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Conventions & Instruments  

On 31 May 2021, Georgia deposited its instrument of accession to the HCCH 1965 Service Convention and the HCCH 1970 Evidence Convention. With the accession of Georgia, the Service Convention now has 79 Contracting Parties. It will enter into force for Georgia on 1 January 2022, subject to the Article 28 procedure. For the Evidence Convention, with the accession of Georgia it now has 64 Contracting Parties. The Convention will enter into force for Georgia on 30 July 2021. More information is available here.

Meetings & Events 

On 1 June 2021, the HCCH and the Asian Business Law Institute co-hosted the webinar “HCCH 1970 Evidence Convention and Remote Taking of Evidence by Video-link”, part of the ongoing celebrations of the Evidence Convention’s golden anniversary. More information is available here.

On 1 June 2021, the HCCH participated in a virtual Regional Discussion on Children’s Rights and Alternative Care, organised by the Council of Europe in preparation to the United Nations Committee on the Rights of the Child Day of General Discussion on this theme. More information is available here.

On 21 June 2021, the HCCH participated in the virtual inaugural event of the Nigeria Group on Private International Law. The recording of the event is available here.

 

Vacancy: The HCCH is currently seeking an Assistant Legal Officer. The deadline for the submission of applications is 23 July 2021 (00:00 CEST). More information is available here.

 

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

Commission / European Food e.a.
Aide d'État
Selon l’avocat général Szpunar, le Tribunal a commis une erreur de droit en concluant que la Commission n’était pas compétente pour examiner, à la lumière du droit des aides d’État, l’indemnisation versée par la Roumanie à la suite d’une sentence arbitrale

CB
Fiscalité TVA
Lors de la détermination de la base d’imposition d’une opération dissimulée par des assujettis à la TVA, les montants versés et perçus tels que reconstitués par l’administration fiscale doivent être considérés comme incluant déjà cette taxe

On 25 June 2021, the Supreme Court of the United Kingdom issued a ruling in General Dynamics United Kingdom Ltd (Respondent) v State of Libya (Appellant) [2021] UKSC 22 on the right of the claimant to dispense service to a foreign State, by invoking exceptional circumstances. The court ruled that in proceedings to enforce an arbitration award against a foreign State under the 1996 Arbitration Act, the State Immunity Act (SIA) requires the arbitration claim form or the enforcement order to be served through the Foreign, Commonwealth (and Development) Office (“FCO”) to the State’s Ministry of Foreign Affairs, thus excluding the application of pertinent CPR rules.

Background

General Dynamics United Kingdom Ltd (“GD”) is part of the General Dynamics group, a global defense conglomerate. Libya is a sovereign state which, at the time of these proceedings, had two competing governments. A dispute arose between the parties over a contract for the supply of communications systems. In January 2016, an arbitral tribunal in Geneva made an award of approximately £16 million (plus interest and costs) in favor of GD. The Award remains unsatisfied, but GD wishes, and has attempted, to enforce it in England and Wales. In July 2018, the High Court made an order which, amongst other things, allowed GD to enforce the Award, dispense with the requirement on it to serve a claim form or any associated documents on Libya and provided for Libya to be notified of the order (as the initial hearing had been held without notice).

Subsequently, Libya applied to the High Court to set aside those parts of the initial order dispensing with service. It referred to section 12(1) of the SIA, which requires service of ‘any writ or other document required to be served for instituting proceedings against a State’ to be transmitted to that state’s Ministry of Foreign Affairs by the FCO. It asserted that, as no service in this manner either of the arbitration claim form or of the High Court’s order giving permission to enforce the Award had occurred, the order had to be set aside and the Award could not be enforced. Accordingly, it argued, any assets of Libya in the jurisdiction could not be used to satisfy the Award. The High Court’s initial order was therefore overturned. However, the Court of Appeal restored the High Court’s initial order finding that it was not mandatory for the arbitration claim form or order permitting enforcement to be served through the FCO ([2019] EWCA Civ 1110). The State of Libya appealed.

Ruling

The Supreme Court was called to address the following issues:

Issue 1: In proceedings to enforce an arbitration award against a foreign State under section 101 of the 1996 Act, does section 12(1) of the SIA require the arbitration claim form or the enforcement order to be served through the FCDO to the State’s Ministry of Foreign Affairs?

Issue 2: Even if section 12(1) applies, in exceptional circumstances, can the court dispense with service of the enforcement order under rules 6.16 and/or 6.28 of the CPR?

Issue 3: Must section 12(1) be construed as allowing the court to make alternative directions as to service in exceptional circumstances where the claimant’s right of access to the court would otherwise be infringed?

The court summarised the judgment as follows.

Issue 1

The majority of the Court allowed Libya’s appeal on the first issue. They considered that a broad reading of section 12(1) of the SIA is appropriate, on account of the considerations of international law and comity which are in play. The words “other document required to be served for instituting proceedings against a State” in section 12(1) are wide enough to apply to all documents by which notice of proceedings in this jurisdiction is given to a defendant State. In the particular context of enforcement of arbitration awards against a State, the relevant document will be the arbitration claim form where the court requires one to be served, or otherwise will be the order granting permission to enforce the award. In cases to which section 12(1) applies, the procedure which it establishes for service on a defendant State through the FCO is mandatory and exclusive, subject only to the possibility of service in accordance with section 12(6) in a manner agreed by the defendant State.

The minority would have dismissed Libya’s appeal on the first issue. They considered that that Parliament intended the applicability of section 12(1) of the SIA to depend on what was required by the relevant court rules. If, as in this case, the operation of the relevant rules does not require service of the document instituting proceedings, then that document will fall outside section 12(1) of the SIA. Documents which do not institute proceedings, such as the enforcement order, fall outside the scope of section 12(1) of the SIA entirely. Where section 12(1) of the SIA does not apply, the status quo of State immunity provided for in section 1 of the SIA must prevail.

Issue 2

The majority’s answer to this question is “No”. Lord Lloyd-Jones explained that section 12(1) of the SIA does not require the court to refer to the CPR to determine whether a document is one which is required to be served. Rule 6.1(a) of the CPR also makes clear that in this instance the CPR do not purport to oust the requirements of section 12(1) of the SIA. The CPR cannot give the court a discretion to dispense with a statutory requirement in any event.

The minority’s answer to this question is “Yes”. Lord Stephens considered that, if the court exercises a discretion to dispense with service in exceptional circumstances, then the relevant document is no longer a document that is “required to be served” for the purposes of section 12(1) of the SIA. In his view, this interpretation gives effect to the underlying purpose of the legislation because it facilitates the restrictive doctrine of State immunity.

Issue 3

General Dynamics argued that the service requirements in section 12(1) of the SIA may prevent a claimant from pursuing its claim, which would infringe article 6 of the European Convention on Human Rights (“ECHR”) as well as the constitutional right of access to the court. It therefore contended that section 12(1) should be construed, pursuant to section 3 of the Human Rights Act 1998 (“HRA”) and/or common law principles, as allowing the court to make alternative directions as to service in exceptional circumstances.

The majority of the Court rejected this argument. They held that the procedure prescribed by section 12(1) of the SIA is a proportionate means of pursuing the legitimate objective of providing a workable means of service which conforms with the requirements of international law and comity, in circumstances of considerable international sensitivity. The procedure cannot therefore be considered to infringe article 6 of the ECHR, or to engage the common law principle of legality. The court cannot therefore interpret section 12 of the SIA as (for example) permitting substituted service, given that a fundamental feature of the provisions is their mandatory and exclusive nature.

The minority would interpret section 12(1) of the SIA as allowing the court to make alternative directions as to service if the claimant’s right of access to the court would otherwise be infringed. They considered that denying access to a court in circumstances where diplomatic service is impossible or unduly difficult would not be proportionate to the legitimate aim of complying with international law to promote comity and good relations between States.

Assessment

The case concerns the application of internal rules of the UK. We will therefore refrain from any comment on the domestic landscape, and approach the issue from a broader perspective.

Some clarifications first:

1. The case falls outside the scope of the EU Service Regulation: Service of process was supposed to take place outside the boundaries of the European Union.
2. The case falls outside the scope of the 1965 Hague Service Convention: The State of Libya is not a signatory of the convention aforementioned.
3. There is no bilateral convention between the UK and the State of Libya in the field of judicial cooperation in civil matters.

Efforts to notify the defendant

As evidenced from the text of the Court of Appeal judgment, the Claimant had permission to dispense with service of the Arbitration Claim Form dated 21 June 2018, any Order made by the Court and other associated documents, pursuant to Civil Procedure Rules 6.16 and 6.28. The Claimant was allowed to courier the Arbitration Claim Form, the Order and the associated documents to the following addresses:

1. Interim General Committee for Defence, Ghaser Bin Gashour, Tripoli, Libya;
2. The Ministry of Foreign Affairs, Ash Shatt St, Tripoli, Libya; and
3. Sefrioui Law Firm, 72 Boulevard de Courcelles, 75017 Paris, France.

All three addresses were associated with the Government of National Accord, the recognised government of Libya. The Defendant could, within two months of the date of this order, apply to set aside this Order and the Award could not be enforced until after the expiration of that period, or, if the Defendant applied to set aside this order within two months of the date of this Order, until after the application has been finally disposed of.

The proceedings did come to the attention of Libya which has applied (within the specified two-month period) to set aside paragraphs 4 and 5 of the order and to vary paragraphs 6 and 7 so that the period for any application to set aside paragraphs 1 to 3 will run from the date of service of the order pursuant to section 12 of the State Immunity Act.

Hence, the question was not whether the State of Libya was aware of the proceedings; it was rather whether the notification met with the requirements of UK law, i.e. with section 12 of the State Immunity Act.

European and global good practices

In the EU context, we could refer to Article 19(1)b of the Service Regulation, which reads as follows:

1. Where a writ of summons or an equivalent document has had to be transmitted to another Member State for the purpose of service under the provisions of this Regulation and the defendant has not appeared, judgment shall not be given until it is established that:

 b the document was actually delivered to the defendant or to his residence by another method provided for by this Regulation;

and that in either of these cases the service or the delivery was effected in sufficient time to enable the defendant to defend.

The same rule applies in the field of the 1965 Hague Service Convention. Article 15(1)b states that,

Where a writ of summons or an equivalent document had to be transmitted abroad for the purpose of service, under the provisions of the present Convention, and the defendant has not appeared, judgment shall not be given until it is established that –

1. b)  the document was actually delivered to the defendant or to his residence by another method provided for by this Convention,

and that in either of these cases the service or the delivery was effected in sufficient time to enable the defendant to defend.

Violation of the defendant’s procedural rights?

In light of the factual situation, it is substantially improbable that the procedural breach has caused an essential injury to the appellant’s defense rights. The State of Libya filed timely an application to set aside the arbitral award, apparently because it received the courier in one of the addresses aforementioned.

Formal service prevails over actual knowledge of the proceedings?

As a conclusion, we wish to underline that the State of Libya was not deprived of its rights to challenge the award. Admittedly, GD could have attempted to serve the documents pursuant to the SIA, before opting for notification by courier. It did so, because it was given the right by the High Court order. In addition, GD attempted subsequently to serve the documents, by following the requirements of section 12 of the SIA, however to no avail.

And now what?

GD is obliged to follow the conditions stipulated in Section 12 SIA. According to the most favorable estimates, evidenced in the judgment of the Court of Appeal, service will be effected no sooner than a year following transmission. Of course, it may not be excluded that service will not take place at all. This will be the moment when article 6 of the European Convention on Human Rights comes into play.

 

Strategic Lawsuits Against Public Participation – SLAPPs (I look at them comparatively in my Monash Strategic and Public Interest Litigation Unit, LAW5478) are a well-known tool to silence critics. Based on defamation, they (or the threat with them) aim to shut down the voice of opposition. Not many find the energy, financial resources and nerves to fight a protected libel suit in court.

The EP recently published the study led by Justin Borg-Barthet and carried out by him and fellow researchers at the University of Aberdeen. At the substantive level, distinguishing between SLAPPs and genuine defamation suits is not straightforward. As Justin et al point out, there is an important private international law element to the suits, too. Clearly, a claimant will wish to sue in a claimant-friendly libel environment. Moreover, where a deep-pocketed claimant can sue in various jurisdictions simultaneously, this compounds the threat.

The Brussels and Lugano regime is particularly suited to the use of SLAPPs as a result of the CJEU case-law on Article 7(2) forum delicti. The Handlungsort /Erfolgort distinction as such already tends to add jurisdictional gateways. In more recent years this has been compounded by the additional ‘centre of interests’ gateway per CJEU e-Date and Bolagsupplysningen – even if this was recently somewhat contained by the Court in Mittelbayerischer Verlag. As I have flagged before, Brussels Ia’s DNA is not supportive of disciplining abusive forum shopping, as illustrated ia in competition law and intellectual property law cases.

For these reasons, the report (Heading 4, p.33 ff) suggests dropping the availability of Article 7(2) and sticking to Article 4 domicile jurisdiction, supplemented with (unlikely) choice of court.

The European Parliament more than the European Commission has picked up the defamation issues both for BIa and for applicable law under Rome II (from which the issue is hitherto exempt; the report reviews the applicable law issues, too). It remains to be seen whether with this report in hand, Parliament will manage to encourage the EC to pick up the baton.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.431 ff, 4.24 ff.

 

Blanchiment - Fraude fiscale

Contrat de travail - rupture

Bail commercial

Fondazione Cassa di Risparmio di Pesaro e.a. / Commission
Droit institutionnel
La résolution de Banca delle Marche par les autorités italiennes a été essentiellement déterminée par sa défaillance

In a series of posts published at the Kluwer Arbitration Blog, Gary Born argues that States Should Not Ratify, and Should Instead Denounce, the Hague Choice-Of-Court Agreements Convention.

At the invitation of the Editors of the EAPIL Blog, Trevor Hartley, Professor emeritus at the London School of Economics, replies.

Gary Born starts by saying that the 2005 Hague Choice-of-Court Convention gives choice-of-court agreements the same enforceability and effect as arbitration agreements. This, he argues, is wrong because, while the parties to an arbitration agreement can choose the individual arbitrators, the parties to a choice-of-court agreement can only choose the country, or the court, from which the judges will be drawn: they cannot choose the individual judges. The reason he finds this objectionable is that the judges in many countries are corrupt or incompetent. He cites various statistics to show this. He names a number of countries which he says are especially bad: Russia, China, Venezuela, Iran, the Congo and Nicaragua. However, none of these countries is a Party to the Hague Convention; so choice-of-court agreements designating their courts would not be covered.

There can be no doubt that corrupt, biased or incompetent judges do exist, as do corrupt, biased or incompetent arbitrators. However, even though the parties to a choice-of-court agreement cannot choose the individual judges who will hear their case, they can choose the country the courts of which will hear it. They can even choose the particular court: Article 3(a) of the Convention. And since there are many countries where the judges are not corrupt, biased or incompetent—several EU countries, as well as the United Kingdom, spring to mind—the parties can, if they choose, ensure that the judges hearing their case are unbiased, competent and impartial. If the parties insist on choosing the courts of a country where judicial corruption is a problem, they have only themselves to blame.

Moreover, it cannot be said that the Convention does not deal with this problem. Article 6(c) provides that the obligation of a court of a Contracting State other than that of the chosen court to suspend or dismiss proceedings covered by an exclusive choice-of-court agreement does not apply  if giving effect to the agreement ‘would lead to a manifest injustice or would be manifestly contrary to the public policy of the State of the court seised.’ While Article 9(e) provides that recognition and enforcement of  a judgment given by a court of a Contracting State designated in an exclusive choice-of-court agreement may be refused if it would be ‘manifestly incompatible with the public policy of the requested State, including situations where the specific proceedings leading to the judgment were incompatible with fundamental principles of procedural fairness of that State.’

Born tries to argue that the grounds for refusing to recognize a judgment under the Hague Convention are insufficient compared with those applicable to arbitration awards under the New York Convention. Little would be gained by a detailed analysis of the two sets of provisions. However, it can be said that the grounds in the Hague Convention are wide ranging—Article 9 has seven paragraphs, each setting out a different ground—and they provide ample opportunities for any court willing to use them to refuse recognition. The same courts will decide on recognition of judgments under the Hague Convention as on the recognition of arbitration awards under the New York Convention. There is no reason to believe that they will be less willing to refuse recognition in the former case than in the latter. In any event, if parties think that their rights will be better protected under an arbitration agreement than under a choice-of-court agreement, there is nothing to stop them from opting for the former. To deprive them of that choice by denouncing the Hague Convention would not enhance party autonomy: it would seriously limit it.

It should finally be said that the provisions on recognition and enforcement in the Hague Convention are very similar to those of the Brussels Regulation and the common law. The Brussels Regulation, rather than the New York Convention, was in fact the model for the Hague Convention. The most important difference between the two is that the grounds for non-recognition are considerably more extensive under the Hague Convention than under the Brussels Regulation. Both the Brussels Regulation and the common law seem to have operated satisfactorily for many years now.

Au cœur d’une controverse sur le (dys)fonctionnement du guichet unique, la Cour de justice de l’Union européenne réaffirme la répartition des compétences entre les autorités chef de file et concernées prévue par le RGPD. L’obligation de coopération loyale appliquée à l’exercice de leurs pouvoirs doit cependant éviter qu’une interprétation trop littérale du texte ne permette d’en trahir l’esprit.

en lire plus

The ERC Building EU Civil Justice team in Rotterdam is running a series of seminars, covering a variety of topics in the field of European civil justice and international litigation.

On Thursday 1 July, 16-18 hrs CET, the webinar is dedicated to the topic Representing Future Generations: Private Law aspects of Climate Change Litigation. Speakers are Chantal Mak, Geert Van Calster and Sanne Biesmans, and the panel is moderated by Jos Hoevenaars. They will address the relationship between climate litigation, fundamental rights and the role of European judges; private international law aspects of climate litigation and strategic aspects; and liability aspects of climate litigation and implications of the recent Dutch Shell judgment (see our earlier blogpost).

Participation is free of charge. You can register here at Eventbrite.

The two remaining sessions of the series are dedicated to:

• The Arbitralization of Courts – Friday, 2 July (09:30-11:30 CET), with Georgia Antonopoulou and Masood Ahmed as speakers and moderated by Xandra Kramer (register)

• European Civil Justice in Transition: Past, Present & Future – Thursday 15 July  (15.30-17.30 CET) with Alan Uzelac, Burkhard Hess, John Sorabji and Eva Storskrubb, moderated by Alexandre Biard and Xandra Kramer (register)