Droit international général

Naivi Chikoc Barreda (University of Ottawa) authored a book titled Succession internationale et dispositions spéciales de la lex rei sitae – Contribution à l’étude de l’impérativité internationale en matière successorale, published by L’Harmattan.

The English summary reads as follows:

While the unity of the applicable law has unquestionably dominated the history of the harmonization of conflict rules in matters of succession, from the first Hague conventions drafts to Regulation (EU) No 650/2012, its scope has always been nuanced by the special rules of the lex situs. These derogatory provisions have borrowed several techniques of intervention. Initially associated with the public policy clause, their admissibility subsequently transited through a substantially oriented choice-of-law rule, before crystallizing in an atypical clause for the application of overriding mandatory provisions. 

These special rules challenge the conceptual premises of a pyramidal understanding of the “lois de police” built on the paradigm of the domestic mandatory rule. This first monograph on the subject proposes a reflection on the “contradictions” at the heart of the traditional notion of “lois de police”, confronted with the particularities of the succession concerning assets subject to economic, family or social purposes, the conservation of which is often ensured by substantive rules respecting the deceased’s individual autonomy.

The EAPIL blog goes on “Winter Break mode”, meaning that only few posts will be published over the next few days. But stay tuned: blogging will resume as usual on 9 January 2023.

We wish you all the best for the festive season!

The Court of Justice yesterday held, without Opinion AG (justifiably in my view), in Case C-98/22 Eurelec Trading Sarl, on yet again the interpretation of ‘civil and commercial’ to determine the scope of application of Brussels Ia.

The dispute in the main proceedings is between the Ministre français de
lʼÉconomie et des Finances and two Belgian companies: Eurelec, a pricing and purchasing negotiation centre founded by the French Leclerc group and the German Rewe group, and Scabel, which acts as an intermediary between Eurelec and the French and Portuguese regional purchasing centres of the Leclerc group. Two French undertakings are also parties to the dispute: the Leclerc groupʼ national purchasing centre which negotiates the annual framework contracts with the French suppliers (ʻGALECʼ) and the association of E Leclerc distribution centres (ʻACDLECʼ).

Following an investigation conducted between 2016 and 2018, the Economic Affairs and Finance Minister suspected that potentially restrictive practices were being implemented in Belgium by Eurelec in respect of suppliers established in France. The Minister brought an action against those four companies before the Paris courts,  seeking a declaration ia that the practices consisting in (i) requiring suppliers to accept Belgian law as lex contractus (said to circumvent French lois de police), and (ii) imposing seriously reduced returns, were abusive.

The French Government argue with reference to CJEU Movic that ʻacting in the general interest should not be confused with the exercise of public powersʼ, and that one should distinguish the inquiry stage from the judicial proceedings, in particular, that the criterion for applicability of the Brussels Ia Regulation is the use made of evidence and not the rules for collecting it.

The CJEU disagrees. [26] the claim is based on evidence procured during searches which an ordinary litigation party cannot make resort to, and [27] the procedure at issue involves ia an administrative (not a criminal) fine being sought, which is not a request than can be made by an ordinary civil party. [29] The procedure is one which follows from acta iure imperii, the exercise of public power. [29] CJEU Movic is distinguished for in that case no fine was being sought, merely an end to the restrictive practices as well as damages, which both are claims that can also be made by ordinary parties. The latter once again means that depending on what is included in a claim, BIa may or may not be engaged.

Geert.

European Private International Law, 3rd ed. 2021, paras 2.28 ff concluding at 2.65.

#CJEU yesterday C-98/22 Eurelec
French Finance Ministry's attempt to impose (civil) fines on Belgian corporation in action aimed at anti-competitive behaviour, is actum iure imperii, does not fall within scope of Brussels Ia 'civil and commercial' claimshttps://t.co/mdQ3EwGJ9z

— Geert Van Calster (@GAVClaw) December 23, 2022

Almost six years have passed since 18 January 2017, when Regulation (EU) No 655/2014 establishing a European Account Preservation Order (EAPO) procedure to facilitate cross-border debt recovery in civil and commercial matters became applicable in full.

A conference will be held in Milan, at the Catholic University of the Sacred Heart, on 3 March 2023, from 9.45 to 17, to discuss the operation of the EAPO Regulation in light of practice and case law.

Speakers include Gilles Cuniberti (University of Luxembourg), Elena D’Alessandro (University of Torino), Fernando Gascón Inchausti (Complutense University, Madrid), Katharina Lugani (Heinrich Heine University, Düsseldorf), Antonio Leandro (University of Bari), Raffaella Muroni (Catholic University of the Sacred Heart), Elena Alina Ontanu (Tilburg University), Carlos Santalò Goris (Max Planck Institute, Luxembourg), María Luisa Villamarín López (Complutense University, Madrid), and Caterina Benini (Catholic University of the Sacred Heart).

The conference will also offer an opportunity to present an article-by-article commentary of the EAPO Regulation, edited by Elena D’Alessandro and Fernando Gascón Inchausti, recently published by Edward Elgar in its Commentaries in Private International Law series. Augusto Chizzini (Catholic University of the Sacred Heart) and Luca Radicati di Brozolo (former professor of the Catholic University of the Sacred Heart, now partner at ArbLit, Milan) will exchange views on this work.

Some of the presentations will be delivered in English, others in Italian, with simultaneous interpretation.

Attendance is free, but prior registration is required. Details regarding registration will be provided in early January 2023, together with the detailed programme of the event.

For information, please write an e-mail to Pietro Franzina at pietro.franzina@unicatt.it.

Written by Mayela Celis

This year has been marked by the high number of EU instruments that have been adopted (and entered into force) or that have started to apply in the European Union, which are directly or indirectly related to the modernisation of the service of judicial and extrajudicial documents and the taking of evidence in civil or commercial matters.

These developments include three (full-fledged) regulations and two Commission implementing regulations. In addition, two Commission implementing decisions were adopted on 20 December 2022 concerning a related topic (i.e. e-CODEX). We have previously reported on this here and here. While the great number of EU instruments in this field and their interrelationship can be daunting to a non-European, they seem to provide a smooth and flexible way forward for EU Member States.

Undoubtedly, such legislative efforts attest to the commitment of EU institutions to modernise this area of Private International Law, in particular by making the electronic transmission of requests for service and the taking of evidence, as well as other communications, a reality at least from 2025 onwards (for more information, see below).

In my view, this goes beyond anything that currently exists among States (at any level) regarding judicial cooperation as the electronic transmission of requests for both service and the taking of evidence is usually done in a piecemeal approach or lacks the necessary security safeguards, including data protection.

On 1 July 2022 two recast Regulations started to apply in the European Union:

1. Regulation (EU) 2020/1784 of the European Parliament and of the Council of 25 November 2020 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents) (recast). See, in particular, Articles 5 (means of communication), 6, 19 (electronic service), 25, 27 and 28;
2. Regulation (EU) 2020/1783 of the European Parliament and of the Council of 25 November 2020 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters (taking of evidence) (recast). See, in particular, Articles 7 (transmission), 8, 12(4), 19 (direct taking of evidence), 20 (videoconferencing), 25, 27 and 28.

These two regulations modernise this field in two distinctive ways.

First and foremost these regulations contain provisions dealing with the means of communication to be used by transmitting agencies, receiving agencies, courts and central bodies through a secure and reliable decentralised IT system. This primarily intends to replace the cumbersome paper transmission of requests and other documents and in this way, speed up proceedings.

For those of you who are wondering what a “decentralised IT system” is, please note that it has been defined in both recast versions as a “network of national IT systems and interoperable access points, operating under the individual responsibility and management of each Member State, that enables the secure and reliable cross-border exchange of information between national IT systems”.

Secondly, these regulations provide for the actual service by electronic means and the taking of evidence by videoconferencing or other distance communications technology. The Service Regulation has included a provision regarding electronic service of documents by allowing this to take place by means of qualified electronic registered delivery services (see EU Regulation (EU) 910/2014) or by email, both requiring (thankfully and rightfully, I must note) the prior express consent of the addressee; on the other hand, the Evidence Regulation provides for the direct taking of evidence by videoconferencing or other distance communication technology.

With respect to the implementation of the decentralised IT system, two Commission Implementing Regulations were adopted and entered into force in 2022:

1. Commission Implementing Regulation (EU) 2022/423 of 14 March 2022 laying down the technical specifications, measures and other requirements for the implementation of the decentralised IT system referred to in Regulation (EU) 2020/1784 of the European Parliament and of the Council;
2. Commission Implementing Regulation (EU) 2022/422 of 14 March 2022 laying down the technical specifications, measures and other requirements for the implementation of the decentralised IT system referred to in Regulation (EU) 2020/1783 of the European Parliament and of the Council.

It should be noted that the decentralised IT system as an obligatory means of communication to be used for the transmission and receipt of requests, forms and other communication will start applying from 1 May 2025 (the first day of the month following the period of three years after the date of entry into force of the Commission Implementing Regulations above-mentioned).

Interestingly, Recital 3 of the Commission Implementing Regulations indicates that “[t]he decentralised IT system should be comprised of the back-end systems of Member States and interoperable access points, through which they are interconnected. The access points of the decentralised IT system should be based on e-CODEX.” Designating e-CODEX as the system on which access points should be based is in my view a breakthrough, given the apparent ambivalent feelings of some regarding such system.

The Annexes of these Commission Implementing Regulations provide more information as to the specificities of the system and indicate that:

• “The Service of Documents (SoD) exchange system is an e-CODEX based decentralised IT system that can carry out exchanges of documents and data related to the service of documents between the different Member States in accordance with Regulation (EU) 2020/1784. The decentralised nature of the IT system would enable data exchanges exclusively between one Member State and another, without any of the Union institutions being involved in those exchanges.”

• “The Taking of Evidence (ToE) exchange system is an e-CODEX based decentralised IT system that can carry out exchanges of documents and messages related to the taking of evidence between the different Member States in accordance with Regulation (EU) 2020/1783. The decentralised nature of the IT system would enable data exchanges exclusively between one Member State and another, without any of the Union institutions being involved in those exchanges.”

This takes us to the new EU instruments relating to e-CODEX.

As a matter of fact, a brand-new Regulation on e-CODEX has entered into force this year:

• Regulation (EU) 2022/850 of the European Parliament and of the Council of 30 May 2022 on a computerised system for the cross-border electronic exchange of data in the area of judicial cooperation in civil and criminal matters (e-CODEX system), and amending Regulation (EU) 2018/1726 (Text with EEA relevance).

This regulation explains e-CODEX in detail and specifies that the European Union Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice (eu-LISA) will take over the administration of e-CODEX.

In particular, I would like to highlight Recitals 7 and 8 of the Regulation (EU) 2022/850, which explain what e-CODEX is and which read as follows:

“(7) The e-CODEX system is a tool specifically designed to facilitate the cross-border electronic exchange of data in the area of judicial cooperation in civil and criminal matters. In the context of increased digitalisation of proceedings in civil and criminal matters, the aim of the e-CODEX system is to improve the efficiency of cross-border communication between competent authorities and to facilitate citizens’ and businesses’ access to justice. Until the handover of the e-CODEX system to the European Union Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice (eu-LISA), established by Regulation (EU) 2018/1726 of the European Parliament and of the Council, the e-CODEX system will be managed by a consortium of Member States and organisations with funding from Union programmes (the ‘entity managing the e-CODEX system’).”

“(8) The e-CODEX system provides an interoperable solution for the justice sector to connect the IT systems of the competent national authorities, such as the judiciary, or other organisations. The e-CODEX system should therefore be viewed as the preferred solution for an interoperable, secure and decentralised communication network between national IT systems in the area of judicial cooperation in civil and criminal matters.”

As previously indicated, two Commission Implementing Decisions have been adopted this week:

• Commission implementing decision (EU) …/… of 20.12.2022 on the technical specifications and standards for the e-CODEX system, including for security and methods for integrity and authenticity verification;
• Commission implementing decision (EU) …/… of 20.12.2022 on the specific arrangements for the handover and takeover process of the e-CODEX system.

The Annexes of the Commission Implementing Decisions are particularly interesting as they provide all the specificities of the system and its handover.

All in all this looks very promising to the long-awaited modernisation of this field in the European Union.

The programme for the fourth German Conference for Young Scholars in Private International Law has been released.

The conference will be held at the Sigmund Freud University in Vienna, 23-24 February 2023.

The speakers will present papers in German and English on different aspects of the general topic “Deference to the foreign – empty phrase or guiding principle of private international law?”.

The keynote speech will be delivered by Professor Horatia Muir Watt (Sciences Po) and a panel discussion will provide practical insights.

Please register here in order to participate. Attendance will be in-person only, free of charge. The organisers can be contacted at ipr@sfu.ac.at.

Nazia Yaqub (Leeds Beckett University, UK) authored a book titled Parental Child Abduction to Islamic Law Countries – A Child Rights Analysis of the Legal Framework, published by Hart / Bloomsbury in its Studies in Private International Law.

As the world becomes smaller, family law is becoming truly global, giving rise to more and more questions for private international law. This book looks at the sensitive and complex question of child abduction, with a unique child rights perspective. Taking Islamic law as its case study, it delves into child abduction in key jurisdictions from Iran to Saudi Arabia and Libya to Pakistan. Rigorous doctrinal analysis is enhanced by empirical insights, namely interviews with abductees, parents and professionals. It is an excellent guide to a complicated field.

 The table of contents can be accessed here.

The Court of Appeal in Teva UK Ltd & Anor v Novartis AG [2022] EWCA Civ 1617 has reaffirmed the principle that while it is not as such unkosher to petition the English courts subsequently to use the spin-off value of that judgment in other jurisdictions (related in some way to using English courts for discovery purposes), it is not proper for E&W courts to make a declaration solely for the purpose of influencing a decision by a foreign court on an issue governed by the law of that very foreign court (here: Germany).

In the case at issue, the claim involves an Arrow declaration (a declaration that a product, process or use was lacking in novelty or obvious as at the priority date of a patent application) with respect to a German patent (admittedly subject to European law which is largely harmonised with the UK approach).

Per Arnold LJ [51-52]

It is not the function of the courts of England and Wales to provide advisory opinions to foreign courts seised of issues which fall to be determined in accordance with their own laws. The English courts have no special competence to determine such issues. If anything, it is likely that they have less competence than the local courts. It makes no difference that the English court and the foreign court are applying the same basic law. Furthermore, comity requires restraint on the part of the English courts, not (to adopt Floyd LJ’s graphic phrase) jurisdictional imperialism. Otherwise the English courts would be enabling forum shopping.

In saying this, I am assuming that the parties have full and unimpeded access to the foreign court. I recognise that the position might possibly be different if that were not the position; but it is not necessary to consider this further for the purposes of the present case, since there is no suggestion that either of these parties lacks full and unimpeded access to the courts of Germany or Country A.

Geert.

Comity, forum shopping
Assisting a foreign court to decide an issue under its own law is not a legitimate reason for the grant of declaratory (patent infringement) relief by the courts of E&W

Teva UK Ltd & Anor v Novartis AG [2022] EWCA Civ 1617 https://t.co/3vQldi2ple

— Geert Van Calster (@GAVClaw) December 9, 2022

The proceedings of the Conference on the Notary’s Role in Private International Law (L’office du notaire en droit international privé) which took place on 25-26 November 2021 in Toulouse University, have been published by Dalloz.

The book, edited by Estelle Gallant, contains eighteen contributions (in French) from experts of private international law, scholars or practitioners, namely.

Contriibutors form academia include: Hugues Kenkack (Toulouse), Fabienne Jault-Seseke (Paris-Saclay), Patrick Wautelet (Liège), Pierre Callé (Paris-Saclay), Christine Bidaud (Lyon 3), Hugues Fulchiron (Lyon 3), Eric Fongaro (Bordeaux), Michel Farge (Grenoble-Alpes), A. d’Abbadie d’Arrast (Toulouse), Hélène Péroz (Nantes), Nathalie Joubert (Bourgogne-Dijon), Sara Godechot-Patris (Paris-Est Créteil), Sandrine Clavel (Paris-Saclay), Marc Nicod (Toulouse), Lukas Rass-Masson (Toulouse), Estelle Gallant (Toulouse) & Cyril Nourissat (Lyon 3).

The following authors are either notaries or legal practitioners working with notaries: Caroline Deneuville (Paris), Richard Crône (Paris), François Tremosa (Toulouse), Mariel Revillard, Marion Nadaud (Bordeaux).

The volume deals with three main topics: (1) the notary as an authority in private international law; (2) Reception and circulation of documents; (3) the drawing up of documents. It is complemented by sectoral analyses on divorce, matrimonial property regimes and international succession, and by concluding remarks on the main findings of the research.

The blurb (originally in French) reads:

The main objective of the research is to identify precisely the instruments and rules or methods of private international law the notary has to use and implement in his European and international notarial practice, whether he is drawing up or receiving deeds in his office, or circulating them across borders, in the European Union or outside the Union.

Against this background, the book’s contributions are drawing up the contours of the notary’s role in private international law, analysing and discussing its foundations, consequences and challenges.

The table of contents of the book can be accessed here.

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

(These abstracts can also be found at the IPRax-website under the following link: https://www.iprax.de/en/contents/)

R. Wagner: European account preservation orders and titles from provisional measures with subsequent account attachments

The enforcement of a claim, even in cross-border situations, must not be jeopardised by the debtor transferring or debiting funds from his account. A creditor domiciled in State A has various options for having bank accounts of his debtor in State B seized. Thus, he can apply for an interim measure in State A according to national law and may have this measure enforced under the Brussels Ibis Regulation in State B by way of attachment of accounts. Alternatively, he may proceed in accordance with the European Account Preservation Order Regulation (hereinafter: EAPOR). This means that he must obtain a European account preservation order in State A which must be enforced in State B. By comparing these two options the author deals with the legal nature of the European account preservation order and with the subtleties of enforcement under the EAPOR.

H. Roth: The „relevance (to the initial legal dispute)“ of the reference for a preliminary ruling pursuant to Article 267 TFEU

The preliminary ruling procedure under Article 267 of the Treaty on the Functioning of the European Union (TFEU) exists to ensure the uniform interpretation and application of EU law. The conditions under which national courts may seek a preliminary ruling are based on the established jurisdiction of the European Court of Justice (CJEU) and are summarised in Article 94 of the Rules of Procedure of the CJEU. One such condition is that the question referred to the court must be applicable to the decision in the initial legal dispute. Any future judgement by the referring court must thereafter be dependant on the interpretation of Union law. When cases are obviously not applicable, the European Court dismisses the reference for a preliminary ruling as inadmissible. The judgement of the CJEU at hand concerns one of these rare cases in the decision-making process. The sought-after interpretation of Union law was not materially related to the matter of the initial legal dispute being overseen by the referring Bulgarian court.

S. Mock/C. Illetschko: The General International Jurisdiction for Legal Actions against Board Members of International Corporations – Comment on OLG Innsbruck, 14 October 2021 – 2 R 113/21s, IPRax (in this issue)

In the present decision, the Higher Regional Court of Innsbruck (Austria) held that (also) Austrian courts have jurisdiction for investors lawsuits against the former CEO of the German Wirecard AG, Markus Braun. The decision illustrates that the relevance of the domicile of natural persons for the jurisdiction in direct actions for damages against board members (Art 4, 62 Brussels Ia Regulation) can lead to the fact that courts of different member states have to decide on crucial aspects of complex investor litigation at the same time. This article examines the decision, focusing on the challenges resulting from multiple residences of natural persons under the Brussels Ia Regulation.

C. Kohler: Lost in error: The ECJ insists on the “mosaic solution” in determining jurisdiction in the case of dissemination of infringing content on the internet

In case C-251/20, Gtflix Tv, the ECJ ruled that, according to Article 7(2) of Regulation No 1215/2012, a person, considering that his or her rights have been infringed by the dissemination of disparaging comments on the internet, may claim, before the courts of each Member State in which those comments are or were accessible, compensation for the damage suffered in the Member State of the court seized, even though those courts do not have jurisdiction to rule on an application for rectification and removal of the content placed online. The ECJ thus confirms the “mosaic solution” developed in case C-509/09 and C-161/10, eDate Advertising, and continued in case C-194/16, Bolagsupplysningen, for actions for damages for the dissemination of infringing contents on the internet. The author criticises this solution because it overrides the interests of the sound administration of justice by favouring multiple jurisdictions for the same event and making it difficult for the defendant reasonably to foresee before which court he may be sued. Since a change in this internationally isolated case law is unlikely, a correction can only be expected from the Union legislator.

T. Lutzi: Art 7 No 2 Brussels Ia as a Rule on International and Local Jurisdiction for Cartel Damage Claims

Once again, the so-called “trucks cartel” has provided the CJEU with an opportunity to clarify the interpretation of Art. 7 No. 2 Brussels Ia in cases of cartel damage claims. The Court confirmed its previous case law, according to which the place of damage is to be located at the place where the distortion of competition has affected the market and where the injured party has at the same time been individually affected. In the case of goods purchased at a price inflated by the cartel agreement, this is the place of purchase, provided that all goods have been purchased there; otherwise it is the place where the injured party has its seat. In the present case, both places were in Spain; thus, a decision between them was only necessary to answer the question of local jurisdiction, which is also governed by Art. 7 No. 2 Brussels Ia. Against this background, the Court also made a number of helpful observations regarding the relationship between national and European rules on local jurisdiction.

C. Danda: The concept of the weaker party in direct actions against the insurer

In its decision T.B. and D. sp. z. o. o. ./. G.I. A/S the CJEU iterates on the principle expressed in Recital 18 Brussels I bis Regulation that in cross-border insurance contracts only the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules. In the original proceedings – a joint case – the professional claimants had acquired insurance claims from individuals initially injured in car accidents in Poland. The referring court asked the CJEU (1) if such entities could be granted the forum actoris jurisdiction under Chapter II section 3 on insurance litigation against the insurer of the damaging party and (2) if the forum loci delicti jurisdiction under Art. 7(2) or 12 Brussels I bis Regulation applies under these conditions. Considering previous decisions, the CJEU clarified that professional claimants who regularly receive payment for their services in form of claim assignment cannot be considered the weaker party in the sense of the insurance section and therefore cannot rely on its beneficial jurisdictions. Moreover, the court upheld that such claimants may still rely on the special jurisdiction under Art. 7(2) Brussels I bis Regulation.

C. Reibetanz: Procedural Consumer Protection under Brussels Ibis Regulation and Determination of Jurisdiction under German Procedural Law (Sec. 36 (1) No. 3 ZPO)

German procedural law does not provide for a place of jurisdiction comparable to Article 8 (1) Brussels Ibis Regulation, the European jurisdiction for joinder of parties. However, according to Sec. 36 ZPO, German courts can determine a court that is jointly competent for claims against two or more parties. In contrast to Art. 8 (1) Brussels Ibis Regulation, under which the plaintiff has to choose between the courts that are competent, the determination of a common place of jurisdiction for joint procedure under German law is under the discretion of the courts. Since EU law takes precedence in its application over contrary national law, German courts must be very vigilant before determining a court at their discretion. The case is further complicated by the fact that the prospective plaintiff can be characterised as a consumer under Art. 17 et seq. Brussels Ibis Regulation. The article critically discusses the decision of the BayObLG and points out how German judges should approach cross-border cases before applying Sec. 36 ZPO.

M.F. Müller: Requirements as to the „document which instituted the proceedings“ within the ground for refusal of recognition according to Art 34 (2) Brussels I Regulation

The German Federal Court of Justice dealt with the question which requirements a document has to comply with to qualify as the “document which instituted the proceedings” within the ground for refusal of recognition provided for in Art 34 (2) Brussels I Regulation regarding a judgment passed in an adhesion procedure. Such requirements concern the subject-matter of the claim and the cause of action as well as the status quo of the procedure. The respective information must be sufficient to guarantee the defendant’s right to a fair hearing. According to the Court, both a certain notification by a preliminary judge and another notification by the public prosecutor were not sufficiently specific as to the cause of action and the status quo of the procedure. Thus, concerning the subject matter of the claim, the question whether the “document which instituted the proceedings” in an adhesion procedure must include information about asserting civil claims remained unanswered. While the author approves of the outcome of the case, he argues that the Court would have had the chance to follow a line of reasoning that would have enabled the Court to submit the respective question to the ECJ. The author suggests that the document which institutes the proceedings should contain a motion, not necessarily quantified, concerning the civil claim.

B. Steinbrück/J.F. Krahé: Section 1032 (2) German Civil Procedural Code, the ICSID Convention and Achmea – one collision or two collisions of legal regimes?

While the ECJ in Achmea and Komstroy took a firm stance against investor-State arbitration clauses within the European Union, the question of whether this will also apply to arbitration under the ICSID Convention, which is often framed as a “self-contained” system, remains as yet formally undecided. On an application by the Federal Republic of Germany, the Berlin Higher Regional Court has now ruled that § 1032 (2) Civil Procedural Code, under which a request may be filed with the court to have it determine the admissibility or inadmissibility of arbitral proceedings, cannot be applied to proceedings under the ICSID Convention. The article discusses this judgment, highlighting in particular that the Higher Regional Court chooses an interpretation of the ICSID Convention which creates a (presumed) conflict between the ICSID Convention and German law, all the while ignoring the already existing conflict between the ICSID Convention and EU law.

L. Kuschel: Copyright Law on the High Seas

The high seas, outer space, the deep seabed, and the Antarctic are extraterritorial – no state may claim sovereignty or jurisdiction. Intellectual property rights, on the other side, are traditionally territorial in nature – they exist and can be protected only within the boundaries of a regulating state. How, then, can copyright be violated aboard a cruise ship on the high seas and which law, if any, ought to be applied? In a recent decision, the LG Hamburg was confronted with this quandary in a dispute between a cruise line and the holder of broadcasting rights to the Football World Cup 2018 and 2019. Unconvincingly, the court decided to circumnavigate the fundamental questions at hand and instead followed the choice of law agreement between the parties, in spite of Art. 8(3) Rome II Regulation and opting against the application of the flag state’s copyright law.

T. Helms: Validity of Marriage as Preliminary Question for the Filiation and the Name of a Child born to Greek Nationals in Germany in 1966

The Higher Regional Court of Nuremberg has ruled on the effects of a marriage on the filiation and the name of a child born to two Greek nationals whose marriage before a Greek-orthodox priest in Germany was invalid from the German point of view but legally binding from the point of view of Greek law. The court is of the opinion that – in principle – the question of whether a child’s parents are married has to be decided independently applies the law which is applicable to the main question, according to the conflict of law rules applicable in the forum. But under the circumstances of the case at hand, this would lead to a result which would be contrary to the jurisprudence of the Court of Justice on names lawfully acquired in one Member State. Therefore – as an exception – the preliminary question in the context of the law of names has to be solved according to the same law which is applicable to the main question (i.e. Greek law).

K. Duden: PIL in Uncertainty – failure to determine a foreign law, application of a substitute law and leaving the applicable law open

A fundamental concern of private international law is to apply the law most closely connected to a case at hand – regardless of whether this is one’s own or a foreign law. The present decision of the Hanseatic Higher Regional Court as well as the proceedings of the lower court show how difficult the implementation of this objective can become when the content of the applicable law is difficult to ascertain. The case note therefore first addresses the question of when a court should assume that the content of the applicable law cannot be determined. It examines how far the court’s duty to investigate the applicable law extends and argues that this duty does not seem to be limited by disproportionate costs of the investigative measures. However, the disproportionate duration of such measures should limit the duty to investigate. The comment then discusses which law should be applied as a substitute for a law whose content cannot be ascertained. Here the present decision and the proceedings in the lower court highlight the advantages of applying the lex fori as a substitute – not as an ideal solution, but as the most convincing amongst a variety of less-than-ideal solutions. Finally, the note discusses why it is permissible as a matter of exception for the decision to leave open whether German or foreign law is applicable.

M. Weller: Kollisionsrecht und NS-Raubkunst: U.S. Supreme Court, Entscheidung vom 21. April 2022, 596 U.S. ____ (2022) – Cassirer et al. ./. Thyssen-Bornemisza Collection Foundation

In proceedings on Nazi-looted art the claimed objects typically find themselves at the end of a long chain of transfers with a number of foreign elements. Litigations in state courts for recovery thus regularly challenge the applicable rules and doctrines on choice of law – as it was the case in the latest decision of the U.S. Supreme Court in Cassirer. In this decision, a very technical point was submitted to the Court for review: which choice-of-law rules are applicable to the claim in proceedings against foreign states if U.S. courts ground their jurisdiction on the expropriation exception in § 1605(3)(a) Federal Sovereign Immunities Act (FSIA). The lower court had opted for a choice-of -aw rule under federal common law, the U.S. Supreme Court, however, decided that, in light of Erie and Klaxon, the choice-of-law rules of the state where the lower federal courts are sitting in diversity should apply.

Michiel Poesen has published an interesting article in the Common Market Law Review (issue 6 of 2022), titled Civil Litigation Against Third-Country Defendants in the EU: Effective Access to Justice as a Rationale for European Harmonization of the Law of International Jurisdiction.

The abstract reads:

The European Union has taken on an active role in harmonizing the law of international jurisdiction over civil and commercial court disputes. However, the jurisdictional rules contained in the key instrument in the area – the Brussels Ia Regulation – only apply to disputes involving EU-based defendants, save for a few exceptions where defendants domiciled in third countries are also covered. This article will explore the rationale for harmonizing the law of jurisdiction applicable to third-country defendants. This central theme is of particular interest, since further harmonization is once again on the EU’s agenda because of the upcoming revision of the Brussels Ia Regulation. The article will outline that proposals for harmonization are rooted in the aspiration to further effective access to justice. Moreover, it will demonstrate that far from a readily implementable programme, furthering access to justice is a multifaceted aim, the pursuit of which potentially has profound ramifications for the EU rules on civil jurisdiction.

(This post is written by Chen Zhi, a Ph.D. candidate at the University of Macau, a trainee lawyer in Mainland China)

The arbitration-favored policy has been adopted by many jurisdictions across the world in recent years, as the support of arbitration by local judiciaries has been viewed as an important standard for gauging the business environment of a jurisdiction.  While the decision of Morgan v. Sundance Inc. rendered in May 2022 by the Supreme Court of the USA illustrates that arbitration-favored policy has its boundary, this seems a trend emerging from the laws and legal trends in other jurisdictions.

Summary of the Fact

This case concerned a class action initiated by a former employee, Morgan against Sundance Incorporate (the owner of a Taco Bell franchise restaurant, hereinafter “Company”) regarding the arrear of overtime payment in the context of Federal law of the USA.

Albeit there was an arbitration agreement incorporated in the contract between Morgan and the Company, the Company failed to raise any motion about the arbitration agreement at the outset and defended as if the arbitration agreement did not exist.

Nearly 8 months after the commencement of the litigation, the company raised jurisdictional objection by invoking the omitted arbitration agreement and filed the motion to compel arbitration under the 1925 Federal Arbitration Act (hereinafter “FAA”). Morgan argued that the Company had waived the right to arbitrate. By measuring the case against the standard for the waiver as set out in the precedent of the Court of Appeal of Eighth Circuit, the court of first instance ruled in favor of Morgan and rejected to refer the case to arbitration.

Nonetheless, the Court of Appeal of the Eighth Circuit had adopted the requirement for waiver based on the “federal policy favoring arbitration”. Under the new requirement, Morgan shall furnish the proof showing prejudice incurred by the delay, and overturns the trial court’s decision thereby.[i] The case was subsequently appealed before the Supreme Court of the USA.

Supreme Court’s Decision

It is not surprising that lower courts in the USA have been consistently adopting specific rules for arbitration in the name of the arbitration-favored policy, which is contradictory to the proposition of the Supreme Court.[ii]

In the Morgan case, the Supreme Court holds that the Appeal Court of the Eighth Circuit has erred in inventing a novel rule tailored for the arbitration agreement, and reiterates that the arbitration agreement shall be placed on the same footing as other contracts. In the unanimous opinion delivered by Justice Kagan, the Supreme Court explicitly states that:

“Accordingly, a court must hold a party to its arbitration contract just as the court would to any other kind. But a court may not devise novel rules to favor arbitration over litigation.”  [iii]

In this regard, the arbitration agreement shall not be distinguished from other types of contracts in the context of Federal Law, under which the prejudice will generally not be asked about in the assessment of waiver. By Stripping off the requirement of prejudice, the Supreme Court remands the case to the Court of Eighth Circuit for reconsideration.

The Supreme Court does not delve into the jurisprudence behind arbitration-favored policy but simply states that the purpose of this policy is to make arbitration agreements as enforceable as other contracts, but not more. [iv]

The Main Concern of Morgan v. Sundance Inc.

In the context of American law, the grounds for equal treatment emerges from Section 2 of the 1925 Federal Arbitration Act, which stipulates that an arbitration agreement is valid and enforceable unless the grounds for revocation of any contract as set out in law or equity were found. Against this backdrop and in collaboration with the drafting history of the enactment of the Federal Arbitration Act, the Supreme Court has set out the basic principle that the arbitration agreement shall be placed on the same footing as other contracts, by which the arbitration-favored policy does entitle a higher protecting standard for arbitration agreement, as stated in Granite Rock Co. v. Teamsters:

“[…]the ‘policy’ is merely an acknowledgment of the FAA’s commitment to overrule the judiciary’s longstanding refusal to enforce agreements to arbitrate and to place such agreements upon the same footing as other contracts.”[v]

Through the decision in the Morgan case, the equal treatment principle is recapped and stressed, by which the arbitration-favored policy creates no new rules tailored for waiver of arbitration clauses under the legal framework of the USA.

The Complexity of Arbitration-favored Policy and the Boundary

Recent years have witnessed state courts’ preference to embrace the notion of “arbitration-favored policy” or “pro-arbitration policy”. Nonetheless, the arbitration-favored policy is a sophisticated and vague concept without an agreed definition worldwide. In principle, this policy flows from the well-recognized characteristics of international commercial arbitration such as autonomy, expediency, efficiency, and enforceability across the world. As per the analysis of Prof. Bremann, there are at least 12 criteria for gauging the arbitration-friendliness policy.[vi]

Likewise, Justice Mimmie Chan at the Court of the Instance of Hong Kong SAR fortifies 10 pro-arbitration principles employed by courts in Hong Kong towards enforcement of arbitration awards in the case of KB v S and Others, which sets up relatively high thresholds for parties to challenge arbitral awards in the enforcement stage, as the Chan J. highlights: (1) the courts’ reluctancy to looking to the merits of the case, (2) challenger’s duty to make a prompt objection against any alleged irregularities under the bona fide principle and, (3) the court’s residual discretion to enforce the award albeit the statutory grounds of rejection has been made out.[vii] Similar principles can also be extracted from decisions by courts in other jurisdictions like Singapore. [viii]

In the author’s view, these considerations for arbitration-favored policy can be distilled as the following four limbs:

(1) adherence to the parties’ autonomy to the largest extent,

(2) promoting the fairness and efficiency of commercial arbitration,

(3) minimizing the judicial interference throughout the arbitration proceedings, including the stages before and after the issuance of the arbitral award, among others, refraining from conducting the review on the merits issue of the case unless in exceptional circumstances and nullifying arbitral award based on trivial errors,

(4) providing legal assistance to arbitration proceedings for the promotion of fairness, expediency and efficiency (i.e., auxiliary proceedings for the enforcement of arbitration agreement and award, issuance, and execution of interim reliefs, taking of evidences).

As to the field of arbitral jurisdiction, the arbitration-favored policy always takes the form of the validation principle, where at least four scenarios are present in legal practice:

First, when confronted with the issue of the law governing arbitration agreement, and more than one laws are relevant, courts are required to apply laws that are in favor of the effectiveness of the arbitration agreement, either by virtue of statutory regulations[ix] or provided as one of the considerations in judicial practice.[x]

Second, courts are declined to intervene in the dispute over arbitral jurisdiction before the decision of the arbitration tribunal is rendered, as a result of the negative effect of the competence – competence principle to ensure the integrity and efficiency of arbitration proceedings.[xi]

Third, the invalidity of the matrix contract does not necessarily negate the arbitration agreement incorporated therein as per the widely-accepted separability doctrine.[xii]

Fourth, the courts will interpret in a manner that is likely to give effect to the arbitration agreement, particularly where the arbitration agreement is pathological in form or substance.[xiii]

At least one of the aforesaid scenarios emerges from legislation or judicial practices in jurisdictions featuring or advocating arbitration-favored policy, in which courts are always inclined to refer the case to arbitration. Nonetheless, the arbitration-favored policy does not mean that the court will give effect to the arbitration agreement unconditionally. The aforesaid Morgan case demonstrates that arbitration-favored policy has boundaries in the context of American law, taking the form of the equal treatment principle.

The boundary of arbitration-favored policy also emerges from laws and legal practices in other jurisdictions, as representative examples, the BNA case by the Court of Appeal of Singapore, the Kabab-Ji case by the Supreme Court of the UK, and the Uber case by the Supreme Court of Canada will be further illustrated below:

BNA Case

In this case, at issue before Singaporean courts was the law governing arbitration agreement, where the parties had designated PRC law as the governing law of the contract and expressly set out the term “arbitration in Shanghai” in the arbitration clause. The plaintiff objected to arbitral jurisdiction after the commencement of arbitration proceedings before the tribunal and subsequently resorted to courts in Singapore for recourse against the tribunal’s decision ruling that the arbitration agreement was valid under the laws of Singapore.

The plaintiff contended that the laws of China shall be applied, while the respondent argued that the arbitration clause in dispute was alleged to be invalid under PRC law, and submitted that the Singaporean court shall apply laws that are more in favor of the effectiveness of the arbitration agreement under validation principle hence the governing law shall be the laws of Singapore. The Singapore High Court applied Singaporean law and the dispute was filed before the Court of Appeal of Singapore.

The Court of Appeal opines that the validation principle can only be taken into consideration when there are other laws that can compete with PRC law to be the governing law of arbitration clause,[xiv] as all factors point to China as the proper law and Singapore was not the seat in the context of Article 10 of International Arbitration Act, this case shall be given to Chinese courts to decide.[xv] Therefore, the Appeal Court overturned the controversial decision by the Singapore High Court which determined Singapore as the seat by twisting the meaning of arbitral seat.[xvi]

Per the decision in the BNA case, the validation principle is only applicable where some prerequisites are met. While parties expressly reach an intention likely to negate the arbitration agreement without other competing factors, the court shall not rewrite the contract to nakedly validate the arbitration agreement.

Kabab-Ji Case

In this case, a Paris seated tribunal decided to extend the arbitration agreement to Kout, the parent company to the signatory which had been actively engaging in performance and re-negotiation of the contract in dispute, while not being a signatory to the contract. The tribunal’s decision was under the scrutiny of judiciaries in the UK at the enforcement stage.

Unlike the scenario in the BNA case, there were two competing factors regarding the determination of the proper law of arbitration agreement in Kabab-Ji: laws of England as the designated laws governing the main contract and the laws of France as the lex arbitri fixed in the contract. While the French laws turn out to be more in favor of the effectiveness of the arbitration clause, the Supreme Court of the UK rejected enforcing the arbitral award for lack of valid arbitration agreement via the application of English law as the proper law of arbitration clause. The court stresses in the decision that the validation principle does not apply to issues concerning the formation of a contract, and hence this principle was not relevant in deciding the issue of non-signatory.[xvii] And departing from the validation principle as set out in its precedent.

Per the decision of the Supreme Court of the UK, the extension of the arbitration agreement to non-signatory pertains to the formation of an arbitration agreement rather than the interpretation of the contract, which is contrary to the approach employed by French courts over the same case scenario. The decision in the Kabab-Ji case has given rise to controversies, as a commentator pointed out, the English court may be criticized for stepping over the line.[xviii] Nonetheless, the decision of Kabab-Ji is to some extent in line with the stringent attitude toward the non-signatory issue of arbitration agreement that judiciaries in England have consistently taken.[xix]

Uber Case

The dispute arose out of the putative employment relationship between Heller, a delivery driver, and UberEATS, a Toronto-based subsidiary of Uber. During the litigation, UberEATS filed a motion to compel arbitration by invoking the arbitration clause embedded in the boilerplate service agreement between Uber and all drivers who sign in for service of Uber.

The Supreme Court of Canada finds the arbitration clause unconscionable based on two main findings: (1) inequality of bargaining power between Heller and Uber, (2) improvidence produced by the underlying arbitration clause. The court stresses the fact that according to the arbitration clause, arbitration proceedings shall be administered under the Rules of Arbitration of the International Chamber of Commerce, which requires US$14,500 in up-front administrative fees for the commencement of the putative arbitration proceedings. Also, Amsterdam shall be the place of arbitration per the arbitration clause, hence further fees for traveling and accommodation will be incurred thereby. The court ruled that the arbitration clause was invalid and rejected to compel arbitration.[xx]

The judgment also discusses the arbitration-favored policy contention, stating that arbitration is respected based on it being a cost-effective and efficient method of resolving disputes.[xxi] By this logic, arbitration clauses creating a hurdle toward cost-effective and efficient resolution of disputes will not be safeguarded albeit the arbitration-favored policy is applicable.

The Uber case illustrates that different values may at odds with each other in the application of arbitration-favored policy, hence trade-offs will be presented before decision-makers. As discussed by Prof. Bremann, one given policy or practice may be pro-arbitration in some respects while anti-arbitration in other respects, further, the implication of arbitration-favored policy may also be detrimental to policies extrinsic to arbitration.[xxii] In the Uber case, two kinds of conflict are present simultaneously, first, upholding the effectiveness of the underlying arbitration clause may be detrimental to the policy for the protection of those who are vulnerable(trade-off between arbitration-friendly policy and extrinsic policies), second the enforcement of alleged parties’ autonomy taking the form of “arbitration administered by ICC in Netherland” is likely to be detrimental to the expediency and efficiency nature of arbitration(trade-off between arbitration-favored policy and extrinsic).

The answer to the said trade-offs remains unresolved, as there is no agreed standard by far, and courts in different jurisdictions can be divergent on this issue. As a prime example, while there is a discrepancy regarding the number of tribunal members between the rules of the arbitration institution and the arbitration clause, where the former provides a mandatory sole-arbitrator regulation for consideration of expedition and efficiency, the latter had designated a three-member-tribunal, the court of Singapore upheld the preemption of arbitration rules over the arbitration clause,[xxiii] while Chinese court once ruled in favor of the arbitration clause and rejected to enforce the award rendered by the sole arbitrator.[xxiv]

Takeaways for China

The arbitration-favored policy is a complicated notion that includes a myriad of separate and to some extent, conflicting considerations. In a general sense, courts embracing arbitration-favored policy are reluctant to negate the arbitration agreement. However, there are some exceptional instances where:

(1) the vindication of the arbitration agreement will produce prejudice to other values that are extrinsic to arbitration, such as the rule of law principle, the consistency of legal practice, policies for the protection of vulnerable parties, etc., like the situations in Morgan case and Uber case, and,

(2) the interpretation or implementation of the arbitration clause will undermine other considerations among the arbitration-favored policy, for instance, while the enforcement of the arbitration clause can be low-efficient and costly, or the validation principle may be contrary to the parties’ true intention, like the situations in BNA case and Kabab-Ji case.

Therefore, every jurisdiction shall tailor the arbitration-favored policy for its legal system and meet its own needs, instead of employing a dogmatic understanding of the policy.

Like other rising economic bodies like India,[xxv] China is also moving toward a jurisdiction that is “arbitration-favored” under the Belt and Road imitative and the blueprint for the construction of the Guangdong- Hong Kong- Macao Greater Bay Area. Against this backdrop, judiciaries are taking more liberal approaches that are tended to give effect to arbitration agreements that are likely to be considered invalid previously, particularly in disputes regarding the choice of law issue and the substance of the arbitration agreement. [xxvi]As to the formal requirement of arbitration agreement, the Supreme People’s Court also made a great leap in dispensing with the stringent approach by acknowledging the effectiveness of an arbitration clause as set out in a draft contract not being signed by neither party, based on the findings that the parties have discussed and finalized the arbitration clause in the draft of the contract during the negotiating phase.[xxvii]

Moreover, the Draft Revised Arbitration Law released in late July 2021 provides more liberal approaches for the validity of arbitration agreements, which includes:

(1) the recognition of ad hoc arbitration agreement in foreign-related disputes,

(2) the relaxing requirement for a valid arbitration agreement, where parties’ failure to designate a sole arbitration institution does not negate the arbitration agreement,

(3) the promulgation of extension of the arbitration agreement to non-signatories in some types of disputes, and

(4) the adoption of a new framework of competence-competence principle that is more in line with the international framework as set out in UNCITRAL Model Law.[xxviii]

These attempts have been heatedly debated and are by and large arbitration-favored and laudable by lifting the unreasonable hurdles for the autonomy, expediency, and efficiency of arbitration. Nonetheless, recognizing the validity of arbitration agreement is not the sole consideration, lawmakers, judiciaries, and other participants in commercial arbitration of Mainland China will confront trade-offs during the law-making and implementation of the rules under the arbitration-favored policy. As a corollary, an arbitration agreement can be safeguarded to the extent it is in line with the basic principles that are placed at a higher level.

[i] Morgan v. Sundance, Inc. 596 U. S. ____ (2022) (Supreme Court of USA, decided on 23 May 2022).

[ii] Amicus brief of Law Professors in Morgan v. Sundance, Inc., 596 U.S. ___ (2022), pp. 11- 12, available at https://www.supremecourt.gov/DocketPDF/21/21-328/207550/20220106140817376_Morgan%20amicus%20brief%20final.pdf last visited on 21 November 2022.

[iii] Morgan v. Sundance, Inc. 596 U. S. ____ (2022) (Supreme Court of USA, decided on 23 May 2022).

[iv] Ibid.

[v] Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U. S. 487(1989), as quoted in Granite Rock Co. v. Teamsters, 561 U. S. 287, 302 (2010) (Supreme Court of USA, decided on 24 June 2010).

5 These considerations are: (1) to what extent does it render international arbitration economical in term of time or cost? (2) to what extent does it ensure consent to arbitrate and enhance the scope for party autonomy? (3) to what extent does it effectuate the likely intentions or expectations of the parties? (4) to what extent is it consistent with the lex arbitri or the institutional rules chosen by the parties? (5) to what extent does it, consistent with party intent, enable the tribunal to exercise sound discretion and flexibility on matters of arbitral procedure? (6) to what extent does it ensure the independence and impartiality of arbitrators? (7) to what extent does it protect a party’s right to be heard? (8) to what extent does it promote accuracy in the administration of justice? (9) to what extent does it minimize, to the fullest extent reasonably possible, the intervention of national courts in the arbitral process? (10) to what extent does it help ensure that the resulting award will be an effective one? (11) to what extent does it enable the resulting award to withstand challenges in an annulment or enforcement action? (12) to what extent does it expand the categories of legal claims treated as arbitrable? See George A. Bermann, What Does it Mean to be ‘Pro-Arbitration’?, Arbitration International, Volume 34 (2018), p. 343.

[vii] KB v S. and Others, [2015] HKCFI 1787, para.1(Hong Kong Court of First Instance, decided on 15 September 2015).

[viii] China Machine New Energy Corporation v Jaguar Energy Guatemala LLC, [2020] SGCA 12, para. 87(The threshold for the finding of breach of natural breach for the purpose of vacating arbitral award is a high one and can only be crossed in exceptional cases.) (Appeal Court of Singapore, decided on 28 February 2020).

[ix] See Article 178 (2) of Private International Law of Switzerland (“As regards its substance, the arbitration agreement shall be valid if it conforms to the law chosen by the parties, or to the law applicable to the dispute, in particular the law governing the main contract, or to Swiss law.”).

[x] Enka Insaat Ve Sanayi AS v. OOO Insurance Company Chubb, [2020] UKSC 38, para. 97 (Where the clause in question is an arbitration clause, because of its severable character its putative invalidity may support an inference that it was intended to be governed by a different law from the other provisions of the contract […]) (Supreme Court of the UK, decided on 9 October 2020). See also BCY v. BCZ, [2016] SGHC 249, para. 74 (“[…] governing law of the main contract should only be displaced if the consequences of choosing it as the governing law of the arbitration agreement would negate the arbitration agreement even though the parties have themselves evinced a clear intention to be bound to arbitrate their disputes.”) (Singapore High Court, decided on 9 November 2016).

[xi]Article 16(1) of UNCITRAL Model Law on International Commercial Arbitration(“[…] an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract.”)

[xii] Tomolugen Holdings Ltd and Another v. Silica Investors Ltd and other appeals, [2015] SGCA, para. 60 (Singapore court should adopt a prima facie standard of review when hearing a stay application) (Court of Appeal of Singapore, decided on 26 October 2015). Fiona Trust & Holding Corp. v. Privalov [2007] UKHL 40 para. 13, (Arbitration clause shall be construed in accordance with the presumption that parties are likely to have intended any dispute arising out of the underlying contract to be decided by the same body.) (House of Lords of the UK, decided on 17 October 2007).

[xiii] “[W]here the parties have evinced a clear intention to settle any dispute by arbitration, the court should give effect to such intention, even if certain aspects of the agreement may be ambiguous, inconsistent, incomplete or lacking in certain particulars…” Insigma Technology Co Ltd v Alstom Technology Ltd [2009] 3 SLR(R) 936, para. 31, as quoted in HKL Group Co Ltd v Rizq International Holdings Pte Ltd, [2013] SGHCR 5, para. 13 (Singapore High Court, decided on 19 February 2013). See also ?????? and ??? v. Ace Lead Profits Ltd and another, [2022] HKCFI 3342? para. 53 (Arbitration clause is not nullified by the non-existence of putative arbitration institution) (Hong Kong Court of First Instance, decided on 4 November 2022).

[xiv] BNA v. BNB and another, [2019] SGCA 84, para. 95. (Court of Appeal of Singapore, decided on 27 December 2019).

[xv] Ibid., at para. 102.

[xvi] See BNA v. BNB, [2019] SGHC 142, para. 101(agreement referring to Shanghai instead of PRC is not a reference to seat) (Singapore High Court, decided on1 July 2019). Ironically, contrary to the plaintiff’s assertion and the Singapore court’s wariness, the validity arbitration clause at issue was subsequently confirmed by the Chinese court following the conclusion of judicial review proceedings before the Singapore Court of Appeal, as set out in Daesung Industrial Gases Co Ltd v. Praxair (China) Investment Co Ltd (2020) Hu 01 Min Te No.83 (Shanghai No.1 Intermediate People’s Court, decided on 29 June 2020). See also José-Antonio Maurellet, Helen Shi, et al., PRC Court Confirms Validity of “SIAC-Shanghai” Clause, available at https://dvc.hk/en/news/cases-detail/prc-court-confirms-validity-of-siac-shanghai-clause/ last visited on 21 November 2022.

[xvii] Kabab-Ji SAL v. Kout Food Group, [2021] UKSC 48, para. 51 ([Validation principle] is not a principle relating to the formation of contracts which can be invoked to create an agreement which would not otherwise exist.) (Supreme Court of UK, decided on 27 October 2021).

[xviii] Andrew Tweeddale, The Validation Principle and Arbitration Agreements: Difficult Cases Make Bad Law, The International Journal of Arbitration, Mediation and Dispute Management, Volume 88, Issue 2 (2022), p. 248.

[xix] The restrictive approach emerges from the Peterson Farms v. CM Farming Ltd., [2004] EWHC 121, as cited in Andrea Marco Steingruber, Consent in International Arbitration (UK: Oxford University Press, 2012), p. 156.

[xx] Uber Technologies Inc. v. Heller, 2020 SCC 16, paras. 93 – 94(Federal Supreme Court of Canada, decided on 26 June, 2020).

[xxi] Ibid., at para. 97.

[xxii] George A. Bermann, What Does it Mean to be ‘Pro-Arbitration’?, Arbitration International, Volume 34 (2018), pp. 343-353.

[xxiii] AQZ v. ARA, [2015] SGHC 49 (2015) (Singapore High Court, decided on 13 February 2015).

[xxiv] Noble Resources International Pte Ltd v. Good Credit International Trade Co Ltd, (2016) Hu 01 Xie Wai Ren No. 1 (Shanghai No.1 Intermediate People’s Court, decided on 11 August 2017).

[xxv] Like India, see Aditya Singh Chauhan and Aryan Yashpal, Change to Improve, Not to Unhinge—A Critique of the Indian Approach to International Arbitration, Indian Journal of Arbitration Law, Volume X, Issue 2 (2021), pp. 1-11.

[xxvi] See Helen Shi, Have Chinese Courts Adopted an Arbitration- Friendly Approach Towards International Arbitration?, in Neil Kaplan, Michael Pryles, et al. (eds), International Arbitration: When East Meets West: Liber Amicorum Michael Moser(Netherlands: Kluwer Law International, 2020), pp. 235-244.

[xxvii] Luck Treat Limited v. Zhongyuancheng Co, Ltd, 2019 Zui Gao Fa Min Te No.1(Supreme People’s Court of China, decided on 18 September 2019).

[xxviii] Terence Wong et al, China: Draft Revised Arbitration Law of PRC Published for Comments, available at https://www.mondaq.com/china/arbitration-dispute-resolution/1104356/draft-revised-arbitration-law-of-prc-published-for-comments- last visited on 4 December 2022. See also Weina Ye et al, Key Changes under Revised Draft of PRC Arbitration Law, available at  https://hsfnotes.com/arbitration/2021/08/11/key-changes-under-revised-draft-of-pcr-arbitration-law/, last visited on 4 December 2022.

I do not often use pictures on the blog but this one is just too evocative to let pass:

On 18 December 2023 (i.e. a year from now), Willem Theus (KU Leuven – UCLouvain), Dr Michel Erpelding (University of Luxembourg), Prof Dr Francesco Tamburini (University of Pisa), Prof Dr Fouzi Rherrousse (University of Oujda), and myself are organising a conference to celebrate the centenary of the Statute of Tangier, signed at Paris. Credit for kicking off the process goes to Willem.

This treaty, signed between France, Spain and the United Kingdom, and later joined by Sweden, Belgium, the Netherlands, Portugal and Italy, provided for the creation of a new legal entity: the International Zone of Tangier. Established by 1925, the Tangier Zone was formally an integral part of Morocco, but subject to a special regime that left most of its institutions under the joint administration of several Western powers. This special regime would last until Morocco’s independence in 1956, with some international elements remaining in place under a Royal Charter until 1960.

Thinking about the Zone triggers an extravaganza of thoughts on international commercial courts, conflict of laws, history of law and so much more. The call asks for papers on

The Politics of Individual Powers Towards/Within the Zone
Moroccan Attitudes and Policies Towards/Within the Zone and Its Institutions
The Interzonal and Foreign Relations of the International Zone17
Politics in the International Legislative Assembly
The Veto-Role of the Committee of Control
The Zone’s Legal System/Codes
The Operation, Case Law and Reforms of the Mixed Court
The Bar of the International Zone

Careers of Individual Lawyers/Officials/Businessmen/Intermediaries
The Tangier Banking System
The Ecclesiastical, Jewish and Sharia Courts
The Working and Case Law of the American Consular Court
The Spanish Civil War and its Impact on the Zone
The Architecture of the International Administrative Buildings of the Zone
Smugglers and the Law; and
The Legal System of the Transition Period (1956–1960)

The call and further details are available in Arabic, English, French, Italian and Spanish.

Happy pondering abstracts!

Geert.

As reported on this blog by Marco Pasqua, the European Commission adopted on 18 October 2022 its 2023 Work Programme, listing the legislative proposals, including in the area of private international law, that the Commission itself regarded as a priority.

On 15 December 2022, the Presidents of the European Parliament, the Council and the Commission signed a Joint Declaration on EU legislative priorities for 2023 and 2024. The document, as indicated in the official press release, “sets out a shared European vision for a stronger and more resilient Europe in the face of Russia’s unprovoked, brutal aggression against Ukraine and its wide-ranging impact – all the while tackling other serious challenges such as the climate crisis and economic headwinds”.

The joint declaration is accompanied by a working document, which lists 164 “key legislative proposals”, that the three institutions agreed to prioritise.

Some of these proposals either primarily relate to private international law or include provisions that have, or may have, significant private international law implications.

These include the proposal for a Directive on adapting non-contractual civil liability rules to artificial intelligence; the proposal for a Directive harmonising certain aspects of insolvency law; the proposal for a Directive on Corporate Sustainability Due Diligence; the proposal for a Directive on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings (SLAPPs); the proposal for a Regulation on the digitalisation of judicial cooperation and access to justice in cross-border civil, commercial and criminal matters; and the proposal for a Regulation on the law applicable to the third-party effects of assignments of claims.

The recently adopted proposal for a Regulation aimed at harmonising at EU level the rules of private international law relating to parenthood (which Marta Requejo presented here) is not among those listed in the document.

There is also no reference to the expected developments regarding the international protection of adults.

This piece was written by Helga Luku, PhD researcher at the University of Antwerp

On 7 December 2022, the European Commission adopted a Proposal for a Regulation which aims to harmonize at the EU level the rules of private international law with regard to parenthood. This proposal aims to provide legal certainty and predictability for families in cross-border situations. They currently face administrative burdens when they travel, move or reside in another Member State (for family or professional reasons), and seek to have parenthood recognised in this other Member State. The proposal follows on a declaration two years ago by the Commission President von der Leyen in her State of the Union address that “If you are a parent in one country, you are a parent in every country”.

How will this proposal change the current situation?  

In line with the case law of the Court of Justice of the EU, Member States are required to recognise parenthood for the purpose of the rights that the child derives from Union law, permitting a child who is a Union citizen, to exercise without impediment, with each parent, the right to move and reside freely within the territory of Member States. Thus, parenthood established in one Member State should be recognised in other Member States for some (limited) purposes. There is currently no specific EU legislation that requires Member States to recognise parenthood established in other Member States for all purposes.

Different substantive and conflict-of-law rules of Member States on the establishment and recognition of parenthood can lead to a denial of the rights that children derive from national law, such as their succession or maintenance rights, or their right to have any one of their parents act as their legal representative in another Member State on matters such as medical treatment or schooling. Thus, the proposal aims to protect the fundamental rights of children and as it is claimed by the Commission, to be in full compliance with the UN Convention on the Rights of the Child. Through the proposed Regulation, the Commission intends to enable children, who move within the Union to benefit from the rights that derive from national law, regardless of:

• the nationality of the children or the parents (on the condition that the document that establishes or proves the parenthood is issued in a Member State);
• how the child was conceived or born (thus including conception with assisted reproductive technology);
• the type of family of the child (including e.g. the recognition of same-sex parenthood or parenthood established through adoption).

In principle, the proposal does not interfere with substantive national law in matters related to parenthood, which are and will remain under the competence of Member States. However, by putting the children’s rights and best interests in the spotlight of the proposal, the Commission is requiring Member States to disregard their reluctance toward the recognition of some types of parenthood.

As the Union aspires an area of freedom and justice, in which the free movement of persons, access to justice and full respect of fundamental rights are guaranteed, the Commission proposes the adoption of Union rules on international jurisdiction and applicable law in order to facilitate the recognition of parenthood among the Member States. It covers not only the recognition of judgments but also the recognition and acceptance of authentic instruments. In this sense, the proposal covers the three main pillars of private international law and it will also introduce a European Certificate on Parenthood.

The main aspects of this proposal include:

• Jurisdiction: jurisdiction shall lie alternatively with the Member State of habitual residence of the child, of the nationality of the child, of the habitual residence of the respondent (e.g. the person in respect of whom the child claims parenthood), of the habitual residence of any one of the parents, of the nationality of any one of the parents, or of the birth of the child. Party autonomy is excluded. (Chapter II, articles 6-15)
• The applicable law: as a rule, the law applicable to the establishment of parenthood should be the law of the State of the habitual residence of the person giving birth. If the habitual residence of the person giving birth cannot be established, then the law of the State of the birth of the child should apply. Exceptions are foreseen for the situation where the parenthood of a second person cannot be established under the applicable law. (Chapter III, articles 16-23).
• Recognition: the proposal provides for the recognition of court decisions and authentic instruments with binding legal effects, which establish parenthood, without any special procedure being required. However, if one of the limited grounds for refusal is found to exist, competent authorities of Member States can refuse the recognition of parenthood established by a court decision or an authentic instrument with binding effects. (Chapter IV, articles 24-43)
• Acceptance: the proposal also provides for the acceptance of authentic instruments with no binding legal effect. These instruments do not have a binding legal effect because they do not establish parenthood, but they refer to its prior establishment by other means or to other facts, thereby having only evidentiary effects. It may be a birth certificate, a parenthood certificate, an extract of birth from the register or any other form. The acceptance of these instruments with evidentiary effects can be refused only on public policy grounds. (Chapter V, articles 44-45)
• Creation of a European Certificate of Parenthood: children or their legal representatives can request it from the Member State in which the parenthood was established. This Certificate will be issued in a uniform standard form and will be available in all Union languages. It is not mandatory but children or their legal representatives have the right to request it and have it recognised in all Member States (chapter VI, articles 46-57).

What is next?

Since the current proposal concerns family law issues with cross-border implications, under Article 81(3) of the Treaty on the Functioning of the European Union, the Council shall act unanimously via a special legislative procedure after consulting the European Parliament. Besides the sensitive area the proposal regulates, it also adopts a pro-diversity and non-discrimination policy, including the recognition of same-sex parenthood and surrogacy. Thus, considering the different approaches and national identities of Member States, often associated with their more conservative or liberal convictions, unanimity will not be easy to reach. However, if unanimity cannot be reached, a number of Member States can still adopt the proposal in enhanced cooperation (see: Article 20 Treaty on European Union). This is not an uncommon procedure for Member States when they have to adopt legislation that concerns family law issues, e.g. Regulation 1259/2010 on the law applicable to divorce and legal separation (Rome III) and Regulation 2016/1103 on jurisdiction, applicable law and the recognition and enforcement of decisions in matters of matrimonial property regimes. However, if it happens that the proposal is adopted in enhanced cooperation, it is doubtful whether its objective to provide the same rights for all children is truly achieved. Additionally, the participating Member States will probably include those that did not impose very restrictive requirements with regard to the recognition of parenthood in their national laws, even before the adoption of the Regulation in enhanced cooperation.

The latest issue of the RabelsZ (Rabels Zeitschrift für ausländisches und internationales Privatrecht) has been published. As always, it contains a number of insightful articles. Here are the authors, titles and abstracts:

Moritz Renner and Torsten Kindt, Internationales Gesellschaftsrecht und Investitionsschutzrecht (Conflict of Corporate Laws and International Investment Law)

The withdrawal of the United Kingdom from the EU has revived the debate on the conflict of corporate laws. Much attention has recently been given to the new generation of EU free trade agreements, such as the EU-UK Trade and Cooperation Agreement, but their impact on conflicts in the field of corporate law remains unclear. This article proposes that the conflict-of-law effects of these agreements can be fully understood only in the light of their common background in international investment law. Building upon an analysis of the role of treaties in Germany’s conflict-of-law system and of the multiple intersections between the conflict of corporate laws and international investment law in general, the article demonstrates that the newest EU free trade agreements imply in particular the application of a restricted conflict-of-law theory of incorporation on foreign corporations originating from the respective signatory states. While the agreements’ effects on conflicts in the corporate law arena are not as far reaching as those of the EU’s freedom of establishment, they nevertheless further narrow the remaining scope of application of the traditional seat theory underlying Germany’s autonomous rules on conflicts vis-à-vis corporate law.

Tobias Lutzi and Felix M. Wilke, Brüssel Ia extendenda est? – Zur Zukunft der internationalen Zuständigkeit deutscher Gerichte in Zivil- und Handelssachen nach Ausweitung der EuGVVO (Brussels I bis extendenda est? On the Future of the International Jurisdiction of German Courts in Civil and Commercial Matters after an Extension of the Regulation)

With the expiry of the deadline of art. 79 Brussels I bis, the academic debate on a possible further extension of the Regulation to situations involving non-EU defendants is (again) gaining momentum. The present study aims to contribute to this discussion. It compares the relevant German rules on international jurisdiction over non-EU defendants with those of the Brussels I bis Regulation in order to be able to assess the consequences of a possible extension from a German perspective. The study reveals that even replacing the national rules in their entirety would not amount to a radical change. In particular, the addition of typified places of performance under art. 7 no. 1 lit. b Brussels I bis to the forum contractus and the availability of a common forum for joint defendants under art. 8 no. 1 Brussels I bis would constitute welcome improvements of the current framework. The loss of jurisdiction based on the presence of assets under § 23 ZPO would arguably be a disadvantage if not properly compensated for, e.g. through a forum necessitatis provision. The biggest advantage, though, would most likely be the harmonization of the law of international jurisdiction across the EU – which, from a German perspective, would come at a rather reasonable price.

Ulla Liukkunen, Decent Work and Private International Law (Open Access)

This article examines the decent work objective set by the ILO and UN Agenda 2030 from the point of view of private international law. It conceptualizes decent work, arguing that inclusivity of protective safeguards and structures in cross-border situations is essential to achieving the objective, and that the need for inclusivity draws attention to the relationship between labour law and private international law. The analysis offered also introduces a migration law-related perspective on decent work and the private international law of employment contracts and labour relations more generally. It is argued that understanding that the idea of inclusivity is embedded in the decent work objective brings up a global dimension which calls for uniform regulatory solutions at the international level. Decent work could be coupled relatively easily with the need for a revival of the private international law of labour relations and for developing a labour rights-based approach in private international law. It also connects private international law’s protective normative frameworks to the body of international labour standards.

Adrian Hemler, Virtuelle Verfahrensteilnahme aus dem Ausland und Souveränität des fremden Aufenthaltsstaats – Zugleich ein Beitrag zum Verhältnis des Völkerrechts zum Kollisionsrecht (Virtual Participation in Court Proceedings from Abroad and Its Effects on the Sovereignty of the Foreign State of Residence – With Consideration of the Relationship Between Public International Law and the Conflict of Laws)

Most German-speaking scholars and some German courts consider participation in virtual court proceedings from a foreign state of residence to be a violation of foreign sovereignty. This essay stakes out a contrary position. In reaching this conclusion, it focuses on the distinction between the exercise of state power abroad and the exercise of state power regarding foreign facts. Especially with regards to extraterritorial legislation, it is argued that the law’s scope of sovereign validity remains territorial even if its scope of application covers facts abroad. The discussion also shows how this distinction is equally applicable to court judgments that concern foreign elements. Furthermore, the article discusses the nature of public international law principles regarding extraterritorial legislation and their relationship to national conflict of laws provisions. Also considered is how the sovereignty principle ought to be understood in cyberspace. Having established this theoretical foundation, it is concluded that regardless of the procedural role of the respective party, participation in virtual court proceedings from a foreign state of residence does not amount to a violation of foreign sovereignty.

Corinna Coupette and Dirk Hartung, Rechtsstrukturvergleichung (Structural Comparative Law) (Open Access)

Structural comparative law explores the similarities and differences between the structures of legal systems. Theoretically grounded in systems theory and complexity science, it models legal systems as networks of documents, organizations, and individuals. Using methods from network analysis, structural comparative law measures these networks, assesses how they change over time, and draws quantitative comparisons between multiple legal systems. It differs from other approaches in its assumptions, its methods, and its goals, in that it acknowledges the relevance of dependencies between system entities and borrows more heavily from data science than from econometrics. Structural comparative law constitutes a novel addition to the comparatist’s toolbox, and it opens myriad opportunities for further research at the intersection of comparative law and data science.

Arseny Shevelev and Georgy Shevelev, Proprietary Status of the Whole Body of a Living Person

This article is a reaction to the growing economic significance of the living human body as well as its legal status. In this paper, we argue that ownership in the human body most effectively guarantees the autonomy of the human will as to the use and disposal of one’s own body, but classical ownership theory is unable to fully ensure the autonomy of the human will, since it risks reviving the institution of slavery. We will demonstrate that theories establishing rights to the body other than ownership rights are limited in content and are inherently inconsistent. At the end of the article, we will propose an abstract ownership theory that allows for the exercise of maximum freedom to dispose of the human body while one is alive and which will be devoid of the flaws of the preceding theories.

The table of contents in German is available here.

The fourth issue of Gravitas Review of Business & Property Law was published this week. It contains the following private international law article:

UV Obi (SAN) et al, “The Enforcement of Foreign Jurisdiction Clauses of Contracts in Nigeria”

The inclusion of foreign jurisdiction clauses in contracts has become a common
trend in international commercial transactions. Since most parties are often not
familiar with the laws of their foreign counterparts and are sceptical about getting a
fair trial in the latter’s jurisdiction when a dispute arises from the contract, the
option of a usually neutral foreign jurisdiction clause, therefore, is cardinal when
considering the risks associated with contractual relationships. In this article, the
Authors consider, inter alia, the meaning and nature of contracts, foreign
jurisdiction clause as a term of a contract, its enforcement in both England and
Nigeria, with a particular focus on the attitude of Nigerian Courts to the
enforcement of foreign jurisdiction clause as a term of a contract. The Authors
opine that while the Supreme Court has consistently upheld and enforced foreign
jurisdiction clauses, the lower courts have often refused to do so because they
perceive those clauses to be ouster clauses. The Authors recommend enacting
legislation and practice direction to uphold parties’ freedom of contract, including
parties’ rights to subject their disputes to the laws and country of their choice. This
will no doubt result in a more predictable outcome of international commercial
contracts litigations and related issues in Nigeria, engender trust in our judicial
system, promote party autonomy, strengthen the parties’ existing rights, promote
access to justice, and strengthen our legal system.

On 2 November 2022, the UK Supreme Court delivered its judgment in The Soldiers, Sailors, Airmen and Families Association – Forces Help and another (Respondents) v Allgemeines Krankenhaus Viersen GmbH (Appellant).

The issue at stake was whether the Civil Liability (Contribution) Act 1978, which regulates whether a person liable from a damage may recover contribution from any other person liable, has overriding effect, and thus applies irrespective of the law governing the claim. The Rome II Regulation did not apply ratione temporis.

Mr Roberts suffered brain damage at birth in the Viersen General Hospital (AKV) in Germany in June 2000. Mr Roberts claims that this occurred as a result of the negligence of the attendant midwife, who was employed by the Soldiers, Sailors, Airmen and Families Association Forces Help (SSAFA). He also sued the Ministry of Defence (MoD), which will indemnify SSAFA against any liability.

SSAFA and MoD have brought a claim against AKV for contribution if Mr Roberts’ claim against them succeeds. The basis for this contribution claim is the 1978 Act. The parties agree that the law governing the contribution claim is German law and under German law, the claim would be time-barred. However, if the 1978 Act has overriding effect and if SSAFA/MoD can show that AKV is liable under it, their contribution claim will be in time.

The High Court considered this issue as a preliminary issue before the rest of Mr Roberts’ claim is decided. The High Court decided that the 1978 Act does have overriding effect and therefore SSAFA/MoD’s contribution claim against AKV is not time-barred. The Court of Appeal agreed. AKV now appeals to the Supreme Court.

The Court allowed the appeal on the grounds which were summarised in the Press Summary as follows.

The 1978 Act does not provide expressly that it has overriding effect. It does not provide that the 1978 Act applies irrespective of the foreign law otherwise applicable to the contribution claim. The question is whether such an intention must be implied from the provisions of the statute [38]. Three statutory provisions were identified variously by the Court of Appeal as supporting overriding effect: sections 1(6), 2(3)(c) and 7(3). The Supreme Court, however, considers these provisions equivocal. Their efficacy is not dependent upon overriding effect [39]-[48]. In particular, even in the absence of overriding effect, section 1(6) will be effective in many situations such as where the parties to the contribution claim are in a special relationship governed by the law of England and Wales [43].

Nothing in the admissible Parliamentary materials or the legislative history supports the view that the legislation was intended to have overriding effect [49] – [51]. However, the Bill was a Law Commission Bill and statements by the Commission in other reports suggest it was not intended to have overriding effect [52]-[55]. The weight of academic commentary strongly favours the view that the 1978 Act does not have overriding effect [73]-[79].

A line of authorities supports overriding effect. In a number of these cases overriding effect was assumed, was not directly in point and was not argued [56]-[60]. Arab Monetary Fund v Hashim (No 9) provides direct support for overriding effect, but the reasoning is open to the criticism that it is circular [61]-[68].

In coming to the conclusion that the 1978 Act was not intended to have overriding effect, the Supreme Court is influenced in particular by two considerations. First, there will be many situations in which a contribution claim will be governed by the law of England and Wales, notwithstanding the fact that the underlying liabilities are governed by a foreign law [82]. Secondly, it is difficult to see why Parliament should have intended to confer a statutory right of contribution whenever the party from whom contribution is sought can be brought before a court in this jurisdiction, regardless of the law with which the contribution claim has its closest connection. A failure of foreign law to provide for contribution claims is not a defect requiring remedy by legislation in this jurisdiction. Moreover, it would seem contrary to principle for the law of England and Wales to be applied if the contribution claim were most closely connected to a foreign system of law [83].

Under the Rome II Regulation, the law governing the claim satisfied by a person liable to the victim also governs the right of that person to seek “compensation” from other persons liable to the victim of the same claim. The Rome II Regulation, however, did not apply in this case.

The judgement eventually concludes that German law should also apply to the contribution claim in a reasoning in three steps.

The first is that, although issues of contribution used to be perceived as issues of procedure, it is now widely considered in the British common law world that it is one of substance.

The second is that the issue should be characterised as closely analogous to a restitutionary or quasi-contractual claim, and that the applicable law should be the law with which this claim is the most closely connected. In the present case, given that the claims of each person liable to the victim was governed by German law, that law would be German law as well. But Lord Lloyd-Jones explains that this could have been otherwise if there had been a special relationship between the two liable persons.

The third is that the statutes with overriding effects should be identified by assessing whether the terms of the relevant legislation cannot be applied or its purpose achieved unless it is overriding, and the legislative policy would be so significant that the statute should override the application of foreign law.

The main difference between the English rule and the Rome II Regulation is now, it seems to me, that the English rule relies on a more flexible test which, in certain cases, could lead to the application of a law other than the law governing the claim of the victim. This was critical in this case, as a particular provision of the 1978 Act somewhat required that there be cases were the law of the claim of the victim would be different from the law governing the contribution claim.

Section 1(6) of the 1978 Act provides:

References in this section to a person’s liability in respect of any damage are references to any such liability which has been or could be established in an action brought against him in England and Wales by or on behalf of the person who suffered the damage; but it is immaterial whether any issue arising in any such action was or would be determined (in accordance with the rules of private international law) by reference to the law of a country outside England and Wales.

The answer of the Court is that, for this provision to make sense, it must be possible that English law sometimes applies where foreign law governs the claim of the victim. The example given is a case where a special relationship existed between the two persons liable.

I reported earlier on the ongoing collective claim against TikTok here. Thank you Xandra Kramer and Eduardo Silva de Freitas for signalling and discussing the first instance jurisdictional finding. I note already that the Court [5.28] has refused interim permission to appeal on the jurisdictional finding (as in i.a. the applicable law issue in Airbus). [5.22] it also refused a preliminary reference o the CJEU even though my concise discussion below already shows that more is at play here than the court has made out. TikTok will now first have to argue the case on the merits to then (presumably) appealing both substance and jurisdictional finding.

As I flagged earlier and as Xandra and Eduardo discuss, the issue here is firstly the relationship between GDPR and Brussels Ia at the jurisdictional level: I discuss that in this paper. Against TikTok Ireland, jurisdiction is established on the basis of A80 GDPR, with no further discussion of A79 (even if A80 partially refers to A79 for the action it establishes).

In my view the court quite carelessly muddles the various concepts used in A79-80, all too easily dismisses ia CJEU Schrems, does not clearly distinguish between assignment, subrogation, mandate etc., and certainly does not correctly delineates the authority which the collective organisations might have under the GDPR: for it is not at all clear that this authority, beyond injunctive relief,  includes a (collective) claim for damages.

[5.13] the court already announces that it may not in fact have jurisdiction for all individuals who are no longer habitually resident in The Netherlands, a concession which in my view in fact goes towards undermining its own reasoning.

[5.14] ff the court then reviews A4 and 7(2) BIa, as a supplementary jurisdictional ground for the GDPR related claims and as a stand-alone ground for the non-GDPR related claims. The court’s decision to apply CJEU Wikingerhof as leading to forum delicti and not forum contractus is in my view optimistic, and surely if A7(2) is at play then the CJEU’s authority ia in Schrems is, too. Yet the court [5.17] quite happily assimilates the harmed individuals’ COMI etc. with the collective organisation.

[5.19-20] the court summarily accepts jurisdiction against the other (non-EU) TikTok entities on the basis of Dutch residual rules for related cases.

Jurisdictional issues will most definitely return upon eventual appeal.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.5.

Written by Eduardo Silva de Freitas (Erasmus University Rotterdam) & Xandra Kramer (Erasmus University Rotterdam/Utrecht University), members of the Vici project Affordable Access to Justice, financed by the Dutch Research Council (NWO), www.euciviljustice.eu.  

Introduction

On 9 November 2022 the District Court Amsterdam accepted international jurisdiction in an interim judgment in a collective action brought against TikTok (DC Amsterdam, 9 November 2022, ECLI:NL:RBAMS:2022:6488; in Dutch). The claim is brought by three Dutch-based representative organisations; the Foundation for Market Information Research (Stichting Onderzoek Marktinformatie, SOMI), the Foundation Take Back Your Privacy (TBYP) and the Stichting Massaschade en Consument (Foundation on Mass Damage and Consumers). It concerns a collective action brought under the Dutch collective action act (WAMCA) for the infringement of privacy rights of children (all foundations) and adults and children (Foundation on Mass Damage and Consumers). In total, seven TikTok entities are sued, located in Ireland, the United Kingdom, California, Singapore, the Cayman Islands and China. The claims are for the court to order that an effective system is implemented for age registration, parental permission and control, and measures to ensure that commercial communication can be identified and that TikTok complies with the Code of Conduct of the Dutch Media Act and the GDPR.

After an overview of the application of the WAMCA, which has been introduced in a different context on this blog earlier, we will discuss how the Court assessed the question of international jurisdiction.

The class action under the Dutch WAMCA

 Following case law of the Dutch Supreme Court in the 1980s concerning legal standing of representative organisations, the possibility to start a collective action was laid down in Article 3:305a of the Dutch Civil Code (DCC) in 1994. However, this was limited to declaratory and injunctive relief. Redress for compensation in mass damage cases was only introduced in 2005 with the enactment of the Collective Settlement of Mass Claims Act (Wet collectieve afwikkeling massaschade, WCAM). This collective settlement scheme enables parties to jointly request the Amsterdam Court of Appeal to declare a settlement agreement binding on an opt-out basis. The legislative gap remained as a collective action for compensation was not possible and such mass settlement agreement relies on the willingness of an allegedly liable party to settle.

This gap was closed when in 2019, after a lengthy legislative process, the Act on Redress of Mass Damages in a Collective Action (Wet afwikkeling massaschade in collectieve actie, WAMCA) was adopted. The WAMCA entered into force on 1 January 2020 and applies to mass events that occurred on or after 15 November 2016. The WAMCA expanded the collective action contained in Article 3:305a DCC to include actions for compensation of damage (Tillema, 2022; Tzankova and Kramer, 2021). While the WAMCA Act generally operates on an opt-out basis for beneficiaries represented by the representative organisation(s), there are exemptions, including for parties domiciled or habitually resident outside the Netherlands. In addition, the standing and admissibility requirements are relatively strict, and also include a scope rule requiring a close connection to the Netherlands. Collective actions are registered in a central register (the WAMCA register) and from the time of registration a three-months period starts to run (to be extended to maximum six months), enabling other claim organisations to bring a claim, as only one representative action can be brought for the same event(s). If no settlement is reached, an exclusive representative will be appointed by the court. Since its applicability as of 1 January 2020, 61 collective actions have been registered out of which 8 cases have been concluded to date; only a very few cases have been successful so far. These collective actions involve different cases, including consumer cases, privacy violations, environmental and human rights cases, intellectual property rights, and cases against the government. Over one-third of the cases are cross-border cases and thus raise questions of international jurisdiction and the applicable law.

As mentioned above, in the TikTok case eventually three Dutch representative foundations initiated a collective action against, in total, seven TikTok entities, including parent company Bytedance Ltd. (in the first action, the claim is only brought against the Irish entity; in the other two actions, respectively, six and seven entities are defendants). These are TikTok Technology Limited (Ireland), TikTok Information Technology Limited (UK), TikTok Inc. (California), TikTok PTE Limited (Singapore), Bytedance Ltd. (Cayman Islands), Beijng Bytedance Technology Co. Ltd. (China) and TikTok Ltd. (also Cayman Islands). The claim is, in essence, that these entities are responsible for the violation of fundamental rights of children and adults. The way in which the personal data of TikTok users is processed and shared with third parties violates the GDPR as well as the Dutch Telecommunications Act and Media Act. It is also claimed that TikTok’s terms and conditions violate the Unfair Contract Terms Directive (UCTD – 93/13/EEC) and the relevant provisions of the Dutch Civil Code.

International jurisdiction of the Amsterdam District Court

 The first stage of the proceedings, leading up to this interim judgment, deals with the international jurisdiction of the District Court of Amsterdam, as the TikTok entities challenge its international jurisdiction. TikTok requested the Court to refer preliminary questions to the CJEU but the Court refused this request, stating that the questions on (a) how the GDPR and Brussels I-bis Regulation regimes interact and (b) the applicability of Article 79(2) GDPR were deemed resolved.

Relevant jurisdiction rules

Considering the domicile of the defendant(s) and the alleged violation of the GDPR, both EU and Dutch domestic jurisdiction rules come into the picture. TikTok alleges that the Dutch courts do not have jurisdiction over this case under Article 79(2) GDPR. Moreover, TikTok alleges that, since Article 79(2) GDPR is a lex specialis in relation to the Brussels I-bis Regulation, the latter cannot be applied to override the jurisdictional rules set out in the GDPR. The three representative organisations argue that the Dutch courts have jurisdiction under both EU private international law rules and the Dutch Code of Civil Procedure (DCCP). Before delving into how the District Court of Amsterdam construed the interaction between the legislations concerned, we will describe the applicable rules on international jurisdiction for privacy violations. The alleged violations occurred, or the claims relate to violations occurring, after 25 May 2018, that is, after the entry into force of the GDPR. TikTok Ireland is a data controller subject to the GDPR. Under Article 79(2) GDPR the “data subjects” (those whose rights are protected by the GDPR) shall bring an action for the violation of their rights in either the courts of the Member State in which the data controller or processor is established or of the Member State in which the data subject has its habitual residence. Furthermore, Article 80(1) GDPR provides for the possibility of data subjects to mandate a representative body which has been properly constituted under the law of that Member State, has statutory objectives which are in the public interest, and is active in the field of the protection of data subjects’ rights and freedoms to file actions on their behalf under Article 79 GDPR.

The case also deals with non-GDPR-related claims, which triggers the application of the Brussels I-bis Regulation, at least as far as the entities domiciled in the EU are concerned. Article 7(1)(a) Brussels I-bis states that, for contractual matters, jurisdiction is vested in the Member State in which the contract is to be performed. More importantly for this case, with regards to torts, Article 7(2) provides jurisdiction for the courts of the place where the harmful event occurred or may occur. Finally, in relation to the TikTok entities that are not domiciled in the EU, the international jurisdiction rules of the Dutch Code of Civil Procedure (Articles 1-14 DCCP) apply. This is the case regarding both GDPR and non-GDPR-related claims. These Dutch rules are largely based on those of the Brussels I-bis Regulation and also include a rule on multiple defendants in Article 7 DCCP.

The claims against TikTok Ireland

The Amsterdam District Court starts its reasoning by addressing whether it has jurisdiction over TikTok Technology Limited, domiciled in Ireland, the entity that is sued by all three representative organisations. The Court states that Article 80(1) GDPR does not distinguish between substantive and procedural rights in granting the possibility for data subjects to mandate a representative body to file actions on their behalf under Article 79 GDPR. Therefore, actions brought under Article 80(1) GDPR can rely on the jurisdictional rule set out in Article 79(2) GDPR which allows for the bringing of actions before the courts of the Member State in which the data subject has its habitual residence. The Court further reasons that the word ‘choice’ enshrined in Recital 145 GDPR, when mentioning actions for redress, allows for the interpretation that it is up to the data subject to decide where she prefers to file her claim.  In the case at hand, since the data subjects concerned reside in the Netherlands, they can mandate a representative body to file claims before the Dutch courts.

As to the non-GDPR-related claims and GDPR violations that also qualify as tortious conduct, the District Court considered first whether the case concerned contractual matters, to decide whether Article 7(1) or Article 7(2) Brussels I-bis Regulation applies. For this purpose, the District Court relied on the rule established by the CJEU in Wikingerhof v. Booking.com (Case C-59/19, ECLI:EU:C:2020:95), according to which a claim comes under Article 7(2) when contractual terms as such and their interpretation are not at stake, but rather the application of legal rules triggered by the commercial practices concerned – or, in other words, contractual “interpretation being necessary, at most, in order to establish that those practices actually occur”. Given that, in this case, the question is whether TikTok’s terms and conditions are abusive under both the UCTD and the DCC, the claim was deemed to fall under Article 7(2) Brussels I-bis Regulation.

Next, the District Court assesses whether the criteria for establishing jurisdiction under Article 7(2) are met. For this purpose it refers to the CJEU ruling in eDate Advertising and Others (Case C-509/09, ECLI:EU:C:2011:685). In this case the CJEU ruled that, when it comes to “publication of information on the internet” that triggers an “adverse effect on personality rights”, the habitual residence of the victim being his centre of interests can be regarded as the place in which the damage occurred. The District Court rightfully ruled that since the rights of TikTok users that have their habitual residence in the Netherlands had been violated through online means, the Netherlands can be regarded as the place in which the damage occurred.

The Court confronts TikTok’s argument that, since Article 79(2) GDPR is a lex specialis in relation to the Brussels I-bis Regulation, the latter cannot be applied to override the jurisdictional rules set out in the GDPR. As per the Court, the rules on conflict of jurisdiction established by the Brussels I-bis Regulation are general in nature and, as such, cannot be derogated from other than by explicit rules. Hence, the Court interprets Recital 147 GDPR – which states that the application of the Brussels I-bis Regulation should be without prejudice to the application of the GDPR – as being unable to strip away the applicability of the Brussels I-bis Regulation. In the Court’s understanding, Recital 147 GDPR points to the complementarity of the GDPR in relation to the Brussels I-bis Regulation, and both regimes coexist without hierarchy. Therefore, according to the Court, the GDPR is not a lex specialis in relation to the Brussels I-bis Regulation. Furthermore, the Court notes that, under Article 67 Brussels I-bis Regulation, its regime is without prejudice to specific jurisdictional rules contained in EU legislation on specific matters. While the relationship between the jurisdiction rules of the GDPR and the Brussels I-bis Regulation is not wholly undisputed, in the present case the provisions do not contradict each other, while at the same time in this case also non-GDPR issues are at stake.

The claims against non-EU based TikTok entities

Having established international jurisdiction in the case against TikTok Ireland, the Amsterdam District Court rules on its international jurisdiction in relation to the other TikTok entities sued by two of the foundations. As no EU rules or international convention applies, the Dutch jurisdiction rules laid down in Articles 1-14 DCCP apply. Article 7(1) DCCP contains a rule for multiple defendants and connected claims similar to that in Article 8(1) Brussels I-bis. The Court considers that both legal and factual aspects are closely intertwined in this case. The claims concern several different services, not only the processing of data, and all defendants are involved in the provision of these services. The claims are therefore so closely connected that it is expedient that they are dealt with in the same proceedings.

Outlook

TikTok attempted to appeal this interim judgment on international jurisdiction. Under Article 337(2) DCCP, it is at the court’s discretion to grant leave to appeal interim decisions when the appeal is not filed against the final judgment at the same time. In this case, the Court did not find sufficient reasons to allow for such appeal. The case will now proceed on other preliminary matters, including the admissibility of the claim under the WAMCA, and (if admissible) the appointment of the exclusive representative. For this purpose, at the end of its judgment the Court orders parties to provide security as to the financing of the case, which requires submitting to the Court a finance agreement with the third-party financer. After that, assuming that no settlement will be reached, the case will proceed on the merits. It may well be that either of the parties will appeal the final judgment, and that on that occasion TikTok will raise the jurisdictional question again.

To be continued.