Droit international général

Maastricht University is organising a webinar on the Evidence Regulation that will take place on Wednesday 27 March 2024 in Dutch. More information is available here.

This event is being organised within the framework of the DIGI-GUARD project, which is co-funded by the European Union under the JUST-2021-JCOO program and which stands for Digital communication and safeguarding the parties’ rights: challenges for European civil procedure.

This webinar is a follow-up to a previous event announced here.

Participation is free of charge (click here). The event will be recorded and will be accessible to registered participants.

The program is available below.

Programma

14:00 – 14:10 Het DIGI-GUARD project: relevantie voor de rechtspraktijk
Marta Pertegás Sender, Universiteit Maastricht 14:10 – 14:40 De Bewijsverordening (Vo 2020/1783)
René Jansen,  Tilburg University 

Introductie tot de verordening, verhouding tot art. 35 Brussel I bis-verordening
(Vo 1215/2012) en de mogelijkheid om in het buitenland bewijs af te nemen
op basis van de nationale wetgeving 14:40 – 14:50 Discussie 14:50 – 15:00 Pauze 15:00 – 15:30 Bewijs in het buitenland? Hoe kan de Bewijsverordening helpen
Marta Pertegás Sender en Jona Israël, Universiteit Maastricht 15:30 – 15:40 Discussie 15:40 – 15:45 Slotwoorden

 

I would like to thank Prof. Lotfi Chedly for providing me with the text of the decision on which this post is based.

 

I. Introduction

Scholars of private international law are well familiar with the classic debate on nationality and domicile as connecting factors in the choice of applicable law (see, for example, L. I. de Winter, “Nationality or Domicile? The Present State of Affairs” 128 Collected Courses III (1969) pp. 357 ff). In Tunisian private international law, this controversy has been particularly pronounced with regard to the role of nationality as a ground for the international jurisdiction of Tunisian courts. Since the enactment of the Tunisian Private International Law Code (“PILC”) in 1998 (for an English translation, see J. Basedow et al. (eds.) Encyclopedia of Private International Law – Vol. IV (Elgar Editions, 2017) 3895 and my own translation of the provisions dealing with international jurisdiction and the enforcement of foreign judgments in 8 Journal of Private International Law 2 (2012) pp. 221 ff)), the debate between opponents and proponents of nationality as a ground for international jurisdiction, especially in family law matters, has never ceased to be intense (for detailed analyses, see eg. Salma Triki, “La compétence internationale tunisienne et le critère de nationalité” in Ben Achour/Triki (eds.), Le Code de droit international privé – Vingt ans d’application (1998-2018) (Latrach edition, 2020) 119ff). This divergence in academic opinion is also reflected in the judicial practice of the courts, with the emergence of two opposing trends: one extends the international jurisdiction of the Tunisian courts when the dispute involves a Tunisian party, in particular as a defendant even when domiciled abroad. The other firmly rejects nationality as a ground for international jurisdiction.

The case commented here illustrates the culmination of this disagreement within the courts. The Supreme Court (mahkamat al-ta’qib – cour de cassation), in a second appeal, strongly denied the existence of such a privilege and emphasized the primacy of domicile over nationality as a basis for international jurisdiction in Tunisia. The Court of Appeal, acting as a court of remand, explicitly recognized that the jurisdiction of the Tunisian courts could be based on what is commonly referred to as “privilege of jurisdiction”. The Court of Appeal went even further by describing the decision of the Supreme Court, from which the case had been remanded, as “legally incorrect”. This stark contrast between the two courts prompted the intervention of the Joint Chambers (chambres réunies) of the Supreme Court, which issued what appears to be the first decision of its kind in the field of private international law in Tunisia (Ruling No. 36665 of 15 June 2023), signed by 62 judges of the Supreme Court (including the Chief Justice (President of the Court), 21 Presidents of Chambers and 40 other judges as counsellors).

 

II. Facts

The case concerns a divorce action brought in Tunisia by X (plaintiff husband and appellee in subsequent appeals) against his wife, Y (defendant and appellant in subsequent appeals). The text of the decision indicates that X and Y were married in 2012 and had a child. Moreover, while X’s Tunisian nationality appears to be undisputed, there may surprisingly be some doubts about Y’s Tunisian nationality, as emerged later in the parties’ arguments before the Joint Chambers.

In 2017, the Court of First Instance of Sousse (a city located about 150 km south of the capital Tunis) declared the parties divorced and ordered some measures regarding maintenance, custody and visitation. Dissatisfied, Y appealed to the Court of Appeal of Sousse. In 2018, the court overturned the appealed decision, considering that the Tunisian courts did not have jurisdiction over the dispute. X appealed to the Supreme Court (1st appeal). In its decision issued later in 2018, the Supreme Court overturned the appealed decision with remand, holding that the Court of Appeal did not correctly examine the existence (or not) of a foreign element in the dispute in order to decline jurisdiction on the grounds that X claimed that the spouses’ matrimonial domicile was in Tunisia, where Y lived and worked.

In 2019, the Court of Appeal of Sousse, as the court of remand, accepted jurisdiction and confirmed the decision of the court of first instance with some modifications. Y appealed to the Supreme Court (2nd appeal). Y argued, inter alia, that the rules of international jurisdiction laid down in the PILC had been violated, since the spouses’ matrimonial domicile was in France and that the couple had only returned to Tunisia during the summer vacations. In 2020, the Supreme Court ruled in favor of Y, stating, inter alia, that the Tunisian legislator had made from “the domicile of the defendant the decisive ground for the international jurisdiction of the Tunisian courts”. The Court also held that the Court of Appeal had reached an erroneous conclusion based on a misapplication of the facts and a misinterpretation of the law. The case was referred back again to the Court of Appeal.

In 2021, the Court of Appeal, in a frontal opposition, declared that the decision of the Supreme Court, according to which the domicile of the defendant was the ground based on which Tunisian courts could assume international jurisdiction, “cannot be followed” and is “legally incorrect”. Then the court affirmed that Tunisian nationals enjoy a “privilege of jurisdiction”, and this “means that Tunisian defendants should be subject to their national courts, even if they are domiciled abroad, since the purpose of granting jurisdiction to Tunisian courts in this category of disputes is to ensure better protection of their interests”.

Y challenged the decision of the Court of Appeal again before the Supreme Court (3rd appeal). As this was a disagreement between the Court of Appeal and the Supreme Court on a second appeal, the jurisdiction of the Joint Chambers was justified (articles 176 and 177 of the Code of Civil and Commercial Procedure, hereafter “CCCP”).

Before the Joint Chambers, Y argued, inter alia, that (1) that she was not a Tunisian national but a holder of dual Algerian/French nationality; (2) that the court had also based its decision on the fact that she was resident in Tunisia, ignoring the fact that she had returned to Tunisia only to spend her summer vacation; (3) that she had left Tunisia for France.

On the other hand, X argued that the Court of Appeal was right to hold that disputes in which one of the parties is Tunisian and in which the subject matter concerns matters of personal status fall within the jurisdiction of the Tunisian courts, since matters concerning the family and its protection concern public policy, especially when the dispute also involves a Tunisian minor.

 

III. Ruling

The Joint Chamber of the Supreme Court held that the Tunisian courts did not have jurisdiction and decided to overturn the decision of the Court of Appeal without further remand. The court ruled as follows (only relevant parts are reproduced here. The gendered style reflects the language used in the text of the Court’s decision):

“The dispute concerns the question whether the international jurisdiction of the Tunisian courts should be determined on the basis of the defendant’s domicile (maqarr), in accordance with Article 3 of the PILC, or on the basis of the privilege of jurisdiction, according to which a Tunisian national is subject to the jurisdiction of his national courts even if he is domiciled abroad.

It goes without saying that in Articles 3 to 10 of the PILC, the legislator has sought to confer jurisdiction on the Tunisian courts on the basis of close connections between the Tunisian legal system and the legal relationship, thereby abolishing the exceptional grounds such as nationality, representation or reciprocity. The reason for the abolition of these exceptional grounds lies in the fact that they do not constitute a genuine connection between the dispute and the Tunisian legal system […].

[…]

As appears from the files of the case, the residence (iqama) of Y in France is established either on the basis of the service of the summons […] on her domicile (maqarr) in France […] or the judicial admission made by X […] [in which he] admitted that his wife had moved to France where she had settled with their daughter and refused to return to Tunisia.

[However], by considering that the privilege of jurisdiction entails subjecting the Tunisian defendant to the jurisdiction of his or her national courts, even if he resides (muqim) abroad, the remand court misjudged the facts and drew erroneous conclusion, leading to a misunderstanding and misapplication of article 3 of the PILC […].”

 

IV. Comments

The principle established by the Joint Chamber regarding the role of the defendant’s Tunisian nationality as a ground for international jurisdiction can be considered a welcome clarification of the interpretation and application of Tunisian law. However, it must also be said that the decision commented on here contains some intriguing and to some extent confusing features, particularly in the parts of the decision not reproduced above relating to the meaning of and the distinction between “domicile (maqarr)” and “residence (iqama)”. For the sake of brevity, only the issue of nationality as a ground of international jurisdiction will be commented on here.

 

1. Prior to the Enactment of the PILC

Prior to the enactment of a PILC, nationality – especially that of the defendant – was used as a general ground for international jurisdiction in all disputes brought against Tunisians, even if they were domiciled abroad (former art. 2 of the CCPC). This rule is common in the MENA region and is generally followed even if it is not explicitly stated in the law (For the case of Bahrain, see here, for the case of Morocco, where a new draft code of civil procedure proposes to introduce a similar rule ex lege, see here).

 

2. Nationality as a ground for international jurisdiction under the PILC

The PILC, adopted in 1998, introduced a radical change in this regard by completely excluding nationality as a ground for international jurisdiction (see eg. Imen Gallala-Arndt, “Tunisia”, in J. Basedow et al. (eds.) Encyclopedia of Private International Law – Vol. III (Elgar Editions, 2017) p. 2586). Henceforth, the PILC recognizes only one legitimate ground of general ground of jurisdiction over any civil or commercial dispute (including family law disputes) arising between persons regardless of their nationality, if the defendant has its “residence (iqama)” in Tunisia, although the semi-official French version of the PILC (as officially published in the Official Gazette) refers to “domicile” (maqarr in Arabic). In literature, there is a general consensus among Tunisian scholars that the word iqama (residence) in the Arabic version of article 3 actually means “maqarr (domicile)”. Case law is, however, quite inconsistent on this issue, with Tunisian courts, including the Supreme Court itself, reaching contradictory decisions on the interpretation and application these basic notions. This issue was addressed in the decision commented here (although in a quite unsatisfactory manner as the Joint Chambers, while distinguishing between “residence” and “domicile”, used both notions interchangeably in a particularly intriguing manner). However, this aspect of the decision will not be discussed here.

It is worth mentioning that the solutions introduced in the PILC have attracted the attention of renowned foreign scholars, who have highlighted the peculiarity of the Tunisian solutions in this regard, describing the Tunisian solutions as “interesting” and the exclusion of nationality as ground for international jurisdiction in all matters, including family law disputes, as “courageous”  (see eg., Diego P. Fernando Arroyo, “Compétence exclusive et compétence exorbitantes dans les relations privées internationales” 323 Collected Courses 2006, pp. 140-141).

 

3. Judicial Application

However, as soon as the PILC entered into force, a trend developed in judicial practice whereby Tunisian courts at all levels showed a willingness to extend their jurisdiction when the dispute involved Tunisian nationals. At the same time, there has been a parallel trend whereby some courts, also at all levels, have strictly adhered to the new policy of international jurisdiction and have refused to assume jurisdiction whenever it appeared that the defendant (whether a a Tunisian national or not) was domiciled abroad. (For a detailed analysis with different scenarios and cases, see Souhayma Ben Achour, “L’accès à la justice tunisienne en droit international privé tunisien” in Ben Achour/Ben Jemia (dir.), Droit fondamentaux & droit international privé (La Maison du Livre, 2016) pp. 11 ff).

a. Regarding the former, Tunisian judges have used various approaches and methods to circumvent the law and extend their jurisdiction beyond the limits set by the PILC. For example:

• In some cases, the courts have simply denied the international nature of the dispute on the grounds that all the parties were Tunisian, even though it was established that all or some of the parties (particularly the defendant) were domiciled abroad (see eg. Supreme Court, Ruling No. 12295 of 14 February 2002).
• In other cases, the courts have inferred a tacit submission to the jurisdiction of the Tunisian courts, even in the absence of the appearance of the defendant (often a foreign wife) (see eg. First Instance Court of Tunis, Ruling No. 30605 of 18 January 2000).
• In some other cases, the courts have confirmed their jurisdiction either on the basis of
  • the choice-of-law rules, according to which personal status shall be governed by the lex patriae of the parties (Supreme Court, Ruling No. 3181 of 22 October 2004), or,
  • on the basis of the rules of indirect jurisdiction laid down in bilateral conventions on mutual judicial assistance, knowing that these conventions do not contain rules of direct jurisdiction (see eg., Supreme Court, Ruling No. 6238 of 23 December 2004).
• More problematically, some courts have relied on the “place of performance” as a ground for international jurisdiction in contractual matters, considering the marriage to be a “contract” and its “performance” to have taken place in Tunisia when the parties consummated the marriage or established their matrimonial residence/domicile there (see eg. First Instance Court of Tunis, Ruling No. 77280 of 12 July 2010).
• In some cases, the courts have invoked forum necessitatis to extend their jurisdiction without indicating whether the requirements of its invocation were met (see eg. First Instance Court of Tunis, Ruling No. 75738 of 22 February 2010).
• Last but not least, in some cases, and in direct violation of the law, the courts have declared themselves to be the “natural” courts in family law disputes involving Tunisians, and that their jurisdiction could be based on the idea of “jurisdictional privilege” based on the Tunisian nationality of the defendant (see eg., Tunis Court of Appeal, Ruling No. 76011 of 12 November 2008) (interestingly, the grounds invoked here are similar to those invoked by the Bahraini courts here).

All these cases, and many others (see eg., Ben Achour op. cit.), have given the impression that Tunisian courts would go to any lengths to assume jurisdiction over disputes involving Tunisians in family law matters (cf., eg., Sami Bostanji, “Brefs propos sur un traité maltraité” Revue tunisienne de droit, 2005, p. 347).

b. This trend should not, however, be allowed to overshadow another that has also developed in parallel as mentioned above. The Supreme Court itself, despite some inconsistencies in its case law, has reaffirmed on several occasions that the jurisdiction of the Tunisian courts can be established only on the basis of the rules laid down in the CPIL, thereby rejecting the idea of nationality as an additional ground of jurisdiction in disputes involving Tunisian nationals (see eg., Supreme Court, Ruling No. 32684 of 4 June 2009).

c. In this respect, the decision of the Joint Chambers is likely to bring some order to the judicial cacophony on this issue, although it may not put an end to the ongoing debate and divergence of opinions among legal practitioners and scholars on the relevance of nationality as a criterion of international jurisdiction. Moreover, the tendency of some judges – sometimes described as “conservative” (cf. Arroyo op. cit.) – to continue to assume jurisdiction in disputes involving Tunisians (particularly in family law disputes) seems to be so entrenched that some scholars in Tunisia have described it as a “movement of resistance” against the legislative policy of the State (cf. eg. Lotfi Chedly, “Droit d’accès à la justice tunisienne dans les relations internationales de famille et for nationalité” in Mélanges offerts à Dali Jazi (Centre de Publication Universitaire, 2010) p. 264). This state of affairs has led some leading authors in Tunisia to question the state’s policy of excluding nationality altogether, even in family law disputes. One of the arguments put forward is that nationality in family law disputes is not an excessive ground for jurisdiction and is widely used in other legal systems (for the various arguments in favor of nationality, see Triki, op. cit.).

 

4. Legislative amendment?

These voices found their way into two legislative proposals in 2010 and 2019 to amend the PILC and introduce nationality as a ground for international jurisdiction in divorce cases (on the 2019 proposal, its background and peculiarities, see Triki, op. cit.). However, these attempts were unsuccessful, mainly due to the unstable political situation in Tunisia (the outbreak of the Tunisian revolution at the end of 2010 and the political crisis that led to the dissolution of the parliament and the suspension of the post-revolutionary constitution of 2014 in 2021). In this general context, and despite the decision of the Joint Chambers, it would not be surprising if some courts persisted in extending their jurisdiction in a disguised manner, based on the methods they themselves have developed to circumvent the constraint imposed by the PILC, when the dispute – particularly in matters of family law – involves Tunisians.

The latest issue of the „Praxis des Internationalen Privat- und Verfahrensrechts“ (IPRax) features the following articles:

 

H.-P. Mansel/K. Thorn/R. Wagner: European Conflict of Law 2023: Time of the Trilogue

This article provides an overview of developments in Brussels in the field of judicial cooperation in civil and commercial matters from January 2023 until December 2023. It presents newly adopted legal instruments and summarizes current projects that are making their way through the EU legislative process. It also refers to the laws enacted at the national level in Germany as a result of new European instruments. Furthermore, the authors look at areas of law where the EU has made use of its external competence. They discuss both important decisions and pending cases before the CJEU as well as important decisions from German courts pertaining to the subject matter of the article. In addition, the article also looks at current projects and the latest developments at the Hague Conference of Private International Law.

 

H. Kronke: The Fading of the Rule of Law and its Impact on Choice of Court Agreements and Arbitration Agreements

Against the background of declining standards of the rule of law in an increasing number of jurisdictions, the article identifies and discusses problematic choices of a forum or of an arbitral seat as well as solutions developed by courts and legal doctrine in private international law, civil procedure and arbitration law. Businesses and their legal advisers are encouraged to anticipate risks and consider appropriate measures when drafting contracts.

 

L. van Vliet/J. van der Weide: The Crimean treasures

In 2013, a collection of highly important archaeological objects, the “Crimean treasures” had been loaned by four Crimean museums to the LVR-Landesmuseum in Bonn, Germany, and the Allard Pierson Museum in Amsterdam for exhibition purposes. During the exhibition at the Allard Pierson Museum, the Crimean Peninsula was illegally annexed by the Russian Federation. The question then arose to whom the Crimean treasures should be returned by the Allard Pierson Museum: to the Crimean museums (de facto in possession of the Russian Federation) or to the State of Ukraine? The legal proceedings concentrated on the interpretation of the notion of “illicit export” in the UNESCO Convention 1970 and on the application of the concept of overriding mandatory rules in the area of property law. As to the UNESCO Convention 1970, the question was whether the concept of illicit export includes the case where protected cultural property is lawfully exported on the basis of a temporary export licence and is not returned to the country that issued the licence after the expiry of the term in the licence. The drafters of the UNESCO Convention did not consider this case. These proceedings are most probably the first to raise and answer this question. The 2015 Operational Guidelines to the UNESCO Convention contain a definition of illegal export that explicitly includes the case of non-return after temporary export. In our opinion, this allows for a broad interpretation of the UNESCO Convention.

The Dutch courts had international jurisdiction because the claims of the Crimean museums were based on the loan agreements and the real right of operational management falling within the scope of the Brussels I Regulation. For the claims of the State of Ukraine, a clear basis for international jurisdiction does not exist when it acts in its state function. Claims iure imperii do not fall under Brussels I or Brussels I bis.

Having ruled that there was no illicit export, the Court of Appeal Amsterdam had to decide whether the contractual and property rights of the Crimean museums to restitution might be set aside by Ukrainian laws and regulations, including Order no. 292 requiring that the Crimean treasures be temporarily deposited with the National Museum of History of Ukraine in Kiev. The Court held that this Order applied at least as an overriding mandatory rule within the meaning of art. 10:7 of the Dutch Civil Code. The Dutch Supreme Court upheld the Court of Appeal’s judgment, agreeing with the Court of Appeal’s application of the concept of overriding mandatory rules. However, the Supreme Court could not give its view on the interpretation of the UNESCO Convention 1970.

 

W. Hau: Litigation capacity of non-resident and/or foreign parties in German civil proceedings: current law and reform

This article deals with the litigation capacity (Prozessfähigkeit) of non-resident and/or foreign parties in German civil proceedings, both de lege lata and de lege ferenda. This question can arise for minors and for adults who are under curatorship or guardianship. Particular attention is paid here to the determination of the law applicable to the litigation capacity in such cases, but also to the relevance of domestic and foreign measures directed to the protection of the party.

 

S. Schwemmer: Jurisdiction for cum-ex liability claims against Non-EU companies

In the context of an action for damages brought by investors in a cum-ex fund against the Australian bank that acted as leverage provider, the German Federal Supreme Court (BGH) had to deal with questions regarding the application of the Brussels Ibis Regulation to non-EU companies. The court not only arrived at a convincing definition of the concept of principal place of business (Article 63 (1) c) Brussels Ibis-Regulation), but also ruled on the burden of proof with regard to the circumstances giving rise to jurisdiction. However, one core question of the case remains open: How should the conduct of third parties, especially senior managers, be taken into account when determining the place of action in the sense of Article 7(2) of the Brussels Ibis Regulation?

 

M. Fehrenbach: In the Thicket of Concepts of Establishments: The Principal Place of Business within the Meaning of Art. 3 (1) III EIR 2017

The Federal Court of Justice (Bundesgerichtshof) referred to the CJEU, among other things, the question whether the concept of principal place of business (Hauptniederlassung) within the meaning of Art. 3 (1) III EIR 2017 presupposes the use of human means and assets. This would be the case if the principal place of business were to be understood as an elevated establishment (Niederlassung) within the meaning of Art. 2 (10) EIR 2017. This article shows that the principal place of business within the meaning of Art. 3 (1) III EIR 2017 is conceived differently from an establishment within the meaning of Art. 2 (10) EIR 2017. Neither follows a requirement of the use of human means and assets from the desirable coherent interpretation with Art. 63

 

M. Lieberknecht: Jurisdiction by virtue of perpetuatio fori under the Insolvency Regulation

In this decision, the German Federal Supreme Court weighs in on the doctrine of perpetuatio fori in the context of international insolvency law. The court confirms that, once the insolvency filing is submitted to a court in the Member State that has international jurisdiction under Art. 3(1) EU Insolvency Regulation, the courts of that Member State remain competent to administer the insolvency proceedings even if the debtor shifts its centre of main interest (COMI) to a different Member State at a later point in time. In line with the EJC’s recent decision in the Galapagos case, the ruling continues the approach to perpetuatio fori established under the previous version of the EU Insolvency Regulation. In addition, the court clarifies that international jurisdiction established by way of perpetuatio fori remains unaffected if the initial insolvency filing has been submitted to a court lacking local jurisdiction under the respective national law.

 

D. Martiny: Arbitral agreements on the termination of sole distribution agreements in Belgium

The Belgian Supreme Court has ruled that disputes on the termination of sole distribution agreements can be submitted to arbitration (April 7, 2023, C.21.0325.N). The Court followed the reasoning of the Unamar judgment of the European Court of Justice of 2013 and applied it to the relevant provisions of Article X.35–40 of the Belgian Code of Economic Law. According to the judgment, these provisions mainly protect “private” interests. Since they are not essential for safeguarding Belgian fundamental public interests, they are therefore not to be considered as overriding mandatory provisions in the sense of Article 9 para. 1 Rome I Regulation. Hence, the question whether a dispute can be subject to arbitration does not depend on whether the arbitrator will apply Belgian law or not. It is also not necessary that foreign law gives the distributor the same level of protection as Belgian law. This means that disputes on the termination of exclusive distribution agreements with Belgian distributors are now arbitrable and that choice of law clauses will be respected.

 

Th. Granier: The Strabag and Slot judgments from the Paris Court of Appeal: expected but far-reaching decisions

In two decisions issued on 19.4.2022, the Paris Court of Appeal held that it was sufficient for an investment protection agreement not to expressly exclude the possible application of laws of the European Union to establish the incompatibility of dispute settlement clauses in investment protection treaties with laws of the European Union. That incompatibility therefore applies to all clauses in those treaties that do not expressly exclude the application of the laws of the European Union by the arbitral tribunal. The Court of Appeal followed decisions of the ECJ in Achmea, Komstroy and PL Holding, by which it is bound. These decisions highlight the increasing difficulties in the recognition and enforcement of arbitral awards rendered pursuant to investment treaties in the European Union.

 

E. Schick/S. Noyer: Acquisition of property according to the law applicable to contracts? A critical analysis of thte existing French private international property law in the light of oft he 2022 draft law

While the private international law of contracts is unified in the Rome I Regulation, the conflict of laws rules for property are still defined individually by member states of the European Union. Autonomous French private international law remains largely uncodified and the product of the jurisprudence of the Cour de cassation, with significant regulatory gaps. The draft legislation for private international law issued by the responsible committee on 31.3.2022 aims to codify large parts of this established jurisprudence and therefore also sheds new light on the conflict rules applicable in France de lege lata. In the field of private international property law, the proposed art. 97–101 feature conflicts rules which do not only appear to the German jurist as exotic, but even raise questions as to the scope of application of the Rome I Regulation. Focusing on the contractual transfer of movable property – an area where contract law and property law are intricately linked – this article offers an account of the applicable French conflicts of laws rules by examining the relevant jurisprudence and scholarly doctrine. The codification proposal and the problems it creates will also be critically analysed.

 

N. Dewitte/L.Theimer: A century of the Hague Academy, 31 July to 18 August 2023, The Hague.

Conventions & Instruments

On 1 February 2024, the 2007 Child Support Convention entered into force for Canada. At present, 49 States and the European Union are bound by the 2007 Child Support Convention. More information is available here.

On 13 February 2024, Albania signed the 2005 Choice of Court Convention and the 2007 Maintenance Obligations Protocol. The Convention and the Protocol will respectively enter into force for Albania only after it deposits an instrument of ratification, pursuant to Art. 31(2) of the Convention and to Art 25(2) of the Protocol. The 2005 Choice of Court Convention currently binds 32 States and the European Union, while the 2007 Maintenance Obligations Protocol currently binds 31 States and the European Union. More information is available here.

On 28 February 2024, the 2007 Child Support Convention entered into force for Azerbaijan. At present, 49 States and the European Union are bound by the 2007 Child Support Convention. More information is available here.

 

Meetings & Events

From 29 January to 2 February 2024, the Working Group on Matters Related to Jurisdiction in Transnational Civil or Commercial Litigation met for the sixth time. Pursuant to its mandate, the Working Group made further progress on the development of draft provisions on parallel proceedings and related actions or claims. More information is available here.

 

Publications

On 27 February 2024, the Permanent Bureau announced the publication of the Recommended Model Forms for use under the 1993 Adoption Convention. The Model Forms are intended to simplify and facilitate compliance with the 1993 Adoption Convention by assisting Contracting Parties in the collection of relevant information. More information is available here.

 

Vacancies

Applications are now open for the position of Project Coordinator (full-time). The deadline for the submission of applications is 13 March 2024. More information is available here.

Applications are now open for three- to six-month legal internships for the period from July to December 2024. The deadline for the submission of applications is 29 March 2024 (18:00 CET). More information is available here.

 

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

Applications are now open for three- to six-month legal internships at the Permanent Bureau’s headquarters in The Hague, for the period from July to December 2024!

Interns work with our legal teams in the areas of International Family and Child Protection Law, Transnational Litigation and Legal Cooperation, and International Commercial, Digital and Financial Law. Duties may include carrying out research on particular points of private international law and/or comparative law, taking part in the preparation of HCCH meetings and contributing to the promotion of the HCCH and its work.

Applications should be submitted by Friday, 29 March 2024. For more information, please visit the Internships Section of the HCCH website.

This post is published by the Permanent Bureau of the Hague Conference of Private International Law (HCCH).

This post was contributed by Horatia Muir Watt and Dominique Bureau, who are respectively professors at Sciences Po Law School (Paris) and Paris II Law Faculty. This is the fourth contribution to the EAPIL’s online symposium on the ruling of the Court of Justice in Inkreal, after the posts of  Sergi Gimenez, Gilles Cuniberti and Pedro de Miguel Asensio.

The ECJ’s ruling enables parties to an intra-European domestic contract (meaning, connected solely to one Member state) to submit their future disputes to the courts of another Member state. The broad justification for this new step is the respect for party autonomy and the subsequent need for effectiveness of exclusive choice of court agreements within the common judicial area (judgment, §26, §36). While the reference to such principles does not come as a surprise in the latter context, their relevance with regard to the specific problem at the heart of the ongoing dispute is hardly convincing. Not that there is any lack of other, more technical, arguments. However, the dialectics are somewhat circular, to say the least. This may be linked to the fact that the Advocate General’s Opinion had proposed the opposite solution, possibly indicating in turn an internal division within the Court.

The novelty in the solution is that a choice of foreign forum in a purely domestic or uni-located situation is governed by Article 25-1 of the Brussels I bis Regulation and permissible thereunder. There is no need, then, for the underlying agreement to have any “foreign elements”. Indeed, in this case, not only was there was no link with the Member State whose courts had been chosen (as now uncontroversially allowed in the case of international forum agreements, whether otherwise intra-European or not), but further, there was no circumstance, past or present, which might attach the disputed contract to any country (whether or not a Member State) other than the one in which the parties were already established at the time the contract was concluded and were still so at the date of the court proceedings.

We see this as problematic. Not only by reason of the pattern of argument deployed here (I), but also because of the epistemology at work (II), and, most importantly, the underlying political economy of the final outcome (III).

I. Pattern of Argument

The problem affecting the reasoning in the judgment lies in a methodological slippage. At first glance, the Court carries out a classical exercise in legal hermeneutics: the wording of article 25-1 is examined (pt. 21), consolidated thereafter by a teleological analysis (pt. 26), then a logical justification (pt. 32), and finally the confrontation with a counter-example in the form of the 2005 Hague Convention (pt. 36). Why the latter did not serve, rather, as an analogy; why the silence of the text was taken to be permissive rather than as an implicit reference to the content or practice of other EU instruments, including Regulation Rome I; why there was no consideration of the delicate balance struck between the policy of free movement and the protection of domestic regulatory objectives in Member States…can of course all be ascribed to the normal mysteries of judicial interpretation.

Nevertheless, given the controversial nature of the legal issue and the potential import of the outcome, the location of the tipping point of the argument (pt. 22-23) comes as a surprise. From this point onwards, all the justifications put forward, whether teleological, logical or contextual, all presuppose a conception of the relationship between the internal and the international, which is precisely at the heart of the dispute.

The latter comprises two successive questions. Does the applicability of Article 25 of Regulation Brussels I bis require the contractual relationship (to which the choice of forum agreement pertains) to be international (or at least non-exclusively domestic, as under its twin article 3§3 of Regulation Rome I on choice of law)? If so, does the sole choice of a foreign court by the parties to such a relationship suffice to fulfill this condition? But answering the second question in the affirmative quite simply negates any prior requirement and merges the two problems into one. As Advocate General J. Richard de la Tour observed, if we hold that recourse to a provision of Regulation No 1215/2012 presupposes the existence of a condition of internationality, it would be fallacious to assume that this is fulfilled through an agreement between the parties. In other words, this way of framing the question puts an end to any further, non subjective, requirement of “internationality”. With the sequence of questions reversed, the reasoning then becomes circular.

This objection could be disqualified as merely aesthetic if it were not for a series of interconnected consequences. These may differ of course according to the structure of the court system in any given country. But let us take France as an example. In the case of an exclusively domestic contract, subject to French law, some forum agreements of which the effect would be to modify the rules of domestic territorial venue – for instance, choosing a court in Paris rather than in Marseilles – would be void under article 48 French Code of Civil Procedure. But then, according to the ECJ’s new ruling, an agreement between the same parties in the same circumstances, but conferring jurisdiction on a court in Rome (rather than in Paris), would be perfectly valid. If the parties are attempting (together or separately) to shop, for various reasons, for a more favorable forum than Marseilles, this opening comes as a godsend.

Indeed, following the ruling, it means that the agreement to take the dispute to a foreign court would have to be enforced – meaning that the court of a Member State other than the one designated under the otherwise applicable rules of domestic civil procedure would have to stay and then possibly decline jurisdiction – assumedly, even if the dispute falls within the scope of mandatory provisions of the (domestic) law of that forum. Thus, in the French example above, the same contract might also contain a choice of (any) foreign law. The latter choice would normally be subject (without prejudice) to the mandatory provisions of local (French) law, under article 3 § 3 of Regulation Rome I. However, if the court of the other Member State designated in the choice of forum agreement were to disregard such provisions – or, rather, since this whole situation is henceforth to be thought of as international, if it were to decline to exercise the option offered by article 9§3 of Regulation Rome I in favour of an overriding statute at the place of performance-, there is no guarantee that a “second look” could make them effective at the ultimate, enforcement stage. Indeed, the violation of an overriding or mandatory rule – and even less a domestic mandatory provision – does not necessarily prevent a judgment handed down in one Member State from becoming effective in another. Moreover, the proviso in article 25 is hardly a protection when it states, in relation to the effectiveness of parties’ choice of court: “unless the agreement is null and void as to its substantive validity under the law of that Member State”, that is, the law of the chosen forum!

In other words, since, it is easy to see how given domestic legal provisions – both substantive and procedural – become irrelevant unless the parties have decided otherwise.  For the moment we must put aside some insidiously nagging questions, beyond the scope of article 25 of Brussels Ibis Regulation: will this expansive permission to engage in jurisdictional barrier-crossing grow into a common understanding as to the merits of party autonomy, so as to apply to cases in which the chosen forum is in a third country? And in such cases is the protection of European mandatory laws (as in the ECJ’s Ingmar line of case-law) sufficient to ensure “jurisdictional touchdown” (“Transnational Liftoff and Juridical Touchdown: The Regulatory Function of Private International Law in an Era of Globalization.” Columbia Journal of Transnational Law 40.2 (2002): 209-274)?  Presumably, a contractual choice in favour of a Member State by parties to a domestic contract in a third country will also be upheld, even if void under the law of the latter?

To come back for the time being to agreements subject to article 25, it might be argued, in response to our objection, that the erasure of the distinction between the domestic and the international as far as choice of court clauses are concerned increases the protection of weaker parties within the European Union, by reason of  the various special asymmetrical fora contained in Chapter II, Section 2 of the Regulation (which might be absent under local rules of civil procedure). A worker or consumer who is obliged to sue in the court of the professional defendant’s domicile in a purely domestic case could, simply by “internationalising” the contract – albeit with the unlikely consent of the employer or seller/service provider – benefit from the availability of a forum closer to home. But if such an advantage is truly important, it would surely be better to oblige Member States to provide the relevant protective forum by means of secondary EU legislation to that effect (as for detached workers, for instance), rather than upsetting the existing general equilibrium between international jurisdictional freedom and domestic procedural and regulatory constraints, with far wider ripple effects.

It could also be said that the “special” jurisdictional rules of article 7 of Regulation Brussels I bis already intrude into local rules of venue. But these have, until now, been triggered only in international cases, that is, when there is, initially, a “conflict of jurisdictions”, in other words a doubt, given the multiple connections of the substantive agreement between the parties, as to which court is apt to decide the case (as the Court accepts: judgment §22). Henceforth, in a domestic context, economic actors can opt out of local rules of venue in contract cases. They are not usually free to change the rules, say in tort cases, within a given Member State.  But, as from now, we may wonder why they should not be able to do so, with a little help from further analogizing. Or is there really something specific about contracts that mandates a more expansive approach to party autonomy?

II. Epistemological Issues

How then to understand the Court of Justice’s resolute erasure of the distinction between the domestic and the international – in the very specific context of Article 25 of the Brussels I bis Regulation, but of which the thrust could be significantly broader? Of course, the alternative approach would have meant defining an objective parameter to trigger the liberal regime – free choice of forum – defined therein. Where exactly to place the threshold of the international? This is undeniably a challenge in itself, as we well know from the long endeavor behind the Rome Convention/Regulation Rome I to define the thrust of party autonomy in respect of choice of law. But at this point one may simply wonder why the Court did not borrow from the (albeit imperfect) definition of article 3 § 3 of the latter, twin, instrument.

This approach sets a limit to freedom of choice of a foreign law in cases that are wholly domestic “but for” the choice itself. Arguably, the terms of the difficulty are not identical when it comes to jurisdiction: in matters of choice of law, it is easier to set a limit to party freedom by subjecting the contract to the domestically mandatory rules of the country in which, but for the agreement,  all the other conceivable connecting factors converge. However, applied to choice of forum agreements under article 25 of the Brussels Ibis Regulation, the “but-for” approach would have allowed each Member State to decide, similarly, for itself, whether party autonomy should or not prevail over countervailing considerations (linked inter alia, in turn, to the content of the applicable substantive law under art. 3§3 of Regulation Rome I).

If party autonomy has conquered new ground with such apparent ease, it is probably because the trend embodied in the ECJ’s new judgment was already present in a series of steps that appeared to need only a little prompting to expand in the same direction. From the contrat sans loi to a forum without a jurisdiction… the Court seems to have fallen into the trap of the “authority paradigm” (an epistemological difficulty amply explored by G.H. Samuel (‘Is Law Really a Social Science? A View from Comparative Law’ (2008) 67 Cambridge Law J. 288), in the sense that the solution is represented as dictated by its own specific legal logic, leading as it were in a straight line to an inescapable outcome: the blurring of the boundary between the internal and the international (or European). Given the silence of the text of article 25 on this point (which nevertheless constitutes the framework for the reasoning adopted), arguments beyond a purely literal interpretation were necessary. As observed above, the analogies and counterexamples supplied by the Court tended to cancel each other out and could have worked both ways. Are there further possible justifications?

Arbitration as an area of investigation provides food for thought. Arguably, there is a certain parallelism between choice of forum agreements and arbitration, which both allow, broadly speaking, an opt-out by private actors from a given legal system. It might be said, therefore, that, since domestic arbitration is permitted in many Member States (but it is difficult to generalise in a field that is not subject to European Union law), there is no reason to be more restrictive in respect of a domestic forum agreement in favour of a foreign court. However, such an argument is hardly convincing. Firstly, and precisely, because domestic arbitration is only permitted under the conditions laid down by a given national legal system, which decides for itself the extent it allows parties to exit its own court system. Secondly, because even in pro-arbitration jurisdictions such as France, the will of the parties is powerless to transform a domestic arbitration into an international one.

What can be said, however, is that the expansion of international arbitration is certainly at the root of a pervasive and under-theorized conception of party autonomy, perceived or used as a generalized derogation from any regulation or control originating in the public sphere (“regulatory lift-off” in the terms of Robert Wai, cited above). It is true that arbitration serves to free the parties from the public domain and by doing so encourages the privatization of the dispute resolution industry. This is not exactly the case here, since the freedom granted is exercised to the benefit of the courts of another Member State. However, the dual phenomena of artificial internationalization of domestic agreements and privatization of the access to justice are not unrelated. More rarely analyzed in this light, unfettered free movement serves an identical political and economic function with regard to both. It authorizes what we have previously called “metaphorical mobility”.  In other words, the license given to economic actors to insert choice-of-forum and choice-of-law clauses in their contracts, and thus tailor the applicable legal regime, is but a different instantiation of the free movement of goods and services in the common market: a form of legal and jurisdictional mobility without moving.

But the distinction between domestic and international cannot be erased – with the wave of a magic wand aka the will of the parties – without counting the costs downstream. At least, if we wish to preserve a measure of pluralism of national legal orders (or if we are legally obliged to do so, where competences are divided and layered, as in the European Union). Even liberal antitrust law teaches us that healthy competition (whether between players or, internationally, between laws) encounters its limits in the risk of creating a monopoly. Thus, outside this framework, it would have been possible to reflect on the very meaning of the boundary between the domestic and the international in the context of jurisdictional conflicts and elsewhere, or to consider more broadly (which amounts to the same thing) the scope to be conferred on party autonomy, which nothing – not even the competitive paradigm of the internal market in which the law unfolds here – obliged the Court to extend. Furthermore, in the silence of a text (and even then…) alternative and equally plausible schemes of intelligibility always exist. In this case, other avenues were perfectly conceivable. This is borne out by the conclusions of the Advocate General – without reference, which is regrettable, to the various debates within the field. It is not as if there has not been critique, and for a long time, of the autonomy/privatization/mobility nexus and its political economy, both within and beyond the confines of the European Union. The terms of this discussion deserved to be taken up. We can only regret the absence of any trace of such considerations in the judgment – if only to refute the objections – in what is undoubtedly a radical move in the evolution of the ECJ’s case law on contractual matters. The legitimacy of the Court’s role in the careful construction of a pluralist European legal and judicial area, is at this price, when it is called upon to rule, on the basis of an individual dispute, on a legal issue of much wider political, social and economic import. To present the position taken on this point as being dictated by legal logic is to flatten or depoliticize the difficulty.

III. Political Economy

At this point, then, we are prompted to look further into the ideological dimension of the outcome. As with free choice, or the distinction between the public and the private spheres, the problem is less in the principle itself (of mobility, party autonomy, private agency…) than in the disqualification of all types of local regulation, perceived exclusively as hindrances to the fulfillment of a higher political and economic goal. From this point of view, erasing the difference between the domestic and the international obeys a classic competitive paradigm, promoted with regard to a certain conception, now largely called into question, of neoliberal economic analysis of law. Thus, allowing the choice by the parties of a forum in another country in domestic contracts (already the principle when the situation is pluri-located) would supposedly create the conditions for an “upward” competitive spiral, thus improving the quality of jurisdictional services across the board as a result of this pressure.

Indeed, the ECJ’s ruling uses the tools of private international law to implement a project based on a specific, and by no means undebatable, economic rationality. Thus, the linchpin of the regulatory competition thesis was largely theorized within Chicago law and economics in the area of the (largely post-war) market for corporate charters. Thereafter, echoing such ideas from across the Atlantic, free metaphorical mobility, or “barrier-crossing” from the public to the private (the very definition of neoliberalism), empowered the unhindered movement of companies within the European internal market. From that point, was there any good reason to distinguish the fate of internal mandatory rules in company law from that of those governing mere commercial contracts: one might even be said to imply the other? Indeed, while most of the prohibitions enshrined in domestic commercial contract law in liberal regimes are presented as exceptions to the freedom of the parties, whereas large swathes of company law is mandatory in the domestic order with the aim of protecting third parties (rules relating to minimum capital, for example, or “blue sky” statutes..). Yet these provisions are largely neutralized by free circulation (as in Centros etc). If the founders of a company can choose to opt out of an applicable regulatory regime by artificially “internationalizing” or moving (formally) across borders, why not allow other forms of metaphorical mobility in contractual cases, through the insertion of choice of law and forum agreements in domestic agreements?

Reminiscent of the neoliberal model of economic analysis just mentioned, such was the plea by J. Damman and H. Hansmann, inspired by the real or supposed virtues of the legislative or regulatory competition induced by the American intra-federal market for corporate charters (‘Globalizing Commercial Litigation’, 94 Cornell L. Rev. 1 (2008)). In vogue at the neoliberal end of the last century when redistributional and environmental concerns were largely ignored, this now outdated, or highly contested, economic analysis of law, still has its supporters, including in France (counterintuitively… but is this the effect of the arbitration lobby, or merely of an academic fashion lag?). Interestingly, the same authors had initially advocated the introduction of a generalized system of “extraterritorial” courts (in other words, established outside their country of origin but administering the justice of the latter, abroad) precisely to enable competition between legal orders through an unfettered access to multiple, competing courts, even in purely domestic situations (perhaps forgetful that such a technique was actually implemented across colonial and neocolonial empires, including by the United States in China, until surprisingly recently…). But of course, a choice of forum agreement does the job in terms of competition, nearly as well.

It is precisely this model – the competitive paradigm – that may have inspired the Court of Justice here, as it has all those who continue to approve a very liberal use of contractual freedom of choice, whether of court or law. But despite the astonishing and recurrent success of the very idea of the “law market”, the difficulty remains of determining the threshold of the license to opt out of local regulatory limits in domestic cases. In the case of jurisdiction agreements, it could be explained by the impulse, in the long term, to standardize all the rules governing “special” jurisdiction among Member States, and thus, indirectly (as seen above) all contract law. Without going back over all the ground already covered in the fierce debates at the turn of the century on the unification of European private law, we shall simply observe that the prerequisite for successful legal harmonization (within the European Union) is the existence of a minimum of shared (equivalent) ground. The failure of the project to codify European private law (even in the sole area of contract) is perhaps an indication that such a consensus does not exist.

Moreover, if we adopt a structural approach to the problem, and move on from the indirect unification of domestic law to the circulation of judgments resulting from choice-of-court clauses, we can only point out that there is no such thing as complete “fungibility” of Member State judgments under the Brussels I bis Regulation itself, which, even after the abolition of exequatur, still allows for the ultimate intervention of local public policy (and on issues involving fair and equitable process is obliged to do so under relevant human or fundamental rights law). It is therefore to be expected that freeing up elective clauses ex ante will only multiply the number of cases of refusal to enforce the resulting decisions ex post. In other words, the lower the threshold of autonomy at the outset, the greater the degree of control at the end. The well-known example of the two contrasting perspectives, French and American, on “arbitrability” or the extent of party freedom in international arbitration (preventive threshold or control of awards) illustrates this phenomenon of “communicating vessels”. In respect of the new regime of jurisdictional clauses under the ECJ’s ruling, we can bet that the threshold issue – i.e., the reappearance of legitimate impediments to the free exercise of will – will quickly reappear downstream.

We also know that corporate mobility within the internal market has not been without its problems. The case law of the European Court of Justice bears witness to a long, shifting and subtle negotiation between the requirements of free movement and the aims protected by the legislative “obstacles” raised by member states in the name of various equally legitimate aims or policies (be they economic, social, environmental, etc.). Such judicial negotiation in case of conflict is the very “dynamic” of the principle of proportionality within the internal market (to use A. Marzal Yetano’s excellent expression in La dynamique du principe de proportionnalité. Essai dans le contexte des libertés de circulation du droit de l’Union européenne, Institut Universitaire de Varenne, 2014). This tension between multiple values is apparent both in corporate matters and in the field of contractually provided services, whether in terms of jurisdiction or applicable law. This is because any legal rule adopted in a democratic regime is the fruit of complex compromises between potentially contradictory interests, so that in the event of conflict in a particular case, no simplistic equation by which one should prevail other the other makes any sense – if to do so means ignoring the balance previously achieved…

The thirty-seventh annual survey on choice of law in the American courts is now available on SSRN. The survey covers significant cases decided in 2023 on choice of law, party autonomy, extraterritoriality, international human rights, foreign sovereign immunity, adjudicative jurisdiction, and the recognition and enforcement of foreign judgments. So, on this leap day, we thought we would leap into the new month by looking back at the old year.

Choice of Law

The Eighth Circuit applied Mexican law to a suit against General Motors over a car crash in Mexico, while an Ohio state court applied South African law to invalidate a marriage. A Washington state court interpreted an Irish forum selection clause to require dismissal of statutory claims against Microsoft despite the facts that Microsoft was not party to the agreement and the clause arguably did not cover statutory claims. Meanwhile the Fifth Circuit enforced a forum selection clause in an insurance contract choosing British Virgin Island courts despite evidence that the claims stood little chance in those courts.

Extraterritoriality

The Supreme Court decided two important extraterritoriality cases. In Yegiazaryan v. Smagin, the Court interpreted civil RICO’s “domestic injury” requirement to apply to a domestic judgment confirming a foreign arbitral award, a decision that brings another tool to bear to help enforce foreign awards and judgments. In Abitron Austria GmbH v. Hetronic International, Inc., the Court held that the Lanham Act applies only to domestic conduct infringing U.S. trademarks and, in so doing, provided important guidance about how to apply the federal presumption against extraterritoriality.

Meanwhile, lower courts struggled with how to fit the Supreme Court’s 1922 decision in United States v. Bowman, which addresses the scope of federal criminal statutes, into its current extraterritoriality framework. The Eleventh Circuit held that Bowman provides an alternative framework that courts may apply instead of the current presumption to determine the reach of criminal statutes, whereas the Ninth Circuit held that Bowmancould be considered part of the relevant “context” at step one of the Court’s present two-step framework. As Bill has explained, both solutions seem doubtful, and the issue may be headed to the Supreme Court.

International Human Rights

In an important decision, the Ninth Circuit held that Chinese practitioners of Falun Gong could sue Cisco Systems and some of its executives for aiding and abetting their torture by designing and building a surveillance system for the Chinese government. The court held that plaintiffs had alleged sufficient conduct in the United States to support their Alien Tort Statute (ATS) claim and that the Tort Victim Protection Act (TVPA) permitted aiding and abetting claims against the corporate executives. Meanwhile, the Supreme Court interpreted the aiding and abetting provision of the Anti-Terrorism Act (ATA) in Twitter, Inc. v. Taamneh to require conscious and culpable participation, thereby shielding social media platforms from liability based on the use of their platforms by terrorist groups.

Foreign Sovereign Immunities Act

In Tu?rkiye Halk Bankasi, A.S. v. United States, the Supreme Court held that the Foreign Sovereign Immunities Act (FSIA) does not apply to criminal prosecutions. The Court remanded for further consideration of Halkbank’s claim of immunity under federal common law.

In Bartlett v. Baasiri, the Second Circuit held that a foreign company can acquire immunity under the FSIA if it becomes majority-owned by a foreign government after a lawsuit is filed. That decision is in some tension with the Supreme Court’s decision in Dole Food Co. v. Patrickson (2003) holding that status as an agency or instrumentality of a foreign state is determined at the time of filing.

Adjudicative Jurisdiction

In Fuld v. Palestine Liberation Organization, the Second Circuit held that the Promoting Security and Justice for Victims of Terrorism Act is unconstitutional because it permits the assertion of personal jurisdiction based on an activity—making payments to terrorists and their families—that cannot be understood as consent to jurisdiction. The court applied the Supreme Court’s newest personal jurisdiction decision, Mallory v. Norfolk Southern Railway Co. (2023), which is also discussed in the survey. Congress could not, the court held, simply take an activity and label it consent to jurisdiction without providing something in return.

In Lewis v. Mutond, the D.C. Circuit dismissed a U.S. citizen’s torture claim against officials of the Democratic Republic of Congo, rejecting an argument that the vitality of the TVPA as a statutory scheme should factor into the court’s personal jurisdiction analysis. The court also reiterated the D.C. Circuit’s position that the limits imposed on federal courts by the Fifth Amendment are the same as those imposed on state courts by the Fourteenth, with Judge Rao suggesting in a concurring opinion that the court should reconsider that position en banc.

Interpreting the doctrine of forum non conveniens, the Tenth Circuit held that a foreign forum is not available if only the moving party, but not the other defendants, has consented to jurisdiction there. In another case, the Fourth Circuit held that a foreign forum was not adequate because it could not address the plaintiff’s American trademark claims.

Recognition and Enforcement of Foreign Judgments

Virginia has adopted the Uniform Foreign-Country Money Judgments Recognition Act, but because that act applies only to money judgments, the Fourth Circuit had to apply Virginia common law to decide whether to recognize a Ghanaian divorce decree. The court held that Virginia’s common law requirements were met, even though Virginia might not have granted a divorce under the same circumstances. Meanwhile, a Texas state court held that a Canadian judgment did not violate Texas public policy even though it awarded speculative damages.

Finally, the Tenth Circuit (applying Colorado law) joined the growing number of courts that have held that a court may order a debtor or third-party garnishee to bring assets held abroad into the United States if the court has personal jurisdiction over the debtor or third-party.

Conclusion

The annual survey on choice of law was admirably maintained by Symeon Symeonides for three decades. The present authors are pleased to have extended this tradition for the last three years.

John Coyle (University of North Carolina School of Law)
William Dodge (University of California, Davis School of Law)
Aaron Simowitz (Willamette University College of Law)

[This post is cross-posted at Transnational Litigation Blog]

A Conference on Cross-Border Dispute Resolution will be held in Dubrovnik on 8-10 May 2024 organized by the Law Schools of the University of Pittsburgh, Verona and Zagreb.

The Conference will deal with cross-border professional responsibility and privilege, aspects of international arbitration and international litigation. Each day will include discussion-oriented presentations and workshops on practical international arbitration and litigation issues.

Speakers include Ron Brand, Marco Torsello, Franco Ferrari, Milena Đorđević, Dora Zgrabljić Rotar and Giesela Ruhl.

The full programme is available here.

For registration and further info see here and here.

On February 20, 2024, the New York Court of Appeals handed down its opinion in Petróleos de Venezuela S.A. v. MUFG Union Bank, N.A. The issue presented—which I described in a previous post as the billion-dollar choice-of-law question—was whether a court sitting in New York should apply the law of New York or the law of Venezuela to determine the validity of certain bonds issued by a state-owned oil company in Venezuela. The bondholders, represented by MUFG Union Bank, argued for New York law. The oil company, Petróleos de Venezuela, S.A. (“PDVSA”), argued for Venezuelan law.

In a victory for PDVSA, the New York Court of Appeals unanimously held that the validity of the bonds was governed by the law of Venezuela. It then sent the case back to the federal courts to determine whether the bonds are, in fact, invalid under Venezuelan law.

Facts

In 2016, PDVSA approved a bond exchange whereby holders of notes with principal due in 2017 (the “2017 Notes”) could exchange them for notes with principal due in 2020 (the “2020 Notes”). Unlike the 2017 Notes, the 2020 Notes were secured by a pledge of a 50.1% equity interest in CITGO Holding, Inc. (“CITGO”). CITGO is owned by PDVSA through a series of subsidiaries and is considered by many to be the “crown jewel” of Venezuela’s strategic assets abroad.

The PDVSA board formally approved the exchange of notes in 2016. The exchange was also approved by the company’s sole shareholder—the Venezuelan government—and by the boards of the PDVSA’s subsidiaries with oversight and control of CITGO.

The National Assembly of Venezuela refused to support the exchange. It passed two resolutions—one in May 2016 and one in September 2016—challenging the power of the executive branch to proceed with the transaction and expressly rejecting the pledge of CITGO assets in the 2020 Notes. The National Assembly took the position that these notes were “contracts of public interest” that required legislative approval pursuant to Article 150 of the Venezuelan Constitution. These legislative objections notwithstanding, PDVSA followed through with the exchange. Creditors holding roughly $2.8 billion in 2017 Notes decided to participate and exchanged their notes for 2020 Notes.

In 2019, the United States recognized Venezuela’s Interim President Juan Guaidó as the lawful head of state. Guaidó appointed a new PDVSA board of directors, which was recognized as the legitimate board by the United States even though it does not control the company’s operations inside Venezuela. The new board of directors filed a lawsuit in the Southern District of New York (SDNY) against the trustee and the collateral agent for the 2020 Notes. It sought a declaration that the entire bond transaction was void and unenforceable because it was never approved by the National Assembly. It also sought a declaration that the creditors were prohibited from executing against the CITGO collateral.

The choice-of-law issue at the heart of the case related to the validity of the 2020 Notes. Whether the Notes were validly issued depended on whether the court applied New York law or Venezuelan law. The SDNY (Judge Katherine Polk Failla) ruled in favor of the bondholders after concluding that the issue was governed by the laws of New York. On appeal, the Second Circuit certified the choice-of-law question to the New York Court of Appeals. The Court of Appeals reformulated this question to read as follows:

Given the presence of New York choice-of-law clauses in the Governing Documents, does UCC 8-110(a)(1), which provides that the validity of securities is determined by the local law of the issuer’s jurisdiction, require the application of Venezuela’s law to determine whether the 2020 Notes are invalid due to a defect in the process by which the securities were issued?

In a decision rendered on February 20, 2024, the Court of Appeals unanimously concluded that the answer was yes.

Section 8-110

The court began with the New York choice-of-law clauses in the Indenture, the Note, and the Pledge Agreement. Under ordinary circumstances, it observed, New York courts will enforce New York choice-of-law clauses by operation of Section 5-1401 of the New York General Obligations Law. That statute provides that the parties to any commercial contract arising out of a transaction worth more than $250,000 may select New York law to govern their agreement even if the transaction has no connection to New York. In this particular case, however, a different part of Section 5-1401 dictated a different result.

Section 5-1401 also states that even when parties choose New York law, that law “shall not apply . . . to the extent provided to the contrary in subsection (c) of section 1-301 of the uniform commercial code.” UCC 1-301(c)(6) states, in turn, that if UCC 8-110 “specifies the applicable law, that provision governs and a contrary agreement is effective only to the extent permitted.” Finally, UCC 8-110(a)(1) states that “[t]he local law of the issuer’s jurisdiction . . . governs . . . the validity of a security.”

After following the chain of choice-of-law rules from Section 5-1401 to UCC 1-301(c) to UCC 8-110, the court observed that the validity of a security is governed by the law of the issuer’s jurisdiction. The court further observed, based on the statutory text, that Section 8-110 was a mandatory rule that could not be altered by a choice-of-law clause. Against this backdrop, the court held that “because UCC 8-110 is applicable here, any issue of the validity of a security issued pursuant to the Governing Documents is determined by the law of the issuer’s jurisdiction. In this case, the issuer is a Venezuelan entity, so the law of Venezuela is determinative of the issue of validity.”

Validity

The court next addressed the meaning of “validity” as used in Section 8-110. The bondholders argued that this term did not sweep broadly enough to encompass the requirement in Article 150 of the Venezuelan Constitution, which provides that the National Assembly must approve all “contracts of public interest.” They argued that the word encompassed only the usual corporate formalities for issuing a security. PDVSA argued that “validity” could be interpreted to include constitutional provisions that bear on the issue of whether a security was duly authorized. The Court of Appeals agreed.

In reaching this conclusion, the court first observed that the issue of “validity” had to be distinguished from the issue of “enforceability.” The first term refers to the “nature of the obligor and its internal processes.” The second term refers to “requirements of general applicability as going to the nature of the rights and obligations purportedly created, irrespective of the nature of the obligor and its processes.”  The court cited usury laws and anti-fraud laws as examples of laws that dealt with enforceability rather than validity. Although these laws may prohibit a court from enforcing a contract, they do not bear on the validity of that same contract because they do not address the procedures that must be followed for the contract to be duly authorized.

The court then distinguished between (1) validity and (2) the consequences of invalidity. While Section 8-110 stated the controlling choice-of-law rule with respect to the validity, it was not controlling with respect to the consequences stemming from that invalidity. “Even if a court determines that a security is invalid under the local law of the issuer’s jurisdiction,” the court held, “the effects of that determination will depend on New York law.”

With these distinctions in mind, the court held that “Article 150 and its related constitutional provisions could potentially implicate validity because they speak to whether an entity has the power or authority to issue a security, and relatedly, what procedures are required to exercise such authority.” In particular, the court observed that this constitutional provision required the approval of the National Assembly before certain contracts could be executed. Since Article 150 identified procedural requirements rather than substantive ones, the court reasoned, it spoke to the issue of validity rather than enforceability. In so holding, the court reasoned that the term “validity,” as used in Section 8-110, could implicate constitutional provisions of the issuer’s jurisdiction that speak to whether a security is duly authorized.

Caveats

After holding that the issue of validity was governed by the law of the issuer’s jurisdiction, and that Section 150 of the Venezuelan Constitution might be relevant to the issue of validity, the court went on to announce several important caveats.

First, the court stated that the application of Venezuelan law on these facts must be “narrowly confined.” It held that the “exception provided by UCC 8-110 provides no opportunity for the application of foreign laws going to the enforceability of a security, nor does it affect the adjudication of any question under the contract other than whether a security issued by a foreign entity is valid when issued.”

Second, the court emphasized that “none of this is to say that plaintiffs will ultimately be victorious.” It noted that the federal courts would still have to determine whether the securities were, in fact, invalid under the laws of Venezuela.

Third, the court went out of its way to emphasize the fact that—issues of validity notwithstanding—New York law governs the transaction in all other respects, including the consequences if a security was issued with a defect going to its validity.

Conclusion

This long list of caveats suggests that the Court of Appeals wanted to apply to New York law in this case to the maximum extent possible. Enforcing New York choice-of-law clauses, after all, generates business for New York lawyers, and the generation of such business ultimately benefits the State of New York. The Court was, however, unable to find an interpretive path that permitted it to apply New York law in light of the text of Section 8-110.

In the days following the court’s decision, several news outlets reported that the value of the PDVSA bonds at issue had fallen precipitously. This decline in price presumably reflects the market’s perception that the bondholders are less likely to gain access to the CITGO assets anytime soon (if at all) if Venezuelan law governs the validity issue. TLB will report on developments in this case going forward.

[This post is cross-posted at Transnational Litigation Blog.]

The latest volume (Vol. 66, 2023) of the Japanese Yearbook of International Law (formerly Annual Yearbook of Private International Law) – published by the International Law Association of Japan – has recently been released. It contains the following articles, case notes, and English translations of some court decisions relating to or relevant to private international law.

MOBILITY AND BELONGING IN A GLOBALIZED WORLD

Yuko Nishitani

Introductory Note (p. 169)

Nami Thea Ohnishi

Nationality and Citizenship in Relation to the Migration Phenomenon (p. 174)

Hirohide Takikawa

Free Movement and Nationality (p. 189)

Kiyoshi Hasegawa

Inclusion and Exclusion of Immigrants and Refugees in Japan: A Preliminary Study (p. 212)

KONDO Atsushi

Human Rights of Non-Citizens and Nationality — The Peculiarities of Japan’s Nationality Legislation from a Comparative Legal Perspective — (p. 245)

OBATA Kaoru

Beyond the Concept of “Human Rights of Permanently Domiciled Foreigners” in Japanese Public Law Theory — Taking Seriously of Ambiguity in Nationality in the Age of International Migration — (p. 272)

Yuko Nishitani

Personal Law in Contemporary Private International Law — The Changing Role of Nationality, Citizenship, and Habitual Residence — (p. 295)

 

CASES AND ISSUES IN JAPANESE PRIVATE INTERNATIONAL LAW

Shiho Kato

Dismissal of Proceedings on Account of Special Circumstances Under Article 3-9 of the Japanese Code of Civil Procedure (p. 445)

Ai Murakami

Extraterritorial Application of the Japanese Antimonopoly Act (p. 457)

 

Judicial Decisions in Japan

1. Private International Law

Intellectual Property High Court, Judgment, July 20, 2022

Applicable Law — Patent Infringement — Territoriality Principle (p. 561)

Tokyo District Court, Judgment, April 12, 2021

Applicable Law to Tort Liability — Infringement of a Right of Child Custody (p. 565)

Tokyo District Court, Judgment, November 12, 2021

Applicable law — Jurisdiction — Liability of Internet Service Providers (p. 567)

Tokyo District Court, Judgment, March 23, 2022

State Immunity — Unrecognized States — Jurisdiction of the Place of Tort — forum necessitatis — Applicable Law to Tort Liability (p. 569)

Tokyo Family Court, Decision, January 4, 2021

Jurisdiction — Applicable Law — Action to Rebut the Presumption of Child in Wedlock (p. 577)

Tokyo Family Court, Adjudication, January 27, 2021

Applicable law — Jurisdiction — Joint Adoption by a Married Couple with Different Nationalities (p. 580)

 

The full table of contents can be viewed here under the “Current Issue” tab.

More information about the Yearbook and the content of its previous volumes can be found here under the “Past Issues” tab.

The full contents of Vols. 1~64 (1957-2021) are available on HeinOnline.

On 22 February 2024, the Law Commission of England and Wales published a call for evidence to help them identify the most challenging and prevalent issues of private international law that arise from the digital, online, and decentralised contexts in which modern digital assets and electronic trade documents are used. They seek the views and evidence of a diverse body of stakeholders from a wide range of perspectives and jurisdictions to ensure their future work on this project will strike the appropriate balance between the theoretical aspect of the law and its practical application. The responses will inform the next steps. They seek responses by Thursday 16 May 2024.

The call for evidence can be downloaded here. A summary of the call can be downloaded here. Responses to the call for evidence should be submitted here.

The Law Commission describes the problem that their project aims to address as follows.

The Problem

When parties to a private law dispute are based in different countries, or the facts and issues giving rise to the dispute cross national borders, questions of private international law arise. In which country’s courts should the parties litigate their dispute? Which country’s law should be applied to resolve it? How can the judgment be enforced in another country? Private international law is the body of domestic law that supplies the rules used to determine these questions.

Problems of private international law are by no means a recent phenomenon. The conditions that give rise to problems of private international law date from at least the fourth century BC. The problems are, however, becoming more difficult and increasingly pervasive because modern technologies challenge the territorial premise on which the existing rules of private international law have been developed.

In this respect, the advent of the internet in the late 1980s has been a catalyst of socio-economic change that has posed significant challenges for private international law. More recent innovations, such as crypto-tokens and distributed ledgers, add novel and arguably intractable problems to these existing challenges.

[The Law Commission’s] project has a particular focus on crypto-tokens, electronic bills of lading, and electronic bills of exchange. This is because these assets are prevalent in market practice, whilst also posing novel theoretical challenges to the methods by which issues of private international law have traditionally been resolved.

The Project

In recent years, a significant aspect of the Law Commission’s work has focused on emerging technologies, including smart legal contracts, electronic trade documents, digital assets, and decentralised autonomous organisations (DAOs). [The Law Commission’s] work has shown that these technologies raise issues of private international law.

In [the Law Commission’s] final report and Bill for work on electronic trade documents, [the Law Commission] noted that there are private international law difficulties associated with electronic trade documents, in particular the inherent difficulties in determining the geographical location of the documents.

However, [the Law Commission] recognised that many of these issues arise in relation to digital assets more broadly. During the passage of the Electronic Trade Documents Act 2023, [the Law Commission] committed to considering these issues in a more general project on private international law and emerging technology.

In 2022, the UK Government asked the Law Commission to conduct this project considering how private international law rules will apply in the digital context. In particular, the Law Commission is asked to consider the disputes which are likely to arise in the digital context (including contractual, tortious and property disputes), and make any reform recommendations it considers necessary to Government.

The Centre for Private International Law (CPIL) of the University of Aberdeen is announcing its 2nd Postgraduate Law Conference of the Centre for Private International Law, which will take place online on 6 May 2024. Researchers are invited to submit abstracts by 29 February.

The Conference aims to provide young scholars with the opportunity to present their research before panels with relevant expertise and receive valuable feedback for further development of their work.

It has four panels, respectively on international family law, civil and commercial law, artificial intelligence and human rights linked to private international law.

For more information, please see the Centre’s website.

The post below was written by Pedro De Miguel Asensio, who is Professor of Private International Law at the Complutense University of Madrid. This is the third contribution to the EAPIL’s online symposium on Inkreal, after the posts of Sergi Gimenez and Gilles Cuniberti.

The main contribution of the Inkreal judgment is to establish that Article 25 of the Brussels I bis Regulation allows the parties to a contract, even if they are domiciled in the same Member State and all the elements of the contract are located in that State, to confer jurisdiction to settle the disputes arising from the contract on the courts of another Member State. In fact, this case has provided the Court of Justice with the opportunity to address a question which had been referred to it previously, but which it was unable to rule on at the time because the request for a preliminary ruling was withdrawn by the Portuguese Supremo Tribunal de Justiça and the case removed from the register (EU:C:2017:237).

In particular, among the questions already referred to the Court of Justice in case C-136/16, Sociedade Metropolitana de Desenvolvimento, in connection with the practice relating to the conclusion contracts under the terms of the ISDA Master Agreement, was whether, in a dispute between two national companies of a Member State concerning swap contracts, the existence therein of clauses conferring jurisdiction in favour of another Member State constitutes a sufficient international element to give rise to the application of the Brussels I bis Regulation. Now, the Inkreal judgment in the framework of case C-566/22 answers a similar question in the affirmative and clarifies that the mere agreement of the parties to a contract designating the courts of a Member State other than that of their common domicile as having jurisdiction is sufficient for the legal situation to have an international element for the purposes of the jurisdiction rules of the Brussels I bis Regulation.

Although it is a criterion that could give rise to misgivings insofar as it could leave it to the parties to circumvent, within the limited framework of Article 25 of the Brussels I bis Regulation, the jurisdiction of the courts of the only Member State with which the contract is connected (as the Advocate General emphasised in his Opinion in Inkreal, EU:C:2023:768) and may sometimes cause serious inconvenience to one of the parties (as raised in the second of the questions referred for a preliminary ruling in case C-136/16), the approach adopted by the Court seems the better view. Its position reinforces: (a) consistency between the Brussels I bis Regulation and other Union instruments on judicial cooperation in civil matters (see I, infra); (b) the objectives of predictability and legal certainty in the application of the Brussels I bis Regulation (II, infra); and (c) the particular significance of the Union’s private international law instruments as an element of integration (III, infra).

I. Consistency between the Brussels I bis Regulation and Other Union Instruments on Judicial Cooperation in Civil Matters

The judgment confirms previous case law according to which the application of the rules of jurisdiction of the Brussels I bis Regulation is in any case subject to the existence of an international element, which corresponds to the fact that it is an instrument relating to judicial cooperation in civil matters having cross-border implications, in the terms of Article 81(1) TFEU. However, the judgment not only confirms that for such international element to be present it is sufficient that the situation raises “questions relating to the determination of the jurisdiction of the courts in the international sphere” (para. 22 referring to the IRnova judgmen, EU:C:2022:648), but also adds as a novelty the clarification that such a circumstance is present whenever the parties to a contract are established in a Member State other than the court seised on the basis of the relevant jurisdiction agreement, insofar as in such situations the question arises of determining the courts of which of those Member States has international jurisdiction to hear the dispute in question (paras. 23-25).

In order to reach that conclusion, the judgment attributes a particular relevance to the definition of “cross-border cases” in Article 3(1) of Regulation (EC) No 1896/2006 creating a European order for payment procedure, which provides that “a cross-border case is one in which at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court seised”. Apart from the relevance given in the judgment to the coordination between the Brussels I bis Regulation and Regulation (EC) No 1896/2006, the approach taken by the Court of Justice also seems to be supported by the content of Regulation (EC 593/2008 on the law applicable to contractual obligations (Rome I Regulation).

Recital 15 to the Rome I Regulation states:

Where a choice of law is made and all other elements relevant to the situation are located in a country other than the country whose law has been chosen, the choice of law should not prejudice the application of provisions of the law of that country which cannot be derogated from by agreement. This rule should apply whether or not the choice of law was accompanied by a choice of court or tribunal.

Consequently, Recital 15 and Article 3(3) of the Rome I Regulation seem to be based on the assumption that the parties to a contract may choose a court of a Member State as having jurisdiction, even if all the relevant elements of the situation prior to their choice of forum (and law) are located in another Member State (regarding the interpretation of Article 3.3 Rome I Regulation in the context of insolvency proceedings, see CJEU Judgment of 8 June 2017, Vynils, C-54/16, EU:C:2017:433, concerning an apparently domestic Italian contract that conteined “a clause stating that English law is the chosen law and a clause choosing the jurisdiction of the London Maritime Arbitrators Association”, para. 20).

In so far as the judgment in Inkreal holds that the rules of jurisdiction in the Brussels I bis Regulation apply only where there is an element of internationality, for which it is sufficient that a purely domestic contract designates a court of another Member State as having jurisdiction, since such a situation “raises a question relating to the determination of international jurisdiction” (para. 24), it is also consistent with the approach underlying the Rome I Regulation. A sort of parallel may be drawn mutatis mutandis between that category and that of a situation “involving a conflict of laws” as regards the field of applicable law. Also, under the Rome I Regulation, in the different context of the applicable law, it is necessary to determine in which situations a foreign element is present, since the rules of the Rome I Regulation only apply “in situations involving a conflict of laws” (as stated in Article 1(1) and recently examined by the Court of Justice in its judgment of 14 September 2023, Diamond Resorts Europe and Others, C‑632/21, EU:C:2023:671, para. 51).

II. Objectives of Predictability and Legal Certainty in the Application of the Brussels I bis Regulation

The judgment highlights that making the application of Article 25 of the Brussels I bis Regulation subject to a finding that the contract has additional links (beyond the agreement conferring jurisdiction) with the Member State of the chosen court would undermine the objective of legal certainty and predictability. It would make it difficult for the designated court before which the action is brought to determine its jurisdiction and increase the risk of parallel proceedings and irreconcilable judgments (paras. 27 to 31).

Although the lis pendens rules of the Brussels I bis Regulation would significantly reduce the risk of parallel proceedings, there is no doubt that the requirement to identify additional elements capable of demonstrating the cross-border impact of the dispute would constitute a significant factor of uncertainty. Illustrative in that respect was the list of potential international elements in addition to the jurisdiction agreement contained in the third of the questions referred for a preliminary ruling in case C-136/16 in relation to the swap contracts at issue. Such elements included the fact that foreign companies were invited to submit proposals to participate in the contracts, that one of the parties is owned by a foreign entity, that under the terms of the contract the parties may transfer their rights and obligations to subsidiaries in other countries, that the contracts at issue had certain connections to contracts concluded with foreign entities, etc.

Moreover, hypothetically, it should be noted that if it had been decided that Article 25 of the Brussels I bis Regulation requires additional factors of internationality to be applied, a particularly broad interpretation in the context of the Union would have been justified. The outcome in practice might not be very different from that resulting from the new judgment.

For example, why would the following not be sufficient connections. First, the mere fact that for one of the parties the contract in question has connections to a different international contract which are relevant to that party. Second, the fact that one of the contracting parties belongs to a group of companies with connections to the Member State in which the designated court is located (for instance, this seemed to be the situation -perhaps with some additional elements- in the notorious El Majdoub judgment, concerning a contract between parties domiciled in Germany with a jurisdiction clause in favour of a court in Leuven (Belgium), see paras 10, 13 and 16 of CJEU Judgment of 21 May 2015, El Majdoub, C‑322/14, EU:C:2015:334).

III. Significance of EU Private International Law rules as an Instrument of Integration 

The broad scope of Article 25 Brussels I bis Regulation is also justified by the Court of Justice as reflecting mutual trust in the administration of justice within the Union and contributing to the development of an area of freedom, security and justice (para. 35). Indeed, the development of civil judicial cooperation within the Union, based on the principle of mutual recognition of judgments, has led to the creation of a judicial area, many elements of which are closer to the treatment of purely internal situations than to strictly international ones. This is reflected, for example, in the contrast between the treatment of situations in which lis pendens arises between Member States of the Union and those concerning parallel litigation in a Member State and a third State.

The criterion adopted in Inkreal is a further step in this direction of overcoming state borders, which is projected onto areas where party autonomy prevails and the choice of the courts of a Member State without any apparent connection with the dispute will typically respond to the legitimate interests of the parties. In practice, moreover, the choice of a court of that other Member State will normally go hand in hand with the choice of its law as the law applicable to the contract. As regards the position of the Member State in which all other elements of the contract are located, Article 3(3) of the Rome I Regulation will be relevant. According to that provision, the choice of law (and court) by the parties does not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement. Consequently, the mandatory rules applicable to the contract will be those of the Member State where all the other elements relevant to the contract are located and not those of the Member State whose courts adjudicate the case and whose law has been chosen by the parties (without prejudice, of course, to the effectiveness of the mandatory rules under Article 9 of the Rome I Regulation).

Given the specificity of the Union’s integration framework, and the particular scope of judicial cooperation in civil matters, the Court is justified in expressly rejecting that the provisions of the 2005 Hague Convention on Choice of Court Agreements should constitute a point of reference in the interpretation of Article 25 of the Brussels I bis Regulation. Pursuant to Article 1(1) of the Convention, its jurisdiction rules only apply either if the parties are not resident in the same State, or if some element relevant to the dispute other than the location of the chosen court has a connection with some other State (see “Explanatory Report” by T. Hartley and M. Dogauchi, paras. 41-43).

Hence, the broad interpretation of Article 25 of the Brussels I a Regulation and its application to purely domestic contracts does not apply to jurisdiction agreements designating the courts of a third State, even if it is a State with which the Union and its Member States are bound by the 2005 Hague Convention on Choice of Court Agreements. Nor does it apply directly in situations where the effectiveness of jurisdiction agreements in favour of a third State is governed by the domestic law of the Member State seised.

Concluding remarks

Unlike in case C-136/16, Sociedade Metropolitana de Desenvolvimento, the Court was not requested in Inkreal to clarify if the application of such a jurisdiction agreement may be waived where the choice of the courts of a Member State other than that of the nationality of the parties causes serious inconvenience for one of those parties and the other party has no good reason to justify such choice. However, the reasoning by the Court seems to support the view that within the specific framework of the Brussels I bis Regulation (and its interplay with the Rome I Regulation) such a concern is of limited significance. This is without prejudice that the possible review of the regulatory framework in order to provide certain protection to small or medium-sized enterprises in a position of contractual imbalance against choice of forum agreements unilaterally imposed on them, is an issue that merits special attention. In any event, such protection would be especially necessary with regard to jurisdiction agreements in favour of the courts of a third State, which in principle fall outside the scope of the Brussels I Regulation.

— This post is based on the post published in Spanish by the author on 8 February 2024, and a short case comment to be published in the journal La Ley Unión Europea.

This is the second contribution to the EAPIL Online Symposium on Inkreal. The first contribution was written by Sergi Gimenez.

As reported earlier on this blog, the CJEU ruled in Inkreal s.r.o. v. Dúha reality s.r.o. (Case C‑566/22) that Article 25 of the Brussels I bis Regulation applies to clauses stipulated in domestic contracts if such clauses provide for the jurisdiction of the court of another Member State.

The CJEU held that domestic contracts providing for the jurisdiction of the court of another Member State have, for that reason alone, an international element which suffices to trigger the application of the Brussels I bis Regulation in general and Article 25 in particular. The clause is thus validated and effective.

Geert van Calster is delighted about this excellent judgment, that Pedro de Miguel Asensio and Matthias Weller also welcome. I disagree.

International Element Required?

The judgment recalls that an international element is required to trigger the application of the Brussels I bis Regulation. The Brussels I bis Regulation was adopted on the basis of Article 81 of the Treaty on the Functioning of the European Union, which gives competence “in civil matters having cross-border implications”. As a result, the court ruled in Owusu that there should be an international element to trigger the application of the Regulation.

The CJEU finds that an international element exists in this case for two reasons. The first is that the proceedings were initiated in a another Member State. The second is the jurisdiction clause itself, which designates a foreign court.

Both of these elements are purely subjective, insofar as they are the result of the will of the parties. Party autonomy suffices to create the international element. And, indeed, the will of a single party, the plaintiff, seems to suffice, as the initiation of the proceedings in another State is deemed sufficient. In this respect, the court relies on the definition of cross border litigation in the European Order of Payment Regulation which refers to the initiation of the proceedings in another Member State. But in the context of the Brussels I Bis Regulation, what really matters is party autonomy and the provision of a jurisdiction clause. In the absence of such a clause, the application of the objective rules of jurisdiction will always grant jurisdiction to the only Member State connected with the dispute, irrespective of where the proceedings were initiated. In contrast, enforcing jurisdiction clauses could be a real game changer.

Adopting subjective criteria such as the inclusion of a jurisdiction clause suggests that, although it cannot rule that the Regulation applies to domestic disputes, the court is ready to interpret the cross border implications test as broadly as possible, so that it can, in effect, extend the reach of the Regulation to domestic disputes.

So what will come next? What will be the other subjective criteria justifying the application of the Regulation and Article 25? Will it be enough for the parties to provide “this is an international contract” in the preamble of their contract? And what about remote objective criteria? For instance, what about the foreign grand parent of one of the local parties to the contract?

The End of the National Rules governing Jurisdiction Clauses?

Many member States have national rules limiting the enforceability of jurisdiction clauses in domestic disputes. In France, for instance, such clauses are only enforceable among certain categories of professional parties (‘commercial people’), and they need to be stipulated in “very apparent characters”.

After Inkreal, it will be possible to bypass those rules by providing, in domestic contracts, the jurisdiction of a Belgian or Luxembourg court. What is the legitimacy of the EU to disapply those rules? One could debate whether party autonomy should be promoted and local parties should always be allowed to choose their preferred court. But certain Member States have made the policy decision that choosing the competent court can have far reaching consequences, and party autonomy should only be allowed between sophisticated actors where it can be established that the parties made an informed choice. What is the legitimacy of the CJEU to cancel this policy decision?

Of course, one could think that national rules will remain applicable and prevent the same parties from including a similar clause providing for another city within the same Member State. But will they? Maybe not, if the parties insisted in their contract that they strongly feel that it is, or want it to be, an international contract.

Coherence with Hague Convention irrelevant

Interestingly, the 2005 Hague Convention on Choice of Court Agreements provides that it only applies to international cases, which are defined objectively:

Art. 1 (2) For the purposes of Chapter II, a case is international unless the parties are resident in the same Contracting State and the relationship of the parties and all other elements relevant to the dispute, regardless of the location of the chosen court, are connected only with that State.

The Court, however, rules that the same definition is not found in the Brussels I bis Regulation, and that there is no reason to seek a coherent interpretation. Instead, as already mentioned, the court prefers to seek coherence with the European Order for Payment Regulation, because it relates to judicial cooperation in civil matters. But is it really convincing, given that this regulation does not include any rule validating party autonomy?

Irrespective of these poor contextual arguments, the result is disastrous. For parties and lawyers providing for jurisdiction clauses (and choice of law clauses) in international contracts, it is critical to avoid developing different legal regimes and to interpret the relevant instruments (Brussels I bis, Rome I, 2005 Hague Convention) coherently whenever it is possible. Most practitioners have a hard time understanding some of the most basic concepts of private international law. They do not need these extra subtleties.

An invitation to participate in the Summer School on Consumer and Market Law in the European Circular Economy has been opened for all interested candidates.

The following topics are particularly addressed: Consumer protection and empowerment; Private international law; Dispute resolution and redress issues; and Market regulation. The goals of the summer school are:
• To offer a blended and intensive training, focusing on transnational developments at the EU level;
• To promote the sharing of knowledge, experiences and practices between participants from different countries;
• To help participants in developing incisive reasoning skills and other soft skills such as team working, problem solving and argumentative reasoning.

The school is taking place in a picturesque Italian setting at the premises of the University of Udine from 11 to 19 July 2024. Additional details are available at the Call for applications and the School Brochure.

This summer school has a long tradition since 2008 and is organised by University of Udine, along with its partners: University of Essex, University of East Anglia, De Montfort University of Leicester, University of Belgrade, University of Rijeka, University of Szeged, University of West Timisoara.

Author: Martina Ticic, assistant at the University of Rijeka, Faculty of Law and doctoral student funded by the Croatian Science Foundation (Hrvatska zaklada za znanost – HRZZ)

On 13 December 2023, two years after the first legislative proposal has been published, the new Regulation (EU) 2023/2844 of the European
Parliament and of the Council of 13 December 2023 on the digitalisation of judicial cooperation and access to justice in cross-border civil, commercial and criminal matters, and amending certain acts in the field of judicial cooperation (Digitalisation Regulation) has been adopted. While the process of digitalisation of judicial cooperation and cross-border procedures in the EU has been ongoing for some time already, the new Digitalisation Regulation represents a major step for advancing digitalisation practices in the EU.

Main features
The Digitalisation Regulation establishes a uniform legal framework for the use of electronic communication and digital tools in cross-border legal proceedings. Particularly, it lays down rules on:
– communication between competent authorities/natural or legal persons and competent authorities
– the use of videoconferencing or other distance communication technology
– the application of electronic signatures and electronic seals
-the legal effects of electronic documents
– electronic payment of fees.
The Regulation establishes that communication between competent authorities of different EU Member States, as well as communication between competent authorities of different Member States and between a national competent authority and EU body or agency, shall be carried out through a decentralised IT system whenever possible. On the other hand, for communication between natural or legal persons and competent authorities in civil and commercial matters, a European electronic access point shall be established on the European e-Justice Portal. The Regulation also provides for the possibility of participating in a hearing through videoconference or other distance communication technology, depending on certain circumstances, e.g., the availability of such technology, parties’ opinion on the use of such technology, or appropriateness of the use of technology. Moreover, the Regulation makes a reference to the eIDAS Regulation in terms of electronic signatures and electronic seals, equates the legal effects of electronic documents with effects of non-electronic ones, and provides for the possibility of electronic payment of fees. Finally, it also amends relevant provisions of other legal instruments, including European Enforcement Order Regulation, European Order for Payment Regulation, European Small Claims Procedure Regulation, European Account Preservation Order Regulation, Regulation on mutual recognition of protection measures in civil matters, Insolvency Regulation, Service of Documents Regulation, and Regulation on the mutual recognition of freezing orders and confiscation orders.

Entry into force
The entire legal framework set by the Regulation, however, will not be fully operational until quite some time. The Regulation will apply from 1 May 2025 – with some exceptions. The Regulation requires the adoption of certain implementing acts by the European Commission, which would mainly set out various technical specifications and requirements. Article 10(3) of the Regulation sets out a timetable for the adoption of different implementing acts, ranging from January 2026 to January 2029.
Articles 3 and 4 of the Digitalisation Regulation, which regulate electronic communication (both between competent authorities and between natural or legal persons and competent authorities in civil and commercial matters) will only apply after two-year period has passed from entry into force of the corresponding implementing acts. These Articles will also only apply to proceedings initiated from that same day. It could be concluded that the Regulation will not be applicable in its entirety for the next seven years, until 2031. However, this only holds true in relation to the provisions on electronic communication. The other regulated aspects, i.e., the provisions on the use of videoconferencing, electronic signatures and seals, legal effects of electronic documents and electronic payment of fees, will all be applicable from May 2025.

Remaining challenges
While certainly a big step forward for the e-Justice developments in the EU, some challenges still remain even after the Digitalisation Regulation becomes fully applicable. Perhaps the biggest issue is fragmentation – both at the EU level and at the national level.
At the EU level, fragmentation is reflected in a complex EU framework and a number of different regulatory sources on different aspects of digitalisation of justice. There are multiple legal acts that address various aspects relevant for the process of digitalisation in the EU, including eIDAS Regulation, e-CODEX Regulation, Directive on Digitalisation of Judicial Cooperation, General Data Protection Regulation, Regulation on processing of data by EU institutions, etc. Moreover, a number of regulations offer specific provisions on digitalisation aspects in a particular procedure, such as European Order for Payment Procedure Regulation, Service Regulation, Evidence Regulation, etc. It is therefore expected that the new Digitalisation Regulation will add to already existing legal framework as an ‘umbrella regulation’, given that it covers a wide range of issues in various steps of legal proceedings in civil, commercial and criminal matters. It should, however, be noted that it will not apply to two crucial procedural aspects of the intra-EU cross-border relations: the service of documents pursuant to the Service Regulation (despite introducing certain amendments to it) nor to the taking of evidence pursuant to the Evidence Regulation, as highlighted in the Recital 17 of the Preamble.
At the national level, while COVID-19 pandemic certainly urged all of the EU Member States to accelerate the usage of digital tools in all aspects of society, there are still varying levels of digital developments in different jurisdictions. This can clearly be seen from the EU Justice Scoreboard, which includes a specific section on digitalisation developments in the Member States. It must be highlighted, however, that a significant improvement over the years is visible when comparing the yearly reports. With the new Digitalisation Regulation, in addition to all the other work that the EU is currently doing to promote digitalisation, the digital tools and digitalisation practices of the Member States will surely only be getting more advanced.
This having been said, diversity of national procedural rules, different e-justice domestic solutions and different levels of the development and usage of digital tools in the proceedings all may still pose problems. It can be expected that the period of the next few years will be especially difficult, as EU Member States will have a lot of work to do – national access points to the e-CODEX will have to be established; harmonised technical standards adopted; and all participants will have to get accustomed to the functionalities of new digital tools and practices. The Digitalisation Regulation partly touches upon this problem by providing that EU Member States must also offer necessary training to competent authorities and professionals concerned in order to ensure efficient use of the IT system and distance communication technology.
In order to ensure that adequate information on national particularities is available for all potential parties, the EU Member States are bound to communicate relevant information to the European Commission, including details of national IT portals, description of national laws and procedure on videoconferencing, information on fees, details on electronic payment methods, etc. Such information will be made available on the e-Justice Portal. On the assumption that the relevant information is regularly updated, the e-Justice Portal will be of great help with the smooth functioning of digital legal framework set by the Digitalisation Regulation.
Thus, while challenging period may be ahead, the result will surely be worthwhile.

What about the parties outside of the EU?
While the Digitalisation Regulation definitely brings important changes to the justice system of the EU and its Member States, potential implications for parties and countries outside of the EU should not be overlooked. Member States are now obliged to work on their national IT portals and digital tools, to train legal staff, and to generally provide for the usage of digital tools in the course of the procedure. Such national developments may then also assist in all cross-border cases, including those with countries outside of the EU. This means that the obligations that the Digitalisation Regulation sets for the Member States can also indirectly allow for better usage of IT tools in the course of cross-border procedures with all of the other countries that make use of such tools as well. On the other hand, for those countries that still lack in the department of digitalisation in law and legal system, this may serve as an incentive for further development in order to make cross-border procedure easier for all. After all, promotion of best practices and cooperation with international partners is one of the EU’s aims, as highlighted in the 2020 Communication from the Commission on the Digitalisation of Justice in the EU.

 

On 11 and 12 April 2024, an international conference on the current topic of the appropriate approach to digital assets in PIL cases will take place at the University of Vienna in a hybrid format. For the impressive speakers list, including internationally renowned academics as well as representatives from UNIDROIT and the HCCH, please refer to the conference announcement below, which was kindly provided by the organizers:

Digital Assets and Private International Law Conference 11 and 12 April 2024 in Vienna

 

Outline

Digital assets, such as cryptocurrencies, stablecoins and other tokens, have become important as objects of investment and trade. They are recorded on the blockchain, an electronic ledger held in identical form on servers (nodes) all over the world. Therefore, the determination of the governing law presents particular challenges. This conference will explore whether Private International Law methodology can be successfully applied to digital assets or whether it needs to be changed in light of the ‘blockchain revolution’.

Date      11 and 12 April 2024

Place     Juridicum, Schottenbastei 10-16, A-1010 Vienna, roof top floor

Format

The conference will take place in a hybrid format. Speakers and participants will meet in the Juridicum. The proceedings will be streamed simultaneously online. Registration (both for physical attendance and online participation) can be made until 6 April 2024 by email at the following address: service.rechtsvergleichung@univie.ac.at. Participation is free but registration compulsory.

 

Programme

 Thursday, 11 April 2024

Time Topic Speaker 13.00 Registration and Coffee 14.00 Inauguration Prof. Brigitta Zöchling-Jud,

Dean of the Law School of the University of Vienna 14.10 Welcome Address Dr. Thomas Gstädtner, President of Supervisory Board, EBI 14.15 Introduction Prof. Matthias Lehmann,
University of Vienna and Radboud University of Nijmegen  

Part 1 – Overarching Issues 14.30 Do We Need a ‘Blockchain Revolution’ in Private International Law? Prof. Andrea Bonomi, University of Lausanne 14.45 Proprietary Rights in Digital and Other Assets and the Conflict of Laws Prof. Christiane Wendehorst, University of Vienna 15.00 The Law Applicable to Payments, Tokenisation and Contracting on Cross-border Digital Platforms Prof. Dr. Gérardine Goh Escolar, Hague Conference on Private International Law 15.15 Which Role for Consumer Law in Blockchain Transactions? Prof. Teresa Rodriguez de las Herras Ballell, UNIDROIT/University Carlos III Madrid 15.30 Discussion 16.00 Coffee Break  

Part 2 – Law Applicable to Digital Assets 16.30 Money or Securities as the Paradigm for Digital Assets? Dr. Burku Yüksel, University of Aberdeen 16.45 A Single Law for the Blockchain vs.  Layer-, Protocol- or Asset-Specific Law Dr. Augustin Gridel, University of Lorraine 17.00 Choice of Law for Digital Assets –Technical Possibilities and Legal Conditions Prof. Florian Heindler, Sigmund Freud University Vienna 17.15 Discussion 17.45 Summary and Conclusion of the First Day Prof. Matthias Lehmann, University of Vienna and Radboud University of Nijmegen 19.00 Speakers’ Dinner

  

Friday, 12 April 2024

Time Topic Speaker 08.30 Coffee Part 3 – Law Governing Blockchain Transactions 09.00 The Determination of the Law of Custody and Its Importance for Digital Assets Prof. Matthias Haentjens, University of Leiden 09.15 Secured Transactions in Digital Assets Prof. Spiridon Bazinas, Sigmund Freud University Vienna (online) 09.30 The Law Applicable to Staking Dr. Fabio Andreotti, Bitcoin Suisse AG 09.45 Decentralized Finance (DeFi) –  Which Law is Governing the Entities, which the Transactions? Dr. Pascal Favrod-Coune, Aegis Partners 10.00 Discussion 10.30 Coffee Break Part 4 – Law Governing Particular Issues 11.00 The Law Governing Private Relations and Liability on the Network Prof. Tobias Lutzi, University of Augsburg 11.15 The Law Governing Trade Finance Tokens Prof. Koji Takahashi, Doshisha University (online) 11.30 Determining the Law Governing Smart Contracts Dr. Jasper Verstappen, University of Groningen 11.45 Discussion

  12.15 Summary and Conclusion Prof. Matthias Lehmann, University of Vienna and Radboud University of Nijmegen

 

About the Interdisciplinary Association of Comparative and Private International Law (IACPIL)

IACPIL is a platform for discussing issues in comparative law and private international law. The association is based in Vienna, where it organises events on current topics, fundamental issues, and methodological questions. Its members reflect a broad professional base rooted in the academic, judicial, and administrative fields, and are also joined by translators and specialists from international organisations.

The association is a critically scrutinising forum. Interdisciplinary topics with legal, political, historical, social, economic, and cultural dimensions are frequently considered. In this way, IACPIL endeavours to promote a modern, humane, and social regulation of cross-border conflicts.

 

About the European Banking Institute (EBI)

The EBI is an international centre based in Frankfurt for banking studies resulting from the joint venture of Europe’s preeminent academic institutions which have decided to share and coordinate their commitments and structure their research activities in order to provide the highest quality legal, economic and accounting studies in the field of banking regulation, banking supervision and banking resolution in Europe.

EBI aims to become a point of reference in the research of banking regulation research in Europe. By promoting the dialogue between scholars, regulators, supervisors, industry representatives and advisors in relation to issues concerning the regulation and supervision of financial institutions and financial markets from a legal, economic and any other related viewpoint, the close relationship with regulators, supervisors, and private sector is expected to guarantee a one-of-its-kind academic research production.

This is the first contribution to the EAPIL’s Online Symposium on Inkreal. It is authored by Sergi Gimenez, who is an Associate Lecturer of Private International Law at the Universitat Pompeu Fabra in Barcelona and a partner in the law firm Augusta Abogados.

In its judgment of 8 February 2024 in Inkreal (Case C-566/22), the Court of Justice of the European Union (“CJEU”) has concluded that there is no impediment for parties to a contract established in the same EU Member State (e.g. Spain) to agree on the jurisdiction of the courts of another Member State (e.g. Germany) to settle their contractual disputes, even if the contract in question has no other connection with the designated Member State. The doctrine established by the CJEU, perhaps questionable in some respects, opens up interesting prospects for companies to choose the dispute resolution mechanism that suits them best, even in purely domestic contractual relations.

Background

Between June 2016 and March 2017, an individual (“FD”) residing in Slovakia lent money to the Slovak company Dúha reality s.r.o. (“Dúha”). The two loan agreements signed between the parties contained a clause whereby the parties agreed that any disputes arising from the loans would be settled “by a court of the Czech Republic having substantive and territorial jurisdiction”.

In early December 2021 FD transferred the claims under the loan agreements in favour of Inkreal s.r.o. (“Inkreal”), a company also incorporated under Slovak law and established in Slovakia.

Since Dúha did not repay the loans, Inkreal sued Dúha before the Supreme Civil and Criminal Court of the Czech Republic at the end of the same month of December, as foreseen in the above mentioned clause.

Doubts then arose as to the possible invalidity of the above-mentioned attribution agreement. Since the dispute concerned a contract governed by Slovak law and was between two Slovak companies, with no connection to the Czech Republic, the Court questioned its possible lack of international jurisdiction. In view of the doubts that arose, the Czech Supreme Court turned to the CJEU for clarification.

The Question

The Czech Supreme Court’s doubts arose from the fact that neither the loan agreements nor the disputing parties have any connection with the Czech Republic. However, the case-law of the CJEU has consistently required that there be an “international element” in the disputes in order for the Brussels I bis Regulation to apply. Thus, the referring court wondered whether the mere will of the parties, by including a clause submitting to the courts of another State, was sufficient to confer an international character on their contractual relationship. If that is not the case, the situation would be purely internal and the EU regulation would not be applicable. In such a case, the possible jurisdiction or lack of jurisdiction of the Czech courts would have to be examined in the light of the internal rules of the Czech Republic itself.

Judgment

In addition to hearing the arguments submitted by the parties involved and analysing the Opinion of the Advocate General (who expressed a view contrary to that reflected in the judgment), the CJEU also took into account the observations submitted by the European Commission and some States that wished to participate. The CJEU concluded that a jurisdiction agreement by which the parties to a contract established in the same Member State agree that the courts of another Member State shall have jurisdiction to hear disputes arising out of that contract falls within the scope of Article 25(1) of the Brussels I bis Regulation even if that contract has no connection with that other Member State.

Reasoning of the CJEU

The CJEU reaches the above conclusion using reasoning that is questionable in some cases but imbued with an undoubtedly practical sense. Although the CJEU insists on its settled case law to the effect that the application of the jurisdiction rules of the Brussels I bis Regulation requires the existence of an “international element”, the truth is that the final decision greatly relativises this requirement.

According to the CJEU, the dispute between Inkreal and Dúha falls within the definition of the concept of a “cross-border case” since the parties are established in a Member State other than that to which the Czech court seised on the basis of the agreement conferring jurisdiction in question belongs (para 23). The CJEU adds that the fact that the main dispute raises a question concerning the determination of international jurisdiction (that of the Czech Supreme Court) reinforces the idea of the existence of a cross-border element (Recital 24).

Paragraph 25 of the judgment contains the key to the CJEU’s decision in determining that

the existence of an agreement conferring jurisdiction on the courts of a Member State other than that in which the parties are established in itself demonstrates the cross-border implications of the dispute in the main proceedings.

In this way, the CJEU opens the way for the parties to a contract to decide, solely by their own free will, to “internationalise” a situation that from any other point of view would be considered purely internal.

To justify its view, the CJEU relies on eminently practical reasons: maintaining that the clause on submission to foreign courts is covered by the Brussels I bis  Regulation allows the plaintiff and the defendant to easily determine the court before which they can sue and be sued, and it also allows the court seised to easily rule on its own jurisdiction. According to the CJEU, the alternative of the court having jurisdiction being determined in accordance with the national rules of private international law of the Member States concerned would lead to greater legal uncertainty, since the application of different national rules could lead to divergent solutions.

Commentary and Possible Implications

Until now, in contractual matters, individuals could “internationalise” a domestic situation with regard to the law applicable to their contract. Indeed, Article 3(1) of Regulation (EC) No 593/2008 (Rome I ) gives a wide freedom of choice of the law applicable to contracts by stating that “the contract shall be governed by the law chosen by the parties“. Thus, in principle, even the parties to a purely domestic contract can choose a foreign law. Notwithstanding this freedom of choice of law, Article 3(3) of the same Rome I Regulation provides for a corrective mechanism to prevent possible abuses or excessively opportunistic choices: if all the relevant elements of the contract (e.g. the place of establishment of the parties, the place of performance of the services or delivery of the goods, etc.) are located in a country other than the country whose law is chosen, the mandatory rules of the first country will continue to apply. Thus, in purely domestic contracts the foreign law chosen by the parties will only apply in those respects in which the law to which the contract is objectively linked does not contain mandatory rules. Article 3(4) of the Rome I Regulation provides for an identical limitation for purely intra-EU cases: if all the elements of the situation are located in two or more EU Member States and the parties choose the law of a third State, such a choice does not prejudice the application of mandatory rules of Community law.

The restrictions provided for in the Rome I Regulation on the law applicable to the contract are not transferable to forum selection clauses. In fact, in its decision, the CJEU has not imposed any kind of limitation on the choice of the courts of another Member State (beyond the restrictions on exclusive and protective forums or those relating to public policy provided for in Article 45). Thus, two or more companies located in the same Member State and concluding a purely internal contract can now decide that any disputes between them will be settled by the courts of a different Member State. And it should be remembered that, by submitting a case to the courts of another Member State, the latter acquire exclusive jurisdiction to hear the case, unless the parties have agreed otherwise.

Until now, in order to transfer a purely domestic dispute to another State, the parties had the mechanism of arbitration at their disposal, agreeing that the seat of the arbitration tribunal would be in another country. With the new doctrine set by the CJEU, the parties may also opt for the ordinary courts of another EU Member State if they consider it appropriate, whether for reasons of speed, efficiency, cost, specialisation or any other reason. Obviously, before making a decision, other aspects must be taken into account, including possible adverse elements such as language difficulties, the added complexity involved in making notifications or taking evidence abroad or even the problems arising from the need to prove to the foreign judge the content of the substantive rules chosen by the parties if these rules are not those of the designated judge.

As the 118th American Society of International Law (ASIL) Annual Meeting approaches, the ASIL Private International Law Interest Group will organize a fireside chat on Thursday, April 4 from 3:30 PM to 4:30 PM ET in Washington D.C.

During this fireside chat, our esteemed speakers will discuss recent developments in private international law in the US and beyond. Professor Ronald A. Brand will analyze the developments at the Hague Working Group, which is currently pursuing a convention on parallel proceedings and related actions or claims. Ms. Sarah Prosser will provide an overview of recent developments in the private international law efforts of the U.S. Department of State in 2023, with insights into initiatives planned for 2024. Professor Carlos M. Vázquez will focus on developments in the United States, including such recent decisions as Mallory v. Norfolk Southern Railway Co, Cassirer v. TBM, and the Mexican Gun Litigation. The fireside chat will adopt a relaxed format, ensuring a casual and enjoyable experience for both speakers and the audience.

Speakers (alphabetized by surname):

Ronald A. Brand
Chancellor Mark A. Nordenberg University Professor
Academic Director, Center for International Legal Education
University of Pittsburgh School of Law

Sarah Prosser
Assistant Legal Adviser for
Private International Law (L/PIL)
Office of the Legal Adviser
U.S. Department of State

Carlos M. Vázquez
Associate Dean for Graduate and International Programs
Scott K. Ginsburg Professor of Law
Georgetown University Law Center

Chair: Dr. Jie (Jeanne) Huang, Co-Chair of the ASIL Private International Law Interest Group and Associate Professor at the University of Sydney Law School

Time: Thursday, April 4 at 3:30 PM – 4:30 PM ET
Venue: TBD at the Washington Hilton

• Happy Hour
We invite Private International Law Interest Group members, newsletter editors, and friends to join us for a casual happy hour gathering at McClellan’s Sports Bar located at the Washington Hilton. Please find event details below:

4:30 PM- 5:30 PM ET, Thursday April 4, 2024
Social & Networking Event
McClellan’s Sports Bar
No Host Bar
We look forward to learning any PIL (and non-PIL) inspirations from you for the more exciting years to come. Everyone is welcome to stop by.

On 8 February 2024, the CJEU ruled in Inkreal s.r.o. v. Dúha reality s.r.o. (Case C‑566/22) that Article 25 of the Brussels I bis Regulation applies to clauses stipulated in domestic contracts if such clauses provide for the jurisdiction of the court of another Member State.

Most early commentators have welcomed this judgment, including Geert van Calster, Pedro de Miguel Asensio and Matthias Weller.

The Advocate General, however, had opined differently. Should Inkreal be praised for promoting party autonomy? Should it be criticised, instead, for extending the reach of EU law beyond its competence?

In the coming days, the EAPIL Blog will host an online symposium on Inkreal. Readers interested in participating should contact the editors of the blog (blog@eapil.org), or directly comment on the posts in the symposium.