Flux Belges et Lux

Dooley & Ors v Castle Trust & Management Services Ltd [2022] EWCA Civ 1569  is the successful appeal against Russen HHJ’s first instance judgment which I discussed here – readers best consult that post for context, before reading on. For reasons I explain in that post, judicial relations between the UK and Gibraltar pre-Brexit engaged the Brussels 1968  Convention.

Carr LJ wrote the reasons for overruling the judgment, and the Court of Appeal does find there is jurisdiction in E&W. [35] she reminds us of the evidentiary burden at the jurisdictional stage

For the purpose of the evidential analysis, the standard lies between proof on the balance of probabilities and the mere raising of an issue. On contentious factual issues, the court takes a view on the material available if it can reliably do so; if a reliable assessment is not possible, there is a good arguable case for the application of the gateway if there is a plausible (albeit contested) evidential basis for it. The test is context-specific and flexible, and if there is an issue of fact the court must use judicial common sense and pragmatism, making due allowance for the limitations of the material available at an early point in the proceedings.

[41] ff the judge is held to have wrongly treated the relationship between Article 5 (mostly known for forum contractus and forum delicti reasons but also including a trust forum: A5(6) concerning trust-related claims in the courts of the trust’s domicile) and Article 13 (the forum consumptoris). [43] Articles 13 to 15 make up an entirely separate and self-contained section and there is no need or indeed allowance to first check whether Article 5’s conditions apply (including on the conditions for a ‘contract’ to exist), subsequently to check whether A13 ff (including the conditions for a ‘consumer contract’ to exist) apply with a consequence of disapplying A5. Both Opinion AG and judgment in CJEU C-96/00 Gabriel are called upon in solid support.

[48] Jurisdiction under Article 13 is thus a self-standing lex specialis and derogation from the general rule in Article 2. If jurisdiction is not established under Article 13, it may nevertheless arise under Article 5(1). But it is not necessary to establish jurisdiction under Article 5(1) in order to make it out under Article 13.

[49] The Judge’s error on this issue was material, in the light of his conclusion that any claim against Castle would fall within Article 5(6) (and so could not fall within Article 5(1)).

Continuing then on A13, the contentious issue is whether the Judge was wrong to conclude that the pensioners did not have the better of the argument for the purpose of A13:  i) that the proceedings were “proceedings concerning” contracts between the pensioners and Castle for the supply of services; and, if so, ii) that in England and Wales the conclusion of the contracts was preceded by specific invitations addressed to the pensioners.

Re i), [55] the Judge appears to have concluded that there was no contract, by reference to the lack of clarity as to the services to be provided by Castle beyond the contents of the Welcome Letter. On appeal Castle concede that a contract for services did exist between each pensioner and Castle, however that the services to be provided by Castle under each contract were limited to the technical execution of the relevant Deed of Adherence in each case and that therefore the proceedings, which made no complaint about the technical execution of the Deeds, were not “proceedings concerning a contract”.

Carr LJ [57ff] insists that the existence of a trustee-beneficiary relationship does not preclude the co-existence of a contract between the same parties, and, referring to language with strong ‘contract’ echo in the marketing, holds that there was indeed a contract between each of the pensioners and Castle, a relationship that went beyond mere technical execution of the deeds.

[61] ff then deals with ii), with the Court holding there is a good arguable case that each pensioner received (in the State of their domicile) a specific invitation addressed to them, such invitation crystallising at the moment that Management Services sent or handed them an application form. Carr LJ suggest that such an invitation might be sufficient for A13(3) purposes without more: A13 does not contain any express requirement for a connection between the invitation and the trader; the focus is on the existence of a sufficiently strong connection between the contract and the country of domicile of the consumer. However the claimants concede that there was a further requirement, namely that the invitation had to be made on behalf of the trader, here Castle. Arguendo, [66] Carr LJ holds 

there is a plausible evidential basis for the proposition that there was some sufficient connection between MS and Castle, including the possibility that MS was acting for Castle as a “middleman” of the type envisaged in the Schlosser Report (by cross-reference to the Giuliano/Lagarde Report). It is, for example, not in dispute that MS obtained Castle’s application forms and provided them to the pensioners. It appears that MS procured or facilitated production of all the complex documentation and declarations as required by Castle from the pensioners in the build-up to the application forms and transfers themselves.

[68] ff are the proceedings then “proceedings concerning” the contracts in question? The Court holds they are, at a general level for the proceedings are not about mismanagement of the trusts once established, but rather that the pensioners should never have entered the Schemes in the first place, and at a more specific level for the claims to relate to specific issues in the services agreement.

The claims can now proceed to trial where, as I noted before, applicable law will be one of the contested issues.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.9.2.1 and 2.2.9.2.2.

Successful appeal on jurisdiction (jurisdiction now established) under Brussels Convention (that's right: the 1968 Convention)
For the 1st instance judgment see https://t.co/JE8yVUJkO3

Dooley eos v Castle Trust & Management Services [2022] EWCA Civ 1569https://t.co/8uUVpYv0DU

— Geert Van Calster (@GAVClaw) November 30, 2022

RWE’s case (seeking huge damages for the impact on its assets following the Dutch coal phase-out) under investor-State dispute settlement (ISDS) continues I understand (I would also suggest it is problematic given the ECT’s fork in the road provisions), while Uniper’s will be dropped as part of its bail-out conditions. Yet this post is about yesterday’s first instance Uniper judgment and RWE judgment in the Dutch courts. I use the Uniper judgment for this post, the RWE judgment is not materially different as to its legal analysis.

Of note is first of all that these judgments are by the ‘commercial’ chamber at the Den Haag court, not an ‘environmental’ chamber. This might be relevant for those wishing to present the judgment as one of a maverick band of environmental crusaders.

RWE and UNIPER’s claims are based on ‘A1P1‘ (Article 1 of the First Protocol to the European Convention on Human Rights) and Article 17 of the Charter of Fundamental Rights of the EU, both of which protect the right to property.

[5.6] the court lays out the benchmarks (translation courtesy of DeepL and double-checked by me):

( a) is there “possession” (property)

( b) is there “interference,” that is, deprivation or regulation of the right to property?

If both these conditions are met, then the following requirements are examined:

( c) is the interference “lawful,” that is, provided for by law;

( d) if so, does the infringement have a legitimate objective that serves to promote the “general interest,” and

( e) if so, is there a “fair balance,” that is, a reasonable balance, between the requirements of the general interest and the protection of the fundamental rights of the individual?

The latter “fair balance test” is not satisfied if there is an individual and excessive burden on the person concerned.

[5.9] the State had argued that uncertain future earnings are not caught by A1P1 however the court [5.10] disagrees. The corporations have a long-term guarantee to use of the site, ia via a long-term lease. That the earnings might potentially not qualify as possessions, does not diminish the qualification of the guaranteed economic interest as ‘property’.

Interference, lawfulness and general interest are established each in one para [5.11 ff] , and did not seem to be the focus of much discussion even by the parties.

Fair balance is discussed extensively [5.14] ff. [5.15.3] the court qualifies the measure as regulatory interference and not de facto expropriation (the latter would have triggered guaranteed compensation rights). Even if electricity generation using coal will be phased-out, after the end of the transition period, Uniper will continue to have use of the site and has indeed already assumed such use in announced coal-free business plans.

The court then discusses the foreseeability at length, concluding [5.16.31] that although the Dutch Government frequently expressed support for modern facilities generating electricity using coal, this was always done with the caveat that that method had to be compatible with the Dutch climate commitments. [5.16.35] the ETS permit defence is dismissed.

[5.17.9] the court, having studies the various scientific reports presented to it, holds that there are most definitely alternative uses for the site. That their profitability is uncertain, is simply also a feature of energy markets as a whole.

[5.18] the court holds that the Dutch coal phase-out does have an effect on reduced CO2 emissions (carbon leakage is not accepted as being of much relevance to that conclusion). For the measure to be considered not the least trade-restrictive, the Dutch State is held to have a wide margin of manoeuvre and it is not established that the State gravely erred in opting for a coal phase-out [5.18.7]. The long transition period is held to substantiate enough room for compensation [5.19.6], again with reference to the volatility of market returns as being part and parcel of energy markets full stop.

Like the Dutch judgments eg in Urgenda, this judgment on protection of property rights viz GHG emission reduction policies, is likely to serve as an international benchmark. It can be appealed, of course.

Geert.

Dutch #RWE #UNIPER coal phase-out judgment is here https://t.co/aJWRCE9H6H
Held ia: phase-out and closure compatible with European Convention, A1P1 #ECHR
Court calls closure foreseeable, transition period testifies to proportionality. https://t.co/qwhU9HZ24j

— Geert Van Calster (@GAVClaw) November 30, 2022

The CJEU last week held in C-358/21 Tilman v Unilever, the context of which I reviewed here. Krzysztof Pacula has initial analysis here and also refers to the application of the consent for choice of court issues in Ebury Partners.

One of the parties’ (Unilever’s) GTCs  are contained on a website, and their existence is ‘flagged’ in the written main contrac, without there bring a tickable box that click-wraps the agreement. Does that suffice to bind the parties as to the GTC’s choice of court (in favour of the English courts)? Note the courts were seized pre-Brexit; the UK’s Lugano troubles are not engaged.

The CJEU answers exactly along the lines I suggested in my earlier post: no impeding of commercial practice; need for the contracting party relying on the clause to have drawn the attention to the clause; need for that clause to be durably consultable and storable; finally it is the national court’s task to verify  the formation of consent in these factual circumstances. That there is no box that can be ‘ticked’ is not conclusive [52].

All in all a welcome support for commercial choice of court.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.10.

For my earlier review of the issues see https://t.co/OKcx31TlsB https://t.co/b9KWaSzaKB

— Geert Van Calster (@GAVClaw) November 24, 2022

Sedgwick v Mapfre Espana Compania De Seguros Y Reaseguros Sa [2022] EWHC 2704 (KB) discusses the application of Article 19 Rome II on direct actions against insurers, and the procedural carve-out of the Regulation.

Claimant lives in Wales. At the time of the accident she was on her honeymoon, staying at the Hotel Blue Sea Callao Garden in Santa Cruz which was owned and operated by a company registered and incorporated in Spain. She was descending an inadequately lit concrete staircase when she fell and sustained severe fracture injuries to her left knee and to her right heel.

Spanish law is the governing law of the insurance contract/policy which provides the tortfeasor with the right of indemnity within the terms of the policy and that the claimant has, under Spanish law, a direct right of action against the insurer. Parties also agree that Spanish law applies per A4(1) Rome II.

The scope of the law applicable is set out in A15 Rome II, which reads in relevant part: “…the law applicable to non-contractual obligations under this Regulation shall govern in particular: (a) the basis and extent of liability including the determination of persons who may be held liable for acts performed by them; (b) the grounds for exemption from liability, any limitation of liability and any division of liability; (c) the existence, the nature and the assessment of damage or the remedy claimed;…”

A1(3) Rome II carves out all matters of procedure and evidence to the law of the forum court: “This Regulation shall not apply to evidence and procedure “. I have reported on the carve-out frequently (see eg here and linked postings there, or use search tag ‘evidence and procedure’).

On a technical side-note, Matthew Hoyle here (he also has a general excellent note on proving foreign law here) correctly notes a confusion with the judge [11] on the issue of proving foreign law, seeing as she conflates assumption of English law as the lex causae when the content of a suggested foreign law is not proven and pleaded (it was so in the case at issue), and assumption in certain circumstances, of the foreign law as being identical to English law.

Issues for determination, are:

i) the resolution of a series of questions relevant to the award of general damages (for non-pecuniary loss) under Spanish law; these are purely issues of Spanish law and of no interest to the blog.

ii) whether the claimant is able to pursue a claim for subrogated losses on behalf of her travel insurer. The contentious issue is whether the claimant herself is able to bring a claim for subrogated losses or whether the claim must be brought in a separate action by the insurer.

[60] if the claim is to be brought separately, it can no longer so be brought because it is now time-barred.

Defendant submits that the claim for those losses incurred by the travel insurer must be brought in accordance with Spanish law and that the proper person entitled to bring a claim against the defendant insurer under A43 Spanish Insurance Contract Act 50/1980 is the third party insurer, not the claimant, as those subrogated losses are losses of the third party payer.

Claimant submits that Spanish law is relevant only to the extent that, as the applicable law of the tort, it provides for recovery of expenses. Spanish law does not govern the relationship between the claimant and the travel insurer, nor the travel insurer’s rights of subrogation by means of the claimant’s claim under those policies. Those matters are regulated, it is argued, by the law governing the insurance policy, in this case, English law, consequential to A19 Rome II (“where a person (the creditor) has a non-contractual claim upon another (the debtor) and a third person has a duty to satisfy the creditor, or has in fact satisfied the creditor in discharge of that duty, the law which governs the third person’s duty to satisfy the creditor shall determine whether and the extent to which the third person is entitled to exercise against the debtor the rights which the creditor had against the debtor under the law governing their relationship.”)

The issue therefore is whether the question of whether the insurer may bring a claim in the name of the insured (rather than by other means) a question of “whether, and the extent to which” the insurer is entitled to exercise the rights of the insured against the third party? Lambert J [73] says it is, as a matter of language and construction, and she also expresses it (less immediately convincing to my mind) as an issue of common sense:

‘Putting the matter another way, it would be distinctly odd if English law determined the right of subrogation and limits upon that right (e.g. the legal principle that there must be full indemnity before subrogated rights attach) but an important aspect of the English law of subrogation (namely that the claim may and must be brought in the name of the insured) may not apply depending on where loss is caused which is to be indemnified.’

Finally, iii) the appropriate rate of interest to apply to the damages award, whether the Spanish (penalty) rate of interest applies or a rate applied under s 35A [E&W] Senior Courts Act 1981. Clearly the issue is whether penalty interest rules are substantive rather than procedural: in the latter case, they are carved out from Rome II, and English law as the lex causae applies.

Troke v Amgen is referred to, and the judge in Swedgwick decides [101]

Whether the decision in Troke is binding upon me or not, I agree with its conclusion and the underlying reasoning which I endorse and follow.

and [102]

the penalty interest provisions are discretionary; they may be excluded if there is a good reason to do so and they are procedural in character.

In my review of Troke I noted its reasoning was unconvincing. Lambert J [101] adds more arguments here, and I find these more convincing, if not conclusive.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 4.8.

! #travellaw, accident abroad
Various issues on the application of A19 Rome II re actions against insurers, and the nature of interest rates as 'procedural' hence carved out from Rome II

More soon on the blog

Sedgwick v Mapfre [2022] EWHC 2704 (KB) https://t.co/EkEjf6IjNk

— Geert Van Calster (@GAVClaw) October 27, 2022

Ebury Partners Belgium SA/NV v Technical Touch BV & Anor [2022] EWHC 2927 (Comm) discusses ia whether choice of court and law included in general terms and conditions – GTCs, agreed (or not) by inclusion in email and /or e-mailed click-wrapeable hyperlink (this is a factual discussion), justifies an anti-suit injunction against Belgian proceedings.

Pre-Brexit such injunction would not have been possible. It has since of course been granted frequently; my most recent report of one was QBE Europe v Generali. Issuing an anti-suit post Brexit therefore is no longer surprising (commentators continue to suggest the EU should somehow shield EU proceedings from them). The application of the Rome I Regulation under retained EU law however does remain less discussed – and it is poorly executed in current judgment.

Anticipatory proceedings seeking a declaration of non-liability were launched unexpectedly (Belgian CPR requires no prior warning in any circumstance) in Belgium on 4 May 2022. The Belgian court later that month held that Ebury’s jurisdiction challenge  will not be dealt with separately, instead, as is standard, will be reserved for consideration at the same time as the merits.

The English proceedings were launched in July 2022. A critical question is whether Ebury can show, with a high degree of probability, that there is a jurisdiction agreement governing the dispute in question. Was the E&W jurisdiction clause contained in Ebury’s RA standard terms incorporated into the agreement between Ebury and TT? The factual circumstances are not conclusive, for there are suggestions of GTCS with choice of court sent by incorporation in an e-mail and /or by click-wrapeable  hyperlink similarly e-mailed.

The judge is correct to classify Rome I as retained law [83]. However the exclusion of choice of court agreements from that Regulation has somehow entirely escaped him and counsel, it seems.

Rather therefore than considering the issue under English conflict of laws (in EU Member States the issue is now subject to Article 25  Brussels Ia however that is irrelevant here), the judgment ventures into Article 10 Rome I’s putative law /von Munchausen /bootstrap principle, to identify English substantive law as the lex cause for the validity (including the issue of incorporation) of the choice of court. This leads after extensive discussion to a finding of incorporation under English law [102].

[103] ff Belgian law is signalled as a fall-back under Article 3(5) and 10(2) Rome I, however the judge essentially ignores that possibility (although he formally entertains it) by referring to a lack of indication on the facts that the counterparty agreed to the relevant clauses. He uses the ‘man on the Clapham omnibus’ formula to reach that conclusion: counterparty did consult or should have consulted the GTCs and there are no factual indications it disagreed with them. Conflicting Belgian law  expert evidence is not discussed.

Anti-suit was eventually granted.

If their apparent lack of raising the proper analysis (ie: no inclusion of choice of court) of the Rome I issue does not prevent defendants from appealing, they clearly should, to the extent the English conflict of laws approach to validity of choice of court, may lead to a finding of non-incorporation.

Geert.

Anti-suit injunction granted viz Belgian proceedings
E&W jurisdiction clause included in GTCs per click-wrap agreement
Discussion ia of A10 Rome I bootstrap principle

Ebury Partners Belgium SA/NV v Technical Touch BV & Anor [2022] EWHC 2927 (Comm) https://t.co/ss8coWfP2Q

— Geert Van Calster (@GAVClaw) November 18, 2022

CA Indosuez (Switzerland) SA & Anor v Afriquia Gaz SA & Anor [2022] EWHC 2871 (Comm) is largely a case of statutory construction (here: of the amended Civil Procedure Rules – CPR).

It transpires from current judgment that similar issues were discussed (yet eventually did not need determination) in Naftiran Intertrade Company (Nico) Limited and Anor v G.L. Greenland Limited and Anor [2022] EWHC 896 (Comm) (unpublished).

I do not often copy /paste big chunks of judgment let alone the facts parts of them, however here I feel it is quite necessary: [1] ff, in summary:

Gulf Petroleum FZC, the First Part 20 Defendant (“GP”) had trade finance facilities with CA Indosuez (Switzerland) SA (the Claimant: “CAIS”) and with UBS Switzerland AG (the Second Part 20 Defendant: “UBS”).

Afriquia Gaz SA and Maghreb Gaz SA, the Defendants and Part 20 Claimants (“AG” and “MG”), purchased a cargo of butane from GP.  GP assigned to CAIS the debt represented by the purchase price.  GP issued its invoices to AG and MG on 23 July 2020 and CAIS sent notices of assignment on 27 and 28 July 2020.

However on 19 August 2020 AG and MG paid, by SWIFT, the sums due to GP’s account with UBS. The funds were received into one of GP’s accounts with UBS and then transferred to what appears to have been its loan or overdraft account.

GP instructed UBS to transfer the sums received to CAIS. UBS refused. It claimed to have been entitled to set off those sums against GP’s liabilities to it.

By Rule 20.1 of the Civil Procedure Rules, the purpose of Part 20 of the CPR is “to enable counterclaims and other additional claims to be managed in the most convenient and effective manner”. CAIS commenced this claim against AG and MG for the purchase price, a claim in debt. AG and MG denied liability but added (Part 20) claims against GP and UBS for the sums received, and in unjust enrichment and for liability as constructive trustee. Following the exchange of expert reports on Swiss law, AG and MG have accepted that their claim against UBS based on an alleged constructive trust must fail, and that the claim in unjust enrichment will only arise in certain circumstances.

GP is incorporated in the UAE.  The sale contract with AG and MG contained an exclusive jurisdiction agreement in favour of the High Court in London. The Part 20 Claim Form was issued with the following indorsement:

“[AG and MG] are permitted to serve the [Part 20] Claim on [GP] pursuant to CPR r.6.33(2)(b)(v) and Article 25 of the Judgments Regulation because [GP] is a party to an agreement … conferring exclusive jurisdiction within Article 25 of the Judgments Regulation.  [AG and MG] are permitted to serve the [Part 20] Claim on [UBS] out of the jurisdiction pursuant to CPR r.6.33(1)(b)(i) and Article 6(3) of the Lugano Convention.

The reference to Article 6(3) was a mistake for Article 6(2).

The Part 20 Claim Form against GP and UBS was issued on 30 December 2020, before the end of the Brexit transition period. UBS declined to instruct solicitors to accept service in England. AG and MG meanwhile on 20 January 2021 obtained an order from Cockerill J extending the validity of the Part 20 Claim Form. The Part 20 Claim Form was served or purportedly served on UBS, out of the jurisdiction, on 9 March 2021.

Crucially, the Court’s permission for service out of the jurisdiction on UBS was not sought. Counsel for claimant informed the Court that those representing AG and MG considered at the time that no permission would be needed, on the basis that jurisdiction under the Lugano Convention, which existed at the date of issue of the Claim Form, was preserved. Counsel also contented that even if permission to serve out was required and had been sought, it would inevitably have been granted, as questions of appropriate forum (considered in an application for permission to serve out) were not relevant in the context of the Lugano Convention. 

UBS acknowledged service on 26 March 2021, indicating an intention to contest jurisdiction.  Current judgment focuses on that contestation.

Under the European Union Withdrawal Act 2018, implementing the EU Withdrawal Treaty, an implementation period came to an end at 23:00 GMT on 31 December 2020 (a day after the claim form that initiated current litigation was issued; also known as “IP completion day”). During the implementation period, obligations stemming from international agreements to which the EU was party continued to apply. Until IP completion day therefore the Lugano Convention applied to it by reason of the EU’s membership of the Convention. That clearly is no longer the case.

Essentially, E&W CPR was amended to include transitional provisions in relation to service out of the jurisdiction, which specifically maintain the pre-existing position that permission is not required for a claim form issued prior to withdrawal where jurisdiction is based on Brussels Ia. However, there is no equivalent saving for claim forms where jurisdiction exists under the Lugano Convention.

Knowles J [25] on the issue of permission, reaches the same conclusion as Ms Dias QC in Naftiran (above): namely that the widened A6.33(3) CPR rule applies to include Lugano Convention claims. That rule now reads

“6.33(3) The claimant may serve the claim form on a defendant out of the United Kingdom where each claim made against the defendant to be served and included in the claim form is a claim which the court has power to determine other than under [the Convention on Choice of Court Agreements concluded on 30th June 2005 at the Hague], notwithstanding that (a) the person against whom the claim is made is not within the jurisdiction; or (b) the facts giving rise to the claim did not occur within the jurisdiction.”

Having decided the issue of permission, the judge still had to decide whether Lugano conveys jurisdiction in this case. A 6(2) Lugano provides that a person domiciled in the state bound by the Convention may be sued “as a third party in an action on a warranty or guarantee, or in any other third party proceedings, in the court seised of the original proceedings, unless these were instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case;”

A core issue in current case is that the main claim is settled [12]; can the third party proceedings still continue in the main claim’s forum? The judge refers to CJEU C-365/88 Kongress Agentur (a Lugano case) and [44] holds that there is sufficiency of connection between the claims for jurisdiction to be established; that there is no authority for defendants’ proposition that only ‘exceptional circumstances’ may justify third-party proceedings to continue when the main claim is settled, and that in essence [41] sufficiency of connection between the third party claims and the main claim suffice for the former to continue in the latter’s jurisdictional home.

There are echoes here of potential for abuse per CJEU CDC, however that route was seemingly not pursued and on the facts would seem challenging to substantiate.

Geert.

Whether amended CPR implementing EU-UK withdrawal agreement requires (held: no) permission for service out in #Lugano Convention scenarios when it still applied
Also considers fate of anchored claim when main claim is settled
CA Indosuez ea v Afriquia Gaz https://t.co/GvNEAklFBv

— Geert Van Calster (@GAVClaw) November 14, 2022

Their relevance is of course insignificant in light of the dreadful events that  triggered the judgments, however I thought I would flag the private international law elements in this week’s four Dutch judgments following the criminal prosecution of the suspects (now culprits) in the downing of MH17.

The judgment against Mr Pulatov was the  only one to respond to defence arguments actually made: he was the only one to have been represented (the other judgments were held in absentia). The judges extrapolate his arguments to the  other defendants to ensure some kind of proper representation, however they also explore further elements not raised by Mr Pulatov in the other judgments. This includes precisely the private international law elements for, it seems, no private claim was attached to the prosecution of Mr Pulatov while it was against the other defendants.

In this post I take the judgment against Mr Dubinskiy as the relevant text (structure and content of the other 2 judgments are essentially the same).

[12.4.1] discusses the possibility of judging the civil leg of a criminal suit. That the crimes could be prosecuted in The Netherlands is established on the basis of international criminal law of course, which is not the area of this blog. Jurisdiction for the civil leg is justified by reference to this being accepted international practice. Support (not: legal basis per se) is found by the court in Article 7(3) Brussels Ia:

A person domiciled in a Member State may be sued in another Member State:

as regards a civil claim for damages or restitution which is based on an act giving rise to criminal proceedings, in the court seised of those proceedings, to the extent that that court has jurisdiction under its own law to entertain civil proceedings;

and in the similar regime under the Lugano Convention. The court rejects a potential (this judgment as noted was issued in absentia) lis pendens argument vis-a-vis proceedings  in the United States. The court remarks that these judgments had already been issued before the Dutch criminal prosecution was initiated; that therefore there are no concurrent proceedings unto which a lis pendens argument could be raised; and that the US judgments reached the same conclusion.

Res judicata of the US judgments is dismissed as an element which would impact the Dutch judgments at this stage. The court does point out that res judicata may return at the enforcement stage of the damages part of the judgments, in that the victims will not be entitled to double compensation. Note that the US judgments included punitive damages which as readers will know is also a complicating factor for enforcement in the EU.

At 12.14.2 the court then turns to applicable law, for which it of course applies Rome II. With reference to CJEU C-350/14 Lazar, it dismisses the ‘extraordinary suffering’ of the relatives of the victims as ‘indirect damage’ under Rome II, instead exclusively taking the direct damage (the passing away) of the victims on Ukrainian territory as determinant for locus damni.

Dutch law is held not to be ‘manifestly more closely connected’ per A4(3) Rome II, despite the majority of the victims being Dutch. The court in this respect refers firstly to the link with Ukraine not being accidental (such as might be the case in ‘ordinary’ mass claims) but rather directly linked to the hostilities in Ukraine), moreover to the need to guard what it calls the ‘internal harmony’ of the judgment seeing as there are also non-Dutch relatives involved. This I find a touch unconvincing, particularly seeing as the court itself in the same para, with reference to Jan von Hein in Callies’ 2nd ed. of the Rome Regulations commentary, refers to the need to consider A4(3)’s escape clause individually, not collectively.

Geert.

Links to all 4 judgments:

https://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2022:12219

https://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2022:12218

https://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2022:12217

https://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2022:12216

Note the conflict of laws element in the civil suit's part of yesterday's #MH17 judgment:
jurisdiction per A7(3) Brussels Ia; no lis pendens or res judicata viz earlier US judgments; application of Ukranian law per Rome II

NL v Kharchenko et alhttps://t.co/d1QZXZwG96

— Geert Van Calster (@GAVClaw) November 18, 2022

In GW Pharma Ltd & Anor v Otsuka Pharmaceutical Co. Ltd [2022] EWCA Civ 1462, the Court of Appeal confirmed jurisdiction for the courts of England and Wales, confirming the first instance judgment which I reviewed here.

The first instance judgment dismissing GW Pharma’s application decided three issues: jurisdiction under the Moçambique principle, foreign act of state and a distinct application for a stay on forum non conveniens grounds.

Arguments on appeal are listed [20] ff:

GW Pharma’s grounds 1 and 2 address the Moçambique principle and its application. GW Pharma contend that the judge erred in applying an overly restrictive test for the purposes of the Moçambique principle and further erred in his application of that test to the facts.

Ground 3 addresses the foreign act of state doctrine, and the common law public policy exception. The submission is that the judge erred in law in holding that the act of state doctrine (or common law public policy) did not require the court to decline jurisdiction.

Ground 4 relates to forum non conveniens, contending that the judge erred in declining a stay on those grounds.

Otsuka’s case is that the judge was right for the reasons he gave but Otsuka also advances two additional points in support of the judge’s overall conclusion. The first point is that as well as the exception to the Moçambique rule based on whether a validity challenge is direct or not which the judge applied, there is a second exception – for claims which relate to a contract. This case would also fall within that exception. The second point is a submission that GW Pharma’s case would necessarily involve a country-by-country approach, contrary to the approach adopted by the English courts in related contexts (citing the Supreme Court in Unwired Planet v Huawei [2020] UKSC 37). The relevant principles ought not to be applied so as to prevent Otsuka from bringing its contractual royalty claim against GW Pharma in a single set of proceedings in GW Pharma’s home jurisdiction.

Birss LJ [26] notes, with common sense, that Brussels Ia authority still has relevance, despite the Regulation no longer applying

the fact the Regulation does not apply is a different thing from the question whether aspects of the thinking behind the Brussels Regulation may illuminate questions which do arise.

[29] the main point of UKSC Lucasfilm is summarised as the

modern trend [being] in favour of the enforcement of foreign intellectual property rights, particularly where there is no issue as to validity.

That modern trend of course provokes discussion as to when a claim engages validity as opposed to mere infringement, with Chugai a classic illustration. The judge here sometimes necessarily skates on thin ice for creative counsel may direct the end-result by claim formulation. Here Birss LJ offers a relevant distinction between direct challenges to the validity of a patent, as opposed to proceedings being ‘principally concerned with’ such challenges:

In Chugai there is reference to both the idea of whether a validity challenge is a direct one and also to whether proceedings are “principally concerned with” validity. These two expressions are performing different tasks and it is worth keeping them distinct. A claim consisting of nothing other than a claim for infringement, in which the defendant does not claim that the patent is invalid, but merely requires the court to ask itself, as a guide to construction, what would be the hypothetical consequences for validity if there was infringement, does not involve a direct challenge to validity. Such a claim is also not principally concerned with validity. On the other hand a claim consisting of nothing other than a request for revocation on the ground of invalidity or a declaration of invalidity would be a direct challenge to validity, and would be principally concerned with validity. However a claim raising multiple issues might well properly be said not to be principally concerned with validity, even if one of the subsidiary issues was a direct challenge to validity; but in such a case the court’s response would depend on the circumstances. The court might not decline jurisdiction over the dispute as a whole but might address individual issues separately. If the direct challenge only arises on a contingent basis then the right response might involve case management. Unlike the judge below, I would not describe this latter situation as one in which what was really a direct validity challenge was rendered not a direct challenge owing to its subsidiary nature in the action as a whole. The nature of the challenge is a direct one, but its status in the proceedings as a whole means that they are not principally concerned with it.

This is a discussion which to my mind is also useful for the A24(4) discussion in Brussels Ia, sub judice in BSH Hausgeräte v Electrolux.

[38] ff discusses the long standing exception to the Moçambique rule concerning contracts and equitable obligations. [40] There are said to be two questions in the present case about the contract exception. One is whether it depends on the existence of an exclusive jurisdiction clause in the contract  (answered [42] in the negative] and the other is about the extent of the exception itself. Would it, for example, allow the court to entertain a direct challenge to the validity of a foreign patent which the court would not have had jurisdiction to determine in the absence of the relevant contract (or equitable obligation)? : [43]:

In a way the question is whether the exception really is an exception to a rule that the court has no jurisdiction to determine a claim principally concerned with title (etc.) to foreign land or whether it is really just a manifestation of the proper application of the test for what it does or does not mean to say that a claim is principally concerned with title (etc.). Or putting it another way, can the court, when considering a contract claim, decide on title to foreign land, and by extension the validity of a foreign patent?

[46] that question is answered with reference to the classic in rem v in personam discussion that is part of the original Moçambique rule (and A24(1)BIa)

The contract exception does not allow the court to make a decision about the validity of a foreign patent in rem but it would allow the court to address the validity of a foreign patent in the course of making a decision concerning contractual rights in personam, assuming (such as if the Lear point does work in the way I have described) such a question was relevant to the contract decision.

[48] ff Lord Justice Birss summarises:

Bearing all this in mind, I would state the Moçambique rule as explained and formulated in Lucasfilm, and as it applies to patents in the following way:

First, in a case in which the courts of England and Wales have in personam jurisdiction over a defendant, then the courts have jurisdiction in proceedings for infringement of a foreign patent save where those proceedings are principally concerned with a question of the validity of that patent. The proceedings will not be principally concerned with validity only because the defendant, who does not claim that the patent is invalid, requires the court to ask itself as a guide to construction, what would be the hypothetical consequences for validity if there was infringement. However what the rule does not permit is a direct challenge to the validity of a foreign patent, and (subject to the exception below) the court has no jurisdiction to determine a claim that the foreign patent is invalid.

Second, this Moçambique principle is also subject to a contractual exception. If the case is one in which the court is asked to enforce a contract between the parties then in addition to questions of patent scope/infringement, if and only to the extent that questions of the validity of foreign patents need to be addressed in order to decide on the true nature and scope of the parties’ contractual obligations to one another, then the court can do so.

Applying this summary to the first instance judgment, that judgment is confirmed [60].

The third ground of appeal then invokes the foreign act of State doctrine, in that is is said that (certain) intellectual property rights may be said to depend on the grant or registration by the state. Birss LJ dismisses the argument [73] essentially by suggesting it harks back to bygone notions of intellectual property rights:

even absent the authorities I would hold that as a matter of principle the modern grant of a patent for an invention does not fit within the act of state doctrine as it stands today for two reasons. The first reason relates to the exercise of grant itself. The very word “grant” harks back to a past time, before the Statute of Monopolies 1623, when letters patent were granted on the whim of the Stuart monarchs (and similarly I suspect the Danish monarchy in Blad v Bamfield). Today there is no such condescension by the sovereign power in the grant of a patent by the Comptroller of the Patent Office. Once a properly constituted patent application has been examined and found to comply with the requirements of the law, the Comptroller is required by statute to grant the patent. The relevant words are in s18(4) of the Patents Act 1977 which provide essentially that if the applicant’s application is all in order then ‘the comptroller shall … grant him a patent.’ The second reason follows on from this and was given by Henry Carr J in Chugai at paragraph 68. He observed that once the patent had been granted, any party can challenge the validity of the patent and then can do so in a manner and on grounds which are quite different from an attempt to challenge legislation or government acts such as requisition.

Conclusion on this ground [75]

on grounds of authority and principle, I agree with the judge below that the act of state doctrine is not relevant to the analysis of the court’s jurisdiction in this case.

The first instance judge’s finding on forum non is also confirmed and the appeal therefore dismissed.

I do not know whether, if sought, permission to appeal to the Supreme Court will be granted, but it seems unlikely. The appeal judgment in my view includes important instruction in particular on the ‘principally concerned with’ issue however it largely applies existing UKSC authority.

Geert.

EU Private International Law, 3rd ed. 2021, 2.196 ff.

Court of Appeal rejects appeal against finding of jurisdiction in foreign #patent case
Rule in Moçambique confirmed as not engaged
See here https://t.co/hHZdeXVpCb for first instance judgment

GW Pharma v Otsuka Pharmaceutical Co. Ltd [2022] EWCA Civ 1462 https://t.co/GLsmtCRNtZ

— Geert Van Calster (@GAVClaw) November 8, 2022

Szpunar AG opined a few weeks back in C-423/21 Grand Production v GO4YU  ea. The case involves a variety of issues related to streaming and VPNs, many of which concern telecoms law yet one is of interest to the blog: namely the question whether

in the event of an allegation of infringement of copyright and related rights guaranteed by the Member State of the court seised, that court has jurisdiction only to rule on the damage caused in the territory of the Member State to which it belongs – because the territoriality principle precludes domestic courts from having jurisdiction to determine and examine the facts in relation to foreign acts of infringement – or can or must that court also rule on offences committed outside that territory (worldwide), as alleged by the author whose rights were allegedly infringed?

It transpires from the Opinion however that the case in the national court does not involve one for damages, yet rather one for a temporary injunction prohibiting distribution. To the degree this is aimed at the Serbian defendants at issue, these are domiciled outside the EU and hence not subject for actions in tort, to Brussels Ia. Against the Austrian defendants, the case is subject to full jurisdiction under A4 forum re, hence not triggering the full or partial jurisdictional issues of the relevant CJEU case-law (Bolagsupplysningen etc.).

The AG suggests inadmissibility of the Brussels Ia question.

Geert.

Opinion first Advocate General Szpunar this morning on VPNs, #copyright and platform streaming, including the jurisdictional aspects: forum delicti under A7(2) Brussels Ia

Grand Production v GO4YU eahttps://t.co/D7Uaor19wO

— Geert Van Calster (@GAVClaw) October 20, 2022

Kingdom of Sweden v Serwin & Ors [2022] EWHC 2706 (Comm) concerns an attempt by Sweden to gain compensation of a number of defendants whom it alleges were parties to a substantial fraud.  The fraud resulted in the misappropriation of in excess of €115m from the pension saving accounts of some 46,222 Swedish pension savers.

I may have to think one or two things through however I wanted to collect my initial thoughts at any rate.

Of note is that the application was one for summary judgment and that quite a few of the respondents did not file an acknowledgment of service or a defence. However, Sweden obtained permission from the court to obtain summary judgment on the merits even against them, rather than entering judgment in default (ia because that makes enforcement more straightforward). Other defendants are serving prison sentences in Sweden and they did enter a defence.

I do not want to turn this post into a banking and finance one however some background is required: [20] ff

The Swedish pension system has various types of pension provision, including a compulsory premium pension (PPM), in which a percentage of a pension saver’s earnings is put into an account, which is invested in investment funds selected by the pension saver from an online platform that the Swedish Pension Authority (SPA) maintains. Each pension saver has a PPM account. Among the investments which might be made were investments in so-called UCITS funds where these had been approved by the Swedish Financial Supervisory Authority (SFSA). UCITS funds are those meeting the requirements of the Undertakings for Collective Investment in Transferable Securities Directive 209/65/EC.

A company that wished to participate in the PPM was required to
enter into a cooperation agreement with the SPA. This case arises from two UCITS funds which were listed on the PPM online platform:

i)            the Optimus High Yield Fund (Optimus), managed by Optimus Fonder which entered into a co-operation agreement with the SPA on 26 March 2012; and

ii)          the Falcon Funds SICA V plc (Falcon) which entered into a co-operation agreement with the SPA in relation to three funders under its management.

The events concerning these two separate funds have been described in the evidence as the Optimus phase and the Falcon phase..

There was consensus ([38]) that the law applicable to the Swedish claims so far as they concerned the Optimus phase was Swedish law, whether by virtue of Article 4(1) or (3) Rome II. That Sweden’s claims relating to the Optimus phase were barred by the doctrine of res judicata, merger, cause of action estoppel or the allied doctrine in Henderson v Henderson, was dismissed by Foxton J [44].

Falcon then was incorporated and authorised by the Maltese Financial Services Authority as a UCITS fund on 22 November 2013. Sweden’s summary judgment claim in relation to the Falcon phase argued that its claims in delict and for breach of fiduciary duty relating to that phase are governed by Maltese law and not Swedish law.

As far as the delict issue is concerned (misappropriation), application of A4(2)  to some of the defendants was clear, and Sweden argued application of A4(1) for the remainder, seemingly arguing (judgment is a bit unclear on this point) that the damage was suffered in Malta when funds held in Falcon were applied to the various classes of loss-making investments.  Reference was made by counsel and judge to Dicey 16th ed. 35-027: “in misappropriation cases … it seems appropriate to locate damage at the place where an asset … is taken from the control of the claimant or another person with whom the claimant has a relationship” – the judge held that it is strongly arguable that this happened when Sweden’s funds became subject to the control of Falcon and the powers of its directors or those operating behind the scenes; the judge seems to locate this in Sweden, not Malta, and to some degree it does not matter for with reference ia to Avonwick and reasons listed [81] it is held that A4(3) arguably is engaged to make the lex causae Swedish law.

[86] reference is again made to Dicey for the applicable law issue as far as breach of fiduciary duties is concerned: Dicey, Morris & Collins [36-069]-[36-070]:

i)                 If equitable obligations of a fiduciary character arise in the context of a contractual relationship, there is a strong argument that the law applicable to the parties’ contractual relationship under Rome I determines whether a fiduciary relationship exists and the nature and content of the duties imposed.

ii)               If, however, the equitable obligations are characterised as incidents of a company law relationship rather than as “contractual”, common law principles determine the applicable law ( company law matters are excluded from Rome I and Rome II).

iii)             If a fiduciary duty arises where the parties were not in a prior relationship, such as in the case of a recipient of trust property, then the “better view” is that the obligation is non- contractual in nature and falls within the ambit of Rome II.

Unlike Sweden, the judge holds there are strong arguments that Swedish law applies, by reference it seems to Dicey, above, i) and with the ‘anchor’ agreement being the one by which Falcon becomes eligible to received PPM funds. Rule ii) seems to be moved aside by the judge here, and at any rate the extent of that rule is not clear-cut (see the CJEU itself recently). It is clear and it was correct to hold that the discussion is not one for summary judgment material.

An interesting final, obiter point comes [91] ff re the ‘reflective loss’ rule (a shareholder (and some others) cannot claim for a fall in the value of their holdings due to loss suffered by the company, if and when the company has a cause of action against the same wrongdoer) under Maltese law. Falcon itself is currently asserting claims against some of the alleged wrongdoers in relation to those same misappropriations, however Sweden argues an exception to that rule on the basis of Maltese expert evidence that was not considered to be robust enough for the summary judgment stage.

I wonder though whether the suggested relevance of the reflective loss rule, does not serve as ammunition for the suggestion that Rome I and II’s corporate carve-out is engaged viz the breach of fiduciary duties claim. For is the DNA of the rule not one of clear lex incorporationis?

To be further pondered.

Geert.

Partially successful application for summary judgment
Some of the implications of lex causae under Rome II for breach of fiduciary duty have to go to trial

Kingdom of Sweden v Serwin & Ors [2022] EWHC 2706 (Comm) https://t.co/JgLAba8zI2
via @legalstyleblog

— Geert Van Calster (@GAVClaw) October 27, 2022

Whether orders for penalty payment my constitute a ‘judgment’ is an issue under Brussels Ia (A55, see also below). It is also under the EU account preservation order Regulation 655/2014 (the ‘APO’ Regulation or simply ‘APO’) and it is on the latter that Szpunar AG opined last week in C‑291/21 Starkinvest (no English version is as yet available).

Per A7 APO, confirmed in CJEU C-555/18 H.K., when the applicant for an APO  (the creditor) does not (yet) have a judgment, court settlement or authentic instrument requiring the debtor to pay the creditor’s claim, creditor must submit sufficient evidence to satisfy the court that he is likely to succeed on the substance of his claim against the debtor: that is the ‘fumus boni juris’ (literally ‘the smoke of a solid right’) requirement.

Under Belgian civil procedure rules, a creditor need not return to the court to have the final amount of a periodic penalty payment confirmed before being able to seize assets commensurate to the amount due: the judgment itself, which for that reason must clearly detail the parameters for the payment’s calculation, serves as enforceable title; the bailiff seizes following her /his own calculation, and the attachment judge confirms the final amount. The point of the exercise is to guarantee sufficient asset seizure, pending the final confirmation of the amount due.

In essence the question is whether this security also works in an international context. The discussion of course triggered discussion of A55 Brussels Ia and its relationship with APO: ‘A judgment given in a Member State which orders a payment by way of a penalty shall be enforceable in the Member State addressed only if the amount of the payment has been finally determined by the court of origin.’

The AG (and with him, the EC and the Member States that intervened) zooms in on the A7(2( APO condition: the debtor must have obtained ‘a judgment, court settlement or authentic instrument requiring the debtor to pay the creditor’s claim‘  (emphasis added): not just ‘a judgment’ as defined in A4(8) APO: “‘judgment’ means any judgment given by a court of a Member State, whatever the judgment may be called, including a decision on the determination of costs or expenses by an officer of the court”. This focus is then followed by a discussion of the word ‘claim’, for which reference is made to the relevant forms prescribed by Commission Implementing Regulation 2016/1823 . This form refers to an amount ‘awarded’ and an ‘amount set out in’ the judgment.

The AG ends his Opinion with the suggestion that the judgment which imposed the penalty payment, together with confirmation eg by a bailiff that the debtor did not meet with the requirements to escape the payment, form a sound basis for the A7(2) APO route of fumus boni iuris.

It is clear that penalty payments could have done with more specific consideration in APO, and  the spirit of the APO Regulation could in my view support a different conclusion. However the textual anchors for the AG’s Opinion would seem strong.

Geert.

Opinion Szpunar AG this morning, whether order to pay periodic penalty payment without determination of the final amount, is a judgment viz the European Account Preservation Order

Starkinvest SRLhttps://t.co/t5a7rPGnzy

— Geert Van Calster (@GAVClaw) October 20, 2022

Banca Intesa Sanpaolo SPA & Anor v Comune Di Venezia [2022] EWHC 2586 (Comm) is an excellent illustration of the relevance of characterisation and of the international harmonisation of same. It also discusses the application of the ‘purely domestic contracts’ rule of Article 3(3) Rome Convention, carried over into the Rome Regulation.

Background is long-running litigation involving derivative transactions used by Italian municipalities to hedge their interest rate risk, as Sarah Ott summarises the context here (she discusses Dexia Crediop SpA v Provincia di Pesaro e Urbino [2022] EWHC 2410 (Comm), a case with many similar issues).

Venice contends that, for various reasons, it lacked the substantive power to enter into the Transactions as a matter of Italian law, and that, applying English conflict of law principles, that means that it did not have capacity to enter into the Transactions and that they are not valid. It also contends that the Transactions breached various rules of Italian law which have the status of “mandatory rules of law” for the purposes of A3(3) Rome Convention 1980 (which is applicable and not the Rome I Regulation) and that as a result the Transactions are void and/or unenforceable.

The Banks deny that the entry into the Transactions contravened any provisions of Italian law, on the basis of arguments as to the effect of Italian law and its application to the facts of this case, and further deny that any such contravention would deprive Venice of capacity to contract as a matter of English conflict of laws principles in any event.

Capacity to enter into contractual relationship itself is not caught by the Rome Convention as a result of the Convention’s carve-out of Article 1(2) c (most legal systems make such capacity subject to the lex incorporationis, and [115] is determined by reference to the law in force when the Transactions were entered into). Foxton J refers as authority to Credit Suisse International v Stichting Vestia Groep [2014] EWHC 3103 (Comm) [185].

Who then is to decide whether a particular issue of Italian law raises a question of capacity, or authority, or some other kind of legal challenge to the validity and efficacy of the Transactions? Here Foxton J wrongly in my view simply refers to lex fori, English law. In reality of course it is the Rome Convention that does so, although as I have pointed out before, neither the Rome Convention nor Rome I excels at clarifying.

[129] ff then follows lengthy analysis of the issues of capacity under Italian law as the lex causae, with the conclusion being that Venice did indeed so lack capacity under Italian law.

The issue of mandatory Italian law replacing the English lex contractus as a result of Article 3(3) Rome Convention’s ‘purely domestic contracts’ rule, is dealt with obiter. It fails at the first hurdle with Foxton J holding [341] that the scenario is not purely domestic. He does not much entertain the issue of whether under Italian law (lack of) a theory of contractual consideration might be of mandatory nature, referring [356] to the similar issues of consideration and privity of contracts under English law (which in effect might subsequently become relevant under the overriding mandatory rules of the forum).

An interesting judgment.

Geert.

Capacity under IT law to enter into financial transactions; Qualification whether 'capacity' is at stake is subject to lex fori, EN law
(Non)application of A3(3) Rome Convention purely domestic contracts rule

Banca Intesa Sanpaolo ea v Comune Di Venezia https://t.co/lrSv1v4E5b

— Geert Van Calster (@GAVClaw) October 14, 2022

In an interesting judgment, the CJEU yesterday held (no English edition yet) in C-604/20 ROI Land Investments Ltd v FD on protected categories suing a defendant not formally associated with the claimant by a clear contract of employment. That the defendant is not domiciled in the EU is in fact of less relevance to the issues.  I had somehow missed Richard de la Tour AG’s Opinion on same (it happens to the best of us).

Claimant in the main proceedings is FD, domiciled in Germany. Defendant is not his current employer and is not domiciled in a Member State. Yet by virtue of a letter of comfort it is directly liable to the employee for claims arising from an individual contract of employment with a third party. The gist of the case is whether an employee can sue this legal person under the employment title if the contract of employment with the third party would not have come into being in the absence of the letter of comfort.

The slightly complex three part construction, transferring relationships of employment, essentially is one of tax optimisation via Switserland. FD used to be employed by ROI Investment, a Canadian corporation, before his contract was transferred to R Swiss, a Swiss SPV created for the very purpose of the operation. ROI Investment via a letter of comfort effectively guaranteed the outstanding wages due to FD. FD’s contract with Swiss was ended, a German court held this to have been done illegally and ordered Swiss to pay a substantial sum whereupon Swiss went into insolvency. FD now wishes to sue the Canadian ’employer’.

CJEU Bosworth is the most recent case which extensively discusses the existence of ’employment’, referring to CJEU Shenavai and Holterman. In ROI Land the CJEU [34] instructs the national court in particular to assess whether there is a relationship of subordination between individual and corporation, even if subordination is actually only one of the Shenavai /Holterman criteria.

Erik Sinander has already noted here (his post came in as I was writing up mine) that this is a different emphasis from the AG: he had suggested a third party who was directly benefitting from the work performed by the employee (“un intérêt direct à la bonne exécution dudit contrat”) should be considered an employer. That to my mind is way too large a criterion and the CJEU is right to stick to the earlier ones.

[35] the CJEU suggests relevant circumstances in the case most probably confirming the relationship of subordination hence of employment: the activities which FD carried out for his two respective employers stayed the same, and the construction via the  SPV would not have been entered into by FD had it not been for his original employer’s guarantee.

The forum laboris in the case at issue is then I assume (it is not discussed quite so clearly in the judgment) determined by the place of habitual performance of the activities for the third party, the formal (now insolvent) employer, not the activities carried out for the issuer of the letter of comfort: for there are (no longer) such activities.

[37] ff the Court entirely correctly holds that more protective national rules cannot trump Brussels Ia’s jurisdictional provisions for the  protected categories: both clear statutory language and statutory purpose support that  conclusion.

[52] ff the CJEU entertains the subsidiary issue raised in the national proceedings as to whether the contract may be considered a consumer contract. It holds that the concept of ‘a purpose outside (a natural person’s) trade or profession’ does not just apply to a natural person in a self-employed capacity but may also apply to an employee. [56] seeing as FD would not have signed the new employment agreement without the letter of comfort, the employment agreement cannot be considered to be outside FD’s profession. Therefore it cannot qualify as a consumer contract.

Geert.

#CJEU this morning on the application of the protective rules for employees, both in Brussels Ia and Rome I, in the event of an employer not domiciled in the EU

ROI Land Investments v FDhttps://t.co/Ne7LQalAFJ

— Geert Van Calster (@GAVClaw) October 20, 2022

Soleymani v Nifty Gateway LLC [2022] EWCA Civ 1297 is the appeal against [2022] EWHC 773 (Comm) which I reviewed here. That post will give readers the necessary background. The Court of Appeal partially overturned. The judge had issued a stay of English proceedings under s9 Arbitration Act 1996, effectively allowing a US arbitrator to decide the validity of the arbitration agreement. That stay has now been lifted and E&W proceedings on that issue will go ahead.

Of note is that the discussion takes place under retained EU law, with the relevant provisions in ia s15b of the Civil Jurisdiction and Judgments Act 1982 (as amended) mirroring the consumer section of Brussels Ia and Directive 93/13 on unfair terms in consumer contracts, as amended.

A first ground of appeal concerned the core of the Brussels Ia issue: whether the Court had jurisdiction under s. 15B CJJA because the exception for arbitration under Article 1(2)(d) of the Recast Regulation did not apply to the Arbitration Claim. In other words whether the exclusion for arbitration is engaged when a consumer, ordinarily protected by the forum actoris provisions in A17 ff BIa, calls upon that protection to seize a UK court.

The first instance judge held that the principal focus and subject matter of Mr Soleymani’s claim is whether he is legally obliged to arbitrate, hence engaging the arbitration exception. The Court of Appeal agrees for largely the same reasons as the judge, and with Popplewell J [89] indicating no change in his views following CJEU Prestige. The CA’s own finding in [2021] EWCA Civ 1589 The Prestige is recalled:  “the question is whether a principal focus of the proceedings is arbitration, the essential subject matter of the claim concerns arbitration, or the relief sought can be said to be ancillary to the arbitration process, these being alternative ways of expressing the same idea”.

The Court of Appeal’s focus seems to be on avoiding abuse by the consumer, who could circumvent the arbitration exception by bringing his claim within the scope of BIa hence characterising it as a claim to enforce his consumer rights.

I continue to find the alternative more convincing: that the consumer section could be easily circumvented, particularly by non-EU based traders and /or in the event of arbitration outside the EU, simply by inserting an ADR clause in the contract, depriving the consumer of the forum actoris. Claimant’s counsel’s nine reasons [51] in my view have convincing appeal, and not Popplewell J’s suggestion [93] ff that in practice the consumer would be protected anyways, either by the ability to sue in the UK and have the ADR clause declared void under consumer protection law, or by the ability to have any foreign award declared unenforceable under the New York Convention’s ordre public exception. The very case at hand show the real difficulties (and costs) the consumer will be put through if and when the business party to the transaction decides to pursue the arbitration proceedings abroad.

The second ground of appeal was dismissed for it relied on s. 15D(1) being construed as invalidating the arbitration clause, which the Court had already held it did not, however ground 3 was accepted, for reasons formulated by Birss LJ.

Mr Soleymani’s claim consisted of claims for three distinct declarations: (i) a declaration that the arbitration clause was unfair and not binding, (ii) a declaration that the governing law clause was unfair and not binding, and (iii) a declaration that the contract formed in the auction was illegal under the Gambling Act 2005.

The jurisdiction issues under Grounds 1 and 2 of the appeal relate only to the first of these three, the arbitration clause claim. The judge as discussed decided that the Arbitration Claim was within the arbitration exception which now forms part of the CJJA (and had its origin in the Brussels Convention and the later Recast Regulation), and the appeal from that decision was dismissed.

The judge however also decided that the other two claims, that is the Governing Law Claim and the Gambling Act Claim were not clearly within the arbitration exception, yet she stayed the E&W proceedings to give way to the arbitration in New York. Therefore these claims were at least capable of falling within the jurisdiction gateway provided for in s15B(2)(b) CJJA 1982.  Ground 3 argued that the first instance judge erred in staying these proceedings under section 9 of the arbitration Act without determining the fairness question or directing a trial before the English Court on the issues raised by that objection.

That ground was upheld for three reasons [151] ff which all go towards limits to Kompetenz Kompetenz in consumer (and other?) cases.

Firstly, the public importance of decisions vindicating (or not) consumers’ rights. The case Mr Soleymani is seeking to make has implications for  consumers in general in this jurisdiction and it is important that they are considered and ruled upon in public in a court. Therefore it was held the s9(4) issues should be decided at a trial and not left to be decided in the arbitral tribunal.

Further [152] the consumer protection rights under UK law involve domestic concepts which UK court are far better placed to adjudicate upon than a New York arbitrator. Even if it were certain that the New York Tribunal would apply UK law (a late proffered undertaking to do so was made and discussed [155] ff), it engages principles which are the subject matter of our domestic jurisprudence, not simply some general notion of fairness.

Thirdly whether the arbitration agreement does in fact operate unfairly on Mr Soleymani is not suited to summary determination. “If the invalidity argument is good, the very reasons which make it good, namely that it places an unfair burden on Mr Soleymani, weigh against allowing the tribunal to decide the issue under its Kompetenz-Kompetenz jurisdiction. The Judge’s finding that there would be nothing unfair about leaving it to the arbitrator to decide that issue is inconsistent with her recognition that there was a triable issue whether this was an unfair arbitration agreement.”

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.3.2, and 2.2.9.2.

Highly relevant judgment under retained EU law on possibility for consumers to enjoy jurisdictional protection of EU rules to avoid #arbitration outside of the EU
Review of the first instance judgment here https://t.co/G1wCZbigfs
Soleymani v Niftyhttps://t.co/3h8nGbIgGZ

— Geert Van Calster (@GAVClaw) October 6, 2022

The (first instance) court at Rotterdam has upheld anchor jurisdiction and refused an application for an Article 34 Brussels Ia stay. The case concerns victims of earthquakes in the Brasilian Maceió region, which they argue are caused by the mining activities of Braskem. The judgment is only available in Dutch.

The Dutch anchor defendants are intra-group suppliers of ia specialty chemicals, and finance. The main target of the claim of course is the Brasilian mother holding. Whether the latter can be brought into the proceedings is not subject to Brussels Ia but rather to Dutch residual rules. However just as in e.g. Shell, the Dutch rules are applied with CJEU authority on Article 8(1) Brussels Ia firmly in mind. In much more succinct terms than the English courts in similar proceedings, the Dutch courts [6.16] finds the cases so ‘closely related’ that it is expedient to hear the cases together. It emphasises that while the respective roles and liabilities of the various undertakings concerned is likely to be very different, there is a bundle of legal and factual questions that runs jointly throughout the various claims. [6.18] it emphasises that the decision to base the European headquarters of the group, and the finance activities at Rotterdam, implies that the concern reasonably could have foreseen it would be sued here.

Equally succinctly [6.19 ff] the Court rejects the argument that the use of the Dutch corporations as anchor defendants is an abuse of process. Such abuse must be narrowly construed and  it is far from obvious that the claim against the anchors is entirely without merit.

Seemingly defendants tried to argue forum non conveniens however [6.23] the court points out such construction does not exist in The Netherlands and obiter it adds (like the Court of Appeal in Municipio) that practical complications in either hearing of the case or enforcement of any judgment are not a reason to dismiss jurisdiction.

Request for a stay in the procedures viz the Brasilian corporations [6.26] is rejected on (Dutch CPR) lis pendens rules for the parties in the proceedings are not the same. Article 34 is dealt with in two paras (quite a contrast with the E&W courts). The pending procedures vis-a-vis Article 34 are not, it seems, Brasilian Civil Public Actions – CPAS (these were at issue in Municipio de Mariana (of some interest is that the law firm behind the claims is the same in both cases)). Rather, pending liquidation proceedings are considered as the relevant assessment points. [6.28] obiter the court finds that the cases are most probably not related. It grounds  its decision however on a stay not being in the interest of the sound administration of justice. The court holds that the Brasilian proceedings are not likely to be concluded within a reasonable time. Defendants’ commitment at hearing to speed up the process in Brasil, are met with disbelief by the court given the defendants’ attitude in the Brasilian procedures hitherto.

[6.32] permission to appeal the interim judgment on jurisdiction is denied. This means that, like in Airbus, discussion on the private international law issues is likely only to resurface at the stage of appealing the judgment on the merits, too.

An important judgment: other than Petrobas, there are to my knowledge no continental judgments discussing Article 34 in this intensity (there are E&W judgments, as readers of the blog will know).

Geert.

See also ‘Dude, where’s my EU court? On the application of Articles 33-34 Brussels Ia’s forum non conveniens- light rules’, Journal of Private International Law, forthcoming 2022.

Dutch court refuses Article 34 Brussels Ia lis pendens applicationhttps://t.co/F46tkOlcRe
Pollution case against #braskem will go ahead in home of Dutch mother corporation. More on the blog soonhttps://t.co/jfa1Sb5o3t @PogustGoodhead

— Geert Van Calster (@GAVClaw) September 26, 2022

QBE Europe SA/NV v Generali Espana De Seguros Y Reaseguros [2022] EWHC 2062 (Comm) is not a surprising judgment of course. I flagged it on Twitter early August and I post it here for the sake of blog completeness.

The judgment grants an urgent anti-suit injunction (ASI) to restrain proceedings brought by the Defendant (Generali) against QBE UK in Spain, and to prevent Generali from commencing similar proceedings against QBE Europe. The proceedings in Spain assert a direct claim against QBE UK under a Spanish statute, by reference to a liability insurance policy. The judgment is exactly the kind of ASI outlawed by CJEU West Tankers and will reinforce the position of London in the arbitration market.

Geert.

Move over CJEU West Tankers….
Anti-suit injunction viz Spanish proceedings granted to protect #arbitration in London. Discusses ia nature of claim in SP proceedings

QBE Europe SA/NV v Generali Espana De Seguros Y Reaseguros [2022] EWHC 2062 (Comm) https://t.co/LwzrDzzNXv

— Geert Van Calster (@GAVClaw) August 1, 2022

Lydia Lundstedt has prior review of the judgment in CJEU C-399/21 IRnova AB v FLIR Systems AB (who had been business partners in the past) here. Swedish courts are clearly busy referring the private international law elements of patent cases to the CJEU.

Of particular note is that a 3 judge chamber would seem to have ruled out reflexive effect as casually as if it were swatting a fly.

On 13 December 2019, IRnova brought an action before the Patent and Market Court seeking, inter alia, a declaration that it had a better right to the inventions covered by international patent applications, subsequently supplemented by European, US and Chinese patent applications deposited by FLIR in 2015 and 2016, and by US patents granted to FLIR on the basis of those latter applications. In support of that action, IRnova had stated, in essence, that those inventions had been made by one of its employees, meaning that that employee had to be regarded as their inventor or, at the very least, as their co-inventor. IRnova therefore argued that, as the inventor’s employer and thus successor in title, it had to be regarded as the owner of the inventions. However, FLIR, without having acquired those inventions or otherwise being entitled to do so, deposited the applications in its own name.

The court had dismissed jurisdiction viz the Chinese and US patent applications, and the US patents, on the ground, in essence, that it regarded the action concerning the determination of the inventor as being linked to the registration and validity of the patents, and it applied A24(4) BIa reflexively. The Appeals Court referred the issue on reflexive effect to the CJEU, in the following terms:

‘Is an action seeking a declaration of better entitlement to an invention, based on a claim of inventorship or co-inventorship according to national patent applications and patents registered in a non-Member State, covered by exclusive jurisdiction for the purposes of Article 24(4) of [the Brussels Ia Regulation]?’

however the CJEU reformulated [22-24] the case as not concerning reflexive effect at all, rather, enquiring about the scope of the A24(4) gateway.

The Court first of all [25] ff makes a point of confirming its broad reading of the ‘international’ element required to trigger European private international law, referring to CJEU Owusu.

It then [35] would seem to rule out reflexivity in a very matter of factly way (and as Lydia also noted, without AG Opinion):

as has already been pointed out in paragraph 26 of the present judgment, the patent applications at issue in the main proceedings were deposited and the patents concerned were granted not in a Member State, but in third countries, namely the United States and China. As Article 24(4) of the Brussels Ia Regulation does not envisage that situation, however, that provision cannot be regarded as applicable to the main proceedings.

This may have already answered a core question in  BSH Hausgeräte v Aktiebolaget Electrolux .

[36] ff it refers ia to CJEU Hanssen and to the exceptional nature of A24 [39]. It holds that [42]

the main proceedings relate not to the existence of the deposit of a patent application or the grant of a patent, the validity or lapse of a patent, or indeed an alleged right of priority by reason of an earlier deposit, but to whether FLIR must be regarded as being the proprietor of the right to the inventions concerned or to a portion of them.

[47] it refers ia to the fact that fact that

an examination of the claims of the patent or patent application at issue may have to be carried out in the light of the substantive patent law of the country in which that application was deposited or that patent was granted [however it ] does not require the application of the rule of exclusive jurisdiction laid down in Article 24(4) of the Brussels Ia Regulation

Much relevant and surprisingly succinct on the reflexivity issue.

Geert.

EU Private International Law, 3rd ed. 2021, 2.208 and 2.548.

I mentioned the pending case C-339/22 BSH Hausgeräte v Aktiebolaget Electrolux yesterday at our excellent (if I say so myself) Max Planck Institute – EAPIL – KU Leuven workshop on Brussels Ia reform. Questions referred, are

Is Article 24(4) [BIA] to be interpreted as meaning that the expression ‘proceedings concerned with the registration or validity of patents … irrespective of whether the issue is raised by way of an action or as a defence’ implies that a national court, which, pursuant to Article 4(1) of that regulation, has declared that it has jurisdiction to hear a patent infringement dispute, no longer has jurisdiction to consider the issue of infringement if a defence is raised that alleges that the patent at issue is invalid, or is the provision to be interpreted as meaning that the national court only lacks jurisdiction to hear the defence of invalidity?

Is the answer to Question 1 affected by whether national law contains provisions, similar to those laid down in the second subparagraph of Paragraph 61 of the [Swedish] Patentlagen (Patents Law), which means that, for a defence of invalidity raised in an infringement case to be heard, the defendant must bring a separate action for a declaration of invalidity?

Is Article 24(4) [BIa] to be interpreted as being applicable to a court of a third country, that is to say, in the present case, as also conferring exclusive jurisdiction on a court in Turkey in respect of the part of the European patent which has been validated there?

BSH hold a European patent relating to a vacuum cleaner. The patent has been validated in Austria, Germany, Spain, France, the United Kingdom, Greece, Italy, the Netherlands, Sweden and Turkey. Electrolux of Sweden has subsidiaries in a number of other Member States, such as Germany. A number of disputes have arisen between BSH and companies in the Electrolux group concerning the patent in question. Inter alia, the European patent validated in Germany was invalidated in 2020 by a German court at the request of a subsidiary of Electrolux. That judgment has been appealed.

On 3 February 2020, BSH brought an action against Electrolux before the Patents and Market Court in Sweden and claimed inter alia that Electrolux should be prohibited from using the patented invention in all the abovementioned States and ordered to pay reasonable compensation for the unlawful use. BSH also claimed compensation for the additional damage caused by Electrolux’s alleged patent infringement. Electrolux argue that the Court should dismiss the action in relation to the foreign parts of the patents. In its view the foreign patents are invalid and the Swedish court therefore lacks jurisdiction to hear infringement actions concerning those patents.

End of December 2020 the court agreed, citing A24(4) viz the EU patents (the claim being issued prior to Brexit implementation day, this includes the UK) and ‘an internationally accepted principle of jurisdiction’ (in essence, the Moçambique rule) viz the Turkish patent.

BSH of course appeal.

A asked students in the August resit exams how they think the CJEU should answer. On Q1 I would expect them to cite the need to interpret A24 restrictively, with reference to one or two cases confirming same (there are plenty); and the lack of solution in the Brussels Recast. Contrary to what Electrolux contend, a proposal to allow a court to merely stay the case pending the foreign court’s decision on validity, was never rejected. Such a proposal was never made. BIa merely confirmed CJEU Gat v Luk’s holding that exclusive jurisdiction kicks in regardless of whether the argument of invalidity is introduced as a claim of by way of defence.

On Q2 I would like to seem them argue something to the effect that national CPR must not infringe the effet utile of BIa. (Only) if the effect of the Swedish rules is that it requires the defendant to initiate IPR invalidity claims in all the relevant States, or lose its possibility of an invalidity defence, this would in my view run counter BIa’s intention and scope.

Finally, on the 3rd Q they should engage with the lack of BIa clarification on reflexive effect, other than in the strict confines of A33-34 and its related recitals. Relevant case-law of course includes Ferrexpo and Central Santa Lucia L.C. v. Meliá Hotels International S.A. Interested readers may wish to consult Alexander Layton KC’s most excellent paper on same. Some students may refer to the UPC developments and the jurisdictional consequences in Article 71 BIa (operational 2023?).

Geert.

The blog is back from summer recess with a post on Airbus Investors Recovery Limited v Airbus SE, where the first instance court at Amsterdam by way of preliminary judgment deals with the law applicable to an investor suit. Claimant has had the investment claims of a number of Airbus investors assigned to it. The core of the claim is that Airbus has tortiously caused damage to the investors in both the act, and in the correspondence leading to, and after, settlement with various financial authorities following allegations of corruption in securing aircraft orders. 

Oddly, no reference at all is made to Petrobas, despite the issues there being similar – perhaps the court in Airbus rejected relevance of the Petrobas decision for that case was held prior to CJEU Vereniging voor Effectenbezitters (VVE v BP).

I flagged many of the issues at issue in the judgment, in my post on applicable law which followed the jurisdictional discussion by the CJEU in VVE v BP.

The judgment is in Dutch of course however non-Dutch speakers may refer to it anyway, for the extract of Airbus’ choice of law provisions in the 2019 annual accounts [2.6]. This is relevant with a view to the discussion on transparency obligations following CJEU VVE v BP. 

The court, and one assumes parties were in agreement for the issue is not discussed, first of all assumes the liability is non-contractual. I continue to be of the view that this need not necessarily be the case. Focusing the discussion on Rome II therefore, the court also accepts readily that the lex societas carve-out of Rome II does not apply (reference is made [5.3] to CJEU Treuhand). Parties are in agreement [5.6] that for Dutch investors, Dutch law applies per Article 4(2) Rome I (shared habitual residence).

[5.10] Airbus absolutely correctly in my view insist that the CJEU’s Brussels Ia application in VVE must not simply be extrapolated to the applicable law issues at stake here. The court essentially disagrees ([5.10] in fine) and in my view it is wrong to do so.

It then [5.111], not entirely convincingly in my view, dismisses application of Article 4(1), holding that this Article in its view always leads to two applicable laws in each investor-Airbus relationship: that of the market in which the shares were bought (which will have subjected the sales to information requirements), always accompanied by Dutch law for that is where in any event listing information needed to be given.

Having ruled out A4(1), it settles for Dutch law under Article 4(3) as the law of the place of the seat of the corporation that issues financial instruments, largely citing predictability. I am not convinced.

Reference to the CJEU, requested by Airbus, is dismissed, as is [5.17] immediate appeal against the applicable law finding. Airbus will no doubt appeal the final judgment to review the issue of applicable law, too. I would suggest they have plenty of reason to do so.

Geert.

EU Private International Law, 3rd ed. 2021, Chapters 2 and 4.

Canara Bank v MCS International [2022] EWHC 2012 (Comm) is interesting with respect to Cooper J’s discussion of privity of choice of court and law, and the corporate carve-out of retained (post Brexit) Rome I.

Canara (an Indian bank) say that the Guarantee at the core of the issues, with English choice of law and court, was transmitted automatically to MCS France under the French Civil Code as a result of an amalgamation or merger of two French companies, namely the original guarantor and MCS France.

On the impact of Rome I, the judge [53] presumably with parties’ counsel approval, remarks that ‘pursuant to Article 1(2)(e) and (f), Rome 1 does not apply to questions governed by the law of companies or to the issue of whether or not an agent is able to bind a principal in relation to a third party. For both these issues, it is necessary to look to common law principles.’

[88] It is said again that whether an agent is able to bind a principal in relation to a third party is excluded from Rome 1 further to article 1(2)(g), the corporate carve-out. I do not think that is necessarily the case, even in combination with the Article 1(2)(e) carve-out for choice of court. The judge at any rate continues by applying the Dicey Rule 243 that where an agent acts or purports to act on behalf of a principal, their rights and liabilities in relation to each other are in general governed by the law applicable to the relationship or contract between them, with Dicey Rule 244(1) adding a bootstrap /von Munchausen /putative law element:

The issue whether the agent is liable to bind the principal to a contract with a third party, or a term of that contract, is governed by the law which would govern that contract or term, if the agent’s authority were established.”

[89] In light of the foregoing, ‘it was common ground between the parties, and rightly so, that Mr. Maurel’s actual authority on behalf of MIF fell to be determined under French law and the question of whether and to what extent Mr. Maurel was able to bind MIF in respect of the Guarantee given Canara’s knowledge of the resolution is a matter of English law.’

Common English conflict of laws is held to apply to the issue of transfer of a guarantee during the dissolution of a company, and parties agree [76] that whether a corporation has been amalgamated with another corporation is to be determined by the law of its place of incorporation: French law is held to be the relevant law for the dissolved guarantor issue, and expert reports were discussed.

Overall conclusion is [125]

Having considered the issue of good arguable case by reference to each of the issues raised by the parties in relation to the question of whether MCS France was a party to the Guarantee and therefore the jurisdiction agreement contained within it, it seems to me to appropriate to step back and consider whether overall Canara has a good arguable case on whether or not MCS France was a party to that jurisdiction agreement. In this regard, I consider that it does. Even were I to be wrong on one of the issues considered above, the balance of the evidence supports the conclusion that MCS France is a party to the Guarantee and to the jurisdiction agreement contained within it. In circumstances, where the evidence establishes that Canara, MCS France and MCS UK have done business since 2014 on the basis that the Guarantee was binding on MCS France, it would be a surprising conclusion that there was no good arguable case that MCS France was a party to the jurisdiction agreement.

Interesting, if flimsy on the corporate carve-out issue.

Geert.

Guarantee with EN law and jurisdiction clause. Whether it extends to French amalgamated company for purposes of jurisdiction.
Retained Rome I held not to apply on basis of corporate law carve-out.

Canara Bank v MCS International [2022] EWHC 2012 (Comm)https://t.co/jRg4GCW0Yr

— Geert Van Calster (@GAVClaw) July 30, 2022