Droit international général

The EAPIL Blog hosts today two posts on the ruling of the Court of Justice in E.E., a case regarding the Succession Regulation decided on 16 July 2020. The firs post, by Matthias Lehmann, appeared this morning. The second post, by Carlos Santaló Goris, a research fellow at the MPI Luxembourg and a Ph.D. candidate at the University of Luxembourg, is featured below.

Introduction  

On 16 July 2020, the Court of Justice of the European Union (“CJEU”) delivered its sixth judgment on Regulation No 650/2012 (the Succession Regulation): C-80/19, E. E.

The preliminary reference allowed the CJEU to address several questions about the
Succession Regulation’s rules on jurisdiction, applicable law, and recognition and enforcement. It also gave the CJEU the opportunity to clarify certain elements of the Succession Regulation: some of them new (such as the determination of the habitual residence), others already familiar to the Court (e.g. are notaries ‘courts’ for the purposes of the Succession Regulation?).

Facts of the Case and Questions Referred

E.E.’s mother – the deceased – was a Lithuanian national who, in 2013, got married to a German national and moved to Germany. The same year she made a will before a Lithuanian notary. In 2017, she passed away in Germany. E.E., also of Lithuanian nationality, requested a notary in Kaunas (Lithuania) to open the succession and issue a certificate of succession rights. The notary rejected the requests arguing the deceased was habitually resident in Germany: therefore, according to the jurisdictional rules of the Succession Regulation, it was up to German authorities to open the succession. E.E. challenged the notary’s refusal. The case ended up before the Supreme Court of Lithuania, which referred the following questions to the CJEU:

(1) Is a situation such as that in the case under examination — in which a Lithuanian national whose habitual place of residence on the day of her death was possibly in another Member State, but who in any event had never severed her links with her homeland, and who, inter alia, had drawn up, prior to her death, a will in Lithuania and left all of her assets to her heir, a Lithuanian national, and at the time of the opening of the succession it was established that the entire estate comprised immovable property located solely in Lithuania, and a national of that other Member State surviving his spouse expressed in clear terms his intention to waive all claims to the estate of the deceased, did not take part in the court proceedings brought in Lithuania, and consented to the jurisdiction of the Lithuanian courts and the application of Lithuanian law — to be regarded as a succession with cross-border implications within the meaning of [the Succession Regulation]?

(2) Is a Lithuanian notary who opens a succession case, issues a certificate of succession rights and carries out other actions necessary for the heir to assert his or her rights to be regarded as a ‘court’ within the meaning of Article 3(2) of [the Regulation]?

(3) If the second question is answered in the affirmative, are certificates of succession rights issued by Lithuanian notaries to be regarded as being decisions within the meaning of Article 3(1)(g) of [the Succession Regulation] and must jurisdiction for that reason be established for the purpose of issuing them?

(4) If the second question is answered in the negative, should the provisions of Articles 4 and 59 of [the Succession Regulation] be construed as meaning that Lithuanian notaries are entitled to issue certificates of succession rights without following general rules on jurisdiction and that such certificates will be held to be authentic instruments which also give rise to legal consequences in other Member States?

(5) Must Article 4 of [the Succession Regulation] (or other provisions thereof) be construed as meaning that the habitual place of residence of the deceased can be established in only one specific Member State?

Should the provisions of Articles 4, 5, 7 and 22 of [the Regulation] be construed and applied in such a way that, in the present case, in accordance with the facts as set out in the first question, it must be concluded that the parties concerned agreed that the courts in Lithuania should have jurisdiction and that Lithuanian law should be applied?

One or More Habitual Residence(s), and Where?

The CJEU addressed first whether a deceased may have more than one habitual residence for the purposes of the Succession Regulation. Indeed, in the case at hand, there were data suggesting that the habitual residence of the de cujus could have been located in two Member States: she had lived for a while in Germany when she passed away, but she held Lithuanian nationality and all her assets were in Lithuania. However, the CJEU made it clear that there can be only one habitual residence. A different answer would lead to a fragmented succession, something that the Succession Regulation aims at avoiding (para. 41).

Was the habitual residence of the deceased in Germany, or rather in Lithuania? The Regulation itself acknowledges that determining the place of habitual residence is not always easy. Some domestic courts have already struggled with this issue. The CJEU relies on the guidance offered by the Regulation’s Preamble, Recitals 23 and 24, inviting the referring court to consider both in order to establish the habitual residence of the deceased in the case at hand.

It is here submitted that by relying on the recitals, the CJEU has vested them with some kind of normative value. From now on, domestic authorities shall consider recitals 23 and 24 of the Succession Regulation when confronted with the need to determine the habitual residence of a deceased. Moreover, the Court’s reasoning indicates how to apply the recitals. First, the national authorities shall rely on Recital 23 to try and establish a close and stable connection with a Member State, taking into account both subjective factors (e.g., why the deceased lived in that Member State) and objective factors (e.g., how long the deceased spent in that Member State). Only if they fail can domestic authorities rely on Recital 24 and consider other data, such as the nationality or the location of the assets.

A Succession with Cross-border Implications?

The CJEU was asked as well whether the succession of E.E.’s mother qualified as one with cross-border implications. Indeed, as the CJEU recalls, the Succession Regulation only applies to such successions (paras. 34 – 35). However, there is no definition of what the European legislator meant by ‘cross-border implications.’ In this sense, the CJEU states: “it must be assessed whether the succession has a cross-border nature due to the location of another element of it in a State other than that of the deceased’s last habitual residence” (para. 42). But what are these other elements? In a non-exhaustive manner, the CJEU referred to the location of the deceased’s assets in a Member State other than the one of habitual residence of the deceased (para. 43). Therefore, in the present case, the succession of E.E.’s mother would fall under the scope of the Regulation if Germany prevails as “habitual residence”, for the estate assets (an apartment) are located in Lithuania.

By contrast, if ultimately (very unlikely, though) the national court prefers Lithuania as place of habitual residence, both the assets and habitual residence would be located in the same Member State. Would the succession be a purely internal one, then? The question arises whether other factors confer a cross-border dimension to a succession; the E.E. judgment is of little help here. Instead, one should look at the AG Opinion, where reference is made as well to the heirs’ habitual residence as a significant element to determine the succession’s cross-border implications (para. 65). In the present case, both potential heirs (E.E. and his stepfather) had their habitual residence in Germany. Therefore, should the deceased’s habitual residence be deemed to be Lithuania, the succession would still be one of interest for the Regulation.

Nothing New Concerning (Lithuanian) Notaries

The referring court also asks whether Lithuanian notaries are “courts” within the meaning of the Succession Regulation. A positive answer would have meant that they are subject to the Succession Regulation’s jurisdictional rules. The question is not new for the CJEU. In C-658/17, WB, a similar one had been referred concerning Polish notaries. The CJEU answered in the negative: the Polish notaries lack “judicial functions” (para. 61), i.e., “the power to rule of [their] own motion on possible points of contention between the parties concerned“(para. 55).

The CJEU applied the same logic in E.E. It appears from its reasoning that Lithuanian notaries in functions like the one deployed in the case at stake are not courts within the meaning of Article 3 of the Succession Regulation (para. 53). However, the CJEU does not say it so in so many words, but leaves it to the referring court to decide (para. 54).

Since the CJEU follows WB, the same critical remarks the judgment has met within scholarly circles will probably apply to E.E.. The CJEU did not fully elaborate on the notion of court, but simply referred to one of the characteristics mentioned in Article 3(2). Additionally, the notion of “jurisdictional functions” retained appears to be inconsistent with C-20/17, Oberle, where the CJEU ruled that the issuance of a domestic certificate of succession by a German court was subject to the Succession Regulation’s jurisdictional rules, in spite of the fact that the proceeding were not “judicial” in the sense of WB (and, now, E.E.). Several scholars have expressed their surprise that a certificate of succession rendered by a German court fall within the Succession Regulation’s jurisdictional scheme, but one rendered by a Lithuanian or a Polish notary does not.

One may wonder whether E.E. was actually a suitable occasion to work out a comprehensive notion of “court”. True, in E.E., the question was formulated in slightly broader terms than in WB. In the latter, the referring court asked whether a Polish notary issuing a certificate of succession is a ‘court’. Conversely, in the latter, the referring court asked whether a Lithuanian notary was a court when it “issues a certificate of succession rights and carries out other actions necessary for the heir to assert his or her rights.” This notwithstanding, it seems that Lithuanian and Polish notaries are quite similar. Thus, it is not surprising that the CJEU followed the same approach. There might be better occasions to address the issue again.

The Lithuanian Certificate of Succession: Judgment or Authentic Instrument?

The CJEU was also requested to determine whether a Lithuanian domestic certificate of succession was a judgment (if notaries are regarded as courts), or an authentic instrument (if notaries are not regarded as courts). The Court explored both possibilities:

Should the notaries be “courts” in the sense of the Regulation, they would be subject to its jurisdictional rules (para. 62), and the national certificate of succession would be a judgment within the meaning of Article (para. 63).

Conversely, if notaries are not ‘courts’, the certificate of succession would be an ‘authentic instrument,’ as long as it fulfils the characteristics imposed by the Succession Regulation on this type of instruments (paras. 72 – 73).

The CJEU’s outcome is hardly surprising considering that it had already explored this point in WB, on the Polish domestic certificate of succession.

The Parties’ Autonomy

In principle, under the Succession Regulation, the courts’ jurisdiction and the applicable law corresponds to the Member State of the deceased’s habitual residence. However, the Regulation grants a certain degree of autonomy to the deceased and to the heirs to opt for a different applicable law and another jurisdiction, respectively. This freedom is nonetheless limited: the deceased can only choose the law of the State his/her nationality (Article 22); the heirs can only opt for the courts of a Member State whose law had been chosen by the deceased (Article 5, Article 7). In E.E., the referring court was uncertain as to whether the deceased had actually opted for the law of her nationality, and the heirs for the jurisdiction of the Lithuanian courts.

Concerning the applicable law, E.E.’s mother had not expressly chosen the law of her nationality. Nonetheless, Article 83(4) of the Regulation creates a fiction according to which “if a disposition of property upon death was made prior to 17 August 2015 in accordance with the law which the deceased could have chosen in accordance with this Regulation, that law shall be deemed to have been chosen as the law applicable to the succession”. Since E.E.’s mother drew up her will before a Lithuanian notary in 2013 according to Lithuanian law, the fiction applies (para. 26) .

Lithuanian law being applicable, the referring court wondered if the potential heirs (E.E. and the deceased’s husband) had chosen the jurisdiction of Lithuanian courts. According to the Succession Regulation they could have done it through a choice-of-court agreement (Article 5); or through express declarations in which they accepted the jurisdiction of the court seized (Article 7). In the present case, unilateral declarations had been made by the deceased’s husband in Germany waiving any claim to the estate, consenting to the jurisdiction of the Lithuanian court and refusing to enter an appearance before it in the proceedings under way in that State. It is clear that these declarations do not amount to an Article 5 choice-of-agreement (para. 85); could they be an “express declaration” in the sense of Article 7? One more time, the CJEU leaves the question open, to be decided by the referring court. AG Campos Sánchez-Bordona went a step further, suggesting a flexible reading of the party’s autonomy. In his words, “it is appropriate to recall that the Regulation must not be read in such a way as to prevent parties from settling a succession out of court in a Member State which they have chosen, if that is possible under the law of that Member State” (para. 122).

Overall Assessment

E.E. will hardly be seen as a landmark case on the Succession Regulation. The main contribution/output of this judgment is the elaboration on an autonomous concept of “habitual residence”, based on the Preamble of the Regulation; and the characterization of Article 83(4) as a fiction, and not a presumption. Beyond that, the answer to the other questions is relatively basic, sometimes even disappointing . The CJEU either relies on what it had already said in previous cases without moving forward (e.g., Oberle; WB); or it paraphrases the text of the Succession Regulation. The referring court may find the AG’s Opinion more instructive than the judgment: something not unusual, and – even if not aimed at by the CJUE’s procedural and estructural rules- a good example of teamwork.

At any rate, E.E. remains an interesting case in that it reflects common difficulties faced by the domestic authorities when dealing with the Succession Regulation.

The EAPIL Blog hosts today two posts on the ruling of the Court of Justice in E.E., a case regarding the Succession Regulation decided on 16 July 2020. Matthias Lehmann and Carlos Santaló Goris, the authors of the two contributions, approach the judgment from different angles and express different views (the post by Carlos Santaló Goris will be out later today). Readers are encouraged to join the discussion!

Sometimes the Directorates for Legal Translations of the Court can take forever to translate a judgment into the other official languages. The bottleneck is increasingly the English language, as there seems to be a draught of English interpreters. An illustration of the phenomenon is the judgment in E.E. (Case C-80/19), which was rendered on 16 July 2020, and for which, to this day, no English translation is yet available.

This should not stop us from taking a closer look at the judgment. In fact, it is the first one to deal with several fundamental issues of the Succession Regulation. Let’s take them one by one after having recapitulated the facts.

Facts

A Lithuanian national had married a German national and lived with him in Germany. In 2013 she made a will before a notary in Lithuania, designating her son E.E. as her only heir. When she died, her estate basically consisted of a piece of real estate in Lithuania.

After the death of his mother, E.E. applied to a Lithuanian notary for a certificate of succession. The notary refused to deliver it on the ground that the deceased’s habitual residence had been in Germany. E.E. brought a claim against the notary before the Lithuanian tribunals. During the proceedings, the German spouse of the deceased declared to have no interest in the succession and agreed to the jurisdiction of the Lithuanian tribunals.

Based on these facts, the Lithuanian Supreme Court decided to refer a number of preliminary questions to the CJEU.

Succession with Cross-Border Implications

The first question raised related to the applicability of the Succession Regulation. The Lithuanian Supreme Court asked whether a succession like the one underlying the reference for preliminary ruling could be considered as having cross-border implications. The notion “succession with cross-border implications” is not used in the rules of the Regulation, but rather in its Preamble (Recitals 1, 7 and 67) as well as in the legal basis on which the Regulation was enacted (Art. 81 TFEU).

To ask whether a case like the present one has cross-border implications may seem factitious, given that the deceased had lived in Germany and owned an asset in Lithuania.

But the Lithuanian Supreme Court highlighted that despite having her last habitual residence in Germany, the deceased had never broken her links with her country of origin, where she had drawn up a will and were almost all her estate was located. The referring court therefore also raised the (fifth) question whether the habitual residence of the deceased can only be located in a specific Member State.

This implied the possibility of multiple habitual residences under the Regulation, which would have been ground-breaking indeed.

The CJEU takes the opportunity to underline that the Regulation is built on the concept of a single habitual residence of the deceased (para 40). Any other interpretation would lead to a fragmentation of the succession (para 41).

Unsurprisingly, the Court of Justice found that a succession has cross-border implications where the habitual residence of the deceased and her major assets were located in different Member States (para 45). One might even say that this is a paradigm case falling within the scope of the Regulation. Thus, the first and the fifth questions were essentially smokescreens which were easily dealt with by the court.

Notion of Court, Scope of Jurisdictional Rules and Authentic Instruments

The next set of questions (2 to 4) concerned the jurisdiction of the notary to issue an authentic instrument of succession.

The CJEU first clarified helpfully that a Lithuanian notary is not to be regarded as a “court” within the meaning of Art. 3(2) of the Regulation because it does not have the right to exercise judicial functions (para 54). The only exception is where it acted pursuant to a delegation of power by a judicial authority or under the control of such an authority (para 55). The CJEU left it to the national court to ascertain whether this is the case.

If the notary is not to be regarded as a court – which seems highly likely –, she would not be bound by the rules on jurisdiction enshrined in Art. 4 to 19 of the Regulation (paras 66 and 80). In particular, she can issue a national succession certificate regardless of the habitual residence of the deceased (para 80).

The Court rightly emphasises in this context that the principle of unity of succession is not absolute (para 69). Nothing therefore stops authorities from different Member States to issue certificates regarding the same succession. Article 64 of the Regulation is an outlier because it concerns the European Certificate Succession, which indeed can only be issued by the authorities of one Member State (para 70).

Although the notary issuing a national certificate of succession is not bound by the rules on jurisdiction of the Regulation, the authentic instrument she issues under national law will have the same evidentiary effects in other Member States as it has in the Member State of origin (paras 75 to 77). This is clearly set out in Art. 59 of the Regulation, which has no link whatsoever to the provisions regarding jurisdiction in Art. 4 to 19 of the Regulation. National authentic instruments will therefore freely circulate within the Union independently of the Member State in which they are made.

Testamentary Choice of Law

 Perhaps the most interesting part of the decision (question 6) concerns the conditions of a choice of law in a will. The deceased had drawn up the will in Lithuania before the entry into force of the Regulation in 2015. The Court concludes that this disposition is deemed to be a choice of law under Art. 83(4) of the Regulation given that the will was made in accordance with Lithuanian law.

Interestingly, the Court bases the conclusion that the will was made “in accordance with Lithuanian law” on the simple fact that the will was made in Lithuania. No other conditions, such as an expression of the testator’s intent or an allusion or reference to the law of Lithuania in the text of the will, seem to be required.

This generous interpretation by the Court greatly facilitates the determination of a choice of law before the entry into force of the Regulation. In future cases, it will be sufficient to prove that the will has been made before a notary of a certain Member State in order to show that the deceased chose the law of this Member State.

Conclusion

Even bad references can make good law. The CJEU has used the opportunity of the somewhat confused reference for preliminary ruling by the Lithuanian Supreme Court to clarify some important issues regarding the Succession Regulation. In particular, it is now clear that a single habitual residence of the deceased has to be identified, that notaries issuing national certificates of succession are not bound by the rules on jurisdiction of the Regulation, and that wills made before a notary prior to the entry into force of the Regulation amount to a choice of the law of the notary’s Member State. If we could finally get this decision in English, the situation would be even clearer. 

In Koninklijke Philips NV v Tinno Mobile Technology Corporation & Ors [2020] EWHC 2553 (Ch) Mann J considers the English side of a licence on  ‘FRAND’ (fair, reasonable and non-discriminatory) terms.  In these English proceedings Philips seek inter alia, a declaration that the terms it has offered are FRAND, or alternatively that FRAND terms be determined. Its injunction claim accepts that the injunction will only come into force if a worldwide FRAND licence is not accepted by TCL, one of the defendants who is seeking the licence. TCL have commenced proceedings in France which, inter alia, seem to seek to have FRAND terms determined. Philips attempted to have those proceedings stayed pursuant to Article 29 Brussels Ia, but that attempt failed, as did an application for a stay under Article 30 BIa. In turn, not surprisingly, TCL seek a stay of the English proceedings, including, crucially, the vacation of a trial date in November which is intended to determine FRAND issues, in favour of its French proceedings pursuant to the same Articles 29 and/or 30 Brussels Ia.

Philips’ claim form says it is for infringement of two of its European patents, corresponding injunction (prohibiting further infringement) and damages or an account of profits, and other ancillary relief.

At 49 in assessing the impact of the French judgment and the scope of its res judicata, Mann J justifiable refers to C-456/11 Gothaer, that it is not just the ‘dispositif’ of a judgment which has res judicata, but also the core reasoning: at 40 of the CJEU judgment: ‘the concept of res judicata under European Union law does not attach only to the operative part of the judgment in question, but also attaches to the ratio decidendi of that judgment, which provides the necessary underpinning for the operative part and is inseparable from it …’

His enquiry of the dispositif and the French judge’s reasoning as well as, to a certain extent, the submissions of the parties, leads Mann J to conclude that the French judge did not hold that the French court was first seized of FRAND proceedings. Instead, she held that the proceedings in England and the proceedings in France did not (for the purposes of A29) have the same subject matter. That means that the question of first seised became irrelevant.

Mann J then holds himself that the English court was first seized of the FRAND issue and consequently has no power under A30 BIa to stay its proceedings. It was suggested in vain by counsel for the defendants that Articles 29 and 30 are not acte clair on the point of new actions arising in an existing action, given a distinction between the word “proceedings” in Article 29 and “actions” in Article 30 at least in the English version of those Articles.

The jurisdictional challenge was rejected and the relief granted. Geert. (Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 2.2.14.5. Third edition forthcoming February 2021. https://twitter.com/GAVClaw/status/1309481362186031105

A free webinar on Access to Justice in cross-border Litigation: Lugano v. the Hague will take place on 27 October 2020, at 12.00 CET, organised by the UK Law Societies Joint Brussels Office.

The webinar aims at exploring the implications of the UK leaving the EU system of enforcement and recognition of judgments in civil and commercial matters on access to justice for citizens.

In particular, the speakers will examine what the future relationship of the UK and EU regarding the enforcement of judgments in civil and commercial matters will look like under both the Lugano Convention and alternatively, The Hague Judgments Convention. The panel will discuss the consequences of both scenarios on citizens and businesses.

The panellists are Philip Thorsen (Partner at Mazanti-Andersen Korso Jensen, Copenhagen), Christopher Deacon (Partner at Stewart & Stewart, London) and Guido Callegari (Partner at De Berti Jacchia Franchini Forlani, Milan).

The discussion will be moderated by Diana Wallis (University of Hull, former President of the European Law Institute and former Vice-president of the European Parliament).

More details and advance registration here.

A quick note for archival purposes on the French Supreme Court judgment earlier this month in which it upheld the lower courts’ decision (which had been reversed upon appeal) that European Convention rights do not trump the impossibility under English law, which is the law under which the claimant had been adopted, for the adopted to confirm descent from both the adopted parents and the biological father.

It is important to keep in mind the specific circumstances of the case in which the Supreme Court let the stability of family relations prevail over ECHR rights. The adoption went back to 1966 (the UK birth to 1958). The true identity of the father seemingly had always been known to the applicant. The mother (1963) and the suspected biological father (2011)  have passed away, the real issue would seem to be inheritance related.

Geert.

 

Interesting French supreme court judgment upholding finding under applicable English law that descendance following adoption trumps later attempt to establish blood descendance
Preference for stability of family relations found not to infringe adopted's A8 #ECHR rights @ECHR_CEDH https://t.co/Gtht0d8YgH

— Geert Van Calster (@GAVClaw) October 15, 2020

The success of the New York Convention has made arbitration a preferred means of dispute resolution for international commercial transactions. Success in arbitration often depends on the extent to which a party may, in advance, ensure that assets or evidence is secured in advance, or that the other party is required to take steps to secure the status quo. This makes the availability of provisional measures granted by either arbitral tribunals or by courts important to the arbitration process. In this chapter, Ron Brand of the University of Pittsburgh School of Law considers the existing legal framework for such provisional measures in aid of arbitration, giving particular attention to the source of the rules that might govern such relief related to international commercial transactions and the arbitration of disputes they may generate. These include the New York Convention, the applicable lex arbitri, institutional arbitration rules, and the arbitration contract. He considers how these sources do or do not provide a comprehensive and coherent framework for effective dispute resolution – including especially the effective satisfaction of any resulting arbitral award – and some of the ways in which the arbitration clause may be drafted to specifically take into account the often unanticipated, but always possible, need for provisional measures.

TThe article is accessible here

Joseph William Singer (Harvard Law School) has published a new casebook on the American Conflict of Laws (Choice of Law – Patterns, Arguments, Practices). As its titles makes clear, its focus is on choice of law, but the book also includes two chapters on Procedure and Constitutional Law which present issues related to jurisdiction and foreign judgments.

The book is different from other American casebooks on conflict of laws in many respects. For foreign scholars, the most important will probably be that it is far more readable and accessible. US casebooks typically offer extracts of cases followed by questions. This might be good to teach American students to think like a lawyer, but for those who will not attend the class, it is not easy to know what American law actually is. Singer summarises the cases instead, and offers comments and his own views on the development of the law.

In particular, the book is a great source on the trends of the emerging Third Restatement, that Singer presents and assesses. The Restatement is still very much a work in progress, but some chapters have now been approved by the council of the American Law Institute, in particular on choice of law and torts, and the drafts are not freely available. The book offers an excellent insight in the most recent version of December 2019, in particular the new choice of law rules on torts.

The book also promotes a different type of learning. More specifically, it promotes experiential learning through persuasion, and includes for that purpose 11 moot courts exercises.

This book provides a new way to learn about the topic of conflicts of law through experiential learning. Most books describe the approaches that have been adopted over time to decide conflicts of laws. This book describes those approaches and includes the emerging Third Restatement. To promote experiential learning, it does more: First, it explains patterns of cases so that students can fit new cases into established frames of reference. Second, it distinguishes between easy cases and hard cases so students can determine when a case cannot be easily resolved. Third, it provides detailed arguments that are typically made on both sides of hard cases that fit the typical patterns. Fourth, it concludes with moot court exercises that students could perform in class to practice advocacy in this field and judging.

With new requirements to provide students with experiential learning opportunities, this text enables any teacher to give students the tools they need to understand the issues in the field, the reasons why cases are hard, the arguments that are available on both sides, and justifications that judges can give for resolving cases one way or the other.

Finally, the book ends with a chapter addressing the issues arising out of the existence of Indian nations and tribal sovereignty in the US, which add 573 governments in the conflicts equation, and are typically neglected in US conflicts books.

We have already reported on PSEFS, that stands for “Personalized Solution in European Family and Succession Law”, a co-funded EU Justice project, on two occasions: here and here.

On Tuesday 20 & Wednesday 21 October 2020 the project leader University of Camerino and its partners are organising the Final PSEFS Project Events to disseminate at the project results and discuss the pressing issues in the area of cross-border implications of couples’ property and succession. Rich programme includes many speakers from justice and academia. The event will take place online and participation is free of charge while registration is mandatory – here.

Most recent project outcomes include:
– handbook available in 5 languages: M.J. Cazorla González, M. Giobbi, J. Kramberger Škerl, L. Ruggeri & S. Winkler (eds.), Property Relations of Cross-Border Couples in the European Union, Napoli, Edizioni Scientifiche Italiane, 2020.
– model documents and guidelines for practitioners in 5 languages: M.J. Cazorla González, L. Ruggeri (eds.), Guidelines for practitioners in cross-border family property and succession law (A collection of model acts accompanied by comments and guidelines for their drafting), Dykinson, 2020.
Both are available via this link at the bottom of the page.

Guillaume Laganière has published his doctoral thesis (McGill University, May 2020) “Liability for transboundary pollution in private international law: a duty to ensure prompt and adequate compensation” online here. Because of the author’s comparative approach to the topic, the work is not only interesting to Canadian readers. The abstract reads as follows:

 

Our legal response to transboundary pollution depends not only on the adoption of preventive measures and regulatory oversight but also on the existence of civil liability mechanisms. Victims fundamentally seek to hold polluters liable for breaching their duties or deviating from basic standards of diligence, to obtain redress for the damage that ensued and to prevent it from continuing. The process becomes difficult, however, when pollution crosses borders and several domestic regimes are involved. This is where private international law comes into play.

This thesis investigates the regulatory function of private international law with respect to transboundary pollution. It uses the International Law Commission’s Principles on the Allocation of Loss in the Case of Transboundary Harm as a benchmark and assesses Canadian private international law accordingly. It suggests that states have a duty to ensure the availability of prompt and adequate compensation for all victims of transboundary pollution (local or foreign). States must implement domestic measures to facilitate claims against transboundary polluters. This includes equal access to justice and equal remedies for all victims. Private international law plays a crucial role in this context: courts must have jurisdiction to hear cross-border claims and apply a law that is favourable to compensation under choice of law rules.

This thesis builds from international environmental law to identify preferable rules of jurisdiction and choice of law for transboundary pollution in the Canadian context. It also addresses the enforcement of foreign judgments against local polluters. The conclusions of this thesis have implications for all cross-border environmental litigation, including climate change litigation against greenhouse gas emitters currently unfolding in domestic courts around the world.

A new commentary on the Brussels I bis Regulation, in Greek, has recently been published.

The book is edited by Paris S. Arvanitakis and Evangelos Vassilakakis, and forms part of a series devoted to the ‘Interpretation of European Regulations on Private and Procedural International Law’. The previous volumes in the series cover the Brussels II bis Regulation (2016), the Service Regulation (2018), and the Small Claims Regulation (2019) Regulations. Commentaries on the Succession and Maintenance Regulations are scheduled for publication in the near future.

Academics, judges and other practitioners contributed to the commentary to the Brussels I bis Regulation, including Eyangelos Vasilakakis, Paris S. Arvanitakis, Apostolos M. Anthimos, Panagiotis S. Giannopoulos, Ioannis S. Delikostopoulos, Stefania Kapaktsi, Vasileios Kourtis, Dimitrios Kranis, Salomi Mouzoura, Kyriakos Oikonomou, Ioannis Revolidis, Konstantinos Ir. Rigas, Christos Triantafyllidis, Antonios D. Tsavdaridis, Sofia Fourlari and Christina Chatzidandi.

More info available here (in Greek).

As announced earlier on this blog, the Working Group on International Property Law will hold a webinar on the suitability and feasibility of a European Regulation on International Property Law via Zoom on Tuesday, 20 October 2020 at 12:30 CEST.

The current members of the Working Group will shortly discuss the various facets of the topic. A discussion will follow, open to participants.

The programme of the webinar is as follwos:

• Teun Struycken (Amsterdam/Utrecht): The Significance of International Property Law (case study)
• Teemu Juutilainen (Turku): The Impact of Free Movement of Goods and Services on International Property Law
• Gilles Cuniberti (Luxembourg): The Impact of the Acquis Communautaire on International Property Law
• Janeen M Carruthers (Glasgow): Global Measures for the Unification of Private International Rules pertaining to Property
• Eva-Maria Kieninger (Würzburg): The Way Ahead: Topics and Goals of the Working Group

Use this link to attend the webinar (meeting ID: 722 581 7358; password is 493028).

Serena Forlati and Pietro Franzina edited a book on the Universal Civil Jurisdiction, which was published by Brill a couple of days ago. The book features contributions prepared by colleagues  from four different European countries and eight universities.

The contributions included are the following:

• ‘The Case of Naït-Liman before the European Court of Human Rights – A Forum Non Conveniens for Asserting the Right of Access to a Court in Relation to Civil Claims for Torture Committed Abroad?’ (Andrea Saccucci, University of Campania);

 

• ‘The Role of the European Court of Human Rights in the Development of Rules on Universal Civil Jurisdiction – Naït-Liman v Switzerland in the Transition between the Chamber and the Grand Chamber’ (Serena Forlati, University of Ferrara);

 

• ‘The Interpretation of the European Convention on Human Rights – Lessons from the Naït-Liman Case’ (Malgosia Fitzmaurice, Queen Mary University);

 

• ‘Public International Law Constraints on the Exercise of Adjudicatory Jurisdiction in Civil Matters’ (Lucas Roorda and Cedric Ryngaert, University of Utrecht);

 

• ‘Universal Civil Jurisdiction and Reparation for International Crimes’ (Beatrice I. Bonafè, University of Rome La Sapienza);

 

• ‘Limitations to the Exercise of Civil Jurisdiction in Areas Other Than Reparation for International Crimes’ (Fabrizio Marongiu Buonaiuti, University of Macerata);

 

• ‘Residual Jurisdiction under the Brussels I bis Regulation – An Unexpected Avenue to Address Extraterritorial Corporate Human Rights Violations (Mariangela La Manna, Catholic University of the Sacred Heart, Milan);

 

• ‘The Law Applicable to the Civil Consequences of Human Rights Violations Committed Abroad’ (Patrick Kinsch, University of Luxembourg);

 

• ‘The Changing Face of Adjudicatory Jurisdiction’ (Pietro Franzina, Catholic University of the Sacred Heart, Milan).

More info available here.

A corrigendum to Brussels I bis in some linguistic versions has been published yesterday (15 October 2020) in the OJEU (L 338). It relates to the Czech, French and Polish versions of the Regulation. Here is the French version:

« Page 23, article 34, paragraphe 1, point c):

au lieu de: «c) la juridiction de l’État tiers concernée est convaincue que le sursis à statuer est nécessaire pour une bonne administration de la justice.»

lire: «c) la juridiction de l’État membre est convaincue que le sursis à statuer est nécessaire pour une bonne administration de la justice ».

It is an alignment with other linguistic versions.

Source : https://eur-lex.europa.eu/legal-content/FR/TXT/?uri=uriserv:OJ.L_.2020.338.01.0013.01.FRA&toc=OJ:L:2020:338:TOC

EUFams II is a study funded by the European Commission with the objective of assessing the functioning and the effectiveness of European family and succession law. The project is coordinated by the Institute for Comparative Law, Conflict of Laws and International Business Law at Heidelberg University (Prof. Dr. Dr. h.c. Thomas Pfeiffer). Project partners are the Universities of Lund, Milan, Osijek, Valencia and Verona as well as the MPI Luxembourg.

The project will come to a close with an Online Final Conference on Friday, 30 October from 9.30 until 13.00 h. The conference is open to the general public and can be accessed without pre-registration and free of charge. It will cover a wide range of topics in the field of European family and succession law presented by speakers from across Europe.

A detailed program and the access link can be found in the conference leaflet.

More information on EUFams II and its research outputs can be found on the project website and in previous posts on conflictoflaws.net here and here.

This project was funded by the European Union’s Justice Programme (2014-2020). The content of this study represents the views of the authors only and is their sole responsibility. The European Commission does not accept any responsibility for use that may be made of the information it contains.

Ilaria Viarengo and Francesca Villata (both University of Milan) have edited Planning the Future of Cross Border Families – A Path Through Coordination, which has just been published by Hart.

This book is built upon the outcomes of the EUFam’s Project, financially supported by the EU Civil Justice Programme and led by the University of Milan. Also involved are the Universities of Heidelberg, Osijek, Valencia and Verona, the MPI in Luxembourg, the Italian and Spanish Family Lawyers Associations and training academies for judges in Italy and Croatia. The book seeks to offer an exhaustive overview of the regulatory framework of private international law in family and succession matters. The book addresses current features of the Brussels IIa, Rome III, Maintenance and Succession Regulations, the 2007 Hague Protocol, the 2007 Hague Recovery Convention and new Regulations on Property Regimes. The contributions are authored by more than 30 experts in cross-border family and succession matters. They introduce social and cultural issues of cross-border families, set up the scope of all EU family and succession regulations, examine rules on jurisdiction, applicable law and recognition and enforcement regimes and focus on the current problems of EU family and succession law (lis pendens in third States, forum necessitatis, Brexit and interactions with other legal instruments). The book also contains national reports from 6 Member States and annexes of interest for both legal scholars and practitioners (policy guidelines, model clauses and protocols).

Authors include Christian Kohler, Thomas Pfeiffer, Rosario Espinosa Calabuig, Diletta Danieli, Mirela Župan, Martina Drventic, Carmen Azcárraga Monzonís, Pablo Quinzá Redondo, Guillermo Palao Moreno, Thalia Kruger, Jacopo Re, Stefania Bariatti, Elena D’Alessandro, Cristina González Beilfuss, Maria Caterina Baruffi, Paul Beaumont, Patrick Kinsch, Laura Carballo Pineiro, Andrea Schulz, Hrvoje Grubišic, Cinzia Peraro, and Marta Requejo Isidro.

More information here.

Case C‑629/19 Sappi Austria Produktions-GmbH & Co. KG and Wasserverband ‘Region Gratkorn-Gratwein’ v Landeshauptmann von Steiermark in which the CJEU held on Wednesday is in my off the cuff view (I did not research it in the recent case-law) the first case where the CJEU specifically mentions the objectives of the circular economy to support its interpretation of the core definition of ‘waste’ in the Waste Framework Directive 2008/98.

Sappi operate a large industrial paper and pulp production plant in Gratkorn (Austria). On that site is also a sewage treatment plant, operated jointly by Sappi and the Wasserverband, which treats waste water from paper and pulp production as well as municipal waste water. During the treatment of that waste water, which is required by national law, the sewage sludge in question in the main proceedings arises. That sludge is therefore made up of both substances from industrial waste water and substances from municipal waste water. Sewage sludge which is produced in the sewage treatment plant is then incinerated in a boiler of Sappi and in a waste incineration plant operated by the Wasserverband, and the steam reclaimed for the purposes of energy recovery is used in the production of paper and pulp.  hat authority found that, admittedly, the majority of the sewage sludge used for incineration, namely 97%, originated from a paper production process and that this proportion could be regarded as having ‘by-product’ status within the meaning of Paragraph 2(3a) of the AWG 2002. However, that does not apply to the proportion of sewage sludge arising from municipal waste water treatment. That sewage sludge remains waste. Since there is no de minimis limit for the classification of a substance as ‘waste’, the authority assumed that all the sewage sludge incinerated in the industrial plants of Sappi and of the Wasserverband must be classified as ‘waste’.

The CJEU first of all holds that there is no relevant secondary law which provides the kinds of qualitative criteria for sewage sludge to meet with the objectives of the WFD. If there were such laws, and the sludge meets their requirements, it would be exempt form the WFD. It then reminds the referring court, of course, of the extensive authority on the notion of waste (most recently C-624/17 Tronex) yet is happy to provide the national Court with input into the application in casu.

In principle, the sludge is waste, the Court holds: it is a residue from waste water treatment and it is being discarded.

However, the referring judge suggests that the sludge may meet the requirements of A6(1) WFD as being fully ‘recovered’ before it is used in the incineration process. It is there that the CJEU refers to the circular economy: at 68:

it is particularly relevant that the heat generated during the incineration of the sewage sludge is re-used in a paper and pulp production process and that such a process provides a significant benefit to the environment because of the use of recovered material in order to preserve natural resources and to enable the development of a circular economy.

Per C‑60/18 Tallinna Vesi, the recovery of sewage sludge entails certain risks for the environment and human health, particularly linked to the potential presence of hazardous substances. For the sludge at issue here not to be waste, presupposes that the treatment carried out for the purposes of recovery makes it possible to obtain sewage sludge with a high level of protection of the environment and human health, such as required by the WFD, which is, in particular, free from any dangerous substance. For that purpose, it is necessary to ensure that the sewage sludge in question in the main proceedings is harmless (at 66). The CJEU concludes, at 67

It is for the referring court to determine whether the conditions laid down in Article 6(1) of Directive 2008/98 are already met before the sewage sludge is incinerated. It must in particular be determined, as appropriate, on the basis of a scientific and technical analysis, that the sewage sludge meets the statutory limit values for pollutants and that its incineration does not lead to overall adverse environmental or human health impacts.

There are as yet no EU standards for the full recovery of sewage sludge, hence the ball of end of waste status is once again in the Member States’ court.

Geert.

(Handbook of) EU Waste law, 2nd ed. 2015, Oxford, OUP, Chapter 1, 1.149 ff.

On 2 September 2020, the French Supreme Court for private and criminal matters (Cour de cassation) issued an interesting decision on both service of judicial documents and international jurisdiction (Cass., First Civil Chamber, 2 September 2020, no. 19-15.337, unreported).

Although elementary at first view, the case provides a good opportunity to discuss the global understanding and acceptance of European private international law rules by French courts.

Facts and Legal Issues at Stake

Private investors living in France suffered financial losses following financial services contracts concluded with a company governed by English law, established in London. They sued the company before French courts. Despite an agreement conferring jurisdiction in favour of English courts provided for in the general conditions, the Parisian tribunal accepted its jurisdiction. The Parisian Court of appeal confirmed the judgement. The company appealed to the French Supreme Court.

First, the company disputed, on the basis of (inter alia) the Service of documents Regulation, the validity of the writ of summons which was served to the branch manager of the company in France, pursuant domestic procedural rules and not at its head office in London. Second, the company challenged the French jurisdiction by virtue of the jurisdiction clause, pursuant Brussels I bis Regulation, while the first judges had applied the French jurisdictional rules to invalidate the clause.

Were these two EU regulations the relevant legal basis in this case, instead of the domestic PIL rules?

Response of the French Supreme Court

Responding to the first litigious item, the French Supreme Court precludes the application of the Service of documents Regulation and confirms the decision of the Court of appeal. The presence in France of a representative of the foreign company eliminates the cross-border dimension of the transmission of documents. Therefore, the transmission of the writ of summons to the branch manager of the company in France was valid since it complied with French domestic procedural law. Then, regarding the competent jurisdiction, the validity of the agreement conferring jurisdiction shall be assessed pursuant Brussels I bis Regulation and not pursuant to national PIL. EU law prevails on national rules. The French Supreme Court invalidates the decision of the Parisian Court of appeal on that latter ground.

Assessment

Behind these two legal issues, the case deals with the articulation between EU and national PIL rules. Despite the well-known principle of primacy of EU law, French judges still have difficulties to implement EU PIL. More globally, they are maybe not fully aware of the multilevel sources in the field and, in particular, how their articulation works

But why? How could we explain this “judicial malfunction” regarding EU PIL? Without being dramatic, nor prophetic, I would like to suggest two possible lines of thought.

 On the Service of Documents Regulation

The non-application of the Service of documents Regulation is not surprising regarding the case law of the French Supreme Court. The Commercial Chamber of the Court ruled exactly the same in 2012, regarding another London-based company having a representative in France (Comm. Chamber, 20 November 2012, no. 11-17.653). Domestic procedural rules on service of documents regain the upper hand thanks to the legal representation ad agendumin France. But the French Supreme Court does not give any explicit grounds for its ruling regarding EU law. The European Regulation is set aside without consistent legal explanations. It surely contributes to the lack of awareness of French judges regarding EU PIL instruments in procedural and cooperation matters.

Some scholars have mentioned an implicit reference to recital 8 of the Regulation, which lays down that it “should not apply to service of a document on the party’s authorised representative in the Member State where the proceedings are taking place regardless of the place of residence of that party”. Recital 8 should provide for a kind of subsidiarity of the European regime on cross-border transmission of documents, vis-à-vis national rules.

However, the European Court of Justice had the opportunity to clarify the scope of this recital in Adler (C-325/11). The ECJ ruled that

from a systematic interpretation of the regulation […] [it] provides for only two circumstances in which the service of a judicial document between Member States falls outside its scope, namely (i) where the permanent or habitual residence of the addressee is unknown and (ii) where that person has appointed an authorised representative in the Member State where the judicial proceedings are taking place (para 24).

In order to support a uniform application of the regulation, the circumstances in which a judicial document has to be served in another Member State should not be conducted by reference to the national law of the Member State in which the proceedings take place (see paras 26-27). This is, however, the core reasoning of the French Supreme Court.

When should it be considered that the litigant (here the London-based company) has appointed an “authorised representative”? Should the manager of the branch of the company be considered a “representative” within the meaning of the Service of documents Regulation? In the end, the French Supreme Court could have referred a question to the Court of Justice. Its ruling takes the opposite direction.

At least, it shows that a legal explanation from the French Supreme Court of its solution would have not been superfluous.

On the Brussels I bis Regulation

On the contrary, when explaining why French PIL rules are not the relevant legal basis to control the validity of the prorogation, the French Supreme Court  takes a true educational approach towards  the lower courts (see already Civ. First Chamber, 23 January 2008, no. 06-21.898 under Article 23 of Brussels I regulation). The validity of the agreement conferring jurisdiction had to be assessed under Article 25 of the Brussels I bis Regulation, applicable to prorogations of jurisdiction in favour of the national Court of an EU Member State (including the UK at the time of the dispute) in civil and commercial matters.

Why did the lower courts did not apply EU PIL? Quite ironically, the absence of French PIL codification can be an explanation for the faulty reasoning of the lower courts. It should be recalled that the French rules of international jurisdiction do not formally exist. They are the result of an extension of the domestic territorial jurisdiction rules into international disputes (see Civ. First Civil Chamber, 30 October 1962, Scheffel). This could explain why the lower courts applied the French Civil Procedural Code, mixing up domestic and international disputes, and the related applicable procedural rules.

Such a basic legal mistake grounded on the oversight of EU PIL requires all the attention of the French expert group on French PIL codification recently created by the French Ministry of Justice. A future Code should probably recall that the validity of an agreement conferring jurisdiction in a cross-border relationship has to be assessed pursuant supra-national sources, in particular the 2005 Hague Convention and the Brussels I bis Regulation and, by default only, pursuant national PIL rules. Clarity regarding multilevel sources in PIL (and their articulation) is crucial for operational legal practice.

Last but not least, Brexit will add more complexity in such a case as it will require applying the 2005 Hague Convention instead of the Brussels I bis Regulation. The London-based company will have to be regarded as located in a third State which is a Contracting Party to the Convention (Article 26(6) of the 2005 Hague Convention).

French courts, get ready!

In Selecta Finance UK Ltd, Re [2020] EWHC 2689 (Ch) Johnson J considered the jurisdictional issues for schemes of arrangement in a touch more detail than recently has been the regular method in both convening and sanctioning hearings.

Selecta Finance UK Limited is a most recent addition to the ‘Selecta’ group , having been established only on 13 August 2020. (Selecta is said to be the leading provider of unattended self-service coffee and convenience food in Europe).  The Scheme concerns three series of senior secured Notes (“the Existing SSNs“), which have an aggregate principal amount of €1.24 billion plus CHF 250 million. The Existing SSNs were issued originally not by the Company but by Selecta Group BV, its parent company incorporated in the Netherlands. They were issued pursuant to a Trust Deed dated 2 February 2018 , and were originally governed by New York law and subject to a provision for the New York Courts to have exclusive jurisdiction.

With reference to authority, Johnson J accepts that the relevant parties in interest who qualify as the Scheme Creditors are the ultimate beneficial owners of the Existing SSNs. By 14 September 2020, the Existing SSN Holders holding a majority by value of the Existing SSNs had provided their consent to (among others) the following key changes to the terms of the SSNs:  i) Amendment of the governing law provisions of the Trust Deed so that the Existing SSNs are governed by English rather than New York law. ii) Amendment of the jurisdiction provisions of the Trust Deed so that the Existing SSNs are subject to the exclusive jurisdiction of the English Court in relation to any proceedings commenced by an obligor of the Existing SSNs, and the non-exclusive jurisdiction of the English Court in relation to other proceedings; iii) Accession of the Company to the Trust Deed as a co-issuer of the Existing SSNs.

At 18 it is said that an expert report on US and New York law confirms that the amendments to the governing law and jurisdiction clauses of the Trust Deed are valid under New York law and would be regarded as effective in any United States court applying that law.

The relevance of that finding for unwilling SSNs beneficiaries, I would argue, is not undisputedly established under Article 10 and Article 3(2) Rome I.

 

The Company then entered into a Supplemental Trust Deed on 14 September 2020 and thereby became a co-issuer of the Existing SSNs under the Trust Deed. As Johnson J notes at 44: it is only by means of the Supplemental Trust Deed that the Company became co-issuer of the Existing SSNs, and that the governing law and jurisdiction provisions were changed so as to refer to English law and jurisdiction.

It is clear that a jurisdictional link with England & Wales has been established specifically for the purpose of a company taking advantage of the scheme provisions in English law. With reference to Newey J in Re Codere Finance (UK) Ltd [2015] EWHC 3778 (Ch) which I reviewed here, this is held to be ‘good forum shopping’.

Article 25 Brussels Ia jurisdiction is only possible by means of the amendments to the Trust Deed effected via the Supplemental Trust Deed, as I also noted above. As I suggest there, had there been recalcitrant minority Note holders objecting to the change in court and law clause, I think the Scheme would not have been jurisdictionally home and dry on A25 choice of court grounds.

The next classic consideration is under Article 8(1)’s anchor defendant mechanism seeing as jurisdiction against the company is established per Article 4.

At 53 reference is made to Snowden J. who in Van Gansewinkel has suggested that in determining whether A8(1) applies, the Court is required to consider whether the “numbers and size of the scheme creditors domiciled in [the UK]” are “sufficiently large“: the result of that instruction is that applicants tend to point out the (debt) size of the creditors so domiciled, even if in DTEK Newey J held that size and number are irrelevant, ditto in Lecta Paper and Swissport Fuelling.

At 54 comes Johnson J’s obiter, useful finding:

Speaking for myself, I incline to the view that the presence of a single creditor is a necessary, but not of itself a sufficient, condition to the operation of Art. 8. I say that because in terms the power conferred by Art. 8 is engaged where “any one of” a number of defendants is domiciled in England & Wales, but even then the power is to be exercised only in cases where the language of the proviso in Art. 8 is satisfied – i.e., where the claims against the various defendants are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. I did not hear detailed argument on the meaning of this language, and in any event the application before me was uncontested, and so I express my view on it somewhat tentatively; but tentatively it seems to me that the question of expediency posed by the proviso is rather less about the geographical distribution in terms of number and size of the prospective defendants, and is rather more about the expediency in case management terms of connected claims being resolved in one place, even if only one anchor defendant is domiciled there. The argument in this case is that it is expedient for the claims against all EU domiciled Scheme Creditors to be resolved in one place, i.e. in England & Wales, because such claims all relate to the reorganisation of their indebtedness vis-à-vis the Company, and these Courts are best placed to resolve such questions given the separate jurisdiction they exercise over the Company under CA Part 26. Indeed, they may be uniquely placed to do so.

Opposition to the Scheme’s jurisdiction tends to evaporate once it gets to the convening and hearing stage. This is typically because the opposing creditors tend to by that stage be converted to the necessity of restructuring and the unattractiveness of having to pursue debt collection against a corporation in serious financial difficulty. As a result nearly all precedent is first instance only.

Geert.

(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 2, Chapter 5. Third edition forthcoming February 2021.

Scheme of arrangement. Rare more detailed consideration of A8(1) BIA jurisdiction (upheld) by Johnson J.
Conclusions on A25 'good forum shopping' remain shaky in my view given change of choice of court and law provisions from New York to English law and court. https://t.co/yL2edW1tMc

— Geert Van Calster (@GAVClaw) October 14, 2020

In a judgment of 3 June 2020, the Paris Court of Appeal ruled that sanctions issued by the Security Council of the United Nations (UN) or by the European Union (EU) are international mandatory rules which define French public policy. As a result, the court ruled that, in principle, an arbitral award violating such sanctions could be set aside by a French court.

In contrast, the court ruled that unilateral sanctions issued by the United States of America do not constitute French public policy. As French authorities have expressed their hostility against them, US sanctions obviously cannot be regarded as defining the most important values of the French state. An arbitral award failing to take them into consideration might not, therefore, be challenged before French courts.

Background

The case was concerned with a gas storage contract to be performed in Yort-E-Shah, Iran. The initial contract was concluded in 2002 between an Iranian and a French company.  A number of letters of credit had been issued by various banks to guarantee the  performance of the contract. In 2008, a dispute arose between the parties. The Iranian party alleged various contractual breaches, terminated the contract and called the guarantees. The French party initiated proceedings before French courts to enjoin the banks from paying under the letters of credit, which were eventually dismissed (see the judgment of the French Supreme Court here).

The French party then initiated arbitration proceedings before an ICC tribunal in Paris arguing that the termination of the contract was illegal. The Iranian party made counterclaims. The tribunal allowed claims from both parties and, after setting them off, ultimately found in favour of the Iranian company.

The French company then initiated proceedings before French courts, arguing inter alia that the award was contrary to French public policy for failing to take into account applicable sanctions and should thus be set aside.

UN Sanctions

The first argument was that the arbitral tribunal had failed to apply UN Resolutions no 1737 of 23 December 2006, no 1747 of 24 March 2007 and no 1803 du 3 mars 2008. The Iranian party challenged the relevance of the UN resolutions for defining French public policy, arguing that UN resolutions are not directly applicable in France, were not implemented in the French legal order, and thus could not be considered as defining French public policy.

The court recognised that the UN resolutions were not directly applicable in France, and that they could not be characterised as French international mandatory rules. However, the court held that they were either foreign international mandatory rules, or  “genuinely international mandatory rules”. The court concluded by adding that, in any case, the objectives pursued by the UN, peace and international security, were essential values to the French state. In principle, therefore, arbitral awards violating UN sanctions would not comport with French public policy and could be set aside on this ground.

This wealth of reasons might reveal that none of them was particularly convincing.

The most unconvincing argument was certainly to distinguish between foreign international mandatory rules and mandatory rules of the forum. The purpose of the distinction is to grant discretion to courts to apply mandatory rules protecting the interests of foreign states. It seems hard, and pretty artifical, to establish a link between UN sanctions and certain states, but not others. A formalistic way of doing this would be to argue that UN sanctions would be non foreign mandatory rules only in the states which have not implemented them. Is that what the court means? If so, it should tell which foreign implementing legislation it is actually considering. And what if UN sanctions are not directly applicable in the vast majority of states? Are they foreign to everybody?

The concept of “genuinely international” mandatory rules (lois de police réellement internationales) is a reference to the idea that while arbitrators have no forum, and cannot be considered as more specifically bound by the mandatory rules of any given state, they should consider that they are the guardians of a genuinely international public policy composed of norms recognised as being of the utmost importance at a global level. The doctrine of “genuinely international public policy” (ordre public réellement international), or “genuinely international mandatory rules”, is a correction of the consequences of the delocalisation of arbitration promoted by the French law of arbitration. The reference to this doctrine in the context of court proceedings, however, raises a number of issues. First, the court implies that arbitral tribunals should be compelled to apply a rule which is not a French international mandatory rule, and that French courts would thus have no obligation to apply if the case was litigated in France. Second, while one can conceive that arbitrators do not have a forum and are thus not bound by the international mandatory rules of the seat of the arbitration, a French court does have a forum, and should thus care about French public policy.

Finally, the court explained that UN resolutions should be considered as defining French public policy because of the importance of the purpose that they served. The court ruled:

the aforementioned resolutions, in so far as they are intended to contribute to the maintenance or restoration of international peace and security, embody rules and values whose disregard must be considered to be incompatible with the French legal system and which therefore fall within the French concept of international public policy

International mandatory rules are defined by the importance of the purpose that they serve, so establishing the purpose of UN Resolutions in this context was no doubt important. Yet, one wonders whether the sole purpose of norms could make them international mandatory provisions irrespective of their enforceability in the relevant legal order.

EU Sanctions

The characterisation of EU sanctions contained in Regulations (EC) no 423/2007, (EU) no 961/2010 (EU) no 267/2012 was much simpler. EU regulations are directly applicable in all Member states. The court thus found that these regulations are French international mandatory rules and, because they contribute to the maintenance or restoration of international peace and security, also define French international public policy. In this context, the reference to the purpose of EU Regulations was aimed at distinguishing those EU regulations which would qualify as international mandatory provisions and those which would not.

US Sanctions

Finally, the court turned to US sanctions and ruled that they did not define French public policy. The court insisted that its role was to assess French public policy. For this purpose, it was highly relevant that the French state had repeatedly expressed through members of its government its opposition to the policy of the US to use unilateral sanctions, calling them unjustifiable and violations of international law. French authorities were working with other Member States to reinforce the economic sovereignty of the EU, in particular by reflecting on extending the scope of the EU blocking regulation (and possibly the French blocking statute). Thus, US sanctions clearly did not define French public policy

Conclusion

After elaborating quite extensively on the characterization of international sanctions as international mandatory rules, the court found that neither the UN Resolutions, nor the EU Regulations applied in the particular case, and that there had not been any actual violation of French public policy. It seems clear, therefore, that the court wanted to signal its doctrine and clarify that, while it would expect arbitrators to take into account UN and EU sanctions, it would participate in the effort of the French state to resist US unilateralism in this respect.

As I seem to be in a comparative mood today, thank you Jan Jakob Bornheim for flagging [2020] NZHC 2560 Lange v Lange. The case is further discussed by Jack Wass here – at the time of writing I only have Jack’s review to go on for the actual decision appears to be as yet unpublished.

TTPA 2010 follows the model of the more recent Hague Judgments Convention: recognition and enforcement of a judgment may be refused if it infringes jurisdictional rules detailed in the Act. For the case at issue, s 61(2)(c) of the TTPA is engaged. It requires the court to set aside registration of a judgment if it was “given in a proceeding the subject matter of which was immovable property” located outside Australia.

The determining concern is whether the New Zealand property was “in issue” (the words which Jack uses and which presumably Gault J employed; the Act itself uses ‘proceeding subject matter of which is’; compare with Brussels Ia’s ‘proceedings which have as their object’) in the proceedings. Gault J, citing authority, finds that a judgment setting aside a fraudulent disposition is not rendered unenforceable simply because the debt concerned the sale of New Zealand land. (A further appeal to ordre public was refused; for that to be successful, the result of recognition must, Jack notes, “shock the conscience” of the ordinary New Zealander” (Reeves v OneWorld Challenge LLC [2006] 2 NZLR 184 (CA) at [67].

Obvious comparative pointers with EU conflicts law are Webb v Webb, Weber v Weber, Schmidt v Schmidt, Komu v Komu etc.: readers will know that Article 24(1) Brussels Ia typically involves feuding family members.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6 . Third edition forthcoming February 2021.