Flux européens

In Fernandes v. Wal-Mart Canada  2017 MBCA 96 the Court of Appeal of Manitoba offers great material for comparative conflict of laws. I will leave the Canadian analysis to the experts, in particular Chloe Snider who alerted me to the case. Suffice to say here that the gist of the ruling is that where a corporation carries on business in the territory (here: Wal MArt operating stores), this suffices to establish jurisdiction (here: re an employment issue): no ‘real and substantive connection’ test needs to be separately established. (Cue comparative litigation: compare with ‘domicile’ and extended notions of domicile in EU conflicts law).

The action was eventually still stayed on forum non conveniens grounds in favour of Ontario (extra cue for comparative review here: for this was so held despite the fact that the Ontario limitation period had probably expired).

Geert.

 

Aspen Underwriting v Kairos Shipping et al [2017] EWHC 1904 illustrates the splintering of claims which may well occur when plaintiff chooses to ignore Brussels I’s core jurisdictional rule of domicile of the defendant. Evidently such splintering often is the strategic intention of a plaintiff and even if it does inconvenience them, having part of the claims settled by one court rather than another may still be its overall preference. The case however also highlights important crossed wires between the common law and EU law on the qualification of ‘tort’, and the relation between Rome II and Brussels I (Recast).

The vessel ATLANTIK CONFIDENCE  sank in the Gulf of Aden in 2013. It had earlier been held in a limitation Action commenced by her Owners, the First Defendant, that the Vessel was deliberately sunk by the master and chief engineer at the request of Mr. Agaoglu, the alter ego of the Owners. In the current action the Hull Underwriters of the Vessel, who paid out on the hull and machinery policy (“the Policy”) in August 2013 but who now consider, on further investigation, that the Vessel was deliberately cast away by her Owners, claim recovery of the insurance proceeds which were paid to Owners and the Vessel’s mortgagees, Credit Europe Bank NV, the Third Defendant (“the Bank”).

The Bank is domiciled in the Netherlands. and maintains that under the Brussels Regulation this court has no jurisdiction to hear and determine the claim against the Bank. It must be sued in the courts of the Netherlands where it is domiciled. The Hull Underwriters maintain that this court has such jurisdiction for three reasons. First, it is said that Bank is bound by a Settlement Agreement which confers exclusive jurisdiction on this court. Second, it is said that the Bank is bound by the exclusive jurisdiction clause in the Policy. Third, it is said that the claims brought against the Bank are matters which relate to tort, delict or quasi-delict and the harmful event occurred in England. This is the judgment of the court upon the Bank’s challenge to the jurisdiction.

Teare J rejected the first and second argument on the basis of analysis of the settlement. He then looks into Article 7(2) Brussels I Recast. The insurance heading of the Regulation does not apply as the relations concern those between two professional parties (at 72 the High Court refers to C-347/08 Voralberger; the CJEU confirmed later in C-521/14 Sovag).

Whether the claim of misrepresentation leading to the settlement, is one in tort or one in contract depends on how closely one finds it to be connected to the contract at issue (the Settlement). Plaintiff suggests that where such misrepresentations induce a contract, in this case the Settlement Agreement, the resulting claims are not matters relating to tort within the autonomous meaning of Article 7(2) but are matters relating to a contract within Article 7(1).

Teare J settles on the basis of the following convincing argument, at 76: ‘The court is concerned with a claim between the Hull Underwriters and the Bank. The Hull Underwriters allege that misrepresentations made by the Bank induced the Hull Underwriters to enter into the Settlement Agreement with the Owners. They seek to recover damages suffered by the Hull Underwriters as a result of the Bank’s misrepresentations. Whilst there is a factual connection between the claim and the Settlement Agreement I do not consider that that is enough to make the claim a matter relating to a contract and so within Article 7(1). Where there is a claim against the contracting party and it is alleged that the contract should be rescinded on the grounds of misrepresentations made by that party because such misrepresentations induced the contract it can sensibly be said that the subject-matter of the claim is the contract. But in the case of the claim against the Bank I do not consider that it can be fairly said that the subject-matter of the claim is the Settlement Agreement.‘

Oddly no reference here is made to relevant CJEU precedent including recently Granarolo and Kareda.

Now, the claim for damages based upon misrepresentation can be brought in England so long as the “harmful event” occurred in England (at 79; with reference to Bier /Mines de Potasse split into locus delicti commissi and locus damni). Jurisdiction for the claim based on misrepresentation can be brought fully in England because (at 79) ‘either the damage occurred in England (where Norton Rose Fulbright signed the Settlement Agreement and/or where the $22m. was paid to Willis’ bank account in London) or the event giving rise to the damage occurred in London (being the place where the misrepresentations were made and/or the place where the Hull Underwriters were induced).’

At 78 the High Court highlights the difficulty of the qualification viz conflict of laws of restitution based on unjust enrichment. The common law has the precedent of the House of Lords in Kleinwort Benson v Glasgow [1999] 1 AC 153.  Teare J summarises ‘In that case Lord Goff, with whom the other members of the court agreed on this point, said that a claim in restitution based upon unjust enrichment does not, save in exceptional circumstance, presuppose a harmful event and so is impossible to reconcile with the words of Article 7(2). He was not deterred from reaching this conclusion by the decision in Kalfelis. The claim for restitution in this case is based upon a mistake; it does not require a harmful event, though there might in fact be one as suggested by [plaintiff]. I consider that I am bound to follow the decision of the House of Lords and to hold that the claim in restitution based upon mistake is not within Article 7(2). It must follow that this court has no jurisdiction over that claim and that if it is to be pursued it must be pursued in the Netherlands where the Bank is domiciled.‘

The claim for unjust enrichment cannot be brought in England. Teare J observes the consequence of the Brussels I Regulation (at 80): ‘On case management grounds it is unsatisfactory to reach the conclusion that the tort claim may be brought in England but that the restitution claim may not be brought in England. However, this is the consequence of the Brussels Regulation as was accepted in Kalfelis. Of course, the entirety of the Hull Underwriters’ case against the Bank could be brought in the Netherlands but in circumstances where the Hull Underwriters’ case against the Owners and Managers is being brought in England that also is not satisfactory. The court cannot however base its jurisdictional decisions when applying the Brussels Regulation on considerations of forum conveniens.’

Of note finally is that Kleinwort Benson was issued post Kalfelis but prior to Rome II, which contains a specific heading on unjust enrichment. Notwithstanding its clear non-contractual nature (‘non-contractual’ being the generic title of Rome II which therefore encompasses more than just torts), it is not generally considered a tort: this continues to create issues in the application of Rome II.

A good case to illustrate the lasting challenges in distinguishing contracts from torts.

Geert.

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

Thank you Ben Zielinski for flagging Bank Leumi (UK) Plc v Screw Conveyor Ltd [2017] CSOH 129. I believe Ben is right in writing that this is the first formal acknowledgement that Scottish judicial authorities have no insolvency business in respect of an English registered company, and the same applies to English courts and Scottish companies,  in spite of the EU’s Insolvency Regulation.

Even if a company carries out its main activities in Scotland, internal UK jurisdictional rules will assign insolvency jurisdiction to the English judicial authorities. That is a result of, as Lord Doherty writes, the Insolvency Regulations designating the ‘Member State the courts of which may open insolvency proceedings’ however ‘territorial jurisdiction within that Member State is established by the Member State’s national law’ (at 9).

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.

The English Bridge Union
Fiscalité TVA
Le bridge en duplicate ne relève pas de la notion de « sport » au sens de la directive TVA et ne peut donc pas être exonéré en tant que tel

When I reviewed Kokott AG’s Opinion in C-106/16 Polbud, I flagged that Ms Kokott concluded that the freedom of establishment provided for in Articles 49 and 54 TFEU only applies to an operation whereby a company incorporated under the law of one Member State transfers its statutory seat to another Member State with the aim of converting itself into a company governed by the law of the latter Member State, in so far as that company actually establishes itself in the other Member State, or intends to do so, for the purpose of pursuing genuine economic activity there. In other words she proposed a test along the lines suggested by Darmon AG in Daily Mail, but rejected by La Pergola AG in Centros.

The CJEU today held along La Pergola lines. It thus indeed facilitates forum /applicable (lex societatis) shopping for companies. The writing was very clearly on the wall when the Court (in Grand Chamber nota bene) started citing the old chestnuts of Daily Mail, Centros and Inspire Art. That no business is actually being conducted by Polbud in the host Member State is viewed by the court as irrelevant (at 37 ff). In the absence of harmonisation of EU law, the definition of the connecting factor that determines the national law applicable to a company or firm falls, in accordance with Article 54 TFEU, within the powers of each Member State (at 34).

Freedom of establishment is applicable (third question);  that freedom has been restricted (first question); and that restriction (transfer of the registered office of a company incorporated under the law of one Member State to the territory of another Member State, for the purposes of its conversion into a company incorporated under the law of the latter Member State, in accordance with the conditions imposed by the legislation of that Member State, is subject to the liquidation of the first company) is not justifiable (second question).

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 7.

POLBUD - WYKONAWSTWO
Libre prestation des services
Les États membres ne peuvent pas imposer une obligation de liquidation aux sociétés qui souhaitent transférer leur siège statutaire dans un autre État membre

Shiri
Espace de liberté, sécurité et justice
Un demandeur de protection internationale peut se prévaloir, devant une juridiction, de l’expiration du délai prévu pour son renvoi vers un autre État membre

Thank you Peter Smith over at Tamimi for flagging [2017] DIFC ARB 003 Pearl v Kurdistan. Peter summarises as follows:

‘In 2007, Crescent Petroleum, the oldest privately-owned oil and gas company in the Middle East, agreed with Dana Gas, one the leading publicly-listed natural gas companies in the region, to create a joint venture called Pearl Petroleum (together, “the Consortium”). The Consortium entered into an agreement with the Kurdistan Regional Government (“KRG”) for the development of the Khor Mor and Chemchemal petrochemical fields in the Kurdistan region of Iraq. The KRG were and remain engaged in a political dispute with the Federal Government of Iraq, meaning that the Consortium were unable to export gas produced by the developed fields. As a result, the KRG became liable under its contract with the Consortium to pay a minimum guaranteed price, but it failed to make the required payments in full.’

Arbitration in London under LCIA rules ensued. The contract between the Consortium and the KRG was governed by English law and provided explicitly that “the KRG waives on its own behalf and that of [The Kurdistan Region of Iraq] any claim to immunity for itself and its assets”.

Cooke J held that whilst the UAE’s recognition of other states was a matter of foreign policy which the DIFC Courts could not rule on, construing the KRG’s waiver of immunity was a question of law and not public policy. In agreeing to arbitrate, a party agrees that the arbitration shall be effective in determining the rights of the parties (at 26). The waiver of any claim to immunity for itself and its assets must mean waiver of immunity from execution (at 28): any argument on that is blocked by issue estoppel (at 36).

Sovereign immunity therefore was not a trump which could be played at the time of enforcement: whatever immunity there might or might not have been had been contractually signed away.

An interesting and well argued judgment.

Geert.

MP
Espace de liberté, sécurité et justice
Selon l’avocat général Bot, l’inexistence de traitements psychologiques appropriés dans le pays d’origine d’une personne qui y a été torturée par le passé ne suffit pas pour que cette personne puisse revendiquer la protection subsidiaire

B
Citoyenneté européenne
Selon l’avocat général Szpunar, l’acquisition d’un droit de séjour permanent est une condition préalable pour qu’un citoyen de l’Union puisse bénéficier de la protection renforcée contre l’éloignement

In [2017] EWHC 2401 (Comm) Team Y&R v Ghossoub, Laurence Rabinowitz QC discussed a number of issues, most particularly anti-suit in the context of an exclusive jurisdictional clause (anti-suit not granted). He summarised the applications as follows:

‘The first application, brought by the claimants to the anti-suit claim, is for an interim injunction seeking to restrain Mr Ghossoub, the defendant to those proceedings, from pursuing related proceedings commenced by him in Hong Kong against four of those claimants until the trial of the anti-suit claim. The second application, brought by Mr Ghossoub as defendant to the anti-suit claim, seeks to set aside two orders made by the Court related to service on him of the anti-suit claim. The first, made by Phillips J dated 20 May 2015, granted permission to serve the anti-suit claim out of the jurisdiction. The second, made by HHJ Waksman QC sitting as a High Court judge dated 8 September 2016, granted permission to serve the claim form and other documents by an alternative method of service. The third application, brought by Mr Ghossoub as defendant to the defaulting shareholder claim, in effect mirrors his application in the anti-suit claim to set aside the service out and service by an alternative method orders.’

Anti-suit would be aimed at courts ex-EU hence the Brussels I antimony against them (per Gasser, among others) does not apply. Incidentally, I do not think that necessarily needs to exclude any EU /CJEU grip on the substantive issue at all: in the current, Recast Regulation, neither party needs to be domiciled in the EU for choice of court to be made in favour of a court established in the EU. This does create an EU interest in the issue of third-party impact of choice of court, and consequently on the use of anti-suit to support or reject such impact.

Now, at para 78 ff Mr Rabinowitz considers the issue of third parties. Not at issue is whether choice of court is binding upon, or may be invoked by such parties (in EU law considered eg in Refcomp, Profit Sim, Assens Havn, Leventis). Rather, whether an exclusive jurisdiction clause should be understood to oblige a contractual party to bring claims relating to the contract in the chosen forum even if the claim is one against a non-contracting party. This would support the idea of ‘one-stop shopping’ which is prevalent eg in English law albeit mostly vis-a-vis the various litigious relations between two and the same parties.

One can see merit in obliging parties bound by choice of court, to bring all related claims to one and the same court. Except of course, as Mr Rabinowitz points out, third parties are quite likely to be in a position to be able to bring the case before a different court, thus putting the contractual party at a disadvantage; moreover, even if the contractual party does bring the claim to the courts at England, these may not in fact have jurisdiction: in such circumstances, insisting on third-party proceedings to be brought before the English courts becomes silly. (My words, not Mr Rabinowitz’).

Taking these and also the entire contractual context into account, the High Court holds that choice of court in the contract at issue does not extend to claims against non-contracting third parties, and dismisses anti-suit.

Take your time to read the judgment: it gives very good context to what to some might seem like a very awkward starting point.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.

 

I reviewed the High Court’s decision in Lungowe here. The Court of Appeal has now confirmed jurisdiction against the non-UK based defendants on largely the same, if slightly more structured and expanded arguments as the High Court.  (Per Owusu, jurisdiction against the UK-based defendant is undeniable; the non-UK defendants need to be joined on the basis of residual English conflicts law).

Ekaterina Aristova has analysis of Simon LJ’s leading judgment here – I am happy to refer. Of particular note is the much more reserved approach of the Court of Appeal on the merits issue of the claim. As I noted in my review of Okpabi v Shell at the High Court, in that case Fraser J looked in serious detail into the issue of merits: not, I believe, justified at the jurisdictional stage. Appeal against Fraser J’s finding will be heard by the Court of Appeal.

Geert.

European private international law, second ed. 2016, Chapter 8, Headings 8.3.1.1., 8.3.2

Yanukovych / Conseil
Relations extérieures
La Cour confirme le gel de fonds de M. Viktor Yanukovych, ancien président de l’Ukraine, et de son fils Oleksandr pour la période allant du 6 mars 2015 au 6 mars 2016

Istanbul Lojistik
Transport
La taxe hongroise sur les véhicules automobiles n’est pas compatible avec l’accord d’association CEE-Turquie

When the ‘Bolkestein’ Directive on the free movement of services was eventually adopted some years back, some of us referred to it as the ‘hairdressers’ Directive (no disrespect): the scope of application was so narrowed down that few professions seemed still to be covered by it. Similarly, the EU’s Succession Regulation Member States wanted to ensure that the recognition and enforcement of rules on succession /estate would not upset national property law on rules held dear, such as numerus clausus. The Regulation to that effect excludes from its scope of application ‘the nature of rights in rem; and any recording in a register of rights in immoveable or moveable property, including the legal requirements for such recording, and the effects of recording or failing to record such rights in a register.’

In C-218/16 Kubicka the Court of Justice held last week. Ms Kubicka wishes to include in her will a legacy ‘by vindication’, which is allowed by Polish law, in favour of her husband, concerning her share of ownership of the jointly-owned immovable property in Frankfurt an der Oder. She wishes to leave the remainder of the assets that comprise her estate in accordance with the statutory order of inheritance, whereby her husband and children would inherit it in equal shares.  She expressly ruled out recourse to an ordinary legacy (legacy ‘by damnation’), as provided for by Article 968 of the Civil Code, since such a legacy would entail difficulties in relation to the representation of her minor children, who will inherit, as well as additional costs. A notary’s assistant refused to draw up a will containing the legacy ‘by vindication’ stipulated by Aleksandra Kubicka on the ground that creation of a will containing such a legacy is contrary to German legislation and case-law relating to rights in rem and land registration.

In the present case, both the legacy ‘by vindication’, provided for by Polish law and the legacy ‘by damnation’, provided for by German law, constitute methods of transfer of ownership of an asset, namely a right in rem that is recognised in both of the legal systems concerned. Therefore, the direct transfer of a property right by means of a legacy ‘by vindication’ concerns only the arrangement by which that right in rem is transferred at the time of the testator’s death. It is not covered by the exception.

Member States and practitioners who suggested an interpretation of the exception beyond its limited scope, were therefore rebuffed. That is a good thing. Property law often for no apparent reason is considered immune from conflict of laws, both in terms of jurisdiction and applicable law. The CJEU’s judgment in Kubicka puts a hold to too wide an interpretation of the rei sitae exception.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 6, Heading 6.2.2.1.

Une réglementation qui prévoit, en tant que critère d’admission à l’école de police, une taille physique minimale indépendamment du sexe peut constituer une discrimination illicite envers les femmes
Une réglementation qui prévoit, en tant que critère d’admission à l’école de police, une taille physique minimale indépendamment du sexe peut constituer une discrimination illicite envers les femmes

Susan Finder has an absolutely indispensable post on two recent initiatives over at the Chinese Supreme Court.

Firstly, the Supreme People’s Court is working on a judicial interpretation of the rules on recognition and enforcement of civil and commercial judgments. This follows the first such recognition from a judgment originating in the United States, Liu Li v. Tao Li and Tong Wu (2015) Yue Wuhan Zhong Min Shang Wai Chu Zi No.00026 – see professor Clarke’s review here. The recent conference at Wuhan which I reported on at my Twitter feed, shows the intensity of engagement of China with the Hague Judgments project.

Next, the SPC is engaging with a multitude of stakeholders to consider setting-up specialist mediation centres, with the examples of Dubai’s DIFC and Singapore’s ICC in mind, to smoothen the participation of foreign governments and companies in China’s Belt and Road initiative. Susan has great review of the implications of same.

Don’t forget to look to the East: Exciting stuff happening there.

Geert.

 

I reported on Sharpston AG’s Opinion in C-413/15 Farrell just before the summer break. The case considers the C-188/89 Foster criteria on what constitutes an ’emanation from the state’, for Directives to potentially have direct effect in individuals’ relations with that body. The CJEU held last week, in Grand Chamber, and decided the criteria apply disjunctively, not conjunctively. It is sufficient that the private body concerned have special powers beyond those which result from the normal rules applicable to relations between individuals; it need not, additionally, be a body under control of the State.

The Irish legislature conferred on the MIBI (Motor Insurance Bureau of Ireland) special powers beyond those which result from the normal rules applicable to relations between individuals, in that, on the basis of that statutory provision, that private organisation has the power to require all those insurers to become members of it and to contribute funds for the performance of the task conferred on it by the Irish State.

A further and important piece in the jigsaw that is direct effect. Next up no doubt: what exactly are the boundaries of ‘special powers’. Conflicts lawyers may recognise some of the discussions surrounding ‘civil and commercial’.

Geert.

 

Thank you Jeffrey Neuburger for flagging Wiseley v Amazon. Jeffrey has excellent overview and analysis so I will suffice with identifying a few tags: the issue of click-wrap agreements (when does one agree to GTCs contained in pop-ups and hyperlinks and the like); application of a putable law to a contract (the von Munchausen or ‘bootstrap’ principle); comparative dispute resolution law: how would EU law look at the issues? Have fun.

Geert.

 

I do not habitually report on the week ahead at the CJEU. I do frequently tweet and Link one specific cases where a Hearing or Opinion AG is planned. This week however offers a great tableau of core issues of EU law: one could hinge an entire course simply on the cases this week: thank you Stefaan Van der Jeught for collating:

C-409/16 Kalliri considers minimum height requirements for police officers: acceptable discrimination? (Judgment WED). C-65/16 Istanbul Lojistik: Hungarian toll on HGVs in transit: compatible with the EU-Turkey Association Agreement? (Judgment Thurs). C-383/16 Vion Livestock: Which rules for transport of life animals ex-EU (also judgment Thurs; one or two recent precedents here). C-522/16 A is particularly intriguing and relevant: can a company with constant exposure to customs law, hide behind (and escape additional duties) its having obtained the green (tax and customs law) light from customs law experts, when a corporate structure turns out to be questionable? This judgment (also due on Thursday) may have considerable relevance for EU law generally, and corporate due diligence in compliance. Also for Thursday: C-281/16 Vereniging Hoekschewaards Landschap, on the classification of a habitat site and finally C-598/16 P Yanukovych, Ukraine’s former president who opposes the freezing of his assets in the EU.

Have a good week! Geert.