Droit international général

UK Supreme Court Rules on Damages for Funding Foreign Surrogacy

EAPIL blog - il y a 3 heures 4 min

On 1 April 2020, the UK Supreme Court ruled in Whittington Hospital NHS Trust v XX on the fascinating issue of whether damages for funding foreign surrogacy could be considered as an appropriate remedy in a tort action.

The plaintiff in this case was a woman who lost the ability to bear a child as a consequence of a medical negligence by an hospital which admitted liability.

The dispute was thus concerned with the assessment of the damages that the plaintiff could receive. The calculation obviously depended on how the woman intended to put herself in a position as she would have been if she had not sustained the wrong.

The remarkable claims of the victim

In this respect, the woman made a number of remarkable claims which, it seems, were accepted without debate by the court: (i) as both her and her partner came from large families, she would want to have four children; and (ii) she would want to have those children through surrogacy. It is unclear whether adoption was considered at any point of the proceedings.

I will not comment here on the fact that it seems that the claimant could seek compensation for as many children as she wanted to (the judgment underscores that her sister had 10, so maybe that was the limit). But one wonders whether the choice of the plaintiff for surrogacy was disputed. One alternative remedy would obviously be adoption. In many countries, one would be legal, while the other would not be, but this is not the case in England. Yet, there is a duty to mitigate loss in the English law of torts, and the duty means that while the plaintiff may choose the most expensive remedy to make good her loss, she may not charge it to the defendant (Darbishire v. Warran, 1963). But maybe adoption is actually more expensive than surrogacy.

The debate focused on a third claim: the claimant would prefer to use commercial surrogacy arrangements in California; but if this would not be funded (i.e. through the damages awarded by the court), she would use non-commercial arrangements in the United Kingdom.

The reason why the claimant feared that her preference for commercial surrogacy might well be denied funding was that the Court of Appeal had ruled in Briody v St Helen’s and Knowsley Area Health Authority that commercial surrogacy in California was contrary to public policy. The Court of Appeal had also ruled in Briody that only surrogacy with the claimant’s own eggs would be restorative.

The first instance judge thus ruled that commercial surrogacy would not be funded, and that, given that the claimant could probably have only two children using her eggs, only two non commercial surrogacies in the UK could be funded, for £ 37,000 each.

Judgment of the Supreme Court

The Supreme Court overruled Briody on both accounts. Lady Hale ruled for the majority that awards of damages for foreign commercial surrogacy are no longer contrary to public policy, and that no distinction should be made based on the origin of the eggs.

From the Press Summary of the Court:

UK courts will not enforce a foreign contract if it would be contrary to public policy. But most items in the bill for a surrogacy in California could also be claimed if it occurred here. In addition, damages would be awarded to the claimant, the commissioning parent, and it is not against UK law for such a person to do the acts prohibited by section 2(1) of the 1985 Act. Added to that are developments since Briody: the courts have striven to recognise the relationships created by surrogacy; government policy now supports it; assisted reproduction has become widespread and socially acceptable; and the Law Commissions have proposed a surrogacy pathway which, if accepted, would enable the child to be recognised as the commissioning parents’ child from birth. Awards of damages for foreign commercial surrogacy are therefore no longer contrary to public policy. However, there are important factors limiting the availability and extent of such awards: both the treatment programme and the costs involved must be reasonable; and it must be reasonable for the claimant to seek the foreign commercial arrangements proposed rather than to make arrangements within the UK; this is unlikely to be reasonable unless the foreign country has a well-established system in which the interests of all involved, including the child, are properly safeguarded [49-54].

Lord Carnwath’s dissenting judgment differs from the majority on [this] issue only. In his view, while this case is not concerned with illegality, there is a broader principle of legal coherence, which aims to preserve consistency between civil and criminal law. It would go against that principle for civil courts to award damages based on conduct which, if undertaken in the UK, would offend its criminal law. Society’s approach to surrogacy has developed, but there has been no change in the critical laws on commercial surrogacy which led to the refusal in Briody of damages on that basis. It would not be consistent with legal coherence to allow damages to be awarded on a different basis [55-68].

So, it seems that the claimant was entitled to choose commercial foreign surrogacy over UK non commercial surrogacy.

But then this begs an obvious question: how can you possibly justify that she charges the defendant with her costly preferences? Unfortunately, it will take another case to know, it seems. Lady Hale concluded her judgment by stating:

Third, the costs involved must be reasonable. This too has not been put in issue in this case, which has been argued as a matter of principle, but it should certainly not be taken for granted that a court would always sanction the sorts of sums of money which have been claimed here.

Webinar on COVID-19 and international child abduction

Conflictoflaws - il y a 8 heures 31 min

A free webinar to hear experts of MK Family Law (Washington) and Grotius Chambers (The Hague) discuss pertinent issues relating to international child abduction in times of COVID-19. 

Date: 8 April 2020
Time: 3 pm (CET Amsterdam)

COVID-19 has a significant impact on all aspects of our lives. Since the WHO declared the outbreak a pandemic, numerous States have implemented travel bans in an attempt to contain its spread. Moreover, States have closed courts and adjourned or even cancelled hearings.

Such restrictions cause direct impacts on transnational families. They may hinder, in particular, the prompt return of children in cases of international child abduction. Parents may encounter difficulties in commencing proceedings before the competent authorities, as well as complying with an agreement or return order.

Melissa Kucinski of MK Family Law and Janaina Albuquerque Azevedo Gomes, Expert in international Child Abduction law, will consider what the current situation may mean for parents. A particular focus will be the prompt return of children under the 1980 HCCH Child Abduction Convention.

Registrations are now open and the Eventbrite Registration Form can be found here.

Registration is required to receive the webinar login credentials. For further information, please contact info@grotiuschambers.com. 

Supreme v Shape: Advocate General ØE on Brussels Ia’s scope of application (‘civil and commercial’ in light of claimed immunity. Opinion at odds with CJEU in Eurocontrol.

GAVC - il y a 8 heures 56 min

Many thanks again María Barral for continuing her updates on C-186/19 Supreme v Shape; see her summary of Thursday’s opinion of the AG below. I just wanted to add two things.

Firstly, the AG’s suggestion that in spite of the intervening Court of Appeal judgment which would seem to make the CJEU case nugatory, the case should continue for against the appeal’s court decision, a further appeal is underway with the Supreme Court.

Second, at 93 etc. the AG advises that the immunity or not of the defendant, bears no relevance to the scope of application of BIa for it does not feature in the concept of ‘civil and commercial’ as developed by the Court.

That in my view is at odds with the CJEU’s very statement in Eurocontrol, at 4: the Court’s seminal judgment on civil and commercial itself in so many words links the scope of application to the practicality of recognition: in Eurocontrol the CJEU interprets ‘civil and commercial’ ‘in particular for the purpose of applying the provisions of Title III of the Convention‘: there is little use bringing issues within the scope of the Convention and now BIa, if ab initio there is no prospect of recognition and enforcement.

In other words I am not at all sure the Court will follow the AG on that part of the analysis. I should emphasise this is my view: María’s review independent of that follows below.

Geert.

 

Immunity does not impact jurisdiction based on Regulation Brussels I bis, AG Saugmandsgaard Øe dixit

María Barral Martínez

Following up on the previous posts (see here and here) discussing the contractual dispute between Supreme site Services v. SHAPE, today’s post addresses  the Opinion of Advocate General Saugmandsgaard Øe in C-186/19 Supreme v Shape.

While the questions posed by the referring court concerned the interpretation of articles 1(1) and 24(5) Brussels Ia, ‘at the CJEU’s request’ (5) limits his analysis to Article 1(1).

In a nutshell, the analysis in his Opinion is twofold: on the one hand, he examines whether the action brought by SHAPE – an international organisation- seeking the lift of an interim garnishee order falls within the meaning of “civil and commercial matters” laid down in article 1(1) of the Brussels I bis Regulation. On the other hand, he analyses whether the fact that SHAPE had invoked its immunity from execution in the interim relief proceedings has any significance on the above evaluation.

In tackling the first prong of his analysis, AG Saugmandsgaard Øe recalls the public hearing held at the CJEU back in December 2019. There, the focus was put on how the  “civil and commercial” nature of the interim relief measures sought by SHAPE is to be assessed – in the light of the features of the proceedings on the merits, based exclusively on the interim relief proceedings or only in relation to the nature of the rights the interim measures intend to safeguard matters. AG Saugmandsgaard Øe rejects the first two alternatives and follows the thesis supported by the Governments of The Netherlands and Belgium and by the European Commission: in line with the judgments de Cavel I and de Cavel II, the nature of the rights whose recognition is sought in the proceedings on the merits and whose protection is the purpose of the interim or protective measures sought is decisive. (Point 46 and 51)

Furthermore, AG conducts a thorough analysis on the immunities recognised under Public International Law vis-à-vis the application of Brussels Ia. He argues that to determine whether a dispute should be excluded from the scope of BIa on the grounds that it concerns “acts or … omissions in the exercise of State authority” – A1(1) in fine-, it is necessary to assess whether the action is based on a right which has its source in acta iure imperii or in a legal relationship defined by an exercise of State authority. (at 90)

On that basis, he concludes that an action for interim measures such as the one in the present case, seeking the lift of a garnishee order, must be regarded as “civil and commercial” in so far as the garnishee order was aimed to safeguard a right arising from a contractual legal relationship which is not determined by an exercise of State authority. (at 104)

Finally, AG Saugmandsgaard Øe posits that the fact that an international organization as SHAPE has invoked immunity from execution, has no bearing in the assessment of the material application of Brussels Ia. What’s more, it cannot serve as an obstacle for a national court to establish its international jurisdiction based on the aforementioned Regulation.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.2.2.

ELI Approves Report on the Protection of Adults in International Situations

EAPIL blog - il y a 9 heures 4 min

On 21 March 2020 the Fellows of the European Law Institute (ELI) have approved a Report on the Protection of Adults in International Situations.

The Report, prepared by Pietro Franzina and Richard Frimston based on the work of a team of academics and professionals, is the outcome of a project launched in 2017. The purpose of the Report is to illustrate the current legal framework applicable in Europe, in cross-border cases, to the protection of persons aged 18 or more who are not in a position to protect their interests due to an impairment or insufficiency of their personal faculties, and to outline the measures that EU institutions might take to enhance such protection.

The Report encourages further ratifications of the Hague Convention of 13 January 2000 on the International Protection of Adults, and suggests a number of legislative and non-legislative measures that the EU could take to complement the Convention and improve its operation in the relationship between Member States.

A Textbook Example of Art 17 Rome II: Higher Regional Court of Cologne, 27 March 2020

Conflictoflaws - dim, 04/05/2020 - 20:47

Art. 17 of the Rome II Regulation, which transposes an element of US conflicts theory (the concept of local data) into a European choice-of-law instrument, is certainly one of the more controversial provisions of the Regulation. It stipulates that

[i]n assessing the conduct of the person claimed to be liable, account shall be taken, as a matter of fact and in so far as is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability.

In a highly illustrative decision of 27 March 2020 (1 U 95/19), the Higher Regional Court of Cologne (upholding a decision from the Regional Court of Bonn) has provided a textbook example of its application in practice.

The case involved two German citizens who had collided while paragliding/hang gliding in Italy. While one had remained unharmed, the other one had sustained several injuries and, upon returning home, decided to sue for damages.

As both parties were habitually resident in the same Member State – in fact, they lived less than 50 km away from each other, in Cologne and Bonn, respectively – the Court naturally applied German law pursuant to Art. 4(2) Rome II. Under the applicable tort statute, the fact that both parties had engaged in aerial activities meant that the degree to which the defendant would be liable depended on the respective dangerousness of each party’s activity as well as on whether or not one party had behaved negligently.

While the first factor already put the claimant on the back foot with the Court deeming his hang glider significantly more dangerous than the defendant’s paraglider, the Court went on to apply two Italian presidential decrees as well as the general regulations approved by the Italian Civil Aviation Authority (Ente Nazionale per l’Aviazione Civile, ENAC) on the basis of Art. 17 Rome II in order to establish that the claimant had negligently violated the applicable aviation rules. Accordingly, his claim failed in its entirety.

 

 

„Matters relating to a contract“ without contract (with the claimant) – ECJ, Judgment of 26 March 2020, Case C-215/18, Libuše Králová v Primera Air Scandinavia A/S, on Article 5 no. 1 Brussels I Regulation

Conflictoflaws - dim, 04/05/2020 - 17:55

In this case, a Czech passenger entered into a package travel contract with a Czech travel agency on a flight from Prague to Keflavik in Iceland and on accommodation there. The flight was operated by the Danish air carrier Primera Air Scandinavia. The flight was delayed by four hours. This is why the passenger brought an action for compensation of EUR 400 against the airline under the Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights. The proceedings were instituted before a District Court in Prague.

In the case of the provision of services, Art. 5 no. 1 lit. b second indent Brussels I Regulation provides for jurisdiction at the place in a Member State where, under the contract, the services were provided or should have been provided. In respect of air carriage, these include, at the passenger’s choice, the courts of the place of departure (as well as the place of arrival) of the flight, see ECJ, judgment of 9 July 2009, Case C-204/08 – Peter Rehder v Air Baltic Corporation.

Nevertheless, the Court held that, first, that the concept of an operating air carrier subject to the Passenger Rights Regulation includes not only the air carrier which operates or has the intention of operating a flight under a contract with a passenger but also the carrier which operates or intends to operate a flight on behalf of a third party which has concluded a contract with that passenger. Therefore, the passenger may rely on the regulation on the rights of air passengers against the carrier, even in the absence of a contract between the passenger and the carrier.

The Court further observed that even though the conclusion of a contract is not a requirement for the application of the special provisions on matters relating to a contract of the Article 5 no. 1 Brussels I Regulation, reliance on those provisions presupposes the existence of a voluntary commitment by one party to another, not necessarily vis-à-vis the claimant, as opposed to Articles 15 et seq. (see para. 58).

Thus, the Court concludes, an operating air carrier that did not enter into a contract with the passenger but is liable to that passenger on behalf of a travel agency in respect of the obligations arising from the Passenger Rights Regulation must be regarded as fulfilling the freely assumed obligations vis-à-vis that agency. Therefore, the passenger may bring an action for compensation against the carrier before the courts of the place of departure of the flight.

The Court had already decided similarly before: Those previous (joined) cases involved compensation for long delays in flights provided by an operating air carrier which had not entered into contracts with the passengers concerned, since they had bought their airline tickets from other airlines before bringing an action against the carrier that operated the segment of the connecting flight that included that delay at issue, see ECJ, judgment of 7 March 2018, joined cases C?274/16, C?447/16 and C?448/16 – flightright and Others.

The judgment is available, currently only in French, German and other languages, but not [yet] in English here.

A New Interesting Book on PIL Aspects of Corporate Social Responsibility

Conflictoflaws - dim, 04/05/2020 - 12:34

A book edited by Catherine Kessedjian & Humberto Cantú Rivera and titled “Private International Law Aspects of Corporate Social Responsibility” has just been released electronically and in hard copy. As said in the abstract of the book, “This book addresses one of the core challenges in the corporate social responsibility (or business and human rights) debate: how to ensure adequate access to remedy for victims of corporate abuses that infringe upon their human rights. However, ensuring access to remedy depends on a series of normative and judicial elements that become highly complex when disputes are transnational. In such cases, courts need to consider and apply different laws that relate to company governance, to determine the competent forum, to define which bodies of law to apply, and to ensure the adequate execution of judgments. The book also discusses how alternative methods of dispute settlement can relate to this topic, and the important role that private international law plays in access to remedy for corporate-related human rights abuses…”

Readers of this blog might be interested in having one to be stored for your own use. If this is the case, please visit the homepage of this book to know more:https://www.springer.com/gp/book/9783030351861?wt_mc=Internal.Event.1.SEM.ChapterAuthorCongrat

Many thanks for your attention and take care in this globally difficult time!

Opening Pandora’s Box – The interaction between human rights and private international law: the specific case of the European Court of Human Rights and the HCCH Child Abduction Convention

Conflictoflaws - dim, 04/05/2020 - 12:07

It is undeniable that there is an increasing interaction between human rights and private international law (and other areas of law). This of course adds an additional layer of complexity in private international law cases, whether we like it or not. Indeed, States can be sanctioned if they do not fulfill specific criteria specified by the European Court of Human Rights (ECtHR). Importantly, the European Convention on Human Rights has been considered to be an instrument of European public order (ordre public), to which 47 States are currently parties.

I have recently published an article entitled “The controversial role of the ECtHR in the interpretation of the Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction, with special reference to Neulinger and Shuruk v. Switzerland and X v. Latvia” (in Spanish only but with abstracts in English and Portuguese in the Anuario Colombiano de Derecho Internacional). To view it, click on “Ver artículo” and then click on “Descargar el archivo PDF”, currently pre-print version, published online in March 2020.

Below I include briefly a few highlights and comments.

As its name suggests, this article explores the controversial role of the ECtHR in the interpretation of the HCCH Child Abduction Convention. It analyses two judgments rendered by the Grand Chamber: Neulinger and Shuruk v. Switzerland (Application no. 41615/07) and X v. Latvia (Application no. 27853/09). And then it goes on to analyse three more recent judgments and in particular, whether or not they are in line with X v Latvia.

The article seeks to clarify the applicable standard that should be applied in child abduction cases as there has been some confusion as to the extent to which Neulinger applies and the impact of X v. Latvia. Indeed Neulinger seemed to suggest that courts should conduct a full examination of the best interests of the child during child abduction proceedings, which is blatantly wrong. X v. Latvia clarifies Neulinger and provides a detailed and thoughtful standard to avoid conducting “an in-depth examination of the entire family situation and of a whole series of factors…” but at the same time upholds the human rights of the persons involved and strikes, in my view and as noted by the Court, a fair balance between the competing interests at stake – those of the child, of the two parents, and of public order.

The article then examines three recent judgments rendered by several chambers of the ECtHR (not the Grand Chamber): K.J. v. Poland (Application no. 30813/14), Vladimir Ushakov v. Russia (Application no. 15122/17), and M.K. v. Grèce (Requête n° 51312/16). M.K. v. Grèce, which was rendered in 2018, has put the ECtHR in the spotlight again. Surprisingly, this precedent has ignored the standard established in X v. Latvia and has followed only Neulinger. The precedents of the Grand Chamber of the ECtHR are binding on the chambers so it is stupefying that this could happen. Nevertheless, I have concluded that the outcome of the case is correct.

By way of conclusion, the legal community seems to be divided as to whether or not X v Latvia sets a good precedent. Human rights lawyers seem to regard this precedent favourably, whereas private international law lawyers seem to be more cautious. This article concludes that X v. Latvia was correctly decided for several reasons based on Article 13(1)(b), Article 3 of the HCCH Child Abduction Convention and the need to provide for measures of protection. Both human rights and private international law can interact harmoniously and complement each other. The efforts of the human rights community to understand the Child Abduction Convention are evident in the change of direction in X v. Latvia. Both human rights lawyers and private international law lawyers should make an effort to understand each other as we have a common goal and objective: the protection of the rights of the child.

Insurance Aspects of Cross-Border Road Traffic Accidents

EAPIL blog - ven, 04/03/2020 - 15:00

Luk De Baere and Frits Blees are the authors of Insurance Aspects of Cross-Border Road Traffic Accidents, published by Eleven International Publishing.

The abstract reads as follows.

Claims handling of cross-border traffic accidents is a complex process. The rules governing the handling and settling of such accidents often requires in-depth knowledge of a wide range of fields of expertise: the applicable law on liability and compensation, insurance law, the law of the European Union, private international law and – last but not least – the functioning of the various Agreements between national organisations of motor insurers such as the Green Card Bureaux, the national Guarantee Funds etc. Insurance Aspects of Cross-Border Road Traffic Accidents provides practitioners in the field with the necessary background information. The book offers a comprehensive analysis of the insurance aspects of cross-border road traffic accidents. This new publication will prove extremely useful for professionals of insurance companies, specialists in claims handling organisations, members of staff within national Green Card Bureaux, Guarantee Funds and Compensation Bodies, but also for solicitors, magistrates and legislators.

Further information available here.

Wallis v Air Tanzania. A good reminder of the (soon to be resurrected) UK reservation viz the Rome Convention.

GAVC - ven, 04/03/2020 - 08:08

In Wallis Trading Inc v Air Tanzania Company Ltd & Anor [2020] EWHC 339 (Comm), at stake is a claim by Wallis Trading, a Liberian company which carried on the business of acquiring and leasing aircraft, against Air Tanzania and the Government of Tanzania in respect of sums which Wallis says are due to it from the Defendants arising out of a lease of an aircraft by Wallis to ATCL.

Of interest to the blog is the discussion of the Rome Convention at 74 ff. Defendants contend that the Lease is invalid, and ‘null and void’ because it was entered into in breach of the Procurement Legislation. Butcher J holds that the Lease expressly provided that English law was to be its governing law. The putative law of the lease therefore is English law (the bootstrap of Article 8 Rome Convention, now Article 10 Rome I. The Procurement Legislation is not part of English law, and non-compliance with it does not, as a matter of English law, render the Lease invalid, null or void.

What however about the application of A7 Rome Convention’s rule on lois de police /mandatory law?

1. When applying under this Convention the law of a country, effect may be given to the mandatory rules of the law of another country with which the situation has a close connection, if and in so far as, under the law of the latter country, those rules must be applied whatever the law applicable to the contract. In considering whether to give effect to these mandatory rules, regard shall be had to their nature and purpose and to the consequences of their application or non-application.

2. Nothing in this Convention shall restrict the application of the rules of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the contract]

Here, Butcher J points out that Article 7(1) of the Rome Convention does not have the force of law in the United Kingdom: the UK had entered an Article 22 reservation viz the lois de police rule. The impossibility of same viz Rome I led to the stricter language in Article 9. In the event of Rome I not being part of the future relations between the UK and the EU, the Convention and its reservation will once again be applicable.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.8, Heading 3.2.8.3.

 

Interesting re applicable law.
Choice of court and law pro England.
Includes consideration of mandatory law (alleged invalidity under Tanzanian procurement law) under the Rome Convention. Rome I does not apply ratione temporis.
UK reservation viz Article 7 Rome Convention. https://t.co/ONQ1oO9YGX

— Geert Van Calster (@GAVClaw) February 24, 2020

Hague Academy Summer Courses Postponed to 2021

EAPIL blog - ven, 04/03/2020 - 08:00

On 2 April 2020, the Hague Academy of International Law announced its decision to postpone the Summer Courses on Public and Private International Law scheduled for July and August 2020, as well the Academy’s Centre for Studies and Research, devoted this year to Applicable Law Issues in International Arbitration.

Both events will take place in 2021.

The Academys’ annoucement reads as follows.

It is with a very heavy heart that, in view of the evolution of the spread of COVID-19, the Academy is forced to cancel its programmes planned for the summer of 2020: the Summer Courses on Public and Private International Law, as well as the Centre for Studies and Research. This is the second time in their almost centenary existence that the Summer Courses will not be able to take place. Only the Second World War was able to stop the running of the courses, the Academy’s main activity;  the one to which it owes its renown.

An exceptional situation, which calls for an exceptional decision: the Academy’s doors will remain closed this summer. The two programmes will be postponed to 2021. The Summer Courses will take place between 5 July and 13 August 2021 and the session of the Centre for Studies and Research between 16 August and 3 September 2021. The updated poster of the 2021 Summer Courses will be available online in April/May.

A video message by Jean-Marc Thouvenin, the Secretary-General of the Academy, may be found here.

Cross-border Corona mass litigation against the Austrian Federal State of Tyrol and local tourist businesses?

Conflictoflaws - jeu, 04/02/2020 - 22:30

While the Corona Crisis is still alarmingly growing globally, first movers are apparently preparing for mass litigation of ski tourists from all over Europe and beyond against the Austrian Federal State of Tyrol and local businesses. The Austrian Consumer Protection Association (Österreichischer Verbraucherschutzverein, VSV, https://www.verbraucherschutzverein.at/) is inviting tourists damaged from infections with the Corona virus after passing their ski holidays in Tyrol, in particular in and around the Corona super-hotspot of Bad Ischgl, to enrol for collective redress against Tyrol, its Governor, local authorities as well as against private operators of ski lifts, hotels, bars etc., see https://www.verbraucherschutzverein.at/Corona-Virus-Tirol/.

In Austria, no real “class action” is available. Rather, the individual claimants need to assign their claims to a lead claimant, often a special purpose vehicle (in this case the Association) which then institutes joint proceedings for all the claims. For foreign claimants who consider assigning their claims to the Association, the Rome I Regulation will be of relevance.

According to Article 14 (1) Rome I Regulation the relationship between assignor and assignee shall be governed by the law that applies to the contract between the assignor and assignee under the Regulation. So far, however, there seem to be only pre-contractual relationships between the Austrian Association inviting “European Citizens only” (see website) to register for updates by newsletters. These pre-contractual relationships will be governed by Article 12 (1) Rome II Regulation. “[T]he contract” in the sense of that provision will be the one between the Association and the claimant on the latter’s participation in the collective action which may, but does not necessarily, include the contract on the assignment of the claim and its modalities. It is the Association that is the “service provider” in the sense of Article 4 (1) lit. b Rome I Regulation. Its habitual residence is obviously in Austria, therefore the prospective contract as well as the pre-contractual relations to this contract will be governed (all but surprisingly) by Austrian law. Art. 6 does not come into play, since the service is to be supplied to the consumer exclusively in Austria, Article 6 (4) lit. a Rome I Regulation.

According to Article 14 (2) Rome I Regulation, the law governing the assigned claim shall determine its assignability, the relationship between the assignee and the debtor, the conditions under which the assignment can be invoked against the debtor and whether the debtor’s obligations have been discharged. As far as the Rome II Regulation is applicable ratione materiae, i.e. for claims against the businesses, its Article 4 will select (again all but surprisingly) Austrian law – no “distance delict” as the potentially delictual act and its harmful effects on the claimant’s health both took place in Austria. Follow-up damages in other states are irrelevant for the law-selecting process.

In respect to delictual claims against Tyrol and its public entities and authorities, Recital 9 of the Rome II Regulation reminds us that, with a view to Article 1 (1) Sentence 2 of the Regulation (no applicability to “acta iure imperii”), “[c]laims arising out of acta iure imperii should include claims against officials who act on behalf of the State and liability for acts of public authorities, including liability of publicly appointed office-holders. Therefore, these matters should be excluded from the scope of this Regulation.” Rather, an autonomous rule of choice of law for liability of Austrian public entities will apply, and this rule will certainly select Austrian law.

There are certain advantages in bundling a multitude of claims in the “Austrian” way: First, the high amount of damages from the collection of claims allows seeking third-party funding. Second, costs for both the court and the lawyers are structured on a diminishing scale. While the collective proceedings are pending, prescription periods do not proceed in respect to claims participating in the joint action. And of course, the “class” of these active claimants has much more weight for negiations than an individual would have.

On the other hand, the jurisdiction at the consumer’s domicile under Art. 18 Brussels Ibis Regulation will no longer be available, once the consumer has assigned his or her claim to another, e.g. a lead claimant. However, this is only relevant in respect to the contractual claims of consumers and only as long as the conditions for directing one’s business at the consumer’s domicile under Article 17 (1) lit. c Brussels Ibis Regulation are fulfilled. The claims in question here mainly ground in non-contractual claims against public entities and private businesses, and they seem to be envisaged as independent civil follow-on proceeding after successful criminal proceedings – if these should ever result in convictions.

The allegation is that the respective public agencies and officers did not shut down the area immediately despite having gained knowledge about first Corona infections in the region, in order to let the tourism businesses go on undisturbed. These allegations are extended to local businesses such as ski lifts, hotels and bars etc., once they gained knowledge about the Corona risk. It will be an interesting question (of the applicable Austrian law of public and private liability for torts) amongst many others (such as those on causality) in this setting to what extent there is a responsibility of the tourist to independently react adequately to the risk, of course depending on the time of getting him/herself knowledge about the Corona risk. If there is such responsibility on the part of the damaged, the next question will be whether this could affect or reduce any tortious liability on the part of the potential defendants. Overall, all of that appears to be an uphill battle for the claimants.

Speaking of responsibilities, a more pressing concern these days is certainly how the European states, in particular the EU Member States and the EU itself, might organise a more effective mutual support and solidarity for those regions and states that are most strongly affected by the Corona Pandemic, in particular in Italy, Spain and France, these days. Humanitarian and moral reasons compel us to help, both medically and financially. Some EU Member States have started taking over patients from neighbouring countries while they are still disposing of capacities in their hospitals, but there could perhaps be more support (and there could have perhaps been quicker support). The EU has a number of tools and has already taken some measures such as the Pandemic Epidemic Purchase Programme (PEPP) by the European Central Bank (ECB). The European Stability Mechanism (ESM) could make (better?) use of its precautionary financial assistance via a Precautionary Conditioned Credit Line (PCCL) or via an Enhanced Conditions Credit Line (ECCL). Further, the means of Article 122 TFEU should be explored, likewise the possibilities for ad hoc-funds under Article 175 (3) TFEU. The European Commission should think about loosening restrictions for state aids.

All of these considerations go beyond Conflict of Laws, and this is why they are not mine but were kindly provided (all mistakes and misunderstandings remain my own) in a quick email by my colleague and expert on European monetary law, Associate Professor Dr. René Repasi, Erasmus University of Rotterdam, https://www.eur.nl/people/rene-repasi (thanks!).

However, cross-border solidarity is a concern for all of us, perhaps in particular for CoL experts and readers. Otherwise, a “European Union” does not make sense and will have no future.

Hague Academy Postpones Summer Courses 2020

Conflictoflaws - jeu, 04/02/2020 - 20:10

The Hague Academy has canceled its summer courses for 2020 and will hold them in the summer of 2021. The announcement, including a video message from the Secretary-General, is here. Moving the program online was rejected because students would not get the special experience of being in the Hague. The promise of other videos to posted on a new website will be only insufficient comfort.

The only prior time that the courses were canceled was World War II. It is sad news for countless students who were looking forward to the courses, for the (excellent) scholars who have prepared their courses, and for the discipline of private international law, which benefits from this regular event. The decision against bringing together students from all the world to one physical space seems eminently rational, and has been made with enough time for participants to adapt plans. The decision against holding the courses online may raise more mixed responses.

Opinion of Advocate General Saugmandsgaard Øe in the case C-186/19, Supreme Site Services and Others: international organisation, execution of immunity and Brussels I bis Regulation

Conflictoflaws - jeu, 04/02/2020 - 16:31

In his today’s Opinion, Advocate General Saugmandsgaard Øe addresses the question that has recently inspired much debate, already reported to our readers this January by Rishi Gulati.

At point 5, the Opinion clarifies that – at the request of the Court of Justice – its scope is limited to analysis of the issues related to Article 1(1) of the Brussels I bis Regulation. Therefore, no considerations concerning Article 24(5) of this Regulation, also invoked in the request for a preliminary ruling, were to be expected in the Opinion.

The question at stake concerns, therefore, the applicability and/or the scope of application of the Brussels I bis Regulation in the context of a case where an international organisation brings an action to, firstly, lift an interim garnishee levied in another Member State by the opposing party, and, secondly, prohibit the opposing party from levying, on the same grounds, an interim garnishee in the future and all that on the basis of on immunity of execution that this international organisation allegedly enjoys.

In essence, at point 90, the Opinion concludes the inclusion of such action within the scope of the Brussels I bis Regulation is determined by nature of the right that the interim garnishee served to protect and the inclusion of that right in the scope of the Regulation.

Moreover, according to point 102 of the Opinion, the fact that an international organization invokes the immunity it allegedly enjoys under international law does not prevent a court of a Member State from establishing its jurisdiction under the Brussels I bis Regulation.

The Opinion is not yet available in English. Some other linguistic versions can be consulted here.

Opinion of Advocate General Campos Sánchez-Bordona in the case C-343/19, Verein für Konsumenteninformation: ‘Dieselgate’-related claims and forum of the place where the damage occurred under Article 7(2) of the Brussels I bis Regulation

Conflictoflaws - jeu, 04/02/2020 - 12:59

A non-profit consumer protection association established in Austria is bringing an action before the Austrian courts against a motor vehicle manufacturer with its registered office in Germany. The association asserts claims for damages, assigned to it by the purchasers of motor vehicles, and seeks the payment of a fixed amount and a declaration establishing the liability of the defendant for all future damage. These claims are related to an alleged emission manipulation: had the purchasers been aware of the manipulation, they would have not purchased the vehicles or would have purchased them at a reduced price.

To establish the international jurisdiction of the Austrian court, the associations relies on  Article 7(2) of the Brussels I big Regulation. It argues, in particular, that the damage materialised in the form of a reduction in the value of the purchasers’ assets, at the earliest upon the purchase and transfer of the vehicles within the Austrian territory.

In those circumstances, the national court refers the matter to the Court of Justice and asks whether the ‘place where the harmful event occurred’ within the meaning of Article 7(2) of the Brussels I bis Regulation may be construed as the place in a Member State where the damage occurred, when that damage consists exclusively of financial damage that is the direct result of an unlawful act committed in another Member State.

This issue is thoroughly analyzed in today’s Opinion of Advocate General Campos Sánchez-Bordona. At point 81, the Opinion concludes:

Article 7(2) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that, where an unlawful act committed in a Member States consists of the manipulation of a product, the existence of which is concealed and only becomes apparent after the product is purchased in another Member State for a price that is higher than its actual value:

  • a purchaser of that product, who retains the product as part of his or her assets when the defect is made public, is a direct victim;
  • the place where the event giving rise to the damage occurred is the place where the event which created the defect in the product took place; and
  • the damage occurred in the place, situated in a Member State, where the victim purchased the product from a third party, provided that the other circumstances confirm the attribution of jurisdiction to the courts of that State. Those circumstances must include, at all events, one or more factors which enabled the defendant reasonably to foresee that an action to establish civil liability as a result of his or her actions might be brought against him or her by future purchasers who acquire the product in that place.

Interestingly, in particular at points 65 et seq., the Opinion addresses the doubts raised by the referring court and relating to the question whether, in the present case, the German courts are not better placed to examine the association’s action. If anything, that would be tantamount to the implantation of some variation of the forum non conveniens doctrine within Article 7(2) of the Brussels I bis Regulation in order to give preference either to ‘Handlungsort’ or ‘Erfolgsort’. However, according to the final point of the Opinion:

Article 7(2) of [the Brussels I bis Regulation] must be interpreted as meaning that it does not authorise the court for the place where the damage occurred to determine that it does or does not have jurisdiction based on an appraisal of the other circumstances of the case, aimed at identifying which court — itself or the court for the place of the event giving rise to the damage — is best placed, in terms of proximity and foreseeability, to decide on the dispute.’

Instead of presenting a synthesis of the Opinion (press release can be found here), it is best to recommend giving it an attentive lecture. Definitely a must-read.

Aspen Underwriting: The Supreme Court overrules on the issue of economically weaker parties in the insurance section.

GAVC - jeu, 04/02/2020 - 11:11

I wrote earlier on the judgments at the High Court and the Court of Appeal in Aspen Underwriting v Kairos Shipping. The Supreme Court held yesterday and largely upheld the lower courts’ decisions, except for the issue of whether an economically equal party may nevertheless enjoy the benefit of the insurance section of Brussels Ia.

Reference is best made to my earlier posting for full assessment of the facts. The Supreme Court considered four issues.

Issue 1: Does the High Court have jurisdiction pursuant to the exclusive English
jurisdiction clause contained in the Policy? This was mostly a factual assessment (is there a clear demonstration of consent to choice of court) which Lord Hodge for the SC held Teare J and the Court of Appeal both had absolutely right. Lord Hodge refers in support to a wealth of CJEU and English (as well as Singapore) courts on assignment and contractual rights v obligations.

Issues 2 and 3: Are the Insurers’ claims against the Bank matters ‘relating to
insurance’ (issue 2) within section 3 of the Regulation and if so, is the Bank entitled to rely on that section (issue 3)?

On issue 2, Teare J and the Court of Appeal had held that the Insurers’ claim against the Bank was so closely connected with the question of the Insurers’ liability to indemnify for the loss of the Vessel under the Policy that the subject matter of the claim can fairly be said to relate to insurance.

On this issue the insurers had appealed for they argued that a claim can be regarded as a matter relating to insurance only if the subject matter of the claim is, at least in
substance, a breach of an obligation contained in, and required to be performed by,
an insurance contract. They referred in particular to Brogsitter and also to Granarolo and Bosworth.

Lord Hodge disagreed with claimant, upholding Teare J and the CA: the need for restrictive interpretation is mentioned (at 38) and at 35 it transpires that of particular relevance in his analysis is the very wording of the title of the insurance section: unlike all other special jurisdictional rules of interest, it does not include ‘contracts’. Further (at 36),

‘the scheme of section 3 is concerned with the rights not only of parties to an insurance contract, who are the insurer and the policyholder, but also  beneficiaries of insurance and, in the context of liability insurance, the injured party, who will generally not be parties to the insurance contract.’

At 40 he holds that in any event the Brogsitter test is met:

‘The Insurers’ claim is that there has been an insurance fraud by the Owners and the Managers for which the Bank is vicariously liable. Such a fraud would inevitably entail a breach of the insurance contract as the obligation of utmost good faith applies not only in the making of the contract but in the course of its performance.’

[Of note is that the ‘related to’ issue was discussed in Hutchinson and is at the CJEU as C-814/19, AC et al v ABC Sl as I flag in my review of Hutchinson).

However (issue 3) both Teare J and the CA eventually held that the insurance title failed to provide the bank with protection for they argued (as I noted with reference in particular to CJEU Voralsberger) that protection was available only to the weaker party in circumstances of economic imbalance between the claimant insurer and the defendant.

Here the SC disagrees and overrules. Lord Hodge’s reasons are mentioned at 43 ff, and I will not repeat them fully here. They include his view on which he is entirely right and as I have pointed out repeatedly, that recitals may be explanatory but only the rules in the Regulation have legal effect). Bobek AG’s Opinion in C-340/16 Kabeg features with force. Hofsoe is distinguished for, at 56,

‘In none of these cases where the CJEU has relied on the “weaker party” criterion to rule on applications to extend the scope of the section 3 protections beyond those parties who were clearly the policyholder, the insured, the beneficiary or the injured party, did the court call into question the entitlement of those expressly-named persons to that protection by reason of their economic power.’

That assessment is not entirely consistent for as Lord Hodge himself notes, and the CJEU acknowledges, in KABEG, Vorarlberger, Group Josi and GIE the jurisdiction of the forum actoris had been extended under articles 11(1)(b) and 13(2) to include the heirs of an injured party and also the employer who continues to pay the salary of the injured party while he was on sick leave.

All in all, it agree following Lord Hodge’s convincing review of the cases, that it is acte clair that a person which is correctly categorised as a policyholder, insured or beneficiary is entitled to the protection of section 3 of the Regulation, whatever its economic power relative to the insurer. (Even if particularly following Hofsoe the application of the section as a whole might need a more structured revisit by the CJEU). In the case at hand the Bank is the named loss payee under the Policy and therefore the “beneficiary” of that Policy (at 60).

In conclusion: Under A14 BIa the Bank must be sued in The Netherlands.

Finally, whether claims in unjust enrichment fall within article 7(2) (answered by Teare J in the negative) ‘does not arise’ (at 60). I am not entirely sure what this means: was it no longer challenged or was Teare J’s analysis on this straightforward? A different reply than that of Teare J would have required overruling Kleinwort Benson Ltd v. Glasgow City Council (No. 2) [1999] 1 AC 153 (HL), that a claim in unjust enrichment for mistake was neither a matter ‘relating to contract’ nor a matter ‘relating to tort’ for the purposes of EU private international law – an issue I discussed in my earlier posting. With the SC’s refusal to entertain it, that authority therefore stands.

One does wish that the CJEU at some point have an opportunity further to clarify the insurance section and will do so in a holistic manner. The SC judgment here is one big step in the good direction.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2.

Peters, Gless, Thomale & Weller on Business and Human Rights

EAPIL blog - jeu, 04/02/2020 - 08:00

Anne Peters (Max Planck Institute for Comparative Public Law and International Law), Sabine Gless (University of Basel), Chris Thomale (Ruprecht-Karls Universität Heidelberg) and Marc-Philippe Weller (Heidelberg University) have posted Business and Human Rights: Making the Legally Binding Instrument Work in Public, Private and Criminal Law on SSRN.

The paper’s starting point is the United Nations Human Rights Council working group’s revised draft of a Legally Binding Instrument to Regulate, in International Human Rights Law, the Activities of Transnational Corporations and other Business Enterprises of July 2019. The paper examines the draft treaty’s potential to activate and operationalize public law, private law, and criminal law for enforcing human rights. It conceptualizes a complementary approach of these three branches of law in which private and criminal legal enforcement mechanisms stand in the foreground. It argues for linking civil (tort) and criminal liability for harm caused by hands-off corporate policies, complemented by the obligation to interpret managerial duties in conformity with the human rights standards of public international law. The combination of public, private, and criminal law allows effective enforcement of human rights vis-à-vis global corporations.

The paper is part of the Max Planck Institute for Comparative Public Law & International Law (MPIL) Research Paper Series.

Site Maintenance Tonight – Some Small Disruptions, But We are Up and Running!

EAPIL blog - mer, 04/01/2020 - 20:00

If you notice something strange on the EAPIL website today, don’t worry. We’re upgrading some of the site functions, which may result in small disruptions. The site as such is up and running. Apologies for any inconvenience!

AG Tanchev’s Opinion on the Rome III Regulation

EAPIL blog - mer, 04/01/2020 - 08:00

On 26 March 2020, advocate general Tanchev delivered his Opinion on the JE case (case C-249/19) – the first case to be decided by the CJEU on the Rome III Regulation on the law applicable to divorce and legal separation (Regulation 1259/2010).

At stake is the interpretation of Article 10 of the Regulation, according to which, ‘Where the law applicable pursuant to Article 5 or Article 8 makes no provision for divorce or does not grant one of the spouses equal access to divorce or legal separation on grounds of their sex, the law of the forum shall apply.’

The question for a preliminary ruling, from the Regional Court of Bucharest, revolves around the expression ‘the law applicable pursuant to Article 5 or Article 8 makes no provision for divorce.

The referring court asks whether that should be interpreted

(a) in a strict, literal manner, that it is to say only in respect of a situation where the foreign law applicable makes no provision for any form of divorce, or

(b) more broadly, as also including a situation where the foreign law applicable permits divorce, but does so in extremely limited circumstances, involving an obligatory legal separation procedure prior to divorce, in respect of which the law of the forum contains no equivalent procedural provisions?

THE FACTS OF THE CASE

JE and KF married in Romania, on 2 September 2001. Fifteen years later, JE brought an action for divorce, also in Romania. By civil judgment of 20 February 2018, the national court established the general jurisdiction of the Romanian courts and established that the law applicable to the dispute was Italian law, pursuant to Article 8(a) of Regulation No 1259/2010, since — on the date on which the court was seized of the divorce petition — the parties were habitually resident in Italy (the parties have resided in Italy for a considerable time).

According with Italian law, a divorce petition such as the one brought by JE can be applied for only where there has been a legal separation of the spouses established or ordered by a court and at least three years have passed between the legal separation and the time at which the court was seized of the divorce petition (the statement, in reality, does not accurately describe the Italian legislation on divorce, as reformed: in 2015, a bill was passed which reduced the three-year period to a one-year period, adding that six months suffice in particular circumstances; arguably, however, the change does not affect the substance of the AG’s reasoning).

Since it had not been demonstrated that a court decision had been made to effect a legal separation of the parties and since Romanian law makes no provision for legal separation proceedings, the court ruled that those proceedings had to be conducted before the Italian courts and, accordingly, any application to that effect made before the Romanian courts was inadmissible.

THE PROPOSAL AND ITS REASONING

The Opinion submits that Article 10 of Regulation No 1259/2010 must be interpreted strictly: the expression ‘where the law applicable pursuant to Article 5 or Article 8 makes no provision for divorce’ therein relates only to situations in which the applicable foreign law does not foresee divorce under any form.

AG elaborates his proposal in a classical, orthodox way. First, he examines the wording and the scheme of the provision. The law of the forum only applies ‘where the law applicable pursuant to Article 5 or Article 8 makes no provision for divorce’; the wording ‘makes no provision for divorce’ cannot mean that the applicable law ‘provides for divorce under certain (substantive or procedural) conditions’. AG explains that the provision is a consequence of the universal application of the Union conflict-of-law rules in relation to divorce and legal separation, in accordance with Article 4 of the same regulation. He acknowledges that Article 10 of Regulation No 1259/2010 endorses favor divortii, but with limits. In particular, it does not cover a case where the marriage cannot be ended because certain prerequisites are not met: for instance, where the applicable law sets out restrictive grounds for divorce such as the requirement of a long(er) period of separation.

To back his opinion, AG seeks additional support in systemic arguments, which he derives from Article 13 and Recital 26. Article 13 of Regulation No 1259/2010 provides that nothing in that regulation shall oblige the courts of a participating Member State whose law does not provide for divorce to pronounce a divorce. According to Recital 26, ‘where this Regulation refers to the fact that the law of the participating Member State whose court is seized does not provide for divorce, this should be interpreted to mean that the law of this Member State does not have the institut[ion] of divorce’. AG posits that the Recital gives an explanation beyond the specific context of Article 13 on the interpretation of the expression ‘makes no provision for divorce’- hence, it also applies to Article 10, which employs the same expression.

The historical interpretation supports as well the construction of the provision proposed in the present Opinion. AG recalls that the first alternative contained in Article 10 was introduced above all with a view to Maltese law, which, at the time of drafting of the Regulation, did not provide for the granting of any divorce.

The spirit and purpose of Article 10 speak equally in favor of a strict interpretation. Through the adoption of common rules on conflict-of-laws, the participating Member States accepted the principle that their courts could be obliged to apply foreign law despite differences which this might present vis-à-vis their own national law; they also accepted limited exceptions to that principle. Article 10 is one of them: like all exceptions, it must be interpreted strictly. Moreover, an extensive interpretation would frustrate the spouses’ autonomy in relation to divorce and to legal separation (foreseen under Article 5 of the regulation), and prevent the application (pursuant to Article 8 of the regulation, in the absence of a choice by the parties) of the law which is most closely linked to them.

CONSEQUENCES OF THE ANSWER

In addition to giving advice to the CJEU, AG Tanchev suggests how it could provide guidance on the consequences of the proposed answer to the preliminary question. In this regard, following the Commission, AG proposes that the court seized apply the substantive conditions foreseen by the applicable law and forgo the application of any procedural conditions foreseen by that law, in circumstances –like in the case at hand- where the procedural law of the forum does not allow for those procedural conditions to be met.

No doubt AG’s intention is to be praised. At the same time, and because the problem the Romanian court is facing can be characterized as pertaining to procedure (the Romanian court declared the petition inadmissible, which by the way begs the question, was it applying Romanian law as lex fori , or rather Italian law?), the proposed solution may be seen a little bit in the verge of overstepping the competences of the Court (who could nevertheless include it obiter). In addition, the parallelism AG Tanchev draws with EU regulations where respect for the substance of the applicable law in the State of the forum, when the latter’s law has no equivalent (substantive) concept in law, is reached through adaptation, is questionable.

Finally, still related to this part of the proposal: AG Tanchev indicates that the Romanian court should “confirm in its decision in the divorce proceedings that that condition of legal separation was fulfilled”. Fine, except for the fact that a problem remains regarding divorce: according to Italian law at least three years must have passed between the legal separation and the time at which the court was seized of the divorce petition. How is the Romanian court going to deal with this – for, obviously, no date of separation is available? (Further: it the parties agreed on the three-years period having elapsed, will their assertion be accepted ?)

 

In spite of the open questions and doubts just described, I believe this is an Opinion that will well received. Indeed, concerning the core subject matter it is not a surprising one; it is at any rate is correct in contents and rationale, and a well articulated piece of work. And – not that common in the writings of the CJEU –  one with many references to legal doctrine.

Lamesa Investments v Cynergy. Rome I-like ‘mandatory law’ provisions applied to US secondary sanctions.

GAVC - mar, 03/31/2020 - 17:17

A long overdue post I fear (I hope in the next week and a half or so to turn to draft posts which for all sorts of reasons have gotten stuck in the queue, finally to be published) on Lamesa Investments Ltd v Cynergy Bank Ltd  [2019] EWHC 1877 (Comm). Latham and Watkins have had background for some time here.

The case concerns a standard clause in an English law governed contract on ‘mandatory law’ as an excuse for contractual non-performance. Here, the clause (in a (credit) facility agreement) read: clause 9.1: (party is not in breach of the agreement if) “… sums were not paid in order to comply with any mandatory provision of law, regulation or order of any court of competent jurisdiction”.

“Regulation” was defined in the Agreement as including “any regulation, rule, official directive, request or guideline … of any governmental, intergovernmental, or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation”.

Lamesa argued that Cynergy could not rely on clause 9.1 because:

  • provision of law” meant a law that applied to a UK entity, acting in the UK, that had agreed to make a sterling payment pursuant to a contract governed by English law; and
  • mandatory” meant that the relevant law made it compulsory for Cynergy to refuse payment

‘In order to comply’ was the focus of discussions, in particular whether there was any territorial limit to it. Pelling J took a flexible approach, holding that Cynery could not reasonably be expected to have excluded the only type of sanction which it could have reasonably foreseen, namely secondary sanctions imposed by US sanctions law (at the time the parties entered into the Facility Agreement, Cynergy was aware that it was possible that US sanctions would be imposed on Lamesa).

Of interest to the blog is the brief reference to Rome I (and the Convention), at 23:

‘It was submitted on behalf of CBL and I agree that English lawyers during the period the FA was being negotiated and down to the date when it became binding would have understood a mandatory law to be one that could not be derogated from. The context that makes this probable includes the meaning given to the phrase “… mandatory provision of law …” in the Rome Convention 1980 and the Rome 1 Regulation on Choice of Law. It was not submitted by CBL that the construction for which they contend applies by operation of either regulation. It submits however and I accept that they provide some support for the submission that lawyers at the relevant time would have understood the effect of the word “mandatory” to be as I have described. It goes without saying that it was not open at any stage to either party to dis-apply the US statutes that purported to apply secondary sanctions by their agreement, nor did the parties attempt to do so either in the FA itself or afterwards.’

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.8, Heading 3.2.8.3.

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