Flux européens

Benjamin Hayward, Conflict of Laws and Arbitral Discretion – The Closest Connection Test, Oxford University Press, 2017, ISBN 9780198787440, pp. 408, GBP 125

Arbitration is the dispute resolution method of choice in international commerce, but it rests on a complex legal foundation. In many international commercial contracts, the parties will choose the law governing any future disputes. However, where the parties do not choose a governing law, the prevailing approach in arbitration is to afford arbitrators broad and largely unfettered discretion to choose the law considered most appropriate or most applicable. The uncertainty resulting from this discretion potentially affects the parties’ rights and obligations, the performance of their contract, the presentation of their cases, and negotiations undertaken to settle their disputes. In this text, Dr Benjamin Hayward critically reviews the prevailing approach to the conflict of laws in international commercial arbitration. The text adopts a focused and detail-oriented analysis – being based on a study of more than 130 sets of arbitral laws and rules from around the world, and drawing heavily on arbitral case law. Nevertheless, it remains both practical and accessible, taking as its focus the needs and expectations of commercial parties, who are the ultimate users of international commercial arbitration. This text identifies the difficulties that result from resolving conflicts of laws through broad and unconstrained arbitral discretions. It establishes that a bright-line test would be a preferable way to resolve arbitral conflicts of laws. Specifically, it recommends a modified Art. 4 Rome Convention rule as the ideal basis for law reform in this area of arbitral procedure.

 

 

I reported on AMT V Marzillier at the High Court, failed to flag its overturn in the Court of Appeal (it’s the Easter period: I am in a confessionary mood), and now report swiftly on the Supreme Court confirming the Court of Appeal’s view early April ([2017] UKSC 13).

MMGR is a company incorporated under the laws of Germany and carries on business as a firm of lawyers in Germany. AMTF alleges that MMGR induced its former clients to issue proceedings against it in Germany and to advance causes of action under German law.  AMTF’s clients were referred to it by ‘introducing brokers’; AMTF in turn is referred to as a non-advisory, “execution only”, derivatives broker. AMTF charged its clients commission for its service and paid commission to the introducing brokers. About 70 former clients, who were dissatisfied with the financial results of their transactions, commenced legal proceedings in Germany against both the introducing brokers and AMTF seeking damages under the German law of delict. The claim against the introducing brokers was that they had given bad investment advice or had failed to warn of the risks of the investments. The claim against AMTF was based on a liability which was accessory to that of the brokers: it was alleged that AMTF had encouraged the brokers to behave as they did by paying them commission from the transaction accounts which it operated for its clients and that it owed and had breached a duty in delict (tort) to the clients to prevent any transactions being undertaken contrary to their interests. AMTF challenged the jurisdiction of the German court. Many of the former clients have recovered damages from AMTF by way of settlement.

AMTF argues that the actions in Germany were in breach of the exclusive jurisdiction and applicable law clauses in their contracts with AMTF. It commenced proceedings in the High Court in London against MMGR, based on the tort, in English law, of inducing breach of contract. It seeks both damages and injunctive relief to restrain MMGR from inducing clients to bring further claims in Germany asserting causes of action under German law. AMTF argues that the English courts have jurisdiction over its claim under article 5.3 of the Brussels I Regulation (Article 7(2) in the Brussels I Recast), which gives jurisdiction in tort claims to the courts for the place in which the harmful event occurred or may occur. MMGR challenges the jurisdiction of the English courts to entertain this action.

Popplewell J in the High Court sided with AMTF – I reviewed his judgment in 2014. He decided that the relevant harm which gives rise to jurisdiction under article 5.3 occurred in England as AMTF had in each case been deprived of the benefit of the exclusive jurisdiction clause, which, he held, created a positive obligation on a former client to bring proceedings in England.

Clarke LJ concluded upon Appeal that the English courts did not have jurisdiction as the relevant harm had occurred in Germany. At 57 he wrote ‘I do not reach this conclusion with any great enthusiasm since there is much to be said for the determination of what is in essence an ancillary claim in tort for inducement of breach of contract to be made in the court which the contract breaker agreed should have exclusive jurisdiction in respect of that contract, rather than in the courts of the country where the inducement and breach occurred. But the governing law of the relationship between the former clients and AMTF (which did not have to be that of England & Wales) is not a determining factor in the allocation of jurisdiction under the Regulation.‘ It is not entirely clear what the German courts’ view is on the matter – the unsettled claims were still pending at the time of the Supreme Court’s judgment.

Lord Hodge, after noting the CA’s reluctance, agrees with its conclusion and does so by once again, concisely yet completely, reviewing the CJEU’s case-law on Article 5(3) [7(2)]. For an even more condensed version, see Jake Hardy. At 24: ‘The task for the court is to identify where the relevant harm occurred. That is relatively straightforward in most circumstances, where there is no need for any special rule such as those which the CJEU has developed when it has not been possible readily to identify one place where that harm occurred. It is straightforward in this case.‘ : namely Germany. ‘It is clear that AMTF did not get the benefit of having any dispute with the former clients determined under English law by English courts. But the former clients were under no positive obligation to sue AMTF, which could have no objection if it was not sued.’ (at 25).

Of note is Lord Hoge’s important emphasis (at 29) that the benefits of connecting factors, which justify the ground of jurisdiction, are not in and of themselves connecting factors. Idem for his instruction at 30 that ‘the inconvenience, which the separation of the resolution of the contractual claims against the former clients from the pursuit of the claims against MMGR entails, (does not) carry much weight when one considers the aims of the Judgments Regulation‘: ‘the CJEU has recognised that the scheme of the Judgments Regulation creates the difficulty that one jurisdiction may not be able to deal with all the related points in a dispute (at 32).

Finally reference to the CJEU was refused on the grounds that the issue is acte claire (at 43, with preceding reference to CJEU precedent).

Delightful.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, 2.2.11.2.7).

 

Thank you, Ludo Veuchelen, for alerting me to Adam Liptak’s reporting on Jesner v Arab Bank, in which certiorari was granted by the United States Supreme Court early April. The case may finally have us hear SCOTUS’ view on the question which led to certiorari in Kiobel but was subsequently ignored by the Court: whether corporations can be culpable for violation of public international law. ‘May’ is probably the keyword in the previous sentence.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 8, Heading 8.2.

 

Belgium’s Lernout & Hauspie case recently entered a further stage in its civil law chapter. The case is part of Belgium’s (and especially Flanders’) collective memory as an illustration of what can go wrong when markets and investors alike are fooled by corporate greed. Is it world-famous, in Belgium: for those outside, Wiki should help.

Of interest to this blog is the recent judgment of the Gent criminal court on the civil chapter of the case: see my colleague proximus Stefaan Voet’s analysis here. Stefaan has helpfully translated the most relevant sections of the judgment, in particular the court’s rejection of the argument that the US opt-out class action settlement were contrary to Belgium’s ordre public. The court, in my view entirely justifiably, holds that Belgium’s Private international law act does not oppose recognition and enforcement. Of note is the extensive comparative reference which the court makes not just to existing Belgian law on class actions (the Belgian legal order can hardly oppose what it tentatively has introduced itself), but also to a European Recommendation on comparative class action law in the EU (a sort of Ius Commune idea).

Recognition and enforcement rarely makes it to substantive review in Belgian case-law. This judgment is one of note.

Geert.

It is too readily assumed by many that general Member States’ obligations under the EU’s environmental laws are context only, and not really legally binding. In my Handbook of EU Waste law however I report on a number of cases where the European Court of Justice has rebuked Member States for having failed to take measures to attain some of these general objectives. These cases relate to waste law, evidently, however in other cases the Court’s case-law extends this to EU environmental law generally.

One can now add C-153/16 EC v Slovenia to this list. Slovenia had attempted to address the continuation of waste tyres storage and processing at an abandoned quarry, in contravention of an expired environmental permit. The company dug in its heels, ia via prolonged litigation, with storage and processing continuing.

The Court of Justice found that Slovenia had infringed the general duty of care provisions, as well as enforcement obligations of the landfill Directive and the waste framework Directive. (On the related issues with respect to hazardous waste, the Court found the Commission’s infringement proceedings wanting).

Not all that glitters is gold, of course. The direct effect of these general duty of care provisions remains an issue, as does the absence, arguably, in EU law of a duty of care directly imposed upon waste holders and processors. For that, citisens need to pass via national law wich as current case shows, is not always up to scratch.

Geert.

 

APVE e.a.
Concurrence
Selon l’avocat général Wahl, les organisations de producteurs agricoles et leurs associations peuvent se rendre coupables d’ententes contraires au droit de l’Union

Don’t it always seem to go, you don’t know what you’ve got till it’s gone. Recognition and enforcement intra-EU is now so smooth in civil and commercial matters, the European Commission wanted to abolish potential for refusal altogether in the Brussels I Recast (regular readers are aware I reported on it at the time of negotiation).

Thank you Clyde & Co for alerting me to the case: In [2017] EWHC 519 (Comm) Midtown Acquisitions v Essar Global parties settled their dispute in an agreement, under which the defendant accepted liability and “confessed to judgment”. The New York courts then entered a Judgment by Confession (similar to an English consent judgment). Recognition and enforcement was sought in England.

In the Brussels system, discussion is still possible on the very notion of ‘judgment’ as I have recently reported (see my postings on Pula Parking and Zulfikarpašić). Refusal of recognition is possible on very narrow grounds. Famously, under the Brussels regime, recognition does not require res judicata of the foreign (intra-EU) judgment. (A misleadingly simple statement made in all Reports. But I’ll leave the detail for another time (see eg Gothaer for earlier analysis).

Outside the Brussels regime however (lest the Brexit negotiations yield a continuing bridge between civil procedure in the UK and EU this will also apply to judgment issued by UK courts), discussion on these two points re-emerges: when can a ruling be considered a ‘judgment’, and does it have res judicata? Defendant in Midtown argues that the New York judgment was not a “judgment” as that expression is used in English law because (i) there was no lis between the parties in New York, (ii) the New York judgment was not final and conclusive and (iii) the New York judgment was not on the merits.

Teare J rejected all three arguments on the basis of relevant precedent. The judgment merits reading for it is a good reminder of the extent of argument ensuing when one is not covered by the umbrella of EU or international harmonisation of recognition and enforcement.  Complications which are not likely to assist the London legal market in maintaining its attraction post Brexit.

Geert.

(Handbook of) European Private International Law, Chapter 2, Heading 2.2.16.

EUIPO / Szajner
Propriété intellectuelle et industrielle
La Cour confirme que la société Forge de Laguiole peut s’opposer à l’enregistrement, au niveau de l’Union, de la marque Laguiole dans le domaine, notamment, de la coutellerie et des couverts

Fahimian
Espace de liberté, sécurité et justice
Les autorités nationales peuvent refuser, pour des raisons de sécurité publique, de délivrer à une ressortissante iranienne diplômée d’une université frappée par des mesures restrictives un visa pour études dans un domaine sensible tel que la sécurité des technologies de l’information

Rincon ((2017) 8 Cal. App 5th 1) is another case suited to comparative conflicts classes. It applies California’s restrictive regime on waiver of jury trial to a contract governed by New York law and with choice of court for New York.

‘Lois de police‘, also known as lois d’application immédiate or lois d’application nécessaire,  are included in the EU’s Rome I Regulation (on applicable law for contracts) in Article 9. (I reported earlier on their application in Unamar).

Jason Grinell has background to the case. Parties had made choice of law and choice of court in favour of New York. The link with New York was real (in EU terms: this was not a ‘purely domestic’ situation), inter alia because of the involvement of New York-based banks, parties being sophisticated commercial undertakings, and the contract having been negotiated in NY. However the real estate development is located at San Francisco, giving CAL a strong link to the case. Under CAL law,  parties generally cannot waive a jury trial before the commencement of a lawsuit unless they use one of two methods approved by the legislature. New York law does not have the same provision and choice of court clauses in favour of New York do not include reference to the only options available under CAL law.

In the case at issue, the boilerplate choice of court clause was set aside by the Court of Appeal. The lower court had denied a substantial enough Californian interest in the case – the CA disagreed. The relevant part of the judgment runs until p.22.

That comparative conflicts binder is filling out nicely.

Geert.

 

The House of Commons’ report on ‘negotiating priorities for the justice system’ reviews more than conflict of laws, indeed it is a tour d’horizon of most (if not all) issues relevant to Justice and Home Affairs in the EU. Martha Requejo makes a number of valid points on the report and indeed plenty of these, and others, have been made by a number of conflicts commentators: I will not review all here. There is a scholarly cottage industry on post-Brexit issues and the area of private international law is no exception.

The report mentions among others that a role for the CJEU in respect of essentially procedural legislation concerning jurisdiction, applicable law, and the recognition and enforcement of judgments, is a price worth paying to maintain the effective cross-border tools of justice discussed throughout our earlier recommendations. That is a very sensible approach, not just within the overall context of UK /continent judicial co-operation: it is also an obvious lifeline for London’s legal services market. Without proper integration into the EU’s civil procedure corpus, judgments from UK courts will immediately lose a lot of their appeal. The Government however have manoeuvred itself into a cul-de-sac by rejecting a role for the European Court of Justice post Brexit. The report’s call, and many with it, therefore is likely to fall upon deaf ears. Both for the UK and for EU conflicts rules, this will be a great loss. Few continental courts live up to the same standards as their UK counterparts when it comes to applying the intricate detail of conflict of laws, whether EU based or not.

Geert.

Il Dipartimento di Giurisprudenza dell’Università di Roma Tre ospita una serie di incontri su temi di diritto internazionale privato.

Interverranno: Pietro Franzina (il 10 Aprile 2017, La tutela internazionale dell’adulto vulnerabile), Caroline Adolphsen (2 maggio 2017, Children seeking asylum in Europe: a Scandinavian approach), Francesco Salerno (2 maggio 2017, “Bruxelles I-bis” e titolo esecutivo europeo: l’efficacia delle decisioni straniere nelle discipline uniformi europee), Javier Carrascosa González (8 maggio 2017, Il nome nel diritto internazionale privato e Matrimonio tra persone dello stesso sesso e unioni registrate in Europa), Maria Asunción Cebrián Salvat (8 maggio 2017, Il regime patrimoniale nel matrimonio e nelle unioni registrate), Javier Carrascosa González e Maria Asunción Cebrián Salvat (9 maggio 2017, Il divorzio nel diritto dell’Unione europea: giurisdizione e legge applicabile e Il regolamento dell’Unione europea sulle successioni) e Francesca Pietrangeli (15 maggio 2017, La clausola di individuazione della legge applicabile al contratto).

Gli incontri si collocano nel quadro delle attività della Cattedra di Diritto internazionale della prof.ssa Antonietta Di Blase.

Maggiori informazioni nella locandina reperibile a questo indirizzo.

La finale européenne du concours de la « European Law Moot Court » se tiendra le 31 mars à la Cour de justice de l'Union européenne à Luxembourg

Fidenato e.a.
Environnement et consommateurs AGRI
Selon l’avocat général Bobek, les États membres ne peuvent adopter des mesures d’urgence concernant des denrées alimentaires et des aliments pour animaux génétiquement modifiés que s’ils peuvent établir, outre l’urgence, un risque important et manifeste pour la santé et l’environnement

Closely linked to my post this morning re Chiquita and CSR, here’s a review of the French CSR corporate vigilance /duty of care Act. I had planned to do my own review but hey, why re-invent the wheel when Ms Bergkamp’s is ticking over nicely.
See also a follow up post here http://bit.ly/2ofirlK on the French Constitutional court seeing little issue with the civil liability side of the Act.

Corporate Finance Lab

On 21 February 2017, the French Parliament adopted a law (the “Corporate Duty of Vigilance Law” or “Law”) that creates novel corporate supply chain liability. Specifically, the Corporate Duty of Vigilance Law imposes a duty of vigilance on large companies to prevent serious violations of human rights and fundamental freedoms and serious environmental damage in their supply chain. In a previous post, I discussed the concept of supply chain liability. As I pointed out there, the concept had not been defined by law makers yet. The French legislature has now attempted to operationalize the concept through new legislation.

View original post 1,588 more words

The title of this post is a result of my confusion on the state of various suits against Chiquita, on alleged collusion in or perpetration of human rights abuses in Columbia. I had reported earlier (scroll down to ‘update on linked development’; this hyperlinks to all relevant links) that the US Supreme Court had denied certiorari in a ruling of the 11th U.S. Circuit Court of Appeals in Miami. This left that ruling standing (a strict application of SCOTUS’ view in Kiobel).

End November (I had tweeted it at the time; my ledger has not left me an opportunity to post on it since) the Southern District court of Florida dismissed an application on forum non conveniens grounds in what must be related litigation. Except my limited knowledge of jurisdictional levels in the US leaves me in doubt where the link is between these two developments (US readers please assist if you can).

At any rate, the ruling reviewed here is a textbook example of forum non conveniens (motion dismissed, nota bene) and a great source for a comparative conflicts class. Such as I teach at Monash :-).

Geert.

(Handbook of) European Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.14.5.

Rosneft
Relations extérieures
Les mesures restrictives adoptées par le Conseil dans le cadre de la crise de l’Ukraine à l’encontre de certaines entreprises russes, dont Rosneft, sont valides

Célébration du 60ème anniversaire de la signature des traités de Rome

In [2017] EWHC 25 (Ch) the Frogmore Group,  there are three relevant companies: FREP (Knowle) Limited. FREP (Ellesmere Port) Limited and FREP (Belle Vale) Limited all of which were incorporated in and have their registered office in Jersey. The Companies form part of Frogmore group (of which the ultimate parent is Frogmore Property Company Limited). The Frogmore group specialises in real estate investment and management in the UK and each of the Companies owns a shopping centre located at Ellesmere Port in Cheshire, Belle Vale in Liverpool and Knowle in Bristol respectively. Each of these shopping centres is managed by Frogmore Real Estate Investment Managers Limited (“FREPIM”), a company formed in England and Wales with its registered office and base for operations at London.

The Nationwide seeking enforcement of security, the group sought a declaration that COMI was at Jersey.

Marshall DJ held with reference to the familiar precedents of Eurofood and Interedil, both featuring heavily in my earlier postings on COMI, but also to Northsea Base Investments in which Birss J paid particular attention to the largest shareholders. Of note is that this reference to the largest shareholders does not entail (and indeed is not so constructed in either Northsea Base or Frogmore) that these get the pick of what COMI might entail. Rather, that the dealings with and experience of one place as being the place where the company’s interest are being managed from, is of particular interest for the Interedil emphasis on ascertainability by third parties. Marshall DJ also rekindles the discussion on whether Interedil’s emphasis is on identifying the ‘Head office’ of the companies: a conclusion which one needs to treat with caution for even in Interedil’s tacit support for the head office approach, the emphasis continues to lie with the combination of factors, all leading to transparency and publicity.

The High Court in the end held with reference to the following: (at 39; all wording as  the judgment but with one or two words left out)

(1) Day- to-day conduct of the business and activities of the Companies has been in the hands of an agent appointed in England, namely FREPIM. Under the Advisory Agreement (which was itself governed by English law and had an English exclusive jurisdiction clause) FREPIM was to take on full responsibility for providing a very large range of services to the Companies, including day-to-day management of the Shopping Centres and dealing with their financing, accounting, marketing and formulation of their business strategy. FREPIM  itself acknowledged that it worked on investment strategy and business plans for the Companies; instructed lawyers, surveyors and consultants for them; negotiated the purchase and sale of properties on their behalf; dealt with their borrowing requirements; and attended to the provision of accounting systems and the preparation of management and annual accounts. These actions were not just limited commercial activities but included the types of function that one would expect a head office to discharge.

(2) Day-to-day dealings with third parties are carried out from the offices of FREPIM at London. This is confirmed by the evidence of the activity of FREPIM described above but it is also supported by, for example, the Companies’ VAT returns where their business address is stated to be those offices. In their day-to-day dealings with third parties regarding expenditure these offices are given as the address for invoices.

(3) If one has regard to the point of view of the largest creditor, Nationwide, the Facility Agreement and the Nationwide Debentures are governed by English law and have an English jurisdiction clause. Under the Facility Agreement the Shareholder is the service agent for the Companies. In the case of the Nationwide Debentures, they have express reference to the power to appoint administrators under the 1986 Act. FREPIM took over the day-to-day contact with Nationwide as well as providing Nationwide with various pieces of information (such as quarterly compliance packs and accounts for borrowers) and did so from London. FREPIM also accepted that the management of the relationship between the Companies and Nationwide had been carried out by [the group treasurer] and the Chairman of the Frogmore group, who was also based in London.

(4) I also note that under the terms of the debentures securing the advances made by the Shareholder that the governing law is English, there is an English exclusive jurisdiction clause, that FREPIM is appointed the service agent of the Companies and there is express provision for the appointment of administrators under the 1986 Act.

The case is a good reminder that even intricate SPV structures should not detract from COMI finding on well-established principles. And that COMI determination always depends on a basket of criteria.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.2., Heading 5.6.1.2.4.

I reported earlier on the November 2015 draft ‘Judgments project’ of the Hague Conference on private international law, otherwise known as the draft convention on the recognition and enforcement of judgments relating to civil and commercial matters. The working group now has a February 2017 draft out. (The project nota bene has even increased in relevance given Brexit).

I could have titled this post ‘spot the differences’ for of course there are changes in formulation between current and previous version. However my main point of concern remains: the absence of Wally: some type of institutional redress which will assist courts in the interpretation of the Convention. Article 23 now calls for uniform interpretation, and there will, one assumes, be a report accompanying its adoption. (Judging by the size of commentaries on the EU mirror, Brussels I Recast, this could turn out to be a very sizeable report indeed). However without a court system ensuring uniformity of application, the Convention in my view will risk being a dead duck in the water.

Geert. (Not by nature pessimistic. But probably realistic).

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