EAPIL blog

Rebecca Legendre (University of Paris 2 Panthéon-Assas) has just published a monograph on fundamental rights and private international Law based on her doctoral thesis: Droits fondamentaux et droit international privé – Réflexion en matière personnelle et familiale, Dalloz, 2020.

The author has provided the following abstract in English:

Fundamental rights put private international law to the test. First, the context in which private international law operates has evolved. Fundamental rights have created a better, closer, intertwining of the separate state legal orders and have achieved a higher protection for  the persons as they experience international mobility. If this evolution does not threaten, as such, the existence of private international law, it must be acknowledged that fundamental rights modify its analysis. Whereas the conflicts between legal orders are transformed into conflicts between values, the hierarchy of interests protected by private international law is replaced by a balancing of these interests. The solutions of private international law are thus disrupted by the enforcement of fundamental rights through litigation.  Proportionality is at the source of this disruption. Being a case by case technique of enforcement of fundamental rights, the influence of the proportionality test on private international is uneven. If the proportionality test is found to be overall indifferent to the methods of private international law, its main impact is on the solutions of PIL. The European courts are indeed prone to favour the continuity in the legal situations of the persons, over the defence of the internal cohesion of the state legal orders. As a consequence, private international law is invited to reach liberal solutions. The enforcement of fundamental rights through litigation must hence be clarified so as to maintain a measure of authority and predictability of the solutions of the rules of conflict of laws, international jurisdiction and recognition of foreign judgements. It is, on the one hand,  by methodologically dissociating the enforcement of fundamental rights from the public policy exception and, on the other hand, through an amendment to the proportionality test, that the balance of private international may hopefully be restored.

More details are available here.

Franco Ferrari (New York University Law School) has posted A New Paradigm for International Uniform Substantive Law Conventions on SSRN.

The abstract reads:

This paper posits that a paradigm shift has taken place in respect of the way the relationship between private international law and international uniform law conventions is understood. The author shows that recent international uniform law conventions evidence that their drafters do not consider the relationship to be an antagonistic one, but rather one of symbiosis.

The paper was published in the Uniform Law Review.

Csongor István Nagy (University of Szeged), has posted on SSRN a paper titled The Reception of Collective Actions in Europe: Reconstructing the Mental Process of a Legal Transplantation, also published on the Journal of Dispute Resolution.

The European collective action is probably one of the most exciting legal transplantation comparative law has seen. Collective litigation, which U.S. law did not inherit from common law but invented with the 1966 revision of class actions, has been among the most successful export products of American legal scholarship. Today in the European Union, seventeen out of twenty–eight Member States have adopted a special regime for collective actions. At the same time, collective actions are intrinsically linked to various extraneous components of the legal system; hence, their transplantation calls for a comprehensive adaptation. The need to rethink class actions has not only generated a heated debate in Europe about whether and how to introduce collective actions, but resulted in Europe’s making collective actions in its own image, producing something truly European: a model of collective actions à l’européenne. This Article presents the process of developing the European collective action and its outcome. It represents the first attempt to give a trans-systemic account of European collective actions and to elucidate them in light of the peculiarities and idiosyncrasies of the mindset of European jurisprudence. Further, this Article gives an analytical presentation of the emerging European collective action model and demonstrates how it was shaped by Europe’s legal thinking and societal attitudes.

Pravovedenie, an academic peer-reviewed legal journal published quarterly in Russia is calling for papers to be included in a special issue of the journal.

The special issue will be about Ensuring the Best Interests of the Child in International Family Procedures. Contributions should deal with the cooperation of States in ensuring the implementation of international legal instruments regulating relations to protect the best interests of the child, as well as in evaluating the necessary efforts to be made by States parties to international treaties to remove obstacles to the implementation of international treaties in the field of international family law.

Submissions are expected by 1 June 2021 at the latest, but the editors encourage interested authors to notify their intention to contribute to the special issue in advance.

A detailed description of the topic of the special issue, together with practical information on submissions, can be found here.

The Court of Justice of the European Union has delivered its ruling in the Novo Banco case (C‑253/19) on 16 July 2020.

The issue before the Court was the determination of the center of main interests (COMI) of individuals not exercising an independent business or professional activity under the Insolvency Regulation, and thus the jurisdiction of the courts of the Member States to open insolvency proceedings against such individuals.

Article 3(1) of the Insolvency Regulation provides that the COMI of such individuals is presumed to be at their place of habitual residence. The issue was more precisely how this presumption could be rebutted.

In this case, the individuals were English residents who were employed in Norfolk. Yet, they claimed that the centre of their main interests was not their habitual residence in the United Kingdom, but rather in Portugal, the Member State where the sole immovable asset which they own was located and where all the transactions and all the contracts leading to their insolvency were conducted and concluded. Furthermore, there was no connection between their place of habitual residence and the events that led to their insolvency, which occurred entirely in Portugal.

The Court ruled:

28 Although the location of the debtor’s assets is one of the objective criteria, ascertainable by third parties, to be taken into consideration when determining the place where the debtor conducts the administration of his or her interests on a regular basis, that presumption may be reversed only following an overall assessment of all the objective criteria. It follows that the fact that the only immovable property of an individual not exercising an independent business or professional activity is located outside the Member State of his or her habitual residence is not sufficient on its own to rebut that presumption.

29 In the present case, the applicants in the main proceedings also argue before the referring court that Portugal is not only the Member State where their only immovable property is located but also the Member State where all the transactions and all the contracts leading to their insolvency were conducted and concluded.

30 In that regard, although the cause of the insolvency is not, as such, a relevant factor for determining the centre of the main interests of an individual not exercising an independent business or professional activity, it nevertheless falls to the referring court to take into consideration all objective factors, ascertainable by third parties, which are connected with that person’s financial and economic situation. In a case such as the one in the main proceedings, as was observed in paragraph 24 above, that insolvency situation is located in the place where the applicants in the main proceedings conduct the administration of their economic interests on a regular basis or the majority of their revenue is earned and spent, or the place where the greater part of their assets is located.

31 In view of all of the foregoing factors, the answer to the question is that the first and fourth subparagraphs of Article 3(1) of Regulation 2015/848 must be interpreted as meaning that the presumption established in that provision for determining international jurisdiction for the purposes of opening insolvency proceedings, according to which the centre of the main interests of an individual not exercising an independent business or professional activity is his or her habitual residence, is not rebutted solely because the only immovable property of that person is located outside the Member State of habitual residence. 

On 16 July 2020, the Government of Portugal decided to start the process whereby Portugal will, in due course, become a party to the United Nations Convention on Contracts for the International Sale of Goods (CISG).

Today, the Convention is internationally in force for 93 States. Once in force for Portugal, it will be binding on all the current members of the European Union, with the exception of Ireland and Malta.

The French Committee for private international law will hold a conference on the codification of private international law in the afternoon of 9 October 2020, in Paris.

The first speaker will be Geraldine Gazo, who practices in Monaco, and who will present the recent law on private international law adopted by Monaco in 2017.

The second speaker will be Justice Jean-Pierre Ancel, who is a former president of the first civil Chamber of the Cour de cassation, and now presides over a working group on the codification of French private international law.

The exact time and location are to be announced on the website of the Committee.

Woo-jung Jon is the author of Cross-border Transfer and Collateralisation of Receivables – A Comparative Analysis of Multiple Legal Systems, published by Hart Publishing.

Legal systems around the world vary widely in terms of how they deal with the transfer of and security interests in receivables. The aim of this book is to help international financiers and lawyers in relevant markets in their practice of international receivables financing. Substantively, this book analyses three types of receivables financing transactions, ie outright transfer, security transfer and security interests. This book covers comprehensive comparison and analysis of the laws on the transfer of and security interests in receivables of fifteen major jurisdictions, encompassing common law jurisdictions, Roman–Germanic jurisdictions and French–Napoleonic jurisdictions, as well as relevant EU Directives. To be more specific, this book compares and analyses the relevant legal systems of the US, Canada, New Zealand, Australia, Korea, Japan, France, Belgium, England, Hong Kong, Singapore, China, Germany, Austria and the Netherlands. Furthermore, in order to analyse those legal systems from the international perspective, this book compares relevant international conventions; it also proposes to establish an international registration system for the transfer of and security interests in receivables.

More information here.

Apostolos Anthimos has posted on SSRN a paper titled Recognition and Enforcement of Foreign Judgments in the Field of Bilateral Conventions of Greece with Balkan States.

The purpose of this paper is to present the current legislative framework and the practice of Greek courts with respect to the recognition and enforcement of foreign judgments falling under the scope of bilateral conventions signed with Balkan States. Prior to presenting individual conventions and related case-law, few brief remarks are given on the role of bilateral treaties in the Greek landscape. A special chapter is dedicated to the conditions for recognition and enforcement, cutting horizontally through all conventions included in the scope of this paper. The findings of the research suggest that, on a bilateral level, judgments from the Balkan States are generally recognized in Greece.

The number of transnational couples continuously increases within the European Union. At the same time, there are still large differences between the national rules on matrimonial property regimes and on the property consequences of registered partnerships. These disparities do not only affect the property relations among such couples themselves, but also – and even more – third parties contracting with transnational couples.

Some jurisdictions provide, for instance, that contracts between one spouse and a third party are not legally effective without the consent of the other spouse, especially in case of real estate transactions. One example of such a rule is the notorious Article 215(3) of the French Code Civil.

Third parties can be surprised by such limitations because they may not be aware that the law of another jurisdiction applies. In many cases, third parties may not even know at all that their business partner belongs to a couple with a transnational background. There is thus a strong need for third party protection not only on the national level, but also in private international law.

In the future, these conflict-of-laws problems must be solved on the basis of the new Council Regulations (EU) 1103/2016 and 1104/2016, which became applicable in their entirety on 29 January 2019. The scope of the Regulations explicitly includes third-party relations. However, the Regulations only provide fragmentary rules on third party protection. A new book analyses these provisions, identifies open questions and submits proposals how the gaps in the Regulations could be filled (Stephan Gräf, Drittbeziehungen und Drittschutz in den Europäischen Güterrechtsverordnungen, Mohr Siebeck 2019).

As the title indicates, the book is written in German. It starts with a comparative analysis of the differences between the national rules on matrimonial property regimes focussing on third party effects. In a subsequent chapter, the author outlines the conflict of law rules of the Regulations and points out that the applicable law can hardly be foreseen by third parties.

On this basis, Stephan Gräf analyses the core provision of third-party protection in both Regulations, namely their respective Article 28 (protection of the good faith of third parties). Although the provision appears to be quite detailed, it is in fact merely fragmentary and partially inconsistent. For example, it does not mention the exact subject of the required good faith of the third party (the applicable law, the particular matrimonial regime within the applicable law or the particular legal effect of the applicable law?). The provision also does not clarify that it is restricted to contractual transactions.

The Regulations furthermore contain provisions for the protection of third-party rights in case of a change of the applicable law with retroactive effect. The wording of the provisions, however, is extremely short. Many questions are left to the interpretation by the courts. Stephan Gräf analyses the scope and the legal consequences of these provisions. He shows, for instance, that they also apply when the applicable law changes only with effect for the future.

The book furthermore deals with the highly controversial coordination between international property law (lex rei sitae rule) on the one hand and the international matrimonial law on the other hand. This matter also affects third parties contracting with married persons. The author argues for the primacy of the lex rei sitae in so far as immovable property is concerned. On this point, he disagrees with the Kubicka decision of the European Court of Justice, which deals with the relationship between the EU Succession Regulation and the lex rei sitae rule.

Additionally, the book addresses the Regulations’ rules on jurisdiction (Articles 4 et seq.). It focuses on the question whether these rules apply in disputes between married persons and third parties. Despite its relevance this question has rarely been discussed so far. The Regulations lack explicit provisions on this matter. Relying on the ECJ’s approach on Article 27 of the Brussels I Regulation (recast: Article 29), Stephan Gräf argues that Articles 4 et seq. of the Regulations govern where matrimonial property law is the “heart of the action”. In disputes with third parties, this is rarely the case, as matrimonial property law typically only becomes relevant on the level of preliminary questions.

Overall, this new book provides valuable insights on the relation of Regulations on matrimonial property regimes and on the property consequences of registered partnerships with the rights and obligations of third parties. Interestingly, the author not only addresses the protection of spouses, but also that of third parties that do not know about the family relation. The Regulations are still young, and is to be expected that this book will influence their interpretation and application in practice.

On 13 May 2020, the French Supreme Court for private and criminal matters (Cour de cassation) issued an interesting decision on jurisdiction based on Article 7(2) of the Brussels I bis Regulation in case of online defamation (here).

The French Court implemented the Bolagsupplysningen and Ilsjan Case ruled by the Court of Justice of the European Union (CJEU) in 2017, but also asked for clarification on its scope of application to the CJEU (here).

Facts

A Czech company, Gtflix Tv, content producer and distributor, sued a film director and distributor, MX, domiciled in Hungary, before French court for unfair competition resulting from online defamation. The company accused MX of having used insulting language against itself and its website materiel on different online forums and websites. Therefore, the company asked for the removal and rectification of the defaming contents as well as for financial compensation. According to it, French jurisdiction should arise under Article 7(2) of the Brussels I bis Regulation, since French viewers are the main audience. MX opposed a lack of international jurisdiction. The Court of Appeal of Lyon followed the latter position and dismissed the demand. Gtflix Tv appealed to the Supreme Court.

Issue at Stake

The legal issue submitted to the French Supreme Court was therefore to determine if any relevant connecting factors pursuant Article 7(2) of the Brussels I bis Regulation, as interpreted by the CJEU, could assert the French jurisdiction.

Legal Background

The application of Article 7(2) of the Brussels I bis Regulation (corresponding to Article 5(3) of the Brussels I Regulation) regarding online defamation matters is not a new issue. In the eDate Case on online infringements of personality rights, the CJEU held that the victim has “the option of bringing an action for liability, in respect of all the damage caused, either before the courts of the Member State in which the publisher of that content is established or before the courts of the Member State in which the centre of his interests is based”. In addition, the Court of justice also admitted that the victim could bring “his action before the courts of each Member State in the territory of which content placed online is or has been accessible” but “only in respect of the damage caused in the territory of the Member State of the court seised”.

Then, this acquis was partially extended by the Bolagsupplysningen and Ilsjan Case to infringements related to online publication of incorrect information and failure to remove comments. On the one hand, the CJEU ruled, by analogy, that the victim could bring an action for rectification and removal of the contested comments and for compensation in respect of all the damage sustained “before the courts of the Member State in which its centre of interests is located”. On the other hand, the CJEU refused to distribute the jurisdiction between “the courts of each Member State in which the information published on the internet was accessible” to rule on rectification and removal of the comments. It is worth noting that the Court of Justice left out the claim for damages.

Response of the French Supreme Court and Preliminary Reference to the CJEU

In the present case, the French Supreme Court applied, by analogy, the Bolagsupplysningen acquis to the unfair competition claim, following publication on the Internet of defaming information against Gtflix TV and failure to remove comments. Since France is not the Member State in which the victim has its centre of the interests under Article 7(2) of the Brussels I bis Regulation (the Czech Republic is), nor the Member State in which the defendant, MX, is domiciled pursuant Article 4, French courts have no competent jurisdiction to hear this part of the case. However, according to the French Supreme Court, the question of jurisdiction for financial compensation remains unclear (for other national judgements on this issue, see the post of Geert Van Calster on Gtflix Tv). Should the Bolagsupplysningen interpretation be extended to that additional issue and exclude the distribution of jurisdiction based on the different places where the information published on the Internet is accessible? Or, on the contrary, should the eDate alternative in favour of the fragmentation of jurisdiction remain applicable? Following the latter solution, French courts could indeed have a partial jurisdiction.

This is the question referred by the French Supreme Court to the CJEU.

As encouraged by the CJEU in its Recommendations to national courts and tribunals in relation to the initiation of preliminary ruling proceedings, the French Supreme Court sketched out a response. Considering the proper administration of justice, it took position in favour of an extension of the Bolagsupplysningen ruling. The competent jurisdiction for ruling on rectification and removal of online comments under Article 7(2) of the Brussels I bis Regulation should have an exclusive jurisdiction to rule on damages, because of the obvious connection between the two actions.

This solution would make online defamation claims much easier and more predictable. And it would contribute to adapt the European jurisdictional rules to the transnational digital area.

The author of this post is Giulio Monga, a PhD student at the Catholic University of the Sacred Heart, Milan.

On 16 April 2019, the Italian Supreme Court (Corte di Cassazione) ruled on the relevance of the Incoterm “FCA – Free Carrier (named place of delivery)” to the operation of Article 5(1) of the Brussels I Regulation , corresponding to Article 7(1) of the Brussels I bis Regulation.

The Facts

An Italian company (Agusta) sued a French company (Team) before the Court of Frosinone seeking the termination of the sales agreement concluded between the two, on the ground that the goods supplied by the latter were defective. Team argued that the seised court lacked jurisdiction. It observed that the goods had been sold FCA (Free Carrier) the Paris International Airport, thereby contending that Paris ought to be regarded as the place of delivery agreed by the parties for the purposes of Article 5(1)(b), first indent, of the Brussels I Regulation (pursuant to the latter provision, jurisdiction over sales of goods lies with the courts for the place “where, under the contract, the goods were delivered or should have been delivered”).

The Relevance of Incoterms to Jurisdiction over Contractual Matters

Incoterms are standard commercial terms drawn up by the International Chamber of Commerce (ICC). Under the FCA rule, the seller undertakes to deliver the goods, cleared for export, to the carrier or another person nominated by the buyer at the seller’s premises or at another named place. The seller bears all costs and risks of delivery, while the buyer undertakes to take care of the delivery of the goods to their final destination, bearing the costs and risks of the onward carriage.

The Italian Supreme Court recalled that in Electrosteel the Court of Justice of the European Union held that the seised court, in order to verify its jurisdiction under Article 5(1)(b), first indent, of Brussels I Regulation, must first ascertain whether the parties have agreed on a place of delivery in the contract. For this, account must be taken “of all the relevant terms and clauses … which are capable of clearly identifying that place, including terms and clauses which are generally recognised and applied through the usages of international trade or commerce, such as the Incoterms …”. According to the Corte di Cassazione, where an Incoterm is incorporated into a contract, and the issue arises of the relevance of that incorporation to the issue of jurisdiction, the seised court must assess whether the Incoterm in question is merely concerned with the allocation of the risks and costs related to the transaction, or whether the parties also meant it to identify – with sufficient clarity – the place of delivery of the goods.

The Judgment

The Corte di Cassazione concluded that by incorporating the Incoterm FCA into their contract, the parties failed to agree on a clear identification of the place of delivery of the goods for the purposes of Article 5(1)(b) of the Brussels I Regulation. The Incoterm FCA, the Court argued, concerns nothing more than the allocation between the parties of the risks and costs related to the transaction.

Some Remarks

Regrettably, the Corte di Cassazione failed to state the reasons for the latter finding. The Court acknowledged that the key issue is whether the chosen Incoterm conveys an agreement of the parties as to the place of delivery of the goods, but did not provide an analysis of the Incoterm FCA, as used in the contract at issue, and did not explain why the naming of the International Airport of Paris could not be regarded as signifying an agreement to that effect (according to the ICC rules that accompany the Incoterms, when goods are sold FCA the seller ‘must deliver the goods to the carrier … nominated by the buyer at the named point, if any, at the named place …’).

Actually, all Incoterms concern the allocation of risks and costs between the parties. By providing for such allocation they perform, in fact, the key part of their job. On top of that, however, they may – as the Court of Justice acknowledged in Electrosteel – convey an agreement as regards the place of delivery. Whether this happens in a particular case depends on the analysis of the circumstances. The way in which the Corte di Cassazione engaged in this analysis is, methodologically, unconvincing. Arguably, one should examine the rules set out by the ICC itself to describe the Incoterm in question, and any other element as may help determine the intended meaning of the agreement (the negotiations between the parties etc.). The fact is that the Corte di Cassazione failed to indicate the circumstances which it considered to be relevant to the issue, and failed to elaborate on their assessment. It merely stated, in rather general terms, that the incorporation of the Incoterm FCA is not evidence, as such, of an agreement as to the place of delivery of the goods.

It’s a missed opportunity, for establishing a clear methodology, ideally one shared by domestic courts across the EU, would serve the needs of predictability and would foster the uniform application of the Brussels I regime.

Jorg Sladič is an associate professor of international and European law at the European faculty of law in Ljubljana (Slovenia). He was a member of the European Commission’s expert group on modernisation of judicial cooperation in civil and commercial matters. This post is based on an article to be published shortly in the Revue des affaires européennes (L’obtention de preuves en matière civile et commerciale dans l’espace judiciaire européen : status quaestionis et la réforme envisagée, RAE 2020/1, pp. 191 – 212).

Taking of evidence abroad is hampered not only by foreign languages, distances etc. The scope of application ratione loci of a given law of civil procedure is limited by the principle of territoriality. Therefore the gathering of evidence in a pending civil proceedings before a forum is limited by the forum’s traditional inherent inability to perform judicial activities abroad. However, Europe is changing. Therefore an assessment of the principle of territoriality in the law of civil procedure is required.

1. Evidence Taking in Civil Procedure in Continental Europe as acta jure imperii

In the EU, judicial cooperation in civil and commercial matters also covers international legal assistance – comprising traditionally the service of judicial and extrajudicial documents abroad and taking of evidence abroad. European rules on cross-border taking of evidence are to be found in the Council Regulation (EC) No 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters. The said regulation can be regarded as an update of existing traditional methods of international legal assistance and is heavily influenced by the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters. Even the direct taking of evidence by the requiring forum goes back to influences of the 1970 Hague Convention.

Traditionally a forum from one EU Member State cannot take evidence in other EU Member States. Continental European States consider evidence gathering and taking as acta jure imperii. The Latin maxim judici fit probatio explains it all (see e.g. O. L. Knöffel, Grenzüberschreitende Beweisaufnahme durch Private, in R. Geimer, R. A. Schütze, T. Garber (eds.), Europäische und internationale Dimension des Rechts, Festschrift für Daphne-Ariane Simotta, Vienne, LexisNexis, 2012, p. 333 and 334; M. Virgós Soriano, F. J. Garcimartín Alférez, Derecho procesal civil internacional : litigación internacional, 2nd ed., Madrid, Thomson Reuters, 2007, p. 486; B. Audit, L. D’avout, Droit international privé, 7th ed., Paris, Economica, 2013, par 484). Evidence is taken by the judge (forum). However, in the common law world, evidence is taken by the parties before the judge and not by the judge. Gathering of evidence is rather a private matter left to the parties. However, in all Member States the Regulation is applied under the principle of national procedural autonomy.

This difference between evidence taking as a private matter between the parties or evidence taking as a performance of public authority by a forum is in short also a major part of the of the famous Justizkonflikt between the US and Germany.

Practical aspects of evidence taking abroad were assessed in the 2017 Luxembourg Study (see B. Hess, M. Requejo Isidro, F. Gascón Inchausti, P. Oberhammer, E. Storskrubb, G. Cuniberti, C. Kern, K. Weitz, X. Kramer, An evaluation study of national procedural laws and practices in terms of their impact on the free circulation of judgments and on the equivalence and effectiveness of the procedural protection of consumers under EU consumer law, Report prepared by a Consortium of European universities led by the MPI Luxembourg for Procedural Law as commissioned by the European Commission, JUST/2014/RCON/PR/CIVI/0082, Strand 1, Mutual Trust and Free Circulation of Judgments, Brussels, Luxembourg, 2017, paras 240 – 263).

2. Principle of Territoriality of a Pending Civil Procedure

As judicial functions belong to performance of a public authority of a State, they are not supposed to be performed in an extraterritorial manner (the principle of territoriality of a pending civil procedure). Without going in the famous Lotus case law of the PCIJ the European version (Opinion of Advocate General JÄÄSKINEN, Lippens, C-170/11) of the rule reads as:

29. A court of a Member State can validly exercise its powers and make use of its ‘imperium’, that is to say, its power of enforcement, only within the limits of its geographical jurisdiction. Measures of inquiry are an exception to this rule in that they can be taken over the whole of national territory. Nevertheless, in view of the principle of territoriality in international law, which is linked to the principle of State sovereignty, the court cannot normally take action to enforce such measures in another Member State.

Fn. 44: However, a court ruling on a civil or commercial matter covered by Regulation No 1206/2001 cannot exercise public authority outside the territory of the Member State in which it is situated by carrying out substantive acts necessitating the use of State coercion such as using the State’s police force to bring a party resident in another Member State by force to appear before it.

It might also be added that the principle of territoriality prohibits in the continental legal thinking the recognition of foreign anti-suit injunctions, an issue that will become of importance if post Brexit negotiations do not produce a sufficient PIL framework between the EU and the UK.

According to the Belgian Court of Cassation, Belgian courts can condemn a third party residing in another EU Member State to produce documents in accordance with the Belgian lex fori and even apply the periodic monetary penalties (astreinte). The application of the regulation Nr 1206/200 is not mandatory (Court of Cassation, 1st Chamber, 26 April 2018, case Banque de Luxembourg, n° C.16.0192.N). The Belgian Court of Cassation also ruled quite laconically that it results clearly from the judgment of the Court of Justice in Lippens (C-170/11) that a court of a Member State may condemn a party resident in another Member State to produce a documents before it in accordance with its lex fori and even apply sanctions for non production of documents (Court of Cassation, 1st Chamber, 25 April 2013, aff. Fortis Luxembourg Vie, n° C.11.0103.F/1). However, as far as sanctioning witnesses residing abroad and having defaulted, the situation appears to be different. The Austrian Regional Court of Appeal in Linz dealt with the question of a regularly summoned German witness residing in Germany and not appearing before an Austrian forum (Oberlandesgericht Linz, 5 September 2013, case 3 R 145/13h, ECLI:AT:OLG0459:2013:RL0000147). The forum of first instance issued a heavy fine against the German witness. The appellate court ruled however that, due to the principle of territoriality of the pending civil proceedings, such a witness is not subject to jurisdiction of Austrian courts. An Austrian forum may summon him so that he can appear and testify, however, due to a non-existent duty to testify in another state, such a witness doesn’t have to comply with the summons. A foreign witness who fails to comply with the summons cannot to be sanctioned. Where the evidence is located abroad, an Austrian forum can order that this evidence be transferred to Austria as for example in the case of the summons of a witness – or may within the scope of Regulation No 1206/2001 proceed to the taking of evidence abroad, either through the requested court (Art. 10 and following of the regulation), or directly (art. 17 of the regulation). The regulation does not prevent the forum to summon a witness living abroad. However, means of constraint cannot be applied against such a witness residing abroad.

3. Methods of Taking of Evidence Abroad

It is generally recognised that evidence from abroad is to be gathered according to certain methods (A. Sengstschmid, Die europäische Beweisaufnahme, in P.G. Mayr (ed.), Handbuch des europäischen Zivilverfahrensrechts, Vienna, Manz, 2017, par. 15.1; L. Fumagalli, La disciplina comunitaira dell’assunzione delle prove all’estero in materia civile e commerciale: il regolamento (CE) n. 1206/2001 in S. M. Carbone, M. Frigo, L. Fumagalli, Diritto processuale civile e commerciale comunitario, Milano, Giuffrè, 2004, pp. 169 and 170):

1. the order of the forum before which the proceedings are pending ordering the parties to transfer themselves the evidence (or the means of evidence) which is located abroad to the forum State;
2. the active international legal assistance (the requesting court issues a letter rogatory which will be executed by the foreign requested forum according to the lex diligentiae, see Art. 10 of the Regulation Nr. 1206/2001);
3. the passive international legal assistance (the requesting court performs itself or through its agents directly the taking of evidence abroad according to its own lex fori. In principle, such an approach requires a prior consent of the requested foreign state. There is also the problem of coercive measures adopted by the requesting forum on the territory of the requested State. Such direct taking of evidence is allowed in the EU Under the conditions of Art. 17 of the Regulation Nr. 1206/2001);
4. videoconferencing or any other modern means of communication where the evidence remains abroad while the proceedings take place before the forum of origin (see Art. 10(4) of the Regulation Nr. 1206/2001);
5. the taking of evidence is performed in cooperation or dialogue between the requesting forum and the requested forum (see Art. 10(3) and (4) and Art. 12 of the Regulation Nr. 1206/2001));
6. obtaining evidence through diplomatic officers or consular agents.

Neither obtaining evidence through diplomatic officers or consular agents nor the request of the forum before which the proceedings are pending ordering the parties to transfer themselves the evidence (or the means of evidence) which is located abroad to the forum State are regulated by the Regulation Nr. 1206/2001.

In this framework the Council Statement Nr. 54/01 of 4 July 2001 on Regulation Nr. 1206/2001 shall be mentioned. According to the Council of the EU “The scope of application of this Regulation shall not cover pre-trial discovery, including the so-called “fishing expeditions”.” (Statement, p. 16).

4. Effet utile of the Regulation Nr. 1206/2001 – Is it of American origin?

However, the effet utile of the Regulation Nr. 1206/2001 has lead the Court of Justice in cases Lippens (C-170/11) and ProRail (C-332/11) to construe that text as being optional and facultative.

It would appear that the US Supreme Court’s decision in case Société Nationale Industrielle Aérospatiale et al. V. United States District Court for The Southern District of Iowa 82 U.S. 522 (1987), on the 1970 Hague Convention was a direct though not cited source of the European case-law. According to the US case law the “Convention does not provide exclusive or mandatory procedures for obtaining documents and information located in a foreign signatory’s territory”. “its purpose [is] to “facilitate” discovery and to “improve mutual judicial co-operation.”” “Although they are not mandatory, the Convention’s procedures are available whenever they will facilitate the gathering of evidence, and “apply” in the sense that they are one method of seeking evidence that a court may elect to employ”.

Documents having lead to the Lippens case, especially the opinion of Advocate General before the High Council of the Netherlands (Hoge Raad der Nederlanden, the Dutch Supreme Court) M. P. Vlas of 1st April 2011, ECLI:NL:PHR:2011:BP3048 and the preliminary reference, judgement of the High Council of the Netherlands, 1st Chamber, 1st April 2011, case 10/02071, ECLI:NL:HR:2011:BP3048, show an in-depth assessment of the US Société Nationale Industrielle Aérospatiale case.

The interpretation of facultative and facilitative nature of international instruments on taking of evidence abroad was extended by the CJEU to the Regulation Nr. 1206/2001. Such an interpretation is indeed not a forgone conclusion. If the rigour used to combat conflicts caused created between EU private international law (Brussels Ia Regulation) and national traditions in anti-suit injunctions (Turner, C-159/02, Allianz, C-185/07, Gazprom, C-536/13) and the forum non conveniens doctrine (Owusu, C-281/02) were to be extended also to the Regulation Nr. 1206/2001, then there there could be no space for facilitative nature of the Regulation Nr. 1206/2001 (C. Thole, Kein abschließender Charakter der Europäischen Beweisaufnahmeverordnung, IPrax, Nr. 3/2014, p. 255). Indeed, there are connecting points linking the Regulation on taking of evidence and the Brussels Ia regulation such as exclusion of arbitration (see on that issue B. Hess, Europäisches Zivilprozessrecht, Heidelberg, C.F. Müller, 2010, p. 465; M. Fartunova-Michel, JurisClasseur Europe Traité, fasc. 2800 : Obtention des preuves en matière civile et commerciale – Coopération entre les juridictions des États membres – Règlement (CE) n° 1206/2001 », update 27 May 2019, par. 20). However, the effet utile lead to a different conclusion.

Indeed, the CJEU ruled in Lippens:

according to recitals 2, 7, 8, 10 and 11 in the preamble to Regulation No 1206/2001, the aim of the regulation is to make the taking of evidence in a cross-border context simple, effective and rapid. The taking, by a court of one Member State, of evidence in another Member State must not lead to the lengthening of national proceedings. […]. Thus, it is clear that, in certain circumstances, in particular if the party summoned as a witness is prepared to appear voluntarily, it may be simpler, more effective and quicker for the competent court to hear him in accordance with the provisions of its national law instead of using the means of taking evidence provided for by Regulation No 1206/2001. (paras. 29 and 31)

Finally, the interpretation according to which Regulation No 1206/2001 does not govern exhaustively the taking of cross-border evidence, but simply aims to facilitate it, allowing use of other instruments having the same aim, is supported by Article 21(2) of Regulation No 1206/2001, which expressly authorises agreements or arrangements between Member States to further facilitate the taking of evidence, provided that they are compatible with the regulation. (par 33)

However, the facilitative nature of the Regulation Nr. 1206/2001 is limited by an exception of public powers of EU Member States (see e.g. C. Thole, op. cit., p. 257 ; G. Cuniberti, L’expertise judiciaire en droit judiciaire européen, Rev. crit. DIP, Nr. 3/2015, p. 535 ; M. Fartunova-Michel, op. cit., point 2 ; see in general law of international civil procedure S. Triva, M. Dika, Građansko parnično procesno pravo, Narodne novine, Zagreb, 2004, p. 57 ; A. Maganić, Pravna pomoć u građanskim stvarima između Republike Hrvatske i Republike Makedonije », Zbornik PFZ, 2/2011 p. 245).

Indeed, the CJEU has ruled in ProRail:

47. in so far as the expert designated by a court of a Member State must go to another Member State in order to carry out the investigation which has been entrusted to him, that might, in certain circumstances, affect the powers of the Member State in which it takes place, in particular where it is an investigation carried out in places connected to the exercise of such powers or in places to which access or other action is, under the law of the Member State in which the investigation is carried out, prohibited or restricted to certain persons.

48. In such circumstances, unless the court wishing to order cross-border expert investigation foregoes the taking of that evidence, and in the absence of an agreement or arrangement between Member States within the meaning of Article 21(2) of Regulation No 1206/2001, the method of taking evidence laid down in Articles 1(1)(b) and 17 thereof is the only means to enable the court of a Member State to carry out an expert investigation directly in another Member State.

Such a ruling was then interpreted e.g. by the Belgian Court of Cassation as follows. A plea entirely based on the argument that the forum of a Member State which requires the act of investigation entrusted to an expert to be performed in the territory of another Member State is always required to request a prior authorization of the other Member State in accordance with Article 17 of Regulation (EC) No 1206/2001, without distinguishing according to whether the taking of evidence may or may not have an influence on the powers of this other Member State or according to whether or not there is a convention or regulation within the meaning of the second paragraph of Article 21 of Regulation 1206/2001, is not founded (Court of Cassation, 1st Chamber, 7 November 2013, case C.10.0286.N/1)

5. Reform

The European Commission proposed a reform of the Regulation Nr. 1206/2001. The EAPIL reported extensively on that. As a consequence an indepth assessment in the article was superseded by posterior legal development. Such direct taking of evidence is allowed in the EU under conditions of Art. 17 of the Regulation Nr. 1206/2001.

On 21 July 2020 the Unidroit Secretariat released a Note on the UNIDROIT Principles of International Commercial Contracts and the COVID-19 health crisis.

As stated in the website of Unidroit, the Note is to be considered as work in progress, and the Secretariat welcomes any comments or suggestions.

The Note’s presentation reads:

In the context of the outbreak of COVID-19, UNIDROIT has prepared this note as a form of guidance as to how the Principles could help address the main contractual disruptions caused by the pandemic directly as well as by the measures adopted as a consequence thereof. The note analyses whether parties may invoke COVID-19 as an excuse for non-performance, and if so, based on which concepts and under what conditions. The analysis also covers the scenario, likely to be common in practice, where performance is still possible, but has become substantially more difficult and/or onerous under the circumstances.

The document aims to guide the reader through the process, leading her to ask appropriate questions and to consider the relevant facts and circumstances of each case. Naturally, solutions will vary according to the particular context of the pandemic in each jurisdiction and there is no one-size-fits-all approach. In particular, the document, considering the different ways the Principles have so far been used in practice, aims to: (i) help parties use the Principles when implementing and interpreting their existing contracts or when drafting new ones in the times of the pandemic and its aftermath; (ii) assist courts and arbitral tribunals or other adjudicating bodies in deciding disputes arising out of such contracts; and (iii) provide legislators with a tool to modernise their contract law regulations, wherever necessary, or possibly even to adopt special rules for the present emergency situation.

The open nature of the Principles furnishes the parties and interpreters with a much-needed flexibility in such an extreme context, constituting an efficient tool to offer a nuanced solution that can help preserve valuable contracts for the parties. Especially in mid-to-long term contracts, and in view of the – apparently – temporary nature of the impediment, mechanisms that allow for an adequate renegotiation and proportionate allocation of losses could ultimately help preserve the contract and maximise value for the jurisdiction(s) involved.

Arguably, the world of contracts has never suffered such an unforeseeable, global, and intense interference. Extraordinary situations require extraordinary solutions, and there is a global need to ensure the economic value enshrined in commercial exchanges is not destroyed. The Principles offer state-of-the-art, best-practice tools to deal with the problem; a set of rules that result from years of study and analysis, with the participation and consensus of the most prominent academics and practitioners in the field, from civil law and common law traditions.

— Many thanks to Carmen Tamara Ungureanu (Alexandru Ioan Cuza University of Iasi, Romania) for drawing the editors’ attention to this development.

Carlos Manuel Vazquez (Georgetown University Law Center) has posted Extraterritoriality as Choice of Law on SSRN.

The abstract reads:

The proper treatment of provisions that specify the extraterritorial scope of statutes has long been a matter of controversy in Conflict of Laws scholarship. This issue is a matter of considerable contemporary interest because the Third Restatement of Conflict of Laws proposes to address such provisions in a way that diverges from how they were treated in the Second Restatement. The Second Restatement treats such provisions — which I call geographic scope limitations — as choice-of-law rules, meaning, inter alia, that the courts will ordinarily disregard them when the forum’s choice-of-law rules or a contractual choice-of-law clause selects the law of a state as the governing law. The Third Restatement does not consider them to be choice-of-law rules, instead maintaining that they are indistinguishable from limitations on the statute’s internal scope, such as a provision specifying that a statute prohibiting vehicles applies only in parks. This means, according to the Third Restatement, that contractual choice-of-law clauses are presumed to select the chosen state’s law subject to their geographic scope limitations, and that the courts of other states are obligated to give effect to such limits when applying the law of the state that enacted the statute with the geographic scope limitation. Indeed, according to the Third Restatement, failure to do so would violate the obligation of U.S. states to give Full Faith and Credit to the laws of sister states.

This article defends the Second Restatement’s understanding of geographic scope limitations as choice-of-law rules. Limits on a statute’s territorial scope are fundamentally different from limits on a statute’s internal scope. When a state enacts a statute and specifies that it applies only to conduct occurring within the state’s territory, or to residents of the state, it has limited the reach of the law out of deference to the legislative authority of other states. The state does not have a different rule for conduct that occurs on the territory of other states or for persons who are not residents. The territorial scope provision tells us only that cases beyond the statute’s specified scope should be governed by the law of a different state. For this reason, such provisions are best understood as choice-of-law rules.

The Third Restatement treats geographic scope limitations as prescribing non-regulation for cases beyond the statute’s specified geographic scope. This understanding of geographic scope limitations is highly implausible and, indeed, either unconstitutionally discriminatory or unconstitutionally arbitrary. Failure to give effect to such provisions does not violate the Full Faith and Credit Clause. Rather, under the Supreme Court’s analysis in Franchise Tax Board v. Hyatt, such provisions violate the Full Faith and Credit Clause. Understood as choice-of-law rules, geographic scope limitations are binding on the courts of the enacting state, and other states may take them into account in determining whether to apply the law of the enacting state. But, if the forum’s choice-of-law rules select the law of the enacting state as the governing law, the constitutional obligation of U.S. states to respect the laws of their sister states poses no impediment to application of the statute’s substantive provisions to cases beyond the statute’s specified geographic scope.

San Marino, the independent State surrounded by Italy, is home to about 5,000 undertakings. Unsurprisingly, given the size of the country (61 km2) and its population (33,344), a significant part of the business carried out in the small Republic is related to Italy. In fact, it is not infrequent for Italian courts to be seised of disputes opposing businesses based in Italy and San Marino, respectively.

Service of Judicial Documents Between Italy and San Marino

Where this occurs, the issue arises, among others, of the (cross-border) service of the document instituting the proceedings.

San Marino is a party to the 1965 Hague Service Convention, since 2002. Italy, too, is a party to that Convention.

However, the application of the Convention between the two countries is proving problematic, at least in Italy.

The difficulties revolve around the declaration issued by San Marino under Article 21(2)(a) of the Convention, whereby San Marino made known its opposition to service by postal channels. In fact, Article 10(a) stipulates that the Convention ‘shall not interfere with … the freedom to send judicial documents, by postal channels, directly to persons abroad’, provided, however, that ‘the State of destination does not object’.

In practice, the above declaration implies that service on a Sammarinese defendant for the purposes of proceedings in Italy may not occur otherwise than in accordance with Article 3 to 6 of the Convention, i.e. by a request conforming to the model annexed to the Convention itself, forwarded to the Sammarinese Central authority.

The View of the Italian Supreme Court

In a judgment of 29 January 2019 (No. 2482), the Italian Supreme Court ruled that the above declaration could (and in fact ought to) be disregarded. It actually concluded that, in the circumstances of that case, service – made by post on a Sammarinese company – was in all respects valid and effective.

The Supreme Court noted that the Government of San Marino, when acceding to the Convention, issued two separate instruments – the instrument of accession itself, and the declarations accompanying it. But while the former was drawn up in the form of a law, the latter resulted from a mere executive act. The Supreme Court characterised the latter, on account of its form, as an act incapable of affecting the operation of the convention (‘un atto inidoneo a ridurre l’ambito di applicazione alla predetta Convenzione’).

Assessment

The ruling is unpersuasive for a number of reasons.

It is not for the courts of one State to scrutinise the appropriateness of the forms employed by another State’s authorities in their international relations.

This is all the more true for declarations issued by the latter State in respect of a multilateral international convention, such as the Hague Service Convention.

In fact, it is for the depositary of the convention concerned (here, the Ministry of Foreign Affairs of the Netherlands) to assess whether the declarations received are in such a form as to effectively serve their purpose.

It appears that the Ministry of Foreign Affairs of the Netherlands received the Sammarinese declaration, and recorded it as such. No objections and no remarks have been raised at a diplomatic level concerning that declaration.

According to Article 77(1)(d) and (e) of the Vienna Convention on the Law of Treaties, the tasks of the depositary include ‘examining whether the signature or any instrument, notification or communication relating to the treaty is in due and proper form and, if need be, bringing the matter to the attention of the State in question’, and ‘informing the parties and the States entitled to become parties to the treaty of acts, notifications and communications relating to the treaty’. If the declarations of a State were to be reviewed by the other Contracting States individually, this would likely frustrate the function of the depositary and undermine its practical advantages.

One would be tempted to label the Italian Supreme Court’s ruling as unfortunate, and to ignore it altogether.

But this is in fact the second such ruling by the Cassazione. The first one, given on 9 November 2011 (No. 23290), was criticised for the above reasons (including by the author of this post: ‘Sulla notifica degli atti giudiziari mediante la posta secondo la Convenzione dell’Aja del 1965’, Rivista di diritto internazionale privato e processuale (2012), 341-362). The fact is that the Court reiterated its views.

In fact, the stance staken by the Court appears to amount, now, to the official position of the Italian Supreme Court on the (not so firm) value of declarations issued in connection with the Service Convention (and, possibly, in connection with any other multilateral convention contemplating similar instruments).

The author of this post is not aware of any diplomatic protests by the Government of San Marino as regards the Italian Supreme Court’s rulings.

It is hoped that, for the sake of the proper functioning of the Hague Service Convention, the approach be reconsidered at the earliest occasion.

 

– Photo credit: Max_Ryazanov, Wikimedia Commons

I have reported earlier on the Commisimpex case and the various decisions of the French Supreme Court on civil and criminal matters (Cour de cassation) which have eventually excluded from the scope of the waiver of immunities of the Republic of Congo assets protected by diplomatic immunity.

On 8 June2020, Commisimpex attached a Falcon 7X business jet belonging to the presidency of Congo on the French airport of Bordeaux-Merignac where it was undergoing maintenance. Rumour has it that the markers of the aircraft were off for several years, but they were mysteriously turned on recently, allowing Congo’s creditors to track it down …

Congo immediately initiated proceedings before the Paris enforcement court to set aside the attachement on the ground that the jet was covered by diplomatic immunity.

In a judgment of 29 June 2020, the Paris Enforcement Court rejected all arguments of the Republic of Congo and confirmed the validity of the attachement.

Diplomatic Clearance

The first argument of Congo in favour of the extension of diplomatic immunity to the jet was that it was a State Aircraft in the meaning of the Chicago Convention on International Civil Aviation and could not, as such, fly over French territory without being authorised to do so. Indeed, it had received “diplomatic clearance” (DIC) from the French Ministry of Foreign Affairs to that effect.

The Paris Court found, however, that the only reason why the various authorisations that the French Ministry could grant were labelled “diplomatic” was that they were issued by the Ministry of Foreign Affairs. The label was unrelated to the use of the aircraft, and did not create any presumtion that the aircraft was used for diplomatic activities. Indeed, it did not even imply that the owner of the relevant aircaft was a state.

Sovereign Immunity, but Which One?

The Paris Court recognised that State Aircrafts must be protected by an immunity against enforcement. The crucial issue, however, was not so much whether the aircraft was covered by some sovereign immunity, but by diplomatic immunity. The Paris Court underscored that French courts have ruled that while the diplomatic immunity of Congo remains intact after its general waiver, Congo has waived all other enforcement immunities.

The Court noted that the 2016 French statute which has established a special regime for diplomatic immunity refers to “assets used (…) in the exercise of the diplomatic mission of foreign states” (French Code of Civil Enforcement Proceedings, Art L. 111-1-3). It further noted that the 1961 Vienna Convention on Diplomatic Relations also referred to the “diplomatic mission”. The Court concluded that Congo enjoyed  diplomatic immunity in France only over assets affected to the Congolese Embassy in Paris.

Congo put forward an additional argument. It argued that the aircraft was used by the presidentcy of Congo, and was thus used by President Sassou Nguesso for his diplomatic activities. The Court noted that the logbook of the aircraft showed that it had been essentially used for domestic flights within Congo. It was also used once to fly to Madagascar, in order to bring back “Covid Organics CVO”, which  was not a diplomatic activity.

In truth, the Court found, in the last two years, each time President Nguesso had travelled internationally for official visits, he had used another plane, a Boeing 787.

In the absence of any evidence of diplomatic use of the Falcon 7X business jet, the Court concluded, it is not protected by diplomatic immunity, and could thus be attached.

The general press has reported that President Nguesso is really upset. One trusts that the fight over this asset, which is worth over € 20 million, is only beginning. Congo has lodged an appeal against the judgment, but it should not suspend its enforcement, which means that a sale by auction can be immediately organised.

Following successful events in Bonn and Würzburg, the third iteration of the conference for young German-speaking scholars in private international law will take place – hopefully as one of the first events post-Corona – on 18 and 19 March 2021 at the Max Planck Institute for Comparative and International Private Law in Hamburg. The conference will focus on the theme of PIL for a better world: Vision – Reality – Aberration?

It will include a keynote by Angelika Nußberger, former judge at the European Court of Human Rights, and a panel discussion between Roxana Banu, Hans van Loon, and Ralf Michaels.

The organisers are inviting contributions that explore any aspect of the conference theme, which can be submitted until 20 September 2020. The call for papers, in German and English, together with further information, can be found on the conference website.

The author of this post is Giulio Monga, a PhD student at the Catholic University of the Sacred Heart, Milan. The editors of the EAPIL blog encourage scholars and practitioners to share their views on the Court’s judgment and its implications. Those interested in submitting guest posts are invited to get in touch with the blog editors at blog@eapil.org. 

On 16 July 2020 the Court of Justice of the European Union (CJEU) delivered its judgment on the Schrems II case (a press release is available here). The ruling is part of the judicial saga between Facebook and the Austrian data protection advocate Max Schrems relating to transfers of personal data from the EU to the US. It follows the judgment of 2015 whereby the CJEU invalidated the so-called ‘Safe Harbour’, later replaced by the ‘EU-US Privacy Shield’, the adequacy of which had been established by the European Commission by a Decision of 2016.

The facts

Max Schrems lodged a complaint against Facebook Ireland Ltd. before the Irish Supervisory Authority (the Data Protection Commissioner, DPC) over the transfer of personal data relating to him by Facebook Ireland to Facebook Inc., the latter’s parent company established in the US.

In particular, Mr Schrems claimed that the inclusion of the controller-to-processor Standard Contractual Clauses (SCC) approved by the EU Commission through Decision 2010/87 in a data transfer processing agreement between Facebook Ireland, acting as a controller with the meaning of Article 4(7) of the General Data Protection Regulation (GDPR), and Facebook Inc., acting as a processor with the meaning of Article 4(8) GDPR, did not justify the transfer of the personal data relating to him to the US. Under US law, Schrems argued, Facebook Inc. is required to make the personal data of its users available to US authorities, such as the NSA and the Federal Bureau of Investigation (FBI), in the context of surveillance programmes that preclude the exercise of the rights enshrined in Articles 7, 8 and 47 of the Charter of Fundamental Rights of the European Union (the Charter). On that basis, Mr Schrems asked that DPC suspend the transfer of data.

The DPC, as well as the referring Irish High Court, noted that it was impossible to adjudicate Mr Schrems’ complaint unless the CJEU examined the validity of the Decision 2010/87. Furthermore, the referring High Court also asked CJEU to rule on the validity of the Decision 2016/1250 establishing the ‘EU-US Privacy Shield’.

The Legal Framework

Pursuant to Articles 25-26 of the repealed Directive 95/46/EC and to Articles 44-50 of the GDPR,  transfer of personal data to a third country may, in principle, take place only if the third country in question ensures an adequate level of data protection.

According to Article 45 GDPR, the Commission may find that a third country ensures, by reason of its domestic law or its international commitments, such an adequate level of protection. With regard to the US, the EU Commission, by Decision 2000/520/EC, firstly established that adequate protection was ensured by companies joining the so-called ‘Safe Harbour’ mechanism, which was invalidated under the first Schrems ruling. Later, with the new adequacy Decision 2016/1250 the EU-US Privacy Shield has been established.

In the absence of an adequacy decision, transfers of personal data to third countries may take place only if the personal data exporter established in the EU has provided appropriate safeguards provided by for Article 46, which may arise, among others, from standard contractual clauses adopted by the EU Commission. Standard Contractual Clauses, depending on the circumstances, might be controller-to-processor SCC such as those used by Facebook Ireland or controller-to-controller SCC approved by EU Commission through Decisions 2001/497/EC and 2004/915/EC.

In addition to the adoption appropriate safeguards, Article 46 GDPR also requires that enforceable data subject rights and effective legal remedies for data subjects are available.

The Judgment

The Court began with considering that the GDPR applies to the transfer of personal data for commercial purposes by an economic operator established in a Member State to another economic operator established in a third country, even if, at the time of that transfer or thereafter, that data may be processed by the authorities of the third country in question for the purposes of public security, defence and State security. The Court added that this type of data processing by the authorities of a third country cannot preclude such a transfer from the scope of the GDPR.

As in Schrems I, the CJEU stated that, according to the relevant rules of GDPR, data subjects whose personal data are transferred to a third country pursuant to Standard Contractual Clauses must be afforded a level of protection essentially equivalent to that guaranteed within the EU by the GDPR, read in the light of the Charter. The Court specified that

[t]he assessment of the level of protection afforded in the context of such a transfer must, in particular, take into consideration both the contractual clauses agreed between the controller or processor established in the European Union and the recipient of the transfer established in the third country concerned and, as regards any access by the public authorities of that third country to the personal data transferred, the relevant aspects of the legal system of that third country. (para. 105)

The Decision on the Standard Contractual Clauses

In light of the foregoing, the CJEU Court considered that the validity of Decision 2010/78 is not called into question by the mere fact that the SCC therein approved do not bind the authorities of the third country to which data may be transferred. In fact,

[t]hat validity depends, however, on whether, in accordance with the requirement of Article 46(1) and Article 46(2)(c) of the GDPR, interpreted in the light of Articles 7, 8 and 47 of the Charter, such a standard clauses decision incorporates effective mechanisms that make it possible, in practice, to ensure compliance with the level of protection required by EU law and that transfers of personal data pursuant to the clauses of such a decision are suspended or prohibited in the event of the breach of such clauses or it being impossible to honour them. (para. 137)

The CJEU found that Decision 2010/87 establishes such mechanisms. Namely, the CJEU pointed out that the decision imposes an obligation on a data exporter and the recipient of the data to verify, prior to any transfer, whether that level of protection is respected in the third country concerned and that the decision requires the recipient to inform the data exporter of any inability to comply with the standard data protection clauses, the latter being, in turn, obliged to suspend the transfer of data and/or to terminate the contract with the former. The Court concluded that nothing affected the validity of Decision 2010/87.

The Invalidation of EU-US Privacy Shield

Lastly, the CJEU examines the validity of Decision 2016/1250 establishing the EU-US Privacy Shield.

In that regard, the CJEU notes that that Decision enshrines the position, as did Decision 2000/520, that the requirements of US national security, public interest and law enforcement have primacy, thus condoning interference with the fundamental rights of persons whose data are transferred under the Privacy Shield framework.

In the view of the Court,

[t]he limitations on the protection of personal data arising from the domestic law of the United States on the access and use by US public authorities of such data transferred from the European Union to the United States, which the Commission assessed in the Privacy Shield Decision, are not circumscribed in a way that satisfies requirements that are essentially equivalent to those required, under EU law, by the second sentence of Article 52(1) of the Charter. (para. 185)

The Court pointed out that, in respect of certain surveillance programmes, those provisions do not indicate any limitations on the power they confer to implement those programmes, or the existence of guarantees for potentially targeted non-US persons. The Court adds that, although those provisions lay down requirements with which the US authorities must comply when implementing the surveillance programmes in question, the provisions do not grant data subjects actionable rights before the courts against the US authorities.

The Ombudsperson mechanism

As regards the requirement of judicial protection, the CJEU focused its reasoning on the Ombudsperson mechanism provided for by the EU-US Privacy Shield Decision, which the EU Commission found as capable to ensure data subjects with level of protection essentially equivalent to that guaranteed by Article 47 of the Charter.

The CJEU stressed that data subjects must be given an opportunity to seise an independent and impartial court in order to have access to their personal data, or to obtain the rectification or erasure of such data.

The CJEU observed in particular that the Privacy Shield Ombudsperson,

[a]lthough described as ‘independent from the Intelligence Community’, was presented as ‘[reporting] directly to the Secretary of State who will ensure that the Ombudsperson carries out its function objectively and free from improper influence that is liable to have an effect on the response to be provided’. (para. 195)

Furthermore, the CJEU noted that nothing in Decision 2016/1250 indicates that the dismissal or revocation of the appointment of the Ombudsperson is accompanied by any particular guarantees, which is such as to undermine the Ombudsman’s independence from the executive.

Similarly, the Court, noted that

[a]lthough recital 120 of the Privacy Shield Decision refers to a commitment from the US Government that the relevant component of the intelligence services is required to correct any violation of the applicable rules detected by the Privacy Shield Ombudsperson, there is nothing in that decision to indicate that that ombudsperson has the power to adopt decisions that are binding on those intelligence services and does not mention any legal safeguards that would accompany that political commitment on which data subjects could rely.

The CJEU found that

[t]he Ombudsperson mechanism to which the Privacy Shield Decision refers does not provide any cause of action before a body which offers the persons whose data is transferred to the United States guarantees essentially equivalent to those required by Article 47 of the Charter.

In light of the foregoing, the CJEU invalidated Decision 2016/1250 on EU-US Privacy Shield.

The ruling is expected to have a very significant impact on the transfer of personal data from the EU to third countries.

Concerning the immediate effects of the judgment, the Court made the following remarks:

As to whether it is appropriate to maintain the effects of that decision for the purposes of avoiding the creation of a legal vacuum … the Court notes that, in any event, in view of Article 49 of the GDPR, the annulment of an adequacy decision such as the Privacy Shield Decision is not liable to create such a legal vacuum. That article details the conditions under which transfers of personal data to third countries may take place in the absence of an adequacy decision under Article 45(3) of the GDPR or appropriate safeguards under Article 46 of the GDPR (para. 202).

On 14 July 2020, Austria ratified the 1965 Hague Service Convention. The Convention is set to enter into force for Austria on 12 September 2020. All EU Member States will then be be bound by the Convention. In practice, the latter will apply in  the relationship between the (Members States of the) EU, one the one hand, and some fifty more States worldwide, on the other.

The Austrian ratification comes more than four years after the Council of the European Union issued a decision authorising Austria to sign and ratify, and Malta to accede to, the Convention ‘in the interest of the European Union’.

The Council decision reflects the fact that, as stated in the preamble, the Union ‘has external competence with regard to the Convention in so far as its provisions affect the rules laid down in certain provisions of Union legislation or in so far as the accession of additional Member States to the Convention alters the scope of certain provisions of Union legislation’, such as Article 28(4) of the Brussels I bis Regulation. Still, the Convention ‘does not allow for participation by regional economic integration organisations such as the Union’, meaning that, to make sure that the Convention is in force for all Member States, the Union had no other option but to authorise (and in fact request) the Member States that had not yet done so, to ratify – or accede to, depending on the circumstances – the Convention in the interest of the Union itself.

The Convention is already applicable to Malta as of 17 July 2018.