EAPIL blog

On 12 April 2021, the Family Court of Namur, Belgium, applied the doctrine of renvoi under Article 34 of the Succession Regulation (the judgment and the commentary of Prof. Jean-Louis Van Boxstael – in French – are available here).

Background

The deceased was born in 1931 in Belgium, but was living in South Korea when he died in 2019. He held both Belgian and Korean nationalities. In 2001, the deceased wrote a will in which he declared that a (Belgian?) foundation would receive all his assets after his death. The plaintiff owned a building in Belgium and had monies on bank accounts. It does not seem that he had children.

The Belgian court was petitioned by the foundation in 2021.

Judgment

The court found that the deceased was resident in Korea. It retained jurisdiction, however, under Article 10(1) of the Succession Regulation, which provides that where the deceased was not habitually resident in a Member State, jurisdiction can be founded on the nationality of the deceased.

The court found that the deceased being a Belgian national, the court could retain jurisdiction.

Under Article 21 of the Succession Regulation, the applicable law should be, in principle, the law of the last habitual residence of the deceased. The court found that it was Korea. However, it noted that, under Art. 49 of the Korean Conflict of Laws Act, a Korean court would apply the law of the nationality of the deceased.

The deceased, however, was a dual national. The Belgian court referred to Art. 3(2) of the Belgian Code of Private International Law which provides that, in case of dual nationality, Belgian nationality prevails. It thus considered that the deceased was a Belgian national, and that Belgian law was applicable by renvoi from Korean law.

Assessment

The most interesting issue raised by the case was that of handling the dual nationality of the deceased.

For jurisdiction purposes, Art. 10 provides:

1.   Where the habitual residence of the deceased at the time of death is not located in a Member State, the courts of a Member State in which assets of the estate are located shall nevertheless have jurisdiction to rule on the succession as a whole in so far as: (a) the deceased had the nationality of that Member State at the time of death…

The rule does not refer to the “nationality of the deceased” in general. It refers to a person who has the nationality of a particular Member State. This resolves the issue of dual nationality where one of the nationalities is that of a third state. A rule of the forum provides taking into account the nationality of the relevant Member State. This implicitly excludes taking into account the nationality of the third state, or whether it might be more effective.

For choice of law purposes, Art. 34 provides:

1.   The application of the law of any third State specified by this Regulation shall mean the application of the rules of law in force in that State, including its rules of private international law in so far as those rules make a renvoi: (a) to the law of a Member State

The rule does not address the issue of dual nationality. It only provides to apply foreign choice of law rules if they refer to the law of a Member State.

So, the critical question is to determine the content of the foreign choice of law rule and ascertain whether the foreign rule designates the law of a Member State. It is therefore for the foreign legal system to say how it addresses dual nationality. If, under foreign private international law, local nationality prevails, this means that the foreign choice of law rule does not designate the law of a Member State.

In this case, the Belgian court should have wondered whether a Korean court would prefer Belgian nationality over Korean nationality. Instead, the Belgian court applied Belgian principles.

Maybe the Belgian court should have read the entirety of the Korean Conflict of Laws Act, a translation of which is freely available on the internet. Article 3 of the Act provides:

(1) In case the law of nationality of a party shall govern, if the party has two or more nationalities, the law of the country, which is most closely connected with the party, shall be the law of nationality: if one of the nationalities is the Republic of Korea, then the law of the Republic of Korea shall be the law of nationality…

So it seems that a Korean court would not have applied Belgian law: it would have applied Korean law. The Belgian court rewrote Korean private international law and invented a renvoi which did not exist.

In a judgment dated 10 December 2020, the German Federal Court restricted the provision tax advice on German soil. The court ruled that advice to German clients cannot be rendered on a permanent basis through a subsidiary unless the partners possess the necessary qualifications under the German Code on Tax Consultancy. Although the case in question concerned a British LLP, it is not limited to them but applies to all partnerships from EU Member States.

A Highly Disputed Case

The ruling is especially remarkable given that the Commission had not only criticized the German Code in a letter for limiting the freedom of establishment (Article 49 TFEU), but even started legal proceedings against Germany for violation of the Treaties. The Federal Court was unmoved. It saw no incompatibility with EU law, nor a need to submit a preliminary question on its interpretation to the CJEU.

On Fundamental Freedoms

In the Federal Court’s view, a tax adviser seeking to offer consultancy services on German tax law must have the qualifications required under German law. Such restriction of the freedom of establishment (Article 49 TFEU) was justifiable by the public interest in the quality of such advice. German law would not violate Art 5(2) of the Directive on the recognition of professional qualifications either, given that the provision of services through a subsidiary is not merely “temporary and on an occasional basis”.

The Federal Court considered the German rules to be coherent and systematic, despite the many exceptions it provides for other professions, such as German notaries or banks. The Federal Court saw the latter as justified because of their limitation to ancillary services, whereas the provision of tax advice through a subsidiary would amount to a main service that required a specialisation in German tax law.

On the Conflict of Laws

From the point of view of private international law, the most remarkable part of the judgment concerns liability. The suit was brought by one of the LLP’s German competitors against one of the partners personally and sought injunctive relief in the form of ceasing and desisting from advertisements for the LLP’s subsidiary’s tax consultancy services, including its entry into the German partnership register. The Federal Court ruled that the partner could indeed be personally liable under sec. 8 of the German Act Against Unfair Competition given that he was one of the applicants of the entry into the register and had publicly advertised with it.

Assessment

The Federal Court’s ruling on EU law is to be criticised. The compatibility of the German rules on tax advice with the freedom to establishment is not as clear as outlined by the Federal Court, as highlighted by the Commission’s action against Germany. The least the Federal Court should have done is to submit a preliminary question to the CJEU.

The conflict-of-laws component demonstrates the danger partners of LLPs or similar entities run in Germany and other EU Member States. They may be personally liable for the breach of regulatory duties and the resulting violations of the law of unfair competition. In particular, this is not excluded by the limitation of liability provided under the applicable partnership law and agreed in the articles of the partnership.

The case is also interesting from a doctrinal perspective. It demonstrates that the law of unfair competition and corporate law use different connecting factors. Moreover, the issue whether regulatory duties have been violated is a “preliminary question” which is subject to a wholly different conflicts approach.

A joint publication of the Secretariats of UNCITRAL, UNIDROIT and the HCCH, titled Legal Guide to Uniform Instruments in the Area of International Commercial Contracts, with a Focus on Sales, has just been released.

As explained on the HCCH website, the Legal Guide “offers an overview of the principal legislative texts prepared by each organisation, such as the United Nations Convention on Contracts for the International Sale of Goods, the HCCH Principles on Choice of Law in International Commercial Contacts and the UNIDROIT Principles on International Commercial Contracts. It also illustrates how these texts interact to achieve the shared goals of predictability and flexibility. The Legal Guide will be a user-friendly resource for those interested in the adoption, application, and interpretation of uniform contract law.”

Following the UNIDROIT website, “it aims at creating a roadmap to the existing uniform law texts in the area of international sales law prepared by each organization […]. It is an effort to clarify the relationship among them, promoting uniformity, certainty and clarity in this area of the law”.

A significant contribution towards the preparation of the Legal Guide is due to Professors Neil Cohen (USA), Lauro da Gama e Souza Jr (Brazil), Hiroo Sono (Japan), Pilar Perales Viscasillas (Spain) and Stefan Vogenauer (Germany).

The Legal Guide is available in English and will soon be released in other United Nations languages (as it is the case of the previous joint publication of the three organisations on Security Interests, 2012).

More information on the Legal Guide here (video announcement) and here (recording of the International Conference on the forthcoming Tripartite Legal Guide, 22 September 2020).

On 26 April 2021, the European Parliament adopted a legislative resolution on the Council position at first reading in a view to the adoption of a regulation of the European Parliament and of the Council establishing the Justice Programme 2021-2027, repealing Regulation 1382/2013. After the parliamentary debate on 27 April, the final act was signed on 28 April.

The (future) regulation (see here the version of the outcome of the trilogue), based on Articles 81(1) and 82(1) TFEU, lays down the objectives of the Justice Programme for the period 2021-2027, the dedicated European budget, the forms of Union funding and the rules for providing such funding (see Article 1). It is part of the 2021-2027 Multiannual Financial Framework.

This regulation is of great interest for Private International Law (PIL) experts since it sketches the key-orientations of the European Justice policy – including its cross-border dimension – for the coming years. Therefore, it should be a source of inspiration for scholars drafting research projects in the field and applying for EU funding.

Background: The 2018 Proposal of the Commission

 In its interim evaluation of the implementation of the (previous) Justice Programme for the period 2014-2020 (published in June 2018 here), the European Commission stated that the Programme – and the funds invested – contributed “to upholding EU values (such as the rule of law, the independence of the judiciary and the effectiveness of the justice) and to supporting Member States to achieve more effective justice systems”. This observation clearly underpinned the proposalmade by the Commission in May 2018 for the regulation establishing the new Justice Programme. Indeed, as underlying by the European Parliamentary Research Service in a recent briefing, the promotion of the rule of law as one of the EU’s founding values pursuant to Article 2 TEU lies at the heart of the proposal. Other key-aspects of the future regulation are the promotion of (gender) equality and the protection of vulnerable individuals such as children.

Looking ahead, these are main avenues for PIL researchers to be explored.

Achievements: The 2020 Amended Regulation

The European Parliament proposed a number of amendments to the EC proposal aiming at strengthening social inclusion within the European Justice system (see the first reading version here). In that sense, the Parliament successfully drafted a “mainstreaming clause” laying down that “in the implementation of all of its actions, the Programme shall seek to promote gender equality, the rights of the child, inter alia by means of child-friendly justice, the protection of victims and the effective application of the principle of equal rights and non-discrimination based on any of the grounds listed in Article 21 of the Charter, in accordance with and within the limits set by Article 51 of the Charter”.

Best Interests of the child and PIL

The great attention drawn to the child within the European Justice system “in progress” is certainly to be read with recent developments of EU PIL, such as the recent recast of the Brussels II Regulation which refers, several times, to the best interests of the child regarding, for instance, the grounds of jurisdiction in matters of parental responsibility,  the hearing of the child or the decision on the placement of a child… But also with forthcoming legislation, such as the preparation of a proposal for a regulation on the recognition of parenthood between Member States.

As argued by the European Commission, “the goal of this initiative is to ensure that children will maintain their rights in cross-border situations, in particular where families travel or move within the Union” and the proposal “will be guided by the best interests of the child as its paramount consideration” (see the call for application for the selection of members of the expert group on the recognition of parenthood between member states). As reported in this blog (here), the Court of Justice is also dealing with this topical issue. The main target objective is that the rights derived by children from European Union law following Article 3, (3) 2 in fine TEU and article 24 of the Charter of Fundamental Rights ought to be safeguarded under domestic law – including PIL – within national Justice systems of the Member States.

LGB People and PIL

In addition, the Parliament successfully proposed to specifically refer to LGBTQI people, beside other vulnerable individuals within the Justice system, in the preamble of the regulation. Pursuant to recital 10, “[training] activities should also include training courses for judges, lawyers and prosecutors in relation to the challenges and obstacles experienced by people who frequently face discrimination or are in a vulnerable situation, such as women, children, minorities, LGBTIQ persons, persons with disabilities, and victims of gender-based violence, domestic violence or violence in intimate relationships, and other forms of interpersonal violence”.

Such an amendment echoes recent European legal developments with obvious PIL dimensions. First, the Commission adopted few month ago a communication titled LGBTIQ Equality Strategy 2020-2025. Among various issues to be addressed, the communication highlights the legal difficulties for trans, non-binary and intersex people to be “recognised in law or in practice […] including in cross border situations”, affecting both their private and family life (see point 3). Following a transnational analytical approach, links may be made with ongoing academic research on Gender and Private International Law (see the project conducted at the MPI for comparative and international private Law).

Second, the European Parliament’s Committee on Petitions requested, few months ago, a study in the broader context of free movement of LGB persons within the European Union, authored by Alina Tryfonidou (University of Reading) and Robert Wintemute (King’s College London). It states that “in many cases, when a border between EU Member States is crossed, the [rainbow] couple ceases to be legally a couple, becoming instead two unrelated individuals, and their child or children go from having two legal parents to only one legal parent or (in a few cases involving surrogacy) no legal parents” (page 9). One recommendation made by the authors is for the Commission to propose a legislation “requiring all Member States to recognise the adults listed in a child’s birth certificate as the legal parents of the child, regardless of the adults’ sexes or marital status” (page 98). As mentioned above, the Commission is following this path.

The Rule of Law and PIL

Finally, the Justice Programme aims at supporting “the further development of a Union area of justice based on the rule of law, the independence and impartiality of the judiciary, mutual recognition and mutual trust, access to justice and cross-border cooperation” (see Recital 2 and Article 3). In that sense, the amended regulation expressly refers to the newly adopted rule of law conditionality regulation (December 2020, reported here). In simple words, under this legal framework, payments from the EU budget can be interrupted, reduced, or suspended in case of breaches of the principles of the rule of law by an EU Member State. The conditionality regulation will be applicable in the implementation of the new Justice Programme (see Recital 30 of the future regulation).

Under a PIL perspective, respecting the rule of law in the Member States is crucial for ensuring mutual trust between national Justice systems and allowing mutual recognition of decisions in civil matters. Then, from a broader analytical view, one key-issue for PIL experts could certainly be the interrelation between PIL (i.e. its rules, methodology and objectives) and the rule of law, within the European judicial area and beyond. This reflection is in line with the recent caselaw of the Court of justice assessing the conformity with EU law of provisions of national law which are liable to affect the requirements of effective judicial protection, pursuant to Articles 2 and 19 TEU, combined with Article 47 of the Charter of Fundamental Rights (see the CJEU judgment in Repubblika reported here).

In this context, in case of serious doubts of domestic judicial independence in a given Member State, one could ask whether (and under which conditions) article 47 of the Charter, which enshrines the right to an effective remedy before a tribunal for every person whose rights guaranteed by EU law are infringed, may be duly invoked by a litigant to remove the application of a ground of jurisdiction laying down by EU PIL (see the CJUE judgements in PARKING and more recently in Obala i lučice and para. 129 of the opinion of Advocate General M. Bobek). Or to rely on the public policy exception in a cross-border enforcement proceedings (see already the CJUE judgement in Donnellan)?

New kinds of breach of effective judicial protection in cross-border litigation may also occur in the near future, notably in the “digitalised” judicial system promoted by the EU (as reported here).

On May 4th, 2021, the European Commission issued a Communication offering its Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention.

The Communication offers the Commission’s analysis on the application and explains why it considers that the EU should not give its consent to the accession of the United Kingdom to the Lugano Convention.

Nature of the Lugano Convention

The Communication explains that the Lugano Convention represents an essential feature of a common area of justice and is a flanking measure for the EU’s economic relations with the EFTA/EEA countries.  Thus, the Lugano Convention supports the EU’s relationship with third countries which have a particularly close regulatory integration with the EU, including by aligning with (parts of) the EU acquis. Though the Convention is, in principle, open to accession of “any other State” upon invitation from the Depositary upon unanimous agreement of the Contracting Parties, it is not the appropriate general framework for judicial cooperation with any given third country. The Convention is based on a high level of mutual trust among the Contracting Parties and represents an essential feature of a common area of justice commensurate to the high degree of economic interconnection based on the applicability of the four freedoms.

International framework for the EU’s civil justice cooperation with third countries

As a consequence, the European Commission argues that the appropriate framework for cooperation with third countries in the field of civil judicial cooperation is provided by the multilateral Hague Conventions, i.e. the 2005 Hague Choice of Court Convention and the 2019 Hague Judgments Convention.

Conclusion

The Commission concludes:

In view of the above, the Commission takes the view that the European Union should not give its consent to the accession of the United Kingdom to the 2007 Lugano Convention. For the European Union, the Lugano Convention is a flanking measure of the internal market and relates to the EU-EFTA/EEA context. In relation to all other third countries the consistent policy of the European Union is to promote cooperation within the framework of the multilateral Hague Conventions. The United Kingdom is a third country without a special link to the internal market. Therefore, there is no reason for the European Union to depart from its general approach in relation to the United Kingdom. Consequently, the Hague Conventions should provide the framework for future cooperation between the European Union and the United Kingdom in the field of civil judicial cooperation.

The Commission then advises:

Stakeholders concerned, and in particular practitioners engaged in cross-border contractual matters involving the European Union, should take this into account when making a choice of international jurisdiction.

The new issue of the AJ Contrat (12/2020) offers a series of articles (in French) compiled by Gustavo Cerqueira (University of Nîmes, France), concerning the CISG on the occasion of its 40th anniversary. 

The dossier contains the following articles:

The challenge of uniform interpretation, by Claude Witz (Saarland University) 

The CISG’s articulation with the European Union Law, by Cyril Nourissat (University of Lyon 3)

Back on the parties’ silence about the GISG’s application, by Gustavo Cerqueira (University of Nîmes) and Nicolas Nord (University of Strasbourg)

The Vienna Convention and the action directe: back on dangerous liaisons, by Etienne Farnoux (University of Strasbourg)

The links between the foreclosure period and the deadline prescription period (about CISG’s Article 39), by Marc Mignot (University of Strasbourg)

The issue of interest rates on arrears, by Franco Ferrari (New York University)

For a reinterpretation of the concept of impediment to perform, by Ludovic Pailler (University of Lyon 3)

The full table of contents is available here.

The European Group of Private International Law (EGPIL-GEDIP) has published the minutes (in French) of its 2020 Meeting.

The topics discussed during the meeting included a proposal for a regulation concerning the applicable law to in rem rights, the codification of the general part of EU private international law and the accession of the European Union to the Hague Judgments Convention.

The EGPIL has also published separately a draft proposal for a regulation on the law applicable to rights in rem in tangible assets and Observations on the possible accession of the European Union to the Hague Convention of 2 July 2019 on the Recognition of Foreign Judgments.

In May 2021 the activity of the CJEU regarding PIL will focus on insolvency and civil and commercial matters.

The decision in C- 709/19, Vereniging van Effectenbezitters (first chamber: J.L. Bonichot, L. Bay Larsen, C. Toader, N. Jääskinen, and M. Safjan as reporting judge) will be delivered on May 12th. AG Campos Sánchez-Bordona’s Opinion was published last December. To the first question, once again on Article 7(2) Brussels Ibis Regulation and the Erfolgsort in a case of purely financial damage, he had proposed to drop the approach holding the location of an investment account as the place of the damage, and requiring particular circumstances to concur for jurisdiction to be established at that place. Moreover, he had provided a separate analysis of the fact that the claim had been filed by a Stichting under Article 3:305a Dutch civil code for merely declaratory purposes (the only possibility open at the time). NoA: A similar request for a preliminary judgment is currently pending before the Court, see C-498/20. Recent examples of claim-bundling strategy following the Dutch model, apt to raise (should they get to court) doubts relating to jurisdiction, can be found in the press: see, recently, FAZ.

A second PIL-related decision will be published on May 20. In Case C-913/19, CNP, the referring court asked several questions to the CJEU on section 3 of Chapter II of the Brussels Ibis Regulation and Articles 7(2) and 7(5) of said Regulation. AG Campos Sánchez-Bordona’s Opinion, delivered last January, follows closely the case law of the CJEU on Article 7(5); it additionally analyses its relationship to Articles 145 and 152 of the Directive 2009/138/EC, on the taking-up and pursuit of the business of insurance and reinsurance. The case has been allocated to the third chamber (S. Prechal, N. Wahl, F. Biltgen, J. Passer, L.S. Rossi as reporting judge).

On the same day, the Opinion of AG Campos’s in C-25/20, Alpine Bau, will also be published. Here, the Višje sodišče v Ljubljani (Slovenia) asks the CJEU whether Article 32(2) of Regulation 1346/2000 is to be interpreted as meaning that the rules on the time limits for lodging creditors’ claims, and the consequences of lodging claims out of time under the law of the State in which the secondary proceedings are being conducted, apply to the lodgement of claims in secondary proceedings by the liquidator in the main insolvency proceeding.

No other PIL-related decisions, conclusions or hearings are scheduled so far. Case C-124/20, Bank Melli Iran, might nevertheless be of interest, in that it relates to commercial policies and the protection against the effects of the extraterritorial application of a third State legislation. AG Hogan’s Opinion will be published on May 12th.

Monika Zalnieriute (University of New South Wales) has posted Data Transfers after Schrems II: The EU-US Disagreements Over Data Privacy and National Security on SSRN.

In the long-awaited Schrems II decision, the Court of Justice of the European Union (CJEU) took a radical, although not an unexpected, step in invalidating the Privacy Shield Agreement which facilitated the European Union – United States data transfers. Schrems II illuminates the long-lasting international disagreements between the EU and USA over data protection, national security, and the fundamental differences between the public and private approaches to protection of human rights in data-driven economy and modern state. This article approaches the decision via an interdisciplinary lens of international law and international relations and situates it in a broader historical context. In particular, I rely on the historical institutionalist approach which emphasizes the importance of time and timing (also called sequencing) as well as institutional preferences of different actors to demonstrate that Schrems II decision further solidifies and cements CJEU’s principled approach to data protection, rejecting data securitization and surveillance in the post-Snowden era. Schrems II aims to re-balance the terms of international cooperation in data-sharing across the Atlantic and beyond. It is the outcome that the US tech companies and the government feared. Yet, they are not the only actors displeased with the decision. An institutionalist emphasis enables us to see that the EU is not a monolithic block, and Schrems II outcome is also contrary to the strategy and preferences of the EU Commission. The invalidation of the Privacy Shield will now (again) require either a reorientation of EU policy and priorities, or accommodation of the institutional preferences of its powerful political ally – the USA. The CJEU decision goes against the European Data Strategy, and places a $7.1 trillion transatlantic economic relationship at risk. Historical institutional analysis suggests the structural changes in the US legal system to address the inadequacies in the Schrems II judgment are unlikely. Therefore, the EU Commission will act quick to create a solution – another quick contractual ‘fix’ – to accommodate US exceptionalism and gloss over the decades of disagreement between the EU and USA over data protection, national security and privacy. When two powerful actors are unwilling to change their institutional preferences, ‘contracting out’ the protection of human rights in international law is the most convenient option.

The paper is forthcoming in the Vanderbilt Journal of Transnational Law.

As the dust settles, the consequences of the British departure from the EU are becoming clearer, including those for British parties litigating on the Continent. Two of Germany’s highest courts have recently ordered litigants with a habitual residence in the UK to provide security for the likely costs of the defendants, which the claimants would have to pay under the German loser pays-system. The decision was taken by both the Federal Supreme Court on 1 March 2021 and by the Federal Patent Court on 15 March 2021. Both rulings have been discussed on the Dispute Resolution Germany blog by Peter Bert here and here.

Duty to Provide Security for Costs under German Procedural Law

Although German procedural law in principle envisages the possibility of an obligation to provide security if demanded by the defendant (see e.g. sec. 110 of the German Code of Civil Procedure and sec. 81(6) of the German Patent Code), the requirement for a UK resident claimant to post security for costs had been illegal as long as the UK was part of the EU. Already in 1997, the ECJ outlawed such demands by German courts in case C-323/95, David Charles Hayes and Jeannette Karen Hayes v Kronenberger GmbH. This decision was based on the prohibition of discrimination on the grounds of nationality (today Art 18 TFEU, ex Art 12 TEC).

As a consequence, litigants with a residence in the EU or the wider EEA have been exempted from the requirement to provide security for costs under sec. 110 of the German Code of Civil Procedure. With Britain now having left the EU and the the transition period having expired, it is reasonably clear the exemption no longer covers UK based claimants, who as of 1 January 2021 may need to provide security for costs upfront.

Exceptions to the Obligation to Provide Security for Legal Costs

Sec. 110(2) no 1 of the German Code of Civil Procedure and by reference also sec. 81(6) 1 German Patent Code provides an exception from the claimant’s obligation to post security for costs where “due to international Treaties, no such security deposit may be demanded”. This exception caused the Federal Patent Court to examine more deeply the legal relations between the UK and Germany post-Brexit.

The Court first analyses the Hague Convention on Civil Procedure 1954, which bans   security for costs in Art. 17. This Convention has however not been signed by the UK.

Next, the Federal Patent Court mentions the 1928 Convention Between His Majesty and the President of the German Reich regarding Legal Proceedings in Civil and Commercial Matters. Besides matters such as cross-border service and taking of evidence, the Convention also provides in its Art. 14 that the subjects or citizens of one contracting party “shall not be compelled to give security for costs in any case where a subject or citizen of such other Contracting Party would not be so compelled”. Yet this clause applies only under the proviso “that they are resident in any such territory”, which means the territory of the contracting party where a claim is brought. Since the British claimants in the cases at hand were not resident in Germany, they could not rely on this clause.

The Court further analyses the European Convention on Establishment, which was concluded under the auspices of the Council of Europe in 1955 and binds a number of states, including Germany and the UK. Its Art. 9 and 30 set out exceptions from the requirement to post security for costs. Yet these provisions are limited to natural persons, whereas the claimant in the case discussed was a corporation.

Finally, the Federal Patent Court also discusses the Trade and Corporation Agreement concluded between the EU and the UK on Christmas Eve 2020. Its Art. IP.6 provides for some special rules with regard to the protection of IP rights. But they only cover the “availability, acquisition, scope, maintenance, and enforcement of intellectual property rights” as well as matters affecting the use of intellectual property rights specifically addressed in the TCA. Security for costs is not among them.

Since there was thus no international treaty in the sense of sec. 110(2) no 1 of the German Code of Civil Procedure, the Federal Patent Court decided that the British claimant had to provide security for costs.

The Relevance of the Brussels Convention 1968

Peter Bert discusses in the Dispute Resolution Germany Blog whether the continued applicability of the Brussels Convention 1968, which has been debated various times in this blog, might change the outcome. From my point of view, this is not the case, as the Convention does not address the issue of security for costs but is focused on issues of jurisdiction as well as recognition and enforcement of judgments.

Conclusion

The two German court decisions illustrate the complexity of international litigation post-Brexit. Courts and parties need to deal with a plethora of often dated international conventions concluded before the UK’s accession to the EU. The decisions clearly show the weaknesses of the lack of international agreements and the disadvantages of Brexit for claimants in Germany who are habitually resident in the UK. The situation in other Member States might well be different from Germany’s, possibly giving rise to even further complications.

On 22 April 2021, the Court of Justice of the European Union ruled on the law governing the avoidance of the payment of a contractual obligaton by a third party in Z.M. v. E.A. Frerichs, Case C-73/20 (see the previous reports of K. Pacula and G. van Calster).

Background

The issue arose in the context of the insolvency of a German company, Oeltrans Befrachtungsgesellschaft, in Germany. Oeltrans had made a payment to Dutch company Frerichs, that the liquidator of Oeltrans sought to challenge pursuant to the German law of detrimental acts.

The payment had been made for the purpose of performing a contact concluded between Frerichs and Tankfracht GmbH, a German company which belonged to the same group as Oeltrans. It was accepted that Dutch law governed the contract.

While the payment could be challenged under German law, it could not under Dutch law.

Issue

In principle, it was clear that the law of the insolvency governed any action for challenging detrimental acts (Art 4 – today 7- of the Insolvency Regulation). The only exception is the famous then article 13 (today 16) of the European Insolvency Regulation, which refers to the law governing the relevant act:

Article 4(2)(m) shall not apply where the person who benefited from an act detrimental to all the creditors provides proof that:

–        the said act is subject to the law of a Member State other than that of the State of the opening of proceedings, and

–        that law does not allow any means of challenging that act in the relevant case.

The question was, therefore, whether the law governing the relevant act, the payment, was the law of the contract. Importantly, the detrimental act was not the contract, to which the insolvent debtor was a third party. It was a payment made by a third party for the purpose of performing a contract.

Rationale of Article 13

The issue raised was primarily one of insolvency law, and the judgment rightly focuses on the interpretation of Article 13.

The court repeats that the rationale of the exception in Article 13 is to protect the expectations of the party who contracted with the insolvent debtor. That party, the court explains, cannot foresee that its debtor could become insolvent, and where such proceedings could be opened.

33. A party to a contract who has benefited from a payment made by its contracting partner or by a third party in performance of that contract cannot reasonably be required to foresee that insolvency proceedings may be opened against that contracting partner or that third party and, if so, in which Member State those proceedings will be opened.

Nothing in this rationale is convincing. Any reasonable businessman knows that his contractual partners may become insolvent. And, if this businessman has any knowledge of private international law (unlikely, but his lawyers should), he/they will know that the insolvency proceedings would be opened in the country of origin of that partner, and that the law of that country will apply. The surprise, if any, is the existence of Art. 13, and the remarkable result to which it leads: contract law trumps insolvency law.

Article 13 is more simply a failure of European integration, which prevents the recognition of insolvency proceedings within the EU. There are many other such rules in the Insolvency Regulation. This is the political compromise that the Member States reached when they negotiated the Regulation 20 years ago.

Encouraging Fraud?

It is not for the CJEU to change this political compromise and to delete Article 13 (although the Court has not hesitated to move beyond the political compromise of Member States in other circumstances, when interpeting the Evidence Regulation for instance).

But the Court needs not extend the scope of Article 13 beyond what is necessary and encourage fraud.

In Vinyls Italia (Case C-54/16), the Court had accepted that the parties to a domestic contract could avoid the application of insolvency law by choosing a foreign law to govern their contract and shield it against insolvency proceedings.

In the  present case, the insolvent debtor was asked by another company from the same group to pay under a contract concluded by the other company of the group. This looked very suspicious indeed. Was the goal to put the funds of the insolvent company beyond the reach of its creditors by releasing a company of the same group from one of its debts? Maybe not in this case, but it is now possible to do exactly that in the future.

So it might have been possible to determine the law governing the payment in a more objective way than simply submitting it to the law of a contract that the parties may freely choose (including if it is a domestic contract).

A possible solution could have been to decide that the payment was governed by the law of the place where the payment occurred.

Jan von Hein and Thalia Kruger are the editors of a new volume published with Intersentia on Informed Choices in Cross-Border Enforcement. The European State of the Art and Future Perspectives. The book is dedicated to the functioning of the European Uniform Procedures in eight Member States (Belgium, France, Germany, Italy, Luxembourg, The Netherlands, Poland, and Spain), and is the outcome of the research project financed by the European Commission called Informed Choices in Cross-Border Enforcement (IC2BE).

The blurb of the book reads as follows:

How to choose the most beneficial enforcement regime for cross-border claims of a client? A question considerably complicated by (1) the existence of various European Union enforcement tools and (2) particularities in the national legal systems that impact on the operation and suitability of the various enforcement tools.

This book compares and analyses the practical utility and potential pitfalls of the 2nd generation regulations (European Enforcement Order, European Order for Payment, European Small Claims Procedure and European Account Preservation Order) and their relation to Brussels I-bis. Further, it analyses whether and to what extent all of the 2nd generation EU regulations prove their worth in the cross-border enforcement of claims, and which measures can be recommended for their practical improvement and for achieving greater consistency in European enforcement law.

The work is based on an extensive evaluation of case law (more than 500 published and unpublished), empirical data (150 interviews with practitioners) and literature from eight Member States (Belgium, France, Germany, Italy, Luxembourg, The Netherlands, Poland, Spain) and the Court of Justice of the European Union. It provides an extensive and up-to-date picture of the cross-border enforcement of claims across Europe and is an important resource for academics and practitioners alike.

Additionally, the case law that was used for the analysis can be consulted online in a free access database. This includes the decisions of the Court of Justice of the European Union (here) and the English summaries (and in certain cases also the links to the original decisions) of the judgments of the national courts regarding the four European procedures (here).

More information about the IC2BE project can be found here.

On Friday, 23 April 2021, we informed our readers about an article on the legal aspects of a possible claim brought by the EU against the pharmaceutical company AstraZeneca. The post could not have been timelier. Today (Monday, 26 April 2021), the Commission announced it has indeed commenced legal proceedings last Friday against AstraZeneca due to vaccine shortages.

The action was brought before the Belgian courts, as is provided for under the contract between both parties and as was predicted in the article authored by Sixto Sánchez Lorenzo.

Stefan de Keersmaecker, a spokesman on health issues for the Commission, said:

The reason indeed being that the terms of the contract, or some terms of the contract, have not been respected and the company has not been in a position to come up with a reliable strategy to ensure the timely delivery of doses.

It is reported that the decision to bring the action was made jointly with all 27 Member States. It is unclear whether this means the Member States have formally joined or merely support the  action. The further developments remain to be seen.

José R. Mata Dona (Independent Practitioner and Member of the Brussels and Caracas Bars) and Nikos Lavranos (Guest Professor at the Free University of Brussels and Secretary-General of the European Federation for Investment Law and Arbitration) are the editors of International Arbitration and EU Law, which has been published by Edward Elgar Publishing in the Elgar Arbitration Law and Practice Series.

The blurb reads as follows:

This book examines the intersection of EU law and international arbitration based on the experience of leading practitioners in both commercial and investment treaty arbitration law. It expertly illustrates the depth and breadth of EU law’s impact on party autonomy and on the margin of appreciation available to arbitral tribunals.

 It contains an analysis of the relevance of EU law on the validity of international agreements to arbitrate; consideration of the impact of EU law on challenges, recognition and enforcement of international commercial awards, and the relationship between anti-suit relief, EU law and the New York Convention; a discussion of selected areas of intersection between EU law and international commercial arbitration, including the ECtHR, consumer protection, damages, competition damages, GDPR, commercial agency and others; an introduction to the complex areas in which the EU regime and international investment arbitration laws intertwine, through a review of the development of the EU’s investment policy; an examination of the impact of EU law on specific issues in international investment arbitration including the Energy Charter Treaty, procedural issues (both ICSID and non-ICSID), damages, taxation, and the proposed Multilateral Investment Court; an appraisal of the potential of International Commercial Mediation and its interrelations with EU law.

Contributors include N. Bassiri, G.A. Bermann, A. Blumrosen, C. Brower, L. Capiel, S. Castagna, D. Chochitaichvili, O. Cojo, Q. Declève, M. Feria-Tinta, A.-K. Grill, E. Hay, B.R. Hoebeke, D. Ingle, T. Kalliokoski, S.J. Lamb, E. Martin, D. Overduin, R. Price, F. Rosenfeld, A. San Román Rivera, J.M. Sánchez Pueyo, S.I. Strong, J. Sullivan, I. Van Damme, M.-C. Van den Bossche, O. van der Haegen, P. Wiliński, B. Williams, H. Wöss, P. Živković.

More information is available here.

On 20 April 2021 the Commercial Court number 17 of Madrid granted provisional measures forbidding FIFA and UEFA (and any other associated football body) to adopt, for the duration of the main proceedings any type of determination against the Super League or against the teams or players participating in the projected new European competition.

The day before, the Super League backers had sent a 6 page letter to FIFA and UEFA calling for cooperation, but also warning that they had taken legal action to prevent any efforts to block their project.

The Mirror reported that the letter reads as follows:

We are concerned that FIFA and UEFA may respond to this invitation letter by seeking to take punitive measures to exclude any participating club or player from their respective competitions.

We hope that is not your response to this letter and that, like us, your organisations will recognise the immediate benefits of the competition established by SLCo.

We also seek your cooperation and support on how the competition can be brought within the football ecosystem and work with us to achieve that objective.

Your formal statement does, however, compel us to take protective steps to secure ourselves against such an adverse reaction, which would not only jeopardise the funding commitment under the grant but, significantly, would be unlawful.

For this reason, SLCo has filed a motion before the relevant courts in order to ensure the seamless establishment and operation of the competition in accordance with applicable laws.

We invite you to attend on an urgent basis discussion with us regarding the details of the competition and how it can best be accommodated within the football ecosystem.

The Spanish Order

The decision orders the aforementioned bodies to refrain from any action that may affect the launch of the competition or supposes a veto to the participation of the founding clubs in the competitions in which they are currently playing, until the court has fully considered the case. In the event that, prior to the decision on the precautionary measures, any such action has already been carried out, FIFA and UEFA shall take the necessary steps to remove it and to leave it immediately without effect.

While the latest developments – the announcement of the  suspension of the activities of the Super League, triggered by the opposition the initiative has met – have likely rendered the judicial order moot, it is still worth having a look into its background and reasoning. Just like it does, I will use the present tense to report.

The Parties

The applicant is European Super League Company S.L. (in what follows, ‘ESLC’), a limited liability company whose members are: Real Madrid club de fútbol ; Associazione Calcio Milan ; Fútbol Club Barcelona ; Club Atlético de Madrid; Manchester United Football Club ; Football Club Internazionale de Milano S.P.A. ; Juventus Football club; The Liverpool Football Club and Athletic Grounds Limited ; Tottenham Hostpur Football Club;  Arsenal Football Club ; Manchester City Football Club ; and Chelsea FC Plc.

ESLC is the sole owner of the Super League, and the parent company of three other companies in charge of the management and supervision of the ELSC. The Super League aims to become the first European competition outside of UEFA, to be held annually with the aim of maximizing the chances of competing for footballers and clubs of the highest sporting level. Such competition would not prevent participating clubs from participating in their respective national competitions and domestic leagues.

The American investment banking JPMorgan Chase is the major financial backer of the Super League.

The precautionary measures are requested against FIFA and UEFA, two private bodies enjoying a monopoly over the authorisation and organisation of international professional football competitions. The following provisions of the FIFA Statutes are quoted:

Article 22, which requires regional confederations to ensure that international leagues or other similar organisations of clubs or leagues are not formed without FIFA’s consent or approval

Article 61 : FIFA, its member associations and the confederations are the original owners of all of the rights emanating from competitions and other events coming under their respective jurisdiction, without any restrictions as to content, time, place and law. These rights include, among others, every kind of financial rights, audiovisual and radio recording, reproduction and broadcasting rights, multimedia rights, marketing and promotional rights and incorporeal rights such as emblems and rights arising under copyright law

Article 68 : FIFA, its member associations and the confederations are exclusively responsible for authorising the distribution of image and sound and other data carriers of football matches and events coming under their respective jurisdiction, without any restrictions as to content, time, place and technical and legal aspects

Article 71 : FIFA, the confederations and the national federations, enjoy exclusive competence to issue prior authorisation to organise international competitions and expressly prohibits the possibility of holding matches and competitions which are not previously authorised by FIFA, the member national federations or by confederations

Article 72 : Players and teams affiliated to member associations or provisional members of the confederations may not play matches or make sporting contacts with players or teams that are not affiliated to member associations or provisional members of the confederations without the approval of FIFA.

Those provisions are taken up in Articles 49 to 51 of UEFA’s Articles of Association. As a consequence, UEFA is conferred a monopoly on the organisation of international competitions in Europe; international competitions in Europe which have not previously been authorised by UEFA are not allowed.

The monopoly for the organisation and authorisation of international competitions was ratified by FIFA and UEFA on a Declaration of 21 January 2021.

The Claims

Based on Article 102 TFEU, the applicant seeks a declaration of abuse of a dominant position by FIFA and UEFA on the internal football market. Under Article 101 TFEU, it requests a declaration related to the violation of free competition in the internal football market, carried out by UEFA and FIFA through the imposition of unjustified and disproportionate restrictions. It asks as well for injunctive relief: the anti-competitive behaviour of FIFA and UEFA and its future repetition shall be prohibited. Finally, it applies for the removal of the effects of any measure or action that the defendants may have carried out already, directly or indirectly.

The Facts

From the documents accompanying the request for precautionary measures, the Commercial Court infers (among other) that:

.- Several professional football clubs have set up a new professional football competition called “Super League”. They have communicated the creation of said competition to FIFA and UEFA, organizations that until now exclusively organized international professional football competitions.

.- Following that communication FIFA and UEFA made a statement expressing their refusal to recognise the creation of a European Super League restricted to certain clubs. According to the declaration, any player or club participating in that competition would be foreclosed from competitions organised by FIFA and the confederations; all competitions must be organised or recognised by the competent body. The statement was confirmed by another one of 18 April 2021 issued by UEFA, the English Football Association and Premier League, the Real Federación Española de Fútbol, the Italian Federation of football and the Italian league Serie A. A warning regarding the adoption of disciplinary measures in respect of clubs and players participating in the creation of the European Super League accompanied the statement.

.- The European association of professional football leagues published a declaration of unanimous support to FIFA and UEFA in order to coordinate the necessary measures preventing the start-up of the new “Super League” competition and / or to adopt the announced disciplinary measures by FIFA and UEFA. Should those measures be adopted, the clubs and / or players that participated in the Super League would be prevented from participating in the soccer Eurocup of June 2021, the Olympic Games in July 2021, and the World Cup in 2022.

In light of the foregoing, the applicant submits that the monopoly exercised by FIFA and UEFA regarding the organization and management of national and international soccer competitions, as well as the exclusivity in the management of economic returns derived from said competitions, together with the sanctions announced by those private organizations, prevent the existence of free competition in the market of sports competitions. Should FIFA and UEFA implement said measures, the European Super League project would fail due to the impossibility of fulfilling the aforementioned condition of compatibility. In addition, the investments and financial contributions by J.P. Morgan would be lost.

It is also submitted that said measures would affect trade between Member States and constitute an infringement of the following community freedoms:

.- The freedom to provide services regulated in article 56 TFEU by preventing the provision of services by the ESLC.

.- The free movement of workers under Article 45 TFEU, by preventing players from providing their services through participation in the European Super League.

.- The freedom of establishment of Article 49 TFEU, by preventing the creation of the three companies that would be in charge of the management and supervision of the ELSC.

.-The freedom of movement of capital and payments regulated in Article 63 TFEU, preventing intra-community movements of payment and capital linked to the European Super League.

Analysis and Findings of the Court

The conditions required to grant provisional measures are satisfied: Article 728 of the Spanish Civil Procedure Code (LEC) – fumus boni iuris ; periculum in mora ; Article 733.2 of said Code – conditions to grant provisional measures inaudita parte.

Article 101 and 102 TFUE apply to the merits.

Fumus boni iuris

It is established (for the purposes of grounding provisional relief) that FIFA and UEFA have abused their dominant position. FIFA and UEFA Statutes subject the creation of alternative sports competitions to the authorization of said private bodies, and allow disciplinary measures to be applied against football clubs that do not request such permission. The prior authorization is not dependent on any type of limit or objective and transparent procedure; it relies on the discretionary power of both private bodies, which, due to the monopoly in the organization of competitions and the exclusive management of the economic returns derived from sports competitions, have a clear interest in rejecting the organization of the aforementioned competitions.

De facto, such actions by FIFA and UEFA imply unjustified and disproportionate restrictions to competition in the internal market. The statutory rules of FIFA and UEFA do not include provisions guaranteeing objectives of general interest in granting prior authorization to the organization of football competitions. Nor do they contain objective and transparent criteria to avoid discriminatory effects, or conflicts of interest, with FIFA and UEFA in the denial of authorization to organize alternative sports competitions by the clubs integrated in the federations affiliated with said private bodies.

Moreover, an abuse of dominance position can be inferred from Articles 67 and 68 of the Statutes of FIFA, in that they oblige the clubs to assign the commercial rights of the sports competitions in which they participate.

Periculum in mora

In the course of the proceedings FIFA and UEFA could adopt disciplinary measures as announced in the statement referred to above, which the consequence that the European Football Super League could not be implemented. This would cause irreparable harm to clubs and players called upon to participate in the Super League ; it would also prevent the enforcement of any judgment on the merits for the claimants. Moreover, the imposition of some of the disciplinary sanctions announced by FIFA and UEFA would seriously compromise the financing of the Super League, having regard to the conditions laid down in the shareholders’ and investment agreement of the founding clubs of the European Football Super League.

Proportionality and suitability

The provisional measures requested are proportionate and suitable to guarantee the protection sought. They prevent actions on the side of FIFA and UEFA that could render ineffective any protection granted in a future judgment. The measures requested are intended to protect free competition in the relevant market, and to impede the adoption of measures by FIFA and UEFA, such as those already announced, which for the reasons already explained would definitively thwart the implementation of the European Football Super League project.

Inaudita parte

The interim relief requested must be adopted inaudita parte. The defendants having publicly announced the imminent adoption of measures restricting free competition; it is therefore urgent to adopt the relief applied for without hearing the other parties. Regard should be paid to the next celebration of the semi-finals of the competition organized by UEFA, the “UEFA Champions League”, where up to three of the founding clubs of the European Football Super League participate. The adoption of the disciplinary measures announced by FIFA and UEFA could compromise the participation of those football clubs in the competition; the negative impact on free competition, latent in the provisions of the FIFA and UEFA Statutes above mentioned would thus crystalize, causing irreparable damage of an economic and sporting nature to the clubs and players affected.

The fact that FIFA and UEFA have their domiciles abroad and the need to seek legal assistance to serve the present proceeding, with the consequent greater delay in the summons of the parties to a hearing in a near period of time, further evidence the need to grant the measures inaudita parte.

Caution under Article 728.3, para 2 LEC

For the measure to be granted, the applicant has to provide a bank guarantee of 1,000,000 euros.

 

Final note : No appeal is possible against the decision.

The latest edition of the Spanish journal La Ley (No 90 March 2021) contains an interesting article about the contract concluded by the European Commission with AstraZeneca for the provision of COVID-19 vaccines. It is authored by Sixto Sánchez Lorenzo, the renowned expert on private international law at the University of Granada. The author deals with the liability of AstraZeneca for the failure to deliver enough jabs, leaving aside possible tortious and product liability suits for the vaccines alleged side effects.

The author argues that the agreement is a binding contract subject to the condition that a vaccine will be developed by the pharmaceutical company. In his view, the Commission acted both as a party and as an agent for (“on behalf of”) the Member States, which are therefore also parties to the contract. This will give them standing in court should they intend to sue the company. According to Sixto Sánchez Lorenzo, the Member States could bring claims individually and need not necessarily act together.

As for jurisdiction, he notes the contract’s jurisdiction clause in favour of the Belgian courts. The author considers this clause to be binding under Art 25 Brussels Ibis Regulation. He puts emphasis on the civil and commercial nature of the agreement, which clearly brings it within the Regulation’s scope. The Commission Implementing Regulation, which allows Member States under certain conditions to restrict the export of vaccines, does not change this characterisation.

In case the choice-of-court agreement would be inexistent or invalid, the courts of the state of incorporation and headquarters (in this case: Sweden) would have general jurisdiction for any claim against the company (Art 4, 63 Brussels Ibis Regulation). The author also points to the jurisdiction of the courts at the place of contractual performance (Art 7(1)(b) Brussels Ibis Regulation). In the event of a collective action brought by the Commission and the Member States, he discusses a possible parallel to the Color Drack case, where the CJEU ruled that in case of multiple places of performance jurisdiction lies with the courts at the “principal place of delivery”. These questions are however merely speculative given the contract’s jurisdiction clause in favour of the Belgian courts.

Regarding the applicable law, the contract stipulates a choice of Belgian law, which the author considers binding according to Art 3 Rome I Regulation. By virtue of this choice-of-law clause, the Vienna Sales Convention (CISG) would govern the entire contractual relation (Art 1(1)(b) CISG), including with those States that have not signed the CISG (Malta and Ireland).

With respect to the substantive law, the crucial question of course is whether AstraZeneca is liable under the contract with the Commission and the Member States, or whether it can invoke the priority of other contracts it has entered into with other parties, such as the UK. Sixto Sánchez Lorenzo refers to Art 28 CISG and the Belgian lex fori for a solution. As he underlines, Belgian law allows a claim for specific performance, contrary to the general position of the Common law.

But what if the company cannot deliver because it cannot produce enough quantities of the vaccine? Sixto Sánchez Lorenzo outrightly discards the exception to liability under Art 79 CISG because the shortage of vaccine would be the result of the dealings of AstraZeneca and not of a force majeure. Rather, the likely solution would be a proportional or “pro rata” condemnation.

This is an insightful article written by one of the masters of the profession. It is possible that the question of liability for non-performance will remain theoretical given the recent banning of AstraZeneca in various Member States. But nevertheless, other suits may arise, for which the article provides useful information.

 

 

 

 

 

Juan J. Garcia-Blesa (Fern University) has posted Indeterminacy, Ideology and Legitimacy in International Investment Arbitration: Controlling International Private Networks of Legal Governance? on SSRN.

This article connects the insights of post-realist scholarship about radical indeterminacy and its consequences for the legitimacy of adjudication to the current legitimacy crisis of the international investment regime. In the past few years, numerous studies have exposed serious shortcomings in investment law and arbitration including procedural problems and the substantive asymmetry of the rights protected. These criticisms have prompted a broad consensus in favor of amending the international investment regime and multiple reform proposals have appeared that appeal to the rule of law ideal as an instrument for increasing the acceptability of the international investment system. This article argues that the reliance of such proposals on jurisprudential approaches that fail to adequately accommodate the post-realist indeterminacy critique and take seriously the role of ideology in adjudication renders reform efforts unable to solve the legitimacy problems of the investment regime. The conclusions suggest the need to abandon implausible claims to depoliticization and face the methodological challenges posed by the promise of ideologically balanced assessments advanced by some rule of law theorists. The article finally points at the urgency to reform traditional approaches to doctrinal work in order to increase awareness of critical challenges and open up doctrinal methods to alternative methodological avenues.

The paper is forthcoming in the International Journal for the Semiotics of Law.

Advocate General Kokott’s Opinion in Case C-490/20 V.M.A. v Stolichna Obshtina, Rayon ‘Pancharevo’ was published on 15 April 2021 (the issues raised by this case have been discussed earlier on this blog by Nadia Rusinova: see here). So far, the text of the Opinion is available only in Bulgarian and French.

This post provides a summary in English of the facts and the main reasoning supporting the proposal to the CJEU (NoA: the narrative relating to Article 2 TUE, present in paras. 116 to 132, has not direct reflection in the final proposal; I skip it too).

Facts and Questions

The dispute concerns a married couple consisting of two women, one of whom, V.M.A., is a Bulgarian national, while the other is a national of the United Kingdom. They got married in 2018 in Gibraltar, where same-sex marriage is possible since December 2016, and had a child in Spain. They reside in the same country. The birth was registered according to Spanish Law (Ley del Registro Civil: inscribable facts and acts that affect Spaniards, and those referring to foreigners which occurred in Spanish territory, are recorded in the Civil Registry)., and a birth certificate was issued by the Spanish authorities designating both women as ‘mother’ of the child.

On the basis of the Spanish document V.M.A. applied to the competent Bulgarian authority to issue a birth certificate for her daughter. Such a certificate is, in turn, necessary for obtaining a Bulgarian identity document.

Bulgarian law does not allow marriage or any other form of union with legal effects between persons of the same sex. Parentage is determined by birth; the mother of the child is the woman who gave birth to it (also in the case of assisted reproduction). When the filiation of a child with regard to one of his parents is unknown, any parent can recognize the child. In the event of registration of a birth occurring abroad the information relating to the name of the child, the date and place of birth, the sex and the established filiation are entered in the birth certificate as they appear in the copy or in the Bulgarian translation of the foreign document produced. Should filiation concerning a parent (mother or father) not be established in the foreign document, the field intended for data relating to this parent in the birth certificate in the Republic of Bulgaria will not completed and shall be crossed out.

The municipality of Sofia (Bulgaria) requested V.M.A. to indicate which of the two spouses is the biological mother, stating that the model Bulgarian birth certificate provides only one box for the ‘mother’ and another for the ‘father’, and that each of those boxes may include only one name. Following V.M.A.’s refusal to supply the requested information, the authority rejected her application, arguing the absence of information concerning the biological mother and the fact that the registration of two female parents in a birth certificate is contrary to the public policy of Bulgaria.

V.M.A. brought an action against that decision before the Administrative Court of the City of Sofia, which referred to the CJEU the following questions:

Must Article 20 TFEU and Article 21 TFEU and Articles 7, 24 and 45 of the Charter of Fundamental Rights of the European Union be interpreted as meaning that the Bulgarian administrative authorities to which an application for a document certifying the birth of a child of Bulgarian nationality in another Member State of the EU was submitted, which had been certified by way of a Spanish birth certificate in which two persons of the female sex are registered as mothers without specifying whether one of them, and if so, which of them, is the child’s biological mother, are not permitted to refuse to issue a Bulgarian birth certificate on the grounds that the applicant refuses to state which of them is the child’s biological mother?

Must Article 4(2) TEU and Article 9 of the Charter of Fundamental Rights of the European Union be interpreted as meaning that respect for the national identity and constitutional identity of the Member States of the European Union means that those Member States have a broad discretion as regards the rules for establishing parentage? Specifically:

–    Must Art. 4(2) TEU be interpreted as allowing Member State to request information on the biological parentage of the child?

–    Must Article 4(2) TEU in conjunction with Article 7 and Article 24(2) of the Charter be interpreted as meaning that it is essential to strike a balance of interests between, on the one hand, the national identity and constitutional identity of a Member State and, on the other hand, the best interests of the child, having regard to the fact that, at the present time, there is neither a consensus as regards values nor, in legal terms, a consensus about the possibility of registering as parents on a birth certificate persons of the same sex without providing further details of whether one of them, and if so, which of them, is the child’s biological parent? If this question is answered in the affirmative, how could that balance of interests be achieved in concrete terms?

Is the answer to Question 1 affected by the legal consequences of Brexit in that one of the mothers listed on the birth certificate issued in another Member State is a UK national whereas the other mother is a national of an EU Member State, having regard in particular to the fact that the refusal to issue a Bulgarian birth certificate for the child constitutes an obstacle to the issue of an identity document for the child by an EU Member State and, as a result, may impede the unlimited exercise of her rights as an EU citizen?

If the first question is answered in the affirmative: does EU law, in particular the principle of effectiveness, oblige the competent national authorities to derogate from the model birth certificate which forms part of the applicable national law?

Relevant EU law

In addition to the provisions mentioned in the request, Articles 2 and 4 of Directive 2004/38/EC of the European Parliament and of the Council of 29 April 2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States must be taken into account:

Article 2, Definitions – For the purposes of this Directive: (1) “Union citizen” means any person having the nationality of a Member State; (2) “Family member” means: (a) the spouse; (b) the partner with whom the Union citizen has contracted a registered partnership, on the basis of the legislation of a Member State, if the legislation of the host Member State treats registered partnerships as equivalent to marriage and in accordance with the conditions laid down in the relevant legislation of the host Member State; (c) the direct descendants who are under the age of 21 or are dependants and those of the spouse or partner as defined in point (b); (d) the dependent direct relatives in the ascending line and those of the spouse or partner as defined in point (b); […]

Article 4, Right of exit – 1. Without prejudice to the provisions on travel documents applicable to national border controls, all Union citizens with a valid identity card or passport and their family members who are not nationals of a Member State and who hold a valid passport shall have the right to leave the territory of a Member State to travel to another Member State. […] 3. Member States shall, acting in accordance with their laws, issue to their own nationals, and renew, an identity card or passport stating their nationality. […]

Analysis

Although the Opinion is presented in a very pedagogical way, to ease its understanding it should be explained that the reasoning is based: (a) on the different nature and effects of a certificate of birth of a child and a document stating his personal identity; (b) and on the premise that a person may be a parent (and a child born to a parent) or not, depending on whether such condition is considered for the purposes of family and successions law, or for the purposes of Union law.

AG Kokott carries out her analysis distinguishing two hypothesis: under the first one, the child is not a European citizen; her arguments revolve around the rights conferred to the Bulgarian mother by the legal order of the Union. Under the second hypothesis, the child is a EU citizen; the focus is on her rights. The reason for the separates approaches is that, according to the referring court, the child is a Bulgarian national; however, the assertion was contested by the Bulgarian Government during the hearing, given that Bulgarian nationality is acquired automatically by any person who has at least one Bulgarian parent, and in the present case the identity of the biological mother is not known.

i) The child is not a EU citizen

In the event that the child does not have Bulgarian nationality, she does not enjoy the rights deriving from Article 4 (3) of Directive 2004/38, and from Articles 20 and 21 TFEU, reserved for citizens of the Union. Consequently, the refusal by the Bulgarian authorities to issue a Bulgarian birth certificate designating, like the Spanish one, the applicant in the main proceedings and her wife as the mothers of the child, as well as the refusal to issue a Bulgarian identity document to this child, cannot infringe these rights.

On the contrary, the refusal to issue the requested birth certificate could constitute an obstacle to the right to free movement of the Bulgarian mother, who, according to AG Kokott (based on the information given by the Spanish government at the hearing), has legally acquired the status of mother of the child under Spanish law. If she is not included in this document, she will not be considered the mother of the child within the meaning of Bulgarian family law. In this regard, it should be recalled that according to the CJEU any national measure which is likely to hamper or make less attractive the exercise of the free movement by nationals of the Union may constitute an obstacle to this freedom.

The referring court asks the CJEU whether such obstacle could be justified on the protection of the national identity in the sense of Article 4 (2) TEU. To this AG Kokott answers in the affirmative: first, the Court has already implicitly recognized that the rules governing marriage are part of national identity within the meaning of Article 4 (2) TEU. Secondly, the national identity enshrined in Article 4 (2) TEU is not only one legitimate objective among others which may be taken into account when examining a possible justification for a restriction of the right to free circulation; on the contrary, it possesses a ‘vertical dimension’, that is to say, the Treaties give it a role in the delimitation of competences between the Union and the Member States. Hence, the Court can only exercise a limited control over measures adopted by a Member State for the purpose of safeguarding its national identity; conversely, it cannot apply a proportionality check like it does with ‘simple legitimate objectives’. Such as test will be applied, though, to measures adopted by the Bulgarian authorities in the field of family law provided ‘the fundamental expression of the concept that the Member State concerned intends to protect as part of its national identity’ is not in cause.

In the case at hand the precedent translates as follows:

.- Given that the determination of parentage within the meaning of family law is the sole competence of the Member States, AG Kokott considers that the Republic of Bulgaria is not required to recognize parentage as established in the Spanish birth certificate for the purposes of the application of Bulgarian family and inheritance law. In other words, the obligation to recognize parentage for the purpose of drawing up a birth certificate affects the fundamental expression of the national identity of the Republic of Bulgaria. (NoA: as the inclusion of the applicant in the main proceedings as a mother on the birth certificate necessarily implies recognition of the legal effects of the same-sex marriage for the purposes of determining parentage, one would have expected a clear assertion in the sense that Bulgaria is not obliged to issue such a certificate at all. This is not said in so many words, though, but hinted at a later stage in the Opinion, when the obligation of the Bulgarian to produce a document of identity allowing the child to travel with her mothers, and each of them to travel with the child pursuant to Article 4 of Directive 2004/38, is addressed).

.- By contrast, the Bulgarian authorities must accept the filiation bonds between the Bulgarian applicant and the child, as established in Spain, for the limited purposes of allowing the former to exercise the rights conferred by secondary Union law relating to the free movement of citizens. That is to say, to travel with the kid and to reside in the Member State of origin (Bulgaria), with the members of the family under normal conditions.

ii) The child is a citizen of the Union

Should the applicant acknowledge she is the biological mother of the child, or recognize the child as her own, the girl would automatically be a Bulgarian national, hence a citizen of the European Union. The refusal to deliver a birth certificate will indeed entail negative consequences for her. Would it be a solution to deliver the certificate only indicating the motherhood of the Bulgarian spouse?

In principle, in the light of the potential consequences on the right to free movement, the possibility just mentioned does not convince AG Kokott: equivalent documents concerning the child, but issued in different States, would contain divergent information on her; she would not be able to travel with each of her parents. To the question whether such obstacles could nevertheless be justified, Ag Kokott answers, first, that the refusal to recognize parentage with regard to the British mother, for the purposes of establishing a Bulgarian birth certificate, could indeed be based on the Bulgarian ‘national identity’ within the meaning of Article 4 (2) TEU.  On the contrary, considering that an identity document has no probative function with regard to the filiation of a person (so the AG), the refusal to recognize parentage for the purpose of issuing an identity document in accordance with Article 4 (3) of Directive 2004/38 is not acceptable.

Some Hints to the Bulgarian Authorities

By its fourth question, the referring court asks whether it should reject the model birth certificate under the national legislation in force, and replace it with a model allowing two mothers to be mentioned under the heading ‘parents’. Indeed, the referring court must – in the event that the child has the Bulgarian nationality – solve the practical problem that the establishment of a Bulgarian birth certificate is the prerequisite for issuing an identity document.

Given that, according to the explanations of the Bulgarian government at the hearing, a Bulgarian identity document does not mention the names of the parents, AG Kokott suggests that said document is issued based on a Bulgarian birth certificated designating as ‘mother’ only one of the spouses, provided it is accompanied by a travel document delivered for the purpose of identifying the parents of the child, where both women are mentioned.

And Further

Case C-490/20 raises questions is very similar to those addressed to the CJEU by a Polish court in Case C-2/21, Rzecznik Praw Obywatelskich. The latter case concerns the child of a Polish national, married to an Irish woman, who reside together in Spain. Again, the Spanish authorities issued a birth certificate designating the two women as the mother of the child. The referring court asks the Court whether the Polish administrative authorities can refuse to transcribe this birth certificate – the transcription being necessary to enable the child to obtain a Polish identity document- on the grounds that Polish law does not accept the parenthood of same-sex couples, and that the said birth certificate designates persons of the same sex as parents.

Daniel Girsberger, Thomas Kadner Graziano and Jan L. Neels are the editors of Choice of Law in International Commercial Contracts, which has been published by Oxford University Press in the Oxford Private International Law Series.

The blurb reads as follows.

Although the possibility of making a choice of law in respect of international commercial contracts has become widely accepted, national law still diverges in many respects with regard to the scope and relevance of, and the limitations on, party autonomy, leading to uncertainty in international commercial relations. This book compares the Hague Principles on Choice of Law in International Commercial Contracts (2015) with national, regional, supranational, and international rules on choice of law around the world in order to chronicle the divergent approaches which exist today.

The work is introduced by a comprehensive comparative report which sets out the similarities and differences between the featured national, regional, supranational, and international rules, comparing such rules with those of the Hague Principles, thereby initiating a discussion on further harmonization in the field. Another report focuses on the application of the Hague Principles in the context of international commercial arbitration. Dedicated chapters analyse the Hague Principles from a historical, theoretical, and international organizational point of view. Finally, examining each jurisdiction in detail, the book presents sixty national and regional article-by-article commentaries on the Hague Principles written by experts from all parts of the world. This dedicated and in-depth global comparative study of national, regional, supranational, and international rules provides a definitive reference guide to the key principles in respect of choice of law for international commercial contracts.

A webinar will take place on 4 May 2021 at 2 pm CEST to launch the book. Prior registration (here) is required.

See here for more information on the book.

The Spanish online journal Cuadernos de Derecho Transnacional, edited by the University Carlos III of Madrid under the directorship of Professors Calvo Caravaca and Castellanos Ruiz, and bearing the quality seal of the Spanish Foundation for Science and Technology (FECyT), has just released the first issue of 2021 (volume 13).

As usual, the journal is composed of four sections: Estudios (in-depth scientific analysis of topics related to Private International law, Uniform law and Comparative law); Varia (comprising shorter studies and notes on case law); Congresos; and Reseñas (book reviews). The whole content is open-access.  Most of the contributions of this issue are written in Spanish, all of them with a summary in English.

Under the heading Estudios the current issue comprises 27 articles. Among the many topics addressed are the following: Brexit and its impact for cross-border litigation in contractual and insolvency matters; family law, in particular in relation to child abduction (but not only); the protection of personality rights in cross-border settings; Covid-19 and its legal consequences on international contracts; competition law (commercial practices based on big data and algorithms, but also the liability of subsidiaries for antitrust infringements of the parent company); legal and bioethical implications of artificial intelligence; smart contracts and lex cryptographia.

Under Varia, this issue of CDT compiles notes to all recent decisions of the CJEU on PIL – maintenance, successions, contract and tort-, together with annotations to Spanish decisions on appeal or second appeal addressing PIL issues.

The second issue will be published in October; contributions should follow the guidelines for authors and are accepted until June. All submissions are peer reviewed.