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One does not often see Nigeria sue Shell. Federal Republic of Nigeria v Royal Dutch Shell Plc & Anor [2020] EWHC 1315 (Comm) engages Article 29 Brussels Ia’s lis alibi pendens rule in a period in which (see other posts on the blog) the High Court intensely entertained that section of Brussels Ia. Royal Dutch Shell Plc (RDS) is the anchor defendant for the other EU-domiciled defendants. Quite a few of the defendants are not domiciled in the EU.

The case concerns Nigerian allegations that monies paid by it under an earlier settlement following alleged expropriation, which had led to bilateral investment treaty arbitration under ICSID rules, had been channeled to pay bribes. Nigeria is pursuing the case in the criminal courts in Italy, too.

Nigeria therefore are already pursuing claims in Italy to obtain financial relief against 4 of the defendants including the anchor defendant. Defendants contend that those claims are the same claims as the English ones and that the court should decline jurisdiction in respect of those claims pursuant to A29 BIa. Defendants then further contend that, if the court so declines jurisdiction over the claims against RDS and Eni SpA, the entire proceedings should be dismissed. This is because RDS is the ‘anchor defendant’ under A8(1) BIa in the case of three of the EU-domiciled defendants and under English CPR rules against the other defendants. In the alternative to the application under Article 29, Defendants seek a stay of the proceedings under A30 BIa (related cases) or, in the further alternative as a matter of case management, pending a final determination, including all appeals, of the claim that the FRN has brought in Italy.

Butcher J refers at 41 to the UKSC in The Alexandros, and to Rix J in Glencore International AG v Shell International Trading and Shipping Co Ltd, at 110: ‘broadly speaking, the triple requirement of same parties, same cause and same objet entails that it is only in relatively straightforward situations that art [29] bites, and, it may be said, is intended to bite. After all, art [30] is available, with its more flexible discretionary power to stay, in the case of ‘related proceedings’ which need not involve the triple requirement of art [29]. There is no need, therefore, as it seems to me, to strain to fit a case into art [29].’

Same parties. Per CJEU The Tatry A29 applies to the extent to which the parties before the courts second seised are parties to the action previously commenced. Butcher J correctly holds that the fact that there may be other parties to the second action does not prevent this. Nigeria nevertheless argue that the involvement of the Italian Public Prosecutor in the Italian case, and not in the English case, and its crucial role in the Italian proceedings, means that the proceedings nevertheless are not between the ‘same parties’. Defendants call upon CJEU C-523/14 Aertssen to counter this: there BE and NL proceedings were considered to be caught by A29 even though the BE proceedings concerned criminal proceedings and the Dutch did not.

At 47 Butcher J holds that the prosecutor is not a ‘party’ in the A29 sense and that even it were, it is nevertheless clear from The Tatry that there does not have to be complete identity of the parties to the two proceedings for Article 29 to be applicable. (Ditto Leech J in Awendale v Pixis).

Same cause of action. Nigeria accept that there is no material difference in the facts at issue in the two proceedings, however contends that the legal basis of its claim in England is different.

Butcher J refers to Lord Clarke in The Alexandros, that in order to consider same cause of action, one must look ‘at the basic facts (whether in dispute or not) and the basic claimed rights and obligations of the parties to see if there is coincidence between them in the actions in different countries, making due allowance for the specific form that proceedings may take in one national court with different classifications of rights and obligations from those in a different national court’. Doing that, at 55 he holds that these basic claimed rights in the IT and EN proceedings, which he characterises as being the right not to be adversely affected by conduct of RDS which involves or facilitates the bribery and corruption of the FRN’s ministers and agents, and the right to redress if there is such bribery and corruption’, are the same.

That seems to me an approach which is overly reliant on the similarity of underlying facts. (At 70, obiter, Butcher J splits the claims and suggests he would have held on a narrower similarity of cause of action for some claims and not the others, had he held otherwise on ‘same cause of action’; and at 80 that he would have ordered a stay under Article 30 or on case management grounds on the remainder of the action).

Same object. Nigeria contend that its present proceedings do not have the same objet as the civil claim in the Italian proceedings. It contends that the only claim made in the Italian proceedings is for monetary damages, while in the English action claims are also made of a declaration of entitlement to rescind the April 2011 Agreements, other declaratory relief, an account of profits and tracing remedies.

Butcher J disagrees. Per Lord Clarke in The Alexandros, he holds that to have the same object, the proceedings must have the ‘same end in view’, per CJEU Aertssen at 45 interpreted ‘broadly’. At 61; ‘that ‘end in view’ is to obtain redress for RDS’s alleged responsibility for bribery and corruption…. Further, it is apparent that a key part of the redress claimed in the English proceedings is monetary compensation, which is the (only) relief claimed in the Italian proceedings. On that basis I consider that the two sets of proceedings do have the same objet.’

That the English action also seeks to rescind the original 2011 agreements is immaterial, he finds, for RDS were not even part to those proceedings. Moreover, that aim included in the English action serves to support the argument that if the two sets of proceedings go ahead, (at 64) ‘there would be the possibility of the type of inconsistent decisions which Article 29 is aimed at avoiding’. ‘If the English proceedings were regarded as involving a significantly different claim, namely one relating to rescission, and could go ahead, that would give rise to the possibility of a judgment in one awarding damages on the basis of the validity of the April 2011 Agreements and the other finding that those Agreements were capable of rescission. That would appear to me to be a situation of where there is effectively a ‘mirror image’ of the case in one jurisdiction in the other,..’

At 66 ff Butcher J adopts the to my mind correct view on the application of A29 to proceedings with more than one ‘objet’: one does not look at all claims holistically, one has to adopt a claim by claim approach, in line with CJEU The Tatry. At 68: ‘Difficulties which might otherwise arise from the fragmentation of proceedings can usually be addressed by reference to Article 30..’

At 71 he then concludes that the stay must be granted, and that he has no discretion not to do so once he finds that the conditions of A29 are fulfilled. He also holds that with the case against the anchor defendant stayed, A8(1) falls away. He appreciates at 72 that this may expose Nigeria to limitation issues in the Italian proceedings, however those are of their own making for they were under no obligation to sue in Italy.

 

At 74 ff Article 30 is considered obiter, and Butcher J says he would have stayed under A29. At 77 he notes the continuing debate on the difference at the Court of Appeal between Privatbank and Euroeco. At 75(2) he summarises the distinction rather helpfully as

‘In the Kolomoisky case, it was decided that the word ‘expedient’ in the phrase ‘it is expedient to hear and determine them together’ which appears in Article 28.3 of the Lugano Convention (as it does in Article 30.3 of the Regulation), is more akin to ‘desirable’ that the actions ‘should’ be heard together, than to ‘practicable or possible’ that the actions ‘can’ be heard together: paras. [182]-[192]. In the Euroeco Fuels case, having referred to the Kolomoisky case, the Court of Appeal nevertheless appears to have proceeded on the basis that the court had no discretion to order a stay under Article 30 when there was no real possibility of the two claims being heard together in the same foreign court’

At 75(5) he then without much ado posits that

‘In any event, even if not under Article 30, there should be a stay under the Court’s case management powers, and in particular pursuant to s. 49(3) Senior Courts Act 1981 and CPR 3.1(2)(f). Such a stay would not, in my judgment, be inconsistent with the Regulation, and is required to further the Overriding Objective in the sense of saving expense, ensuring that cases are dealt with expeditiously and fairly, and allotting to any particular case an appropriate share of the Court’s resources. Given that the Italian proceedings are well advanced, and that after the determination of the Italian proceedings English proceedings may well either be unnecessary or curtailed in scope, there appear good grounds to consider that a stay of the English proceedings will result in savings in costs and time, including judicial time.’

Whether such case-management stay under CPR 3.1(2)(f) is at all compatible with the Regulation in claims involving EU domicileds, outside the context of Articles 29-34 is of course contested and, following Owusu, in my view improbable.

Most important lis alibi pendens considerations at the High Court these days.

Geert.

(Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 2.2.14.5.

 

More lis alibi pendens.
Article 29/30 Brussels IA. All English claims stayed under Article 29, in favour of pending Italian proceedings. https://t.co/8EaGXfsLWP

— Geert Van Calster (@GAVClaw) May 22, 2020

CK Telecoms UK Investments / Commission
Concurrence
Le Tribunal de l’Union européenne annule la décision de la Commission refusant le projet de rachat de Telefónica UK par Hutchison 3G UK dans le secteur du marché de la téléphonie mobile

Conseil / K. Chrysostomides & Co. e.a.
Droit institutionnel
Selon l’avocat général Pitruzzella, les juridictions de l’Union ne sont pas compétentes pour connaître des recours en indemnité formés contre l’Eurogroupe

Hongrie / Parlement et Conseil
L’avocat général Campos Sánchez-Bordona invite la Cour à rejeter les recours en annulation introduits par la Hongrie et par la Pologne contre la directive renforçant les droits des travailleurs détachés

The author of this post is Aygun Mammadzada, PhD Researcher at the Institute of Maritime Law of the University of Southampton.

Status quo

Withdrawal of the United Kingdom from the European Union leaves many uncertainties and puzzling effects on civil justice and cross-border judicial cooperation. Upon its departure on 31 January 2020 the United Kingdom ceased to be a member of the Union while remaining subject to the EU law and rulings of the European Court of Justice throughout the transition period under Article 67 of the Withdrawal Agreement. In less than five weeks – by 1 July 2020, the United Kingdom and European Union should decide whether to extend the transition period up to two years, as permitted by the Agreement. However, that has been ruled out by the United Kingdom, which could be altered by another legislation and it seems hardly a case.

Once the transition period ends, the Brussels I bis Regulation will no longer be applicable to jurisdiction, as well as choice of court agreements and the recognition of judgments between the United Kingdom and the Union.

Absent such an instrument, successful operation of the sphere will mostly depend on either Article 33-34 of the Recast Regulation which are not comprehensive enough or domestic rules which prevent uniformity and certainty due to inevitable varieties. This will significantly affect businesses and individuals. Data suggested that in 2018 the UK was the largest legal services market in Europe (valued at approximately £35 bn in 2018).

On the same line, 75% of over 800 claims which were issued at the Admiralty and Commercial Court involved at least one foreign party and in 53% of the case all parties were international. In 2019, 77% of over 600 such claims were international in nature whilst in half of the cases all parties were international. On the same note, despite the fact that the Member States are taking different measures, such as establishing special commercial courts to attract international commercial parties, there is still not any alternative to the London Commercial Court as a leading global centre for international dispute resolution, as discussed by Giesela Rühl. Nonetheless, without any harmonized legal framework applicable to jurisdiction and the recognition of judgments in cross-border civil and commercial cases, parties to international trade might refrain from linking their transactions to English jurisdiction or avoid English choice of court agreements.

Among other measures, the UK has expressed that enhanced judicial cooperation with the EU is part of its global outlook and it will continue adherence to the existing international treaties, conventions and standards in the field. In this ambit, on 8 April 2020, the UK deposited its request for acceding the Lugano Convention of 2007 (see here a comment by Matthias Lehman).

The Convention is still applicable in regard to the UK during the transition period as part of the EU law. Unlike the Hague Convention on Choice of Court Agreements of 2005 which is also among the UK’s Brexit-related channels, the Lugano Convention is not an open treaty. According to Article 72 of the Convention, the UK can become a member only upon the unanimous consent of all of the contracting parties (EU and EFTA states). This brings many uncertainties about the foreseeable status of the UK’s accession request.

The Lugano Convention is mainly mirroring the Brussels regime and therefore, it might enshrine perspectives of cross-border judicial cooperation in civil and commercial matters between the UK and Union. The government perceives the importance of the Convention for the provision of judicial certainty and prevention of multiple court proceedings. Nevertheless, the Convention does not contain new lis pendens provisions that were brought by the Brussels I bis Regulation, hence lacks the same degree of respect to party autonomy and choice of court agreements as ensured by the revised Regulation.

Mastermelt Ltd v Siegfried Evionnaz SA: The relevance of the case

In the recent case of Mastermelt Ltd v Siegfried Evionnaz SA, the High Court decided that the Brussels I bis Regulation does not affect the interpretation of the Lugano Convention. Mr Justice Walksman concluded that unlike the new lis pendens provisions as contained in Article 31(2) of the Brussels I bis Regulation, the Lugano Convention preserves the “court first seized” rule and therefore, regardless of an exclusive jurisdiction agreement the court first seized shall continue the proceedings and rule on its jurisdiction.

This decision is very timely since it triggers nonequilibrium views on the foreseeable membership of the United Kingdom to the Convention. It confirms continuation of the Gasser scenarios and torpedo actions under the Lugano Convention, furthermore, gives rise to the risk of parallel proceedings and irreconcilable judgments.

Factual background

The dispute arose between Mastermelt Limited (Claimant), an English company, and Siegfried Evionnaz SA (Defendant), a Swiss company, over the quality of Mastermelt’s performance of the reclamation services in 2018.

After Siegfried informed Mastermelt about their intention to commence proceedings in Switzerland on the basis of the exclusive jurisdiction clause in favour the Swiss courts contained in Siegfried’s standard terms and conditions of contract (“STC”), the claimant initiated the English proceedings on 5 February 2019 seeking negative declaratory relief against the defendant. Later, on 23 July 2019, Siegfried instituted the Swiss proceedings in the Zurich Commercial Court against Mastermelt and subsequently, on 24 May 2019, applied the English High Court, for a declaration that it had no jurisdiction.

Mastermelt brought another set of Swiss proceedings for a stay in early 2020, which was rejected by the Zurich Commercial Court on 13 February 2020 and advanced to the Federal Supreme Court. As of the date of the hearing in the English High Court, the Supreme Court had not given any ruling on that.

Issues

The English court considered whether the harmonised version of Article 27 of the Lugano Convention applies and if so, it would have had stayed the proceedings until the Swiss court had decided the question of jurisdiction. Subsequently, the court also decided the question of its own jurisdiction and validity of the exclusive jurisdiction agreement.

Analysis

While considering the proper interpretation of Article 27 of the Lugano Convention the court as a primary point conferred that it was not bound by the Swiss court’s decision on the same issue which was relied upon by Siegfried.

Referring to Protocol No 2 to the Lugano Convention, Mr Justice Walksman paid ‘due account’ to the Swiss judgment, however, refused its binding effect. Drawing on the ‘too remote’ nature of the former to be characterized as res judicata, the judge opposed to the defendant’s contention to apply the CJEU’s decision in Gothaer v Samskip. On this line, the High Court resisted the harmonised interpretation of Article 27 of the Lugano Convention as Article 31(2) of the Brussels I bis Regulation and as the first seized court denied staying the proceedings.

Contrary to the defendant’s reasoning, the court determined that although the CJEU’s decision in Gasser was reversed by the new Article 31(2), it was not obsolete and still had limited application outside the Regulation. The court reiterated its conclusion by emphasizing the significance of academic discussion. As stated by Professor Briggs, “the innovation created by 31.2 … does not apply to proceedings within the scope of Lugano II which remains regulated by the original rule of strict temporal priority …”. Professor Joseph also took a similar approach by expressing that “… there is no equivalent provision in the … Convention to Article 31.2 … Therefore, as regards the enforcement of jurisdiction agreements, the court first seized will examine the enforcement of such an agreement, irrespective of whether it is the chosen court…”

These brought continuation of the proceedings and examination of the second issue – jurisdiction of the court first seized. Pursuant to the Convention, if there was an exclusive jurisdiction agreement in the ambit of Article 23 of the Lugano Convention the English court had to dismiss the proceedings in favour of the designated court, otherwise Siegfried’s claim had to be litigated in England as the place of performance according to Article 5.1(a).

Referring to a significant body of the European and English case law (including the CJEU’s rulings in Salotti v Ruwa, Berghoefer v ASA SA, Iveco v Van Hool, Benincasa v Dentalkit and the judgment o the Court Appeal in Deutsche Bank v Asia Pacific), Mr Justice Walksman regarded the existence of an agreement as an independent concept. The court highlighted the reasoning in Powell Duffryn and Aeroflot and stated that a valid agreement should be “clearly and precisely” demonstrated either in a form of “writing” or ‘evidenced in writing’. Moreover, it was asserted that the written form could be evidenced not only in a single document but it could consist of multiple documents such as the seller’s quotation and buyer’s purchase order.

While considering what constituted “writing”, Mr Justice Walksman articulated the tendency of the courts to adopt a flexible approach as in the CJEU’s judgment in Berghoefer and his own earlier decision in R + V Versicherung v Robertson which in turn referred to the decision of the Court of Appeal in 7E Communications v Vertex.

At the same time, he emphasized the importance of the valid agreement in the sense of consent in line with the opinion of the Advocate General Bot in Profit Investment. On this basis it was submitted that an oral agreement of the party to the other party’s STC which included an exclusive jurisdiction agreement would not be sufficient to meet the durability requirement without later written evidence of such putative consent. This view was also supported by academic commentaries and English authorities such as ME Tankers v Abu Dhabi Container Lines [2002] 2 Lloyds 643, Claxton Engineering v TXM [2007] 1WR 2175, Chester Hall v Service Centres [2014] EWHC 2529.

The court admitted that there was a written agreement and manifested consent between the parties on the basis of the purchase orders and STC, which were strongly compelled by prior dealings, later statements and invoices expressly found in the email exchange. It was also maintained that there was “much the better of the argument” satisfying the good arguable case standard for the applicability of Article 23.1(a) and any opposing presumption would be “commercially absurd”.

Upon these observations, Mr Justice Walksman held that the English proceedings had to be dismissed in favour of the exclusively designated Swiss court.

Comments

This decision is of importance for several reasons. It reaffirms the emphasis that has been traditionally placed on party autonomy and authentic consent in English law and practice.  Likewise, it reasserts the exhaustive interpretation of the form requirement of the exclusive jurisdiction agreements within the meaning of the Lugano Convention which might be a useful reference point for the courts post-Brexit provided the UK would have become a member to the framework.

On the other hand, the judgment is particularly sensible at the time of the United Kingdom’s Brexit planning and strategy to continue the Lugano membership. It reveals serious differences between the Brussels I bis Regulation and Convention notwithstanding the equivalent rules existing in both.

Contrary to the remarks favoring the Convention as an “oven ready” option for the United Kingdom, the lack of a mechanism preventing parallel proceedings and irreconcilable judgments frustrates legal certainty, provokes waste of time and expenses, thus, threatens the vital principle of private international law – party autonomy.

Articles 5 and 6 of the Hague Convention on Choice of Court Agreements which enforce parties’ choice and oblige any non-chosen court to stay or dismiss the proceedings, might be helpful in this regard, however only to some limited extent due to its limited scope and application only to the Contracting States, whereas the EFTA states have not ratified the treaty.

In this regard, return of anti-suit injunctions as the measures frequently issued by the English courts in support of exclusive jurisdiction agreements provokes special attention. Indeed, the lack of mutual trust within the Lugano framework might result in the reversal of the West Tankers ruling, however the matter is still uncertain since there has not been any relevant authority for such an implication. All the mentioned points raise considerable doubts over the satisfactory replacement of the Brussels I bis Regulation by the Convention for the post-Brexit UK.

Moreover, unusual obligation to “pay due account” to the case law of other contracting states, as well as the CJEU provided by Protocol No 2 to the Convention broadens skepticism. As indicated by Professor Hess, such language “… does not mean more than looking at the pertinent case-law and giving reasons as to why a deviation is considered to be necessary”. Furthermore, the absence of any sanction upon deviations brings “inherent weakness” of the Protocol and rests its application perspectives solely on “… goodwill and of courtesy of the courts …”.

All these lead to non-uniformity and harbours suspicion against the Convention as a successful post-Brexit means of the UK. These concerns leave further room for discussion about seeking robust solutions and especially reaching a bilateral agreement in this context as advised by Professor Hess. However crucial these items are, they are the subject matter of another study.

All in all, provided the United Kingdom becomes a Contracting State to the Lugano Convention, the Mastermelt ruling alerts the parties to be more careful and get appropriate legal advice while contracting and designating a competent forum for the resolution of their disputes.

Par un arrêt du 7 mai 2020, la Cour de justice se prononce sur l’application du Règlement Bruxelles I aux sociétés de classification et de certification des navires.

en lire plus

Le juge français qui a pour mission d’exécuter une mesure de gel décidée par une juridiction étrangère ne dispose pas des pouvoirs à lui dévolus par les dispositions propres aux saisies pénales spéciales lorsqu’il ordonne lui-même la saisie, et ne peut autoriser des créanciers à poursuivre des procédures civiles d’exécution.

en lire plus

Awendale Resources v Pyxis Capital Management [2020] EWHC 1286 (Ch) applies Article 29 Brussels Ia’s lis alibi pendens rule.

Awendale is a company incorporated under the law of the Seychelles and Pyxis is a company incorporated under the law of Cyprus. On 7 November 2017 Infinitum Ventures Ltd, a company incorporated in the British Virgin Islands, issued proceedings in Cyprus against Mr Andreas Andreou, Awendale and Pyxis. Awendale entered an appearance and submitted to the jurisdiction of the Cypriot court. On 24 June 2019 Awendale then issued the Claim Form in the current proceedings and on 20 August 2019 Pyxis filed an acknowledgment of service stating that it intended to defend the claim. Pyxis now applies to stay the English Claim on the basis that it and the Cypriot Claim involve the same cause of action between the same parties and that Article 29 is engaged. 

At 31 Leech J lists the six issues for determination: i) The same cause of action: Are the English Claim and the Cypriot Derivative Claim “proceedings involving the same cause of action”? ii) The same parties: If so, are the English Claim and the Cypriot Derivative Claim “between the same parties”? iii) Seisin: If so, was the Cypriot court first seised? iv) The scope of Article 29: If so, is Article 29 nevertheless inapplicable because of the jurisdiction clause in relevant Loan Agreements? v) The time of application: Is the operation of Article 29 excluded because the stay application was not filed earlier and in accordance with CPR Part 11. vi) Reference to the CJEU: If Pyxis succeeds on the first four issues but fails on the fifth issue, should the Court consider referring a question to the CJEU?

Leech J first, at 32 ff gets Article 31(2)’s priority rule for choice of court (which I discussed the other day in my review of Generali Italia v Pelagic) out off the way: that is because A31(2) is without prejudice to A26 and as noted, Awendale had submitted to the Cypriot courts.

On the determination of the ‘same cause of action‘, he then refers to The Alexandros, and of course to CJEU Gubisch and The Tatry. A discussion ensues as to whether the Cypriot and English proceedings concern two sides of the same coin, which at 42 Leech J decides they do, with at 43 supporting argument from professor Briggs’ litmus test: actions have the same cause if a decision in one set of proceedings would have been a conclusive answer in the other.

The same parties condition may be a bit more exacting (‘same cause of action’ implies some flexibility), however there need not be exact identity of parties. Here, the issue to hold was whether despite seperate legal personalities, the different interests of Infinitum and Pyxis are identical and indissociable which Leech J held they are to a good arguable case standard (and obiter, at 56, to a substantive standard, too). This condition therefore requires some wire-cutting through corporate interests and true beneficiaries of claims.

At 67 ff then follows an extensive discussion of the impact of the English CPR timing rules on the application proprio motu or not of A29. Reference here was made to the Jenard Report, and a contrario to provisions in BIa (including A33). Leech J holds at 78 that a party who fails to apply to stay proceedings under Article 29 within the time limit in CPR Part 11(4) is deemed to have submitted to the jurisdiction.

Eventually Leech J decides to use his discretion to allow Pyxis to apply for a time extension so as they can apply out of time for a stay of proceedings under A29. Unlike what I first tweeted, the stay has not exactly been granted yet, therefore. But it is likely to be. Pyxis made an undertaking  to consent to any stay being lifted if the Cypriot Claim is struck out and Awendale was permitted to apply to set aside the stay if Infinitum fails to take reasonable steps to prosecute or proceed with the Cypriot Claim.

More lis alibi pendens reviews are on their way.

Geert.

(Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 2.2.14.5

Lis alibi pendens, Article 29 Brussels Ia everywhere!
Stay granted on the basis of Cypriot proceedings. https://t.co/uCD2z4F4AK

— Geert Van Calster (@GAVClaw) May 23, 2020

This book provides an unprecedented analysis on the place of performance. The central theme is that the place of performance is of considerable significance as a connecting factor in international commercial contracts. This book challenges and questions the approach of the European legislator for not explicitly giving special significance to the place of performance in determining the applicable law in the absence of choice for commercial contracts. It also contains, inter alia, an analogy to matters of foreign country mandatory rules, and the coherence between jurisdiction and choice of law. It concludes by proposing a revised Article 4 of Rome I Regulation, which could be used as an international solution by legislators, judges, arbitrators and other stakeholders who wish to reform their choice of law rules.

The table of contents and further information on the book can be found on the publisher’s website: https://www.bloomsburyprofessional.com/uk/place-of-performance-9781509936205/.

The second issue of the Journal du droit international for 2020 is out. It contains one article concerned with private international law and several casenotes.

The article is authored by Djoleen Moya and discusses whether EU choice of law rules allocate normative powers or serve private interests (Conflits intra-européens de lois et conflits de souverainetés). The English abstract reads:

For the past 70 years or so, choice-of-law rules have been considered as rules of private law, dealing primarily with the interests of private persons involved in international situations. This conception, however, is now disputed. According to a growing number of scholars, the solutions deriving from EU law on matters of conflicts of laws would tend to allocate normative powers between Member States and circumscribe their respective legislative sovereignties. In this respect, the Europeanisation of private international law would have reinvented the problem of choice-of-law in terms of conflicts between States, rather than between private persons. On reflection, though, the necessary conditions to consider choice-of-law rules as allocating legislative powers are not met. In particular, the legal regime of choice-of-law rules in EU law looks pretty incompatible with any representation of conflicts of laws as conflicts of sovereignties.

A full table of content of the issue can be accessed here.

Written by John Coyle, the Reef C. Ivey II Distinguished Professor of Law, Associate Professor of Law at the University of North Carolina School of Law, and Katherine C. Richardson, Law Clerk, U.S. Court of Appeals for the Sixth Circuit, 2020-21 Term

 

European legal scholars have long bemoaned the difficulty in identifying “black letter rules” when it comes to U.S. private international law.  One area where this law is famously opaque relates to state enforcement of “outbound” forum selection clauses.  Outbound clauses—which are known as derogation clauses in the rest of the world—state that a dispute must be heard by a court other than the one where the suit was brought.  State courts in the United States generally refused to enforce these provisions prior to 1972.  After the U.S. Supreme Court rendered its seminal decision in The Bremen, however, attitudes began to change.  Today, it is generally acknowledged that state courts are far more likely to enforce outbound forum selection clauses than they were fifty years ago.  To date, however, nobody has attempted to determine empirically the extent to which state court practice has shifted since the early 1970s.  Our new paper seeks to accomplish this goal.

 

State Practice by the Numbers

 

We reviewed every published and unpublished state court decision addressing the enforceability of outbound forum selection clauses decided after 1972.  Our analysis of these decisions revealed the following:

 

1. State courts in the United States enforce outbound forum selection clauses approximately 77% of the time when one party challenges the enforceability of the clause.

 

2. The enforcement rate is remarkably consistent across large states in the United States. In California, the enforcement rate was 80%. In Texas, it was 79%. In New York, it was 79%. In Florida, it was 78%.  In Ohio, it was 78%. In Illinois, it was 74%.

 

We are currently gathering data about federal court practice.  Our preliminary results suggest that the enforcement rate is at least as high, if not higher, when the enforceability of an outbound clause is challenged in federal court.

 

In addition to looking at enforcement rates, we also examined the rationales proffered by state courts in cases when they declined to enforce outbound clauses.  Knowing how often state courts enforce these clauses, and more importantly, why they do not enforce them, offers valuable insights for contract drafters, judges, and scholars. We found that when a state court refuses to enforce an outbound clause, it is almost always because the clause is contrary to public policy (8% of all cases) or unreasonable (12% of all cases).  What does it mean, however, for a clause to be contrary to public policy?  And what are the situations when a clause will be deemed unreasonable?  The cases in our data set shed light on both of these questions.

 

Public Policy

 

With respect to public policy, state courts most frequently refuse to enforce an outbound clause because there is a state statute directing them to ignore it.  Forty-nine states have enacted states declaring outbound clauses unenforceable in consumer leases.  Twenty-eight states have enacted statutes announcing a similar rule with respect to clauses in construction contracts.  All told, we identified more than 175 state statutes directing courts to refuse to enforce outbound clauses across a wide range of agreement types.  Our paper includes a detailed chart that shows which statutes are in force in which states.

 

U.S. courts also sometimes refuse to enforce a clause on public policy grounds by citing an “anti-waiver” statute. Anti-waiver statutes provide that certain rights conferred by state law are non-waivable.  When a state court is presented with a contract that contains an outbound forum selection clause, and when the forum court concludes that the courts in the chosen jurisdiction are unlikely to give effect to non-waivable rights conferred by the forum state, the forum court may refuse to enforce the forum selection clause on public policy grounds.  On this account, the enforcement of the clause is contrary to the public policy of the forum not because the legislature has specifically directed the courts to ignore it.  Instead, these clauses go unenforced because their enforcement would result in the waiver of non-waivable rights.

 

Reasonableness

 

The most common basis cited by state courts in refusing to enforce an outbound forum selection clause is a lack of reasonableness. The most common reason why state courts strike down clauses on reasonableness grounds is that the clause would result in duplicative litigation. Courts are reluctant to enforce the clause—and send litigation elsewhere—if it means the plaintiff would have to litigate the same set of facts in two different fora.

 

Second, many state courts refuse to uphold forum selection clauses if it means the plaintiff cannot secure effective relief in the chosen forum. Typical examples of this type of concern include procedural or jurisdictional problems in the chosen forum, claims that are so small as to make it uneconomical for a plaintiff to pay the costs to travel to pursue them, and fora that constitute a “serious inconvenience” to the plaintiff. We should note here that most state courts do not refuse to enforce clauses because it would be expensive for the plaintiff to maintain the lawsuit in another state. However, when the plaintiff presents an extremely small claim or an extreme expense to litigate, some courts will take pity the plaintiff and refuse to enforce the outbound clause.

 

In several other categories of cases, state courts refuse to uphold outbound clauses when (1) the plaintiff has no notice of the clause, or (2) the chosen forum bears no reasonable relationship to the parties. The notice issue arises most frequently in cases of form passage tickets, mostly for cruise lines, and in online “clickwrap” agreements. Some courts have been reluctant to hold plaintiffs responsible for forum selection clauses in these two scenarios when the defendant did not reasonably communicate the clause to the plaintiff. In addition, some courts refuse to uphold outbound clauses against unsophisticated parties where the clause is buried in fine print amid other legal jargon. We note, however, that simply because a forum selection clause is contained in a contract of adhesion does not make it unreasonable. This scenario was obviated by the Supreme Court’s ruling in Carnival Cruise Lines, Inc. v. Shute, where the Court upheld a forum selection clause on the back of a preprinted cruise ticket. Finally, the typical contract defenses, such as fraud, unconscionability, and problems with formation, all apply to forum selection clauses as well, with some variation among the states.

 

This is  short post for archival purposes: I have been looking in vain in the past few weeks for a copy of prof Nuyts’ 2007 study for the European Commission on ‘residual jurisdiction’ (Review of the Member States’ Rules concerning the “Residual Jurisdiction” of their courts in Civil and Commercial Matters pursuant to the Brussels I and II Regulations). It was no longer on the EC’s studies page and the url which many of us have been using in the past no longer works. So here it is. Courtesy of the European Commission and of prof Nuyts.

Enjoy. It has lost nothing of its topical nature.

Geert.

 

Non lieu à renvoi

On 2 July 2019, the Hague Conference on Private International Law (HCCH) adopted the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (2019 HCCH Judgments Convention). The instrument has already been described as a true game changer and the apex stone in international commercial litigation.

To celebrate the adoption of the 2019 HCCH Judgments Convention, the Netherlands International Law Review (NILR) produced a special edition entirely dedicated to the instrument.

Volume 67(1) of the NILR, which is now available in its final, paginated version, features contributions from authors closely involved in the development of the instruments. The articles provide deep insights into the making, and intended operation, of the instrument. They are a valuable resource for law makers, practitioners, members of the judiciary and academics alike.

The NILR’s Volume comprises the following contributions (in order of print, open access contributions are indicated; the summaries are, with some minor modifications, those published by the NILR).

Thomas John ACIArb, “Foreword” (open access)

Ronald A. Brand, “Jurisdiction and Judgments Recognition at the Hague Conference: Choices Made, Treaties Completed, and the Path Ahead”

Ron Brand considers the context in which a Hague Convention on Jurisdiction and the Recognition and Enforcement of Foreign Judgments was first proposed in 1992. It then traces the history of the Hague negotiations, both from within those negotiations and in regard to important developments outside the negotiations, through the completion of the 2005 Convention on Choice of Court Agreements and the 2019 HCCH Judgments Convention. The article ends with comments on whether it is advisable to now resume discussion of a separate convention on direct jurisdiction.

Francisco Garcimartín, “The Judgments Convention: Some Open Questions”

Francisco Garcimartín explores some of the open issues that were discussed in the negotiation process but remained open in the final text, such as, in particular, the application of the 2019 HCCH Judgments Convention to pecuniary penalties (2) and negative obligations (4), as well as the definition of the res judicata effect (3).

Cara North, “The Exclusion of Privacy Matters from the Judgments Convention”

Cara North considers on issue of particular focus in the later phases of the negotiations of the Convention, namely, what, if any, judgments ruling on privacy law matters should be permitted to circulate under the 2019 HCCH Judgments Convention. Having acknowledged that privacy is an evolving, broad and ill-defined area of the law and that there are obvious differences in the development and operation of privacy laws and policies in legal systems globally, the Members of the Diplomatic Session on the Judgments Convention determined to exclude privacy matters from the scope of the Convention under Article 2(1)(l). The purpose of this short article is to describe how and why the Diplomatic Session decided to exclude privacy matters from the 2019 HCCH Judgments Convention and to offer some observations on the intended scope of that exclusion.

Geneviève Saumier, “Submission as a Jurisdictional Basis and the HCCH 2019 Judgments Convention”

The 2019 HCCH Judgments Convention establishes a list of jurisdictional filters, at least one of which must be satisfied for the judgment to circulate. One of those is the implied consent or submission of the defendant to the jurisdiction of the court of origin. While submission is a common jurisdictional basis in international litigation, its definition and treatment vary significantly across states, whether to establish the jurisdiction of the court of origin or as a jurisdictional filter at the enforcement stage in the requested court. This diversity is most evident with respect to the mechanics and consequences of objecting to jurisdiction to avoid submission. The 2019 HCCH Judgments Convention adopts a variation on an existing approach, arguably the least complex one, in pursuit of its goal to provide predictability for parties involved in cross-border litigation. This contribution canvasses the various approaches to submission in national law with a view to highlighting the points of convergence and divergence and revealing significant complexities associated with some approaches. It then examines how the text in the 2019 HCCH Judgments Convention came to be adopted and whether it is likely to achieve its purpose.

Nadia de Araujo, Marcelo De Nardi, “Consumer Protection Under the HCCH 2019 Judgments Convention”

The 2019 HCCH Judgments Convention aims at mitigating uncertainties and risks associated with international trade and other civil relationships by setting forth a simple and safe system according to which foreign judgments can easily circulate from country to country. The purpose of this article is to record the historical moment of the negotiations that took place under the auspices of the HCCH, as well as to pinpoint how consumer cases will be dealt with by the Convention under Article 5(2).

Niklaus Meier, “Notification as a Ground for Refusal”

The 2019 HCCH Judgments Convention provides for several grounds for the refusal of recognition, including refusal based on insufficient notification. While this ground for refusal of the 2019 HCCH Judgments Convention seems quite similar to those applied in other conventions, the comparison shows that there are several differences between this instrument and other texts of reference, both with respect to the context of application as well as with respect to the details of the wording. The optional nature of the grounds for refusal under the 2019 HCCH Judgments Convention indicates that its primary focus is the free circulation of judgments, and not the protection of the defendant. The latter’s protection is left to the discretion of the state of recognition: a sign of trust amongst the negotiators of the 2019 HCCH Judgments Convention, but also a risk for the defendant. Practice will show whether the focus of the negotiators was justified.

Junhyok Jang, “The Public Policy Exception Under the New 2019 HCCH Judgments Convention”

The public policy exception is inherently a fluid device. Its content is basically left to each State. A shared public policy is an exception. Therefore, the obligation of uniform interpretation, as provided in Article 20 of the 2019 HCCH Judgments Convention, will have an inherent limit here. Moreover, the 2019 HCCH Judgments Convention leaves some important issues, including procedure, to national rules. Each requested State retains a discretion to invoke the Convention grounds of refusal in a concrete case, and on whether to make an ex officio inquiry or have the parties prove those refusal grounds. The 2019 HCCH Judgments Convention also provides for the concrete applications of the public policy exception, following the model of the 2005 Choice of Court Convention. Here, a purely grammatical reading may create some peripheral problems, especially with the specific defences of conflicting judgments and parallel proceedings. Solutions may be found in the method of purposive interpretation and some general principles, particularly the evasion of the law and the abuse of rights, before resorting to the public policy defence.

Marcos Dotta Salgueiro, “Article 14 of the Judgments Convention: The Essential Reaffirmation of the Non-discrimination Principle in a Globalized Twenty-First Century”

The 2019 HCCH Judgments Convention includes a non-discrimination disposition in Article 14, according to which there shall be no security, bond or deposit required from a party on the sole ground that such a party is a foreign national or is not domiciled or resident in the State in which enforcement is sought. It also deals with the enforceability of orders for payment of costs in situations where the precedent disposition applied, and lays down an ‘opt-out’ mechanism for those Contracting States that may not wish to apply that principle. This article frames the discussion of the non-discrimination principle in the wider context of previous private international law instruments as well as from the perspectives of access to justice, human rights and Sustainable Development Goals (SDGs), understanding that its inclusion in the 2019 HCCH Judgments Convention was an important, inescapable and necessary achievement.

Paul R. Beaumont, “Judgments Convention: Application to Governments” (open access)

The 2019 HCCH Judgments Convention makes the classic distinction between private law matters within its scope (civil or commercial matters) and public law matters outside its scope. It also follows the same position in relation to State immunity used in the Hague Choice of Court Convention 2005 (see Art. 2(5) in 2019 and 2(6) in 2005). The innovative parts of the 2019 HCCH Judgments Convention relate to the exclusions from scope in Article 2 relating to the armed forces, law enforcement activities and unilateral debt restructuring. Finally, in Article 19, the Convention creates a new declaration system permitting States to widen the exclusion from scope to some private law judgments concerning a State, or a State agency or a natural person acting for the State or a Government agency. This article gives guidance on the correct Treaty interpretation of all these matters taking full account of the work of the Hague Informal Working Group dealing with the application of the Convention to Governments and the other relevant supplementary means of interpretation referred to in Article 32 of the Vienna Convention on the Law of Treaties.

João Ribeiro-Bidaoui, “The International Obligation of the Uniform and Autonomous Interpretation of Private Law Conventions: Consequences for Domestic Courts and International Organisations”

This article addresses the issue of the uniform and autonomous interpretation of private law conventions, including of private international law conventions, from the perspective of their Contracting States, particularly their judiciaries, and of the international organizations. Firstly, the author analyses the use of standard uniform interpretation clauses, and the origin of such clauses, in the context of the Hague Conference on Private International Law. The following part the article addresses negative and positive obligations imposed on States and their judiciaries under international law regarding the uniform and autonomous interpretation of international treaties. It is argued that States are not only obliged to refrain from referring to concepts from national laws for the purpose of the interpretation of international law instruments, but also that they face certain positive obligations in the process of applying the conventions. Those include referring to foreign case law, international scholarship, and under certain circumstances, also to travaux préparatoires. Thirdly, the author discusses the role of international organizations—e.g. HCCH, UNCITRAL, UNIDROIT, in safeguarding and facilitating the uniform and autonomous interpretation of private law conventions. It does so by describing various related tools and approaches, with examples and comments on their practical use (e.g. advisory opinions, information sharing, access to supplementary material, judicial exchanges and legislative action).

The NILR’s Special Edition on the 2019 HCCH Judgments Convention concludes with a reproduction of the text of the 2019 HCCH Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, as adopted on 2 July 2019.