Flux Belges et Lux

Mr Villiers reacted to Villiers v Villiers [2020] UKSC 30 with a letter in the FT yesterday, set against the general background of ‘divorce tourism’ said to have been encouraged by the Supreme Court ruling last week. Ms Villiers now lives in England however the majority of the marriage was spent in Scotland which is also where divorce proceedings were issued.

Sales J for the majority summarises the legislative background at 8:

The national legislation governing jurisdiction in cross-border cases is primarily contained in the Civil Jurisdiction and Judgments Act 1982 (“the CJJA 1982”). That Act gave effect in domestic law to the [1968] Brussels Convention… [which] was amended on the association of Denmark, Ireland and the United Kingdom in 1978. It was replaced as the principal instrument governing jurisdiction in cross-border cases between member states of the European Union by [Brussels I] which in large part replicated the provisions of the Brussels Convention. The CJJA 1982 was amended to refer to and give effect in domestic law to the Brussels Regulation. The Brussels Regulation has been replaced by [Brussels Ia].

The Brussels Convention did not apply to issues of the status of natural persons, including marriage, nor to rights in property arising out of a matrimonial relationship (article 1(1)), but it did apply in respect of claims for maintenance. This was later carved out and titled into a separate Regulation, the Maintenance Regulation 4/2009. The UK until Brexit day chose to apply the Regulation intra-State, too, i.e. between the constituent parts of the Kingdom. 

Lord Sales posits that all in all, the application of the jurisdictional rules is ‘straightforward’ (at 25) however his needing 32 paras to set out the test somewhat belies that statement, as does Lord Wilson’s and Lady Hale’s lengthy dissent at 93 ff. (and Lady Black’s at

There is no forum non conveniens rule in the Maintenance Regulation. The CJEU held so in C-468/18 R v P and Lord Sales refers to that judgment.

The only viable route to a stay of the jurisdiction in principle of the English courts, the place of habitual residence of Mrs Villiers, the maintenance creditor, is via the ‘related actions’ gateway of A13 of the Regulation. Are the husband’s divorce proceeding in Scotland a “related action” for the purposes of A13? And, pursuant to that provision, should the English court decline jurisdiction in respect of the wife’s maintenance claim? At 45 Sales LJ holds that to be related actions, they must refer

‘primarily to maintenance claims of the kind to which the special regime in the Regulation applies. If the position were otherwise, and the word “actions” meant legal proceedings of any kind whatever, that would undermine the fundamental object of the Maintenance Regulation that a maintenance creditor has the right to choose in which jurisdiction to claim maintenance. On such a reading, there would be a substantial risk that this object of the Maintenance Regulation would be undermined by the commencement of proceedings by the maintenance debtor according to the jurisdictional provisions of instruments other than the Maintenance Regulation, laid down in pursuance of entirely different jurisdictional policies than that reflected in the Maintenance Regulation.’

At 48 he adds obiter (for the husband’s suit in Scotland here concerned the divorce and the divorce only) that contra to the likely position in Moore v Moore [2007] EWCA Civ 361, even a maintenance debtor’s claim for distribution of family property with an impact on maintenance, cannot be a related action for the purposes of A13: for it would hand the debtor a torpedo against the creditor’s Regulation-protected choice.

It is on the issue of related actions that Lord Wilson and Lady Hale disagree at 147 ff., with Lord Wilson adding an arguably stinging postscript at 172 ff. At 162 Lord Wilson refers to A13(2) as ‘the dog. The reference to “irreconcilable judgments” is no more than the tail.’ A wide interpretation therefore of A13 (Lady Black, consenting with Sales, at 85 puts more emphasis in the irreconcilability of the judgments).

A most interesting to and fro of arguments and one which post Brexit will be recommended reading for the continuing application of the Maintenance Regulation in the EU.

Geert.

Maintenance regulation Brussels II, applied intra-State (UK) by incorporation by that Member State.
Application of lis alibi pendens. Non-existence of forum non conveniens. Distinction with matrimonial Regulation. https://t.co/AllsUqm05Q

— Geert Van Calster (@GAVClaw) July 1, 2020

In [2020] EWHC 1626 (TCC) Engie Fabricom, O’Farrell J essentially had to hold whether the primary activity at an energy from waste plant is power generation or waste treatment. The classification of waste to energy – W2E as either waste recovery (see Waste Framework Directive Recovery Annex, R1 ‘used principally as a fuel or other means to generate energy’) or waste disposal is a classic in EU waste law, with specific implications for shipments permits. It also of course has an impact on a Member State’s waste targets and renewable energy targets. Aside from the Waste Framework Directive, the Industrial Emissions Directive 2010/75 is also involved – although oddly no CJEU authority is mentioned in the judgment.

In the case at issue an interesting extra element is that the plant at issue received funding via the European Regional Development Fund ERDF (at 145) however ERDF funding was for the generation of electricity from the biodegradable part of waste based on advanced fluidised bed gasification technology, which at the time of the application was expected to be 84.65% of the fuel. However, subsequently the plant changed to use refuse derived fuel or RDF without any waste wood which reduced the biodegradable percentage of the waste to 50%.

At 149 Justice O’Farrell concludes that the primary activity at the Energy Works Hull facility is power generation, for the reasons listed there. Of particular relevance is her comment that ‘the plant was not developed or intended to be operated in furtherance of any particular waste or energy policy, although it was consistent with both policy initiatives.’

There is an interesting expert evidence issue to the case, as Gordon Exall discusses here. I am suspecting one or two of the issues involved could be chewed over upon appeal, with reference to CJEU case-law.

Geert.

Handbook of EU Waste law, OUP, second ed, 2015.

Refuse-derived fuel – RDF.
Whether the primary activity at an energy from waste plant is power generation or waste treatment.
Held: in casu: power generation.
Considers ia EU waste framework Directive and ERDF funding.
Impacts ia VAT and adjudication process. https://t.co/2FskpGblDj

— Geert Van Calster (@GAVClaw) June 25, 2020

Thank you Maxime Barba for flagging the judgment in the Paris Court of Appeal Sodmilab et al. (Text of the judgment in Maxime’s post). The case concerns the ending of a commercial relationship. Part of the contract may be qualified as agency with lex causae determined under the 1978 Hague Convention. On this issue, the Court of Appeal confirmed French law as lex causae.

Things get messy however with the determination of that part of the contract that qualifies as distribution (a mess echoing DES v Clarins), and on the application of Rome II.

The Court of Appeal first (at 59) discusses the qualification of A442-6 of the French Code du commerce, on unfair trading practices (abrupt ending of a commercial relationship), dismissing it as lois de police /overriding mandatory law under Article 9 Rome I. As I noted in my review of DES v Clarins, this is a topsy turvy application of Rome I. The qualification as lois de police is up to the Member States, within the confines of the definition in Rome I. The Court of Appeal holds that A442-6 only serves private interests, not the general economic interest, and therefore must not qualify under Rome I. Hitherto much of the French case-law and scholarship had argued that in protecting the stability of private interests, the Act ultimately serves the public interest.

Next (as noted: this should have come first), the Court reviews the application of A4f Rome I, the fall-back position for distribution contracts – which would have led to Algerian law as lex causae. It is unclear (62 ff) whether the Court reaches its conclusion as French law instead either as a confirmation of circumstantial (the court referring to invoicing currency etc.) but clear choice of law under Article 3, or the escape clause under Article 4(3), for that Article is mentioned, too.

Rome I’s structure is quite clear. Why it is not properly followed here is odd. That includes the oddity of discussing French law under Article 9 if the court had already confirmed French law as lex causae under A3 or 4.

Finally, corners are cut on Rome II, too. Re the abrupt ending of the relationship (at 66ff). French law again emerges victorious even if the general lex locus damni rule leads to Algerian law. The court does not quite clearly hold that on the basis of Article 4(3)’s escape clause, or circumstantial choice of law per A14. The court refers to ‘its findings above’ on contractual choice of law, however how such fuzzy implicit choice under Rome I is forceful enough to extend to choice of law under Rome II must not be posited without further consideration. Particularly seeing as Article 6 Rome II excludes choice of law for acts of unfair trading.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9; Chapter 3, Heading 3.2.8, Heading 3.2.8.3; Chapter 4).

Anyone planning a conflict of laws course in the next term might well consider the succinct Council of Europe report on the application of islamic law in the context of the European Convention on Human Rights – particularly the case-law of the Court. It discusses ia kafala, recognition of marriage, minimum age to marry, and the attitude towards Shari’a as a legal and political system.

Needless to say, ordre public features, as does the foundation of conflict of laws: respect for each others’ cultures.

Geert.

Thank you Gaetan Goldberg for flagging that the French Supreme Court has confimed on 19 June last, jurisdiction of the French Data Protection Agency (‘DpA’), CNIL for issuing its fine (as well as confirming the fine itself) imposed on Google for the abuse of data obtained from Android users. The Court was invited to submit preliminary references to the CJEU on the one-stop shop principle of  the GPDR, but declined to do so.

Readers of the blog know that my interest in the GDPR lies in the jurisdictional issues – I trust date protection lawyers will have more to say on the judgment.

With respect to the one stop shop principle (see in particular A56 GDPR) the Court held at 5 ff that Google do not have a ‘main establishment’ in the EU at least not at the time of the fine complained of, given that the Irish Google office (the only candidate for being the ‘main establishment) at least at that time did not have effective control over the use and destination of the data that were being transferred – US Google offices pulling the strings on that decision. A call by the CNIL under the relevant EU procedure did not make any of the other DPAs come forward as wanting to co-ordinate the action.

On the issue of consent the SC referred to CJEU Cc-673/17 Planet49 and effectively held that the spaghetti bowl of consent, ticking and unticking of boxes which an Android user has to perform to link a Google account to Android and hence unlock crucial features of Android, do not amount to consent or proper compliance with GDPR requirements.

Geert.

French SC confirmation of French DPA fine in #Android data case
On jurisdiction, rejects application of #GDPR one stop shop principle on the basis that #Google's Irish representation does not have decision power over use of the data
See 3 ff of judgmenthttps://t.co/ZVAuZnjznd https://t.co/Jqz7Mm2nfl pic.twitter.com/WBAhjdudVJ

— Geert Van Calster (@GAVClaw) June 19, 2020

A short update on the Prestige litigation. I reported earlier on the disclosure order in the recognition leg of the case. In that review I also listed the issues to be decided and the preliminary assessment under Title III Brussels Ia. That appeal is to be heard in December 2020 (see also 21 ff of current judgment). In The London Steam-Ship Owners’ Mutual Insurance Association Ltd v Spain (M/T “PRESTIGE”) [2020] EWHC 1582 (Comm) Henshaw J on 18 June held on yet another set of issues, related to arbitration and State Immunity.

He concluded after lengthy analysis to which it is best to refer in full, that Spain does not have immunity in respect of these proceedings; that the permission to serve the arbitration obligation our of jurisdiction, granted earlier to the Club should stand; and that the court should appoint an arbitrator.

I am pondering whether to add a State immunity chapter to the 3rd ed. of the Handbook – if I do, this case will certainly feature.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2, Heading 2.2.16.

Acte clair is in the eyes of the beholder, I assume. However a confident judge would have sufficient CJEU authority to help them hold on the A24(1) BIa issues in C‑433/19 Ellmes Property Services in which Szpunar AG opined last week. (No EN version available at the time of publication of this post).

Do actions brought by a co-owner seeking to prohibit another co-owner from carrying out changes to his property subject to co-ownership, in particular to its designated use, arbitrarily and without the consent of the other co-owners, concern the assertion of a right in rem? In the negative, is the forum contractus per A7(1)(a) Brussels Ia the location of the property? The less clear issue in my view is the forum contractus element.

The location is Zell am Zee, contested use is, not surprisingly, tourist accomodation. Applicant in the national proceedings is an individual who lives in the apartment building. Defendant is a UK corporation who uses it for short-term lets despite the residential designation assigned to the building as a whole in the co-ownership agreement.

From CJEU authority including C-438/12 Weber v Weber it should be clear that other than the hardcore cases of ownership of real estate, the erga omnes v in personam character of rights in real estate depends on national law. The Advocate General in this respect points out that for the rights of co-owners in the case at issue to be rights in rem, Austrian law would have to be enable them to exercise these rights not just vis-a-vis the other co-owners, but also vis-a-vis third parties such as tenants. Whether this is the case in Austrian law has not been sufficiently explained in the reference, it seems.

For the impact of entry in the land register (where third parties can consult the co-ownership agreement), Szpunar AG reviews and contrasts C‑417/15 Schmidt v Schmidt, and C-630/17 Milivojević v Raiffeisenbank. Mere registration does not always entail erga omnes impact.

The Advocate General reminds us of the overall interpretation of Article 24, including the need for restrictive interpretation, and flags (with reference inter alia to the Handbook, p.73, for which I am, as always, sincerely humbled) that it is not just, or not even so much sound administration of justice which underlies A24. At least partially, Member States’ strategic interests are served by the issues listed in the Article.

Ellmes Property Services does not seem to raise additional issues such as we saw in C-25/18 Kerr. The Austrian courts could have dealt with this on their own, and seeing as the referring judge did not provide the kind of detail for the CJEU to judge, the AG’s suggestion is to leave it up to them to verify the erga omnes character.

That leaves (whether it will be needed depends on what the eventual insight will be on the erga omnes element), the forum contractus under A7(1). Parties differ as to the qualification of the contractual duty: is it a positive one (do!) or a negative one (must not!). The AG opts for the latter, with reference to CJEU 14/76 De Bloos: A7(1) refers to the contractual obligation forming the basis of the legal proceedings. I find the precedent value of De Bloos problematic in light of the many changes that have been made to Article 7 since, and in light of the engineering possibilities it hands to parties.

The AG advises that forum contractus will have to be determined by the Italian judge following the conflicts method per CJEU 12/76 Tessili v Dunlop, with little help from European harmonisation seeing i.a. as the initial co-ownership agreement dates back to 1978.

I am curious to see how far the Court will go in entertaining the issues at stake.

Geert.

(Handbook of) EU Private International Law, Chapter 2, Heading 2.2.6.1 (cited by the AG) and Heading 2.2.11.1.

In Alexander Brothers Ltd (Hong Kong SAR) v Alstom Transport SA & Anor [2020] EWHC 1584 (Comm) Cockerill J discussed inter alia (at 177 ff) the impact of EU law on the ordre public assessment for potential refusal of recognition of an arbitral award under section 103 of the 1980 New York Convention.

CJEU authority are C-126/ 97 Eco Swiss (concerning EU competition law) and C-168/ 05 Claro (unfair terms in consumer contracts). At 183 Cockerill J does not suggest the CJEU authority should no longer stand. Indeed she suggests obiter that there is no reason to suggest the CJEU’s line of reasoning should not apply to wider issues than just competition law or consumer law. However, the burden of proof of showing that particular parts of EU law are of a nature to justify the ordre public exception, lies upon the party objecting to recognition. In casu Alstom have fallen short of that duty. Yes, there is scant reference to anti-corruption in the private sector; and yes there is EU money laundering law. However (at 186) ‘the EU has, in general terms, set its face against corruption. But aside from the area of money laundering it has not put in place mandatory laws or rules. In the context of international corruption of the kind in focus here it has left it to the individual member states to adopt what measures seem good to them. There is, in short, no applicable mandatory rule or public policy.’

An interesting discussion.

Geert.

Application for refusal of #arbitration award under New York Convention section 103: ordre public. Alternatively, issue estoppel, or failure of full and frank disclosure: all dismissed.
Cockerill J discussing ia C-126/ 97 Eco-Swiss. https://t.co/YF0dB6lVah

— Geert Van Calster (@GAVClaw) June 18, 2020

Henshaw J in  DVB Bank SE v Vega Marine Ltd & Ors [2020] EWHC 1494 (Comm) (a substantively straightforward case on sums loaned) made some important observations on the benefits of summary judgment as opposed to a default judgment in the context of recognition and enforcement.

This a few days before publication of the thesis of Vincent Richard on the very topic.

There is no doubt the English courts have jurisdiction per a valid choice of court clause under A25 BIa. Claimants are pressing for summary judgment, citing

• Brexit. The Withdrawal Agreement extends EU law in civil procedure to proceedings issued before the end of the transition period, however claimants express anxiety over the speed of Greek enforcement proceedings given courts’ shutdown in the Covid19 era. At 61: ‘Greek counsel has advised the Claimants that the Greek courts shut down earlier this year for an indefinite period, so that obtaining an enforcement order in Greece would be likely to be delayed;’.
• More crucially however, Henshaw J notes at 61, correctly, that even under BIa, default judgments are more vulnerable:

there is a risk that an enforcement order based on a simple default judgment, even if obtained before 31 December 2020, might be set aside on public policy grounds. Greek counsel advised that the Greek courts would be much less likely to refuse to recognise and enforce a reasoned English judgment following a hearing on the merits.

Summary judgment was given against the defendants.

Geert.

Summary judgment granted.
Hanshaw J holding ia that for enforcement purposes both before and after Brexit (ordre public arguments in State of enforcement), summary judgment is to be preferred over default judgment. https://t.co/iS9Jhgjdp8

— Geert Van Calster (@GAVClaw) June 10, 2020

In Senior Taxi Aereo Executivo LTDA & Ors v Agusta Westland S.p.A & Ors [2020] EWHC 1348 (Comm) Waksman J discusses the same issues which I analysed in my review of Sabbagh v Koury (and he refers to that case at 51 ff). Proceedings arise out of the fatal crash of an Agusta Westland AW 139 twin turbine helicopter on 19 August 2011, during a flight from the Petrobras P-65 offshore oil platform in the Atlantic, west of Rio de Janeiro, to Macae Aerodrome in Brazil.

First and third defendant are an Italian company. Second defendant, AgustaWestland Ltd is an English company and the anchor defendant per A8(1) Brussels IA. At 32:

‘Defendants’ contention is that in order for Article 8 (1) to apply at all, the claim against the anchor defendant must at least be a sustainable one. I described this as “the Merits Test”. For present purposes, the requirement of sustainability can be equated with “viability”, “a real prospect of success”, a “serious issue to be tried” or a “good arguable case”. Neither party sought to argue that any fine point of distinction between these various expressions was relevant here.’

Reisch Montage and Freeport of course are CJEU authority referred to. As is Kolassa for the CJEU consideration of ‘merits review’ (particularly there: taking account of both defendant and claimant’s arguments) under A25 and A26 BIA) and CDC for the CJEU’s most recent proper discussion of the issue (at 86 Waksman J suggest CDC is not a ruling on the merits issue).

At 65 ff Waksman J follows the majority in Kabbagh, and not the dissent of Lady Justice Gloster – I as noted was more enclined to agree with her. Having confessed to his preference for there being a merits test, he then seeks to distinguish the CJEU in Reisch by focusing on the CJEU there finding on the basis of a ‘procedural bar’ in the Member State of the anchor defendant. At 83:

‘I do not find the reasoning of the CJEU here persuasive and I consider that the decision should be distinguished if possible. It can be distinguished because it is very clear from the judgments that the focus was on a national rule as to admissibility of the claim. Even allowing for differences of language, the expression “procedural bar” is not apt to include a lack of any substantive merit. Reisch is not therefore an obstacle to deciding that there is a Merits Test.’

And at 85:

‘that the reasoning of the court in Reisch was concerned more with what it simply saw as an illegitimate incursion of a domestic procedural rule (a bankrupt cannot without more be sued in ordinary litigation) into the operation of Article 6 (1). That, in and of itself decided the point. It was a question of form and not substance. But the Merits Test is a matter of substance.

Held: there is a Merits Test which must be satisfied before A8(1) can be invoked. That merits test is not met in casu.

A8(1)’s ‘so closely connected’ test clearly requires some appreciation of the facts and the legal arguments, as well as a certain amount of taking into account the defendant’s arguments. Yet this in my view does not amount to a merits test, and ‘sustainability’, “viability”, “a real prospect of success”, a “serious issue to be tried” or a “good arguable case” may well be synonyms – but there are not the same as an A8(1) merits test.

One to watch upon appeal.

Geert.

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

Includes challenge of the A8(1)BIa anchor jurisdiction.

Re fatal crash of Agusta Westland AW 139 helicopter on 19 August 2011, during a flight from the Petrobras P-65 offshore oil platform in the Atlantic, west of Rio de Janeiro, to Macae Aerodrome in Brazil. https://t.co/de4okNUMkY

— Geert Van Calster (@GAVClaw) June 13, 2020

A short note on Public Joint Stock Company (Rosgosstrakh) v Starr Syndicate Ltd & Ors [2020] EWHC 1557 (Comm) just to illustrate the complications for recognition and enforcement in the absence of a near-automated process such as under Brussels IA (the Hague Judgments Convention is meant to lubricate the process internationally). Claimant applies for summary judgment on its claim for recognition and enforcement of three judgments obtained in its favour in the Russian courts in 2015 and 2016.

Moulder J first discussed the issue of lack of jurisdiction for the Russian courts and she finds at 93 after consideration that the discussions to and fro, and the evidence of Russian experts for each of the parties, necessitates proper discussion with oral evidence of the contractual construction, under Russian law, of the relevant choice of court clauses. Of course under BIa and other regimes operating with a certain amount of mutual trust, second-guessing jurisdiction is not part of the assessment.

Next, the allegations of bias are also discussed, with at 126 ia reference to an interference by President Putin, and at 138 a solid set of reasoning for Moulder J to dismiss the potential for summary judgment on this point, too. Of course bias is an ordre public issue which even under BIa’s rules for recognition of judgments from other Member States, might justify refusal of recognition.

Geert.

Application for summary judgment re recognition and enforcement of 3 Russian judgments refused.
I.a. allegations of bias require proper assessment. https://t.co/nfVLicgsQQ

— Geert Van Calster (@GAVClaw) June 17, 2020

International comity underlies the rule of both Ralli Brothers v Compania Naviera Sota y Aznar (‘Ralli Bros’) [1920] 2 KB 287 and Foster v Driscoll [1929] 1 KB 470, jointly known as ‘illegality under foreign law’. They both engage lois de police of the place of performance, and the English courts’ attitude towards not assisting with contractual performance that would go against such lois. Per Cockerill J in Magdeev v Tsvetkov [2020] EWHC 887 at 307:

“The Foster v Driscoll and Ralli Bros principles differ in this way: the latter is concerned only with whether the contract between the parties necessarily involves performance of an act which is illegal by the law of the place of performance, irrespective of the object and intention of the parties; the former is only concerned with whether the object and intention of the parties is to perform their agreement in a manner which involves an illegal act in the place of performance, and is not concerned with whether the contract necessitates the undertaking of such an act…’

At issue in Colt Technology Services v SG Global Group SRL [2020] EWHC 1417 (Ch), is an injunction to restrain SGG (of Italy) from presenting a winding-up petition against it. SGG claims that Colt UK is indebted to it in the sum of US$4,936,619.93 plus interest. Colt UK contends that the debt is bona fide disputed on substantial grounds, such that the Companies Court is not an appropriate forum to determine the dispute and the presentation of a winding-up petition would be an abuse of process. Colt UK says that SGG was not the true supplier of the services under the relevant agreement, but was a shell company acting as a front for another supplier and was engaged in a form of VAT “missing trader” fraud with the Italian authorities as victims.

After due consideration Wicks J holds that Colt UK has a properly arguable illegality defence to the sums claimed by SGG, based on the Ralli Bros principle. Held: the presentation of a winding-up petition against Colt UK would be an abuse of process and in all the circumstances it is right to restrain SGG from taking that step.

Another interesting example of international comity in private, commercial litigation.

Geert.

Fasken alerted me to, and have good review of Newfoundland and Labrador (Attorney General) v Uashaunnuat (Innu of Uashat and of Mani‑Utenam) 2020 SCC 4. The Canadian Supreme Court held that Quebec has jurisdiction over aboriginal rights claims in a neighburing province. This assertion of jurisdiction hinges on the qualification of rights under section 35 of the Constitution Act, 1982 (the section which deals with aboriginal and treaty rights) as rights sui generis. A qualification as rights in rem erga omnes, as the dissenting opinion suggested, would have kept the case outside of Quebec jurisdictional reach.

The case came a week after the decision of the High Court of Australia in Love v Commonwealth[2020] HCA 3 which as Michael Douglas analyses here, is a case about personal status and whether an aboriginal may be considered an ‘alien’ for immigration purposes. Judges split as to the required approach to the issue.

Indigenous rights and conflict of laws for sure will continue to exercise one or two minds (ia in view of the UNSDGs) and these two cases seem to anchor a number of issues. Not something a short blog post can do justice to.

Geert.

Most interesting. Indigenous rights and conflict of laws.
CAN SC finds Québec has jurisdiction to hear Innu claims re land in Newfoundland, Labrador
Aboriginal rights are sui generis, neither personal rights or real rightshttps://t.co/DPQBZk2byC

— Geert Van Calster (@GAVClaw) March 10, 2020

In T‑574/18 Agrochem-Maks the General Court at the end of May upheld the Commission Regulation not extending market authorisation for the active substance oxasulfuron, a pesticide. The EC Regulation noted that EFSA, the European Food Safety Authority, had identified a large number of data gaps resulting in the inability to finalise the risk assessment in several areas and that ‘in particular, the available information on oxasulfuron and its metabolites did not allow finalising the assessment of the overall consumer exposure, the groundwater exposure, the risk to aquatic organisms, earthworms, soil macro and microorganisms and non-target terrestrial plants’. Since  ‘it has not been established with respect to one or more representative uses of at least one plant protection product that the approval criteria provided for in Article 4 of Regulation … No 1107/2009 [on plant protection products; see here, GAVC] [were] satisfied’, authorisation was not renewed.

The case at issue is brought by a small Croatian, family-owned company. That is a change from the classic pattern in this kind of cases, with large bio-agricultural industry routinely taking cases to the CJEU in laser-shoot fashion, hoping they might hit the target once or twice.

The General Court extensively outlines the procedure foreseen in the relevant EU laws, thereby identifying the core issue in near all of these cases held under the precautionary principle: the EU courts do not carry out a merits review; rather, they assess whether holes have emerged in the preparation of a decision, which could mean that the Institutions could not reasonably have come to the decision they came to.

That is no different here: at 62: ‘the EU Courts must verify that the relevant procedural rules have been complied with, that the facts admitted by the Commission have been accurately stated and that there has been no manifest error of appraisal or misuse of powers’. At 65, per CJEU T-13/99 Pfizer: ‘a scientific risk assessment carried out as thoroughly as possible on the basis of scientific advice founded on the principles of excellence, transparency and independence is an important procedural guarantee whose purpose is to ensure the scientific objectivity of the measures adopted and preclude any arbitrary measures.’

Specifically for current Regulation: at 66: ‘the burden of proving that the conditions for approval or renewal under Article 4 of Regulation No 1107/2009 are met lies, in principle, with the notifier.’ At 67 per CJEU T-584/13 BASF Agro: ‘it is the person seeking approval who must prove that the conditions of such approval are met in order to obtain it, and not the Commission which must prove that the conditions of approval are not met in order to be able to refuse it’.

The General Court then at length considers the procedure followed, including the reasons for the identified gaps, and then assesses the application of the precautionary principle to same: at 109 ff with reference to the 2000 Communication on the Precautionary Principle, COM(2000)1. Crucially, at 121, as noted ‘(u)nder Regulation 1107/2009 when the applicant words its renewal application, it bears the burden of proving the efficacy and safety of the substance in question.’ ‘Since it did not discharge that burden, the approval of the active substance could not be renewed.’

The case highlights once again the crucial nature of administrative compliance with the rulebooks under EU regulatory law. Many of us will have sat through presentations by EFSA or EC officials outlining the rules in excruciating and yes, not very sexy detail. Yet to follow procedure to a tee is crucial to ensure defence against corporations taking issue with the findings at the CJEU.

The case also emphasises the importance of burden of proof and, preferably, the ‘no data, no market’ rule in EU regulatory law.

There might of course still be an appeal with the Court.

Geert.

EU environmental law (with Leonie Reins), Edward Elgar, 2018, p.28 ff.

Precautionary principle, standard of proof, standards of judicial review. https://t.co/gHDzyIQS1u pic.twitter.com/R1Z1qCy4qq

— Geert Van Calster (@GAVClaw) May 29, 2020

Must Article 107 TFEU be interpreted as meaning that a system whereby a private, non-profit eco-body, approved by the public authorities, receives contributions from those who place on the market a particular category of product and who enter into a contract with it to that effect, in return for a service consisting in the organisation on their behalf of the treatment of the waste from those products, and redistributes to operators responsible for the sorting and recovery of that waste, subsidies the amount of which is set out in the approval, in the light of environmental and social targets, is to be regarded as State aid within the meaning of that provision?

That is the question as phrased in C‑556/19 Société Eco TLC and on which Pitruzzella AG Opined on 28 May. TLC stands for Textiles, Lignes de maisons, and chaussures (textiles, household linen and shoes). Producers or as the case may be first importers pay a fee to the collective body in lieu of their personal commitments under extended producers responsibility per Waste Framework Directive 2008/98.

The AG of course revisits the definition of ‘State Aid’ under CJEU C-379/98 Preussen Elektra, on which more here and here. Preussen Elektra remains controversial for it would seem to give Member States quite a bit of room for manoeuvre to reach the same result as direct State Aid more or less simply by inserting a private operator who receivs funds directly from private operators however in line with direct State instructions on level and modalities of payment.  The AG opines that in the case at issue there is no State Aid however he directs further factual lines of enquiry (ia re the State control over payments by the collective body to recyclers.

Geert.

Handbook of EU Waste law, 2nd ed. 2015 OUP, para 4.116 ff.

State Aid, collective #waste recycling bodies. https://t.co/UaPdf4T69b

— Geert Van Calster (@GAVClaw) May 29, 2020

In La Micro Group (UK) Ltd & Anor v La Micro Group, Inc & Ors[2020] EWHC 1405 (Ch) 1st Claimant, LA Micro Group (UK) Ltd (“LA (UK)”), is an English company. It was incorporated in 2004 and acquired by the 2nd Claimant, Mr David Bell, a British citizen resident in England. It now has two issued shares, one in the name of Mr Bell, and one in the name of the 3rd Defendant, Mr Arkadiy Lyampert. Mr Bell and Mr Lyampert are also the two directors of the company. The substantive question raised in the action is as to the beneficial ownership of LA (UK). The position of the Claimants is that Mr Bell and Mr Lyampert are not only the legal owners of the two issued shares but also the beneficial owners, and that they are each entitled to 50% of the distributable profits of the company by way of dividends. Mr Lyampert’s position is the same, although he has indicated that he does not intend to take any active part in the proceedings. All defendants are resident in California.

This preliminary issue is one of jurisdiction given claimants seek permission to serve out of jurisdiction. There are a variety of proceedings in California: disputes between Mr Frenkel and Mr Lyampert in 2010 led to Mr Frenkel and some of LA Inc’s other employees, including Mr Gorban, leaving LA Inc and starting a competing business called IT Creations, Inc (“ITC”). In the words of the Court of Appeal of California, “a profusion of lawsuits followed”.

It is i.a. argued by defendants that it would an abuse of process for LA Inc to relitigate the same issues as were decided by that judgment, even if the CAL judgments do not strictly give rise to res judicata given the differences between parties.

At 49 Nugee J holds on that particular issue that the relevant CAL Judgment did not decide anything about whether LA Inc had lost its rights to a beneficial interest in LA (UK), and the findings of fact on which the Claimants rely were not necessary to the English court’s decision on any of the matters that were in issue.

Of specific interest to the blog is the forum non conveniens application at 58 ff., with at 68 ff consideration of whether one of the pending CAL proceedings is the mirror image of the English ones, which would count heavily in a forum non consideration given the English law’s preference for the whole issue to be submitted to one tribunal. At 78 Nugee J  sums up the core issue:

The choice is between (i) allowing the English proceedings to continue so that a definitive answer can be given to one discrete question (has LA Inc lost its beneficial interest?) which will then enable the Californian court to proceed on a correct understanding of what has been decided in England rather than on what is said to be a misapprehension; or (ii) requiring the Claimants, unless they are willing to abandon their claims, to go to California to argue matters that on the view I take are matters of English law and largely concern acts taking place in England.

At 77 Nugee J expresses strong support for Gleichlauf:

(T)here are many advantages in questions of law being decided by a home court rather than a foreign court. Evidence and cross-examination is not required, which is likely to make resolution of the point both quicker and cheaper. And the court is familiar with its own law, in a way that it is not with foreign law, which means that the court’s resolution of the issues is likely to be both easier and more soundly based. Other things being equal, I have no doubt that it is preferable, both in terms of practical convenience and in terms of the ends of justice, for questions of English law to be argued in England as questions of law rather than for them to be argued in California as questions of fact on expert evidence (and possibly, although I have no evidence as to whether this would be the case, before a jury).

He concludes at 92:

England is the most appropriate forum for those matters to be decided; but even in relation to the declarations in respect of Mr Lyampert’s share, leaving the parties to litigate in California has a mix of advantages and disadvantages and there is not in my judgment sufficient to displace England as the forum in which the dispute can most suitably be tried for the interests of all the parties and for the ends of justice.

Nugee J does not therefore give Gleichlauf preponderant weight ab initio. Yet all other things being equal, Gleichlauf in this case pushed back a finding of forum non.

Geert.

Application for stay on forum non conveniens grounds. Dismissed.
Nugee J: 'Leaving parties to litigate in CAL has mix of (dis)advantages, not sufficient to displace EN as forum in which dispute can most suitably be tried for the interests of all parties and for ends of justice. https://t.co/Rm3i16dEPg

— Geert Van Calster (@GAVClaw) June 3, 2020

Graham Woloff eaor Calzaturificio Zengarini eaor re Akkurate Ltd, [2020] EWHC 1433 (Ch) concerns the question whether the court has the power under section 236(3) of the Insolvency Act 1986 to require persons resident in the EU to produce books and papers and an account of their dealings with a company being compulsorily wound up in England and Wales (it is not disputed that Akkurate’s centre of main interests (“COMI”) was in England and Wales under the European Insolvency Regulation EIR).

EIR 2000 applies to this case, because the winding up of Akkurate was before 26 June 2017, however the issue is not materially different in the new Regulation. There are inconsistent first instance decisions which Vos C reviews ia at 27 ff and at 54 after consideration, he considers s236(3) does not have extraterritorial effect on the basis of what he considers to be the binding authority of Re Tucker (a bankrupt) [1990] Ch. 148. however that following the EIR 2000 (unchanged in EIR 2015) the European regime can and does extend the territoriality of purely domestic insolvency provisions. CJEU authority cited is in particular C-339/07 Seagon v Deko Marty Belgium (at 58 ff) – which I find may be a bit optimistic. Vos C also decides that he can and should apply his discretion to grant orders as formulated at 68.

Clearly, post Brexit, the situation will revert to Tucker. Which would make the English courts less attractive than their continental counterparts – although of course one would have to wait for CJEU authority to confirm the issue less equivocally.

Geert.

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

EU #Insolvency Regulation 1346/2000. Whether EN court has power to require persons resident in EU to produce documents re company with COMI in EN.

Held, considering CJEU authority: Yes. https://t.co/0dcgtOc7fF

— Geert Van Calster (@GAVClaw) June 4, 2020

Mad Atelier International BV v Manes [2020] EWHC 1014 (Comm) engages among others Articles 29-30 BIa on lis alibi pendens and its relation with issue estoppel. Stewart Chirnside has analysis here and  I am happy to refer. The judgment itself is not straightforward for Bryan J had much to decide – I agree with his conclusion at 124 on A29-30 BIa related issues that he is

‘satisfied that the French Civil Proceedings does not give rise to any issue estoppel because, for the reasons that I have given: (1) The decision of the Paris Commercial Court on such issues is not final or conclusive; (2) The parties to both proceedings are not privies; (3) The issues identified by Mr Manès were not issues concluded by the court, but rather comments on the state of the evidence, and (4) The issues in the English Proceedings are significantly broader than the issues in the French Civil Proceedings. Each of these is, in and of itself, fatal to the contention that an issue estoppel arises from the Paris Judgment, and I find that no issue estoppel arises.’

Geert.

Recognition and enforcement. Res judicata. Issue estoppel. https://t.co/yJDw3uHMD6 https://t.co/ACwZWMB6Wg

— Geert Van Calster (@GAVClaw) May 1, 2020

Many thanks indeed Kevin La Croix for flagging the suit brought in New York by a group of Bayer AG shareholders, against Bayer (with seat at Leverkusen, Germany), concerning the not altogether successful purchase of Monsanto by Bayer. Kevin has excellent analysis and I am happy to refer.

Claimants of course pre-empt arguments of lack of subject-matter jurisdiction and, subsidiarily, forum non conveniens – please refer to Kevin’s overview for the arguments to and fro. Most interesting. It brought back to me echoes of the Australian case of Tiger v Morris, not because the subject-matter is similar (it is not) but because in this increasingly globalised world (despite Covid19), courts everywhere are increasingly asked to consider the reach of their courts in cases with competing local and foreign interests. Comity considerations underlying the historic roots of conflict of laws are being brought back to the fore, no doubt also partially as a result of the impact of third party financing, contingency fees etc.

One to keep an eye on. One wonders whether Bayer might be launching a related case in Germany, then triggering A33/34 considerations.

Geert.

Forum shopping, corporate law. Lex causae undoubtedly German law. Shareholder seeking to take advantage in particular of procedure.

via @alahav https://t.co/TBcKULJIQc

— Geert Van Calster (@GAVClaw) March 18, 2020

Jefferies International Ltd & Anor v Cantor Fitzgerald & Co & Ors [2020] EWHC 1381 (QB) engages everything including the kitchen sink (but excluding Articles 33-34 Brussels Ia, one assumes because no competing foreign suits were pending when the English courts were seized) in its application for a stay.

The First to Third Claimants [together Jefferies] and the First to Third Defendants [together Cantor] carry on business in the financial services industry internationally, including investment banking and capital markets business and in particular in the international power and renewables sector. The First Defendant is a general partnership organised under the laws of New York. The Second Defendant is an unlimited company registered in England and regulated by the Financial Conduct Authority. The Third Defendant is a limited liability company incorporated in Hong Kong. The action arises out of what has become known as a team move. Jefferies’ case is that on 20 November 2017 twenty-six of its employees each resigned in materially identical terms, almost all of the resignations took place at 11.00 am London time notwithstanding that this was outside the normal working hours of those who worked in New York and Hong Kong, each of the employees in each jurisdiction instructed the same solicitors and each now works for Cantor. Jefferies asserts that Cantor has directed each of the twenty-six employees to refuse to honour repayment obligations in respect of certain “Replacement Awards” and “Bonuses” which were triggered by their resignations and subsequent employment by Cantor.

The following issues were agreed for determination:

i) Are the claims of Jefferies US against Cantor US subject to an arbitration agreement between Jefferies US and Cantor US, and if so should those claims be stayed pursuant to the Arbitration Act 1996 section 9?

ii) Should Jefferies’ claims against Cantor US and Cantor HK be stayed because England is not the proper place for determination of those claims?

iii) Should Jefferies’ claims against Cantor US and Cantor HK be stayed because Jefferies breached its duty of fair presentation on its without notice application for permission to serve out?

iv) Do Jefferies’ claims against Cantor US and Cantor HK, insofar as they relate to repayment agreements governed by New York law, have no reasonable prospects of success, because those repayment agreements are unenforceable as a matter of New York law?

v) Should service of the claim form and particulars of claim on Cantor US and Cantor HK and the Order of Master Thornett granting permission to serve Cantor US and Cantor HK out of the jurisdiction be set aside on any of the above grounds?

vi) Should the proceedings (or any part of them not otherwise stayed on the above grounds) be stayed on case management grounds pending final award in the FINRA arbitration?

vii) Should Jefferies’ claims against the Employee Defendants be stayed as a result of exclusive jurisdiction clauses in relevant repayment agreements favouring the courts of the State of New York?

viii) Should Jefferies’ claims against the Employee Defendants be stayed on case management grounds pending final award in the FINRA arbitration?

Master Cook dismissed all applications for a stay in a surprisingly (given the size of the list) succinct judgment and readers are best referred to the text itself for perusal. Other than Articles 33-34 (see above), only abuse of process I think could have been added to this extensive list of attempted grounds for a stay.

Geert.

Application for stay on the basis of i.a. forum non, case management, preference to #arbitration.
All dismissed. Claims to proceed, with English anchor defendant. https://t.co/nsvXupnH4z

— Geert Van Calster (@GAVClaw) June 2, 2020