EAPIL blog

This post was contributed by Fabienne Jault-Seseke, who is Professor at University Paris Saclay (UVSQ), and a member of GEDIP.

On 26 May 2021, the French supreme court for private and criminal matters (Cour de Cassation) issued an important judgment requiring the ex officio application of a European conflict of laws rule. The Court specifically relies on the principles of primacy and effectiveness of EU law to justify the solution, which is different from its traditional doctrine on the application of conflict of laws rules.

Background

The case involves Mienta France and Groupe SEB-Moulinex, a French group, in relation to their activities on the Egyptian market. Groupe SEB-Moulinex granted Intercommerce the exclusive representation and distribution of Moulinex brand products. It also granted Blendex an exclusive licence to use the international Moulinex brands and a licence to manufacture certain products, while lending it moulds and supplying certain components. After these relationships were terminated,  Groupe SEB-Moulinex sued Intercommerce and Blendex for liability for  brutal termination of an established commercial relationship. The group brought also an action for forced intervention against Mienta France. It is alleged that Mienta manufactures, directly or through Blendex, small household appliances which it markets under the Mienta brand on the Egyptian market, in particular through the company Intercommerce. These products are likely to create harmful confusion in the public mind with the Seb group’s own products. It is alleged that these facts constitute unfair competition and parasitism.

Ex Officio Application of EU Choice of Law Rules

The question of the law applicable to the dispute does not appear to have been discussed before the Court of Appeal. The Cour of Cassation therefore decided to set aside the judgment of the lower court for failing to apply ex officio Article 6 of the Rome II Regulation to the issue of unfair competition. It should be noted that the court does not decide here the question of the law applicable to the action for brutal termination of established commercial relations. Article 6 designates the applicable law to unfair competition (law of the country where competitive relations or the collective interests of consumers are affected, or if the act of unfair competition affects exclusively the interests of a specific competitor, the law of the country in which the damage occurs or the law of the country where the person claimed to be liable and the person sustaining damage both have their habitual residence) and specifies also that the law applicable may not be derogated from by an agreement.

The Court refers to two sets of norms to require ex officio application of Article 6. The first is Article 12 of the French Code of Civil Procedure, which states that “the judge shall decide the dispute in accordance with the rules of law applicable to it”. The second are “the principles of primacy and effectiveness of European Union law”. To our knowledge, this combination is used for the first time to justify the authority of a conflict of laws rule. The Cour de Cassation has used it once to ensure the application of the product liability regime established by the 1985 Directive.

More specifically, the Court rules that courts must apply a conflict of laws rule ex officio when it is forbidden to derogate from it. Implicitly, the Court deduces that Article 6 of the Rome II Regulation must be applied because the parties do not have the power to agree on the applicable law. For the first time, it is thus indicated that courts must apply ex officio conflict of laws rule which excludes party autonomy in choice of law.

Assessment

Placed under the patronage of the principles of primacy and effectiveness of European Union law, the solution is limited to conflict rules of European origin. Nevertheless, one might consider extending it to the whole of French Private international law. First of all, the regime of conflict rules has not been harmonized at European level. Consequently, there is no need to distinguish the European rules from other conflict-of-laws rules. As regards the Rome II Regulation specifically, the foreign law regime ressembles the Arlesian woman, about which one speaks, but that one never sees (see Article 30, 1. I and the lack of any study). Secondly, the proposed solution would be more readable than the one that results today from the criterion of the free availability of rights (libre disponibilité des droits) that the Cour de Cassation usually uses.

The application of Article 6 in the dispute brought by the Seb group is likely to lead to the application of Egyptian law, which will upset those who point out that in matters of unfair competition the law of origin of competitors should prevail over the law of the market (see V. Pironon, Rev. crit DIP 2020. 814). It may be possible to avoid this by establishing that Mienta France has its habitual residence in France and that only the interests of the Seb group are affected. In this case, the judgment of 26 May 2021 will simply have made it possible to refine the regime of the conflict of laws rule. This is already a lot.

In June 2021 the CJEU will rule on in two cases of interest for private international law.

On 3 June 2021, the decision on the request for a preliminary ruling from Bulgaria C-280/20, Generalno konsulstvo na Republika Bulgaria, will be delivered by the 8th Chamber (judges N. Wahl, F. Biltgen, J. Passer, with the latter as reporting judge).

The request concerns the action filed by a person who claims to be a worker against the Bulgarian Embassy in Valencia, Kingdom of Spain, for the payment of financial remuneration in respect of unused paid annual leave to which she claims to be entitled under the labour law of the Republic of Bulgaria. The referring court has doubts as to whether it has been seised of a dispute with a ‘cross-border implication’.

The judgment in C-800/19, Mittelbayerischer Verlag, from the Court of Appeal, Warsaw (Poland), will be published on Thursday 17th by the 1st Chamber, with Judge Silva de Lapuerta acting as reporting judge (J.C. Bonichot, R. Silva de Lapuerta, L. Bay Larsen, M. Safjan, N. Jääskinen).

For the record, here are the questions:

1) Should Article 7(2) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters 1 be interpreted as meaning that jurisdiction based on the centre-of-interests connecting factor is applicable to an action brought by a natural person for the protection of his personality rights in a case where the online publication cited as infringing those rights does n contain information relating directly or indirectly to that particular natural person, but contains, rather, information or statements suggesting reprehensible actions by the community to which the applicant belongs (in the circumstances of the case at hand: his nation), which the applicant regards as amounting to an infringement of his personality rights?

2) In a case concerning the protection of material and non-material personality rights against online infringement, is it necessary, when assessing the grounds of jurisdiction set out in Article 7(2) of Regulation [No 1215/2012], that is to say, when assessing whether a national court is the court for the place where the harmful event occurred or may occur, to take account of circumstances such as:

– the public to whom the website on which the infringement occurred is principally addressed;

– the language of the website and in which the publication in question is written;

– the period during which the online information in question remained accessible to the public;

– the individual circumstances of the applicant, such as the applicant’s wartime experiences and his current social activism, which are invoked in the present case as justification for the applicant’s special right to oppose, by way of judicial proceedings, the dissemination of allegations made against the community to which the applicant belongs?

AG Bobek delivered his Opinion on 23 February 2021. He proposed the Court to answer that :

1)  Article 7(2) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that the establishment of the jurisdiction based on the centre of interests does not require that the allegedly harmful online content names a particular person.

2)   However, in order to establish jurisdiction pursuant to Article 7(2) of that regulation, a national court must verify that there is a close connection between that court and the action at issue, thus ensuring the sound administration of justice. In the particular context of online publications, the national court must ensure that, in view of the nature, content, and the scope of the specific online material, assessed and interpreted in its proper context, there is a reasonable degree of foreseeability of the potential forum in terms of the place where the damage resulting from such material may occur.

No other decisions nor Opinions are expected. As for hearings, the one in C-262/21 PPU, A, from the Supreme Court of Finland on the return of the child in application of the Hague Convention, is scheduled for 28 June. In the case at hand, a request had been made for the return to Sweden of a child who has been taken to Finland. The question that arises is whether the removal or retention of a child may be considered to be wrongful where one of the two parents, without the authorisation of the other, has removed the child from the State in which he was habitually resident to another Member State of the European Union after the immigration authority of the State of residence considered that it was in that other Member State that the applications for asylum concerning the child and the parent in question should be examined. I remember having studied myself the interfaces between the Dublin III Regulation and the Brussels II bis Regulation in 2017, although concentrating on the situation of unaccompanied minors seeking asylum (Cuadernos de Derecho Transnacional, open access). The case has been allocated to the 1st Chamber (J.C.  Bonichot, reporting judge ; C. Toader, M. Safjan, L. Bay Larsen, N. Jääskinen), and to G. Pitruzzella as Advocate General.

 

NoA: The Grand Chamber decision of 15 June 2021 regarding C-645/19, Facebook Ireland e.a., on the GDPR, will certainly be also of interest, even if not directly related to cooperation in civil and commercial matters in cross-border cases.  The request comes from the Hof van beroep te Brussel (Belgium), L.S. Rossi is the reporting judge, and AG Bobek delivered his Opinion last January.

On 11 May 2021, the Juzgado de lo Mercantil nr. 17 of Madrid has submitted a request for a preliminary ruling to the Court of Justice of the European Union (CJEU) on the interpretation of Articles 101 and 102 TFUE, on the one hand, and of Articles 45, 49, 56 and 63 TFUE, on the other, in the frame of a declaratory claim filed on behalf of European Superleague Company S.L. on 19 April 2021. Readers may recall that inaudita alter parte interim measures were granted the next day.

The Juzgado refers now six questions to the CJEU – maybe a bit over the threshold which separates interpreting EU law and applying it to the case at hand. In a nutshell, the Spanish court is asking whether specific provisions in the bylaws of UEFA and FIFA fall under the prohibition of either Article 101 or Article 102, or both. In case of an affirmative answer regarding the former, the court asks whether the exception in para 3 of Article 101 could nevertheless apply. In case of a positive answer vis à vis Article 102, the equivalent question is whether such a restriction could benefit from an objective justification. In addition, the referring court is asking about the compatibility between the prior authorization FIFA and UEFA require for the establishment of a pan-European club competition, and the free movement of persons, services and capital.

While waiting for the request to be available at the website of the CJEU, I have made the following translation (questions one and two are practically identical in Spanish; I changed a little bit the wording in an attempt to make them more intelligible):

1. Must Article 102 TFEU be interpreted as prohibiting FIFA and UEFA, which have conferred upon themselves an exclusive competence to organize or authorize international club competitions in Europe, an abuse of a dominant position consisting in imposing in their Statutes ( in particular, articles 22 and 71 to 73 of the FIFA Statutes, articles 49 and 51 of the UEFA Statutes, and any similar article contained in the statutes of member associations and national leagues) any third party entity wishing to establish a new pan-European club competition such as the Super League the need to obtain prior authorization, in particular as there is no regulated procedure based on objective, transparent and non-discriminatory criteria, and taking into account the possible conflict of interests that would affect FIFA and UEFA?
2. Must Article 101 TFEU be interpreted as meaning it prohibits FIFA and UEFA, which have granted themselves exclusive competence to organise or authorise international competitions in Europe, to require in their statutes (in particular Articles 22 and 71 to 73 of FIFA’s statutes, Articles 49 and 51 of UEFA’s statutes, and any similar article in the statutes of member associations and national leagues) their prior authorisation for any third party entity to establish a pan-European club competition, such as that at issue in the main proceedings, in particular as there is no regulated procedure thereto based on objective and non-discriminatory criteria, and taking into account the possible conflict of interest that would affect FIFA and UEFA?.
3. Should articles 101 and / or 102 TFEU be interpreted as meaning that they prevent FIFA, UEFA, their member associations and / or national leagues, to threaten with sanctions the clubs participating in the Super League, and / or its players, in light of the deterrence effect such threats can generate? In case sanctions for exclusion from competitions or the prohibition to participate in national team matches are adopted, would they, without being based on objective, transparent and non-discriminatory criteria, constitute a violation of Articles 101 and / or 102 of the TFEU?
4. Are Articles 101 and/or 102 TFEU to be interpreted as incompatible with Articles 67 and 68 of the FIFA Statute, in so far as the latter identify UEFA and its national federations as ‘original holders of all rights arising from competitions… within their respective jurisdiction’, thus depriving participating clubs and any alternative competition organiser of the original ownership of said rights, and assuming the exclusive responsibility for their marketing?
5. If FIFA and UEFA, as entities entrusted with exclusive competence to organise and authorise international football clubs competition in Europe, prohibit or oppose, on the basis of the abovementioned provisions of their statutes, the development of the Super League, must Article 101 TFEU be interpreted as meaning that those restrictions on competition benefit from the exception it provides for, considering that: production is substantially limited, alternative products to those offered by FIFA / UEFA in the market is prevented, and innovation is restricted in that other formats and modalities are prevented, thus potential competition in the market is removed and consumer choices limited? Would such a restriction have an objective justification, so that it could be concluded that there is no abuse of a dominant position within the meaning of Article 102 TFEU?
6. Are Articles 45, 49, 56 and/or 63 TFEU to be interpreted as meaning that a provision such as that contained in the FIFA and UEFA Statutes (in particular under Articles 22 and 71 to 73 of the FIFA statutes, Articles 49 and 51 of the UEFA Statutes and any other similar article contained in the statutes of associations belonging to national leagues) constitutes a restriction of one of the fundamental freedoms enshrined in those provisions, in that it requires prior authorisation of those entities for an economic operator of a Member State to establish a pan-European competition?

The Auto (Order) is available in Spanish here. I would also like to draw attention to the post of 22 April 2021, by Dwayne Bach, in the Kluwer Competition Law Blog, where he makes a first assessment of the situation under EU competition law.

The Assas International Law Review (Revue de droit international d’Assas) is an online journal published once a year by the doctoral school of the University. It features articles on public and private international law written by professors and doctoral students.

The main theme of the 2020 issue is climate change and international law. The issue features ten articles on this topic. It also includes short articles summarizing the doctoral theses recently defended at the University and three more articles on various topics.

Of particular note for private international law scholars is an article written by Eduardo Alvarez-Armas (Brunel Law School) on Climate change litigation and Article 17 Rome II (Le contentieux international privé en matière de changement climatique à l’épreuve de l’article 17 du règlement Rome II : enjeux et perspectives). The author has kindly provided the following abstract:

The article is the first instalment in a series of three pieces of work on the interplay between climate change matters and private international law. It sketches, as a first approximation, the role that the EU’s private international instruments may play in “private international” climate change litigation, which could be roughly defined as litigation: i) amongst private parties; ii) of a private-law (generally, tort-law) nature; iii) conducted on the basis of private-international-law foundations; iii) over damage threatened or caused by climate-change-derived phenomena.

After some general/introductory considerations, the article explores a selection of difficulties that may arise in climate change litigation from the interplay between Article 7 of the Rome II Regulation (the EU’s choice-of-law provision on the law applicable to non-contractual obligations arising from environmental damage) and Article 17 Rome II, a general provision on “Rules of safety and conduct”, which establishes that “[i]n assessing the conduct of the person claimed to be liable, account shall be taken, as a matter of fact and in so far as is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability”. In order to conduct its assessment, the article uses as an illustration Lliuya v. RWE (a case currently pending before German courts which, irrespective of its ultimate outcome, is prone to become a milestone) and builds a hypothetical model thereon. The model analyses the said Art. 7-Art. 17 interplay in practice, when further confronted with EU rules on international jurisdiction and domestic rules of public law and/or administrative authorizations/permits, depicting a concerning landscape in terms of climate action and environmental protection.

As this is a piece on “enjeux et perspectives”, it presents a first set of conclusions, amongst which, notably, that the “ordinary” use (literal interpretation and mandatory application) of Article 17 of the Rome II Regulation (which seems to be “pro-polluter”) is incompatible with the polluter-pays and favor laesi principles, and needs to be blocked in “private international” climate-change litigation (and possibly in all instances of “private international” environmental litigation).

This “introductory” article will be followed by two further pieces of work. The first one will take a “micro” perspective and provide a further analysis (in English) of the referred Art. 7-Art. 17 interplay. The second one (in English too) is a contribution to the collective research project “The Private Side of Transforming the World – UN Sustainable Development Goals 2030 and the Role of Private International Law”, led by Ralf Michaels, Verónica Ruíz Abou-Nigm, and Hans van Loon. It will explore the overall intersection between private international law and climate change matters from a “macro” perspective, by addressing the contribution that private international law may make to the United Nation’s “Sustainable Development Goal” 13: “Take urgent action to combat climate change and its impacts”.

Ilya Kokorin (PhD Researcher at Leiden University) and Bob Wessels (Professor Emeritus of International Insolvency Law at Leiden University and Expert Advisor on Insolvency and Restructuring Law of the European Commission) have authored together a book on Cross-Border Protocols in Insolvencies of Multinational Enterprise Groups. This much awaited analysis has just been published with Edward Elgar Publishing in the Elgar Corporate and Insolvency Law and Practice series.

The blurb of the book reads as follows:

Cross-border insolvency protocols play a critical role in facilitating the efficient resolution of complex international corporate insolvencies. This book constitutes the first in-depth study of the use of insolvency protocols, enriching existing knowledge about them and serving as a comprehensive introduction to their application in the context of multinational enterprise group insolvency. It traces the rise of insolvency protocols and discusses their legal basis, contents, effects, major characteristics and limitations.

Key features of the work regard:

• the proposition of a Group Insolvency Protocol (GIP) design;
• a comprehensive study of around 50 insolvency protocols from 1992 to 2020;
• the analysis of major international insolvency law instruments, modern trends and developments in the area of insolvency of enterprise groups;
• practical recommendations for drafting an insolvency protocol, addressing problems related to their adoption and offering suggestions for the improvement of group coordination
• the  exploration of the nature of insolvency protocols and pertinent issues including the preservation and realization of material assets, resolution of intercompany claims, information exchange, conflicts of interest, participation rights and group governance in insolvency.

The book structured in 13 chapters aims to be become an indispensable resource for insolvency practitioners, lawyers, judges and policy makers, whilst also being of value to scholars and students concerned with insolvency law and corporate governance.

The second issue of the Journal du droit international for 2021 has just been released. It contains two articles and several case notes relating to private international law issues.

In the first article, Mathieu Guerriaud and Clotilde Jourdain-Fortier (University of Burgundy Franche-Comté, CREDIMI) discuss, from a political perspective, the legal regime of the international contracts for the procurement of Covid-19 vaccines concluded by the European Union (“L’accès au vaccin contre la Covid-19 : le contrat international peut-il suffire ?“). 

The English abstract reads:

The European Union has opted for centralized negotiation to ensure the supply of Covid-19 vaccines to its Member States. To this end, several international contracts have been concluded by the European Commission with pharmaceutical companies. In principle, those contracts are covered by confidentiality, but three of them were published following a dispute over the interpretation of the obligations of one of those companies. Analysis of those contracts indicates that they are advance purchase agreement, which may fall under the Vienna Convention on the International Sale of Goods, and raise issues of interpretation as to the nature of the obligation to manufacture and deliver the vaccine doses. Is it an obligation of result, as the Commission seems to assert, or an obligation of means on the part of laboratories ? The “best reasonable efforts” clauses are particularly difficult to interpret here, especially as part of contracts characterized by an obligation of cooperation between the parties and in a European context of pharmaceutical deindustrialization. In the face of supply difficulties in the execution of those contracts, contractualization shows its limits and some believe that a more radical solution could be envisaged, that of infringing the industrial property rights of the laboratory. To this end, several weapons available to the public authorities are examined here. Some of them, like the ex officio license or the compulsory license, are moderately prejudicial to the rights of the patentee, while others are much bolder and more damaging for the manufacturer, like the expropriation of the patent, the requisition or even the nationalization. In all cases, the question of sovereignty and the pharmaceutical industrial apparatus arises, and it is on this point that decision-makers will have to work for the next decades to come, because medicines, and vaccines in particular, have become diplomatic weapons.

In the second article, Mauricio Almeida Prado (Arbitrator, PhD, University of Paris X) addresses the important issue of incorrect awards in international commercial arbitration (“Réflexions sur les sentences incorrectes au fond dans l’arbitrage commercial international“). 

The English abstract reads:

Awards that incorrectly decide the merits of a dispute are regrettable events in the practice of international commercial arbitration.

As a voluntary mechanism, trust in its ability to promote legal certainty and provide technically correct decisions is at the heart of its choice as a method of dispute resolution. Consequently, the recurrence of incorrect awards as to the merits has negative effects on the arbitral system because it threatens its credibility.

The article is based on three main ideas. First : it is important to define what is meant by an incorrect sentence as to its merits and, above all, not to confound it with divergent sentences, but technically correct. Second, it addresses the most common reasons that lead to errors in arbitral awards. Third : few proposals are presented to improve the organization of evidence production and the quality of the decision-making process by the arbitral tribunals.

A full table of contents can be downloaded here.

Tobias Lutzi (University of Cologne) and Ennio Piovesani (University of Turin) have taken over the responsibility of chairing the EAPIL Young Research Network from Tamás Szabados (ELTE Eötvös Loránd University). They are joining Martina Melcher (University of Graz), who founded the Network in 2019 together with Susanne Gössl (University of Kiel).

The Young Research Network aims to facilitate academic exchange between junior faculty members working on questions of private international law across Europe and to further comparative research through international cooperation. It became part of the EAPIL in 2020 as an official ‘activity’ of the Association.

Since its creation, the Network has successfully completed two research projects, further information on which can be found here.

Together with Dora Zgrabljić Rotar (University of Zaghreb), Tobias and Ennio are currently working on a third research project, that is going to focus on the national rules on jurisdiction in civil and commercial matters over non-EU defendants, in light of the report envisioned in Article 79 Brussels I bis Regulation.

The Young Research Network can be contacted via e-mail at youngresearch@eapil.org.

The author of this post is Simon Laimer of the University of Linz.

By a ruling of 10 December 2020, the Austrian Supreme Court addressed a case relating to a statement of fault in respect of divorce, i.e. a statement that one spouse is to blame for the breakdown of marriage (the ruling’s reference is 3 Ob 58/20f). The case raised the question of whether, for the purposes of determining the applicable law, the matter ought to be characterised as a matter relating to divorce, or rather as a matter relating to maintenance. Under Austrian law, one key implication of fault is that the ex spouse who is found to be at fault is basically not entitled to maintenance.

Background

The plaintiff sought a declaration that the defendant was solely to blame for the breakdown of the marriage, which had previously resulted in a final divorce decree by the Tribunal of Brussels. The defendant objected inter alia that the Belgian divorce decree could not be supplemented by a declaration of fault. The court of first instance dismissed the action (on the grounds of equal fault). The Court of Appeal amended the decision to find that the defendant was predominantly at fault.

The generally accepted view in Austrian case law (see here) and doctrine (cf. Nademleinsky/Weitzenböck in Schwimann/Kodek, ABGB, 5th ed. [2019] § 61 EheG N° 21; Koch in Koziol/Bydlinski/Bollenberger, ABGB, 6th ed., [2020] § 61 EheG N° 4) is that even if a foreign court has terminated the marriage on the basis of a provision of a foreign legal system without a finding of fault (here, Belgian divorce law, which abandoned the principle of fault in 2007), the interested spouse may still seek a statement of fault as provided for under Section 61(3) of the Austrian Marriage Act.

Judgment

The Austrian Supreme Court upheld the extraordinary appeal. It observed that an action to supplement a divorce decree by a statement of fault does deal with the question of fault for the breakdown of marriage, but it does so for the purposes of determining the implications of divorce as regards maintenance. Consequently, there is only a need to supplement a foreign divorce decree with an award of fault if the post-marital maintenance is governed by a substantive law whereby the enforceability of a maintenance claim depends on whether the opposing ex spouse is predominantly at fault for the breakdown of the marriage, or not.

Article 1(2)(g) of the Rome III Regulation on the law applicable to divorce and legal separation expressly excludes from its scope maintenance obligations. Therefore, although the supplementary action complements the divorce proceedings with regard to the question of fault, its only objective is to make a separate decision on a (preliminary) question relevant to the maintenance claims. It follows that the applicable substantive law is rather to be determined in accordance with the Hague Protocol of 23 November 2007 on the Law Applicable to Maintenance Obligations.

Pursuant to Article 3(1) of the Hague Protocol, maintenance is governed, as a rule, by the law of the State in which the maintenance creditor has his habitual residence, which in the specific case leads to the application of Austrian law. An exception applies if one of the parties objects and claims that there is a “closer connection of the marriage to another State”. As this had not yet been discussed with the parties, the decisions of the lower instances had to be set aside to supplement the proceedings. The court of first instance will therefore have to give the parties the opportunity to state their position on the matter.

Malik Laazouzi (Paris II University) is the editor of a new book on choice of court agreements (Les clauses attributives de compétences internationales : de la prévisibilité au désordre).

The book is the publication of the proceedings of a conference held on 21 November 2019 in Paris.

The speakers and contributors included Marie-Élodie Ancel, Sylvain Bollée, Sandrine Clavel, Samuel Fulli-Lemaire, Jeremy Heymann, Fabienne Jault, Caroline Kleiner, François Mailhé, Renato Nazzini, Cyril Nourissat, Ludovic Pailler, David Sindres, Édouard Treppoz.

More detail on the topics addressed by each of the speakers can be found here.

A webinar titled 1981-2021: 40 Years Since the Accession of the Hellenic Republic to the EU – The Impact on the Domestic Procedural Legal Order will take place on 26 May 2021 at 5 pm CET, organised by the law review Lex & Forum and Sakkoulas Publications.

The webinar, which will be held in Greek, will consist of four sections: (1) A flashback to the common European procedural roots; (2) The practical dimension; (3) The steps ahead; (4) A glimpse at the common European procedural future.

Speakers include Paris Arvanitakis (Aristotle University, Thessaloniki), Antonios Alapantas (President of the Court of first Instance, Piraeus), Ioannis Valmantonis (President of the Court of first Instance, Athens), Vassilios Sariyannidis (Director of the Unit on special legal matters of the Greek Ministry of Justice), Ioannis Delikostopoulos (University of Athens), Lida Pipsou (Aristotle University, Thessaloniki), Apostolos Anthimos (Attorney at law and  Editor in chief of Lex & Forum), Dimitrios Titsias (President of the Court of first Instance, Justice Counselor, Permanent Representation of Greece to the EU).

The full programme and the registration form can be found here. Registrations are open until 25 May at noon. Attendance is free.

On 12 May 2021, the Court of Justice rendered its long-awaited judgment in the case Vereniging van Effectenbezitters v. BP. The case concerned the international jurisdiction for a collective action based on issuer liability for inaccurate, incomplete and misleading information in capital markets.

The Court ruled that under Article 7(2) Brussels I bis Regulation such actions may be brought at the place where the issuer is subject to statutory reporting obligations, which is usually the place where the financial instruments are traded on a stock exchange. In contrast, they could not be brought at the location of the investment account in which the financial instrument are held.

The ruling is important from a capital markets perspective, yet it also adds another piece to the puzzle of where to localise purely financial or economic loss.

Facts

The facts of this case go back to the accident at the Deep Water Horizon oil platform in 2010, which was one of the biggest environmental disasters of all time and laid the Southern coast of the U.S. to waste.

The Dutch action underlying the reference alleges that BP, who operated the platform, failed to properly inform its shareholders about its security and maintenance programme prior to the accident. What is particular about this case is that the claim was brought by an association under Dutch law as a collective action on behalf of all persons who bought, held or sold BP shares in the three years preceding the accident. It is also important that the shares of BP are dually listed in London and Frankfurt, but not in the Netherlands.

The Rechtbank Amsterdam and the Gerechtshof (Court of Appeal) Amsterdam denied international jurisdiction of the Dutch courts on the grounds that no damage was suffered in the Netherlands.

Legal Questions 

The Dutch Hoge Raad, to which the dispute was presented at last instance, decided to submit a reference for a preliminary ruling to the CJEU. It wanted to know whether Dutch courts have jurisdiction to decide over (1) the collective action, and (2) any individual claim that may be brought subsequently by BP investors. In addition, the Dutch highest court asked two questions on whether Article 7(2) of the Brussels I bis Regulation determines, besides international jurisdiction, internal territorial jurisdiction as well.

Ruling

The CJEU held that the Dutch courts have no jurisdiction over the action brought. Importantly, the court also stated that this jurisdiction is independent of the collective nature of the action. It refused to answer the questions regarding international and internal territorial jurisdiction as they would be merely hypothetical at this stage.

Rationale

The reasoning of the CJEU centres around the well-known question of how purely financial damage is to be localised. This problem has already kept the CJEU busy in many other cases, e.g. Kronhofer, Marinari, Dumez, Kolassa, Universal Music and Löber, to name but a few.

Of these, the most relevant for the current case were Kolassa and Löber, given that both were as well concerned with allegations of incorrect investor information. However, the present case differs from these precedents in that it does not relate to deficiencies of informing the primary market – the market on which financial instruments are issued by the issuer to the investors – through a prospectus. Instead, it concerns deficient information of the secondary market – on which financial instruments are traded amongst investors – through insufficient ad hoc disclosure.

This difference is crucial. In Kolassa and Löber, the CJEU located the loss of investors on the primary market at the place of the investor’s domicile provided that it coincides with the place of establishment of the bank with which the investor held his account. The account meant here was most probably a payment account, because the investor had paid the financial instruments from this account and thus arguably suffered damage there.

The same reasoning could not be applied in the case of Effectenbezitters because many of the investors had already bought (and paid) the financial instruments on the secondary market when the deficient disclosure occurred. The most likely place of the damage they suffered was thus not the place of their payment account, but that of their investment account, i.e. the account in which they hold the BP shares. The difference is important because the payment and the investment account are not necessarily administered by the same institution, and thus do not need to be located at the same place.

Yet in the end, the CJEU did not localise the damage at the place of the investment account. Its main argument was that this would not ensure foreseeability of the competent court in the same way as in the Kolassa and Löber cases (para. 34). Indeed, investors in the secondary market potentially hold their investment accounts anywhere in the world. The issuer could thus not know in which country it may be sued for insufficient investor information.

Instead, the Court opts for the place in which the issuer has to comply with his statutory reporting obligation for the purposes of the listing of its shares on a stock exchange (para. 35). This solution is remarkable. It deviates from the conclusions by AG Sánchez-Bordona, who suggested to disapply Article 7(2) Brussels I bis in such cases for lack of an identifiable place of damage. The Court instead adopts for a ‘market localisation’ of the damage, which has long been defended in the literature.

The collective nature of the action brought is, in the opinion of the Court, “not in itself decisive” for the determination of the place where the harmful event occurred in the sense of Article 7(2) Brussels I bis (para. 36). It thus does not matter for jurisdictional purposes whether the claim is brought on behalf of a number of investors or by an individual investor. In either event, the Dutch courts had no jurisdiction because the BP shares were not listed in the Netherlands.

Provisional Assessment

The ruling of the CJEU is to be welcomed. In particular, the Court must be applauded for rejecting to localise the at the place of the investment account, since such a localisation would have resulted in a dispersal of court competence. This would not only have led to unforeseeable venues from the point of view of the issuer, but also been disadvantageous for investors, as they could have brought a collective action exclusively at the domicile of the issuer (Article 4 in conjunction with Article 63 Brussels I bis).

The solution chosen by the Court to retain the place where shares are listed as the place of damage is certainly ingenuous. This criterion leads to predictable results and chimes well with the regulatory duties, which largely depend on the place where the instruments are traded. It also facilitates the bundling of investor claims in collective actions, provided that the law of the country of listing disposes of a mechanism for collective redress. The Court is also right in holding that collective action and individual actions are not treated differently under the current Brussels Ibis regime.

Two points remain open: (1) the place of damage in case of dual listings in the EU, and (2) the place of damage in case of non-listed financial instruments (those that are traded over the counter – OTC). The Court will possibly have the opportunity to clarify these points in later rulings.

While the decision of the CJEU is thus satisfying from a policy point of view, it is hard to reconcile with the option offered in the Bier case between the ‘place where the damage occurred’ and the ‘place of the event which gives rise to and is at the origin of that damage’.

The CJEU allegedly determined the first place in Effectenbezitters, but it needs considerable tongue twisting to say that the ‘damage occurred’ at the place where the issuer failed to fulfil its statutory duties of information. This is rather the place at the origin of the damage than that where the damage occurred. This point is important, as it may create difficulties in the context of Article 4(1) of the Rome II Regulation, which has taken up the first-mentioned prong of the Bier case and refers to the ‘law of the country in which damage occurs’. In reality, the CJEU has created a new, special localisation rule for wrongful investor information cases, which deviates partially from the Bier case. Transposing this case law to the Rome II Regulation may be difficult.

This is merely a first assessment of the case. The European Association of Private International Law will use the occasion of this ruling for an online symposium on the localisation of financial loss. The question is of general importance and has already been addressed several times on this blog (see e.g. the CJEUs Volkswagen judgement or Rechtbank Rotterdam’s judgment in Petrobas). We will discuss it in more depth, with the first contribution coming from Laura van Bochove (Leiden).

From 9 to 11 September 2021, the Max Planck Institute for Comparative and International Private Law will host a conference titled The Private Side of Transforming our World – UN Sustainable Development Goals 2030 and the Role of Private International Law. Depending on the course of the pandemic, the organizers plan that the conference will take place either at the Max Planck Institute in Hamburg virtually or in a hybrid form. An official invitation was issued and registration is now open.

The conference is designed to present findings of the research project bearing the same title led by Ralf Michaels (Max Planck Institute for Comparative and International Private Law), Verónica Ruiz Abou-Nigm (University of Edinburgh) and Hans van Loon (former Secretary General of the Hague Conference on Private International Law). The project, as explained by its leaders, “aims to raise an awareness of how PIL – with its methods and institutions – is also capable of making a significant contribution in the quest for sustainable development” defined in UN Sustainable Development Goals 2030. The edited volume presenting findings of the project will be published by Intersentia and is scheduled to be released in September 2021, to be ready for the conference. The volume will be freely accessible online, in open access.

The following 19 contributors involved in the project will present and discuss their findings on respective SDGs (the exact conference program will be ready in the coming weeks):

SDG 1 No Poverty

Benyam Dawit Mezmur (University of the Western Cape, South Africa)

SDG 2 Zero Hunger

Jeannette Tramhel (Organization of American States, United States of America)

SDG 3 Good Health and Well-being

Anabela Susana de Sousa Gonçalves (Universidade do Minho, Portugal)

SDG 4 Quality Education

Klaus Beiter (North-West University, South Africa)

SDG 5 Gender Equality

Gülüm Özçelik (Bilkent Üniversitesi, Turkey)

SDG 6 Clean Water and Sanitation

Richard Frimpong Oppong (Kamloops, Canada)

SDG 7 Affordable and Clean Energy

Nikitas E. Hatzimihail (University of Cyprus, Cyprus)

SDG 8 Decent Work and Economic Growth

Ulla Liukkunen (University of Helsinki, Finland)

SDG 9 Industry, Innovation and Infrastructure

Vivienne Bath (University of Sydney, Australia)

SDG 10 Reduced Inequality

Thalia Kruger (Universiteit Antwerp, Belgium)

SDG 11 Sustainable Cities and Communities

Klaas Hendrik Eller (Universiteit van Amsterdam, Netherlands)

SDG 12 Responsible Consumption and Production

Geneviève Saumier (McGill University, Canada)

SDG 13 Climate Action

Eduardo Álvarez-Armas (Brunel University London, United Kingdom and Université Catholique de Louvain, Belgium)

SDG 14 Life Below Water

Tajudeen Sanni (Kampala International University, Uganda)

SDG 15 Life on Land

Drossos Stamboulakis (Monash University, Australia)
Jay Sanderson (University of the Sunshine Coast, Australia)

SDG 16 Peace, Justice and Strong Institutions

Sabine Corneloup (Université Panthéon-Assas, Paris II, France)
Jinske Verhellen (Universiteit Gent, Belgium)

SDG 17 Partnerships for the Goals

Fabricio Polido (Universidade Federal de Minas Gerais, Brazil)

The European Group of Private International Law, also known as GEDIP (Groupe européen de droit international privé), has just launched a new website.

Created in 1991, GEDIP aims to study the interactions of private international law and European law in the broad sense. It is a place for the exchange of information and ideas for scientific and academic purposes, bringing together a small number of colleagues, mainly from Universities in various Member States of the European Union. The Group, chaired by Catherine Kessedjian, holds an annual three-day meeting at the invitation of a member.

The new website, which is bilingual (English and French), provides for easier and more comprehensive access to information regarding the Group’s activities, namely the documents adopted by the Group over the years and the papers drafted by individual members in preparation of the meetings.

Searches within the Group’s rich collection can be made by meeting and by topic.

The new website, like the previous one, also includes a list of acts and conventions (or projects) related to the European Union which include provisions of private international law.

Ludovic Pailler (University of Lyon 3)  has just published a monograph on respect for the Charter of Fundamental Rights of the European Union in the European judicial area in civil and commercial matters, based on his doctoral thesis: Le respect de la charte des droits fondamentaux de l’Union européenne dans l’espace judiciaire européen en matière civile et commerciale, Pedone, 2021.

The author has provided the following abstract in English:

When the Treaty of Lisbon gave the Charter of Fundamental Rights of the European Union its legally binding force, it gave rise, in article 67, paragraph 1, of the Treaty on the Functioning of the European Union, to a legal obligation to respect fundamental rights while building the Freedom, Security and Justice Area. As this legal obligation concerns all the rules of this space, it raises questions in the European Judicial Area in civil and commercial matter where rules coordinating national legal systems are partially resistant to the influence of fundamental rights. Polysemy of the notion of respect make it possible to consider different ways for the Charter and the European Judicial Area law to interact. If the hierarchical principle seems to be the most obvious way to ensure the respect of the Charter, it transpires to be inappropriate by itself and because of the specific context fort the application of the Charter commanded by the European Judicial Area. So, it would be more convenient to substitute the hierarchical principle with a more supple way of interaction, the combination, so as to conform the studied space to the article 67, paragraph 1, of the Treaty on the Functioning of the European Union.

More details are available here, including a foreword by Fabien Marchadier (University of Poitiers) and Eric Garaud (University of Limoges) and the table of contents (here).

 

On 12 May, 2021, Advocate General Hogan delivered his opinion in Case C‑124/20 Bank Melli Iran v. Telekom Deutschland GmbH on the interpretation of the EU blocking statute (Regulation 2271/96 of 22 November 1996 protecting against the effects of the extraterritorial application of legislation adopted by a third country).

The context of the case was the newly reinstated sanctions of the U.S. against Iran. The main issue raised in the case was that of the impact of Article 5 of the blocking statute on the right of EU businesses to terminate private contracts.

Article 5 reads:

No person referred to in Article 11 shall comply, whether directly or through a subsidiary or other intermediary person, actively or by deliberate omission, with any requirement or prohibition, including requests of foreign courts, based on or resulting, directly or indirectly, from the laws specified in the Annex or from actions based thereon or resulting therefrom.

Persons may be authorised, in accordance with the procedures provided in Articles 7 and 8, to comply fully or partially (…).

Background

The German branch of Bank Melli Iran had entered into a framework contract with Telekom Deutschland GmbH which allowed Bank Melli to group all its company connections at various sites in Germany under one contract. In the context of this contractual relationship, Bank Melli ordered different services which formed the exclusive basis of its internal and external communication structures in Germany and were therefore indispensable to its business activities.

After the Trump administration decided that the U.S. would withdraw from the 2015 Joint Comprehensive Plan of Action aimed at controlling Iran’s nuclear programme and lifting economic sanctions against Iran, the U.S. reinstated sanctions against Iran in 2018.

In November 2018, ten days after the new U.S. sanctions entered into force, Telekom Deutschland GmbH terminated its contract with Bank Melli. It gave similar notice to four other German based entities with connections with Iran.

Bank Melli brought proceedings against Telekom Deutschland GmbH in a German court based on the infringement of the EU blocking statute and requesting performance of the contract.

Obligation to Give Reasons to Terminate Contracts

The most far reaching proposition of A.G. Hogan is to consider that the effet utile of Article 5 of the Blocking Statute requires a redistribution of the burden of proof. He opined that private parties terminating contracts in circumstances where they might be subject to foreign sanctions should have a duty to demonstrate that they did not do so because of the said sanctions.

Article 5 would therefore establish a duty to give the reasons for terminating the contract. Article 5 would also require that the reason be precise and objective, so that it could be verified that it was not to comply with the foreign sanction legislation.

AG Hogan explained:

89. (…) it (…) follows from the uncompromising terms of the first paragraph of Article 5 of the EU blocking statute that – in principle, at least – an undertaking seeking to terminate an otherwise valid contract with an Iranian entity subject to the US sanctions must demonstrate to the satisfaction of the referring court that it did not do so by reason of its desire to comply with those sanctions.

Should the CJEU follow A.G. Hogan, a first consequence would be that persons subject to the EU regulation could not rely on their freedom of terminate contracts without giving reasons under the law governing the contract. Article 5 of the blocking statute would establish an obligation to give a reason for terminating, or refusing to enter into, a contractual relationship with a person sanctioned by the relevant foreign legislation.

A second consequence would be that contractual clauses granting broad discretion to a contractual party to terminate the contract on vague regulatory grounds would be unenforceable. A.G. Hogan explained:

In particular, in my view, a person referred to in Article 11 of that statute should not be able to invoke a termination clause for force majeure to justify the termination of the contractual relationship without at least demonstrating that the event constituting force majeure is unrelated to the US sanctions legislation listed in the annex to that statute.

Sanctions: Punishing vs Redressing

Article 5 does not provide sanctions for the obligations that it establishes.

A.G. Hogan concluded that, in principle, it was for each Member State to lay down sanctions for infringements of the provision, and that their margin of discretion would be wide as far as punitive sanctions are concerned.

However, he opined that the margin of discretion of Member States would be very limited for civil sanctions, and that they would be bound to provide full effect to the provision by offering remedies which would put right-holders in the situation they would have been in in the absence of that unlawfulness.

108. Accordingly, I consider that, in the event of a breach of a provision prescribing a rule of conduct which must be complied with on a continuing basis (such as here), the national courts are required to order the infringer to put an end to the breach, on pain of a periodic penalty payment or other appropriate sanction, since only then can the continuing effects of the unlawfulness committed be brought to an end and compliance with EU law fully guaranteed.

Other Issues

The conclusions are long and address a number of other issues.

A.G. Hogan concluded by the following summary:

1) The first paragraph of Article 5 of Council Regulation (EC) No 2271/96 … is to be interpreted as not applying only where an administrative or judicial authority of a country whose laws and regulations are listed in the annex to that regulation has addressed, directly or indirectly, some instructions to a person referred to in Article 11 of that regulation. The prohibition contained in this provision accordingly applies even in the event that an operator complies with such legislation without first having been compelled by a foreign administrative or judicial agency to do so.

2) The first paragraph of Article 5 of Regulation No 2271/96 is to be interpreted as precluding an interpretation of national law under which a person referred to in Article 11 of that regulation may terminate a continuing contractual obligation with a contracting party named on the Specially Designated Nationals and Blocked Persons List held by the US Office of Foreign Assets Control, without ever having to justify its decision to terminate those contracts.

3) The first paragraph of Article 5 of Regulation No 2271/96 is to be interpreted as meaning that, in the event of a failure to comply with the provisions of that article, the national court seised by a contracting party subject to primary sanctions is required to order a person referred to in Article 11 of that regulation to maintain that contractual relationship, even though, first, the second paragraph of Article 5 should be interpreted restrictively, secondly, such an injunction measure is liable to infringe Article 16 of the Charter of Fundamental Rights of the European Union and, thirdly, such a person is therefore liable to be severely penalised by the authorities responsible for applying one of the laws referred to in the annex to that regulation.

For several years, Greek scholars and practitioners had no access to a periodical in Greek specialized in Private International Law and International Civil Litigation.

Upon the initiative of Prof. Vrellis, a Private International Law Review [Κοινοδίκιον = Koinodikion] was published biannually between 1995-2003. Since then, conflict of laws issues were hosted in law reviews which were concerned generally with civil, commercial and civil procedure law.

Those days are now over! A new quarterly has just been launched by Sakkoulas Publications. ‘Lex & Forum’ is a brand new review, focusing on civil and commercial cross border matters from a European or international perspective.

Lex & Forum will host articles, notes, comments and book reviews in Greek and major European languages; it will publish rulings of international and national courts alike, not limited to the Greek legal order; finally, it will cover developments and report on news in the field of Private International Law.

The first issue contains an article by the Greek Judge at the CJEU, Michail Vilaras, and an extensive focus on judicial cooperation after Brexit, reflecting a webinar, organized earlier this year. The issue also comes with comments on recent rulings rendered by the CJEU (namely C-500/18, Reliantco, C-774/19, Personal Exchange, and C-272/18, VKI), as well as by Greek courts (among them, Supreme Court No 662/2020, and Court of Appeal of Piraeus No 120/2021, reported in this blog here, and here), UK courts [High Court of Justice, Gategroup Guarantee, EWHC 304(Ch)2021], and Swiss courts (Bezirksgericht Zürich, 24 February  2021).

The first issue contains an introductory note drafted by the scientific directors, Mr Arvanitakis, Ordinary Professor at the law faculty of the Aristotle University, Thessaloniki, and Mr Kranis, former Vice President of Areios Pagos, the Hellenic Supreme Court, and ex Vice Minister of Justice. The team of editors consists of academics, judges, staff members of the Ministry of Justice, lawyers, and Phd candidates in the field.

On 17 May 2021 (from 5 to 7 pm CET), the French Supreme Court in civil and criminal matters (Cour de cassation) will host an online seminar (in French) on the respective roles of the court and the parties in the application of conflict-of-laws rules (L’office du juge et la règle de conflit de lois).

The chairmen are François Ancel (President of the International Commercial Chamber of the Paris Court of Appeal, ICCP-CA) and Gustavo Cerqueira (Professor at the University of Nîmes).

Speakers include Gian-Paolo Romano (Professor at the University of Geneva and co-director of the Yearbook of International Private Law), Nicolas Nord (Associate Professor at the University fo Strasbourg and Secretary General of the ICCS), Lukas Rass-Masson (Professor at the University of Toulouse 1, Director of the European school of law Toulouse) and François Mélin (Counsellor at the Paris Cour of Appeal).

The seminar will be streamed live on the website of the French Supreme Court (here).

It is part of a conference series dedicated to the office (role) of courts in different legal contexts and from a multidisciplinary approach.

The Department of Juridical Sciences of the University of Bologna (Italy), Ravenna Campus, is organising a Summer School on Transnational jurisdiction: current issues in civil and commercial matters. This will be held in Ravenna (and online) between 19-23 July 2021.

Given the growing relevance of cross-border litigation, the Summer School is looking to address a variety of issues from a comparative perspective combining theoretical and practical approaches. The topics address issues of jurisdiction, various aspects of private international law (e.g. cross-border service of documents, taking of evidence, arbitration agreements, Brexit, applicable law in non-contractual obligations, corporate social responsibility), available remedies, and the harmonisation of procedural rules.

The Director of the School, Prof. Michele Angelo Lupoi, has invited experts from different jurisdiction (see here) to lecture on several aspects of private international and procedural law. The programme of the Summer School is available here.

The Summer School is aimed at law students as well as law graduates and law practitioners who want to obtain a specialised knowledge in the complex and fascinating area of international civil procedure.

The lectures are likely to be held in a hybrid form – in presence and online – in respect of the applicable rules and advice.

More information about the Summer School and the registration can he found here.

This post was contributed by Dr Nicolas Kyriakides, who is a practising lawyer in Cyprus and an Adjunct Faculty at the University of Nicosia, and Ms Yomna Zentani (LLM, Cantab – Cambridge Trust scholar), who is a future Trainee Solicitor at Clifford Chance LLP.

On 21 April 2021, the English High examined the interplay between the Brussels Recast Regulation (BRR) and the principle of ‘modified universalism’ in international insolvency proceedings in WWRT Ltd v Tyshchenko & Anor ([2021] EWHC 939 (Ch)). It particularly addressed whether proceedings can be stayed on the grounds of modified universalism, despite jurisdiction having been established by Article 4 of the BRR (see also the previous report of G. van Calster).

Background

The claimant, WWRT, brought proceedings against the defendants, Mr Serhiy Tyshchenko and his ex-wife Mrs Olena Tyschchenko on the grounds that they had both carried out extensive fraud on the Ukrainian Bank, JSC Fortuna Bank which was owned by Mr Tyschenko between the years 2011 and 2014. The fraud consisted of the granting of numerous loans to companies with limited commercial activity who had no intention of repaying these loans. This then led to the bank declaring insolvency and being liquidated by which a package of assets consisting of also the disputed loans, was sold to Star Investment One LLC, a Ukrainian Company. The package, along with the rights to them were sold to WWRT in March 2020. WWRT argued that it had now acquired the rights to bring the claim relied upon in the present proceedings and obtained ex parte a worldwide freezing order. Mr and Mrs Tyschenko were both served in England within the court’s jurisdiction.

One of the main arguments centred around Mr Tyschenko’s objection to the court’s jurisdiction. He argued that WWRT’s claims should be stayed under common law so as to prevent WWRT from circumventing the Ukrainian insolvency proceedings opened on 9 December. He submitted that under Ukrainian law, claims such as the one contested in this case should only be adjudicated within the proceedings opened in December and thus must be stayed on the principle of “modified universalism.” The discussion surrounding this principle is of particular interest in this case.

Modified Universalism and Owusu

As potentially one of the final cases concerning the Brussels Regulation in England and Wales, we are reminded of the importance of the CJEU judgment in the case of Owusu v Jackson which set out that a finding of jurisdiction under Article 4 would exclude any challenge on forum non conveniens grounds.

Mr Tyschenko was found to be domiciled in England for the purposes of Article 4, however, a further argument was advanced on whether the court may stay these proceedings on the principle of modified universalism. Whilst accepting that Article 4 jurisdiction could not be challenged, a further argument was made by Mr Tyschenko’s legal representation, stating that the court in Owusu did not address the question of whether “…a domestic court could nevertheless stay its proceedings in favour of insolvency proceedings that had already commenced in another Member State.” He went on to state (at [52]) that the principle at work in such a case was not one of forum non conveniens but rather the common law principle of modified universalism, which carries with it the requirement to provide assistance to foreign insolvency proceedings. As stated by Lord Sumption in Singularis Holdings v PriceWaterhouseCoopers [2015], the principle is founded on

the public interest in the ability of foreign courts exercising insolvency jurisdiction in the place of the company’s incorporation to conduct an orderly winding up of its affairs on a worldwide basis, notwithstanding the territorial limits of their jurisdiction.

It was undisputed that a stay on this principle is conceptually different from a stay on forum non conveniens grounds. However, the question that the court had to address was whether this particular distinction could allow the present situation to be distinguished from the rule set out in Owusu and thus allowing a stay of proceedings, despite jurisdiction being founded on Article 4 (formerly Article 2 when Owusu was decided). In other words, whether the particular nature of insolvency proceedings require a different approach to the rule.

The decision on Owusu was reached out of respect for the principle of legal certainty, which the BRR (formerly the Brussels Convention) was built upon and the mandatory nature of Article 4. Allowing a deviation of this rule on the basis of forum non conveniens would have greatly undermined the predictability of the rules of jurisdiction as laid down by the Convention.

Further, insolvency proceedings and their peculiarities were taken out of the scope of the BRR altogether and reflected in other legislation, namely the Recast Insolvency Regulation and the UNICTRAL Model Law on cross-border insolvency. As such, the court reaffirmed the significance of Article 4 and held that a stay could not be granted on the basis of modified universalism. The court subsequently upheld the worldwide freezing injunction.

Analogous Application of Article 34 BRR?

In the alternative, the defendant suggested that a stay could be granted by the reflexive or analogous application of Article 34 of the BRR. This Article provides that:

1. Where jurisdiction is based on Article 4 … and an action is pending before a court of a third State at the time when a court in a Member State is seized of an action which is related to the action in the court of the third State, the court of the Member State may stay the proceedings if:

(a)  it is expedient to hear and determine the related actions together to avoid the risk of irreconcilable judgments resulting from separate proceedings;

(b)  it is expected that the court of the third State will give a judgment capable of recognition and, where applicable, of enforcement in that Member State; and

(c)  the court of the Member State is satisfied that a stay is necessary for the proper administration of justice.

The defendant accepted that “[…] the bankruptcy exclusion in Article 1 of the BRR precludes the express application of Article 34 if the pending action in the third State is in the nature of bankruptcy or insolvency proceedings.” However, he nevertheless contented that the Article could be applied by analogy to this case similarly to how Article 28 of the Lugano Convention was applied by analogy or reflexively to pending proceedings in JSC, Commercial Bank v Kolomoisky [2019] EWCA Civ 1708 §§159-181.

However, the court was not satisfied that the present proceedings were in anyway related to the pending insolvency proceedings in Ukraine (those opened on the 9th of December), to the effect that they would create a risk of irreconcilable judgments. Distinguishing Kolomoisky, the court stated that Article 28 was only given reflexive or analogous effect to the pending proceedings in Ukraine in that particular case in order to “[…] address the problem of the lacuna that would otherwise have arisen from the fact that Article 28 expressly applies only to related actions pending in the courts of different States bound by the Convention.” (at [91])

The reflexive application in Kolomoisky would not subvert the objectives of the Convention but would further its purposes by achieving legal certainty and ensuring that the risk of inconsistent judgments is avoided.

In the current case, the court held that the problem that was trying to be avoided in Kolomoisky when applying Article 28 reflexively, did not arise in this instance. This is because Article 34 of the BRR now specifically addresses proceedings in third States. The defendant’s argument thus attempted to advance a different proposition, distinct from what was advanced in Kolomoisky. The court held that the defendant’s apparent extension of Article 34, namely that it should be applied to proceedings which the defendant accepts as expressly excluded from the scope of the BRR, is not a proper one. The court continued that even in the event Article 34 could be applied by analogy or reflexively, it was not satisfied that the pending insolvency proceedings in Kyiv were related to the extent that they could create a risk of irreconcilable judgments.

Consequently, the proceedings were not stayed on the basis of this argument and the court subsequently upheld the worldwide freezing injunction.

As reported by Pietro Franzina last January, the Standing International Forum of Commercial Courts (SIFoCC), which brings together the commercial courts of several countries across the world, launched the second edition of its Multilateral Memorandum on Enforcement of Commercial Judgments for Money.  Last April, SIFoCC’s Second International Working Group, co-chaired by Sir William Blair and Judge François Ancel, has produced a Commentary to accompany the Multilateral Memorandum setting out an understanding of the procedures for the enforcement of a money judgment by the courts of one jurisdiction obtained in the courts of another jurisdiction, written by judiciaries from across the world.

The Multilateral Memorandum with the commentary is available here. The non-binding character of the Memorandum is highlighted from the outset; so is its purpose , which does not intend to “signal” the enforceability of the judgments of commercial courts, but to explain to how the courts which have contributed to the Memorandum approach requests for the enforcement of judgments of other courts. In turn, the commentary added to the second edition does not purport to state common principles arising form the contributions (see the statement in para. 31, “this seems unnecessary now that the Hague Conference has concluded its work on the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters”); it rather describes common themes that arise from the contributions, identifying significant differences of approach and indicating how far the contributions appear to show a tendency towards convergence.

An interesting reading by all means.