Agrégateur de flux

The author of this post is Michiel Poesen, PhD candidate at KU Leuven.

This post tells a short story about the fate of European private international law’s neutrality paradigm… Our story starts where you probably would not expect it: the 2019 Belgian company law reform.

In 2019, the Belgian legislature reformed the Company Law Code in a bid to attract more investors to Belgium. (For the record, the previous government also launched the idea of offering businesses an interesting venue for transnational litigation–the Brussels International Business Court or BIBC, which did not make it through).

One of the reform’s key elements was to make company law leaner and more flexible. Facilitating this flexibilisation, the legislature also revised the Belgian private international law provisions pertaining to company law. In sympathy with the well-known CJEU case law on the freedom of establishment in the EU, the legislature traded the seat principle for the incorporation principle as the connecting factor for the law applicable to and adjudicatory jurisdiction over companies (Articles 109–110 Code of Private International Law; Article 111 contains a list of legal questions governed by the lex societatis).

Clearly, the incorporation principle gives up on the traditional idea that the connecting factor for companies should be based on a physical element such as the presence of a company’s place of administration (see R Michaels, ‘Globalizing Savigny? The State in Savigny’s Private International Law and the Challenge from Europeanization and Globalization’ in M Stolleis & W Streeck (eds), Aktuelle Fragen zu politischer und rechtlicher Steuerung im Kontext der Globalisierung (Nomos 2007) 142).

Interestingly, the statute provides for one carve-out concerning adjudicatory jurisdiction (I should thank Professor Joeri Vananroye and Professor Stijn De Dier for bringing it to my attention). Claims relating to the personal liability of directors towards third parties can be brought in the Belgian courts if the company has its ‘main establishment’ in Belgium and has a merely formal connection the state where it is incorporated:

… the Belgian courts have jurisdiction over actions concerning the liability of directors of corporations resulting from Article 2:56, §1, of the Corporations and Associations Code towards third parties other than the corporation that arose out of acts committed in the performance of their administrative function, provided that the main establishment of the legal person is in Belgium, while the legal person is incorporated outside if the European Union [or indeed an EFTA state that ratified the Lugano II Convention] and has a merely formal connection to that state [Translation by the author, the authentic text is available in Dutch and French in the Belgian state gazette].

The main establishment ‘is determined by taking into account primarily the place of administration, as well as the centre of its business and activities, and in subsidiary order the statutory seat’ (Article 4, §3 Code of Private International Law, available in English here – although not yet reflecting the 2018 overhaul). This, in fact, is a special tort jurisdiction rule that seeks to shield Belgian residents from companies who operate in Belgium but are incorporated outside of the EU (e.g. for fiscal or organisational purposes).

The Belgian legislature enacted this provision to strike a balance between a company’s freedom to choose the forum pursuant to the incorporation principle and the protection of general interests in Belgium, such as environmental protection or the fight against tax fraud (see here, at 144–145).

Private international lawyers will be interested to know that finding the physical ‘seat’ (Sitz in classical Savignyan terms) of the tortious relationship between a director and a third party, however, was not part of the legislature’s motives. This is quite interesting. For it demonstrates how the legislature sought to balance material interests through the law of conflict of jurisdictions (see Michaels, supra, 140–141).

Hence, the legislature was not enticed by European private international law’s traditional focus on finding the legal relationship’s geographical connection (which one American realist provocatively called ‘transcendental nonsense’ long before the Belgian company law reform; FS Cohen, ‘Transcendental Nonsense and the Functional Approach’ (1935) 35 Columbia Law Review 811).

Written by Fieke van Overbeeke[1]

 

On 1 December 2020 the Grand Chamber of the CJEU ruled in the FNV/Van Den Bosch case that the Posting of Workers Directive(PWD) is applicable to the highly mobile labour activities in the road transport sector (C-815/18). This judgment is in line with recently developed EU legislation (Directive 2020/1057), the conclusion of AG Bobek and more generally the ‘communis opinio’. This question however was far from an ‘acte clair’ or ‘acte éclairé’ and the Court’s decision provides an important piece of the puzzle in this difficult matter.

The FNV/Van Den Bosch case dates back all the way to the beginning of 2014, when the Dutch trade union FNV decided to sue the Dutch transport company Van den Bosch for not applying Dutch minimum wages to their Hungarian lorry drivers that were (temporarily) working in and from its premises in the Netherlands. One of the legal questions behind this was whether the Posting of Workers Directive is applicable to the road transport sector, for indeed if it is, the minimum wages of the Netherlands should be guaranteed if they are more favourable than the Hungarian minimum wages (and they are).

At the Court of first instance, the FNV won the case with flying colours. The Court unambiguously considered that the PWD is applicable to road transport. Textual and teleological argumentation methods tied the knot here. The most important one being the fact that Article 1(2) PWD explicitly excludes the maritime transport sector from its scope and remains completely silent regarding the other transport sectors. Therefore the PWD in itself could apply to the road transport sector and thus applies to the case at hand.

Transport company Van Den Bosch appealed and won. The Court of Appeal diametrically opposed its colleague of first instance, favouring merely the principles of the internal market. The Court of Appeal ruled that it would not be in line with the purpose of the PWD to be applied to the case at hand.

The FNV then took the case to the Supreme Court (Hoge Raad), at which both parties stressed the importance of asking preliminary question to the CJEU in this matter. The Supreme Court agreed and asked i.a. whether the PWD applies to road transport and if so, under which specific circumstances.

The CJEU now cuts this Gordian knot in favour of the application of the PWD to the road transport sector. Just as the Court in first instance in the Netherlands, the CJEU employs textual and teleological argumentation methods and highlights the explicit exception of Article 1(2) PWD, meaning that the PWD in itself could apply to road transport.

As regards to the specific circumstances to which the PWD applies, the CJEU sees merit in the principle of the ‘sufficient connection’ (compare CJEU 19 December 2018, C-16/18 Dobersberger, paragraph 31) and rules:

‘A worker cannot, in the light of PWD, be considered to be posted to the territory of a Member State unless the performance of his or her work has a sufficient connection with that territory, which presupposes that an overall assessment of all the factors that characterise the activity of the worker concerned is carried out.’

So in order to apply the PWD to a specific case, there has to be a sufficient connection between worker and temporary working country. In order to carry out this assessment, the CJEU identifies several ‘relevant factors’, such as the characteristics of the provision of services, the nature of the working activities, the degree of connection between working activities of a lorry driver and the territory of each member state and the proportion of the activities compared to the entire service provision in question. Regarding the latter factor, operations involving loading or unloading goods, maintenance or cleaning of the lorries are relevant (provided that they are actually carried out by the driver concerned, not by third parties).

The CJEU also clarifies that the mere fact that a lorry driver, who is posted to work temporarily in and from a Member State, receives their instructions there and starts and finishes the job there is ‘not sufficient in itself to consider that that driver is “posted” to that territory, provided that the performance of that driver’s work does not have a sufficient connection with that territory on the basis of other factors.’

Finally, it is important to note that the Court provides a helping hand regarding three of the four main types of transport operations, namely transit operations, bilateral operations and cabotage operations. A transit operation is defined by the Court as a situation in which ‘a driver who, in the course of goods transport by road, merely transits through the territory of a Member State’. To give an example: a Polish truck driver crosses Germany to deliver goods in the Netherlands. The activities in Germany are regarded as a ‘transit operation’. A bilateral operation is defined as a situation in which ‘a driver carrying out only cross-border transport operations from the Member State where the transport undertaking is established to the territory of another Member State or vice versa’. To give another example, a Polish truck driver delivers goods in Germany and vice versa. The drivers in those operations cannot be regarded as ‘posted’ in the sense of the PWD, given the lack of a sufficient connection.

By referring to Article 2(3) and (6) of Regulation No 1072/2009, a cabotage operation is defined by the CJEU as ‘as national carriage for hire or reward carried out on a temporary basis in a host Member State, in conformity with that regulation, a host Member State being the Member State in which a haulier operates other than the haulier’s Member State of establishment’. For example, a Polish lorry driver carries out transport between two venues within Germany. According to the CJEU, these operations do constitute a sufficient connection and thus will the PWD in principle apply to these operations.

In short, the CJEU gives a green light for transit- and bilateral operations and a red light for cabotage operations. The CJEU however remains silent regarding the fourth important road transport operation: cross-trade operations. A cross-trade operationis a situation in which a lorry driver from country A, provides transport between countries B and C. The sufficient connection within these operations should therefore be assessed only on a case-by-case basis.

At large, the judgment of the CJEU is in line with the road transport legislation that has been adopted recently (Directive 2020/1057). This legislation takes the applicability of the PWD to road transport as a starting point and then provides specific conflict rules to which transport operations the PWD does and does not apply. Just like the judgement of the CJEU, this legislation determines that the PWD is not applicable to transit- and bilateral operations, whereas the PWD is applicable to cabotage operations. Cross-trade operations did not get a specific conflicts rule and therefore the application of the PWD has to be assessed on a case-by-case basis, to which the various identified factors by the Court could help.

All in all, the Gordian knot is cut, yet the assessment of the applicability of the PWD to a specific case will raise considerable difficulties, given de wide margin that has been left open and the rather vague relevant factors that the CJEU has identified. Hard and fast rules however seem to be impossible to impose to the highly mobile and volatile labour activities in the sector, and in that regard the CJEU’s choice of a case by case analysis of a sufficient connection seems to be the lesser of two evils.

***

[1] Fieke van Overbeeke, Legal Counsel at the International Institute for International and Foreign Law – the Netherlands and research fellow at the University of Antwerp – Belgium. On 13 December 2018 successfully defended her PhD on the topic of the applicability of the Posting of Workers Directive to the road transport sector. The PhD (in Dutch) is fully available online. Disclaimer: Fieke van Overbeeke has been a  legal expert on the side of the FNV during the trials in the Netherlands and at the CJEU.

The Grand Chamber of the Court of Justice delivered yesterday (8 December 2020) its judgment in case C‑626/18 (Republic of Poland v European Parliament), which is about the posting of workers, including in relation to Rome I.

Background: “By its application, the Republic of Poland asks the Court, principally, to annul Article 1(2)(a) and (2)(b) and Article 3(3) of Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services […] (‘the contested directive’), and, in the alternative, to annul that directive in its entirety”.

Relevant part of the case: “the Republic of Poland refers to Article 9 of the ‘Rome I’ Regulation and considers that the contested directive does not constitute a lex specialis, within the meaning of Article 23 of that regulation.

131 On that point, it must be observed that Article 8(1) of the ‘Rome I’ Regulation establishes a general conflict-of-law rule that is applicable to employment contracts, the designated law being the law chosen by the parties to such a contract, and that Article 8(2) of that regulation provides that, where such a choice has not been made, the individual employment contract is to be governed by the law of the country in which or, failing that, from which the employee habitually carries out his or her work, that country not being deemed to have changed if the employee is temporarily employed in another country.

132 However, Article 23 of the ‘Rome I’ Regulation provides for the possibility of derogation from the conflict-of-law rules established by that regulation, where provisions of EU law lay down rules on the law applicable to contractual obligations in certain areas, while recital 40 of that regulation states that the ‘Rome I’ Regulation does not exclude the possibility of inclusion of conflict-of-law rules relating to contractual obligations in provisions of EU law with regard to particular matters.

133 Given both their nature and their content, both Article 3(1) of the amended Directive 96/71, with respect to posted workers, and Article 3(1a) of that directive, with respect to workers who are posted for a period that, in general, exceeds 12 months, constitute special conflict-of-law rules, within the meaning of Article 23 of the ‘Rome I’ Regulation.

134 Further, the drafting process of the ‘Rome I’ Regulation demonstrates that Article 23 of that regulation covers the special conflict-of-law rule previously laid down in Article 3(1) of Directive 96/71, since, in the Proposal for a Regulation of the European Parliament and of the Council on the law applicable to contractual obligations (Rome I) (COM(2005) 650 final) of 15 December 2005, the Commission had annexed a list of special conflict-of-law rules established by other provisions of EU law, which mentions that directive.

135 Last, while the Republic of Poland considers that Article 3(1a) of the amended Directive 96/71 does not comply with Article 9 of the ‘Rome I’ Regulation, suffice it to state that the latter article, which must be interpreted strictly, refers to ‘overriding mandatory provisions of the law’ of the Member States, namely mandatory provisions respect for which is regarded as crucial by a country for safeguarding its public interests (judgment of 18 October 2016, Nikiforidis, C‑135/15, EU:C:2016:774, paragraph 41 and 44). There is nothing in the documents submitted to the Court to indicate that Article 3(1a) of the amended Directive 96/71 is contrary to such overriding mandatory provisions of law”.

Source: http://curia.europa.eu/juris/document/document.jsf?docid=235183&mode=req&pageIndex=1&dir=&occ=first&part=1&text=&doclang=EN&cid=17610010

Par un arrêt du 18 novembre 2020, la première chambre civile décide de soumettre à la Cour de justice une délicate question relative à la mise en œuvre de la règle de compétence subsidiaire énoncée par l’article 10, point 1, du règlement du 4 juillet 2012.

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Guest Post by John Coyle, the Reef C. Ivey II Distinguished Professor of Law at the University of North Carolina School of Law

One tried-and-true way of obtaining personal jurisdiction over a foreign person that otherwise lacks minimum contacts with a particular U.S. state is to require the person to agree ex ante to a forum selection clause.  This strategy only works, however, if the forum selection clause will be enforced by the courts in the chosen state.  To date, scholars have written extensively about the enforceability of “outbound” forum selection clauses that redirect litigation from one court to another.  They have devoted comparatively less attention to the enforceability of “inbound” forum selection clauses that purport to provide a basis for the chosen court’s assertion of personal jurisdiction over a foreign defendant.

 

In a recent paper, Katherine Richardson and I seek to remedy this deficit.  We reviewed 371 published and unpublished cases from the United States where a state court was asked to assert personal jurisdiction over an out-of-state defendant on the basis of an “inbound” consent-to-jurisdiction clause.  In conducting this review, we documented the existence of several different enforcement frameworks across states.  The state courts in New York, for example, take a very different approach to determining whether such a clause is enforceable than the state courts in Florida, which in turn take a very different approach to this question than the state courts in Utah.

 

These differences in enforcement frameworks notwithstanding, we found that consent-to-jurisdiction clauses are routinely given effect.  Indeed, our data suggest that such clauses are enforced by state courts approximately 85% of the time.  When the courts refuse to enforce these clauses, moreover, they tend to cite just a handful of predictable reasons.  First, the courts may refuse to enforce when the clause fails to provide proper notice to the defendant of the chosen forum.  Second, the courts may conclude that the clause should not be given effect because the parties lack a connection to the chosen forum or that litigating in that forum would be seriously inconvenient.  Third, a clause may go unenforced because it is contrary to the public policy of a state with a close connection to the parties and the dispute.

 

After mapping the relevant terrain, we then proceed to make several proposals for reform.  We argue that the courts should generally decline to enforce consent-to-jurisdiction clauses when they are written into contracts of adhesion and deployed against unsophisticated counterparties.  We further argue that the courts should decline to enforce such clauses in cases where the defendant was never given notice as to where, exactly, he was consenting to jurisdiction.  Finally, we argue that the courts should retain the flexibility to decide whether to dismiss on the basis of forum non conveniens even when a forum selection clause specifically names the jurisdiction where the litigation is brought.  Each of these reforms would, in our view, produce fairer and more equitable results across a wide range of cases.

 

Although our research focused primarily on state courts, our reform proposals are relevant to federal practice as well.  Federal courts sitting in diversity are required by Federal Rule of Civil Procedure 4(k)(1)(a) to follow the law of the state in which they sit when they are called upon to determine whether to enforce a consent-to-jurisdiction clause.  If a given state were to revise or reform its rules on this topic along the lines set forth above, the federal courts sitting in that state would be obliged to follow suit.

The post below was written by Peter Mankowski, who is Professor of Private International Law at the University of Hamburg. Apart from one section, the post is based on the author’s German-language case note in the Lindenmaier Möhring Kommentierte BGH-Rechtspechung. The translation into English was permitted courtesy of C.H. Beck Verlag, München.

This is the fourth contribution to the EAPIL online symposium on the ruling of the Court of Justice in the case of Wikingerhof v. Booking.com. The previous posts, authored by Matthias Lehmann, Adrian Briggs and Gilles Cuniberti, can be found here, here and here. 

Readers are encouraged to share their views by making comments to the posts. Those wishing to submit longer contributions for publication are invited to get in touch with the managing editor of the blog, Pietro Franzina, at pietro.franzina@unicatt.it.

Problem Description

The boundary between contract and tort, between Article 7 pts. (1) and (2) of the Brussels I bis Regulation, has been a mine-field for years.

The CJEU has continued to defer it to the detriment of tort and to the benefit of contract (see paradigmatically Brogsitter, paras 24-27, and flightright, paras 59-64; cf. also Holterman Ferho, paras. 70-71, and Feniks, paras 40-49). This generates enormous uncertainty (see only Baumert, EWiR 2014, 435; Slonina, ecolex 2014, 790; Wendenburg/Maximilian Schneider, NJW 2014, 1633; Dornis, GPR 2014, 352; Brosch, ÖJZ 2015, 958; Wendelstein, ZEuP 2015, 624; Reydellet, RLDA 111 [2016], 33; Pfeiffer, IPRax 2016, 111).

According to the CJEU, for a matter to be contractual, it is sufficient that there has been a breach of contractual obligations because it appears essential for the interpretation of the contract to determine whether the conduct at issue in the main proceedings is lawful or unlawful (Brogsitter, paras 24-27).

The national courts struggle with this and in some cases even make express ‘Brogsitter reservations’ (see in particular OGH ÖJZ 2015, 1051 with note Brenn; discussed by Mankowski, EuZA 2016, 368). By submitting its reference, the German Bundesgerichtshof (GRUR 2019, 320 — booking.com) sought certainty and a general decision from the CJEU on how far the CJEU intends to stick to Brogsitter (Mankowski, EWiR 2019, 157, 158). The CJEU has acknowledged and recognised that the concrete reference for a preliminary ruling in Wikingerhof is important in terms of legal policy, as is clearly evidenced by the fact that the Grand Chamber with the President and Vice-President of the CJEU decides, the fullest brass possible below the full plenum (the latter being reserved for rather constitutional matters).

Legal Assessment

Article 7 pt. (2) Brussels I bis Regulation refers to any action seeking to establish liability for damage on the part of the defendant and which does not relate to ‘matters relating to a contract’ within the meaning of Article 7 pt. (1) (Kalfelis, para. 18; Löber, para 19). An autonomous interpretation is required for both ‘contract’ and ‘tort’, which is more abstract from national understandings (paras 30 et seq.).

Both Article 7 pts. (1) and 2 are exceptions to the general jurisdiction of Article 4 Brussels I bis Regulation and are therefore to be interpreted strictly. According to Recital (16) of the Regulation, they are both justified from the point of view of particular proximity to the facts and evidence. An action therefore has as its object ‘matters relating to a contract’ within the meaning of Article 7 pt. (1) if an interpretation of the contract between the applicant and the defendant appears indispensable in order to determine whether the conduct alleged by the applicant against the defendant is lawful or, on the contrary, unlawful (Brogsitter, para. 25).

This is the case, inter alia, of an action based on the provisions of a contract or on legislation applicable under that contract (Holterman Ferho, para. 53, and Kareda, paras 30-33). On the other hand, where an applicant relies on the rules on liability in tort, delict or quasi-delict, that is to say, a breach of a legal obligation, and it does not appear necessary to examine the content of the contract concluded with the defendant in order to assess whether the conduct alleged against the defendant is lawful or unlawful, since that obligation on the defendant exists independently of that contract, an tort falls within the scope of the action within the meaning of Article 7 pt. (2).

In the present case, Wikingerhof relies on an infringement of German antitrust law, which generally prohibits the abuse of a dominant position irrespective of a contract or other voluntary commitment. More specifically, because of Booking.com’s strong position on the relevant market, Wikingerhof had no choice but to conclude the agreement at issue and to be subject to the effects of the subsequent amendments to Booking.com’s General Sales Conditions, even though some of Booking.com’s conduct was unfair.

The central legal question is therefore whether Booking.com has abused a dominant position for the purposes of antitrust law. In order to determine whether the practices alleged against Booking.com are lawful or unlawful under that competition law, it is not essential to interpret the contract between the parties to the main proceedings, since such an interpretation is, at most, necessary in order to establish the existence of those practices (para. 35).

It follows that, subject to verification by the referring court, the action brought by Wikingerhof, in so far as it is based on the statutory obligation not to abuse a dominant position, must be regarded as constituting a tort.

That is consistent with the objectives of proximity and the sound administration of justice pursued by the Brussels I bis Regulation. The court having jurisdiction under Article 7 pt. (2) — in cartel cases, that of the market affected by the alleged anti-competitive conduct — is best placed to rule on the main question of the merits of that allegation, in particular with regard to the collection and assessment of the relevant evidence (para 37 with reference to Tibor-Trans,  para. 34, and VKI v Volkswagen, para. 38).

Contract vs Tort in European International Procedural Law and Conflict of Laws

The CJEU is trying to engineer a cautious move away from Brogsitter without formally abandoning Brogsitter, and indeed by repeating the central statement from Brogsitter. In any event, for antitrust cases Brogsitter should not pass through.

In a very important situation, the CJEU restores its right to jurisdiction in tort. However, the gain in legal certainty is not as great as if a more general statement had been made. This is because the restriction to a specific situation still leaves the initial question open to all other situations. It may even induce the national courts to make even more complicated attempts to reveal, by comparison parallels or divergences with antitrust law for the situations to be assessed by each of them. AG Saugmandsgaard Øe had launched nothing less than a frontal full-force attack on Brogsitter or at least on a ‘maximalist’ reading of Brogsitter (Opinion of 10 September 2020, paras. 74-115).

Yet the CJEU has not endorsed this and has not distanced itself from Brogsitter at the general level. Wikingerhof does not overrule Brogsitter. It does not finally break with Brogsitter (Matthias Lehmann, Wikingerhof: CJEU Reestablishes Equilibrium between Contract and Tort Jurisdiction). It even cites with seeming approval to the Brogsitter formula – yet eventually opts for partially breaking free from that formula, namely for claims based in antitrust law. On the other hand, Wikingerhof does not firmly shut the door to future deviations from Brogsitter in other fields or in general.

In the age of private enforcement in particular, antitrust law is not a good ground for — as the CJEU is now trying to do — dissolving contract law in particular, but not in general.

Civil actions in the field of antitrust, especially since actions for damages or injunctions to use certain General Terms and Conditions will often come from suppliers or customers of the cartel participants or of the dominant enterprise. They therefore operate in the context of contractual relations. The cartel and abuse of power will be reflected in an arrangement of the contractual terms (service, consideration or conditions) favourable to the cartel or dominant undertaking. Antitrust induced nullity of the contract leads to more than one stage. The cartel or abuse of power becomes the background to the contract in question, and vice versa, it becomes almost a preliminary question of the cartel effect or abuse of power. It is therefore precisely in the case of cartels or abuse of power that contracts are the rule, not the exception (see to a similar avail Briggs, Wikingerhof: A View from Oxford).

However: Preliminary questions do not determine the classification of the main question. Nor do they do so with regard to the distinction between the contract and the tort for the main issue. There is no specific qualification for the main question (Pfeiffer, IPRax 2016, 111).

The CJEU’s departure from Brogsitter in antitrust law and the establishment of a tort/delict qualification could possibly give rise to an argumentum a maiore ad minus (tentatively in a similar direction the comment of Simon Horn to Matthias Lehmann’s post on this blog). If one is already moving in antitrust law with its relative proximity to the contract in tort law, it is necessary to move even more safely into tort law in the case of torts less close to the contractual realm.

However, this would be an attempt to assess parallels to, or divergences from, antitrust law by comparing them. Wikingerhof may indicate a reversal of the trend. The previously seemingly unstoppable rise of contract at the expense of tort/delict does not progress any further at least. However, a full reversal of the trend has not yet been completed, but rather requires further probation samples. But Wikingerhof might be some beginning. That tort regains some ground at the expense of contract is not akin to a catastrophe (but cf. Briggs, Wikingerhof: A View from Oxford), but a necessary correction of the previous over-stretching of ‘contract’ by Brogsitter.

If different, but concurring claims in contract and tort happen to exist, the best way to treat them might possibly be the introduction of annex competences rather than re-characterisation or deferring boundaries by characterisation.

Yet this enters another difficult field of striking balances of competing interests right (Mankowski, in: Ulrich Magnus/Mankowski, Brussels I-bis Regulation [2016] Art. 7 notes 34-35). Re-characterizing certain claims in tort as claims in contract if they can be said to be based on a breach of contractual obligations – in essence what Brogsitter boils down to –, and the result that two claims in contract compete would be not more than a bypassing escape strategy (Baumert, EWiR 2014, 435, 436; Kiener/Neumayr, ZFR 2015, 505, 506-507; Mankowski, in: Ulrich Magnus/Mankowski, Brussels I-bis Regulation [2016] Art. 7 note 35).

The CJEU’s Missing Look at the Conflict of Laws

Unfortunately, the CJEU in Wikingerhof completely fails to look at the sister area of conflict of laws as well. The mere existence of Article 6(3) Rome II Regulation and the clear attribution of private antitrust law to the unlawful acts in the realm of conflict of laws have provided very strong arguments for classifying private law specifically in tort/delict.

In that realm, Recitals (7) of the Rome I and Rome II Regulations require that the Brussels I bis Regulation be interpreted as well. Unfortunately, there is no parallel Recital in the Brussels I bis Regulation. At the occasion of the next recast, a future Brussels I ter Regulation should receive such a Recital in order to draw the current missing third line to the interpretation triangle with Rome I and Rome II and make the triangle so obvious that it can no longer be ignored by the CJEU.

Does an Overarching Notion of ‘Contract’ Exist under the Brussels I bis Regulation?

A major part of the discussion subsequent to Wikingerhof, in particular on Conflictoflaws.net, has focused on whether ‘contract’ has the same meaning throughout the entire Brussels I-bis Regulation, i.e. in essence, whether Wikingerhof gets also relevant for insurance, consumer or employment contracts; opinions are divided (see Lutzi, Briggs, Van Calster, Poesen, Álvarez-Armas ).

Undeniably, there is a certain tendency particularly in Králová, paras. 58-63, pointing towards the CJEU tentatively favouring different notions of ‘contract’ for the purposes of Article 7 pt. (1) Brussels I bis Regulation, on the one hand, and Article 17 of the same Regulation, on the other (a then isolated predecessor might be found in Ilsinger, paras 56-57). AG Saugmandsgaard Øe expressed such tendency even more clearly in Wikingerhof (Opinion of 10 September 2020, para. 113).

Furthermore, Brogsitter has some counterparts extending the domain of consumer contracts to claims which under national law might have their fundament in tort (see in particular BGH NJW 2011, 532; BGH NJW 2011, 2809; BGH IPRax 2013, 168, 171; BGH WM 2012, 646; BGH ZIP 2013, 93). Reliantco, decided after Králová, is the current highwater mark (see paras. 58-73). In the background informing Article 17(1) in general, the desire for adequate consumer protection – mandated by Art. 153 TFEU – is a strong and specific influence. Yet ‘contract’ should follow the same concept throughout which is essentially based on economic ideas and categories of voluntary or involuntary creditorship plus cooperating mechanisms and the meeting of the minds (in detail Mankowski, ‘Ein eigener Vertragsbegriff für das europäische Internationale Verbraucherprozessrecht?’, GPR 2021 sub III). ‘Consumer contract’ adds the B2C element to ‘contract’, but is nevertheless based on ‘contract’ (in detail Mankowski, ‘Ein eigener Vertragsbegriff für das europäische Internationale Verbraucherprozessrecht?’, GPR 2021 sub IV).

‘Hotels Can Sue in Germany’: Marketplace Court for Cartel Victims and Danger of Derogation

Broken down from the high and abstract plane to the small change: The poster titles on Wikingerhof in the relevant internet publications have the tenor ‘Hotels can sue in Germany’ (in particular LTO, 24 November 2020; Hamburger Abendblatt, 25 November 2020).

In fact, under Article 7 pt. (2) Brussels I bis Regulation, the Court of Justice of the European Union establishes a market jurisdiction for the victims of the cartel. However, there is no reason why it should apply only to certain sectors, or even only to hotels, and not to all sectors, as Article 7 pt. (2) does not differentiate anywhere according to bananas, nor does Article 6(3) Rome II Regulation in the conflict of laws.

However, the counter-reaction seems obvious for cartels and dominant companies if it has not been implemented proactively for a long time: in its own general terms and conditions for contracts with suppliers or customers, by means of a jurisdiction clause, the courts have exclusive jurisdiction in their own place of residence. This is because Article 7 pt. (2) Brussels I bis Regulation creates only a ground of special jurisdiction and not a ground of exclusive jurisdiction which would bar any derogation. Article 7 pt. (2) gives way to Art. 25 Brussels I bis Regulation, and the Brussels I bis Regulation does not provide protection against derogating choice of court agreements (on antitrust claims and jurisdiction agreements under Article 25 Brussels I bis Regulation / Article 23 Brussels I Regulation, see Cartel Damages Claims, and Apple Sales International; see also Mankowski, EWiR 2015, 687; id., TBH 2020, 45; Stammwitz, Internationale Zuständigkeit bei grenzüberschreitenden Kartelldelikten [2018] pp. 391-437; Pfeiffer, LMK 2018, 412366; C. Krüger/Seegers, WuW 2019, 170; Goffinet/R. Spangenberg, J. dr. eur. 2019, 199).

However, this is not yet the final step in the assessment. The market power of internet portals in particular is a well-known phenomenon and a significant problem. In turn, it has provoked a specific counter-reaction by the European legislator. This counter-reaction is the P2B Regulation, i.e. Regulation (EU) 2019/1150 on promoting fairness and transparency for business users of online intermediation services.

That said, the P2B Regulation only grants protection to business users by means of (unsystematic) individual standards (Nadine Schneider/Kremer, WRP 2020, 1128, 1129; Stefan Ernst, CR 2020, 735, 739), but not comprehensive. It requires transparency and mandatory content in general terms and conditions. On the other hand, it refers only exceptionally to orders for annulment in respect of general terms and conditions, in particular in Article 3(3) P2B Regulation. In particular, it does not lose any word on choice-of-court agreements. This fits with the general line that recent EU special acts for the online sector – e.g. the Geo-Blocking Regulation in its Article 1(6) – in principle respect the Brussels I bis Regulation (see e.g. Recital (9) P2B Regulation).

It is true that the P2B Regulation favours mediation as the preferred method of dispute resolution. However, Art. 12 (5) P2B Regulation expressly states that the P2B Regulation does not affect the enforcement of rights by way of court action. The Brussels I bis Regulation protects its species, namely Articles 15, 19 and 23. However, only typically weaker parties with derogation bans, but not business users within the meaning of the P2B Regulation and small enterprises such as the Wikingerhof Hotel.

The market-based jurisdiction under Article 7 pt. (2) Brussels I bis Regulation, which has now been confirmed by the Court of Justice of the European Union, thus enables cartel victims against foreign internet portals to form a forum actoris, a forum actoris at their own domicile, but is subject to a derogation. In the broad legal policy perspective, de regulatione ferenda it can be considered to include special protection standards for SMEs (small and medium-sized enterprises) in a future Brussels I ter Regulation, i.e. to treat C2SME contracts as a separate category.

This is, however, a new round of the game, to be played in the future, and would in any event be the subject of a major debate which will certainly feature fiercely competing lobbying interests, with an uncertain outcome as to the final result.

Groupe Canal + / Commission
Concurrence
La Cour annule une décision de la Commission rendant obligatoires des engagements offerts par une entreprise pour préserver la concurrence sur les marchés

The post below, written by Gilles Cuniberti, a professor of Private International Law at the University of Luxembourg, and an editor of this blog, is the third contribution to the EAPIL online symposium on the ruling of the Court of Justice in Wikingerhof v. Booking. The previous posts, authored by Matthias Lehmann and Adrian Briggs, can be found here and here.

Other contributions will follow, the next one being scheduled for later today. Readers are encouraged to share their views by making comments to the posts. Those wishing to submit longer contributions for publication are invited to get in touch with the managing editor of the blog, Pietro Franzina, at pietro.franzina@unicatt.it.

One of the novelties of Wikingerhof is the introduction of a new requirement for the application of the special jurisdictional rules laid down by Article 7(1) and (2) of Regulation No 1215/2012: the claimant’s choice to rely on one of those rules.

29 It must therefore be held that the applicability of either point 1 of Article 7 of Regulation No 1215/2012 or point 2 of Article 7 thereof depends, first, on the applicant’s choice whether or not to rely on one of those rules of special jurisdiction and, second, on the examination, by the court hearing the action, of the specific conditions laid down by those provisions.

This is because, the court explains, the scheme of Regulation No 1215/2012 ‘is characterised by the possibility which it confers on the applicant of relying on one of the rules of special jurisdiction laid down by that regulation’ (para. 27).

The purpose of this post is to explore the implications of this requirement.

Which Choice?

If the claimant is offered the possibility to choose, one would think that this is because he has an option. In the context of Article 7, this would seems to mean that courts having jurisdiction on the basis of Article 7(1) and courts having jurisdiction on the basis of Article 7(2) are simultaneously available.

This, however, is hard to conceive.

First, the court held that the rules on special jurisdiction laid down in  Article 7 of the Brussels I bis Reguation “are mutually exclusive in the application of that regulation” (para. 26). This seems to mean that the special rules in Article 7 cannot be applicable at the same time. If one rule is applicable, the application of the other is excluded.

Secondly, the second applicability requirement of the rules in Art 7(1) and (2) is that “the specific conditions lay down by these provisions” are ascertained by the relevant court. The conditions for each of the provisions turn around a single test, which is whether it is indispensable to examine the content of the contract in order to assess the lawfulness of the conduct of the defendant. If it is, Article 7(1) applies, and Article 7(2) does not. If it is not, Article 7(2) applies, and Art 7(1) does not.

So there is no option. The conditions of Article 7(1) or Art 7(2) cannot be met at the same time. Only one of these rules applies (at best).

So what does it mean that the claimant can choose to rely on one or the other?

Whose Choice?

What it could mean is that the claimant could choose an Article 7(1) forum over an Article 7(2) forum irrespective of the respective conditions of application of each of the provisions. In other words, the claimant could derogate from the conditions of applicability and choose one forum which would not have jurisdiction under Article 7.

This interpretation would be surprising, for a number of reasons.

First, as already underscored, the Wikingerhof court held that the second applicability requirement condition is that the court verifies that the conditions for the relevant jurisdictional rule are met. This suggests that it should not retain jurisdiction if these conditions are not met.

Second, while the parties may derogate from jurisdictional rules, this is only possible if both parties agree, whether expressly (choice of court agreement) or implicitly (submission to jurisdiction). There is no reason to favour the claimant in this respect. The Wikingerhof court explained that it is somehow relevant that Wikingerhof chose to rely on (national) tort rules. But why wouldn’t it be relevant that the defendant would choose to rely on (national) contractual defences? It does not seem that Booking did exactly that in that case, but not far: it relied on a choice of court agreement.

Conclusion: Second Order Characterisation

Finally, it is not quite clear why, after insisting that the concepts of ‘matters relating to a contract’ and ‘matters relating to tort’ should receive an autonomous interpretation, and repeating the European definitions of these concepts, the Wikingerhof court found it useful to underscore on which ground of national law the claimant would be seeking to establish liability.

Why should it matter if the conditions to meet are defined at European level? And how could it matter? Would this mean that Article 7(2) would only be available if the substantive claim was delictual in nature under the applicable national law? But, as far as substantive law is concerned, there is no freedom of choice between tort and contractual liability in all legal systems. In France and Luxembourg, there is no choice: contractual liability prevails and excludes tort liability when a given claim could fall within the scope of both kinds of liability.

Ultimately, one wonders whether the possibility of second order characterization was well perceived by the court. As the readers of this blog will know, it is common, and perfectly fine, to make one characterization for private international law purposes, and another for the purpose of applying substantive rules. In the context of the Brussels I bis Regulation, it is equally fine to characterize the claim for jurisdictional purposes pursuant to European concepts, and then to characterize the same claim differently for the purpose of applicable substantive rules.

Il faut retenir de cet arrêt que, devant la chambre de l’application des peines, l’affaire est dévolue aux seconds juges dans les limites fixées par l’acte d’appel et la qualité de l’appelant.

en lire plus

L’arrêt du 18 novembre 2020 porte sur des circonstances que l’on croirait tirées d’un cas pratique universitaire : un coureur cycliste professionnel de nationalité australienne résidant à Monaco est renversé en Italie par un véhicule conduit par une ressortissante française, assurée par une société française. La victime ayant saisi en France le juge des référés, en demandant une expertise et une provision, la question de la loi applicable se pose.

en lire plus

The following entry is the first of two parts that provide an introduction to the Elgar Companion to the Hague Conference on Private International Law (HCCH). Together, the parts will offer readers an overview of the structure of the Companion (Part I) as well as of the core themes as they emerged from the 35 Chapters (Part II). Both parts are based on, and draw from, the Editors’ Introduction to the Elgar Companion to the HCCH, which Elgar kindly permitted.

Introduction

The Elgar Companion to the HCCH will be launched on 15 December 2020 as part of a 1 h long virtual seminar. The Companion, edited by Thomas John, Dr Rishi Gulati and Dr Ben Koehler, is a unique, unprecedented and comprehensive insight into the HCCH, compiling in one source accessible and thought-provoking contributions on the Organisation’s work. Written by some of the world’s leading private international lawyers, all of whom have directly or indirectly worked closely with the HCCH, the result is a collection of innovative and reflective contributions, which will inform shaping the future of this important global institution.

The Companion is timely: for more than 125 years, the HCCH has been the premier international organisation mandated to help achieve global consensus on the private international law rules regulating cross-border personal and commercial relationships. The organisation helps to develop dedicated multilateral legal instruments pertaining to personal, family and commercial legal situations that cross national borders and has been, and continues to be, a shining example of the tangible benefits effective and successful multilateralism can yield for people and businesses globally.

Approach to private international law

The Companion approaches private international law classically, that is, by understanding the subject matter with reference to its three dimensions: jurisdiction, applicable law, and the recognition and enforcement of foreign judgments. But, as the contributions in this work show, since its inception, and in particular since the 1980s, the HCCH has helped to reach international consensus concerning a further, a “fourth” dimension of private international law: cross-border legal cooperation.

In line with this development, and with the firm belief that such cooperation is crucial to the private international law of the 21st century, the Companion has adopted a strong focus on cross-border legal cooperation, including by an increased use of technology. This deliberate choice was fortuitous: the global pandemic is testing the domestic and international justice sector like never before, bringing into sharp focus the often non-existing or still arcane methods prevalent especially in the area of cross-border legal cooperation.

Structure of the Companion

The Companion comprises 35 Chapters that are organised into three Parts.

Part I of the Companion: Institutional perspectives

Part I consists of three Sections. Section 1 considers the HCCH as an international organisation and the contributions trace the development of the Organisation from its inception in 1893 until the present day, including its trajectory towards a truly global organisation. The initial Chapters specifically concern the history of the HCCH; its institutional setting, especially in terms of the HCCH’s privileges and immunities; as well as a contribution on the relationship between the HCCH, and the other two international organisations dealing with international private law issues, i.e., UNCITRAL and UNIDROIT, often also referred to as the HCCH’s ‘Sister Organisations’.

The following Section is dedicated to the HCCH as an organisation with global reach. The Chapters demonstrate how the HCCH is evolving from an organisation whose membership was historically European-based into an increasingly global institution. The HCCH currently has 86 Members (as of December 2020), comprising 85 States and the EU. Perhaps other Regional Economic Integration Organisations (REIO) may also become members one day, and this should be encouraged. Remarkably, since the turn of the century, the HCCH has added 39 New Members (or 45% of its current membership), including six South American States, two States from North America, one in Oceania, fourteen in Asia, eleven in Europe and five in Africa.[1] Since 3 December, the HCCH has a further Candidate State: Mongolia, which has applied for membership and for which the six-month voting period is now running. Importantly, this Section considers the HCCH’s expanded reach, including thoughtful contributions on the organisation’s work in Latin America and the Caribbean; Africa; and in the Asia Pacific. The Chapters also reflect on the work of the HCCH’s Regional Offices, namely, the Regional Office for Asia and the Pacific (ROAP), which is based in Hong Kong and commenced its work in 2012; as well as the Regional Office for Latin America and the Caribbean (ROLAC), operating out of Buenos Aires since 2005.

Part I’s final Section looks at the HCCH as a driver of private international law. The Chapters contain stimulating contributions concerning some of the contemporary philosophical dimensions of private international law as shaped by globalisation, and the ways in which the HCCH can be understood in this context; the role the Organisation can play in shaping private international law into the future; considering whether the 2015 Choice of Law Principles establish a good framework for regulatory competition in contract law; what role the HCCH can play in further strengthening legal cooperation across borders; and the concept of public order, including its relationship with mandatory law.

Part II of the Companion: Current instruments

Part II of the Companion concerns contributions on existing HCCH instruments. It traces the evolution, implementation, and effectiveness of each of those instruments, and looks forward in terms of how improvements may be achieved. The contributors not only provide a record of the organisation’s successes and achievements, but also provide a critical analysis of the HCCH’s current work. They canvassed the traditional tripartite of private international law, including forum selection, choice of law and the recognition and enforcement of judgments. In addition, they also provided their thoughts on the fourth dimension of private international law, i.e. cross-border legal cooperation, tracing the pioneering, as well as championing, role of the HCCH in this regard, resulting in cooperation being a quintessential feature, in particular of more modern conventions, developed and adopted by the HCCH.

Part II is organised following the three pillars of the HCCH: (1) family law; (2) international civil procedure, cross-border litigation and legal cooperation; and (3) commercial and financial law.

The first Section of Part II addresses HCCH instruments in the family law sphere. Contributions include an analysis of the HCCH and its instruments relating to marriage; the 1980 Child Abduction Convention; the 1993 Intercountry Adoption Convention; a Chapter on the challenges posed by the 1996 Child Protection Convention in South America; the 2000 Adult Protection Convention; a contribution on HCCH instruments in the area of maintenance Obligations; the work of the HCCH in the field of mediation in international children’s cases; and a contribution overviewing the interaction between various HCCH instruments concerning child protection.

The second Section concerns HCCH instruments that are some of its major successes. But as the Chapters show, more work needs to be done given the ever-increasing cross-border movement of goods, services and people, and the need to better incorporate the use of technology in cross border legal cooperation. Contributions concern the 1961 Apostille Convention; the 1965 Service and 1970 Evidence Conventions; the 2005 Choice of Court Convention; and finally, the 2019 Judgments Convention which was decades in the making.

The final Section in Part II consists of contributions on HCCH commercial and finance instruments. Contributions specifically focus on the 1985 Trusts Convention; the 2006 Securities Convention; and the 2015 Choice of Law Principles, which constitute a soft law instrument demonstrating versatility in the kind of instruments HCCH has helped negotiate.

Part III – Current and possible future priorities

Part III of the Companion consists of Chapters that discuss the substantive development of private international law focusing on current and possible future priorities for the HCCH. In that regard, this Companion seeks to bridge the HCCH’s past and its future.

The first Section focuses on current priorities. It consists of contributions on a highly difficult and sensitive area of international family law, i.e. parentage and international surrogacy and how the HCCH may assist with its consensual solutions; how the HCCH may play a global governance role in the area of the protection of international tourists; and how the exercise of civil jurisdiction can be regulated. Specifically, this Chapter shows how the doctrine of forum non conveniens is increasingly being influenced by access to justice considerations, a matter borne out by comparative analysis.

The second Section of Part III, and of the Companion, contemplates possible future priorities for the HCCH. Contributions concern how private international law rules ought to be developed in the context of FinTech; what role the HCCH may play in setting out the private international law rules in the sphere of international commercial arbitration; how the digitisation of legal cooperation ought to reshape the fourth dimension of private international law; the potential development of special private international law rules in the context of complex contractual relationships; how the HCCH can engage with and embrace modern information technology in terms of the development of private international law; and finally, what role there is for the HCCH in developing a regulatory regime for highly mobile international employees. It is hoped that in addition to providing ideas on how progress may be made on its current priorities, the contributions in Part III can also provide a basis for the HCCH’s future work.

Concluding remarks and outlook

The editors, who collaboratively prepared this entry, chose this structure for the Companion to provide the reader with an easy access to a complex organisation that does complex work. The structure also makes accessible the span of time the Companion bridges, chronicling the HCCH’s history, reaching back to 1893, while looking forward into its future.

The second entry on Conflict-of-Laws.net will outline the editor’s reflections on the 35 Chapters, drawing out some of the key themes that emerged from the Companion, including the HCCH’s contribution to access to justice and multilateralism.

[1] HCCH, ‘Members & Parties’ <https://www.hcch.net/en/states> accessed 6 December 2020. The latest Member State is Nicaragua for which the Statute of the HCCH entered into force on 21 October 2020.

The University of Zurich, Switzerland, has asked CoL to publish the following:

The University of Zurich is seeking applications for a Professorship in private law (with a focus on the Code of Obligations) to take effect from the beginning of the Spring Semester 2022 (1 February 2022), or by arrangement. The level of employment is 50%. The professorship is to be occupied by an individual with a command of the Swiss Code of Obligations as a subject in its full breadth and in reference to comparative law. Proof of exceptional qualification in this subject is to be provided in the form of an outstanding dissertation and a completed or near-com-pleted habilitation thesis (or equivalent academic accomplishment). Also desirable is a willingness to use research and teaching to address current issues concerning the Code of Obligations that may arise in the course of digitalisation, for example, as well as other develop-ments. Depending on the applicant’s qualifications, the professorship will take the form of a full or associate professorship. A temporary tenure-track assistant professorship is possible if the applicant’s habilitation thesis is at an advanced stage but is not yet completed. The University of Zurich strives to increase the representation of women in research and teaching, and therefore specifically encourages qualified female academics to apply. Further information relating to this job profile can be found below. Please submit your application documents as specified in the job profile by 30 December 2020 via www.recruiting.ius.uzh.ch. You may be requested to submit hard-copy documents separately at a later point. The relevant member of the appointment committee, Professor Helmut Heiss (helmut.heiss@rwi.uzh.ch), is available to answer any questions and provide further information.

Further information is here.

The British Institute of International and Comparative Law (BIICL) (in consortium with Civic Consulting) has been selected by the European Commission to conduct a study supporting the preparation of a report on the application of the Rome II Regulation (EC) No. 864/2007 on the law applicable to non-contractual obligations (JUST/2019/JCOO/FW/CIVI/0167).

The study assesses the 10-year application of the Rome II Regulation in the Member States and will support the Commission in the future review of the Regulation. It analyses all areas covered and looks into specific, cutting-edge questions, such as cross-border corporate violations of businesses against human rights and the potential impact of the development of artificial intelligence.

To gather views of practitioners and academics from all Member States, BIICL conducts a survey which is available here: https://www.surveymonkey.com/r/JLWQ8XQ

Please contribute your experience to the study, if you have a particular expertise in the Rome II Regulation, or in one of the above-mentioned areas – namely cross-border torts related to artificial intelligence, corporate abuses against human rights, or defamation.
BIICL invites interested colleagues from all Member States to participate in the survey, but seeks in particular more contributions from: Bulgaria, Croatia, Cyprus, Finland, Luxembourg, Romania and Slovenia.

Deadline: December 31st, 2020

More information about the Study is available on BIICL’s website (https://www.biicl.org/projects/com-study-on-the-rome-ii-regulation).

 

The author of this post is Caterina Benini, a Phd student at the Catholic University of the Sacred Heart in Milan.

A Controversial but Topical Issue

In the credits market, the price of a contract (or that of the claims arising from a contract) is determined by the nominal value of the claims concerned and by the risks surrounding their enforcement, including the risks relating to the uncertainty that may exist as to the courts with jurisdiction to hear and enforce the contract or the claims concerned.

Ironically, uncertainty may be greater when the assigned contract includes a choice of court clause, as it is not clear whether, and subject to which conditions, such a clause may be binding upon the assignees.

The European Court of Justice considered the issue of the third-party effects of choice of court clauses in Tilly Russ, Coreck and Profit Investment.

However, it was only in Ryanair, a case decided on 18 November 2020, that the Court specifically analysed whether an assignee of a claim is bound by the choice of court clause included in the contract from which the assigned claim arose. The recent Court’s ruling raises a number of questions, some of which have already been pointed out by Matthias Lehmann in this blog.

One takeaway of Ryanair is that, in the absence of clear rules, the fate of choice of court agreements following the assignment of the contract which included them is a fertile ground for disputes. Instead of elaborating on the Court’s findings in Ryanair, I will focus on a recent ruling of the Italian Supreme Court (Corte di Cassazione), which addressed the consequences of an assignment of claim for the enforceability of a choice of court clause (Judgment No 7736/2020).

The Ruling of the Corte di Cassazione

The facts underlying the case decided by the Italian Supreme Court may be summarised as follows.

An Italian company (hereinafter, the manufacturer) and a Finnish company (the distributor) entered into various contracts. Each contract included a choice of court clause conferring exclusive jurisdiction upon the Tribunal of Torino. The Italian manufacturer assigned part of its claims under the contracts to a factoring company seated in Italy. Following the assignment, a dispute arose between the manufacturer (the assignor creditor) and the distributor (the assigned debtor). Upon an application by the former, the Tribunal of Torino ordered the Finnish distributor to pay a certain amount of money. The latter lodged an opposition, arguing that, as a result of the assignment of the claims, the Italian company was prevented from relying on the choice of court clause featured in the contracts.

Both the Tribunal of Torino and the Court of Appeal of Torino dismissed the move. The Finnish distributor brought the case before the Corte di Cassazione, which dismissed the appeal, ultimately upholding that Italian courts had jurisdiction to hear the case.

The Cassazione reached that conclusion on the ground that the effectiveness of a choice of court clause between the original parties to a contract giving rise to claims subsequently assigned should not be doubted. The Cassazione referred for this purpose to the case-law of the Court of Justice, noting that, according to Dansommer and Profit Investment, a choice of court agreement may be binding also upon the third party, thus impliedly submitting that this the assignment results in an extension of the subjective scope of the clause rather than a transferral of the same from one assignor to the assignee.

The Court added that the assignee, having taken over the position of the assignor vis-à-vis the assigned debtor, is bound by the choice of court agreement included in the contract giving rise the claim. This is because the position of the assigned debtor should remain unaltered also with regard to jurisdiction, if not otherwise provided by the assigned party himself and the assignee.

This Author’s Submission

If party autonomy is to be taken seriously, choice of court clauses, it is submitted, should be deemed to be subject to an independent regime, different from that governing the contract where the clause is featured.

This implies that, for the purposes of determining the fate of a choice of court clause following the assignment of the legal relationship to which the clause refers, or belongs, reference ought to be had to the substantive law applicable to the dispute resolution clause itself. It is on the basis of the latter law that one should assess whether the rights and obligations provided for under the choice of court clause passed on to the assignee.

No other approach, it is contended, would be consistent with Article 25(5) of the Brussels I bis Regulation. This provides that “[a]n agreement conferring jurisdiction which forms part of a contract shall be treated as an agreement independent of the other terms of the contract”, adding, in a separate subparagraph, that “[a]n agreement conferring jurisdiction which forms part of a contract shall be treated as an agreement independent of the other terms of the contract”.

Separability only for the Purposes of Validity vs. Separability Also for the Purposes of Transferability

The issue of the fate of a dispute resolution agreement following the circulation of the legal position to which the clause relates has been mainly discussed with respect to arbitration agreements. Although choice of court agreements cannot be equated to arbitration agreements, the terms of the problem roughly coincide.

Essentially, the discussion revolves around two opposite conceptions of the principle of severability.

The first interpretation posits that, while the dispute resolution clause is severable from the main contract for validity purposes, it should be considered as an integral part of the contract for transferability purposes. Hence, when the assignee becomes the holder of the rights and obligations that arise from the contract which includes the dispute resolution agreement, it becomes automatically bound by the latter as well.

The second approach views the severability principle as a mere façade of a broader principle, which requires to consider a dispute resolution agreement as a contract in its own right, independent in all aspects from the contract to which it refers. This means that, unless the parties agree otherwise, the dispute resolution agreement will not automatically circulate together with the contract as a result of the assignment.

Independence of Choice of Court Agreements as the Key Principle

Article 25(5) of the Brussels I bis Regulation fosters the second approach described above.

Indeed, if the principle of separability were to operate for validity purposes only, the EU legislator would have limited Article 25(5) to the first subparagraph, which enshrines the principle in its traditional meaning. The inclusion of a separate subparagraph specifying that a choice of court agreement shall be considered independently from the other terms of the contract suggests that, in the view of the legislator, the principle involves more than merely prescribing the survival of the dispute resolution clause in the event that the main contract is invalid. Rather, it is submitted, the whole of para 5 indicates that a choice of court clause should be considered, in all respects, to be independent from the agreement where it is featured.

The question then is: what does the independence of a choice of court clause precisely stand for?

Independence should not be taken as meaning that the choice of court agreement should be treated as something that is materially separate from the main contract.

Arguably, the independence of the clause means that the issues surrounding the clause rules are not (necessarily) to be decided in accordance with the rules that one would resort to for the purposes of deciding the same issues in respect of the main contract.

Such normative independence of choice of court clauses has already been recognized with respect to the formal validity, which has been consistently evaluated on the basis of the uniform material rules provided for by the Brussels Regime and not on the basis of the formal requirements governing the main contract.

The same approach should then be followed also for the fate of choice of court agreements. This means that the court seised of the matter should assess whether the assignee of the contract (or of the claims arising thereform) is bound by the choice of court agreement, based on the rules governing the transferability of the dispute resolution agreement itself.

If such solution were to be followed, it would entail a significant alignment with Castelletti, where the Court ruled that “the national court seised should be able readily to decide whether it has jurisdiction on the basis of the rules of the Convention, without having to consider the substance of the case” (para. 48). Indeed, the seised court may rule on its own jurisdiction without dwelling into the merits of the case only if the enforceability of the choice of court clause is subject to a different and autonomous from the one applicable to the substantive issues.

The Tilly Russ Case

The above analysis on the principle of separability of choice of court clauses can turn useful when the interpreter (as the Corte di Cassazione did) investigates whether the CJEU’s case-law developed in relation to the third-party effects of choice of court agreements can provide an answer to the issue of the fate of choice of court clauses.

In Tilly Russ, the Court of Justice ruled that the third party is bound by the jurisdiction clause incorporated in the main contract (a bill of lading in that case), which is valid as between the original parties, “in so far as a third party, by acquiring the bill of lading, has succeeded to the shipper’s rights and obligations under the relevant national law” (para. 24).

The meaning of this crucial passage of the Court’s reasoning is unclear. One may wonder whether the shipper’s rights and obligations in which the third party succeeds are those provided for under the main contract or the dispute resolution clause. The aspect has since never been clarified by the Court, although the Court did rely on the said passage in Coreck and Profit Investment.

According to the majority of scholars, the rights and obligations to which the Court referred are those arising from the main contract. This entails that, if the third party succeeds to the assignor’s rights and obligations under the main contract in accordance with the law applicable to the assignment, the third party is automatically bound by the choice of court agreement included in the main contract.

This conclusion contradicts the independence of choice of court agreements.

Independence requires that issues relating to a choice of court clause be solved on the basis of the rules governing the dispute resolution agreement itself, regardless of the rules governing the main contract. The vicissitudes of the main contract, including the assignment of the claims arising thereform, are not relevant per se to the dispute resolution clause.

In light of this, the passage in Tilly Russ recalled above should be interpreted as requiring the seised court to determine whether the third party, simultaneously or after entering into the main contract, “has succeeded to the shipper [assignor]’s rights and obligations [provided for under the jurisdiction clause] under the relevant national law [applicable to the jurisdiction clause]”.

The Law Applicable to a Choice of Court Agreements under the Italian PIL Statute

Which law applies to a dispute resolution clause?

Courts sitting in a Member State cannot rely on the Rome I Regulation, given that choice of court agreements are excluded from the scope of application of the Regulation under Article 1(2)(e). Accordingly, regard should be had to domestic conflict of laws rules.

In a case such as the one discussed by the Corte di Cassazione in the ruling mentioned above, the relevant provision would arguably be Article 57 of the Italian Statute of Private International Law. The rule, drawn up in 1995 (and never amended since) extends the operation of the 1980 Rome Convention on the law applicable to contractual obligations (the predecessor of the Rome I Regulation) to any contract, including those excluded from the scope of the Convention itself.

Assuming that the reference to the Convention should be read today as a reference to the Rome I Regulation, an Italian court would – in the absence of a choice of law – rely on Article 4(4) of the Rome I Regulation, and apply the law of the country with which the choice of court agreement is most closely connected.

Hongrie / Parlement et Conseil
Libre circulation des personnes
La Cour rejette les recours en annulation introduits par la Hongrie et la Pologne contre la directive renforçant les droits des travailleurs détachés

Staatsanwaltschaft Wien (Ordres de virement falsifiés)
Espace de liberté, sécurité et justice
Contrairement à un mandat d’arrêt européen, une décision d’enquête européenne peut être adoptée par le parquet d’un État membre exposé au risque d’être soumis à des instructions individuelles provenant du pouvoir exécutif

The PAX Moot is a specialised moot court competition dedicated to students interested in Private International Law.

The 2021 Round of the competition is named after Arthur von Mehren, a renowned scholar of international procedure law across the Atlantic, for the 15th anniversary of his passing away.

This Round of the competition will focus on Transnational Law and Private International Law issues and will require participants to apply and handle the complexities and nuances of how international conventions and regulations interact with each other in the context of globalisation.

The case is grounded in the present challenging global events (COVID-19 virus) and involve the application of the new 2019 Hague Judgments Convention.

The competition comprises a written round and an oral round for the students. The teams will be required to address matters of jurisdiction, applicable law and parallel actions.

More information about the competition and its timetable are available here and here.