EAPIL blog

The sixth edition of Derecho de los Negocios Internacionales, a treatise on international business law authored by José Carlos Fernández Rozas, Rafael Arenas García and Pedro Alberto De Miguel Asensio, was published in March 2020 by the Spanish publisher Iustel.

The new edition is arranged into the following sections: Regulating Cross-Border Business Activities; Intellectual Property, Unfair Competition and Antitrust; Company Law; International Commercial Contracts; Sale of Goods and Transport; Means of Payment, Guarantees and Financing; Distribution Contracts, Transfer of Technology and E-Commerce; Insolvency Proceedings and International Commercial Arbitration.

See here for more information, and here to access the extended table of contents.

Brexit and its legal consequences was the topic of an earlier post in this blog, suggesting the United Kingdom should join the Lugano Convention. The British government has now taken the first step in this direction.18

The UK’s Application for Accession

On 8 April 2020, the UK deposited an application to accede to the Lugano Convention with the Swiss Federal Council as the depositary of the Convention (Article 69(2) Lugano Convention). In accordance with Article 72(2) of the Lugano Convention, the information was transmitted to the Contracting Parties. Enclosed as Annex A was the information required under Article 72(1) of the Convention, amounting to 41 pages. The necessary French translation (Article 70(2) Lugano Convention) is still missing.

Switzerland requested to convene a meeting of the Standing Committee in accordance with Article 4(2) of Protocol 2 to the Convention. The Signatories of the Convention (the EU, Denmark, Iceland, Norway and Switzerland) now have to decide whether to grant the application. According to Article 72(3) Lugano Convention, they shall endeavour to give their consent at the latest within one year.

The Situation During the Transition Period

Already on 30 January 2020, the Swiss Federal Council informed the Signatories of a document it had received titled Annex to the Note Verbale on the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community. The objective of this Annex is to secure the UK’s continued treatment as a party to the Lugano Convention during the transition period, which runs from 1 February 2020 to at least 31 December 2020, subject to a further extension for up to one or two years.

The Annex to the Note Verbale first sets out some principles of the Withdrawal Agreement concluded between the EU and the UK. In particular, it recalls that the “Withdrawal Agreement encompasses international agreements concluded by the Union” (point 4 Annex). In relation to the EU and Euratom, the UK is bound by these international agreements during the transition period (Art 129(1) Withdrawal Agreement). Furthermore, the Withdrawal Agreement provides that the EU notifies parties to international agreements that the UK is treated by the Union as a Member State for the purposes of these international agreements (point 5 Annex).

After recalling these principles, the Annex to the Note Verbale adds the following sentence (point 6 Annex):

It is understood that the principles set out in this Annex also extend to international instruments and arrangements without legally binding force entered into by the Union or Euratom and to international agreements referred to in point 4 above which are provisionally applied.

The Swiss Federal Council has asked the Signatories to consent to the Note Verbale, which the EU has already done. If the other Signatories agree as well, the Lugano Convention could remain binding on all parties during the transition period. Unfortunately, the outcome of the process is unknown, which creates unnecessary uncertainty.

Back to the Past?

The UK’s application to accede to the Lugano Convention is the strongest indication yet that the UK wishes to continue participating in judicial cooperation in Europe. There are important voices against the UK’s accession to the Convention. Without it, though, those seeking legal protection will encounter obstacles in the enforcement of British judgments on the European continent, and vice versa. It therefore seems better the UK’s request would be granted.

On 25 and 26 September 2020, the University of Bonn will host a conference titled The 2019 Hague Judgments Convention: Prospects for Judicial Cooperation in Civil Matters between the EU and Third Countries.

The conference focuses on the Hague Convention of 2 July 2019 on the recognition and enforcement of foreign judgments in civil and commercial matters, and is organised by Moritz Brinkmann, Nina Dethloff, Matthias Lehmann, Philipp Reuss and Matthias Weller.

The event is organised in cooperation with the Permanent Bureau of the Hague Conference on Private International Law (HCCH), the Zentrum für europäisches Wirtschaftsrecht at the University of Bonn and The International Litigation Exchange (ILEX). Dr Christophe Bernasconi, Secretary General of the HCCH, will give a welcome note (via video message), while Dr Ning Zhao, Senior Legal Officer, HCCH, will provide an overview of the genesis of the Convention, and Dr João Ribeiro-Bidaoui, First Secretary, HCCH, will conclude the event with summary remarks.

Speakers include Hans van Loon (Former Secretary General of the Hague Conference on Private International Law), Pietro Franzina (Catholic University of Milan), Xandra Kramer (Erasmus Universiteit Rotterdam), Wolfgang Hau (Ludwig-Maximilians-Universität Munich), Francisco Garcimartín Alférez (Autonomous University of Madrid), Colin Brown (to be confirmed) and Andreas Stein (both European Commission), Jan Teubel (German Ministry of Justice), Heiko Heppner (ILEX), Paul Beaumont (University of Stirling), Marie-Elodie Ancel (University of Paris-Est Créteil), Pippa Rogerson (University of Cambridge), Ilija Rumenov (Ss. Cyril and Methodius University), Veronica Ruiz Abou-Nigm (University of Edinburgh), José Angelo Estrella-Faria (Former Secretary General of UNIDROIT, Senior Legal Officer UNCITRAL Secretariat, International Trade Law Division Office of Legal Affairs, United Nations).

The programme of the event can be found here. Looking forward to meeting as many as possible of you in Bonn!

Giesela Rühl (University of Jena) has posted Smart (Legal) Contracts, or: Which (Contract) Law for Smart Contracts? on SSRN.

The abtract reads:

The law applicable to smart contracts is a neglected topic. At times it is even discarded as irrelevant or unnecessary. In fact, many authors claim that smart contracts especially when stored and executed with the help of blockchain technology make contract law and, in fact, the entire legal system obsolete. “Code is law” is the frequently (mis-) cited catchphrase. In the following chapter I will challenge this view and argue, first, that smart contracts need contract law just as other, traditional contracts, and, second, that the applicable contract law can – at least in most cases – be determined with the help of the traditional rules of private international law.

The paper is forthcoming in Benedetta Cappiello & Gherardo Carullo (eds.), Blockchain, Law and Governance, Springer.

The latest issue of the International and Comparative Law Quaterly was just released.

It includes an article written by Matteo Winkler (HEC Paris) on Understanding Claim Proximity in the EU Regime of Jurisdiction Agreements. The abstract reads:

The Brussels I Recast Regulation entitles business actors to agree on which court(s) will have jurisdiction but restricts the effectiveness of such jurisdiction agreements to disputes ‘which have arisen, or which may arise, in connection with a particular legal relationship’. This article fills a gap in the academic literature by examining the content and implications of this necessary connection (proximity) between the claim and the legal relationship between the parties. First, it characterises claim proximity as a question of party autonomy by distinguishing it from the subject matter of the jurisdiction agreement, which is an issue of contract interpretation. Second, it scrutinises the foreseeability test which has been frequently used by the CJEU in order to determine claim proximity, highlighting its main operational aspects. Building on both theoretical considerations and some cases where the foreseeability test has been used by domestic courts, this article provides clarifications about the scope, the proper functioning and the limits of such a test in order to raise awareness regarding the difficulties that may arise in its use in court to determine claim proximity and therefore assess jurisdiction.

On 27 February 2020 the Court of Justice rendered its ruling in Corporis (case C-25/19), a case regarding the interpretation of Solvency II Directive and the Service Regulation.

The Court held that Article 152(1) of the Directive, read in conjunction with Article 151 of the same text and Recital 8 of the Service Regulation (pursuant to which the Regulation ‘should not apply to service of a document on the party’s authorised representative in the Member State where the proceedings are taking place regardless of the place of residence of that party’), must be interpreted as meaning that the appointment by a non-life insurance undertaking of a representative in the host Member State also includes the authorisation for that representative to receive a document initiating court proceedings for damages in respect of a road traffic accident.

Stefano Dominelli provided an account of the ruling in Conflictoflaws. By this post, I would like to add some comments on the issues discussed by the Court.

The ‘novelty’ of the judgment

In general terms, Corporis brings owls to Athens. The Court had already made its point in 2013, in the ruling concerning the Spedition Welter case. It stated then that Article 21(5) of the Motor Insurance Directive must be interpreted as meaning that the claims representative’s sufficient powers must include authority validly to accept service of judicial documents necessary for proceedings for settlement of a claim to be brought before the court having jurisdiction.

The difference between the two cases lies in the content of the preliminary request: unlike the German court in the former case, the Polish court that made the request in the latter case additionally brought the Service Regulation into the picture.

The Court’s findings however remain basically the same. This is somehow evidenced by the fact that the Court considered it could proceed to judgment without the Advocate General’s opinion.

Actually, some domestic courts have already issued judgments going in the same direction. See in particular the ruling of the Portuguese Supremo Tribunal de Justiça of 4 July 2019, and the ruling of the Tribunal da Relação de Guimarães of 17 November 2016 ( which are available through this database), and the ruling of the Landgericht Saarbrücken of 11 May 2015, reproduced in IPRax, 2015, 567. I’m sure there are more, but for the time being I managed to trace the above. Any feedback from other jurisdictions is more than welcome.

The notion of the ‘authorized representative’

Hence, in Corporis the Court reiterates its original views. It does not shed light to the overall question, i.e. what constitutes an authorized representative: first, because it had not been asked to do so, and second, because this seems to be an issue for the national courts to decide.

At least this is the common understanding among courts and scholars.

The fact is, however, that this situation comes, potentially, at a cost for the proper application of the Service Regulation. Burkhard Hess warned about the pitfalls nearly 20 years ago (Die Zustellung von Schriftstücken im europäischen Justizraum, NJW, 2001, 22).

Neither the predecessor of the current Service Regulation (Regulation No 1348/2000) nor the Service Convention drawn up by the Council of the European Union in 1997 (and never entered into force) referred to ‘authorized representatives’. The notion was also missing in the original 2005 Commission’s proposal to amend Regulation No 1348/2000.

The term only appeared in 2006, in the Commission’s proposal that replaced the latter proposal, without any further information. Thomas Rauscher indicates that it was added to solve a problem which appeared in the Dutch legal order. I understand that the introduction came as one of the 35 proposed amendments by the Rapporteur of the European Parliament. To sum up, there’s no clear indication of the rationale which led to the inclusion of the notion into the preamble.

What is noteworthy however, is that the term nay not be treated as equivalent to that of a representative ad litem, as referred to in Article 40(2) of Regulation No 44/2001 (Brussels I). The language employed to in the Service Regulation and in the Brussels I Regulation are not the same: the German version of the two texts refers, respectively, to ‘Bevollmächtigter’ and ‘Zustellungsbevollmächtigter’; the Spanish version refers to ‘representante autorizado’ and ‘mandatario ad litem’; the French version employs ‘représentant mandaté’ and ‘mandataire ad litem’, etc.

The issue under the forthcoming amended Service Regulation

On 31 May 2018, the Commission presented a proposal for a Regulation amending the Service Regulation, which is currently under discussion.

In this framework, the Commission suggested, inter alia, to move the text that is currently included in Recital 8 to Article 1. This change reflects the importance given to the matter, in light of the Alder case, where the CJEU held that the Service Regulation precludes Member States form providing in their legislation that judicial documents addressed to a party whose place of residence is in another Member State are placed in the case file, and deemed to have been effectively served, if that party has failed to appoint a representative who is authorised to accept service and is resident in the State where the judicial proceedings are taking place.

Although the proposal was accepted by the Council, the European Parliament refused to abide. Hence, the second exception to the application of the Regulation will most probably remain ‘hiding in the bushes’…

Extending the boundaries of the judgment

Notwithstanding the above, the judgment of the CJEU in Corporis paves the path to an extensive protection of other parties.

In paragraphs 41-44, the Court accentuates the difficulties faced by the victims of road traffic accidents. For those (insured) persons, the Brussels I Regulation has granted a forum actoris. Now the Court provides them with yet another benefit, i.e. the possibility to serve proceedings within the forum, and without attaching a costly translation.

De lege ferenda, the same level of protection could be granted to other recognized categories of weak(er) parties, such as consumers and employees, in their capacity as claimants against sellers, service providers, or employers.

Beyond insurance companies, one could think of foreign pharmaceutical companies, air carriers, car industries, social network giants, and the like. The fact that the above enterprises did not grant explicit powers to their representatives to receive judicial documents on their behalf shouldn’t be an impediment anymore. This is at least the implication of the CJEU in the Corporis case.

María Asunción Cebrián Salvat and Isabel Lorente Martínez (both from the University of Murcia) have edited a collection of essays in Spanish titled Protección de menores y Derecho internacional privado (Child Protection and Private International Law), published by Comares.

The abstract, kindly provided by the editors, reads as follows.

More and more frequently, families live a highly international life. Children move with their parents, travel and live in different States. Consequently, there has been an exponential growth of international legal disputes in which minors are involved. Legal operators shall be prepared to provide legal solutions to the private international law challenges of these cases and thus, to satisfy the best interest of the child in the specific case. This work brings together a collection of essays dealing with the hot spot areas of private international law in which minors play the major role. Some of these studies address the latest developments of institutions like the protection of unaccompanied minors, adoption, child abduction, rights of custody and rights of access, kafala, surrogacy, online contracts, sports, child workers, fatherhood recognition, family reagrupation… Others deal with the principles underlying the protection of minors in private international law (the “habitual residence of the child” connection, the need of urgent procedures, State cooperation…). Topics are addressed from an European and Spanish Private International Law perspective and written by a renowned team of private international law scholars and practitioners.

For more information, see here.

Confinement has severely curtailed our freedom of movement, but it has certainly not put an end to disagrements and disputes.

Citizens and businesses needing to take procedural action in a cross-border case may be unable to do so due to emergency measures taken in an EU Member State in order to counter the spread of the COVID-19 virus.

These measures may result in the complete or partial suspension of the work of courts and authorities; the temporary inability to obtain legal aid; difficulty to access information normally provided by the competent authorities; other practical issues, for instance delays in enforcing a decision in a cross-border context or in serving a judicial document; temporary adjustments in terms of communication with the public (by email, by phone or by postal mail).

With this is mind, the e-Justice Portal has opened a page aiming to provide an overview of temporary measures taken within the European Union in relation to the COVID-19 virus. The page gives access to a table (pdf document) with information provided by the EJN contact points – and the usual disclaimer: ‘If you need additional information, please consult the webpages of the Ministry of Justice of the Member State for which you need information’

As the situation is changing rapidly and information on this topic is still evolving, the page is updated regularly to reflect new developments.

The EAPIL blog hosts an ongoing on-line symposium aimed to explore the impact of the coronavirus crisis on the phenomena of mobility and exchange that form the constituent elements of private international law, and to discuss the responses that private international law rules provide to the challenges posed by the crisis itself. Contributions on this topic have been proposed so far by Giovanni Chiapponi, Matthias Lehmann and Tomaso Ferando. Those interested in proposing a guest post for publication on these issues are encouraged to contact the blog’s editorial team at blog@eapil.org. 

On 2 April 2020, the conclusions of Advocate General Sánchez-Bordona in Verein für Konsumenteninformation v Volkswagen (Case C-343/19) were published. They add a new piece to the puzzle of locating purely economic loss – a much-discussed issue which was recently considered in this blog.

Facts

The case concerned a request by the Landesgericht Klagenfurt (Regional Court in Austria) for a preliminary ruling.  Austrian residents had purchased VW cars in their home country. Thereafter, it became known that the manufacturer had fitted the vehicles with illicit software which enabled them to flout emissions tests. Cars fitted with the software consequently dropped in market value. The buyers assigned their rights arising out of their losses to the Verein für Konsumenteninformation (VKI), an Austrian consumer protection association. VKI subsequently sued VW in Austria for damages. VW contested the jurisdiction of the Landesgericht Klagenfurt.

Legal issue

The request by the Landesgericht Klagenfurt for a preliminary ruling concerns the question of whether the Austrian courts have jurisdiction over VKI’s claim under Article 7(2) of the Brussels I bis Regulation. In cases of tort or delict, Article 7(2) confers special (meaning optional) jurisdiction on  the courts of the place where the harmful event occurred. The CJEU interprets “the place where the harmful event occurred“ as giving the tort victim a choice to sue either: (i) at the place of the event giving rise to the damage; or (ii) at the place where the damage occured. In the present case, the Austrian courts could only have jurisdiction under the second option.   Therefore, the crucial question was: where, on the present facts, did the damage ‘occur’ within the meaning of under Article 7(2) of the Brussels I bis Regulation.

Opinion of the Advocate General

Advocate General Sánchez-Bordona took the view that the damage occurred in Austria and that, consequently, the courts there had jurisdiction over the case under Article 7(2) of the Brussels I bis Regulation.

Legal standard

The Advocate General pointed to three well known precedents for determining the location of purely financial loss: Kolassa, Universal Music and Löber. In his view, these three CJEU judgments establish that the actual place where the damage occurred is only the starting point for determining the competent court. Thereafter, other specific circumstances of the dispute, taken as a whole would have to be considered (paragraph 56).

The Advocate General considered that such ‘other specific circumstances’ could include “1. factors relevant to the proper administration of justice and the effective conduct of proceedings; and 2. factors which may have served to form the parties’ views about where to bring proceedings or where they might be sued as a result of their actions.” (paragraph 67).

Further, the Advocate General pointed to the dual principles of proximity and foreseeability of the competent court, between which a reasonable balance must be struck (paragraphs 63-64).

Application to the present case

Applying these standards to the present case, the Advocate General opined that, in general, the location of the cars as tangible objects was irrelevant because it is unforeseeable (paragraphs 71-73). He instead considered the correct starting point for locating the loss to be the act through which the product became part of the victims’ patrimony, thereby causing the damage (paragraph 74). Hence, he identified the place of loss to be the place where the transaction for the purchase of the car was concluded (id.).

The Advocate General further viewed this location to be unaffected by the other specific circumstances of the case. In particular, the jurisdiction of the Austrian courts would have been foreseeable for the Defendant (paragraph 80).

Assessment

The result reached by the Advocate General is certainly agreeable. The purchasers of rigged cars should not be forced to start legal proceedings at the seat of the manufacturer. Rather, they should have the ability to sue the tortfeasor closer to their homes. The same place should also be used to identify the applicable law to their claims under Article 4 of the Rome II Regulation.

It may, however, be a little too simplistic to identify the place of loss as the place of the relevant sales transactions. This place is notoriously uncertain, fortuitous, and vulnerable to manipulation. The purchasers could, for instance, have met the vendor at a car fair, or they could have bought the cars in another country for tax reasons. Should this really determine the location of their loss? Moreover, ‘locating’ a sales transaction can be very tricky; for instance, in the case of purchases on the internet. For these reasons, the law of the place where the contract was concluded (lex loci solucionis) was largely ousted from the conflicts rules for contractual obligations. It would be paradoxical if it made a comeback through non-contractual obligations.

The other circumstances of the case should be taken more seriously. These other factors could, for instance, include the purchasers’ domicile and the place where they mostly use the cars. It is indeed a combination of factors that must be used in cases like the present one to determine the place where the damage occurred.

William S. Dodge (University of California, Davis) has published The New Presumption against Extraterritoriality in the Harvard Law Review.

Canons of statutory interpretation are sometimes said to promote continuity and stability in the law. Yet it is widely acknowledged that canons themselves often change. The presumption against extraterritoriality is a prime example. It evolved from a rule based on international law, to a canon of comity, to a tool for finding legislative intent. The presumption then fell into disuse for nearly forty years until it was reborn in EEOC v. Arabian American Oil Co. (Aramco) and substantially revised in Morrison v. National Australia Bank Ltd.

This Article makes three contributions. First, it describes the evolution of the presumption against extraterritoriality over two centuries, providing a detailed account of change in an important canon of interpretation. Second, the Article describes the new, post-2010 presumption, arguing — contrary to the conventional wisdom — that the current version of the presumption is superior to previous ones. Third, the Article addresses the problem of changing canons. It argues changing canons constitute a form of dynamic statutory interpretation, which imposes certain responsibilities: to justify the changed canon in normative terms, to explain the need for change, and to mitigate the transition costs.

The article can be freely accessed here.

Springer has recently published a new volume on Private International Law Aspects of Corporate Social Responsibility in the series Ius Comparatum – Global Studies in Comparative Law. The book has been edited by Catherine Kessedjian (University Panthéon-Assas Paris II) and Humberto Cantú Rivera (Universidad de Monterrey, Mexico).

This book addresses one of the core challenges in the corporate social responsibility (or business and human rights) debate: how to ensure adequate access to remedy for victims of corporate abuses that infringe upon their human rights. However, ensuring access to remedy depends on a series of normative and judicial elements that become highly complex when disputes are transnational. In such cases, courts need to consider and apply different laws that relate to company governance, to determine the competent forum, to define which bodies of law to apply, and to ensure the adequate execution of judgments. The book also discusses how alternative methods of dispute settlement can relate to this topic, and the important role that private international law plays in access to remedy for corporate-related human rights abuses.This collection comprises 20 national reports from jurisdictions in Europe, North America, Latin America and Asia, addressing the private international law aspects of corporate social responsibility. They provide an overview of the legal differences between geographical areas, and offer numerous examples of how states and their courts have resolved disputes involving private international law elements. The book draws two preliminary conclusions: that there is a need for a better understanding of the role that private international law plays in cases involving transnational elements, in order to better design transnational solutions to the issues posed by economic globalisation; and that the treaty negotiations on business and human rights in the United Nations could offer a forum to clarify and unify several of the elements that underpin transnational disputes involving corporate human rights abuses, which could also help to identify and bridge the existing gaps that limit effective access to remedy. Adopting a comparative approach, this book appeals to academics, lawyers, judges and legislators concerned with the issue of access to remedy and reparation for corporate abuses under the prism of private international law.

More information is available here.

On 1 April 2020, the UK Supreme Court ruled in Aspen Underwriting Ltd v Credit Europe Bank on the concept of insurance matters under the Brussels I bis Regulation and the scope of the protection it offers.

The background of the case was the loss of a vessel which took fire and then sank in the Gulf of Aden in 2013. The owners of the vessel negotiated a settlement agreement with the insurers (Aspen Underwriting) for a sum of $ 22m.

Before the loss, a Dutch Bank, Credit Europe, had funded the re-financing of the vessel and, in exchange, was assigned the insurance policy. However, the Bank did not participate in the negotiations after the loss and, at the request of the owners, issued a letter to the insurers requesting that they pay any claim to a nominated company, which the insurers eventually did.

Three years after the loss, it appeared that the owners had deliberately sunk the vessel in the Gulf of Aden. The insurers sued both the owners and the bank in London pursuant to an exclusive jurisdiction clause contained in the insurance policy. The bank challenged the jurisdiction of the English courts.

Two issues arose. The first was whether the jurisdiction clause was binding on the bank. The second was whether the bank could benefit from the special provisions relating to insurance matters in the Brussels Ibis Regulation, in particular Art 14 which provides that insurers may only bring claims in the court of the domicile of the beneficiary of the insurance.

Assignment of the Jurisdiction Clause

The bank was not a signatory of the insurance policy. It had been assigned the policy. Under the case law of the CJEU (Coreck, Case C-387/98), a third party will be bound by a clause if it became a successor to a party under the applicable national law. In this case, the applicable national law was English law.

The Supreme Court held that, under English law, the bank was not bound by the jurisdiction clause.

26. The Bank’s entitlement to receive the proceeds of the Policy in the event that there was an insured casualty rests on its status as an equitable assignee. It is trite law that an assignment transfers rights under a contract but, absent the consent of the party to whom contractual obligations are owed, cannot transfer those obligations (…). An assignment of contractual rights does not make the assignee a party to the contract. It is nonetheless well established that a contractual right may be conditional or qualified. If so, its assignment does not allow the assignee to exercise the right without being subject to the conditions or qualifications in question.

The bank, therefore, could have asserted its assigned rights in a way that was inconsistent with the terms of the Policy, including the jurisdiction clause. But the Supreme Court held that the bank had not:

29 In the present case the Bank did not commence legal proceedings to enforce its claim. Indeed, it did not even assert its claim but left it to the Owners and the Managers to agree with the Insurers the arrangements for the release of the proceeds of the insurance policy by entering into the Settlement Agreement. It is not disputed that the Bank was not a party to the Settlement Agreement and the Bank derived no rights from that agreement. The Letter of Authority, which the Bank produced at the request of the Owners and the Managers, enabled both the Insurers and Willis Ltd to obtain discharges of their obligations and to that end it was attached to the Settlement Agreement. The Letter of Authority facilitated the settlement between the Insurers and the Owners and provided the Owners/Managers with a mechanism by which the Bank as mortgagee, assignee and loss payee could receive its entitlement. At the time of payment of the proceeds of the Policy there was no dispute as to the Bank’s entitlement and no need for legal proceedings. There was therefore no inconsistency between the Bank’s actions and the exclusive jurisdiction clause. The Bank therefore is not bound by an agreement as to jurisdiction under article 15 or article 25 of the Regulation.

Matters Relating to Insurance

If the jurisdiction clause did not Apply, what was the applicable ground for jurisdiction? Was it the general rule for misrepresentation (Art 7(2)), or could the bank benefit from the special provisions in the Brussels Ibis Regulation on matters relating to insurance?

The insurers argued that these provisions were only available if the subject matter of the claim was, at least in substance, a breach of an obligation contained in, and required to be performed by, an insurance contract. The Supreme court rejected the argument as follows (from the Press Sumary of the Court):

The Supreme Court finds that the Insurers’ claims against the Bank are “matters relating to insurance” within the meaning of section 3 of the Regulation [41]. The Supreme Court notes that the title of section 3 is drafted in broader language than other sections of the Regulation, which refer to individual contracts [35]. It is also significant that the scheme of section 3 is concerned with the rights not only of parties to an insurance contract but also of beneficiaries and injured parties, who will typically be non-parties [36]. The recitals to the Regulation do not operate to narrow the scope of section 3 [37]. Whereas EU case law indicates that articles derogating from the general rule in article 4 should be interpreted strictly, article 14 operates to reinforce article 4 and so need not be read narrowly [38]. Even if section 3 were to apply only to claims based on a breach of an individual insurance contract, the insurance fraud alleged by the Insurers would inevitably entail a breach of the Policy [40].

Is there a Weaker Party Exception for Insurance Contracts?

Finally, the lower courts had ruled that the rationale for the special provisions on insurance matters were to protect weaker parties, and that the bank was not one.

The argument is rejected by the Supreme Court on the following grounds (from the Press Sumary of the Court):

The Supreme Court holds that there is no “weaker party” exception to the protection of article 14 [43]. Article 14 protects certain categories of person because they are generally the “weaker party” in a commercial negotiation with an insurance company, not because of their individual characteristics [44]. Whilst recital (18) explains the policy behind section 3, it is the words of article 14 which have legal effect [45]. Article 14 refers to the policyholder, the insured and the beneficiary without further qualification and derogations from the jurisdictional rules in matters of insurance must be interpreted strictly [46, 57]. In any case, it would undermine legal certainty if the applicability of section 3 were to depend on a case by case analysis of the relative strength or weakness of contracting parties. This is why the Court of Justice of the European Union (“CJEU”) has treated everyone within the categories identified in article 14 as protected unless the Regulation explicitly provides otherwise [47-49]. The CJEU only has regard to recital (18) in deciding whether to extend the protections of article 14 to persons who do not fall within the identified categories, not to decide whether a particular policyholder, insured or beneficiary is to be protected [50-56]. Further, in deciding whether to extend the protections of article 14 in this way, the CJEU seeks to uphold the general rule in article 4 [43].

The Max Planck Institute Luxembourg has launched a call for applications for PhD scholarships in 2021.

Advanced doctoral students working in comparative procedural law, international procedural law and adjudication are invited to apply by 15 May 2020. While proficiency in English is compulsory to be able to participate in the Institute’s scientific activities, the call is also open to doctoral candidates writing their thesis in a language other than English.

The scholarship offers young scientists the opportunity to stimulate their scientific inspiration and advance their research in a dynamic environment. In addition to a monthly grant of 1.500 €, the selected candidates will be offered a workstation in the reading room, and will have the opportunity to participate in the Institute’s scientific activities.

To apply, the interested candidates meeting the requirements of the call must submit the following documents, in English: a cover letter (max. 1 page), stating the motivation for their application, the correlation between the topic of their research and the Institute’s areas of research, and the desired time frame for the scholarship stay; an up-to-date curriculum vitae, with an indication of the class of degree awarded (undergraduate and postgraduate, if relevant); a summary of the PhD project (max. 2 pages), including subject, description and work plan; two letters of recommendation (including one from the PhD supervisor, with his/her contact details).

More information about the call is available here.

Contact persons: Christiane Göbel & Viktoria Drumm, scholarship@mpi.lu.

Peter Mankowski is the editor of a Research Handbook on the Brussels Ibis Regulation, juest published by Edward Elgar.

Here’s the blurb.

The Brussels Ibis Regulation is the magna carta for jurisdiction and the free circulation of judgments in civil and commercial matters in the EU, and forms a cornerstone of the internal market. This timely Research Handbook addresses the cutting edges of the regime, in particular its place within the overall system of EU law and its adaptations in response to specific kinds of lawsuits or the needs of particular industries.

Featuring original research by leading academics from across Europe, chapters take a systematic approach to examining a broad variety of topics in relation to the Brussels Ibis Regulation. Such topics include collective redress, injunctive relief, lis pendens and third states, negotiorum gestio, arbitration, intellectual property lawsuits, and its interface with the European Insolvency Regulation (Recast). Moving beyond what is offered by textbooks and commentaries, this incisive Research Handbook analyses the most recent developments in legislation and practice, as well as providing an outlook on the future of this field of EU law.

This Research Handbook will prove a critical read for scholars and students of EU law. Judges and practitioners working in this area will also find its insights to be of significant practical relevance.

Contributors include Tomas Arons, Sylvain Bollée, Tim Dornis, Etienne Farnoux, Thomas Garber, Christian Heinze, Antonio Leandro, Leander D. Loacker, Peter Mankowski, Fabrizio Marongiu Buonaiuti, Johan Meeusen, Dario Moura Vicente, Guillaume Payan, Aukje van Hoek, Cara Warmuth and Matteo Winkler.

For more information see here and here.

Edoardo Rossi is the author of a monograph in Italian titled La Sharing economy nel diritto internazionale privato europeo (Sharing Economy – A European Private International Law Perspective), published by Giappichelli.

The author provided the editors of this blog with an abstract in English. The abstract reads as follows.

In the current economic and social context new and controversial sharing practices, offering anyone the opportunity to search for or make available goods or services on the market regardless of the professional or amateur nature of the persons involved, have emerged. These practices, very heterogeneous and concerning the most different areas of daily life, such as mobility, housing, business activities, communications, work, culture, communication, education and finance, have been linked  to the notion of “sharing economy”, which brings them together by virtue of temporary access to goods or services, facilitated by the large-scale intervention of digital platforms, through which requests and offers are coordinated online in order to share goods or services.

The legitimacy of schemes linked to this new economic models has been challenged in a number of aspects, including low quality of services, safety of consumers, authorisation and licensing, taxes and compliance with competition rules. The inadequacy of the existing rules to deal with the provision of services through the sharing economy models has consequently emerged.

In spite of these critical profiles, the legal relations established through sharing economy platforms are constantly increasing around the world, implying the emergence of elements of transnationality, from which derives the recourse to the rules of private international law, in order to determine the applicable law and the judge competent to rule on any disputes.

The monograph thus attempts to analyse some of the most important private international law issues, such as the inadequacy of the party autonomy in regulating the phenomenon, especially with reference to the general terms and conditions of contract unilaterally drawn up by platform operators, which state that the latter is totally unrelated to the legal relations between users, often in conflict with the minimum level of consumer protection guaranteed by EU law and by the national legislations. Critical profiles have also been identified in the online conclusion of contracts that bind the parties involved in sharing economy legal relations, in ascertaining the effectiveness of consent on the choice of forum and choice of law clauses, in cases of potential related actions and in the location of the “domicile” of the platform operators.

Further information can be found here.

The author of this post is Giulio Monga, a PhD student at the Catholic University of the Sacred Heart, Milan.

On 8 July 2019, Italian Supreme Court (Corte di Cassazione) ruled on the jurisdiction of Italian courts over passengers’ claims for compensation against air carriers established in non-EU countries (order No 18257 of 2019).

The facts

D.M. and R.G., two Italian citizens residing in Italy, purchased tickets to fly from Copenhagen to Havana, and back. The flights were operated by the Russian airline Aeroflot. The tickets were purchased through the Aeroflot website.

The flight to Havana was first cancelled and only replaced with a longer flight the day after. On the return flight, the two passengers’ luggage was mishandled only to be delivered ten days later.

The two sued the Italian subsidiary of Aeroflot for damages before the Justice of Peace of Rome.

Aeroflot challenged the jurisdiction of Italian courts and asked the Supreme Court to give a ‘preliminary’ ruling on jurisdiction, as provided for in Article 41 of Italian code of civil procedure (this is a ruling on jurisdiction alone, which either party may request for as long as the case is not decided at first instance).

Specifically, Aeroflot submitted that the action had no connection with Italy, apart from the nationality and the residence of the plaintiffs. It stressed that the tickets had been purchased through the Moscow-based website of the company and that Italy was neither the country where the contract ought to take place nor the country where the alleged non-performance had occurred.

The legal framework

In its ruling, the Supreme Court began by pointing out that the matter came with the purview of the Montreal Convention of 1999 for the unification of certain rules for international carriage by air.

The Convention, to which Italy is a party, applies to all international carriage performed by aircraft for reward (Article 1(1)). A carriage is ‘international’ for the purposes of the Convention where, among other situations, the place of departure and the place of destination are situated in the territories of two States parties. The latter condition was met in the circumstances, given that the Convention is also in force for Cuba and Denmark.

Jurisdiction over passengers’ rights under the Montreal convention

The Montreal Convention deals with jurisdiction over passengers’ claims for damages in Article 33. Specifically, Article 33(1) provides that an action for damages may be brought, at the option of the plaintiff, before the courts of the following contracting States: the State of the carrier’s domicile, the State of the carrier’s principal place of business, the State where the carrier has a place of business through which the contract was made, or the State of the place of destination of the flight.

In the instant case, the Court noted, the question was whether the defendant, Aeroflot, could be regarded to have a ‘place of business’ in Italy, and whether such place could be considered to be the place of business through which the contracts between Aeroflot and the plaintiffs had been made.

The ‘place of business through which the contract was made’

The Court observed that, where tickets are purchased on-line, the place of business through which the contract was made must be identified regardless of the physical location of the agencies, subsidiaries or branches of the carrier concerned.

Air carriers, the Court remarked, present themselves on the web as commercial operators interacting with users based anywhere in the world. Neither the carrier’s nor the website users’ location or geographical origin are relevant to the transaction, since no physically identifiable intermediation occurs between the passenger and the carrier for the purposes of the purchase.

According to the Supreme Court, the online purchase of tickets challenge the traditional methods of localisation of a contract for jurisdictional purposes.

Against this background, the ‘place of business through which the contract has been made’, as referred to in Article 33(1) of the Montreal Convention, cannot be determined based on the location of the server used for completing the purchase. It would be unreasonable, the Court added, to burden the passenger with the task of assessing the location of the relevant server. Moreover, an inquiry to that effect would lead to uncertain results, and would hardly be consistent as such with the goals of predictability that the rules on jurisdiction, including Article 33(1) of the Montreal Convention, are expected to pursue.

Having stressed that the Montreal Convention must be given an autonomous interpretation, the Court observed that Article 33(1) should be read in light of other provisions in the Convention concerning jurisdiction. By this statement, if the understanding of the author of this post is correct, the Court meant to refer, in particular, to Article 33(2).

The latter provision applies, alongside Article 33(1), to actions for damages ‘resulting from the death or injury of a passenger’. It provides that those actions may also be brought before the courts of the State Party ‘in which at the time of the accident the passenger has his or her principal and permanent residence and to or from which the carrier operates services for the carriage of passengers by air, either on its own aircraft, or on another carrier’s aircraft pursuant to a commercial agreement, and in which that carrier conducts its business of carriage of passengers by air from premises leased or owned by the carrier itself or by another carrier with which it has a commercial agreement’.

While Article 33(2) was inapplicable as such to the circumstances of the case, the Supreme Court apparently relied on the latter provision to construe, consistent with the principles of the Convention, the expression ‘place of business through which the contract was made’ as used in Article 33(1), in particular as regards on-line purchases. The Court argued that in on-line purchases, that place should be understood to correspond to the place where the purchase order is made and the payment is likely to take place: in the Court’s view, that place should in fact be identified with the domicile of the passenger, a connecting factor that complies with the requirements of certainty and foreseeability.

In the Court’s view, one of the general goals underlying the Montreal Convention, as it arises from an overall analysis of the above provisions, is in fact to enhance the protect of the passenger, namely by facilitating access to justice. To corroborate its findings, the Court also referred to the rules of the Brussels I bis Regulation on contracts concluded by consumers, as an example of the kind of protection that jurisdictional rules may want to afford to weaker parties.

In light of all of the foregoing, the Supreme Court concluded that, in the event of tickets purchased online by the passenger himself, the expression ‘place … through which the contract has been made’ in Article 33(1) should be deemed to refer to the place where the passenger becomes aware of conclusion of the contract, that is, in fact, the domicile of the passenger himself. This interpretation, the Court finally contended, complies with the goal of giving adequate protection to the passenger as a weaker party, while ensuring predictability and protecting air carrier against forum shopping.

The raising of a problem child

The creation of the European Patent Court has been fraught with difficulties. After Spain and Italy had impeded its establishment for linguistic concerns, it was embedded in 2013 in an international treaty, the Agreement on a European Patent Court. In March 2017, the German Parliament (Bundestag) passed a law ratifying the Agreement. A mere 35 of its more than 600 members were present at the vote.

A patent lawyer with a constitutional hunch

Patent lawyer Dr Ingve Björn Stjerna from Düsseldorf was unhappy. He saw his right of democratic representation, protected under Art 38 of the German Constitution (Grundgesetz), being violated. That is why he brought a constitutional complaint against the law by which the German Parliament had consented to the Agreement.

A court concerned about German sovereignty

The German Constitutional Court (Bundesverfassungsgericht) affirmed the complaint. It declared the German act assenting the Agreement to be void. In the view of the majority of the Justices, the procedure in which the law had not been adopted was defective. The act would require the consent by at least two thirds of all members of Parliament and of the Federal Council (Bundesrat), which is necessary normally only for amendments to the text of the Constitution (Art 79(2) German Constitution).

The rationale of this ruling was the following: In the Court’s view, the act ratifying the Agreement on the European Patent Court materially alters the German Constitution. By creating a new international court, Germany would transfer sovereign powers, which it would find impossible to regain later. As a result, German citizens would no longer be able to influence the exercise of the state powers through their vote. Hence their right of being democratically represented would be violated.

A dissenting opinion concerned about European integration

The decision was rendered by a 5 to 3 majority. In a dissenting opinion, the minority criticised the Court for having overstretched the right of democratic representation (Art 38 of the German Constitution). The latter would not be put into question by a merely formal mistake in the legislative procedure. Furthermore, the dissenters warned that the position taken by the majority would endanger further European integration, which enjoys constitutional status in Germany.

Assessment

It is remarkable that the Constitutional Court requires a majority of two thirds of the Parliament for the act ratifying the Agreement on a European Patent Act. Can it really be said that this act amounts to a change of the German Constitution? Doubts are in order.

The court also conveniently ignores that judges are not elected representatives. It is therefore strange to invoke the right of democratic representation to invalidate such a law.

Even more peculiar, from an outsider’s view, must seem the fact that a single person can trigger the constitutional review of a legislative act based on merely formal errors. This creates opportunities for putting spanners in the work of the legislative procedure.

The German Constitutional Court’s emphasis on sovereignty is odd and throws a spanner in the works of further European integration. There seems to be an agenda behind this. Mind you that this is the same chamber of the Court that has repeatedly questioned the legality of monetary policy measures by the European Central Bank.

Fortunately, most other Member States do not have courts with similar far-reaching powers and extreme positions. But already, some – like Hungary – are starting to imitate Germany and endow their Constitutional Courts with powers to control the EU and its institutions. If more were to follow that path, this would surely be the end of European integration.

The Upshot

The decision by the Constitutional Court does not make the creation of the European Patent Court impossible. The German Parliament and the Federal Council have to vote for the law once more with two thirds of their members. However, precious time will be lost again.

A free webinar on Force Majeure and Hardship under Cross-border and Comparative Perspectives will take place on 8 April 2020 at 17.00 BST, organised by the British Institute of International and Comparative Law.

Speakers include Alice Decramer (avocat, Signature Litigation Paris), Nicole Langlois (Barrister, XXIV Old Buildings) and Tom Sullivan (partner & attorney, Shook Hardy Bacon, Philadelphia). The webinar will be chaired by Duncan Fairgrieve (Senior Research Fellow in Comparative Law & Director, Product Liability Forum). 

The objective of this webinar is to examine the legal consequences of a party’s inability to perform a contract due to events outside their control, by comparing and contrasting a series of different juridictions including the US, France and the UK. An analysis will be made of the issue of force majeure / and hardship in comparative perspective, looking at the impact of contractual force majeure clauses, and their interpretation by the courts in a series of different juridictions. The seminar will look at supply of goods contracts, as well as commercial contracts more generally. An analysis will be given of the position where there is no specific contractual provision, and reliance is instead placed on frustration / hardship or impracticability. What are the conditions of these doctrines and what is the remedy that might be awarded? Distinguished speakers will examine the issues with a particular focus on the impact of the current circumstances.

More details and advance registration here.

April 2020 opened at the Court of Justice with the publication of two AG’s opinions, as announced: AG Saugmandsgaard Øe‘s on case C-186/19 (so far, not available in English), and AG Campos Sánchez-Bordonas’ on case C- 343/19 (press release here). The latter have already been widely reported in the news (see for instance here, here or here).

The next reading of an Opinion – this one by AG Szpunar –
will take place on 26 April 2020, and will concern case C-73/19, Movic. The question, referred by the Hof van beroep te Antwerpen, is once more about the meaning of the expression “civil and commercial matters” for the purposes of the Brussels I bis Regulation.

Is an action concerning a claim aimed at determining and stopping infringing market practices and/or commercial practices towards consumers, instituted by the Belgian Government in respect of Dutch companies which from the Netherlands, via websites, focus on a mainly Belgian clientele for the resale of tickets for events taking place in Belgium, pursuant to Article 14 of the … Law of 30 July 2013 regarding the sale of admission tickets to events … and pursuant to Article XVII.7 WER, a civil or commercial matter within the meaning of Article 1(1) of the [Brussels I bis Regulation], and can a judicial decision in such a case, for that reason, fall within the scope of that Regulation?

No need to say that, whatever the answer, it will have far-reaching consequences for collective actions.

AG Szpunar’s Opinion on case C-253/19, Novo Banco, is expected one week later. Here, the Tribunal da Relação de Guimarães is asking about the new Insolvency Regulation.

Under Regulation (EU) 2015/848 of the European Parliament and of the Council, do the courts of a Member State have jurisdiction to open main insolvency proceedings in respect of a citizen whose sole immovable asset is located in that State, while he, along with his family unit, is habitually resident in another Member State where he is in paid employment?

No judgments dealing with issues of private international law are scheduled. Hearings listed until 30 April 2020 are adjourned until a later date.

On 1 April 2020, the UK Supreme Court ruled in Whittington Hospital NHS Trust v XX on the fascinating issue of whether damages for funding foreign surrogacy could be considered as an appropriate remedy in a tort action.

The plaintiff in this case was a woman who lost the ability to bear a child as a consequence of a medical negligence by an hospital which admitted liability.

The dispute was thus concerned with the assessment of the damages that the plaintiff could receive. The calculation obviously depended on how the woman intended to put herself in a position as she would have been if she had not sustained the wrong.

The remarkable claims of the victim

In this respect, the woman made a number of remarkable claims which, it seems, were accepted without debate by the court: (i) as both her and her partner came from large families, she would want to have four children; and (ii) she would want to have those children through surrogacy. It is unclear whether adoption was considered at any point of the proceedings.

I will not comment here on the fact that it seems that the claimant could seek compensation for as many children as she wanted to (the judgment underscores that her sister had 10, so maybe that was the limit). But one wonders whether the choice of the plaintiff for surrogacy was disputed. One alternative remedy would obviously be adoption. In many countries, one would be legal, while the other would not be, but this is not the case in England. Yet, there is a duty to mitigate loss in the English law of torts, and the duty means that while the plaintiff may choose the most expensive remedy to make good her loss, she may not charge it to the defendant (Darbishire v. Warran, 1963). But maybe adoption is actually more expensive than surrogacy.

The debate focused on a third claim: the claimant would prefer to use commercial surrogacy arrangements in California; but if this would not be funded (i.e. through the damages awarded by the court), she would use non-commercial arrangements in the United Kingdom.

The reason why the claimant feared that her preference for commercial surrogacy might well be denied funding was that the Court of Appeal had ruled in Briody v St Helen’s and Knowsley Area Health Authority that commercial surrogacy in California was contrary to public policy. The Court of Appeal had also ruled in Briody that only surrogacy with the claimant’s own eggs would be restorative.

The first instance judge thus ruled that commercial surrogacy would not be funded, and that, given that the claimant could probably have only two children using her eggs, only two non commercial surrogacies in the UK could be funded, for £ 37,000 each.

Judgment of the Supreme Court

The Supreme Court overruled Briody on both accounts. Lady Hale ruled for the majority that awards of damages for foreign commercial surrogacy are no longer contrary to public policy, and that no distinction should be made based on the origin of the eggs.

From the Press Summary of the Court:

UK courts will not enforce a foreign contract if it would be contrary to public policy. But most items in the bill for a surrogacy in California could also be claimed if it occurred here. In addition, damages would be awarded to the claimant, the commissioning parent, and it is not against UK law for such a person to do the acts prohibited by section 2(1) of the 1985 Act. Added to that are developments since Briody: the courts have striven to recognise the relationships created by surrogacy; government policy now supports it; assisted reproduction has become widespread and socially acceptable; and the Law Commissions have proposed a surrogacy pathway which, if accepted, would enable the child to be recognised as the commissioning parents’ child from birth. Awards of damages for foreign commercial surrogacy are therefore no longer contrary to public policy. However, there are important factors limiting the availability and extent of such awards: both the treatment programme and the costs involved must be reasonable; and it must be reasonable for the claimant to seek the foreign commercial arrangements proposed rather than to make arrangements within the UK; this is unlikely to be reasonable unless the foreign country has a well-established system in which the interests of all involved, including the child, are properly safeguarded [49-54].

Lord Carnwath’s dissenting judgment differs from the majority on [this] issue only. In his view, while this case is not concerned with illegality, there is a broader principle of legal coherence, which aims to preserve consistency between civil and criminal law. It would go against that principle for civil courts to award damages based on conduct which, if undertaken in the UK, would offend its criminal law. Society’s approach to surrogacy has developed, but there has been no change in the critical laws on commercial surrogacy which led to the refusal in Briody of damages on that basis. It would not be consistent with legal coherence to allow damages to be awarded on a different basis [55-68].

So, it seems that the claimant was entitled to choose commercial foreign surrogacy over UK non commercial surrogacy.

But then this begs an obvious question: how can you possibly justify that she charges the defendant with her costly preferences? Unfortunately, it will take another case to know, it seems. Lady Hale concluded her judgment by stating:

Third, the costs involved must be reasonable. This too has not been put in issue in this case, which has been argued as a matter of principle, but it should certainly not be taken for granted that a court would always sanction the sorts of sums of money which have been claimed here.