Droit international général

By Tobias Lutzi, University of Cologne

There should be few readers of this blog, and few conflict-of-laws experts in general, to whom Adrian Briggs will not be a household name. In fact, it might be impossible to find anyone working in the field who has not either read some of his academic writings (or Lord Goff’s seminal speech in The Spiliada [1986] UKHL 10, which directly credits them) or had the privilege of attending one of his classes in Oxford or one of the other places he has visited over the years.

Adrian Briggs has taught Conflict of Laws in Oxford for more than 40 years, continuing the University’s great tradition in the field that started with Albert Venn Dicey at the end of the 19th century and had been upheld by Geoffrey Cheshire, John Morris, and Lawrence Collins (now Lord Collins of Mapesbury) among others. His writings include four editions of The Conflict of Laws (one of the most read, and most readable, textbooks in the field), six editions of Civil Jurisdiction and Judgments and his magnus opus Private International Law in English Courts, a perfect snapshot of the law as it stood in 2014, shortly before the UK decided to turn back the clock. His scholarship has been cited by courts across the world. Still, Adrian Briggs has managed to maintain a busy barrister practice in London (including well-known cases such as Case C-68/93 Fiona Shevill, Rubin v Eurofinance [2012] UKSC 46, and The Alexandros T [2013] UKSC 70) while also remaining an active member of the academic community regularly contributing not only to parliamentary committees but also, on occasion, to the academic discussion on this blog.

To honour his impact on the field of Conflict of Laws, two of Adrian’s Oxford colleagues, Andrew Dickinson and Edwin Peel, have put together a book, aptly titled ‘A Conflict of Laws Companion’. It contains contributions from 19 scholars, including four members of the highest courts of their respective countries, virtually all of whom have been taught by (or together with) the honorand at Oxford. The book starts with a foreword by Lord Mance, followed by three short notes on Adrian Briggs as a Lecturer at Leeds University (where he only taught for about a year), as a scholar at Oxford, and as a fellow at St Edmund Hall. Afterwards, the authors of the longer academic contributions offer a number of particularly delightful ‘recollections’, describing Adrian Briggs, inter alia, as “the one time wunderkind and occasional enfant terrible of private international law” (Andrew Bell), “the perfect supervisor: unfailingly generous with his time and constructive with his criticism” (Andrew Scott), and “a tutor, colleague and friend” (Andrew Dickinson).

The academic essays that follow are conventionally organised into four categories: ‘Jurisdiction’, ‘Choice of Law’, ‘Recognition and Enforcement of Foreign Judgments’, and ‘Conflict of Laws within the Legal System’. They rise to the occasion on at least two accounts. First, they all use an aspect of Adrian Briggs’ academic oeuvre as their starting point. Second, they are of a quality and depths worthy of the honorand (possibly having profited from the prospect of needing to pass his critical eye). While they all are as insightful as inspiring, Ed Peel’s contribution on ‘How Private is Private International Law?’ can be recommended with particular enthusiasm as it picks up Adrian Briggs’ observation (made in several of his writings) that, so far as English law is concerned, “a very large amount of the law on jurisdiction, but also on choice of law, is dependent on the very private law notions of consent and obligation” and critically discusses it from the perspective of contract-law expert. Still, there is not one page of this book that does not make for a stimulating read. It is a great testament to one of the greatest minds in private international law, and a true Conflict of Laws companion to countless students, scholars, colleagues, and friends.

Chinese Private International Law

Edited by Xiaohong Liu and Zhengyi Zhang

Written with the assistance of a team of lecturers at the Shanghai University of Political Science and Law, this book is the leading reference on Chinese private international law in English. The chapters systematically cover the whole of Chinese private international law, not just questions likely to arise in commercial matters, but also in family, succession, cross-border insolvency, intellectual property, competition (antitrust), and environmental disputes.  The chapters do not merely cover the traditional conflict of law areas of jurisdiction, applicable law (choice of law), and enforcement.  They also look into conflict of law questions arising in arbitration and assess China’s involvement in the harmonisation of private international law globally and regionally within the Belt and Road Initiative. Similarly to the Japanese and Indonesian volumes in the Series, this book presents Chinese conflict of laws through a combination of common and civil law analytical techniques and perspectives, providing readers worldwide with a more profound and comprehensive understanding of Chinese private international law.

 

Xiaohong Liu is Professor and President and Zhengyi Zhang is Associate Professor and Deputy Director of the International Affairs Office, both at Shanghai University of Political Science and Law, China.

 

May 2021   |   9781509924370   |   352pp   |   Hbk   |    RSP: £130

Discount Price: £104

Order online at www.hartpublishing.co.uk – use the code UG7 at the checkout to get 20% off your order!

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This post has been drafted by Dr. Felix M. Wilke, University of Bayreuth, Germany.

A new contestant has entered the ongoing debate about the law applicable to Electronic Securities and/or in the blockchain context. On 10 June 2021, the new German Act on e-Securities (Gesetz zur Einführung von elektronischen Wertpapieren, eWpG) entered into force. Its § 32 contains a special conflict-of-laws rule.

The following is a sketch of my first impressions and potential implications of the new rule. Any input is very much welcome!

The German E-Securities Act in General

The substantive scope of the eWpG somewhat belies its broad title. Far from being about all types of e-securities one can imagine, it only concerns bearer bonds (§ 1 eWpG). The act introducing the eWpG, however, also contains changes to the Capital Investment Code (Kapitalanlagegesetzbuch, KAGB), providing for the possibility of issuing electronic shares in investment funds.

It should also be noted that the e-Securities Act is no genuine piece of blockchain legislation. The word “blockchain” does not appear in it. The Act is not limited to securities recorded in a blockchain, nor would all blockchains necessarily meet the requirements of the Act.

Indeed, parts of the act merely concern centralized registers for e-securities to be maintained, e.g., by central securities depositories. Here, the main difference to current practice seems to consist in dispensing with the need for the depository to safekeep even only one paper (global) certificate.

Yet when other parts of the eWpG mention registers which are supposed to be decentralized as well as forgery-proof (sic) and to offer protection against any subsequent modification of recorded information (§§ 16(1), 4(11) eWpG), it becomes obvious that blockchain/distributed ledger technology can play an important role for so-called “crypto securities”. If one looks closely at the changes to the KAGB, one comes across an opening for distributed ledger technology for shares in investment funds, as well: § 95(5) KAGB.

Core aspects of the Act are the publicity, the contents, and the conditions for changes of registers for e-securities. A litany of (technical) details are delegated to the German Federal Ministry of Justice and Consumer Protection and the German Federal Ministry of Finance. One provision that will certainly raise an eyebrow or two is § 2(3) eWpG: It sets forth that e-securities are to be considered “things” within the meaning of the German Civil Code (Bürgerliches Gesetzbuch, BGB). Thus, in principle, the rules for corporeal objects will apply to an incorporeal asset.

The New Conflict-of-Laws Rule

32 eWpG concerns the applicable law. I would tentatively translate it as follows, sticking closely to the structure and word order of the German original:

(1) To the extent that § 17a Securities Account Act does not apply, rights regarding an e-security and dispositions about an e-security are governed by the law of the State under whose supervision the register office is in whose e-securities register the e-security is recorded.

(2) If the register office is not under supervision, its seat is decisive. If the seat of the register authority cannot be determined, the seat of the issuer of the e-security is decisive.

The Subject Matter

32 eWpG applies to rights regarding and dispositions about e-securities. Due to the limitation of the entire Act, one might assume that the conflict-of-laws rule will only apply to electronic bearer bonds (under German law). Yet as the provision has clearly been designed as an omnilateral provision, and considering that the definition of an e-security is much broader (§ 2 eWpG), it is conceivable that the conflict-of-laws rule encompasses more securities than that the Act in which it is found. This, of course, would be a phenomenon well-known to private international law scholars, but perhaps not-so-well-known in other circles.

In any case, the express reference to § 17a Security Account Act (Gesetz über die Verwahrung und Anschaffung von Wertpapieren, DepotG) has a limiting effect – whose impact is not obvious. The bill had not included this proviso.

§ 17a DepotG is Germany’s transposition of Article 9(2) of the Settlement Finality Directive (SFD). If the rule(s) of SFD were to be interpreted broadly to encompass modern digital assets (not an easy task: see Matthias Lehmann’s thoughts on this blog), a rule like Germany’s would likely have to be interpreted in conformity with the SFD. Not that we did not already have enough discussions about § 17a DepotG, including about its conformity with the SFD, in the first place…

What is more, the Security Account Act itself was changed along with the introduction of the eWpG, extending the meaning of securities for the purposes of the former to e-securities under the latter. This should affect the scope of § 17a DepotG, shaping the understanding of § 32 eWpG in turn.

My first idea is that § 17a DepotG will be the relevant conflict-of-laws provision for e-securities in a collective deposit, and that § 32 eWpG will apply to the rest.

The Connecting Factors

The law of the State with supervision over the respective e-securities register office governs rights in and dispositions about an e-security under paragraph 1.

At first sight, this might seem to be a rather easy rule. I would submit, however, that it actually implicates a tricky analysis. In order to correctly apply the rule, one seems to have to look for (typically unilateral) rules of competence for financial supervision authorities.

First, it will not always be easy even to ascertain the respective rules (at least for foreign States).

Second, their connecting factors are likely to differ from State to State: e.g. seat of an institution to be supervised vs. place where it carries out business activities. This could lead to an accumulation of applicable laws that somehow would have to be resolved.

And what if a foreign register without State supervision is at issue? Under the bill, this was an open question. The final version now has a second paragraph, making the seat of the register office a subordinate connecting factor. But why does the provision not again refer to “State” supervision?

If the seat of the register office cannot be determined, either (also in cases where there is no register office?), the second clause of the second paragraph employs the seat of the issuer of the e-security as the connecting factor. The substantive part of the eWpG contains a similar approach, in that the issuer of an e-security will be treated as the register office if the issuer does not designate such an office in relation to the bearer (§ 16(2) cl. 2 eWpG).

Outlook

The new Act and its conflict-of-laws rule offer plenty of food for thought. Expect the first articles and even rule-for-rule commentaries to pop up in the near future. Because of the obvious connections between the conflict-of-laws rule to the substantive provisions of the Act, it will not always be easy to tell apart where private international law is supposed to be limited and where it can strike out on its own.

 

The Project Jean Monnet Network – BRIDGE, co-funded by the Erasmus+ Programme of the European Union, and the Latin-American Center for European Studies invite young Latin American researchers to submit their works to the “Monograph Contest for Young Latin American Researchers – Jean Monnet Award”, whose main objective is to foster excellence in research on topics related to European integration in Latin America.

Only unpublished monographs submitted by young researchers who are up to 30 years old at the date of the submission will be accepted. Authors must also be enrolled in any higher education institution of Latin America.

Monographs (between 60-120 pages) written in English, Spanish or Portuguese will be accepted and authors must submit their monographs by 1 August 2021.

For more information, access: https://eurolatinstudies.com/laces/announcement/view/25.

 

By Stephen G.A. Pitel, Western University

In common law Canada, it has long been established that a court will not recognize and enforce a foreign judgment concerning title to land in the forum.  The key case in support is Duke v Andler, [1932] SCR 734.

The ongoing application of that decision has now been called into question by the British Columbia Court of Appeal in Lanfer v Eilers, 2021 BCCA 241 (available here).  In the court below the judge relied on Duke and refused recognition and enforcement of a German decision that determined the ownership of land in British Columbia.  The Court of Appeal reversed and gave effect to the German decision.  This represents a significant change to Canadian law in this area.

The Court of Appeal, of course, cannot overturn a decision of the Supreme Court of Canada.  It reached its result by deciding that a more recent decision of the Supreme Court of Canada, that in Pro Swing Inc v Elta Golf Inc, 2006 SCC 52, had overtaken the reasoning and result in Duke and left the Court of Appeal free to recognize and enforce the German decision (see paras 44-45 and 74).  This is controversial.  It has been questioned whether Pro Swing had the effect of superseding Duke but there are arguments on both sides.  In part this is because Pro Swing was a decision about whether to recognize and enforce foreign non-monetary orders, but the orders in that case had nothing to do with specific performance mandating a transfer or title to land in the forum.

I find it hard to accept the decision as a matter of precedent.  The title to land aspect of the foreign decision seems a significantly different element than what is at issue in most non-monetary judgment decisions, such that it is hard to simply subsume this within Pro Swing.  What is really necessary is detailed analysis of whether the historic rule should or should not be changed at a normative level.  How open should courts be to recognizing and enforcing foreign judgments concerning title to land in the forum?  This raises related issues, most fundamentally whether the Mocambique rule itself should change.  If other courts now know that British Columbia is prepared to enforce foreign orders about land in that province, why should foreign courts restrain their jurisdiction in cases concerning such land?

In this litigation, the defendant is a German resident and by all accounts is clearly in violation of the German court’s order requiring a transfer of the land in British Columbia (see para 1).  Why the plaintiff could not or did not have the German courts directly enforce their own order against the defendant’s person or property is not clear in the decision.  Indeed, it may be that the German courts only were prepared to make the order about foreign land precisely because they had the power to enforce the order in personam and that it thus did not require enforcement in British Columbia (analogous to the Penn v Baltimore exception to Mocambique).

Given the conflict with Duke, there is a reasonable likelihood that the Supreme Court of Canada would grant leave to appeal if it is sought.  And if not, a denial of leave would be a relatively strong signal of support for the Court of Appeal’s decision.  But the issue will be less clear if no appeal is sought, leaving debate about the extent to which the law has changed.

 

Carlos Santaló Goris, Researcher at the Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law and Ph.D. candidate at the University of Luxembourg, offers an analysis of some aspects of a judgment rendered by the Paris Court of Appeals.

Regulation No 655/2014, establishing a European Account Preservation Order (“EAPO Regulation”) introduced not only the first uniform provisional measure at the EU level but also the first European specific system to search for the debtors’ bank accounts. The so-called information mechanism is, though, less accessible than the EAPO itself. According to Article 5 of the EAPO Regulation, creditors can apply for an EAPO ante demandam, during the procedure on the substance of the matter; or when they have already a title (a judgment, a court settlement, or an authentic document). However, only creditors with a title can submit a request for information. Furthermore, in case the title is not yet enforceable, creditors are subject to specific additional prerequisites.

In broad terms, the information mechanism operates following a traditional scheme of cross-border cooperation in civil matters within the EU. A court in a Member State sends a request for information to an information authority in the same or other Member State. The information authority then searches for the bank accounts and informs the court of origin about the outcome of that search.

Member States have a wide margin of discretion in implementing the information mechanism. They can freely pick the national body appointed as information authority. They also have the freedom to choose whichever method they consider more appropriate to search for the debtors’ bank accounts as long as it is “effective and efficient” and “not disproportionately costly or time-consuming” (Article 14(5)(d) EAPO Regulation).

France assigned the role of information authority to its national enforcement authority, the bailiffs (“huissiers”). Information about the debtors’ bank accounts is obtained by filing an application with FICOBA (“Fichier national des comptes bancaires et assimilés”). FICOBA is a national register hold by the French tax authority containing data about all the bank accounts existing in France. Other Member States, such as Poland or Germany, have also relied on similar domestic registers.

This is where the paradox emerges. In France, creditors without an enforceable title who apply for a French domestic preservation order do not have access to FICOBA; conversely, creditors without an enforceable title who apply for an EAPO do. Article L151 A of the French Manual on Tax Procedures (“Livre des procédures fiscales”) expressly indicates that bailiffs can access FICOBA for the purpose of ensuring the execution of an enforceable title (“aux fins d’assurer l’exécution d’un titre exécutoire”). The only exception is found, precisely, when they have to search for information in an EAPO procedure. This situation generates an imbalance between creditors who can access the EAPO Regulation and those who cannot.

In a judgment rendered by the Paris Court of Appeal on 28 January 2021 (Cour d’appel de Paris, Pôle 1 – chambre 10, 28 janvier 2021, n° 19/21727), the court found that such a difference of treatment between creditors with and without access to the EAPO Regulation “constitutes an unjustified breach of equality and discrimination between creditors” (“cette différence de traitement constitue une rupture d’égalité injustifiée et une discrimination entre créanciers”). Relying on the principle of equality, the court decided to extend access to FICOBA, beyond the context of the EAPO Regulation, to those creditors without an enforceable title.

The relevance of this judgment lies in the French court’s use of the EAPO Regulation to interpret a national domestic procedure. The influence of the national civil procedures system on the European procedure is well known. Uniform European civil procedures, such as the EAPO Regulation, contain numerous references to the Member States’ national law. Furthermore, courts tend to read these instruments through the lens of the national civil procedural systems, even with regard to those aspects that should apply uniformly (here is an example concerning the EAPO Regulation kindly offered by Prof. Requejo Isidro). The Paris Court of Appeal shows us that the European civil procedures can also be a source of inspiration when it comes to interpreting domestic procedural law.

The irony behind this judgment is that, during the travaux préparatoires of the EAPO Regulation, the French delegation expressly requested to restrain access to the information mechanism to those creditors who had “an enforceable title to support [their] application”. One of the reasons argued by the delegation was that “in French law, access to information is only given if the creditor possesses an enforceable title”. Ultimately, it is the French civil procedural system that is being influenced by the EAPO Regulation, and not the other way around.

 

 

The Permanent Bureau of the Hague Conference on Private International Law (HCCH) is seeking an Assistant Legal Officer. The successful candidate will work in the field of International Family Law and Child Protection, primarily in relation to the 2000 Convention on the Protection of Adults and the 2007 Convention on Child Support and its Protocol, but also the 1961 Convention on the Form of Testamentary Dispositions and 1970 Convention on the Recognition of Divorces.

Applications should be submitted by Friday 23 July 2021 (00:00 CEST). For more information, please visit the Recruitment section of the HCCH website.

This post is published by the Permanent Bureau of the Hague Conference of Private International Law (HCCH). 

 

In spite of the numerous studies and decades of analysis, the interface between private international law and human rights keeps scholars busy.

No surprise, thus, that the (current) 4th Commission of the Institut de Droit International is presenting a new Draft Resolution next August, on the occasion of the IDI biannual meeting, held on line.

The Resolution, whose reporter is Fausto Pocar, will be based on the preparatory documents – including the
Report of Jürgen Basedow, Rapporteur until The Hague session in 2019 -, the previous draft resolutions, the written proposals of amendments submitted at The Hague that could not be discussed, and the plenary discussions as they result from the minutes of the Hague session.

The text in its version of 27 January 2021, is available on line. It is preceded by a thorough introduction to the work done until that date and to the general and specific issues dealt with. For a proper understanding of the Draft Resolution, it is worth noting that it addresses, without necessarily espousing, the two main points of criticism at the Hague session: “the Draft Resolution then discussed did not capture sufficiently the relationship between private international law and the public international law dimension of human rights protection, sometimes indulging in technical descriptions of private international law issues that had no or a too limited human rights component”; and “it was observed that the consideration of human rights in that Draft Resolution might appear to the reader exceedingly influenced by western values rather than focused on a global vision which would better suit an Institute’s Resolution” (NoA: Having read the documents available online regarding the first draft resolution I personally fail to understand the first reproach, but I am probably too much familiar with PIL technicalities myself. No opinion on the second ground for criticism).

The current Draft Resolution consists of 20 provisions. In a nutshell, like the former one it addresses the impact of human rights on international jurisdiction, applicable law and recognition: the tripartite division typical to cross-border settings underlies indeed the narrative of the Resolution – although not in the unsophisticated way I am describing it. Also like the former text, the present one includes provisions devoted to specific heterogeneous areas (name, identity, marriage, parentage, property, corporate social responsibility…), to explicitly tackle human rights concerns germane to each area. By way of example: under the heading “Marriage” the following is written:

(1) Child marriage and marriage agreed upon in the absence of the free and full consent of the two spouses infringe upon human rights and shall not be recognized

Or, under the heading “Protection of property”:

(2) Where a change of the applicable law resulting from private international law is conducive to the loss of such right, the forum State shall grant the holder an equivalent right to the extent possible.

The Resolution is short; so are its articles, separately taken. The wording is clear, attention is paid to stay in the realm of PIL and, I believe, to avoid assertions that may not be palatable to the IDI majority of Public International Law members. The scholarly distinction still exists (not only at the IDI), whether one likes it or not, and the gap does not seem to be without consequences.

I fear human rights activists will feel a little bit deceived by the Draft Resolution, should it be adopted as it stands. It may indeed be in the nature of this kind of document not to be too ambitious. This one remains to a large extent programmatic; it defers to other instruments or fora; it openly prefers to promote the accession to, and the respect of existing international conventions instead of coming up with detailed, statutory-like proposals. It is soft in the proper sense of the word. However, to my mind, it is no less relevant because of this character, which is obviously a conscious choice following in-depth analysis and reflections. It may be the only one possible to date.

– Picture: Session of The Hague 2019. ©Marieke Wijntjes)

I have reported before on the jurisdictional consequences of CJEU Vereniging van Effectenbezitters v BP. In this post for the European Association of Private International Law, I give my views on the impact for applicable law.

Geert.

Blogged.

My view on applicable law in cases of purely economic damage, following #CJEU Vereniging voor Effectenbezitters. https://t.co/U8lijC8sGB

— Geert Van Calster (@GAVClaw) June 23, 2021

This is the third post of an online symposium on the recent judgment of the CJEU in Vereniging van Effectenbezitters v. BP after the posts of Matthias Lehmann and of Laura van Bochove and Matthias Haentjens.

The author of this post is Prof. Geert van Calster, who teaches at and is Head of the department of European and International Law of the University of Leuven (Belgium), and an independent legal practitioner at the Brussels Bar.

Leiden University’s Round Table on the consequences of CJEU Vereniging van Effectenbezitters v BP (VvE) provided me with an opportunity not just to talk on the consequences of the ruling for applicable law, but also to discuss those views with an excellent group of scholars. That afternoon’s discussion no doubt has had an impact on some of what I write below, however clearly this post is my own responsibility.

Contractual or non-contractual obligations?

Clearly a first element of note is that the applicable law picture looks entirely different depending on whether one is looking at a contractual (triggering application of the Rome I-Regulation) or non-contractual (meaning Rome II will apply) relationship. The general assumption is that in a case like VvE, Rome II is engaged.

This results firstly from parties claiming jurisdiction on the basis of Brussels IA’s tort gateway, Article 7(2). The suggested parallel between the Brussels Ia and Rome Regulations then indicates that where jurisdiction goes, applicable law needs to follow (below I talk more about that parallel).

Further, there is CJEU case-law making a contractual jurisdictional basis unlikely. In CJEU C-366/13 Profit Investment Sim, the Court held that a choice of court contained in a prospectus produced by the bond issuer concerning the issue of bonds may be relied on against a third party who acquired those bonds from a financial intermediary under quite narrow circumstances only. These circumstances include considerations of applicable national law. In CJEU C-375/13 Kolassa the Court held that, on the facts of the case, there were no indications that there was a contract under either the consumer title or the general Article 7(1) gateway, between the holder of a securities account and Barclays, the issuer of certificates held in that account.

On the other hand, following the CJEU’s much stretched notion of ‘contract’ in C-337/17 Feniks and follow-up case-law, I do not think that the existence of a ‘contract’ between the issuer of the financial instruments and the (very) downstream investor can be entirely ruled out.

In the remainder of this post however I shall assume the majority’s intuition that the applicable law analysis be pursued under the Rome II Regulation.

A reminder: the general rule of Article 4(1) Rome II

The standard applicable law rule to purely economic loss, is included in Article 4(1) Rome II and holds that the applicable law is the

‘law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur’

There is no specific rule for purely economic loss as such. However, there may be circumstances in which purely economic loss may be covered by one or two of the specific categories included in Rome II. I am thinking in particular of the product liability rules (with discussions on whether financial instruments may be qualified as a ‘product’ under same), and the rules on unfair competition and infringement of competition law.

Further variations to the rule exist in Article 4 itself, and via the scope of applications, which excepts a number of non-contractual obligations hence giving space for residual, national private international law to take over.

Need for absolute parallel between Rome II and Brussels Ia?

To the degree one assumes that Article 7(2) Brussels Ia’s tort jurisdictional gateway, and Rome II’s rules on applicable law for non-contractual obligations need to be applied in synchronicity, clearly a judgment like VvE will have an important impact on the application of Article 4 Rome II’s general rule.

However the CJEU itself is ambivalent on the need for such parallel. In Kainz, the CJEU specifically rejected the need for consistency between Brussels Ia and Rome II, while in other cases the recital’s encouragement of consistency has had an impact on the court’s rulings.

Once must tread with caution therefore in extending the VvE findings to the applicable law discussion. Those with an interest in doing so will find support in the authorities to talk down the impact of VvE on applicable law.

Echoes of an exception, and a tailor-made lex causae not achieved

First the Finnish and then the UK delegation to the Rome II Committee, actually (unsuccessfully) suggested an exclusion from the scope of application for financial instruments. The UK proposal to that effect would have added to Rome II’s exclusions from the scope of application

“Non-contractual obligations arising out of transactions, such as issuing, admission to trading, offering or marketing, relating to financial instruments, including transferable securities, moneymarket instruments, units in collective investment undertakings, options, futures and other derivatives instruments“

In that discussion reference was also made to the fall-back lex contractus rule for certain financial instruments in Article (4)(1)h of the Rome I Regulation.

When it transpired that the proposal for this exception had the support of neither the EC nor enough Member States, the UK suggested singularity of lex causae by introducing a specific heading for financial instruments in which either the lex loci incorporationis (of the issuer) or the law of the place where the issuer has its primary listing, would be applicable to non-contractual loss.

The former suggestion echoed somewhat the difficulties in establishing the exact scope of Rome II’s corporate law exception (Article 1(2)d Rome II). CJEU Kolassa (a 1980 Rome Convention case) unfortunately failed to bring much clarity on this point.

 National case-law: Petrobas

In Petrobas Rotterdam, the Dutch court identified the locus damni in an investor suit as

the location of the market(s) where the financial instruments are listed and traded.

It emphasised predictability and it conceded a Mozaik effect, including of course application of non-EU laws (in the case at issue, viz the Brazilian and Argentinian investors). This finding might in fact chime with the CJEU in VvE where as other posts on this blog clarify, the

place of statutory duties of information

was upheld as locus damni. This synergy between the finding at the applicable law level in Petrobas, and the jurisdictional criterion in VvE, only applies of course provided all places of listing and trading are subject to such duties.

If one were to apply the ‘law of the place of statutory duties of information’, however, rather like at the jurisdictional level, this would raise the mental twister that this criterion is more akin to locus delicti commissi than locus damni, as Matthias Lehmann has pointed out.

Moreover, like in VvE, such criterion does not help us for unlisted financial instruments.

Finally, Article 4(3)’s ‘manifestly more closely connected’ variation to the lex loci damni rule clearly will give a judge some (but not much: the Article needs to be applied restrictively) room for manoeuvre to identify a different law with more, and intense, affinity to the case.

Help on the horizon? Pending case before the CJEU

As was helpfully pointed out by Tomas Arons at the aforementioned Round Table, in the pending case C-498/20 ZK , in his capacity as liquidator in the bankruptcy of BMA Nederland BV v BMA Braunschweigische Maschinenbauanstalt AG, locus damni considerations in Rome II in a case of purely economic loss (alleged breach of duty of care by a mother holding for allegedly failing to provide its daughter company with adequate financing) are currently sub judice before the CJEU. The judgment in that case will undoubtedly feature VvE and will hopefully clarify the application of Rome II to cases of purely economic loss.

This is the second post of an online symposium on the recent judgment of the CJEU in Vereniging van Effectenbezitters v. BP after the post of Matthias Lehmann. 

The authors of this post are Dr. Laura van Bochove (Assistant Professor at Leiden University) and Prof Dr Matthias Haentjens (Professor of Private Law at Leiden University)

On 3 June 2021, Leiden University hosted a seminar with international experts from the judiciary, law firms, civil service and academia to discuss the recent CJEU judgement in Vereniging van Effectenbezitters v. BP. The discussion clearly showed that the judgment may be interpreted differently. Some experts, including Matthias Lehmann (see here), argued that in VEB/BP, the CJEU refused to localise the Erfolgsort at the place of an investment account and, instead, localised damage at the place of listing. We see some merit in attributing jurisdiction to the court of the place of listing, but we do not think the CJEU has chosen such a radical departure from existing case law. Rather, we believe the CJEU continues to (try to) localize the Erfolgsort, also in cases of financial loss, and may continue to consider as connecting factors in that context the investment account, possibly next to the place of listing.

We believe VEB/BP represents another change in direction. We see that the CJEU introduced ‘foreseeability’ as a relevant consideration when having to determine the place where losses have materialized. This clearly derogates from previous CJEU case law and raises new questions.

Connecting factor #1: bank account

One of the participants to our seminar, Dorine Verheij, once said that when a Dutchman rides his bike on the Champs-Elysees and gets hit by a 2CV, it is clear in which jurisdiction the damage was caused and also where it materialized. This is not so for financial loss. Financial loss, by its very nature, is immaterial and therefore as a matter of logic, not localizable. However, the CJEU has continued to (try to) localize the Erfolgsort in several financial loss cases, including Kronhofer, Kolassa, Universal Music and Löber. This case law has been fiercely criticized in legal literature. In his Opinion in VEB/BP, Advocate General Campos Sánchez-Bordona sided with this critique and suggested to abandon the Erfolgsort in financial loss cases. The CJEU did not follow suit, and we believe this is a strong indication the Court continues to (try to) localize the Erfolgsort, also in cases of financial loss. Moreover, the Court did not explicitly depart from the case law just referred to (ie Kronhofer, Kolassa, Universal Music and Löber). In these cases, the court considered as relevant connecting factors the applicant’s “bank account” (Kolassa, Löber, Universal) as well as “other specific circumstances of that situation” (Löber). In VEB/BP, the Court specifically considered the “investment account” as a possible connecting factor, whilst that it held that this factor was insufficient to attribute jurisdiction in this case.

As one of us has written elsewhere, we believe that when securities have lost value or have become worthless, possibly as a result of misleading information from the issuer of the securities, any losses suffered by the owner of the securities concern those securities specifically. Thus, it is the relevant securities account in which those securities are credited, that is the ‘place’ where the financial loss materializes (wherever that may be), rather than in any bank account from out of which these securities were initially purchased. We therefore believe it is welcome that the Court has now clarified that it is the ‘investment account’ (rather than the bank account) that may be of relevance as a connecting factor when having to determine where to localize financial loss. However, and as we have also argued elsewhere, the localization of an investment account (which we thus understand to be the relevant securities account) is dogmatically and logically impossible, since securities accounts have no physical location. This fact makes a securities account or ‘investment account’ unsuitable for any attribution of jurisdiction.

In the VEB/BP case, however, the Court concluded for other reasons that the ‘investment account’ was not adequate as a connecting factor to attribute jurisdiction to the court of the Member State where the account is held, as it held that as a connecting factor, an investment account could not ‘ensure’ the ‘objective of foreseeability’. Before we turn to discuss foreseeability as a connecting factor, first we will pay attention to the ‘place of listing’, which the Court introduced in VEB/BP as a possible connecting factor.

Connecting factor #2: the place of listing

Which factors should be considered relevant or decisive so as to attribute jurisdiction in a specific case, remains elusive. In Kronhofer, the Court held that the place of the applicant’s domicile may not be sufficient if the relevant investment account is located in another jurisdiction. This judgment did not say, however, which connecting factor would suffice to attribute jurisdiction. When the place of the applicant’s domicile coincides with the relevant investment account, this may suffice, the Court held in Kolassa and Löber. But in Universal Music, the Court dismissed this combination of connecting factors on the ground that the other case law concerned a “specific context” (yet without explaining what the element of distinction was), so that “the ‘place where the harmful event occurred’ may not be construed as being, failing any other connecting factors, the place in a Member State where the damage occurred, when that damage consists exclusively of financial damage which materialises directly in the bank account of the applicant and is the direct result of an unlawful act committed in another Member State.” Arguably, in VEB/BP, the Court found such ‘other connecting factor’ in the place of listing.

More specifically, in paragraph 35 the CJEU held:

“It follows that, in the case of a listed company such as that at issue in the main proceedings, only the jurisdiction of the courts of the Member States in which that company has complied, for the purposes of its listing on the stock exchange, with the statutory reporting obligations can be established on the basis of the place where the damage occurred. It is only in those Member States that such a company can reasonably foresee the existence of an investment market and incur liability.”

In isolation, this paragraph appears to provide for a clear jurisdiction rule, attributing jurisdiction on the basis of the place where the damage occurred to the courts of the Member State in which the listed company has complied, for the purposes of its listing on the stock exchange, with the statutory reporting obligations (the place of listing). However, this paragraph [35] must not be considered in isolation, as indicated by the introductory words “[i]t follows that”. These words refer to the previous paragraph [34], where the CJEU held that in the present case, the applicant’s domicile and the place of its investment account would not ensure the objective of foreseeability. In other words, the CJEU held in paragraph [34] that the combination of connecting factors that were considered sufficient for attribution of jurisdiction in Löber and Kolassa, proved inadequate in the present case, as it would not guarantee that the defendant would be able to reasonably foresee where it could be sued.

We think the Court has been most persuasive where it held that in financial loss cases such as VEB/BP, the location of the applicant’s investment account is arbitrary and not reasonably foreseeable for the defendant, ie the issuer of the relevant securities. However, this does not mean that the place of listing can logically be considered as a ‘place where the damage occurred’, as the Court seems to suggest. Neither should this be interpreted to mean that the place of listing suffices, in and by itself, as a connecting factor that can attribute jurisdiction, because the Court gives no indication that it departed from earlier case law.

First, the place of listing is a place where securities are traded. This place has no, if only indirect relevance for the localization of the place “where the alleged damage actually manifests itself” (Löber, cited in VEB/BP, para. 31), ie the place “where the applicant has suffered financial consequences” (VEB/BP, para. 29). An investor commonly orders his investment firm (ie bank or broker), to acquire or sell certain financial instruments. The investment firm may proceed to acquire those instruments, for that investor, on a regulated exchange, but these can also be acquired on other official trading venues such as multilateral trading facilities, organized trading facilities, or even internally settled on the books of the investment firm. This practical reality shows, we think, that the investor does not “suffer financial consequences” on the place of listing (possibly with the exception of the rare instance where the investor itself is an admitted member of an exchange). We therefore think the place of listing may be a relevant connecting factor, but logically in most cases it cannot qualify as an Erfolgsort.

Second, the Court introduced the place of listing only in the context of foreseeability of damage. It did not explicitly (or implicitly) depart from its earlier case law, where other connecting factors were considered adequate as discussed above. Therefore, we consider it likely (but the Court does not make this explicit), that the Court may continue to consider the investment account as the place where financial damage ‘actually manifests itself’, but that this connecting factor was not deemed sufficient in the present case for reasons of foreseeability only. Rather, the Court seemed to imply that the place of the investment account may be considered foreseeable for the defendant only if that defendant’s securities are listed in the same Member State. If anything, this interpretation would accord (better) with Kolassa and Löber.

Relevant circumstance: foreseeability

Whilst we welcome the Court’s dismissal of the investment account as a sole connecting factor in the present case, the CJEU’s introduction of and reliance on ‘reasonable foreseeability’ as a relevant circumstance is not unproblematic, as the CJEU’s interpretation of ‘reasonable foreseeability’ in VEB/BP seems to deviate from its previous case law. In that earlier case law, the threshold for foreseeability is often low, as illustrated in the ‘Dieselgate’ case VKI/Volkswagen. In that case, the CJEU attributed jurisdiction to the courts of the place where the applicants bought their cars from a third party. This third party virtually never was the same as the defendant that equipped the cars with manipulative software. Here, the CJEU held that that the manufacturer ‘by knowingly contravening the statutory requirements imposed on it’ may reasonably expect to be sued in the courts of the place where the car was purchased by the final purchaser, even though this could potentially lead to the jurisdiction of the courts of all EU member states, since the purchases of second-hand or imported cars were not excluded. Similarly, in eDate Advertising, the CJEU readily assumed the foreseeability of the place of damage in case of online infringement of personality rights, which could be anywhere where the content on the website was accessible.

Thus, in VEB/BP the CJEU seemed to have interpreted ‘reasonable foreseeability’ more restrictively and as a ground to deny jurisdiction, whilst in VKI/Volkswagen and eDate Advertising the Court used reasonable foreseeability more liberally and as a ground to attribute jurisdiction. Put differently, on the basis of VKI/Volkswagen and eDate Advertising, one could have expected the CJEU to attribute jurisdiction in VEB/BP to the courts of the Netherlands, as BP directs its activities and communications to investors worldwide. But we would think that the Court’s relatively strict interpretation of ‘foreseeability’ in VEB/BP accords better with the objectives of Brussels Ibis, ie ensuring legal certainty by preventing a multiplicity of courts having jurisdiction. Whether the CJEU will use a similar, strict interpretation of reasonable foreseeability in future cases remains to be seen.

VEB/BP and future case law

The VEB/BP case was eagerly awaited, especially by Dutch investors, multinationals and their lawyers. Should the CJEU have attributed jurisdiction to the Netherlands, this would have allowed other collective actions for investment losses to be opened in the Netherlands, making the Dutch courts an attractive go-to jurisdiction for the recovery of investment losses. This now seems to have been limited to cases where the financial losses were ‘reasonably foreseeable’ to have materialised in the Netherlands. Consequently, the CJEU’s judgment in VEB/BP will also have implications for other pending cases, including VEB’s pending collective action in the Amsterdam court against Volkswagen for misleading information in relation to ‘Dieselgate’.

We believe VEB/BP is to be applauded in view of the objectives of the Brussel Ibis Regulation, as the Court has dismissed the investment account which has always been highly unreliable a connecting factor. However, the Court’s reasoning gives rise to several new questions which does not seem helpful for applicants or defendants, including: has the investment account been permanently dismissed as a connecting factor? (we think not); is the place of listing to be considered as the sole connecting factor in cases concerning listed securities? (we think not); is reasonable foreseeability now to be interpreted strictly? (we are doubtful). It is to be hoped that the CJEU answers these questions in future cases, which will be as eagerly awaited as VEB/BP.

Georgia acceded on 31 May 2021 to the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters and the Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters. The first one will enter into force for Georgia on 1 January 2022, subject to the Article 28 procedure. The second one will enter into force for Georgia on 30 July 2021.

Source: https://www.hcch.net/en/news-archive/details/?varevent=803

 Comparative Procedural Law and Justice (CPLJ) is a global project of the Max Planck Institute Luxembourg for Procedural Law, with the support of the Luxembourg National Research Fund (019/13946847), involving more than one hundred scholars from all over the world.

CPLJ is envisioned as a comprehensive study of comparative civil procedural law and civil dispute resolution schemes in the contemporary world. It aims at understanding procedural rules in their cultural context, as well as at highlighting workable approaches to the resolution of civil disputes.

In this framework, the Max Planck Institute Luxembourg for Procedural Law will host its 6th CPLJ Webinar on 2 July 2021, 3:00 – 5:15 pm (CEST).

The programme reads as follows:

Chair: Loïc Cadiet (University of Paris I Panthéon-Sorbonne)

3:00 pm         Bruno Deffains (University of Paris II Panthéon-Assas / University Institute of France)

            Comparative procedural law and economics

3:30 pm          Discussion

4:00 pm          Intermission

4:15 pm           Remco van Rhee (Maastricht University)

            The use of foreign models of civil procedure in national law reform: ‘Lessons‘ from History?

4:45 pm           Discussion

5:15 pm           End of conference

The full programme is available here.

Participation is free of charge, but registration is required by 29 June 2021 via a short e-mail to events@mpi.lu.

(Image credits:  Rijksmuseum, Amsterdam)

 

This post was contributed by Thomas Mastrullo, who is a lecturer at the Sorbonne Law School (Paris 1)

On 31 March 2021, the Legal High Committee for Financial Markets of Paris (“Haut Comité juridique de la Place Financière de Paris” – HCJP) has published a report on the applicable law to companies  (Rapport sur le rattachement des sociétés – see here). This report is of great interest for those who are interested in the evolution of international company law.

Context

For several years, there has been a reflection in France about the conflict-of-law rule in corporate matters.

We know that two theories coexist in international company law: the theory of incorporation, which consists in applying to the company the law of the State where it was incorporated and where its registered office, or statutory seat, is located; the real-seat theory, which submits the company to the law of the State where its head office, or central administration, is localised.

In French law, the conflict-of-law rule in corporate matters is laid down in unilateralist terms, with almost the same drafting, in Article 1837 of the Civil Code (see here) and in Article L. 210-3 of the Commercial Code (see here).

The doctrine is divided on the interpretation of these texts, which have been bilateralized by French Cour de cassation (e.g. Com. 9 mars 1993, n° 91-11.003, Bull. civ. IV, n° 94 ; see here). The traditional view among French writers is that the connecting factor is in principle the real seat, because the statutory seat is not enforceable against third parties in case of dissociation of the registered office and the head office. But the modern view is that the connecting factor is in principle the statutory seat, considering that third parties have an option between the registered office and the head office in case of dissociation.

In this context, by letter dated 18 February 2020, the HCJP was jointly seized by the Ministry of Justice and the Ministry of the Economy with a request for a study on the “Opportunity, feasibility and conditions of turning to the theory of incorporation”. This initiative takes place in an environment of increased economic and legal competition: the adoption of the theory of incorporation might strengthen the legal attractiveness and economic influence of France. But the referral letter does not ignore that such a liberal conflict-of-law rule might also encourage opportunistic behaviors by economic actors and departure of French companies abroad.

Several questions were therefore raised in the referral letter: Consequences of adopting the theory of incorporation in terms of attractiveness? Experience of other EU Member States? Compatibility with EU law? Risks of forum and law shopping? Consequences for matters related to company law?

Finally, the letter requested that “the necessary legislative and regulatory changes” be proposed.To meet this demand, a working group was set up under the chairmanship of Professor Hervé Synvet, composed of academics and legal practitioners.

The result of the working group’s reflection is the report under consideration, which is divided into two parts.

Impact of a New Conflict-of-law Rule in Corporate Matters on Other Matters

In the first part, the HCJP studies the impact that the evolution of the French connecting factor in corporate matters would have on other branches of law. Several matters are taken into consideration: tax law, insolvency law, social law, capital market law, regulation of foreign investments, banking and financial law. The conclusion is that the adoption of the theory of incorporation would have little impact on these different branches of the law, and in any case no negative effects likely to prevent a reform. Indeed, these different disciplines have their own conflict-of-law rules and the connecting categories are quite clearly defined in French private international law. In addition, each of these matters has a specific approach to the company seat.

Proposed Reform

In the second part, the working group argues in favor of an evolution of the French conflict-of-law rule. More precisely, it proposes to adopt a new connecting factor relying exclusively on the statutory seat – or registered office, and to abandon any reference to the real seat.

Arguments in favor of the adoption of the connecting criterion by the statutory seat

Several arguments are advanced in support of this proposition.

Firstly, this conflict-of-law rule would be simpler and, as a consequence, more favorable to legal certainty. Indeed, on the one hand, it would eliminate the touchy question of the place of the real seat and, on the other hand, it would guarantee respect for the operators’ choice of the law to rule their company or even their group of companies. Thus, France’s attractiveness might be reinforced. Secondly, the solution is inspired by the comparative private international law (German, Irish, Luxembourg, Dutch, British, Swiss and Delaware law are studied) which reveals a strong tendency towards the generalization of the theory of incorporation or connecting criterion by the registered office. Thirdly, the solution is presented as more suited to the development of EU law which, through the jurisprudence of the CJEU – and in particular the Centros, Uberseering, Inspire Art and Polbud judgments – and some regulations – such as European Regulation n° 2157/2001 on SE (see here), tends to favor the registered office as a connecting factor.

Although it is not unaware of the risk of law shopping, the HCJP considers that this risk should not be overestimated since the laws of the EU’s Member States have “a common base” because of the European directives adopted on corporate matters, which is likely to prevent a “race to the bottom”. Moreover, the transfer of registered office from one Member State to another is still difficult, which is an obstacle to law shopping.

Proposed new texts

The HCJP recommends amending the Civil Code, and in particular Article 1837, and repealing Article L. 210-3 of the Commercial Code.

The new bilateral conflict-of-law rule, applicable to all companies with legal personality, is set out in Article 1837, paragraph 1, of the Civil Code. It provides that the company would be governed by the law of the State in which it has its statutory seat – or registered office. Rather than a reference to the company’s incorporation, this formulation is chosen because it would ensure terminological continuity with the current Article 1837 and would model the French conflict-of-law rule on that of the European Regulation on the SE.

Besides, the HCJP devotes paragraph 2 of Article 1837 to companies without statutory seat. For these companies, the conflict-of-law rule would be inspired from the solutions provided by the Rome 1 Regulation: the applicable law would be the law chosen by the partners or, in the absence of choice, the law of the country with which the company is most closely connected.

The proposed Article 1837 reads:

Article 1837 du Code civil

La société est régie par la loi de l’État dans lequel elle a son siège statutaire.

À défaut de siège statutaire, la société est régie par la loi choisie par ses associés ou, à défaut de choix, par la loi de l’État avec lequel elle présente les liens les plus étroits.  

The HCJP proposes also to introduce a new article 1837-1 of Civil Code devoted to the lex societatis’ scope of application, inspired from Swiss law. The aim is to increase the readability and, as a result, the attractiveness of French law. A list of questions falling within the scope of lex societatis would be drawn, this list being non-exhaustive as suggested by the use of the French adverb “notamment” (which can be translated by “in particular”).

The proposed Article 1837-1 reads:

Article 1837-1 du Code civil

La loi applicable à la société en vertu de l’article précédent régit notamment : a) la nature juridique de la société ; b) la capacité juridique de la société ; c) la dénomination ou la raison sociale ; d) la constitution de la société ; e) la nullité de la société, ainsi que celle des délibérations sociales ; f) la dissolution et la liquidation de la société ; g) les opérations emportant transmission universelle de patrimoine et le transfert du siège statutaire ; h) l’interprétation et la force obligatoire des statuts ; i) la modification des statuts, en particulier la transformation de la société ; j) l’organisation et le fonctionnement de la société, ainsi que sa représentation ; k) les droits et obligations des associés ; l) la preuve, l’acquisition et la perte de la qualité d’associé ; m) la détermination des titres susceptibles d’être émis par la société ; n) la détermination des personnes responsables des dettes sociales et l’étendue de leur responsabilité ; o) la responsabilité civile encourue en cas de violation des règles gouvernant la constitution, le fonctionnement ou la liquidation des sociétés, ou d’obligations statutaires. 

In addition, the HCJP considers the introduction of an Article 1837-2 which includes a substantive rule aiming at protecting “French” contracting parties of foreign companies. More precisely, the legal or statutory restrictions on the capacity or the powers of the representatives of a company under foreign law, which would produce effect in external relations according to the foreign law, would be unenforceable against “French” co-contractors, as long as they are of good faith. This rule aims mainly to protect the co-contractors of companies incorporated outside EU – such as American companies which apply the ultra vires doctrine ; the risk is indeed lower in EU, thanks to the protective regime of directive 2017/1132/UE (see here).

The proposed Article 1837-2 reads:

Article 1837-2 du Code civil  

Les restrictions légales ou statutaires à la capacité juridique ou aux pouvoirs des représentants d’une société de droit étranger concluant un acte juridique en France qui, selon la loi régissant la société, produiraient effet dans ses relations externes, sont inopposables au cocontractant ayant légitimement ignoré ces restrictions. 

In conclusion, the HCJP’s “Report on the connecting factor of companies” appears to be a stimulating contribution for the modernisation of French international company law.

Written by the Asian Business Law Institute and the Permanent Bureau of the HCCH

It was reported previously that the Asian Business Law Institute (ABLI) and the Permanent Bureau of the Hague Conference on Private International Law (HCCH) were to co-host a webinar titled HCCH 1970 Evidence Convention and Remote Taking of Evidence by Video-link on 1 June.

The session has since been successfully held. The organisers would like to share the summary and key takeaways of the session with readers of this blog. Readers who are interested in learning more about the session and requesting access to the video recording may contact ABLI at info@abli.asia.

On 1 June 2021, the Permanent Bureau of the Hague Conference on Private International Law (HCCH) and the Singapore-based Asian Business Law Institute co-hosted webinar HCCH 1970 Evidence Convention and Remote Taking of Evidence by Video-link, welcoming attendees from 30 different jurisdictions, including representatives of Central Authorities, HCCH Members, private practitioners, international public service officers and business professionals.

Dr Christophe Bernasconi, Secretary General of the HCCH, opened the webinar with a welcoming address where he underscored that the success of the 1970 Evidence Convention was attributable to not only its simplified transmission procedures and its flexibility to accommodate the needs of different legal traditions, but also the technology-neutral approach adopted by drafters, which has allowed the Convention to remain fit for purpose in the 21st century. Specifically, Dr Bernasconi highlighted that the Convention, with 63 Contracting Parties representing every major legal tradition, facilitated the transmission of thousands of requests for taking of evidence every year and allowed the use of video-link technology in the taking of evidence abroad.

Professor Yun Zhao, Representative of the HCCH Regional Office for Asia and the Pacific, was next to speak where he gave an overview of the operation of the Evidence Convention. He explained how the Convention provided, in Chapter I, a main channel of transmission under which a judicial authority in a requesting State may send a Letter of Request directly to a Central Authority in the requested State, before elaborating that the Convention also provided, in Chapter II, a streamlined process for the direct taking of evidence by commissioners or consuls, to which Contracting Parties may object upon or after accession. Professor Zhao pointed to the recently published Guide to Good Practice on the Use of Video-Link under the 1970 Evidence Convention and outlined a plethora of ways in which video-link technology may be used to take evidence abroad, e.g. to facilitate the presence of the parties and their representatives by video-link at the execution of a request or to permit a commissioner located in the State of Origin to take evidence by video-link in the State of Execution.

Following Professor Zhao’s presentation, Mr Alexander Blumrosen, Partner at Polaris Law (Paris), provided a historical account of the use of the Evidence Convention in the United States and the significance of the landmark Supreme Court decision Aérospatiale. He went on to explain in detail, and by reference to his practical experience, how evidence located in France but needed for U.S. civil or commercial proceedings may be taken through a Letter of Request (under Chapter I) or more swiftly through a commissioner (under Chapter II). Mr Blumrosen highlighted that the execution of a Chapter I Letter of Request in France usually took between six weeks and three months, and that under Article 9 of the Convention, foreign counsel may be allowed to participate in the direct or cross examination of witnesses by video-link provided that such participation was expressly requested in the Letter of Request and allowed by local law and practice as it is in France. Mentioning that the taking of evidence by commissioner under Chapter II could be even faster and more flexible, Mr Blumrosen added that once the Central Authority had authorized a commissioner – which could take between one to ten days, depending on the matter – the evidence may be taken immediately either in person in conference room facilities or using video-link, without needing any further intervention or participation by a local judge. He mentioned the increased use of Chapter II discovery in requests from the U.S. over the last ten years, and applauded the qualified Article 23 reservation adopted by France to the Convention that allows for pre-trial discovery but requires requests to be “enumerated limitatively” and to be relevant to the underlying dispute in order to avoid overly broad “fishing expeditions”.

Turning attendees’ attention from France to Singapore was Mr Edmund Kronenburg, Managing Partner of Braddell Brothers LLP, who presented a brief overview of the operation of the Evidence Convention in Singapore by looking at the country’s legal framework. In his view, the popularity of the Convention was likely to increase in the coming years in tandem with Singapore’s efforts to reinforce its dispute resolution hub status. Mr Kronenburg then moderated a lively panel discussion among all panelists, including Mr Blumrosen, Justice Anselmo Reyes of the Singapore International Commercial Court, Dr João Ribeiro-Bidaoui, First Secretary at the HCCH and Professor Zhao.

To conclude the session, Dr Ribeiro-Bidaoui spoke of the salient benefits and main features of another HCCH instrument, the 1965 Service Convention, highlighting that the Service Convention, with 78 Contracting Parties, was accessible to almost 70% of the global citizenship who represents more than 80% of the world’s GDP.?

The Permanent Bureau of the HCCH and ABLI are heartened by the positive feedback received after the webinar. Some Singaporean practitioners who were in the midst of preparing for virtual hearings found the session especially timely. One attendee from the business community commented that although not legally trained, he found the discussions useful in understanding the difficulties involved in multi-jurisdictional legal processes from the perspective of running a multinational business. Attendees joining from outside of Singapore said they benefited most from learning about the implementation of the Evidence Convention in places other than their home jurisdictions. Specifically, Matthijs Kuijpers and Sofja Goldstein from Amsterdam-based law firm Stibbe shared that they found it extremely valuable for their international litigation practice to have judges, practitioners and academics from various jurisdictions exchange and discuss experiences and best practices. In particular, they very much appreciated that the organisers actively engaged practitioners during the session as such engagement helped overcome issues that would inevitably rise over time given that the methods of taking evidence today differ significantly from how it was envisioned when the Convention was drafted.

The organisers thank all attendees for their active participation and warm reception and look forward to having more such opportunities for exchange of ideas and sharing of experiences.

The full version of the key panel discussion takeaways can be read here.

The Young Research Network of the European Association of Private International Law (EAPIL) has just launched its latest research project, which is being led by Tobias Lutzi, Ennio Piovesani, and Dora Rotar. The project will 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 Ia Regulation.

As the project will primarily be based on national reports describing the situation in each Member State (structured by a detailed questionnaire), the organizers are currently still looking for participants who would be interested in providing a national report for one of the following Member States: Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, and Sweden.

The full Call for Participants can be found here.

The EAPIL’s Young Research Network has just launched its latest research project, which is being led by Tobias Lutzi, Ennio Piovesani, and Dora Rotar. The project will 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 Ia Regulation.

As the project will primarily be based on national reports describing the situation in each Member State (structured by a detailed questionnaire), the organizers are currently looking for participants who would be interested in providing a national report for one of the following Member States: Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, and Sweden.

The full Call for Participants can be found here.

If you are a junior researcher (below full professor) or practitioner under the age of 45 and would like to receive information about similar projects before they are posted publicly, you can join the EAPIL Young Research Network by simply filling out this form.

Xu Huang, Wuhan University Institute of International Law

1. Background
On 10 June 2021, China’s Standing Committee of the National People’s Congress (hereinafter “NPC”) issued “Anti-Foreign Sanctions Law of the People’s Republic of China” (hereinafter “CAFSL”), which entered into force on the date of the promulgation. This is a reaction in response to the current tension between China and some western countries, in particular, the US and the EU that have imposed a series of sanctions on Chinese officials and entities. For example, in August 2020, the Trump administration imposed sanctions on 11 individuals for undermining Hong Kong’s autonomy and restricting the freedom of expression or assembly of the citizens of Hong Kong. In June 2021, President Biden issued Executive Order 14032 to amend ban on US persons purchasing securities of certain Chinese companies. In March 2021, the EU imposed unilateral sanctions on relevant Chinese individuals and entity, based on the human rights issues in Xinjiang. China has responded by imposing counter sanctions, which were issued by the Ministry of Foreign Affairs as administrative orders. The Anti-Foreign Sanctions Law provides the legal basis for China’s further action and counter measures. This law was enacted after only two reading rather than normal three demonstrating China’s urgent need to defend itself against a growing risk of foreign hostile measures.

2. The main content

Competent Authority: All relevant departments under the State Council have been authorized to involve in issuing the anti-sanction list and anti-sanction measures (Art. 4 and Art. 5). The “Ministry of Foreign Affairs” and “other relevant departments under the State Council” are authorized to issue orders of announcement (Art. 9). Reviewing from the current practice of China’s response to foreign sanctions, the Ministry of Foreign Affairs has always issued sanctions lists against foreign individuals and organizations, so it is likely that the China’s Ministry of Foreign Affairs will still lead the movement of announcing and countering the foreign sanctions. However, other departments now also have the authority to sanction relevant individuals and entities. This provides flexibility if the foreign sanctions relate to a particular issue that is administrated by the particular department and when it is more efficient or appropriate for the particular department to handle it directly.

Targeted measures: Circumstances under which China shall have the right to take corresponding anti-sanction measures are as follows: (1) a foreign country violates international law and basic norms of international relations; (2) contains or suppresses China on various pretexts or in accordance with its own laws; (3) adopts discriminatory restrictive measures against any Chinese citizen or organization; (4) meddles in China’s internal affair (Art. 3).The CAFSL does not expressly specify whether the circumstances should be satisfied simultaneously or separately. From the perspective of legislative intent, it is obvious that the full text of the CAFSL is intended to broaden legal authority for taking anti-sanctions measures in China, so it may not require the fulfilment of all four conditions.

It does not clarify the specific meanings of “violates international law and the basic norms of international relations”, “contains or suppresses”, and “meddles in China’s internal affairs”, which vary in different states and jurisdictions. But considering the sanctions issued by China and answers by the NPC spokesman, the key targeted circumstances are meddling China’s internal affairs. It is reasonable to assume that these circumstances mainly aimed at unilateral sanctions suppressing China under the pretexts of so-called sea-based, epidemic-based, democracy-based and human rights-based issues in Xinjiang, Tibet, Hong Kong and Taiwan. Therefore, other issues may not be included.

Art. 3 aims against the sanctions imposed by foreign states, for example the US and the EU. But from the text of the law, the concept of “sanctions” is not used, instead the concept of “discriminatory restrictive measures” is adopted, which isvery vague and broad. Discriminatory restrictive measures can be interpreted as foreign unilateral sanctions directly targeting Chinese individuals and organizations, which are the so-called “primary sanctions”, different from the “secondary sanctions” restricting Chinese parties from engaging in normal economic, trade and related activities with directly sanctions third state’s parties. In a press conference, the NPC spokesman stated that “the main purpose of the CAFSL is to fight back, counter and oppose the unilateral sanctions against China imposed by foreign states.” It should only apply to tackle the primary sanctions against China.

Targeted entities: The targeted entities of anti-sanction list and anti-sanction measures are vague and broad. The targeted entities of anti-sanctions list include individuals and organizations that are directly involved in the development, decision-making, and implementation of the discriminatory restrictive measures (Art. 4). What means involvement in the development or decision-making or implementation is ambiguous. And the indirect involvement is even vaguer, which may broaden the scope of the list. Besides, following entities may also be targeted: (1) spouses and immediate family members of targeted individuals; (2) senior executives or actual controllers of targeted organizations; (3) organizations where targeted individuals serve as senior executives; (4) organizations that are actually controlled by targeted entities or whose formation and operation are participated in by targeted entities (Art. 5).

Anti-sanction measures: The relevant departments may take four categories of anti-sanction measures: (1) travel ban, meaning that entry into China will not be allowed and deportation will be applied;(2) freezing order, namely, all types of property in China shall be seized, frozen or detained; (3) prohibited transaction, which means entities within the territory of China will not be allowed to carry out transactions or other business activities with the sanctioned entities; (4) the other necessary measures, which may include measures like “arms embargoes” or “targeted sanctions” (Art. 6). Former three anti-sanction measures have been taken by the Ministry of Foreign Affairs in practice. For example, on 26 March 2021, China decided to sanction relevant UK individuals and entities by prohibiting them from entering the mainland, Hong Kong and Macao of China, freezing their property in China, and prohibiting Chinese citizens and institutions from doing business with them.

Relevant procedure: The decisions made by the competent authorities shall be final and not subject to judicial review(Art. 7).The counterparty shall not file an administrative lawsuit against anti-sanction measures and other administrative decisions. The counterparty can change the circumstance causing anti-sanction measures, and request the relevant department for the modification and cancellation of anti-sanction measures. If any change in the circumstances based on which anti-sanction measures are taken happens, the competent authorities may suspend, change or cancel the relevant anti-sanction measures (Art. 8). The transparency requirement stipulates the relevant orders shall be announced (Art. 9).

A coordination mechanism for the anti-foreign sanctions work shall be established by the state to coordinate the relevant work. Coordination and cooperation, and information sharing among various departments shall be strengthened. Determination and implementation of the relevant anti-sanction measures shall be based on their respective functions and division of tasks and responsibilities (Art. 10).

Legal consequences of violation: There are two types of legal consequences for violating the obligation of “implementation of the anti-sanction measures”. Entities in the territory of China will be restricted or prohibited from carrying out relevant activities (Art. 11). Any entities, including foreign states’ parties, will be held legally liable (Art. 14).
Besides, a party suffering from the discriminatory restrictive measures may be entitled to bring a civil action against the entities that comply with the foreign discriminatory measures against China (Art. 12). The defendant, in theory, includes any entities in the world, even entities that are the nationals or residents of the country imposing sanctions against China. It is curious how this can be enforced in reality. In particular, if a foreign entity has no connections with China, it is hard for a Chinese court to claim jurisdiction, and even taking jurisdiction, enforcing judgments abroad can also be difficult, if not impossible. Because enforcement jurisdiction must be territorial, without assets and reputation in China, a foreign state’s party may disregard the Chinese anti-sanction measure.

3. Impact of the CAFSL

The CAFSL is a higher-level legislation in Chinese legal system than the relevant departmental rules, such as the Chinese Blocking Rules and “unreliable entity list” . It is a much more powerful legal tool than former departmental rules as it directly retaliates against the primary sanction on China. It provides a legal basis and fills a legal gap. However, it may not be good news for international businesses that operate in both the US and China. Those companies may have to choose between complying with foreign sanctions or Chinese laws, which may probably force some enterprises to make strategic decision to accept risk of penalty from one country, or even to give up the Chinese or US market. The CAFSL is vaguely drafted and likely to create unpredictable results to the commercial transaction and other interests. The application and enforcement of the CAFSL and Chinese subsequent rules and regulations may give detailed interpretation to clarify relevant issues to help parties comply with the CAFSL. However, to China, the CAFSL serves apolitical purpose, which is more important than the normal functioning of a law. It is a political declaration of China’s determination to fight back. Therefore, the most important matter for Chinese law-makers is not to concern too much of the detailed rules and enforcement to provide predictability to international business, but to send the warning message to foreign countries. International businesses, at the same time, may find themselves in a no-win position and may frequently face the direct conflict of overriding mandatory regulations in China and the US. By placing international businesses in the dilemma may help to send the message and pressure back to the US that may urge the US policy-makers to reconsider their China policy. After all, the CAFSL is a counter-measure, which serves defensive purposes, and would not be triggered in the absence of sanctions against Chinese citizens and entities.

The Hague Academy of International Law is holding its Summer Courses on Private International Law for the first (and perhaps last) time online from 26 July to 13 August 2021. Registration is open until Sunday 27 June 2021 at 23:59 The Hague time. More information is available here.

As you may remember, we announced in a previous post that the 2020 Summer Courses were postponed and that the only prior time that the courses were cancelled was World War II.

This year’s general course will be delivered by NYU Professor Linda Silberman and is entitled The Counter-Revolution in Private International Law in the United States: From Standards to Rules. The special courses will be given by José Antonio Moreno Rodríguez, Mary Keyes, Pietro Franzina (former editor of Conflictoflaws.net), Sylvain Bollée, Salim Moollan, Jean-Baptiste Racine and Robert Wai. The inaugural lecture will be delivered by Alexis Mourre, President of the International Court of Arbitration of the ICC. The poster is available here.

The holding of the Summer Courses in times of the Covid-19 pandemic attests to the perseverance of the Hague Academy, which has organised two live broadcasts per day to cater to people living in different time zones.

Please note that “no certificate of attendance will be delivered upon completion of the courses. Instead, each attendee will receive an electronic certificate of enrolment at the end of the session.”

If you are interested in a more full-fledged experience, you may consider registering for the Winter Course, which appears to be an in-person course. Registration for the Winter Courses 2022 is open since 1 June 2021 and will end 31 July (scholarships) and 29 September 2021 (full fee). For more information, click here.

 

The first issue of 2021 of the Netherlands Journal of Private International Law (Nederlands Internationaal Privaatrecht – NIPR) has been published. More information about the review is available here.

The following articles are included in the issue:

R. Vriesendorp, W. van Kesteren, E. Vilarin-Seivane and Sebastian Hinse on Automatic recognition of the Dutch undisclosed WHOA procedure in the European Union

On 1 January 2021, the Act on Court Confirmation of Extrajudicial Restructuring Plans (‘WHOA’) was introduced into the Dutch legal framework. It allows for extrajudicial debt restructuring outside of insolvency proceedings, a novelty in the Netherlands. If certain requirements – mostly relating to due process and voting – are met, court confirmation of the restructuring plan can be requested. A court-confirmed restructuring plan is binding on all creditors and shareholders whose claims are part of that plan, regardless of their approval of the plan. WHOA is available in two distinct versions: one public and the other undisclosed. This article assesses on what basis a Dutch court may assume jurisdiction and if there is a basis for automatic recognition within the EU of a court order handed down in either a public or an undisclosed WHOA procedure.

T. Arons, Vaststelling van de internationale bevoegdheid en het toepasselijk recht in collectieve geschilbeslechting. In het bijzonder de ipr-aspecten van de Richtlijn representatieve vorderingen (in English, Determination of international jurisdiction and applicable law in collective dispute resolution. In particular, the PIL aspects of the Representative Actions Directive)

The application of international jurisdiction and applicable law rules in collective proceedings are topics of debate in legal literature and in case law. Collective proceedings distinguish in form between multiple individual claims brought in a single procedure and a collective claim instigated by a representative entity for the benefit of individual claimants. The ‘normal’ rules of private international law regarding jurisdiction (Brussel Ibis Regulation) and the applicable law (Rome I and Rome II Regulations) apply in collective proceedings. The recently adopted injunctions directive (2020/1828) does not affect this application. Nonetheless, the particularities of collective proceedings require an application that differs from its application in individual two-party adversarial proceedings. This article focuses on collective redress proceedings in which an entity seeks to enforce the rights to compensation of a group of individual claimants. Collective proceedings have different models. In the assignment model the individual rights of the damaged parties are transferred to a single entity. Courts have to establish its jurisdiction and the applicable law in regard of each assigned right individually. In the case of a collective claim brought by an entity (under Dutch law, claims based on Art. 3:305a BW) the courts cannot judge on the legal relationships of the individual parties whose rights are affected towards the defendant. The legal questions common to the group are central. This requires jurisdiction and the applicable law to be judged at an abstract level.

C. Bright, M.C. Marullo and F. J. Zamora Cabot, Private international law aspects of the Second Revised Draft of the legally binding instrument on business and human rights

Claimants filing civil claims on the basis of alleged business-related human rights harms are often unable to access justice and remedy in a prompt, adequate and effective way, in accordance with the rule of law. In their current form, private international law rules on jurisdiction and applicable law often constitute significant barriers which prevent access to effective remedy in concrete cases. Against this backdrop, the Second Revised Draft of the legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises has adopted a number of provisions on private international law issues which seek to take into account the specificities of such claims and the need to redress the frequent imbalances of power between the parties. This article analyses the provisions on jurisdiction and applicable law and evaluate their potential to ensure effective access to remedy for the claimants.

B. Van Houtert, Jurisdiction in cross-border copyright infringement cases. Rethinking the approach of the Court of Justice of the European Union (dissertation, Maastricht University, 2020): A summary

The starting point of this research are the three rulings in the Pinckney, Hi Hotel, and Pez Hejduk in which the CJEU particularly focused on the interpretation of ‘the place where the damage occurred or may occur’ – the Erfolgsort – for determining jurisdiction according to Article 7(2) Brussels Ibis. The Court developed three criteria for jurisdiction in cross-border copyright infringements cases: (1) the state of the court seised should protect the copyright relied on, the so-called locus protectionis criterion, (2) the ‘likelihood of damage’ criterion which means that it should be likely that the damage may occur in the state where the court is located, and (3) court’s jurisdiction will be territorially limited to assess the damage caused within the forum state. The dissertation proceeds to demonstrate the need to rethink the CJEU’s approach to jurisdiction in cross-border copyright infringement cases. Based on common methods of interpretation, the author examines the leeway that the CJEU has regarding the interpretation of Article 7(2) Brussels Ibis in cross-border copyright infringement cases. She also examines alternative approaches to jurisdiction in cross-border copyright infringement cases adopted by scholars and courts of EU Member States and states of the United States of America distilling three main approaches: the ‘copyright holder’s centre of interests’ approach; the ‘substantial damage’ approach; and the ‘directed activities’ approach. The last part of the dissertation suggests that a combined approach to jurisdiction can be adopted in the recast of the Brussels Ibis Regulation or a future EU Copyright Regulation. Van Houtert considers that the proposals can also be adopted at the international level as they satisfy common principles of private international law and copyright law. Additionally, several global issues are considered in the analysis carried out such as copyright havens, online piracy, the cross-border flow of information, international trade, and the trend of competing jurisdictional claims.

N. Touw, The Netherlands: a forum conveniens for collective redress? (Conference Report)

On the 5th of February 2021, the seminar ‘The Netherlands: a Forum Conveniens for Collective Redress?’ took place. The starting point of the seminar is a trend in which mass claims are finding their way into the Dutch judicial system. To what extent is the (changing) Dutch legal framework, i.e. the applicable European instruments on private international law and the adoption of the new Dutch law on collective redress, sufficiently equipped to handle these cases? And also, to what extent will the Dutch position change in light of international and European developments, i.e. the adoption of the European directive on collective redress for consumer matters, and Brexit? In the discussions that took place during the seminar, a consensus became apparent that the Netherlands will most likely remain a ‘soft power’ in collective redress, but that the developments do raise some thorny issues. Conclusive answers as to how the current situation will evolve are hard to provide, but a common ground to which the discussions seemed to return does shed light on the relevant considerations. When legal and policy decisions need to be made, only in the case of a fair balance, and a structural assessment thereof, between the prevention of abuse and sufficient access to justice, can the Netherlands indeed be a forum conveniens for collective redress.