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As noted, I have come up for some air after a few hectic weeks – next case to report on is [2019] EWHC 879 (Comm) Ramona v Reliantco, held 12 April. (A similar case is pending with the CJEU against Reliantco as Case C-500/18).

Defendant (‘Reliantco’) is a company incorporated in Cyprus offering financial products and services through an online trading platform under the ‘UFX’ trade name. Claimant, Ms Ang, is an individual of substantial means who invested in Bitcoin futures, on a leveraged basis, through the UFX platform. She claims, essentially and primarily, that Reliantco wrongfully blocked and terminated her UFX account and should compensate her for the loss of her open Bitcoin positions, or at a minimum should refund her cash value invested. She also makes claims for relief in respect of what she says have been breaches of data protection obligations owed by Reliantco in connection with her UFX account.

The judgment does not concern the merits of Ms Ang’s claims but rather an application by Reliantco challenging jurisdiction. Reliantco contends that Ms Ang is bound by its standard terms and conditions, clause 27.1 of which provides that the courts of Cyprus are to have exclusive jurisdiction over “all disputes and controversies arising out of or in connection with” her customer agreement. Reliantco therefore relies on Article 25 Brussels Ia.

Ms Ang says that clause 27.1 is ineffective to require her to bring her claim in Cyprus, either because she is a consumer within Section 4 of Brussels (Recast) or because clause 27.1 was not incorporated into her UFX customer agreement with Reliantco in such a way as to satisfy the requirements of Article 25. Ms Ang says, in the alternative, that her data protection claims may be brought here notwithstanding Article 25 Brussels Ia even if Article 25 applies to her primary substantive claims.

All in all a nice set of jurisdictional issues and no surprise to have prof Jonathan Harris QC involved as counsel.

At all times material to her claim, Ms Ang was not employed or earning a living in any self-employed trade or profession (unless, which is contentious between the parties and considered below, her activity as a customer of Reliantco via the UFX platform is itself to be so classified). Ms Ang worked in money markets for two months as a trainee, observing US$/DM currency swaps. Other than that, she has no professional currency trading or money market experience (again, that is, unless her use of the UFX platform to invest in Bitcoin futures itself counts as such).

At 9, s little bit of Bitcoin drame enters the scene: Ms Ang’s husband, Craig Wright, is a computer scientist with cybersecurity and blockchain expertise who works as Chief Scientist for nChain Ltd, a blockchain technology company with a corporate vision “to transform how the world conducts all transactions – using the blockchain’s distributed, decentralised ledger that chronologically records transactions in an immutable way“. As a researcher, he publishes prolifically and has developed innovations for which patent protection has been sought. He is the same Craig Wright who has identified himself publicly as being ‘Satoshi Nakamoto’, the online pseudonym associated with the inventor (or a co-inventor) of Bitcoin. Baker J holds that he need not consider whether that claim is true, and on the evidence for this application I would not be in any position to do so.

 

Was Ms Ang a ‘consumer’? At 52 ff the arguments of Reliantco are summarised; at 55 ff those of Ms Ang.

CJEU precedent discussed by Baker J is C-89/91 Shearson; C-269/95 Benincasa; C-464/01 Gruber; C-498/16 Schrems; and the pending cases C‑208/18 Petruchová [I reviewed the AG’s Opinion (issued a day before the High Court’s judgment) yesterday] and C-500/18 Reliantco Investments and Reliantco Investments Limassol Sucursala Bucureşti.

Baker J concludes at 34 ‘the ECJ/CJEU has not decided whether contracts entered into by a wealthy private individual for the purpose of investing her wealth, or particular types of such contract, are not (or can never be) consumer contracts.’

Reference is then made to English precedent along the very lines of the precedent dismissed by Tanchev AG in Petruchová: including AMT Futures v Marzillier, and at 35 ff Standard Bank London Ltd v Apostolakis both through the English and the Greek courts – with differing results. At 44: ‘the disagreement between the English and Greek decisions in Apostolakis turns upon and is constituted by a difference of view as to whether investing private wealth for gain, if it takes the form of buying and selling foreign currency, is by nature a business activity so that an individual investing their wealth in that way cannot when doing so be a ‘consumer’ under Brussels (Recast). Longmore J thought there was no such proposition of law; the Greek court took the contrary view.’ German case-law is also discussed.

At 63 Baker J comes to the core of his reasoning: ‘In my judgment, the investment by a private individual of her personal surplus wealth (i.e. surplus to her immediate needs), in the hope of generating good returns (whether in the form of income on capital, capital growth, or a mix of the two), is not a business activity, generally speaking. It is a private consumption need, in the sense I believe intended by the ECJ in Benincasa, to invest such wealth with such an aim, i.e. that is an ‘end user’ purpose for a private individual and is not exclusively a business activity. That means, as was also Popplewell J’s conclusion in AMT v Marzillier, that it will be a fact-specific issue in any given case whether a particular individual was indeed contracting as a private individual to satisfy that need, i.e. as a consumer, or was doing so for the purpose of an investment business of hers (existing or planned).’

And at 65 in fine: the ‘question of purpose is the question to be asked, and it must be considered upon all of the evidence available to the court and not by reference to any one part of that evidence in isolation.’

At 68 he concludes ‘the purpose of her contract with Reliantco therefore was outside any business of hers’.

Baker J notes that he was not asked to defer any decision in C‑208/18 Petruchová. I believe it would have been of help to determine the issue before him. Tanchev AG (as noted, in an Opinion not available to Baker J at the time of his drafting his judgment) suggests that ‘to determine whether a person must be regarded as a consumer, reference must be made to the nature and objective of the contract, not to the subjective situation of the person concerned.’ 

 

Obiter, he then reviews Article 25, where CJEU authority discussed is ia Colzanni and Cars on the Web. Ms Ang contended that she was not able to access the standard terms web page at the time she opened her account, and therefore clause 27.1 did not comply with Article 25 B1a. At 78 extensive technical detail is discussed and at 80 Baker J finds that the Cars on the Web criterion of accessibility and durability were met; and at 81 that in any case, the current issue is not one of a click-wrap agreement for a signed hard copy of the GTCs with choice of court in it, had also been sent.

Equally obiter, at 83 ff Baker J summarily discussed the GDPR jurisdictional arguments which would have been more relevant had he not accepted jurisdiction under the consumer title. The brief discussion entirely fulfills my summer 2018 prediciton here: Article 79 GDPR will create a lot of issues at the level of jurisdiction.

A very relevant case.

Geert.

(Handbook of) EU private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

 

 

Inspecteur van de Belastingdienst
Sécurité sociale des travailleurs migrants
Un marin qui conserve sa résidence dans son État membre d’origine, tout en travaillant pour le compte d’un employeur établi dans un autre État membre, sur un navire battant pavillon d’un État tiers et naviguant en dehors du territoire de l’Union européenne, relève du champ d’application du règlement sur la coordination des systèmes de sécurité sociale

Praxair MRC
SOPO
Le calcul des indemnités de licenciement et de reclassement d’un salarié en congé parental à temps partiel doit être effectué sur la base de la rémunération à temps plein

Villar Láiz
SOPO
La réglementation espagnole sur le calcul des pensions de retraite des travailleurs à temps partiel est contraire au droit de l’Union si elle s’avère être particulièrement désavantageuse à l’égard des travailleurs féminins

Österreichischer Gewerkschaftsbund
DFON
Le régime autrichien de rémunération et d’avancement des fonctionnaires et agents contractuels de l’État reste contraire à l’interdiction d’une discrimination en fonction de l’âge

Tanchev AG Opined mid last month in C-208/18 Jana Petruchová v FIBO Group Holdings, essentially on the issue whether Article 17(1) Bussels Ia is to be interpreted as covering an individual who engages in trade on the international currency exchange market through a third party professionally engaged in that trade.

Or, as the AG himself puts it at 3, whether a natural person which engages in trade on the FOREX market must be regarded as a consumer or whether, by reason of the knowledge and expertise required to engage in that trade, of the complex and atypical nature of the contract at issue, and of the risks incurred, that person cannot be considered a consumer, so that he falls outside the scope of the section affording protection referred to above.

Under consideration is inter alia the impact of Rome I and of Directive 2004/39 – the relation in other words between applicable law and jurisdiction, and between substantive law and jurisdiction – see also my review of Pillar Securitisation here.

Ms Petruchová, residing in Ostrava (Czech Republic), and FIBO Group Holdings Ltd (‘FIBO’), a brokerage company established in Limassol (Republic of Cyprus), entered into a contract entitled ‘Terms of Business’ (‘the Framework Agreement’ – with choice of court for Cyprus). The purpose of the Framework Agreement was to enable Ms Petruchová to make transactions on the FOREX market by placing orders for the purchase and sale of the base currency, which FIBO would carry out through its online trading platform.

At 29, the AG suggests in my view correctly (Handbook p.106 2nd full para) that for choice of court under Article 19 B1a to be valid, it must allow the consumer to bring proceedings in courts in addition to those identified by Article 18.

Article 17(1) of the Brussels Ia Regulation applies if three conditions are met: first, a party to a contract is a consumer who is acting in a context which can be regarded as being outside his trade or profession; second, the contract between such a consumer and a professional has actually been concluded; and, third, such a contract falls within one of the categories referred to in Article 17(1)(a) to (c) of that regulation.

The question referred to the Court in the present case relates to the first condition. The AG refers in particular to C-269/95 Benincasa; and C-498/16 Schrems. At 46, referring to these cases: to determine whether a person must be regarded as a consumer, reference must be made to the nature and objective of the contract, not to the subjective situation of the person concerned. 

(at 40) ‘The question before the Court of Justice is whether a person who carries out transactions on the FOREX market may be denied the status of a consumer by reason of the knowledge and the expertise required to engage in such trades, the value of the transaction, the fact that the person is actively placing his own orders, the risks incurred on the FOREX market, and the number and frequency of the transactions carried out.’

In essence therefore, do the sophistication of the market and the intensity of the individual’s voluntary engagement with it, impact on their qualification as a consumer? The AG opines they do not, and I am minded to agree given CJEU authority, in my view most correspondingly C-218-12 Emrek – which the AG does not refer to. In that case the CJEU emphasised the objective charachter of the Pammer /Alpenhof criteria, decoupled from the consumer’s actual introduction to the business via word of mouth rather than the website.

The AG also refers to Schrems, where the Court held that the notion of a consumer is ‘distinct from the knowledge and information that the person concerned actually possesses’.

At 48 the AG finds additional support in Directive 93/13/EECon unfair terms in consumer contracts – although as we know e.g. from Pillar Securitisation, such support has now become less substantial.

At 51 the AG also emphasises the predictability of the Brussels regime – a classic interpretative tool which was bound to make an appearance. At 54 he adds that the risks involved in the conclusion of CfDs cannot preclude classification as a consumer. Quite the reverse: because of the risks, consumers need to be protected. At 59 he rejects [2014] EWHC 1085 (Comm) AMT Futures v Marzillier as relevant (national) precedent, although I do not think that either he or the Commission properly presented Popplewell J’s views on the issue. As I noted in my review at the time, ‘I do not think too much should be read in these examples – more so, the insistence that circumstances of the case do have an impact on the qualification as ‘consumer’.

At 69 on the issue of consumers, the AG concludes that ‘in order to determine whether a person who engages in trade on the FOREX market should be regarded as a consumer within the meaning of Article 17(1) of the Brussels Ia Regulation, no account should be taken of that person’s knowledge; of the value of the contract; of the fact that the person actively places his own orders; of the risks incurred; or of the number and frequency of the transactions.’

That leaves the questions

• whether A17(1) BIa should be interpreted in a manner consistent with Article 6 Rome I, given that financial instruments such as CfDs are excluded from the scope of the rules applicable to consumer contracts laid down in Article 6(1) and (2) of the Rome I Regulation). Suggested answer: No: per Kainz, and now also I would suggest, Pillar Securitisation; and
• whether account should be taken of the fact that the person is a retail client within the meaning of Directive 2004/39: for similar reasons: ditto answer.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

 

Liverpool have just beaten Barcelona 4-0 to reach the Champions League finals, and I am slowly making my way through marking a smallish pile of essay papers. Yet in the midst of all of this I was asked whether the Swedish language and societal phenomenon of ‘Flygskam’ has an English equivalent.

Flygskam stands for being ashamed of flying. ‘Flying shame’ is what the English speaking media seem to have come up with so far.

Embarrassment of flying, therefore. Putting an embarrassment to take to the air together, I came up with Embairrassment.

I might be the first to do so and I hope it might, well, take off or indeed, fly.

Geert.

 

 

Non lieu à renvoi et Irrecevabilité

Vente immobilière

Cassation

Homicide et blessures involontaires

Peines

Monachos Eirinaios
Liberté d'établissement
La législation grecque interdisant à un moine ayant la qualité d’avocat dans un autre État membre de s’inscrire au barreau, en raison de l’incompatibilité entre sa qualité de moine et la profession d’avocat, est contraire au droit de l’Union

The CJEU held last week in C-694/17 Pillar Securitisation (v Hildur Arnadottir), on the Lugano Convention’s protected category of consumers. I have review of Szpunar AG’s Opinion here. The issues that are being interpreted are materially very similar as in Brussels I Recast hence both evidently have an impact on the Brussels I Recast Regulation, too (see in that respect also C‑467/16 Schlömp).

At stake in Pillar Securitisation is the meaning of ‘outside his trade or profession’ in the consumer title. The CJEU at 22 rephrases the case as meaning ‘in essence, whether Article 15 of the Lugano II Convention must be interpreted as meaning that, for the purposes of ascertaining whether a credit agreement is a credit agreement concluded by a ‘consumer’ within the meaning of Article 15, it must be determined whether the agreement falls within the scope of Directive 2008/48 in the sense that the total cost of credit in question does not exceed the ceiling set out in Article 2(2)(c) of that directive and whether it is relevant, in that regard, that the national law transposing that directive does not provide for a higher ceiling.’

The CJEU notes that Pillar Securitisation claims that Ms Arnadottir acted for professional purposes and is not covered by the definition of a ‘consumer’. However, the referring court has not referred any question to the Court on the purpose of the credit agreement concluded. On the contrary, as is clear from the wording of the question that it did refer, the referring court asks its question to the Court on the assumption that the contract at issue was concluded for a purpose that can be regarded as being outside Ms Arnadottir’s profession. In addition, in any event, the order for reference does not contain sufficient information in order for the Court to be capable, where relevant, of providing useful indications in that regard (not much help therefore to assist with the interpretation of issues such as in Ang v Reliantco, on which I shall be reporting next).

As I wrote in my review of the AG’s Opinion: the issue is how far does material EU law impact on its private international law rules. I referred in my review to the need to interpret Vapenik restrictively, and to Kainz in which the CJEU itself expressed caution viz the consistent interpretation between jurisdictional and other EU rules, including on applicable law and on substantive law.

I am pleased to note the Court itself makes the same observation, and emphatically so: at 35: ‘the need to ensure consistency between different instruments of EU law cannot, in any event, lead to the provisions of a regulation on jurisdiction being interpreted in a manner that is unconnected to the scheme and objectives pursued by that regulation.’ Subsequently establishing the very diffeent purposes of both sets of law, the CJEU rejects impact on one over the other (and also remarks that Pillar Securitisation’s reference to the Pocar report needs to be taken in context: prof Pocar referred to Directive 2008/48 by way of example only).

Conclusion: for the purposes of ascertaining whether a credit agreement is a credit agreement concluded by a ‘consumer’ within the meaning of Article 15, it must not be determined whether the agreement falls within the scope of Directive 2008/48 in the sense that the total cost of credit in question does not exceed the ceiling set out in Article 2(2)(c) of that directive, and it is irrelevant, in that regard, that the national law transposing that directive does not provide for a higher ceiling.

A good judgment.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

Professor Dr Robert Magnus is looking for a highly skilled and motivated PhD candidate and fellow (Wissenschaftliche/r Mitarbeiter/in) to work at the Chair for Civil Law, Private International Law and Civil Procedural Law, EBS Law School Wiesbaden, Germany, on a part-time basis (50%).

The successful candidate holds the First German State Examination in Law. A good command of English and additional language skills are an advantage.

The fellow will be given the opportunity to conduct his/her PhD project (according to the Faculty’s regulations). The initial contract period is two years, with an option to be extended. Responsibilities include research and teaching.

If you are interested in this position, please send your application (cover letter; CV; and relevant documents and certificates, notably university transcripts and a copy of law degree) by email to robert.magnus@ebs.edu or by mail to

Lehrstuhl für Bürgerliches Recht, Internationales Privatrecht und Zivilprozessrecht
EBS Universität für Wirtschaft und Recht
Gustav-Stresemann-Ring 3
65189 Wiesbaden

Further information can be found here.

Written by Leonhard Huebner, Institute for Comparative Law, Conflict of Laws and International Business Law (Heidelberg University)

The third-party effects of the assignment are one of the “most discussed questions of international contract law” as it concerns the “most important gap of the Rome I Regulation”. This gap is regrettable not only for dogmatic reasons, but above all for practical reasons. The factoring industry has provided more than 217 billion euros of working capital to finance more than 200,000 companies in the EU in 2017 alone. After a long struggle in March of 2018, the European Commission, therefore, published a corresponding draft regulation (COM(2018)0096; in the following Draft Regulation). Based on a recent article (ZEuP 2019, 41) the following post explores whether the Draft Regulation creates the necessary legal certainty in this economically important area of law and thus contributes to the further development of European private international law (see also this post by Robert Freitag).

Legal background and recent case law

Although Article 14 of the Rome I Regulation provides for a rule governing the question regarding which law is applicable to the voluntary assignments of claims, it is the prevailing opinion that the third party effects of assignments are not addressed within the Rome I Regulation. According to Article 27 (2) of the Rome II Regulation, the European Commission was under the obligation to submit a report concerning the question of the effectiveness of an assignment or subrogation of a claim against third parties and the priority of the assigned or subrogated claim over a right of another person. Said report should have been published no later than 17 June 2013. In March 2018, almost nine years after the Rome I Regulation came into force, the Commission finally presented said report in form of the Draft Regulation subject to this article. The practical importance and the need for a harmonized European approach have also been demonstrated by recent case law proving the rather unsatisfactory status quo in European PIL. Two recent decisions of the Higher Regional Court of Saarbrücken (dated 8 August 2018 – 4 U 109/17) and of the Norwegian Supreme Court (see IPRax 2018, 539) gave striking examples of how the diverging requirements for the effectiveness of the assignment vis-à-vis third parties lead to different solutions within the respective PIL rules of the member states. The preliminary reference to the ECJ of the Higher Regional Court of Saarbrücken concerns a multiple assignment, while the ruling of the Norwegian Court of Justice deals with the question whether unsecured creditors of the assignor can seize the allegedly assigned claims of the assignor in insolvency (see also this post by Peter Mankowski).

The material scope of the proposed regulation

Art. 5 of the Draft Regulation determines the material scope of application of said Draft Regulation with regard to the effectiveness of an assignment as well as its priority vis-à-vis third parties. The effectiveness vis-à-vis third parties is regularly determined by registration or publication formalities (lit. a), while priority conflicts for the assignee arise vis-à-vis various persons. Lit. b) concerns multiple assignments, while lit. c) regulates the priority over the rights of the assignor’s creditors. In addition, lit. d) and e) assign priority conflicts between the assignee and the rights of the beneficiary of a contract transfer/contract assumption and a contract for the conversion of debts to the Draft Regulation.

In essence, Art. 5 of the Draft Regulation covers notification requirements to the assignee. Most legal systems require a publicity act for binding effects vis-à-vis third parties and the debtor, such as a notice of assignment to the debtor or a registration in a public register. Whereas under German law the assignment becomes effective immediately between the assignor and the assignee as well as against third parties, in other jurisdictions this only applies once the debtor has been notified of the assignment (signification in French law pursuant to former Art. 1690 of the Code civil or within the framework of legal assignment in the UK).

Connecting factor: habitual residence of the assignor combined with sectorial exceptions

The connecting factors employed by current national PIL rules considerably vary between the member states. In principle, three connecting factors compete with each other: the habitual residence of the assignor, the law applicable to the transfer agreement (assignment ground statute) and the law applicable to the transferred claim. Furthermore, the law at the debtor’s domicile might also be considered an important factor.

Art. 4 (1) of the Draft Regulation unties this gordic knot as it specifies the law of the country in which the assignor has his habitual residence “at the relevant time” as the primary connecting factor. The goal of the European Commission is to create legal certainty and, above all, to promote cross-border trade in claims. By way of sectoral exceptions, the law of the transferred claim is to be applied if either (i) “cash collateral” credited to an account or (ii) claims from financial instruments are transferred (Art. 4 (2) of the Draft Regulation).

A downside of the link to the law of habitual residence is its changeability, which may lead to a conflit mobile. By altering the connecting factor, the applicable law may also change leading to legal uncertainty. To overcome such conflict, so called meta conflict of laws rules are also provided for in the Draft Regulation. In this case, it is a matter of determining the relevant point in time in order to make a viable connection. This rule has been implemented in Art. 4 (2) of the Draft Regulation.

An unsolved problem is the determination of the “material point in time” cited in Art. 4 (1) of the Draft Regulation. Accordingly, the third parties’ effects are determined by the assignor’s habitual residence at the relevant time. However, neither a recital nor the catalogue of Art. 2 of the Draft Regulation give an adequate definition of this relevant point in time so far. It is therefore advisable to replace the term “at the relevant time” with “at the time of conclusion of the assignment contract” in the final regulation. This is also reflected in the EP’s legislative resolution of 13 February 2019 (P8_TA-PROV(2019)0086, p. 12). The advantage of this clarification would be that the same point in time would be relevant in the legal systems of the member states which follow the principle of separation as well as those which follow the principle of unity.

A step forward?

The Draft Regulation would represent a major step forward in the trade of cross-border receivables in the EU. It closes a large gap within European PIL, while at the same time aiding EU member states to partly adapt their domestic legal system accordingly. Even if the European Commission did not comply with the (unrealistic) deadline for the review cited in Art. 27 (2) of the Rome I Regulation, the legal debate made this essential progress possible demonstrating the EU’s ability to reach compromises. Although the Draft Regulation solves many problems, it may also raise new ones. That is again good news for lawyers interested in PIL. Nevertheless, the enactment of the Draft Regulation would eventually answer “one of the most frequently discussed questions of international contract law”. The old saying “patience is a virtue” would be proven right again.

This blog post is a condensed version of the author’s article in ZEuP 2019, 41 et seqq. which explores the new Draft Regulation in more detail and contains comprehensive references to the relevant literature.