Flux européens

I have reported before on the relevance of lex curia /curial law and other lex causae decisions to be made in the arbitration context. I have also reported on the qualification of ‘international‘ for conflict of law /private international law purposes. And finally of course privity of choice of court and -law is no stranger in my postings either. All these considerations apply in the arbitration context, too.

Thank you Herbert Smith for flagging CS(COMM) 447/2017 GMR Energy, in which all these issues featured in the arbitration context. The judgment would not seem to add anything new (mostly applying precedent) however it is a usual reminder of the principles. As reported by HS (and with further factual background there), GMR Energy argued

• on the plain reading of the arbitration clauses, Singapore was not the seat of arbitration but only the chosen place or venue for hearings; Not so, the High Court found: reference to SIAC rules and to Singapore  points to Singapore as the curial seat;
• the parties being Indian, choice of a foreign seat for arbitration would be in contravention of Section 28 of the Indian Contract Act 1872 which provides that agreements which restrain parties’ rights to commence legal proceedings are void (save for those which do so by way of an arbitration agreement) – GMR Energy contended that an agreement between Indian parties to arbitrate offshore would fall foul of this provision. This, too, the High Court rejected: per precedent, offshore arbitration is compatible with the Act. (It is also particularly useful for Indian subsidiaries of foreign companies); and
• for two Indian parties to choose an overseas seat for their arbitration (thereby disapplying Part I of the Arbitration Act) would amount to a derogation from Indian substantive law, and therefore would not be permissible. This, the High Court ruled, is not a decision to make at the stage of jurisdictional disputes between the parties.

Further, on  the issue of privity, Doosan India ‘contended that GMR Energy should be party to the SIAC Arbitration proceedings by virtue of common family ownership and governance, lack of corporate formalities between the companies, common directorships, logos and letterheads, and GMR Energy’s past conduct in making payments towards GCEL’s debts’ (I am quoting HS’s briefing here). This is referred to as the alter ego doctrine and the High Court upheld it. Liability for affiliated undertakings’ actions is to be discussed on the merits (here: by the arbitral tribunal). But a the level of jurisdiction (including reference to arbitration), Doosan India’s arguments were upheld: the common ownership between the entities; the non-observance of separate corporate formalities and co-mingling of corporate funds; and GMR Energy’s undertaking to discharge liabilities of GCEL (and the fact that it had made part payments towards the same) all conspire to the conclusion that GMR Energy is bound by the arbitration agreement.

An interesting confirmation of precedent and ditto application of the alter ego doctrine.

Geert.

 

López Pastuzano
Espace de liberté, sécurité et justice
Une décision d’éloignement ne peut pas être adoptée à l’encontre d’un ressortissant d’un État non UE, résident de longue durée, pour le seul motif qu’il a été condamné à une peine privative de liberté supérieure à un an

Coca-Cola / EUIPO - Mitico (Master)
Propriété intellectuelle et industrielle
Coca-Cola peut s’opposer à l’enregistrement du signe « Master » qui utilise la même écriture que la sienne pour la commercialisation de boissons et de produits alimentaires

Thank you Bob Wessels for again alerting us timely to two recent decisions by the Dutch courts, applying the Insolvency Regulation 2015, on the determination of COMI – Centre of Main Interests. Bob’s review is excellent per usual hence I am happy to refer for complete background. In short, the decisions are

• in Powerstorm: textbook applications on the public expression (hence ascertainability by third parties, to use the CJEU’s phrase of words) of COMI, which third parties have to rely on. Here: to displace the presumption of COMI in the United States (place of incorporation; in re Powerstorm) in favour of Amsterdam.
• in Bezuijen BV against X, a natural person: with extensive reference to the recitals of the EIR 2015, that the Dutch courts have to consider jurisdiction proprio motu, evidently, and that they need serious evidence to uphold jurisdiction against a natural person who, both parties agree, no longer has his residence in The Netherlands (where it is, is in dispute but it is probably somewhere in the vicinity of Paris).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.

Coty Germany
Concurrence
Un fournisseur de produits de luxe peut interdire à ses distributeurs agréés de vendre les produits sur une plate-forme Internet tierce telle qu’Amazon

At the end of October the Rechtbank Amsterdam held that ‘booze bikes’ can be kept from parts of Amsterdam. The municipality had resorted to the ban both to address congestion (the bikes are slow and chunky; the roads in the part of Amsterdam concerned, narrow) and rowdiness (the bikes are often used for stag parties and let’s just say that the ‘bike’ part of the trip is not the one that attracts its users). In my experience (from a resident’s point of view) these bikes are a bit like Brexit: attractive for five minutes to some; a right nuisance for the remainder of the journey.

In 2009 I wrote a short piece reflecting on use restrictions from an EU point of view. In it I refer ia to C-142/05 Mickelsson and to C-110/05 Commission v Italy (motorcyle trailers) – my analysis and that of Peter Oliver may be applied here mutatis mutandis. The degree to which lawfully marketed products may be restricted in their use has so far not entertained the Court of Justice in great numbers. Yet the use of such restrictions is bound to increase, with local authorities in particular imposing restrictions for environmental, public health and other ‘sustainable development’ purposes. Witness e.g. Venice banning wheeled suitcases, historic city centres banning diesel cars etc.

In the booze bike case the Court at Amsterdam (at 2.9) simply said that applicants should have provided detail of their argument as to why the ban might contravene EU law. Expect a second round on similar cases at some point.

Geert.

 

Xiaomi / EUIPO - Apple (MI PAD)
Propriété intellectuelle et industrielle
Apple parvient à faire échec à l’enregistrement de « MI PAD » comme marque de l’Union européenne pour des appareils électroniques et des services de (télé)communication

Others have studied the EU’s legal basis for energy policy much better than I have. Chiefly among them prof Leonie Reins. e.g.  for RECIEL here and in her Phd here. The impact of this discussion is high: since the introduction of an energy Title in the EU Treaties (following Lisbon) whether so designed or not, the prospect of that Title’s requirement on unanimity for measures which ‘have a significant effect on a Member State’s choice between different energy sources’ looms heavily over the EU’s environment policy. The EU’s emissions trading system – ETS is the prime candidate for falling victim to an extensive interpretation of Article 192(2)c TFEU, which harbours the unanimity requirement.

In C-5/16 Poland v EP and Council Mengozzi AG Opined last week. At issue is Poland’s opposition to a MSR – a market stability reserve for the Union greenhouse gas emission trading scheme, essentially a long-term parking for surplus allowances to enable the ETS to safeguard collapse of prices in the event of excess supply. The resulting increase in the price of allowances was inter alia intended to encourage fuel switching and to discourage investments in coal-fired power stations (hence of course Poland’s interest).

Relevant to future reference is especially the AG’s view at 25, which I include in full: ‘as a derogation, Article 192(2)(c) TFEU is to be interpreted strictly, especially since an efficient modern environment policy cannot ignore energy questions. I share the fears expressed by the defendants and the interveners that the applicant’s proposed interpretation of Article 192(2)(c) TFEU and the conclusions which it draws from that interpretation for the examination of the legal basis of the contested decision would effectively block any legislative initiative by recognising a right of veto for Member States, as the Union would adopt measures inviting them only to rationalise their CO2-consuming activities. Furthermore, such an interpretation would doom the ETS to failure as it would prevent the EU legislature from correcting its structural deficiencies. In addition, although I would point out that the goal of introducing the MSR is not to form the price of allowances but simply to ensure the efficiency of the ETS, in any event, an operator’s choice of a certain energy source or production technology cannot depend on that price alone, which does not in itself define the production costs, which are determined by a variety of factors. Even with the introduction of the MSR, the choice of technology still remains in the hands of operators and is not dictated by the European Union.’

I am not sure to what degree the Court’s judgment will enable us to draw criteria with wider impact than just the current case – but it would certainly be helpful. Mengozzi AG firstly emphasises strict interpretation of the ‘energy mix’ exception. Further, in the paras preceeding the aforecited one, links amendments to existing laws largely to the latter’s legal basis. Supports the Institutions and Spain, France and Sweden (intervening; the position of Germany, also intervening, was not made clear) in their warning against veto power in the energy /climate change context; and finally further dilutes the exception by looking at policies as they work in practice, not just in theory. On this point, the AG looks at the ETS specifically however his view has broader appeal: it would essentially mean that when Member States’ and individuals’ /undertakings’ behaviour is determined by regulatory intervention, some of which clearly based on a legal basis other than Article 192(2)c TFEU, the latter is not determinant in deciding proper legal basis.

This is an important case for the future of EU environment and energy policy.

Geert.

 

 

MB
SOPO
Selon l’avocat général Bobek, une disposition nationale qui exige qu’une personne ayant changé de sexe soit célibataire pour pouvoir bénéficier d’une pension de retraite de l’État est illicite

M.A.S. et M.B.
FIN
L’obligation de protéger les intérêts financiers de l’Union européenne doit être conciliée avec le respect du principe de légalité des délits et des peines

In [2017] EWHC 2932 (Fam) Radseresht v Radsheresht-Spain Cohen J is asked to recognise a divorce (and ensuing financial arrangements) granted under Dubai law.

I will not discuss the merits of the case (Justice Cohen does so proficiently, not just to my lay eye but I am assuming also the expert eye; he decides there was an intention to continue to stay married). Rather, the case is an interesting example to show those having to get used to conflict of laws. The High Court has no hesitation to apply Dubai law with all its in and outs (part of the judgment queries whether there were continued sexual relationships between the (ex?) spouses), in a court in London.

Of note is also that the High Court suggests that but for the very late raising of the issue, it could have queried whether the courts at Dubai had jurisdiction in the first place, habitual residence of the parties not having been at the UAE (the suggestion seems to have been made by counsel of the husband that the relevant criterion would have been nationality anyway).

Geert.

 

Liga van Moskeeën en Islamitische Organisaties Provincie Antwerpen e.a.
Agriculture
Selon l’avocat général Nils Wahl, l’exigence selon laquelle les abattages rituels sans étourdissement doivent avoir lieu dans un abattoir agréé n’enfreint pas le droit à la liberté religieuse

Bilde / Parlement
Droit institutionnel
Le Tribunal de l’Union européenne confirme la décision du Parlement européen de recouvrer auprès de l’eurodéputée Dominique Bilde les sommes versées pour l’emploi d’un assistant parlementaire, au motif qu’elle n’a pas démontré l’effectivité du travail de celui-ci

King
Libre circulation des personnes
Un travailleur doit pouvoir reporter et cumuler des droits au congé annuel payé non exercés lorsqu’un employeur ne met pas ce travailleur en mesure d’exercer son droit au congé annuel payé

VCAST
Liberté d'établissement
La mise à disposition de copies de programmes de télévision stockées dans un nuage (cloud) doit être autorisée par le titulaire des droits d’auteur ou des droits voisins

In [2017] EWHC 2928 (Comm) Dana Gas v Deutsche Bank et al., Leggatt J treats his readers to a concise insight into islamic finance (particularly in para 10) which he needs to inform readers of the essence of the case. The operation essentially involves raising investment (with a view to restructuring), organised by the main agreement (of the ‘Mudarabah’ type), subject to UAE law, and supported by a purchase undertaking of the same date, subject to English law. The set-up therefore evidently is not one of dépeçage per se (this would require one and the same agreement being subject to different laws) however it comes close.

Inevitably following unfavourable market conditions, an anti-suit injunction was sought and obtained in the UAE, followed however by English proceedings which required the aint-suit to be lifted – something which Dana Gas did not succeed in as a result of shareholder opposition. The English proceedings were effectively saved from collapse by the involvement of a third party, BlackRock, who as a non-party to the UAE sharia proceedings, were not bound by the anti-suit injunction. The somewhat complicated result is that the English proceedings really can only limp along.

Dana Gas seek confirmation that the transaction is unlawful and all the relevant contractual obligations are unenforceable as a matter of UAE law. Leggatt J with neither emotion nor hesitation refers essentially to Rome I’s universal application: the Mudarabah agreement is subject to UAE law and he is happy to assume it is invalid under UAE law – hence not enforceable by an English court. See in this respect Article 10(1) Rome I.

That however leaves the viability of the purchase undertaking. (at 46) The fact that the contract or its performance would be regarded as invalid or unlawful under the law of some other country than England (for example, a country where one of the parties is domiciled or carries on business) is generally speaking irrelevant (reference is made to Kleinwort, Sons & Co v Ungarische Baumwolle Industrie AG [1939] 2 KB 678.

At 48, Dana Gas sets out its case for unenforceability of the purchase agreement under English law. This includes reference to ordre public but also inevitably an attempt to ‘contaminate’ the purchase agreement with the Mudarabah agreement. Leggatt J justifiably turns this around: at 54: it is apparent from the purchase agreement’s terms that the risks against which the Purchase Undertaking is intended to protect the Certificateholders include the risk that the mudarabah and the transaction documents governed by UAE law will turn out to be invalid. That is why they needed to be separated. (In that respect merging the two agreements into one and applying dépeçage might give even stronger force to this argument: however I do not know whether under UAE law such constriction would be acceptable).

Further arguments swept aside, the Court turns to ordre public: Dana Gas nb employs both ordre public and, earlier Article 9(3) Rome I: overriding mandatory law: a rare treat indeed. Relevant English precedent is Ralli Brothers: Ralli Brothers v Cia Naviera Sota y Aznar [1920] 1 KB 614: an English court will not enforce an obligation which requires a party to do something which is unlawful by the law of the country in which the act has to be done. However Dana Gas later abandoned that claim for (at 80) those rules of law are only applicable if and in so far as the obligations in question have to be performed in the UAE – quod non. A switch was then made to ordre public, now with Foster v Driscoll [1929] 1 KB 470 as leading precedent. However, here too, it is only if a contract has as its object and intention the performance in a friendly foreign country of an act which is illegal under the law of that country that the contract will be considered (at 82 in fine) contrary to English public policy.

Conclusion:  the Purchase Undertaking is valid and enforceable.

Without claiming anything near proper competence in Islamic finance law, it would seem that Dana Gas does not introduce new principles. However in diligently applying conflicts analysis, Leggatt J in my view does practice a great service: he re-emphasises the need for parties clearly to identify locus implementi: the place of performance of an obligation.

Geert.

(Handbook) of Private International Law, 2nd ed. 2016: essentially, almost every section of Chapters 2 and 3.

And I would be very happy to supervise. Thank you Nicolas Contis for flagging  Stockholm National Museum v X at the French Supreme Court /Cour de Cassation. Nul ne peut se contredire au détriment d’autrui: aka (here: procedural) estoppel. (The newly out Encyclopedia of Private international law, edited by Basedow, Ruhl, Ferrari and de Miguel Asensio, has a very good entry on it, discussing both public and private international law).

On the eve of a hearing on the ownership of an ancient artefact, a cup, defendants changed their stance and argued that the cup had belonged to their mother, for whom they were acting as representatives only. Previously, they had always presented themselves as owners. They suggested therefore that the suit was misdirected, hoping to sink it. The Court of Appeal dismissed the defendants’ motion on account of procedural estoppel. The Supreme Court disagreed: its stance means, as Nicolas summarises, that ‘to face the procedural penalty of dismissal, not only must the change of stance happen throughout the judicial proceedings (ie, notably, that a contradiction including a repeated allegation made before the launching of a suit could not pass the estoppel test), but the party at fault must also have changed its ‘pretentions’ – that is, its legal claims (meaning that changing the factual allegations presented to the courts could not pass the test either)’.

I do not see entirely clear in French civil procedure law but as I saw the case reported, the thought struck me: this would be a good topic for a PhD: a comparative study in procedural estoppel, specifically in a private international law context (especially if one were also to throw a comparison with arbitration in the mix).

Happy to discuss. Geert.

 

Rodrigues de Andrade
Rapprochement des législations
Les dommages causés par des véhicules qui ont vocation à être utilisés aussi comme machines de travail ne doivent être couverts par l’assurance obligatoire de la responsabilité civile résultant de la circulation des véhicules que lorsque ceux-ci sont principalement utilisés comme moyens de transport

This is effectively my second posting today on Article 24(2) Brussels I Recast.

In C-560/16 Dědouch, Wathelet AG Opined last week, on the scope of the exclusive jurisdictional rule of (now) Article 24(2) of Regulation 1215/2012. The issue arose in proceedings between Michael Dědouch et al, a group of minority shareholders on the one hand, and Jihočeská plynárenská a.s. (established in the Czech Republic) and E.ON Czech Holding AG (‘E.ON’) [established in Germany] on  the other, concerning the reasonableness of the sum which, in a procedure for removing minority shareholders (‘squeeze-out’), E.ON was required to pay Mr Dědouch et al following the compulsory transfer of their shares in Jihočeská plynárenská.

Mr Dědouch et al are suing both companies and are asking the Regional Court, České Budějovice, Czech Republic to review the reasonableness of the sum. In those proceedings E.ON raised an objection that the Czech courts lacked jurisdiction. E.ON argue that, in view of the location of its seat /domicile, only the German courts had international jurisdiction per (now) Article 4.

The regional court initially accepted jurisdiction on the basis of (now) Article 8(1): the anchor defendant mechanism (one of the two defendant companies being a Czech company). Eventually the High Court, Prague found that the Czech courts had jurisdiction under (old) Article 5(1)(a) of the Brussels I Regulation: the special jurisdictional rules for contracts.

Wathelet AG suggests the case raises the complex issue of litigation in intra-company disputes. At 21 he writes that the facts highlight a structural problem in the Regulation, namely ‘the absence of a basis of jurisdiction dedicated to the resolution of internal disputes within companies, such as disputes between shareholders or between shareholders and directors or between the company and its directors.’ That is not quite correct: it is not because the Regulation has no tailor-made regime for this type of dispute that is has no jurisdictional basis for it. That a subject-matter is not verbatim included in the Regulation does not mean it is not regulated by it.

The AG then (at 23) considers that the issue under consideration is complicated by the difficulty of applying (now) Articles 7(1) and (2), ‘since the removal of the minority shareholders and the consideration decided by a resolution of the general meeting are neither a contract nor a tort, delict or quasi-delict.’ I am not so sure. Is there no ‘obligation freely assumed’ between minority and other shareholders of the same company? Are they not bound by some kind of ‘contract’ (in the broad, Jakob Handte sense) when becoming shareholders of one and the same company? That (at 24) ‘The principle of a procedure for squeezing out the minority shareholders is that the principal shareholder can start it without their consent‘ I do not find convincing in this respect. Plenty of contractual arrangements do not limit contracting parties’ freedom to act: except, their actions may have contractual consequences. The AG in my view focuses too much on the squeeze out being one-sided. An alternative view may see a wrongful deployment of squeeze-out a breach of an earlier contractual, indeed fiduciary duty between /among shareholders.

Unlike the AG (at 26), neither do I see great obstacle in the difficulty in determination of a specific place of performance of such contractual duties between shareholders in the company law context. They may not fit within the default categories of Article 7(1), however I can see many a national judge not finding it impossible to determine a place of performance.

On the basis of these perceived difficulties the AG dismisses application of Articles 7(1) and (2) and then considers, and rejects, a strict application of Article 24(2). In other words in the AG’s view Article 24(2) is engaged here.

This is a tricky call. Justified reference is made by the AG to C‑372/07 Hassett, in which (then) Article 22(2) was held no to apply to a decision made by the Board of the Health Organisation not to indemnify two of their members in cases of medical negligence: this was found by the CJEU to be an action relating to the way in which a company organ exercises its functions – not covered by Article 24(2). In Dědouch, the action relates to the amount which the General Meeting of the company fixed as the compensation E.ON was required to pay the minority shareholders following the transfer of the shares. Notwithstanding Czech company law being the lex causae in assisting the GM in that decision, I am not convinced this engages Article 24(2) (hence reserving jurisdiction to the Czech courts).

In summary, I believe the Court should reject application of Article 24(2), and instruct the national courts to get on with the determination of jurisdiction per Article 7, or indeed 8.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.5, Heading 2.2.11.1, Heading 2.2.12.1.

 

I reported on submission to jurisdiction in the English legal context in re Golden Endurance, and on the issue of the application of (now) Brussel I Recast’s Article 24’s exclusive jurisdictional rules in Dal Al Arkan. In Dennis v TAG Group [2017] EWHC 919 (Ch) the High Court first of all revisits the issue of submission to jurisdiction in the context of injunction proceedings, and also held that permission for service out of jurisdiction is not required since the (now) Article 24 rules apply regardless of domicile of the parties. Clyde & Co have summary of the facts here.

Mr Dennis was the CEO of the England and Wales incorporated McLaren Technology Group Ltd. He claims he has suffered unfair prejudice as a result of suggested Board resolutions to be passed (and now passed) and relies on purported breaches of the Companies Act 2006, articles of association, shareholder agreement and service agreement to support his petition: this arguably engages Article 24(2) of the Brussels I Recast.

Application for injunctive relief sought to restrain Respondents from placing Plaintiff on garden leave and delegating the authority of the board to an interim committee. At issue first is whether Respondents’ engagement with the injunctive proceedings amounted to submission of jurisdiction. Briggs CR held that it so did: language in isolated correspondence reserving rights as to jurisdiction amounts to nothing if parties keep schtum about it when it really matters: at the injunctive hearings and forms relating to same.

Briggs held that even in the alternative, had there not been submission, Article 24 (I assume what is meant is Article 24(2) given the subject of the claim) applies regardless of the domicile of the parties hence submission is irrelevant (and indeed permission for service out of jurisdiction not required  – one assumed to the (insurance) relief of Respindents’ counsel. On that point Dal Arkan had already been confirmed Deutsche Bank AG v Sebastian Holdings Inc & Alexander Vik [2017] EWHC 459 .

A good and attractively concise ruling.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.