties were not referred to arbitration in relation to these matters. Nevertheless, a stay was ordered because the determination of the arbitrable matters would be an essential precursor to the assessment of the non-arbitrable matters.

Commentary

This is an important judgment that offers not only an authoritative interpretation of the concept of a “matter” in Article II(3) NYC (like its sister UKSC judgment in Mozambique) but also of the concept of “inoperative” in this provision.

Importantly, the UKPC clarified the difference between “subject matter non-arbitrability” and “remedial non-arbitrability”. However, the judgment can be criticised on two bases.

First, the efforts of the UKPC to decide the case by reference to comparative law are commendable. Still, the court’s focus on the jurisprudence from the “leading arbitration jurisdictions in the common law world” ([57]; similarly [74], [75], [77]) has a whiff of parochialism. The same criticism can be levelled at the UKSC judgment in Mozambique, which focused on the jurisprudence of the “leading jurisdictions involved in international arbitration in the common law world” ([71] of that judgment).

Second, the court could have gone a step further in its dealing with the concepts of “inoperative” and set out some kind of test for determining whether or not a matter is arbitrable. Provisions like 203 of the UK Employment Rights Act 1996 and section 144(1) of the UK Equality Act 2010 that expressly prohibit contracting out are an exception. When it comes to non-arbitrability for reasons of public policy, one is left to wonder when exactly “there is an inherent conflict between arbitration and the public policy considerations involved in that particular type of dispute” or when there is “no public element in the dispute”. The instruction to the courts to look at “the jurisprudence of the courts of other common law jurisdictions” to answer these questions is not necessarily helpful. Can the courts look at the jurisprudence of the courts of non-common law jurisdictions, which are the majority of NYC jurisdictions and include some very important arbitration centres? Does this instruction even make much sense in a world where the NYC and the UNCITRAL Model Law have done so much to transcend the common law – civil law divide in international commercial arbitration?

The Court of Justice will not be extremely busy with private international law this October, but I am pretty sure the three cases – one of them in particular- have generated a lot of expectation beyond the usual crowd.

Advocate General J. Richard de la Tour will deliver his Opinion in case C-566/22, Inkreal, on Thursday 12. In the request for a preliminary ruling, the Nejvyšší soud (The Supreme Court, Czech Republic) submits the following question to the Court:

From the perspective of the existence of an international element, which is required for [the Brussels I bis regulation] to apply, is the application of that regulation to be based solely on the fact that two parties with their seat in the same Member State agree on the jurisdiction of courts of another EU Member State?

The main proceedings concern an application for the payment of EUR 153,740 plus interest and ancillary costs. The applicant, a company incorporated under Slovak law and established in Slovakia, is asking for the determination of the court having territorial jurisdiction to rule on the merits of the case pursuant to Law No 99/1963 – the code of civil procedure- as amended (the ‘CCP’).

The amount of EUR 153,740 corresponds to receivables assigned to the applicant by means of an agreement dated 8 December 2021. The receivables arose from an Agreement on a Financial Loan dated 29 June 2016 and Agreement on a Financial Loan dated 11 March 2017, entered into by the applicant’s legal predecessor, as the creditor, and the defendant, as the debtor. Both creditor and debtor are domiciled in Slovakia.

According to the Loan Agreements, ‘any ambiguities or disputes arising from the Agreement and in connection therewith shall be first resolved by negotiation aimed at reaching a solution acceptable for both parties. If the parties are unable to settle such a dispute, the dispute shall be settled by a court of the Czech Republic having substantive and territorial jurisdiction, in line with Law No 99/1963, the Code of Civil Procedure, as amended.’ The applicant holds that this is a valid prorogation agreement in a private law relationship involving international elements, pursuant to Article 25(1) of the Brussels I bis regulation, and there is no special or exclusive jurisdiction of another court pursuant to the regulation. The applicant states that, in view of the fact that the defendant is a legal entity having its registered office abroad with no plant or organisational unit in the Czech Republic, and that, at the same time, international jurisdiction of the courts of the Czech Republic is given pursuant to the Brussels I bis regulation, territorial jurisdiction cannot be determined in the standard fashion, as the conditions for determining territorial jurisdiction pursuant to the CCP are lacking or cannot be established. The applicant asked the Supreme Court to determine which court will hear and decide the matter.

The case will be decided by a chamber of five judges, with A. Kumin as reporting judge.

On the same day, the Court will publish its decision on C-21/22, OP, on Regulation (EU) No 650/2012 on matters of succession. I reported on the case here. In his Opinion delivered on 23 March 2023, related only to the second question asked, Advocate General M. Campos Sánchez-Bordona suggests the Court of Justice replies to the Sąd Okręgowy w Opolu (Regional Court, Opole, Poland) as follows:

Article 75 of Regulation (EU) No 650/2012 …, in conjunction with Article 22 thereof, is to be interpreted as not precluding a situation where, pursuant to a bilateral treaty concluded between a Member State and a third country before the accession of that Member State to the European Union, a national of the third country, who is resident in the Member State bound by the bilateral treaty, does not have the right to choose the law applicable to his or her succession.

Finally, on 17 October 2023, a hearing will take place in case C-633/22, Real Madrid Club de Fútbol. Here, the French Court of Cassation requests the interpretation of the ‘old’ Brussels Regulation in relation to the Charter of Fundamental Rights of the EU:

1) Must Articles 34 and 36 of the [Brussels I] regulation and Article 11 of the Charter of Fundamental Rights of the European Union be interpreted as meaning that a financial penalty imposed for harm caused to the reputation of a sports club by the publication of a story in a newspaper can manifestly infringe freedom of expression and therefore constitute a ground for refusing to recognise and enforce a judgment?

2) In the event of an affirmative answer, must those provisions be interpreted as meaning that the court in which enforcement is sought may find that the penalty is disproportionate only where the damages have been categorised as punitive either by the court of origin or by the court in which enforcement is sought and not where they have been awarded as compensation for non-material damage?

3) Must those provisions be interpreted as meaning that the court in which enforcement is sought may take account only of the deterrent effect of the penalty in the light of the resources of the person on whom the penalty is imposed, or may it have regard to other factors such as the seriousness of the wrong or the extent of the harm?

4) Can the deterrent effect in the light of the resources of the newspaper in itself form a ground for refusing to recognise and enforce a judgment due to a manifest infringement of the fundamental principle of freedom of the press?

5) Must the deterrent effect be understood as meaning that the financial stability of the newspaper is threatened or may it simply refer to an intimidating effect?

6) Must the deterrent effect on the newspaper publishing house and on a journalist as an individual be assessed in the same way?

7) Is the general economic situation of the print media a relevant factor when assessing whether, beyond the newspaper in question, the penalty is likely to have an intimidating effect on the media overall?

Background of the preliminary reference is a Spanish decision sentencing the newspaper Le Monde and one of its journalists to pay damages to Real Madrid and to AE, a member of its medical team, for damage to their reputation. Real Madrid and AE asked for the recognition and enforcement of the decision in France; the Paris Court of Appeal refused. On cassation, the referring court asks the Court a series of questions relating to the reason for refusal of recognition based on public policy (Article 34, point 1, of the Brussels I Regulation), read in the light of Article 11 of the Charter.

Judge T. von Danwitz will act as reporting judge for a decision to be taken by the Grand Chambre, benefiting from an Opinion by Advocate General M. Szpunar.

The Working Group charged by the Hague Conference on Private International Law with advancing the Jurisdiction Project met in Buenos Aires from 18 to 22 September 2023. This was the fifth meeting of the Working Group since its establishment, in 2021.

The Jurisdiction Project builds on the conclusion of the 2019 Judgments Convention and explore the possibility of drafting a harmonised set of rules dealing with jurisdiction and parallel proceedings.

In establishing the Group, the Council on General Affairs and Policy of the Conference tasked it to proceed, in an inclusive and holistic manner, with an initial focus on developing binding rules for parallel proceedings and related actions, while acknowledging the primary role of both jurisdictional rules and the doctrine of forum non conveniens, notwithstanding other possible factors, in developing such rules.

No detailed report of the recent Buenos Aires meeting was publicly available at this stage at the time of writing this post. As stated in the news section of the website of the Hague Conference, the Working Group “made further progress on the development of draft provisions on parallel proceedings and related actions or claims”.

The detailed reports of previous meetings, with the draft texts resulting therefrom, can be found here (February 2022) and here (February 2023).

The sixth meeting of the Working Group will take place in January 2024. The Group will then report on the progress of its work to the Council on General Affairs and Policy. The Council is expected to address the topic (and decide about the next steps) at its next meeting, in March 2024.

Those interested in the Project may refer to the scholarly works listed in the useful bibliography prepared by the Permanent Bureau of the Conference.

On 2 August 2023, Gerard Quinn, the UN Special Rapporteur on the rights of persons with disabilities, and Claudia Mahler, the Independent Expert on the enjoyment of all human rights by older persons, issued a joint statement regarding the European Commission’s proposals of 31 May 2023 on the protection of adults in cross-border situations.

As explained in a post on this blog, the latter proposals consist of a proposal for a Council Decision whereby all Member States would become (or remain) parties to the Hague Convention of 2000 on the International Protection of Adults Convention “in the interest of the Union”, and a proposal for a Regulation of the Parliament and the Council that would complement the Hague Convention in the relations between Member States, including by the creation of a European Certificate of Representation which would make it easier for the representatives of an adult to prove their powers in a Member State other than the Member State where those powers were conferred or confirmed.

Scope and Purpose of the Submission

The joint submission examines the above proposals against the background of the United Nations Convention on the Rights of Persons with Disabilities (UNCRPD). While acknowledging that private international law “has a profoundly important role to play in giving effect to the object and purpose, substance and interpretation of the UNCRPD”, the authors express serious reservations regarding the solutions envisaged by the Commission, and reiterate the idea – voiced in a previous joint statement, of 2021 – whereby the Hague Convention should “be re-purposed” in light of the UNCRPD “to subserve higher and newer goal of protecting human autonomy”.

According to the document, ratification of the Hague Convention and its implementation (including regionally, through the proposed EU measures) “must selfconsciously steer toward higher substantive norms and trends”, notably as regards the preservation of the autonomy of persons with disabilities.

There is “a real risk”, the submission warns, that, “if enacted as proposed”, the Regulation and the Decision

will only be used to freeze into place an outdated policy response to disability and the needs of older persons [and] only attract needless legal liability in the international legal order for the EU and its Member States.

Hence the call to

think through how the Hague Convention might be selfconsciously moulded to underpin and not undermine the UN CRPD and also create breathing space for the drafting and eventual adoption of a universal (UN) treaty on the rights of older persons.

Main Concerns Expressed in the Submission

The authors of the submission note that the Commission did recall the UNCRPD in its proposals, notably in Recitals 10 and 15 of the proposed Regulation, but consider that is largely insufficient. They just “do not see any consistent follow-through from these Recitals in the substantive provisions of the proposed Regulation”, and rather see “many contradictions”.

According to Recital 10, the interpretation of the Regulation “should be guided by its objectives that are to enhance the protection of fundamental rights and freedoms and other rights of adults in cross-border situations, including their right to autonomy, access to justice, right to property, right to be heard, right to free movement and equality”, since the rights enshrined in this regard in both the UNCRPD and the Charter of Fundamental Rights of the European Union “are to be protected both in national and cross-border cases”. Measures taken in relation to persons with disabilities, the Recital goes on, are to be in line with the UNCRPD in order to benefit from recognition under the Regulation.

For its part, Recital 15 of the proposed Regulation observes that, regardless of the terminology used in each Member State, “measures directed to the protection of adults and taken in compliance with the fundamental rights of the adults concerned should circulate without obstacles in the Union”, adding that, to this end, the Regulation “should be interpreted in accordance with the Charter and the UNCRPD”, where assessing whether a measure taken by the authorities of another Member State is not manifestly contrary to public policy (and should accordingly be refused recognition), “the authorities of a Member State where the recognition is sought should assess whether that measure ensures the fundamental rights of the adult, in light of Articles 3, 9 12 and 19 of the UNCRPD”.

All this being regarded as insufficient, the authors of the submission reiterate the view, expressed in the joint statement of 2021, mentioned above, that States, when joining the Hague Convention, should adopt an interpretive declaration whereby they would commit to interpret and apply the Hague Convention in accordance with obligations arising out of or relating to their participation in the UNCRPD and other relevant human rights obligations, “or as a result of participation in future human rights treaties” on the same matter.

The move, the submission explains, “would make clear (not only within the EU but also vis-à-vis third States) that the CRPD is given lexical priority”.

The authors of the joint submission further suggest, for the same purpose, that States joining the Hague Convention should make a reservation to that Convention, aimed at excluding (to the effect that the Convention does allow for it) “institutionalisation” (i.e., measures whereby an adult would be placed or kept in a residential institution against or regardless of their will), from the scope of protective measures that would benefit from the Convention (and the Regulation).

This would play a significant role, they say, in ensuring that institutionalisation “is no longer seen as an appropriate response to the needs of persons with disabilities or older persons”.

According to the submission, the proposed Regulation should even go further than that, and “explicitly” prohibit institutionalisation “as a form of ‘protection’ … as between EU Member States”, as this would be “manifestly at odds” with Articles 5 and 19 of the UNCRPD.

The submission is also concerned with “representation agreements”, a term used in the document to refer to private mandates or “powers of representation”, to use the language of the Convention. The authors argue, first, that the arrangements in question “should be re-framed to only mean ‘supported decision making agreements’”. Arrangements “that only kick into place upon the occurrence of a contingency like ‘incapacity’”, it is added, should be “avoided at all costs”.

Some General Remarks

Gerard Quinn and Claudia Mahler address in their submission a range of delicate and complex issues. These cannot be discussed in detail here. I will limit myself to two rather general remarks.

Do the Hague Convention (and the Proposed EU Regulation) Really Need “Re-purposing”?

The joint submission appears to build on the premise that the rules of private international law (PIL) laid down in the Hague Convention (and in the Proposed Regulation) are designed to serve goals that differ from (and couldin fact be incompatible view) the objects of the UNCRPD. The general orientation, the submission seems to argue, not just their practical operation, should accordingly be reconsidered.

This assumption is, in my view, questionable. In a contribution to the Guide to Global Private International Law edited by Paul Beaumont and Jayne Halliday (Hart Publishing 2022), I argued that the Hague Convention was designed in such a way as to advance precisely the goals that the UNCRPD (which was adopted a few years later) is meant to promote.

The Convention, for example, sets out some rather elaborate rules regarding the allocation of jurisdiction among Contracting States and the mutual communication and cooperation between the authorities of the States concerned. These rules depart significantly from those found in other texts (the Brussels I bis Regulation for instance). This is so because they are inspired by policy considerations that reflect the peculiar concerns that surround the protection of adults, including the preservation and enhancement of their autonomy. In fact, the Convention is not guided by “value-neutral” policies such as legal certainty, nor it purports to ensure that Contracting States “blindly” open their legal systems to measures of protection taken elsewhere, or private mandates governed by foreign law. Rather, the Hague Convention aims to ensure that the fundamental rights of the adults concerned may be properly realised in cross-border situations; the same can be said, generally speaking, of the proposed EU Regulation.

The question, then, in my view, is not so much whether the purpose of the Convention or the proposed Regulation should be “corrected”. The issue is rather whether the technical solutions in the Convention and in the Regulation are such that they effectively and efficiently ensure the realisation of the UNCRPD in all circumstances.

Thus, the matter is not one of orientation, but one of legal engineering. I believe the Convention and the proposed Regulation already go in the same direction as the UNCRPD. One might wonder whether the interpretation of the Convention and the wording of the proposed Regulation can be improved in a way that is more conducive to the objectives of the UNCRPD being fully met.

Should References to the UNCRPD be Featured More Prominently in PIL Rules in this Area?

The joint submission seems to underlie a concern for the visibility of the UNCRPD. This is entirely understandable. The UNCRPD brought about a real paradigm shift in disability law. Tremendous efforts are needed at the national, regional and international law to make sure that the rights enshrined in the UNCRPD turn into policy and normative changes that can actually improve the life of those concerned. In this sense, recalling the achievements of the UNCRPD and the challenges posed by its implementation is no doubt helpful.

That said, various elements indicate that PIL scholars and practitioners are already generally aware, notably in Europe, of the need to take human rights seriously in their day-by-day work.

For instance, more than twenty years have passed since the European Court of Human Rights ruled, in Pellegrini, that foreign judgments simply cannot be recognised if they were given in breach of the fundamental rights of the parties. And while it’s true that EU legislation has made the (intra-EU) movement of judgments easier, but – as the Court of Justice itself consistently repeated (starting from Debaecker) – this goal cannot be attained by undermining in any way the fundamental rights of those concerned. The two-decade long experience with EU texts dealing with the cross-border protection of children further attest that it is perfectly possible to embody human rights considerations in PIL instruments. Additionally, as the Court made clear in Krombach, the public policy defence – if no other tools are available – can always be triggered to avoid that fundamental rights are infringed through a “mechanical” application of PIL rules.

The question, accordingly, is not whether practitioners should be directed at taking the UNCRPD into account (they obviously should, and this should occur in respect of any rule, in the field of PIL or elsewhere). The issue is, again, technical rather than political in nature. It is uncontroversial that PIL rules must be crafted and applied in a manner that is entirely consistent with the UNCRPD: the question is, rather, whether this entails that safeguards other than those arising from the Convention and the Regulation must be adopted.

The joint submission suggests that States should issue a declarative interpretation when ratifying the Hague Convention that the latter must be read and applied in light of the UNCRPD, and even make a reservation regarding institutionalisation.

I’m not entirely certain this would be strictly necessary (the Vienna Convention on the Law of Treaties already provides various tools aimed to guarantee the kind of inter-textual coordination advocated by the submission), and sense that a similar initiative may have some unintended adverse effects.

I consider, however, that such a move would hardly be sufficient in itself. It is the task of those applying PIL rules (and, of course, the task of the Union’s legislature, for its part) to ensure, creatively as the case may be, the proper articulation of PIL rules and human rights instruments relating to the protection (including the self-determination) of adults. It’s a complex and certainly unfinished task, but one that should reasonably be approached with optimism.

The joint submission of Gerard Quinn and Claudia Mahler is a powerful reminder that the topic requires further discussion, and that efforts aimed at ensure mutual understanding between experts in different fields (human rights law and PIL, in this case) remain crucially necessary.

This post was written by Nadia Rusinova (Hague University of Applied Sciences).

On 12 September 2023 a draft law to amend and supplement other statutes regarding the proceedings in civil cases under the application of the law of the European Union was submitted for consideration to the Bulgarian Parliament.

The adoption of legislative changes in the Civil Procedure Code, Child Protection Act and Private International Law Code is explained in the proposal as necessitated by the need to ensure the smooth and proper functioning of the common European area of justice while respecting the different legal systems and traditions of the Member States. The draft law is currently under discussion.

Civil Procedure Code

The draft law refers to the special rules regarding civil proceedings under the application of EU law. It provides conditions for implementing the provisions of three instruments: the Taking of Evidence Regulation, the Service Regulation and the Brussels II ter Regulation.

The amendments regarding the Taking of Evidence Regulation concern: the participation of representatives of the requesting court in evidence collection by the requested court, and the rights of the parties, their representatives, and experts to participate in evidence collection in another Member State as permitted by Bulgarian law (Article 615 of the Civil Procedure Code); possibility for direct collection of evidence in another Member State by the court, a delegated member of the court, or an expert appointed by the court (Article 614); implementation of Article 3(1) of the Regulation specifying that requests for evidence collection in Bulgaria are directed to the district court within whose jurisdiction the collection will occur (Article 617); and designation of the district court in Bulgaria, within whose jurisdiction the direct evidence collection will take place, as competent to authorize and provide practical assistance for evidence collection under Article 19 of the Regulation (Article 617).

The amendments relating to the Service Regulation are as follows: the indication of bailiffs as ‘transmitting authorities’ under Article 3(1) of the Regulation, in addition to district courts (Article 611 of the Code); a new rule for service in the event of an unsuccessful attempt to serve the specified address – the receiving authority makes an official check on the recipient’s address and, if necessary, forwards the request to the district court in whose district the service must be carried out (Article 611, para. 3); the indication of competent authorities under Article 7(1)(a) of the Regulation – the district court for whose district the address data is provided is competent. When no address information is provided, the Sofia District Court is competent (Article 612).

The amendments in respect of the Brussels II ter Regulation include the introduction of domestic procedures for issuing, correcting, and revoking certificates required by the Regulation (Articles 620a and 620b). A new Article 622c is envisaged, governing the direct enforcement of decisions from another member state in Bulgaria. It adheres to regulation principles, including the right to defense for the party against whom enforcement is sought, the ability to request refusal, and the right of the plaintiff to swift enforcement with the use of coercive measures, without harming the child. Provisions are made for suspention of the enforcement if it endangers the child, as well as measures in cases of long-term risk.

Child Protection Act

Changes stemming from the Brussels II ter Regulation affect as well the Child Protection Act regarding legal proceedings before Bulgarian courts concerning child return. They include hearing the child’s opinion based on age and maturity, evidence collection, decision deadlines, and issuing certificates for decision implementation. New rules cover measures for the child’s contact with the left behind parent, child protection during and after legal proceedings, ensuring the child’s safety upon return. The participation of a prosecutor in proceedings for child return under the 1980 Hague Convention is eliminated, aligning Bulgarian procedures with those of European countries. Prosecutors’ involvement is only maintained when the prosecutor initiates the return request, whereas in cases initiated by a parent through the Ministry of Justice, the Ministry represents the applicant, and the case is considered civil.

Private International Law Code

The proposed amendments to the Private International Law Code include a rule whereby international jurisdiction should be verified ex officio by the seised court, with the court ruling at an earlier stage on its own jurisdiction, including when the choice of court is made in the course of the proceedings. This would enable the court to take a stance on jurisdiction at the time of drawing up the preliminary report and notify the parties thereof.

Such early indication on the grounds of international jurisdiction and the applicable law, as well as the reflection of the choice of court and applicable law in the minutes of the hearing, create clarity and legal certainty and provide the parties with an opportunity to conduct the process in view of the applicable legal framework. The choice of court affects the issue of parallel proceedings in other Member States so it must be documented at the time of its execution.

Article II(3) of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NYC) provides:

The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

What is the meaning of a “matter” in this provision? This is the question that the UK Supreme Court addressed in its judgment of 20 September 2023 in Republic of Mozambique v Privinvest Shipbuilding SAL (Holding) [2023] UKSC 32.

Facts

In 2013 and 2014, three special purpose vehicles wholly owned by the Republic of Mozambique entered into supply contracts with three of the respondents in this case for the development of Mozambique’s exclusive economic zone. The contracts are governed by Swiss law and contain broad arbitration clauses. The arbitration clauses in two contracts cover “all disputes arising in connection with” the contracts and the arbitration clause in the third contract covers “any dispute, controversy or claim arising out of, or in relation to” to the contract.

The SPVs borrowed money from various banks and Mozambique granted sovereign guarantees for the borrowing. The guarantees are governed by English law and provide for dispute resolution in English courts.

Mozambique accuses the three respondent companies and some other persons of bribing its officials and exposing it to a potential liability under the guarantees. It brought a claim for damages against the respondents in England in 2019.

The Respondents argue that Mozambique is bound by the arbitration clauses and seek a stay of proceedings under section 9 of the Arbitration Act 1996, which implements Article II(3) of the New York Convention into English law.

Was the matter in dispute in the English proceedings a “matter” within the meaning of section 9 of the 1996 Act/Article II(3) of the NYC? This is the preliminary question that the court addressed in its judgment. For the purposes of the preliminary question, it was assumed that Mozambique was bound by the arbitration clauses.

Judgment

Lord Hodge gave the judgment, with which Lord Lloyd-Jones, Lord Hamblen, Lord Leggatt and Lord Richards agreed.

The UKSC provided an interpretation of the concept of a “matter” in this context that is based on five principles. In doing so, it considered other countries’ (HK, Singapore, Australia, and Cayman Islands) jurisprudence on this issue.

First, in applying section 9 of the 1996 Act, the court adopts a two-stage process: first, the court must identify the matter or matters which the parties have raised or foreseeably will raise in the court proceedings, and, secondly, the court must determine in relation to each such matter whether it falls within the scope of the arbitration agreement. The court must ascertain the substance of the dispute(s) between the parties, without being overly respectful to the formulations in the claimant’s pleadings, and have regard to the defences raised or reasonably foreseeable.

Secondly, the “matter” need not encompass the whole of the dispute between the parties. Partial stays of court proceedings are possible.

Thirdly, a “matter” is a substantial issue that is legally relevant to a claim or a defence which is susceptible to determination by an arbitrator as a discrete dispute, rather than an issue which is peripheral or tangential to the subject matter of the proceedings. If the “matter” is not an essential element of the claim or of a relevant defence to that claim, it is not a “matter” in respect of which the legal proceedings are brought.

Fourthly, the process entails a matter of judgment and the application of common sense rather than a mechanical exercise.

Fifthly, when turning to the second stage of the analysis, the court must have regard to the context in which the “matter” arises in the legal proceedings.

The substance of the dispute in the English proceedings was whether the contracts and the guarantees were obtained through bribery, and whether the respondents had knowledge of this at the relevant times. The court found that it was not necessary to examine the validity of the contracts and that a defence that the contracts were valid and on commercial terms would not be relevant to the question of the respondents’ liability. This defence would only be relevant in relation to the quantification of the loss suffered by Mozambique. As the validity and commerciality of the contracts were not essential to any relevant defence, the court held that they were not “matters” within the meaning of section 9 of the 1996 Act in relation to the question of the respondents’ liability. The court further found that there was no case law in which section 9 had been invoked to obtain a stay only in relation to a dispute about the quantification of a claim.

The court also dealt with the issue of scope of the arbitration clauses. It held that there was no question of the arbitration clauses extending to cover Mozambique’s allegations on which it relied to establish the respondents’ liability. With respect to the dispute over the partial defence to the quantification of Mozambique’s claim, rational businesspeople would not seek to send such a subordinate factual issue to arbitration. In other words, this partial defence fell outside the scope of the arbitration clauses and the court did not have to decide whether it was a “matter” within the meaning of section 9 of the 1996 Act.

Importance of the Judgment

English law adopts a pro-arbitration approach. But the judgment in Mozambique v Privinvest Shipbuilding SAL (Holding) shows that there are limits to this approach.

The judgment is also important because it offers an authoritative interpretation of the concept of a “matter” within the meaning of Article II(3) NYC. This is one of the ways in which English law (see also the recent proposed changes to the 1996 Act) makes an important contribution to the comparative law of international commercial arbitration.

In a recent article, Pedro de Miguel Asensio points to a seeming contradiction at the heart of EU consumer law (see La Ley – Unión Europea, issue 116/2023, soon available here). This contradiction concerns the notion of consumer in the rules of substantive consumer law and in EU Private International Law (PIL). The CJEU has constructed in both areas differently.

The Notion ‘Consumer’ in Substantive EU Law

For substantive consumer law, the Court adopts a very wide notion of the consumer, in principle also covering contracts concluded for a dual private and commercial purpose. Consumer protection is excluded only where the commercial purpose predominates the private one (see e.g. in the context of the Unfair Terms Directive CJEU Case C-570/21 I.S. and K.S. v YYY. S.A., para 53).

The Notion ‘Consumer’ in EU PIL

In the context of PIL, in contrast, the CJEU defines ‘consumer’ much more narrowly. Regarding the special provisions of the Brussels I Regulation for the protection of consumers, it has held that they must be interpreted strictly and, in principle, do not apply in case of dual use (see CJEU Case C-464/01 Gruber v Bay Wa, para 39). It would be otherwise only where the link between the contract and the trade or profession of the person concerned was ‘so slight as to be marginal’ (ibid). One must follow Pedro de Miguel when he submits that this narrow interpretation needs to be extended to the Rome I Regulation as another instrument of EU PIL as well (see Recital 7 Rome I).

Divergences Cause Distortions

As a result of these divergences, a contract may be a consumer contract for the purposes of substantive law and a professional or commercial contract for the purposes of PIL. Pedro de Miguel frets that this may give rise to certain ‘distortions’. For instance, in the Lyoness case (commented here), it was questionable whether terms in a cross-border contract were abusive in the sense of the Unfair Terms Directive. Even if this were the case and EU substantive law applied, one could not be sure that the consumer could vindicate the protections of the Directive in a Member State court. After all, the special protective heads of jurisdiction for consumer actions under the Brussels Ibis Regulation are to be interpreted more narrowly than those of the Unfair Terms Directive (see also for the possibility of a waiver of the consumer status under the Brussels Ibis Regulation the comment by Marion Ho-Dac here).

The Impact of Choice-of-Court Clauses

Pedro de Miguel brings the problem to a head with the hypothetical example of a contract with an unfair term that also contains a choice-of-court clause in favour of a non-Member State court, e.g. a Swiss court. In this case, the Member States’ courts would have to decline jurisdiction if the EU resident had pursued more than a marginal professional or commercial purpose with the contract. This evidently undermines the goals of the Unfair Terms Directive, which most certainly would not be given effect by third country courts where their general PIL rules do not lead to a Member State law. Pedro de Miguel denounces this as a hole in the EU consumer protection rules.

Attempting an Explanation

The seeming incoherence between EU substantive and Private International Law may have quite a simple reason. In its substantive law, the EU is free to take consumer protection to an extreme level, covering also contracts that serve up to 49 % a professional or commercial purpose. However, on the international plane, the EU policy clashes with that of other regions or states that follow a much more restricted concept of the consumer. In light of these divergences, it may be advisable to not fully follow the EU consumer protection policy through in order to avoid quarrels with third country courts over jurisdiction or the non-recognition and/or enforcement of Member State judgments.

Comparison with Convention Law

However, the wider notion of the consumer of EU substantive law is seemingly in line with the Hague Choice-of-Court Convention and the Hague Judgments Convention. Both contain special rules for contracts concluded by a consumer (see Art 2(1)(a) Hague Choice-of-Court Convention and Art 5(2) Hague Judgments Convention), and define the consumer as a person acting ‘primarily’ for personal, household or family purposes. This wording of ‘primarily’ seems to be more in line with the extensive definition of the consumer in EU substantive law than with the restrictive of EU PIL.

However, one must also pay attention to the notion ‘for personal, household or family purposes’, which is in fact much more restrictive than both EU notions. The latter apply whenever a contract is concluded outside a trade or profession, never mind whether it is for personal, household or family or for other purposes, e.g. a speculative investment or saving for retirement. One may thus say that the convention strikes a middle ground between the wide and the narrow consumer notion. Without venturing into an analysis of the compatibility of the Brussels Ibis Regulation’s rules with the Hague Conventions, one can say that the latter do not support an extreme version of consumer protection.

Conclusion

The definition of the ‘consumer’ in EU substantive law differs from that in EU PIL. This may mean that EU citizens and residents do not get the full benefit of the Union’s substantive law when they go abroad. But this may be a price worth paying for international harmony and avoiding quarrels with other states.

— Thanks to Paul Eichmüller for reviewing this post.

Jacco Bomhoff (LSE), Manuel Penades (KCL), and I are pleased to announce that the LSE Law School will host a symposium to celebrate the scholarly work of emeritus professor Trevor C. Hartley.

Trevor has long been one of the world’s most distinguished scholars of Conflict of Laws (Private International Law), continuing a tradition started at the LSE by Professor Otto Kahn-Freund. For many decades, he has been at the forefront of developments in the field. As a prominent critic, notably of the Court of Justice’s efforts to unify European private international law. But also as an active participant in projects of legislation and modernization. And as author of authoritative treatises and clear and accessible student textbooks.

His publications include the Hartley & Dogauchi Explanatory Report on the 2005 Hague Convention on Choice of Court Agreements, Hague lectures on ‘Mandatory Rules in International Contracts: the Common Law Approach’ and ‘The Modern Approach to Private International Law – International Litigation and Transactions from a Common-Law Perspective’, student textbook on International Commercial Litigation (CUP, now in its third edition from 2020), and monographs on Civil Jurisdiction and Judgments in Europe (OUP, now in its second edition from 2023) and Choice-of-Court Agreements under the European and International Instruments (OUP, 2013).

This Symposium will bring together colleagues and friends, from the UK and abroad, to celebrate and discuss Trevor’s many contributions. It is organised around some of the main themes of Trevor’s private international law scholarship.

The first panel will focus on global and comparative private international law. Paul Beaumont, Alex Mills, Veronica Ruiz Abou-Nigm, and Koji Takahashi (chair Roxana Banu) will discuss the 2019 and 2005 Hague Conventions, common law and civil law traditions in private international law, and the role of private international law in protecting global commons.

The second panel will examine contemporary English conflict of laws, through the lens of Trevor’s famous ICLQ article on the systematic dismantling of the common law of conflict of laws. Eva Lein, Andrew Dickinson, Jonathan Harris, and Adrian Briggs (chair Pippa Rogerson) will discuss the ‘Italian torpedo’, anti-suit injunctions, forum non conveniens, and the residual influence (if any) of the Brussels I Regulation in English law.

The third panel will focus on dispute resolution. Alexander Layton, Richard Fentiman, Jan Kleinheisterkamp, and Linda Silberman (chair Yvonne Baatz) will explore the reflexive effect of EU private international law and dispute resolution clauses, the interplay between EU (private international) law and arbitration, and the comparison between the 2005 Hague Convention and the New York Convention.

In addition, Lawrence Collins, Hans van Loon, Damian Chalmers, and Carol Harlow will give keynote speeches, reflecting on Trevor’s influence on private international law, the work of the Hague Conference, EU law, and LSE.

This event is open to all, subject to capacity, but registration is required. Please follow this link for more information about the event, including programme and registration.

In a judgment of 28 June 2023, the French Supreme Court for Private and Criminal Matters (Cour de cassation) ruled that foreign states may rely on their immunity from suit in exequatur proceedings.

As a result, the court confirmed that French courts could dismiss proceedings to declare enforceable a US judgment which had retained jurisdiction over and ruled against Iran on the ground that Iran benefited from an immunity from suit in France.

Background

In Flatow v. the Islamic Republic of Iran et alii (999 F. Supp. 1 (D.D.C. 1999), see also this report of the NY Times), the US District Court for the District of Columbia ordered the Republic of Iran and other Iranian defendants to pay various members of the family of Alisa Flatow over USD 40 Million in compensatory damages and over USD 225 Million in punitive damages.

Alisa Michelle Flatow was a twenty-year-old Brandeis University student. For the 1995 spring semester, she arranged for and participated in an independent foreign study program in Israel.

While in Israel, she communicated with her father (picture), to ask whether she could travel to a community on the Mediterranean Sea with friends. He reviewed their itinerary with her, and as he believed that the Israeli government would not provide civilian passenger bus service unless it were safe to do so and he gave her permission to travel in Gaza.  On April 9, 1995, she took the number 36 Egged bus, which was traveling from Ashkelon, Israel to a Mediterranean resort in the Gush Katif community. At or about 12:05 p.m. local time, near Kfar Darom in the Gaza Strip, a suicide bomber drove a van loaded with explosives into the number 36 Egged bus, causing an explosion that destroyed the bus. Alisa Flatow died at an Israeli hospital the next day.

The Israeli government informed the father of Alisa Flatow that the Shaqaqi faction of Palestine Islamic Jihad had claimed responsibility for the bombing, and that their investigation had confirmed that claim.

In July 1996, the US Department of State’s Coordinator for Counterterrorism informed the father that the Department of State was satisfied that the group which had claimed responsibility for the bombing had in fact perpetrated the bombing, and that the Islamic Republic of Iran provided approximately two million dollars to Palestine Islamic Jihad annually in support of its terrorist activities.

Exception to Immunity from Suit under US Law

In the Antiterrorism and Effective Death Penalty Act of 1996, the US Congress lifted the immunity of foreign states for a certain category of sovereign acts which are repugnant to the United States and the international community. That Act created an exception to the immunity of those foreign states officially designated by the Department of State as terrorist states if the foreign state commits a terrorist act, or provides material support and resources to an individual or entity which commits such an act, which results in the death or personal injury of a United States citizen.

Of note is the fact that an amendment was adopted in 1996 to clarify that punitive damages were available in actions brought under the state sponsored terrorism exception to immunity. This provision of law is commonly referred to as the “Flatow Amendment.” It was applied retroactively by the US court in that case.

The US Court thus ruled that Iran did not benefit from an immunity from suit in this case.

Immunity from Suit in Exequatur Proceedings?

When the Flatows sought to declare the US judgment enforceable in France (it is unclear whether they had limited the scope of their claim to compensatory damages), the issue arose as to whether the issue of the immunity from suit could be raised by Iran in the French proceedings.

The Cour de cassation holds that the issue of immunity from suit is a procedural issue which must be addressed before ruling on whether the foreign judgment meets the requirements for being granted exequatur and thus declared enforceable. The court further rules that the findings of the US Court on the immunity of Iran under US law are irrelevant for that purpose.

The characterisation of the issue as procedural allows, in the particular context of exequatur, to avoid the critique that this might amount to reviewing the foreign judgment on the merits.

The most interesting contribution of the judgment is that Iran could invoke its immunity from suit in exequatur proceedings. The court does not explain why, but there are likely two rationales for it.

The first is that the court has ruled several times that States may not raise their immunity from enforcement to dismiss exequatur proceedings. The reason is, it seems, that exequatur is not enforcement per se, insofar as it does not attach any asset or constrain otherwise the (state) debtor. This is abstractly convincing, but, in practice, the essential reason for seeking exequatur is to allow enforcement of the judgment.

The second reason is likely that exequatur proceedings are judicial proceedings. It can seem only logical, then, to apply the immunity from suit in that context. But the subject matter of the suit is not the liability of the debtor. It is the foreign judgment, which has finally ruled on this issue. Should the foreign State be able to raise an immunity from suit in this context? Also, judgments can produce effects irrespective of exequatur and any judicial proceedings. They can be recognised. The result is that state immunity will block certain effects of the judgment only. Is it satisfactory to prevent certain effects, but allow others?

Maybe the initial decision of the Cour de cassation to exclude exequatur from the scope of immunity from enforcement was based on too abstract considerations.

No Exception under French State Immunity Law

Because it finds that Iran may invoke its immunity from suit, the Court then assesses whether the relevant acts were covered by state immunity.

Unsurprisingly, the Court finds that they were.

The Court starts with the case law of the European Court of Human Rights (citing Al-Adsani and J.C. v. Belgium) and rules that there can be no violation of the right to a fair trial and the right to access to court if the limitation is based on customary international law.

The Court then relies on the case law of the International Court of Justice (Germany v. Italy) and the ruling that, in the present state of customary international law, violations of jus cogens have no direct impact on state immunity.

Finally, the Court recalls that, in any case, it has ruled in 2011 that States which are only morally responsible for violations of jus cogens (i.e. sponsors as opposed to direct perpetrators) could not conceivably lose their immunity (one may add that the ECtHR has also ruled so in J.C. v. Belgium).

Iran could thus invoke its immunity from suit in exequatur proceedings. The exequatur proceedings are declared inadmissible.