Droit international général

Readers of this blog may be interested in the book (in Chinese) entitled, The Development and Perfection of Chinese Inter-Regional Conflict of Laws: From the Perspective of the Achievements of Hague Conference on Private International Law. click here (angle.com.tw), written by Meirong Zhang, associate professor at UCASS (University of the Chinese Academy of Sciences) Law School, Beijing.  It should be noted that this book was published in early 2020.

The book has four Parts: 1. The development of Chinese inter-regional conflict of laws and HCCH achievements, 2. Inter-regional civil and commercial jurisdiction, 3. Interregional choice of law rules, and 4. Inter-regional judicial assistance in civil and commercial matters. From the preface (in English) by Hans van Loon (former Secretary General of the Hague Conference on Private International Law (HCCH)):   

“Mainland China, Hong Kong Special Administrative Region (SAR), Macao SAR and Taiwan not only all have their own systems of substantive civil, commercial and procedural law, they also have their own rules of private international law or conflict of laws. As a result, each region has its own rules to determine whether its courts and authorities have jurisdiction to deal with a civil or commercial issue, what law applies to such issues, whether, and under what conditions, a foreign judgment may be recognised and enforced, and how to organize administrative and judicial assistance to foreign jurisdictions. Moreover, these rules apply, in principle, not only in the relations between each region and third States, but also in the relations between the four regions.

In this pioneering work, Meirong Zhang analyses the existing diversity of private international law systems in the four Chinese regions, and explores ways to better coordinate these rules, and improve communication and cooperation among the regions. In our days of increasing mobility of persons, goods, services, capital and information, both among the Chinese regions and in their relations with third States resulting in multiple and manifold cross-border legal issues, this is a question of eminent practical importance. Central to this study are the daily interests and concerns of individuals, families, companies and other entities in our increasingly interconnected, complex world.

The author has wisely chosen an approach to her research that is principled and pragmatic at the same time. Her starting point is the Chinese concept of “regional pluralism of legal systems”.

She points out that this principle has three dimensions: “first, equality between different legal regions; second, understanding and respect for each legal region’s characteristics and its autonomous public policy; third, mutual progress and benefits for all four legal regions based upon cooperation between the people across all four legal regions”. Therefore, mutual respect, based on the recognition of equal value of each legal system, and cooperation grounded in mutual respect should govern the future of interregional private international law in China.

Whilst “regional pluralism of legal systems” is the starting point, Meirong Zhang adds a second pillar to support her proposals: “Chinese inter-regional conflict of laws should also be the carrier of the good values and spirit of mankind”. It would be a mistake to view this as an expression of naive idealism, and to think that it would suffice to focus on the interregional situation isolated from the rest of the world. Firstly, the increase in interregional cross border contacts among the four Chinese regions is in part the result of increased global interaction. Indeed contemporary globalization blurs the boundaries between local including interregional, and global affairs as never before. Secondly, and in part as a result of globalization, people all over the world are increasingly faced with challenges common to humankind, whether one thinks of the risks to which children around the world are exposed in cross-border situations, the global financial system, or the global climate. Global issues should preferably [be] solved globally. Common global approaches based on sound values are not only desirable but in the end also more effective.

Basing her proposals on the two pillars “regional pluralism of legal systems” and “a community with a shared future for humanity”, the author turns to the work of the Hague Conference on Private International Law for inspiration for the future development of private international law among the four regions of China. She has good reasons to do so. Firstly, as she points out, to a various extent and in various ways, the private international law systems of all four regions have already been influenced by the work of the Hague Conference. Secondly, as she also reminds us, arrangements have recently been concluded between Chinese regions, namely Mainland China and Hong Kong SAR, which have borrowed provisions and language from Hague Conventions. Thirdly, and most fundamentally, the Hague instruments reflect both the spirit of the Chinese concept of “regional pluralism of legal systems” – mutual respect, based on the recognition of equal value of each legal system, and the need for close cooperation on that basis – and globally accepted values. All Hague instruments are carefully crafted texts, and the result of inclusive negotiations among experts and delegates representing States from all continents, based on sound comparative research and input from stakeholders from across the world.

Hague Conventions are primarily aimed to provide common legal frameworks for relations between States, and provide expressly that ratifying States are not bound to apply them to conflicts solely between different legal systems with such States. Therefore, when China joins a Hague Convention, the rules of that Convention do not thereby apply to the relations between Mainland China and the other three regions. However, as the arrangements between Mainland China and Hongkong SAR demonstrate, they may provide a model for a private international law regime for interregional relations. A model, not a straightjacket: Hague Conventions have always made room for specific local including regional needs.

It is on this basis that Meirong Zhang then examines whether and to what extent the work of the Hague Conference could serve as inspiration for a common private international law framework for the four Chinese regions. Successively, she deals with the issue of jurisdiction of the courts and authorities of the four regions (Chapters 2-3), interregional choice of law rules (Chapters 4-7), administrative and judicial cooperation, and recognition and enforcement of foreign judgments (Chapters 8-10). She does not advocate to slavishly copy the content of Hague Conventions into an interregional system. For example, and interestingly, she suggests that the specific characteristics of Chinese family realities may qualify or colour the notion of “the child’s best interests” (Conclusion Part II).

Obviously, an innovative work like this can only lay the foundation for more detailed reflections and research. But because the study is both principled and pragmatic, the groundwork it lays is strong. One senses the firm commitment of the author to the good causes of removing outdated and parochial obstacles to cross-border relationships and transactions, of facilitating the life of citizens in a complex mobile world, of safeguarding their civil interest and rights, of protecting weaker parties and vulnerable people and vital public interests and common global goods. Meirong Zhang has written a seminal study that will inspire many readers. It deserves a wide readership.” (Our emphasis)

 

In Re G (Abduction: Consent/Discretion) judgment issued on 9 February 2021 the Court of Appeal (Civil Division) of England and Wales ruled on an appeal proceeding following an order to return issued by the High Court of Justice (Family Division) based on the 1980 Hague Convention on the Civil Aspects of International Child Abduction.

The importance of the case is related to the interpretation of the provisions of Article 13 of the Convention, the existence of consent and the exercise of discretion by the requested court in ordering the return of the child when consent is established.

The proceedings were initiated by the father who consented to the mother bringing the children to England. In first instance the High Court ordered the return of the two children to Romania to their father. Following an appeal by the mother, the Court of Appeal reversed the order.

Background

Between 2015 and 2018, the parents and their children I and P have relocated twice from Romania to England. In 2018, the father returned to Romania while the mother and the two girls remained in England. In February 2019 the parents agreed to divorce in Romania. On 14 March 2019 the parents entered into a notarised agreement by which the mother could travel out of Romania with the children, without the father, for a period of three years.

During the divorce procedure the parents discovered that if they wanted their children to live in England with the mother, they had to go through a court divorce. In order to avoid this on 15 April 2019 they entered into a notarised agreement that parental authority would be exercised by both parents and that after the divorce the children would live with the mother in Romania. This is required by Article 375(2) Romanian Civil Code for the finalisation of the divorce procedure. However, in fact, the parents agreed that the children would continue to live with the mother in England.

In an attempt to reconcile, the parents agreed that the girls will spend a trial period with the father in Romania, while the mother remained in England. Thus, for a period of five months (September 2019 – February 2020) the children were with the father in Romania. The mother continued to work in England and the father and children visited for Christmas. During this period the parents agreed that it would be better overall for the children to return to live in England with the mother.

On 5 February the mother traveled to Romania to take the children back to England. When meeting the father in Romania she told him that she formed another relationship with another man. Although upset, the father gave the mother the children traveling documents, birth certificates and helped with the packing of the children’s belongings. The mother and the children remained with the mother’s parents the evening before returning to England.

Without the mother knowledge the father visited a notary on 5 February and executed a document revoking his agreement from March 2019 allowing the mother to travel with the children. The father gave the documents to his Romanian lawyer who sent it to the border authority, but did not inform the mother of the revocation of content although he bound himself to do so and was aware that the revocation was only effective from the moment of its communication to her.

By the time the revocation was registered by the Romanian authorities the next day, the mother together with the children already flew to England.

Proceedings in Romania

On 16 March 2020 the mother begun proceedings in Romania seeking an order that she did not require the father’s permission for the children to travel. She has since made further applications and the proceedings are ongoing. The Romanian Judge was aware of the proceedings in England.

Proceedings before the High Court

On 17 July 2020, the father issued proceedings in England seeking the children’s summary return to Romania. Before the judge he argued that he had showed the revocation of consent document to the mother when they first met on 5 February. However, the Judge found that while the mother was in Romania the father neither gave her the revocation document nor informed her of its existence, and she had only learned about it when she saw it on the family’s shared photo drive five days after she returned to England.

Further, the mother argued that the children were not habitually resident in Romania on 6 February 2020 so that their removal was not wrongful, that the father had consented to the removal, and that the older child objected to the return. The child’s objections defence was scarcely pursued, and the Judge rejected it.

The High Court Judge concluded that at the time of their removal the girls were habitually resident in Romania, the father consented to the removal, but based on the exercise of his discretion granted by the Convention the Judge would order to return of the children to Romania as the jurisdiction that should determine the issues related to their welfare.

Appeal Judgment

The mother sought permission to appeal on three grounds. The Judge stayed the return order and granted permission to appeal on two grounds: (1) assessment of habitual residence of the children and (2) the exercise of judge discretion in ordering the return of the children. The father thought to uphold the same order for additional reasons.

Habitual residence

With regard to the assessment of the habitual residence. The appeal judges in paragraph 22 considered that the High Court Judge:

directed himself correctly by reference to the summary of principle contained in Re B (A Child) (Custody Rights: Habitual Residence) [2016] EWHC 2174 (Fam) at [16-19], as approved with one significant amendment by this court in Re M (Children) (Habitual Residence: 1980 Child Abduction Convention) [2020] 4 WLR 137; [2020] EWCA Civ 1105 at [63]. His task was to assess the degree of the children’s integration in their Romanian social and family environment, and in doing so to focus firmly on their actual situation as opposed to weighing their comparative connections with the two jurisdictions. (…) But here they had oscillated between two countries with which in both cases they had strong social and family connections. Up to 5 February they were living with their father and grandparents under arrangements that might, had their parents reconciled, have continued along similar lines. The conclusion that they were significantly integrated, and accordingly habitually resident, in Romania is one that was clearly open to the Judge.

Therefore this ground of appeal was reject by the Court.

Consent

With regard to assessment of existence of consent, the analysis focused on the following exception in Article 13 of the Convention:

Notwithstanding the provisions of the preceding Article, the judicial or administrative authority of the requested State is not bound to order the return of the child if the person, institution or other body which opposes its return establishes that – 1. the person, institution or other body having the care of the person of the child… had consented to or subsequently acquiesced in the removal or retention; …

In summarising the Court’s practice in previous case law – Re P-J (Children) (Abduction: Consent) [2009] EWCA Civ 588 [2010] 1 WLR 1237, drawing on the decisions in Re M (Abduction) (Consent: Acquiescence) [1999] 1 FLR. 174 (Wall J); In re C (Abduction: Consent) [1996] 1 FLR 414 (Holman J); In re K (Abduction: Consent) [1997] 2 FLR 212 (Hale J); and Re L (Abduction: Future Consent) [2007] EWHC 2181 (Fam); [2008] 1 FLR 914 (Bodey J). Other decisions of note are C v H (Abduction: Consent) [2009] EWHC 2660 (Fam); [2010] 1 FLR 225 (Munby J); and A v T [2011] EWHC 3882 (Fam); [2012] 2 FLR 1333 (Baker J) – the Judge concluded that the key point of analysis rested on whether the giving or withdrawing of consent by the remaining parent must have been made known by words and/or conduct to the removing parent and whether the consent or withdrawal of consent of which a removing parent is unaware can be effective. This remained to be clarified by the Court as this did not arise for consideration in the above reported cases.

The court proceeded to analyse the interpretation of the text of the Convention on this point in paragraph 26 as following:

there are compelling reasons why the removing parent must be aware of whether or not consent exists. The first is that as a matter of ordinary language the word ‘consent’ denotes the giving of permission to another person to do something. For the permission to be meaningful, it must be made known. This natural reading is reinforced by the fact that consent appears in the Convention as a verb (“avait consenti/had consented”): what is required is an act or actions and not just an internal state of mind. But it is at the practical level that the need for communication is most obvious. Parties make important decisions based on the understanding that they have a consent to relocate on which they can safely rely. It would make a mockery of the Convention if the permission on which the removing parent had depended could be subsequently invalidated by an undisclosed change of heart on the part of the other parent, particularly as the result for the children would then be a mandatory return. Such an arbitrary consequence would be flatly contrary to the Convention’s purpose of protecting children from the harmful effects of wrongful removal, and it would also be manifestly unfair to the removing parent and the children.

In applying this reasoning to the case before them, the judges found that Judge’s primary findings of fact could not be challenged. The appeal judges agreed that although the father had developed misgivings, given his action to remove the consent by the notary, this actions showed otherwise. But, in fact, his behaviour the evening before their departure showed that he had not in fact withdrawn his consent, he had delivered the children and their passports to the mother on the eve of travel and he did not show the revocation document to the mother.

The Court agreed that the ‘best guide to the father’s eventual state of mind was to be found in his own actions’ (paragraph 29) and although having second thoughts he had not in fact withdrawn his consent. Therefore, the High Court Judge was not obliged to give weight to the sending of the revocation by the lawyer to the border authority because the revocation had been made known to the mother.

The Court concluded that ‘[c]onsent under the Convention is more than a private state of mind. Even if the father had in fact decided to withdraw his consent, it was necessary for the mother to have been made aware of that before the children departed’; therefore, the finding of the first Judge was upheld in appeal.

Discretion

On the exercise of discretion with regard to ordering a summary return of the children to Romania, the appeal judges acknowledged that the exercise of the discretion under the Convention is highly case-specific and has to be carried out within a framework of policy and welfare considerations.

Therefore, the court proceeded to weight in all relevant factors: the desirability of a swift restorative return of abducted children; the benefits of decisions about children being made in their home country; comity between member states; deterrence of abduction generally; the reasons why the court has a discretion in the individual case; and considerations relating to the child’s welfare.

By relying on Re J (A Child) (Custody Rights: Jurisdiction) [2006] 1 AC 80 at [12], the appeal judges found that the High Court Judge made an error of approach in attaching significant weight to the Convention considerations favouring the return based on a theoretical assessment rather than weighting in the relevant factors to the particular circumstance of the case. Thus, the Court considered it is bound to intervene for the following reasons (paragraph 49):

• The judge had ‘approached the balancing exercise incorrectly’ with regard to his discretion.
• ‘He then gave significant, indeed predominant, weight to policy considerations without explaining why he was doing so. He noted that the mother had been entitled to remove the children but he did not take into account that there was in consequence no reason for restorative or deterrent action. As to comity and home-based decision-making, he gave no weight to the fact that England is at least as much their “home country” as Romania – apart from the interrupted period of 20 weeks, these young children aged 6 and 3 had lived here for the last 2½ years. Nor did the Judge explain why it would be beneficial for the children to be in Romania while the Romanian court made its decisions. On the information now available, that can happen wherever the children are living, and there was no contrary information before the Judge. Moreover, as the leading proposal for the children’s future is for them to live with their primary carer in England, it might be thought that there was some advantage in the assessment being made while the children are here.
• In contrast, the Judge gave no identifiable weight to the reason for his being invested with a discretion, namely that the father had agreed to the removal, nor to the inherent unfairness of his then succeeding in summoning the mother and children back.
• The only other positive reason for a return order was that the children could have contact with their father in the interim, but that had to be balanced against the other consequences of summary return and the fact that it had been the father’s original decision to live in a different country to the children. The other matters (that some delay had been due to the pandemic, that the children are used to travelling, and that the mother would return with them) were not reasons in favour of a return, but factors that might mitigate its disadvantages. The Judge also accepted the father’s offer of protective measures at face value, even though his evidence had been fundamentally untruthful and he had already shown himself to have taken legal measures behind the mother’s back.
• The welfare analysis did not address the negative impact of a summary return at all. The children appear to be settled in the colloquial sense and the fact that they have been backwards and forwards in the past is not a reason why that should continue. The Judge noted that the mother would return and could apply to relocate, but he attached no weight to the limbo in which the children would meanwhile be living, or to their important relationship with their maternal grandmother, or to the disruption caused to their mother, who is resident in England and upon whose employment the children depend, or to the prospect of the children being sent to Romania only to return to England if the mother was given permission to relocate, or to I’s wishes. All in all, an effective summary survey of the welfare issues in this case was not carried out; had it been, it would have pointed strongly towards maintaining the interim status quo’.

The Court concluded that in this case the child-centre welfare considerations outweigh policy considerations’ and that the children current situation gave rise to no obvious concerns, and there were no advantage (and considerable disadvantage) in them being moved from where their father had agreed they should be in order for a decision to be taken about their future. Therefore, the Court of Appeal set aside the order for return finding that the exercise of the discretion was erroneous.

by Apostolos Anthimos

By virtue of Law Nr. 3858/2010, Greece has adapted its legislation to the UNCITRAL Model Law on Cross-Border Insolvency. The appearance of the law in practice is scarce; so is the case with respect to legal scholarship. A recent judgment by the Chamber of the Piraeus 1st Instance court [date of publication: 15/12/2020] demonstrates the pitfalls in the field of recognition.

THE FACTS

The applicant is a foreign company registered in the USA. It requested the recognition of an order issued by the United States Bankruptcy Court for the Southern District of New York. The order was issued in accordance with Chapter 11 of the United States Bankruptcy Code, following a motion for entry of an order authorising rejection of certain unexpired leases and granting related relief. The motion was submitted by the applicant and a number of subsidiary companies. The applicant clarified that it acts as a trustee of the business, in his capacity as debtor in possession. There’s no direct reference in the judgment’s text, but I presume that the applicable provision must have been § 1107, 11 U.S. Code [Rights, powers, and duties of debtor in possession].

THE RULING

The Greek court confirmed its jurisdiction by a simple reference to the Law 3858/2010 and domestic procedural rules. Despite the lack of reasoning, the court was indeed competent: all subsidiary companies were apparently registered in Greece. In addition, the applicant had presumably assets in the jurisdiction.

Moving ahead however, the court dismissed the request as inadmissible, referring to Articles 9 and 15(1) of the Law (same numbering with the Model Law). In particular, the court considered that the application was not filed by a foreign representative for the purposes of Article 15(1). The applicant failed to furnish the documents provided for in Article 15(2), or any other documents which would prove the above. The sole documents submitted were the US order and its notification (does not explain to whom); the latter do not suffice for proving the capacity of the applicant to act as a trustee in bankruptcy (= foreign representative).

In addition, the request was also unfounded and contrary to Greek public policy. In accordance with Greek perceptions, it is not admissible to request jointly recognition for the entire group of companies (as the court notes). Hence, the request contravenes Article 6, and is to be dismissed.

SHORT NOTE

The judgment of the court proves that the subject matter needs extensive elaboration in Greece. First, a sheer reference to the US statutes would have convinced the Greek court to overcome the first hurdle. § 1107, 11 U.S. Code reads as follows: (a) Subject to any limitations on a trustee serving in a case under this chapter, and to such limitations or conditions as the court prescribes, a debtor in possession shall have all the rights, other than the right to compensation under section 330 of this title, and powers, and shall perform all the functions and duties, except the duties specified in sections 1106(a)(2), (3), and (4) of this title, of a trustee serving in a case under this chapter.

Second, the dismissal of the request by clinging to public policy is a recipe often followed when a court is faced with a different approach compared to domestic legislation. Unfortunately, the exceptional nature of the provision (see Article 6: …if the action would be manifestly contrary to the public policy of this State) did not convince the court to delve into the matter, and  discover some useful material tackling with the issue in question [see the UNCITRAL Legislative Guide on Insolvency Law – Part three: Treatment of enterprise groups in insolvency, p. 88: Although the Model Law has limited application in the enterprise group context, it is desirable that the access to courts and recognition of foreign proceedings it provides with respect to individual debtors also be provided with respect to insolvency proceedings involving members of the same enterprise group].

NB v MI [2021] EWHC 224 (Fam) engages capacity to marriage. A marriage was formed on 1 June 2013 in Pakistan under sharia law between the parties. 18 years earlier, when she was 6, the wife was involved in a serious accident which left her among others badly neurologically damaged. She only slowly recovered from these injuries, to the extent that expert evidence suggested she does now, but did not have capacity in all the areas of life canvassed including to marry and enter sexual relations, at the time of her 2013 marriage.

Mostyn J considers the issues of whether partners understand the constituent elements of what it means to get married, starting with Durham v Durham [1885] 10 PD 80 and of course noting the changed approaches to the institute of marriage since. The core test then is to check whether at the time of marriage, the partners understood what it means to get married: financially, emotionally, sexually.

Mostyn J upon review of the evidence held that the wife lacked awareness of the difference between Islamic and English marriage; or the financial consequences depending on the contract; or her husband’s potential claims against her estate; or her husband’s proposed living arrangements. Yet that these say nothing at all about her capacity to marry [37]: ‘They may say quite a lot about her wisdom in getting married, but that is not the issue I have to decide.’ Although reference is made to KC & Anor v City of Westminster Social & Community Services Dept. & Anor [2008] EWCA Civ 198 I find the conflict of laws analysis could have been made clearer: is the overpowering engagement of English law a finding of confirmation of lex domicilii (the lex patriae of the wife is not mentioned but might be British), entirely disregarding a role for the lex loci celebrationis?

This is not my core area – I imagine others may have a more expert insight.

Geert.

Validity of Pakistani marriage valid under #sharia law, per English law, on grounds of mental capacity following neurological injuries suffered earlier in life. https://t.co/VXrfjiIDVl

— Geert Van Calster (@GAVClaw) February 8, 2021

The latest issue of the „Praxis des Internationalen Privat- und Verfahrensrechts (IPRax)“ features the following articles:

 

H.-P. Mansel/K. Thorn/R. Wagner: European Conflict of Law 2020: EU in crisis mode!

This article provides an overview of developments in Brussels in the field of judicial cooperation in civil and commercial matters from December 2019 until December 2020. It provides an overview of newly adopted legal instruments and summarizes current projects that are presently making their way through the EU legislative process. It also refers to the laws enacted at the national level in Germany as a result of new European instruments. Furthermore, the authors look at areas of law where the EU has made use of its external competence. They discuss both important decisions and pending cases before the CJEU as well as important decisions from German courts pertaining to the subject matter of the article. In addition, the article also looks at current projects and the latest developments at the Hague Conference of Private International Law.

 

C. Kranz: International private law aspects of taking security over membership rights in international financing transactions

In international financing transactions, pledges of membership rights play an important role. The private international law question, pursuant to which law the pledge is determined in the case of companies with a cross-border connection, cannot be answered in a generalised manner, but confronts those applying the law with some differentiations, in particular where membership rights have been certified in share certificates. The following analysis undertakes the attempt to clarify the key aspects from the perspective of German international private law.

 

F. Eichel: Choice of Court Agreements and Rules of Interpretation in the Context of Tort or Anti-trust Claims

In its rulings CDC (C-352/13) and Apple Sales (C-595/17) the ECJ gave a boost to the discussion on the range of choice of court agreements vis-à-vis antitrust claims. The article discusses a decision of the OLG München (Higher Regional Court of Munich, Germany) which has decided on this topic. In spite of a choice of court agreement pointing to Irish courts for “all suits to enforce this contract” (translation), the OLG München has held itself competent for antitrust claims, as – according to the reasons given – no interpretation of the contract was necessary. In the opinion of the author, this decision will no longer be relevant in Germany because it is not consistent with the decision Apple Sales, which has been rendered almost a year later. However, the reasons given by the OLG München are of particular interest, as it has made reference to the ECJ’s decision Brogsitter (C-548/12). Brogsitter is a decision on the range of the contractual jurisdiction of Art. 7 No. 1 Brussels Ia Regulation/Art. 5 No. 1 Lugano Convention 2007 vis-à-vis claims in tort. The present article has taken this as a reason to examine if the Brogsitter ruling can be understood as a “rule of interpretation” which comes into play once the intention of the parties of a choice of court agreement remains unclear. The article argues that in general the interpretation of choice of court agreements is subject to the lex causae of the main contract. However, with regard to torts and antitrust claims there are rules of interpretation arising from Art. 25 Brussels Ia Regulation itself. They are effective throughout the EU and are not influenced by the peculiarities of the national substantive law of the member states.

 

A. Kronenberg: Yet again: Negative consequences of the discrepancy between forum and ius in direct lawsuits after traffic accidents abroad

The Higher Regional Court (OLG) Saarbrücken had to decide upon appeal by a German-based limited liability company (GmbH) against a French motor vehicle liability insurer on various questions of French indemnity law and its interaction with German procedural law. The case once again highlights both well-known and less prominent disadvantages of the discrepancy between international jurisdiction and applicable law in actions which accident victims can bring directly against the insurer of the foreign party responsible for the accident at their place of residence.

 

M. Andrae: Once Again: On Jurisdiction when the Child’s Usual Residence Changes to Another Contracting Member State of the Hague Convention 1996

The discussed decision deals with the jurisdiction for a decision when it comes to a parent’s right of access. If at the time of the decision of the court of appeal the child has their habitual residence in a contracting state of the Hague Convention 1996 for the Protection of Children that is not a member state of the European Union, the Convention shall apply. For the solution it cannot be left open at which date the change of habitual residence occurred. If the change took place before the family court made the decision on the matter, the court of appeal must overturn this due to a lack of jurisdiction. This is done afterwards, the court of appeal lacks international jurisdiction to make a decision on the matter. The decision of the family court that has become effective remains in force in accordance with Art. 14 (1) Hague Convention 1996 until an amended decision by the authorities of the new habitual state of residence is made.

 

D. Stefer: Third-Party Effects of Assignment of Claims – Not a Case for Rome I

While an assignment of claims primarily involves the assignor, the assignee and the debtor of the assigned claim, it may nevertheless concern third parties that, though not directly involved in the transfer of the claim itself, may still be subjected to its effects. Such third parties can be creditors of the assignor, a liquidator or another potential assignee of the same claim. From a conflict of laws perspective, it is of particular relevance to determine which law applies to these thirdparty effects, since the outcome may differ depending on the jurisdiction. For instance, in case of multiple assignments of the same claim, German law gives priority to the assignment that was first validly concluded. Contrary to that, under Italian or English law priority will be given to that assignee who first notifies the debtor of the assignment. Yet, Article 14 of the Rome I Regulation does not contain an explicit rule governing the law applicable to third-party effects of an assignment. It is for that reason that the issue has been subject to constant debates. In particular, it was controversial to what extent the Rome I Regulation applied at all to the issue of third-party effects.

In BNP Paribas ./. Teambank AG, the Court of Justice recently held that no direct or implicit rule in that respect could be inferred from the Regulation. In the Court’s view, it was a deliberate choice of the EU legislature not to include rules governing the third-party effects of assignments of claims into the Regulation. Consequently, de lege lata the issue is subject to the national rules of private international law. Hence, under the rules of German private international law, the law applicable to the third-party effects of an assignment is the law that applies to the assigned claim.

 

F. Rieländer: The displacement of the applicable law on divorce by the law of the forum under Article 10 Rome III Regulation

In its judgment (C-249/19) the ECJ provided clarification on the interpretation of Article 10 of Regulation No 1259/2010 in a twofold respect. Firstly, Article 10 of Regulation No 1259/2010 does not lead to the application of the law of the forum if the applicable foreign law permits divorce, but subjects it to more stringent conditions than the law of the forum. Since Article 10 of Regulation No 1259/2010 applies only in situations in which the lex causae does not foresee divorce under any form, it is immaterial whether in the specific case the individual marriage can already be divorced or can still be divorced according to the applicable foreign law. Secondly, the ECJ held that the court seised must examine and establish the existence of the substantive conditions for a mandatory prior legal separation of the couple under the applicable foreign law, but is not obliged to order a legal separation. Unfortunately, the ECJ missed the opportunity to give a clear guidance on distinguishing substantive conditions foreseen by the applicable law from procedural questions falling within the law of the forum. Apart from this, it remains uncertain whether recourse to the law of the forum according to Article 10 of Regulation No 1259/2010 is possible if the lex causae knows the institution of divorce as such but does not make it available for the concrete type of marriage, be it a same-sex marriage or a polygamous marriage.

 

M. Scherer/O. Jensen: The Law Governing the Arbitration Agreement: A Comparative Analysis of the United Kingdom Supreme Court’s Decision in Enka v Chubb

On 9 October 2020 the Supreme Court of the United Kingdom rendered its much-anticipated decision in Enka Insaat Ve Sanayi A.S. v OOO Insurance Company Chubb (Enka v Chubb). In an extensive judgment, the Supreme Court engaged in a detailed review of the different approaches to determining the law applicable to the arbitration agreement and set out the relevant test under English law. The present case note analyses the judgment, explains why the majority’s decision is well-reasoned but its conclusion not inevitable and provides a comparative analysis of the English approach. The result: the age-old question of which law governs the arbitration agreement (and why) has not lost in complexity and continues to engage courts and scholars around the world.

 

D. Otto: In-/validity of unconscionable arbitration clauses

Impecunious parties occasionally are an issue in international arbitration. The Canadian Supreme Court had to decide a case involving a – nominally self-employed – driver of Uber, who commenced a class action in a Canadian court to have Uber drivers declared as employees and to challenge violations of Canadian employment laws. His standard-term service agreement with Uber provided for the application of Dutch law and for mediation and arbitration in the Netherlands, which would have required the driver to advance mediation and arbitration fees in an amount of over 70 % of his total annual income from Uber. Uber requested the court to stay proceedings in favour of arbitration in the Netherlands. The Supreme Court held that the arbitration clause was unconscionable and void. The court opined that in general parties should adhere to agreed arbitration clauses. However, the court found that in this case the driver was not made aware of the high costs of arbitration in the Netherlands, that Uber had no legitimate interest to have such disputes decided in far away countries and that the unusual high costs of such proceedings (amounting to over 70 % of the drivers total annual income) effectively made it impossible for him to enforce his rights before the foreign arbitration tribunal. The court dodged the other issue (affirmed by the lower court) whether a dispute involving alleged violation of Ontario’s Employee Standards Act was arbitrable at all.

 

V. Bumbaca: Remarks on the judgment of the US Supreme Court “Monasky v. Taglieri”

The decision of the US Supreme Court in Monasky v. Taglieri confirms that the determination of the newborn/infant’s habitual residence should focus on the intention and habitual residence of his/her parents or caregiver – the analytical approach is parent-centered. The US Supreme Court ruling, in affirming the decision of the Sixth Circuit Court of Appeals, also clarifies that the determination of the habitual residence of the adolescent/older child should focus on his/her own acclimatization – the analytical approach is child-centered. According to the Supreme Court, the determination of the habitual residence of the child found to be within a transnational family conflict, such as that contemplating an international abduction or an international marital dispute concerning, inter alia, parental authority, must take into account the specific circumstances and facts of each individual case – fact-intensive determination. Based on the practice of other States and of the CJEU, this judgment considers that a predetermined formula applied to the analysis of the child’s habitual residence cannot be deemed to be in conformity with the objectives of the 1980 Hague Convention (applicable to the United States and Italy, both of which are involved in this case) – in particular, by virtue of the fact-based approach followed by this notion, unlike other connecting factors such as domicile and nationality. Regrettably, in affirming the decision the Supreme Court upheld the reasoning of the Court of Appeal as a whole. Thus, it set aside two elements which were not considered in depth by the Court and which in the author’s opinion it should have retained, regardless of the child’s age and given the child’s development within a potentially disruptive family context: The principle of the best interests of the child and the degree of instability attributed to the child’s physical presence before the wrongful removal.

 

E. Jayme: Canada: Export restriction for cultural property of national importance: The Federal Court of Appeal – Attorney General of Canada and Heffel Gallery Limited, 2019 FCA 82 (April 16, 2019) – restores the decision of the Canadian Cultural Export Review Board which rejected the export permit for a painting by the French artist Gustave Caillebotte

Canada: The case decided by the Federal Court of Appeal (Attorney General of Canada, Appellant, and Heffel Gallery Limited, Respondent, and 10 Canadian cultural institutions as interveners, 2019 FCA 82 [April 16, 2019]) involved the following facts: A Toronto based auction house sold a painting by the French impressionist Gustave Caillebotte (“Iris bleus”) to a commercial gallery based in London, and applied to the Department of Canadian Heritage for a cultural export permit, which was refused following the recommendation of an expert examiner. Then, the auction house requested a review of that decision before the Canadian Cultural Export Review Board which rejected the export permit application. Then, the auction house asked for a judicial review of that decision: The Federal Court held that the Board’s decision was unreasonable and remitted the case to another panel for reconsideration. This decision of the Federal Court was appealed by the Attorney General of Canada. Thus, the case passed to the Canadian Federal Court of Appeal which allowed the appeal, dismissed the application for judicial review and restored the decision of the Board, i.e. the refusal to issue an export permit for the painting, in the words of the court: “I am of the view that the Federal Court erred in failing to properly apply the standard of reasonableness. The Board’s interpretation of its home statute was entitled to deference, and the Federal Court’s failure to defer to the Board’s decision was a function of a disguised correctness review.”

The case involves important questions of international commercial law regarding art objects, questions which arise in situations where art objects have a close connection to the national identity of a State. The Canadian decision shows the importance of experts for the decision of whether a work of art is part of the national cultural heritage. The Canadian cultural tradition is based on English and French roots. In addition, the Canadian impressionism has been widely influenced by the development of French art. Thus, it is convincing that the painting by Caillebotte which had been owned and held by a private Canadian collector for 60 years forms part of the Canadian cultural heritage, even if the painter never visited Canada. In addition, the case is interesting for the general question, who is entitled to decide that question: art experts, other boards or judges. The court applied the standards of reasonableness and deference to the opinion of the art experts.

 

A. Kampf: International Insolvency Law of Liechtenstein

Due to various crises, the International Insolvency Law increasingly comes into the focus of currently discussed juridical issues. With reference to this fact, the essay gives an overview of the corresponding legal situation in Liechtenstein, considering that the EU regulation 2015/848 on insolvency proceedings is not applicable. In particular, the author concerns himself with the complex of recognition and the insofar existing necessity of reciprocity. In comparison to the regulation mentioned above, the author comes to identical or at least similar results. He votes for necessity to be abolished and argues for recognition not only of movable assets being located in Liechtenstein.

A new edition of Geert van Calster’s European Private International Law. Commercial Litigation in the EU has just been published by Hart.

The third edition of the book is a valuable addition to the library of any scholar, practitioner and student interested in matters of Private International Law. The book can serve as a good introduction into the topic for non-EU readers and a refreshing text for those familiar with the EU reality. The author’s experience as a practitioner is a plus for the analysis the book provides. Specific insights into national case law developments on particular aspects of private international law add to the richness of information the reader gets. Compared with the previous edition, the updated text includes some new sections on the realities of Brexit for European Private International Law and developments of the Hague Conference of Private International Law.

The blurb reads:

This classic textbook provides a thorough overview of European private international law. It is essential reading for private international law students who need to study the European perspective in order to fully get to grips the subject.

Opening with foundational questions, it clearly explains the subject’s central tenets: the Brussels I, Rome I and Rome II Regulations (jurisdiction, applicable law for contracts and tort). Additional chapters explore the Succession Regulation, private international law and insolvency, freedom of establishment, and the impact of PIL on corporate social responsibility. The new edition includes a new chapter on the Hague instruments and an opening discussion on the impact of Brexit.

Drawing on the author’s rich experience, the new edition retains the book’s hallmarks of insight and clarity of expression ensuring it maintains its position as the leading textbook in the field.

More information about the book can be found here. The table of contents and a sample reading of the book are available here and here.

The publisher offers a 20% discount to the readers of the EAPIL blog who order the book online at www.hartpublishing.co.uk. Using the code UG7 at the checkout to benefit from the discount.

A quick post on an issue I actively published on last year, including with Kathleen Garnett: the innovation principle. My post here is a bit of a documentation gateway on same. I just wanted to draw readers’ attention to two developments.

First, the European Risk Forum which stood at the cradle of a proposed innovation ‘principle’ has been rebranded into the ‘European Regulation and Innovation Forum’ – ERIF. This of course even more than ‘Risk Forum’ is meant to conjure up positive feelings: who could possibly be against Regulation let alone innovation? It calls itself a think tank but it is in fact a trade association – interest group.

Further, the focus of the campaign has now changed. No longer it seems is the introduction of a new innovation principle the aim of the campaign. Rather, a restrictive take on regulation using cost benefit analysis and ‘proportionality’ – both existing principles of e.g. EU environmental law and at odds e.g. with the recently proposed essential use idea within the EU’s chemicals policy. It seems ERIF looks among others to the EU’s Regulatory Scrutiny Board to keep proposed laws in check.

Worth keeping an eye on, I suggest.

Geert.

In two judgments delivered on 10 December 2020, the French Supreme Court for civil and criminal matters (Cour de cassation) extended the reach of French attachments to any claims owed to third parties established in France, irrespective of whether the third party had its headquarters in France or abroad, and irrespective of the situs of the debt.

In the most spectacular case, the Cour de cassation allowed the attachment of rents owed by an American law firm to the United States of America with respect to a building in Paris, because the American law firm was a partnership with an office in Paris.

In both cases, the creditors were represented by French boutique law firm Archipel, which has engineered the most innovative enforcement strategies in recent years in France (in particular against foreign states such as Congo).

Background

The creditor in the first case was an employee of the U.S. embassy in Paris. After he was dismissed, he sued the U.S. in French courts. The U.S. raised a number of procedural arguments, including that it had not been lawfully served, and that the personal immunity of the Ambassador prevented that he be made a joint party to the proceedings (in addition to the U.S.). In 2009, the French court rejected the arguments of the defendants, held that the dismissal was unfair and ordered the U.S. to pay over € 130,000. The U.S. refused to pay. The plaintiff had passed away in the meantime, so his heirs went back to court to obtain an order that the U.S. complies with the judgment under penalty of € 1,000 a day. The U.S. argued that the judgment had not been properly served and still refused to pay (was that to Make America Great Again?). The total sum reached € 734,000.

The U.S. owns a building in Paris that it has been renting to Jones Day for its Paris office. I understand that Jones Day is a U.S. partnership headquartered in Cleveland, Ohio. The Paris office does not have an autonomous legal personality.

The French lawyers of the employee served Jones Day in Paris with an attachment order over the rents owed by the firm to the United States.

Traditional Paradigm: Situs of the Debt

Although it was never clearly formulated by the Cour de cassation, it was widely admitted in France that the focus of the principle of the territoriality of enforcement was the location of the relevant asset. As far as debts are concerned, this meant the situs of the debt. The understanding was thus that French enforcement authorities could attach debts located in France. As debts are intangibles with no genuine location, a rule was designed, which is not uncommon: debts were deemed to be located at the domicile of the debtor. For legal persons with branches in several countries, this meant at their headquarters.

On this basis, the Cour de cassation allowed French attachement orders to reach funds held in bank accounts in foreign banches of French banks. Although the court had not expressly said so, analysts agreed that the rationale for this outcome was that the debts of the foreign branchs were situated in France, at the headquarters of the French bank.

In this case, the debt was owed by an entity headquartered in the U.S. Under the traditional paradgim, it was thus situated in the U.S., and thus beyond reach of French enforcement measures. On this ground, the lower courts set aside the attachments. The employee appealed to the Cour de cassation, and his lawyers clearly argued that a shift in paradigm was necessary.

New Paradigm: Establishment of the Third Party

The Cour de cassation allowed the appeal and confirmed the validity of the attachment of the rents owed by Jones Day to the United States.

It held that French enforcement officers could reach any third party established in France, and that, for that purpose, a third party was established in France either if it had its seat in France or if it had there any “entity” with the power to pay the debt of the debtor.

The court then made clear that whether the situs of the debt  might have been in the U.S. was irrelevant.

These rules were deduced from a redefinition of the rule of territoriality of enforcement, that the court linked to the principle of sovereignty and independence of states, ie its view of public international law. The court held the said rule meant that constraint could only be exercised on a third party established in France. It was thus concerned with persons rather than assets.

Assessment

The shift from a paradigm focused on the location of intangible assets to a paradigm focused on the location of third parties is convincing. Intangible assets in general, and debts in particular, have no physical existence, and are thus located nowhere. The location of debts at the domicile of debtors is artificial, and it is unreasonable to determine the jurisdiction of enforcement authorities on such a factor.

While the shift in paradigm is convincing, the details of the new regime will have to be determined. The criteria for determining the establishment in France of third parties were not fully debatted before the court. It is not clear what the court meant by its reference to entities with the power to pay the debt of the debtor. I will report later on the second case in which a bank established in France was found not to be such an entity.

The University of Amsterdam in collaboration with the Open University, Maastricht University and Tilburg University are organising a conference on Transformative effects of covid-19 on globalisation and law, to be held online on 16 and 17 September 2021.

The conference is organised within the research project named Transformative Effects of Globalisation in Law (TEGL) funded by the Dutch Ministry of Education as part of the multi-year Sectorplan Social Sciences research initiative. The event is envisaged as a series of panels, organized bottom-up and discussing specific angles and questions related to COVID-19 effects and globalisation of law. 

As no area of life remains unaffected by the Coronavirus pandemic – from travelling to doing groceries and from grieving to global politics, there are signs that some of the effects of this period are more transient, while others are here to stay: the pandemic will have had transformative effects in a number of domains. What about law?

Within the research theme Transformative effects of Globalisation in Law, the organisers want to look at the possible transformative effects of the pandemic through three main lenses: boundaries and international cooperation, transformative effects on markets and transformation of institutions. The conference will close with a roundtable reflecting on the implications of the ongoing transformations – (how) can law help in reconstructing “better”, in light of the further crises we are all facing?

As possible themes to be explored, think of the following: Coordination and multi-level pandemic governance; Vaccines, TRIPs exceptions and IP caution; Evidence-based law and policy in the pandemic; Will free movement ever be the same again?; Covid-19 and global trade; Love and care at the time of Covid: reproductive labour; The contestation of expertise and/or; Independent agencies and regulatory institutions – a new role for central banks and competition authorities?; Covid-19 and courts: how to test government intervention in the midst of a global emergency?;Covid-19 and the Anthropocene.

The organisers invite scholars from within and outside the Transformative effects of globalisation in law theme to convene a panel on one of these themes or a related theme investigating by preference the transformative effects of the pandemic on the legal configuration of international cooperation and boundaries, institutions and markets.

Interested scholars must provide an abstract for their panel, including a tentative list of speakers, by 1 April.

More information about the call can be found here.

Thanks to Pietro Franzina for the tip.

The Ministry of Justice of Portugal is organising a High level Conference on Protecting Vulnerable Adults across Europe – the Way Forward. The Portuguese Presidency of the Council of the EU has included the international protection of adults among its priorities.

The Conference is planned for 30 March 2021. The Programme includes speakers of the European Parliament, the European Commission, the Hague Conference on Priavte International Law, the Fundamental Rights Agency and national ministers of various countries. Access is free, but prior registration is required.

The post below was written by Alex Layton, of Twenty Essex, London. It is the third and final contribution to an on-line symposium devoted to the fate of the 1968 Brussels Convention, launched after a post by Matthias Lehmann (Brexit and the Brussels Convention: It’s All Over Now, Baby Blue?), which attracted comments by Eduardo Álvarez-Armas, Apostolos Anthimos, Gilles Cuniberti, Burkhard Hess, Costanza Honorati, Alex Layton, François Mailhé and Fabrizio Marongiu Buonaiuti. The previous contributions to the symposium, by Andrew Dickinson and Serena Forlati, can be found here and here.

Since the start of this year, the United Kingdom has been outside the Brussels-Lugano regime and it remains very doubtful that it will be welcomed back into the Lugano Convention 2007 in the near future. In this situation, as previous posts on this blog show, some ideas persist about whether the old Brussels Convention (1968, as amended) and the earlier Lugano Convention (1988) may have taken on a new relevance following the United Kingdom’s withdrawal from the European Union. I shall aim to show that such ideas are misplaced.

The latest development to prompt this discussion is the decision of the District Court of Zurich of 24 February 2021 (here, in German) to deny recognition of an English judgment dated September 2020 and to dismiss the application for a declaration of its recognition dated 18 February 2021. The decision is discussed by Rodrigo Rodriguez in a post on this blog dated 10 March. He says that the Zurich court refused to recognise the English judgment pursuant to the Lugano Convention. And if that is indeed what it decided, then I would agree with him (diffidently, as I am not a Swiss lawyer) that the point was wrongly decided by the Zurich court. But I am not sure that that is what it decided and even if it were I reach that conclusion by a somewhat different route.

I shall first explain my reasons for taking that view, and then turn to the question – also much discussed on this blog and elsewhere – on whether the Lugano Convention of 1988 might have provided an alternative basis for thinking the decision was wrongly decided and the related question of whether the old Brussels Convention of 1968 might also be revived.

Zurich Decision

The Lugano Convention 2007 formed part of the law of the European Union which, by reason of Article 127 of the Withdrawal Agreement, continued to apply “to and in” the United Kingdom during the transition period which ended on 31 December 2020. The critical point is that until that date, the UK was a State bound by the Convention. Article 33(1) of the Lugano Convention provides:

A judgment given in a State bound by this Convention shall be recognised in the other States bound by this Convention without any special procedure being required.

By that Article Switzerland undertook to recognise the English judgment from the time that it took effect in its own state of origin. Recognition of the English involves the extension of its authority into the Swiss legal order. It gained that authority in England – and hence also in Switzerland – in September and (so far as I am aware) nothing occurred in Swiss law to revoke the authority which it gained at that time.

The question of the enforcement of the English judgment is of course different. Here, the Lugano Convention, (like its counterpart in Regulation 44/2001 [Brussels I] but unlike Regulation 1215/2012 [Brussels I bis]), still provided for enforcement to take place following the issue of an exequatur. I can well see that by February 2021, the United Kingdom was no longer a “State bound by this Convention” within the meaning of Article 38(1) of the Lugano Convention which therefore would not (at least readily) provide a legal basis for an order for its enforcement. It would be a matter for Swiss procedural law to provide a mechanism for the inchoate recognition of the English judgment to be weaponised for the purposes of enforcement.

In the event, I think this is what the Swiss court actually decided. The judgment notes that the application was for a Vollstreckbarerklärung – a declaration of enforceability – which is what Article 38 relates to, rather than a declaration of recognition (Annerkennung). Indeed Article 38(1) is expressly referred to in the judgment.

In the converse situation, if an English court were now called upon to enforce a Swiss judgment given before 31 December 2020, it could clearly not do so pursuant to any legal powers in the Convention. English law is a dualist system and the domestic legislation giving effect to EU law – and hence to the Lugano Convention – was repealed with effect from 31 December 2020. Unlike the provisions of Brussels I bis, which continue to have effect in respect of judgments given in other EU states before that date, by reason of Article 67(2) of the Withdrawal Agreement, no such provision was made in respect of the Lugano Convention. This is not surprising, as it was not within the competence of either the EU or the UK to provide for the continued application of the Lugano Convention in relation to non-EU Contracting States. The statement by the Swiss Federal Office of Justice suggesting that the Lugano Convention would continue to apply cites the principle that jurisdiction is founded as a matter of principle upon the commencement of proceedings. But, with great respect,  that seems to me to lose sight of the distinction between adjudicatory jurisdiction to which that principle applies, and enforcement jurisdiction which probably requires a separate analysis.  The statement also cites doctrine pointing to Article 67.2 of the Withdrawal Agreement by way of analogy, but rightly does not concur with that view. Such an analogy would anyway be unconvincing unless Switzerland has ceded to the EU treaty-making powers in the field of civil justice (which I am not aware that it has).

How would an English court react in the converse situation? Although I am not aware of any case in which it has been tried, it is at least arguable that English law would recognise a Swiss decision made before 31 December 2020 and would find an alternative procedural means (such as an action for a declaration of recognition, or an action at common law on the Swiss judgment relying on its prior inchoate recognition under Article 33) that would enable this to occur. English law provides that a repeal does not affect any right acquired under the repealed enactment (Interpretation Act 1978, s. 16((1)(c)) and the extended authority of the Swiss judgment pursuant to Article 33 would probably confer such a right on the judgment creditor.

Interestingly enough, the non-application of the Lugano Convention after 31 December 2020 for a judgment given before that date was recognised as a potential issue in UK – Norwegian relations. By an Agreement signed in Oslo on 13 October 2020, the old bilateral convention on recognition and enforcement of judgments dating from 1961 was updated in certain respects, and provided, by Article 2(2), that:

The Parties shall continue to apply the rules of the Lugano Convention 2007 concerning recognition and enforcement of judgments, to the same extent that those rules applied immediately before the Lugano Convention 2007 ceased to apply to the United Kingdom and subject to the same limitations set out therein, to judgments given in proceedings that were instituted in a court of one of the Parties before the Lugano Convention 2007 ceased to apply between the Parties.

There was no equivalent bilateral convention between the United Kingdom and Switzerland, but there would be nothing to stop the UK and Switzerland – neither of which is now bound by the exclusive external competence of the European Union – from concluding a bilateral agreement to the same effect. Does the absence of an equivalent agreement with Switzerland perhaps support the idea that the Lugano Convention does not have an after-life in Anglo-Swiss relations?

Lugano 1988 (and Brussels 1968)

So, if Lugano 2007 does not live on, does the old Lugano Convention of 1988 maybe have an after-life? And if this involved an EU state, would the 1968 Brussels Convention maybe also have an after-life? In summary, a purposive interpretation of Brussels I and Lugano 2007 leave little or no room for doubt that the older instruments were intended to be consigned to the history books. The arguments have been well canvassed in earlier posts, notably by Andrew Dickinson, and I will not go over them again here.

But what of a literal textual interpretation?  True, the Lugano Convention of 1988 continues to govern relations with those non-European territories of France and the Netherlands to which the 2007 Convention has not been applied by their European ‘mother’ states: Articles 69(7) and 73(2). But this seems to me to be nowhere to the point. Also true, the 1988 Convention is not among those superseded by Lugano 2007 as defined by Article 65 and Annex VII. But Article 69(6) of the 2007 Convention is clear enough in providing that it “shall replace” (French: remplace; German: ersetzt) the 1988 Convention. That was a stipulation which was binding on the United Kingdom at the time, and which continues to bind Switzerland. It conveys a displacement of the old convention and the emplacement of the new convention. It does not leave linguistic room for the revival of the displaced.

So, what of the Brussels Convention of 1968?  Admittedly, when it was overtaken by the Brussels I regulation, the latter provided by Article 68 that it “shall …. supercede” the Brussels Convention, and that “supercede” has a less definitive tone that “replace”. But any such linguistic distinction disappears when confronted by other language versions. French uses the word “remplace” as in Lugano 2007.  The German text states “tritt … an die Stelle” (literally, “takes the place of”).

But perhaps the best literal argument for the afterlife of the Brussels Convention is that Article 70 of Brussels I (and also of Brussels I bis) provides that conventions referred to in Article 69 “shall continue to have effect” in relation to matters to which the Regulation does not apply. Read in isolation, that might suggest a revival of the Brussels Convention in relation to those Member States which were parties to it in its last amended form (that is, before the 2004 expansion of the EU). But the argument is harder to sustain when it is read together with Articles 68 and 69. Article 68, as we have just seen, provides for the Brussels Convention to be superceded, while Article 69 in turn refers to conventions which cover the same matters as  Brussels I, but then goes on to list “in particular” conventions not including the Brussels Convention. Although linguistically Article 69 can be read as including the Brussels Convention, read in context it is plain that it is not contemplated by Article 70.

Finally, the last word as far as English law is concerned lies with the UK legislator, which has repealed the provisions which gave effect to both Lugano Conventions and the Brussels Convention. In a dualist system, that is the end of the matter. If other states choose to regard  those instruments as still being in effect, that is a matter for them; but if their domestic legal systems require reciprocity as a condition of recognising foreign judgments, they will not find it in English law except in the limited class of cases in which English law recognises foreign judgments. Both under bilateral conventions, of which there are half a dozen with other Member States (France, Belgium, Netherlands, German, Italy and Austria) and under English common law, recognition is accorded only to final judgments for fixed sums of money given by a court of a country within whose territory the defendant was present when the proceedings began or to the jurisdiction of which the defendant agreed or submitted.

In conclusion, it is clear to me that both theoretically and as a matter of practical application of the law, and subject only to transitional exceptions for the Brussels I bis regulation and minor exceptions for non-European territories of Member States for both the Brussels and the Lugano instruments, the entire Brussels-Lugano regime no longer applies as between the United Kingdom and either other Member States or other Lugano states. Apart from Norway.

So, now, the question is whether the UK will be re-admitted to the 2007 Lugano Convention. The UK made its application in April 2020 and Switzerland, Norway and Iceland have all given their approval. But the EU (including Denmark in its own right) has yet to make its position clear. By Article 72(3) of Lugano 2007, it shall endeavour to give its consent at the latest within one year after the invitation by the Depositary. It only has a few weeks left, and its consent looks increasingly unlikely.

Jamieson v Wurttemburgische Versicherung AG & Anor [2021] EWHC 178 (QB) has been in my draft folder for a while – Master Davison refused an application for a stay on the basis of A29 Brussels I’a’s lis alibi pendens rule, holding that the issue of which court was being seized first, was properly sub judice in the German courts, as is the issue whether litigation subject to the protected categories, should rule out a stay in cases where the weaker party is being disadvantaged.

James Beeton has the background to the case here. Claimant was injured in a road traffic accident in Munich. He was working as a commodities broker for the second defendant. He was attending the Oktoberfest with clients, whom he was entertaining. He was walking from the beer hall to his hotel. He crossed a busy highway and was struck by a taxi, sustaining very severe injuries. The precise circumstances of the collision are in dispute. The taxi was insured by the first defendant, against whom the claimant has a direct right of action.

I tell students and pupils alike that too strong a hint of judicial action in pre-litigation action may trigger a torpedo suit in a court not preferred by client. That is exactly what happened in this case. In pre-action correspondence the insurers for the taxi were asked to confirm that they would not issue proceedings in another jurisdiction – to which they never replied other than by issuing proceedings in Germany for a negative declaration, i.e. a declaration that they were not liable for the accident. Those proceedings had been issued on 18 July 2017. Claimants then issued protectively in England on 10 May 2018. The to and fro in the German proceedings revealed that the correct address for the English claimant was not properly given to the German courts until after the English courts had been seized. 

Hence two substantive issues are before the German courts: when were they properly seized (a discussion in which the English courts could formally interfere using A29(2) BIa); and if they were seized first, is A29 subordinate to the protected categories’ regime: for if the German torpedo goes ahead, claimant in the English proceedings will be bereft of his right to sue in England.

The suggestion for the second issue is that either in Brussels Ia, a rule needs to be found to this effect (I do not think it is there); or in an abuse of EU law (per ia Lord Briggs in Vedanta) argument (CJEU authority on and enthusiasm for same is lukewarm at best).  Despite Master Davison clear disapproval of the insurer’s actions at what seems to be an ethical level, he rules out a stay on the basis of comity and of course CJEU C-159/02 Turner v Grovit: the English High Court must not remove a claim from the jurisdiction of the German courts on the basis of abuse of EU law before those courts.

A most interesting case on which we may yet see referral to the CJEU – by the German courts perhaps.

Geert.

EU Private International Law, 3rd ed 2021, Heading 2.2.9.4, 2.2.15.1.

Lis alibi pendens, Articles 29 &32 Brussels Ia.
Application for stay refused. https://t.co/rIyTL62nPa

— Geert Van Calster (@GAVClaw) February 5, 2021

More information will follow soon. Please click here for a link to the registration page. The Facebook page of the events is available here.

The author of this post is Olivera Boskovic, who is Professor of Private Law at the Université de Paris.

Background

On 12 February 2021, the Supreme Court of the United Kingdom delivered its judgement in Okpabi and others v. Royal Dutch shell and another. The action was brought by two Nigerian communities against Royal Dutch Shell, the UK-domiciled parent company of a multi-national group of companies and its Nigerian subsidiary. The appellants claimed that numerous oil spills in the vicinity of their communities had caused environmental harm leading to damage to health and property.

The first question was a jurisdictional one. Could the UK courts hear the case? This depended, among other questions, on “whether the claimants had an arguable case that a UK domiciled parent company owed them a common law duty of care so as to properly found jurisdiction against a foreign subsidiary company as a necessary and proper party to the proceedings”.

As underlined by Eva-Maria Kieninger, contrary to the decision in Vedanta, the Supreme Court did not clearly distinguish in Okpabi, as it should have, jurisdiction over the parent company and jurisdiction over the subsidiary. Having said that, at first instance and on appeal, it was held that “there was no arguable case that RDS owed the appellants a common law duty of care to protect them against foreseeable harm caused by the operations of SPDC”. On the contrary, the Supreme Court answered this question affirmatively and allowed the appeal.

A very important part of the jurisdictional question is thus solved in favour of the appellants. However, the final result is uncertain since the High court after remitting may still have to address some jurisdictional issues, at least concerning the subsidiary, such as forum non conveniens and/or access to justice in Nigeria which were not addressed in these proceedings.

The decision is in line with the landmark case Vedanta Resources PLC and another (Appellants) v Lungowe and others (Respondents), decided in 2019.

Key Findings

Concerning the duty of care, at the jurisdictional stage, the key points to remember are the following :

• When determining the arguability of the claim at the interlocutory stage, the court should focus on the particulars of the claim, rather than the weight of the evidential case. Factual assertions on which the claim is based should be accepted by the court unless, exceptionally, they are demonstrably untrue and unsupportable and this will be the case only in very exceptional cases. Mini-trials should be avoided. On the documentary evidence it is particularly important to note that the preferred test is “are there reasonable grounds for believing that disclosure may materially add to or alter the evidence relevant to whether the claim has a real prospect of success » (§128)? (For the purpose of comparison, on the difficulties of access to documents which could establish the exact way of functioning of the group of companies in the French context see an interesting example Paris Court of Appeal, 17 September 2020, no. 19/20669)
• The existence of duty of care depends on the circumstances. There is no limiting principle such as the one the Court of Appeal relied on when deciding that the issuance of group wide policies can never give rise to a duty of care. Secondly the Court of Appeal focused inappropriately on the issue of control which in fact should only be the starting point. A duty of care may arise regardless of the issue of control as in the situation where the parent holds itself out as exercising that degree of supervision and control over its subsidiaries even if it does not in fact do so.
• As already stated in Vedanta, “the liability of parent companies in relation to the activities of their subsidiaries is, not of itself a distinct category of liability in common law negligence”. The general principles which determine such liability are “not novel” and hence do not require “an added level of rigorous analysis”

Jurisdiction: A Comparative Perspective

After Vedanta and Okpabi one can now say that English courts seem more prepared to hear cases brought at the same time against UK based companies and their over-seas subsidiaries. This is a very important step. Under the Brussels regime, no longer applicable in the UK, jurisdiction for an action brought against a UK domiciled company was easy to establish, but it was associated with the extreme difficulty of establishing liability (However, it is worth noting that the future is unclear; will the UK join the Lugano Convention or will it go back to common law rules on jurisdiction ?).

On the other hand, jurisdiction for an action brought against over-seas subsidiaries was very uncertain. Indeed, jurisdiction against foreign companies for damage sustained in a foreign country by foreign claimants was considered as problematic not only in the UK but in many countries.

In France, before the 2017 Duty of vigilance Act was adopted the main rules for jurisdiction based on the domicile of the defendants, the place of the harmful event or the nationality of the claimant did not allow French courts to assert their jurisdiction in such cases. Two possible grounds for jurisdiction, co-defendants and the risk of denial of justice, did exist, but both were very uncertain.

In 2017 the French Parliament adopted the Duty of Vigilance Act requiring certain large companies to identify risks that their business creates for human rights and the environment and prevent violations. Under certain conditions these companies can be liable for damage caused by their subsidiaries or companies in their supply chain. This means that, since 2017, mother companies can be considered as proper defendants. Hence, within the limited scope of the Duty of vigilance Act the co-defendants rule should be able to found the jurisdiction of the French courts over foreign subsidiaries. Outside of its scope, the situation remains uncertain.

At EU level, a recent proposal was made to introduce a forum necessitatis in the Brussels I recast which would, under certain conditions, give jurisdiction to Member States’ courts  to decide on business-related civil claims on human rights violations brought against undertakings located in third-countries, but within the supply chain of an EU undertaking. It was also proposed to amend the Rome II Regulation (see the posts of Geert Van Calster, Giesela Rühl, Jan von Hein, Chris Thomale, Eduardo Álvarez-Armas). Both of these proposals were rejected last week.

Choice of Law

Accepting jurisdiction is only the beginning.  The next step, which will be more difficult, is establishing liability. The liability of the subsidiary will, no doubt, be governed by the law of the place of the damage, which is also the law of the place of the causal event and the law of the place of the domicile of the subsidiary.

However, concerning the liability of the mother company one can hesitate. In Okpabi, the court considered that liability was governed by Nigerian law, which was identical to English law.

For environmental torts, Article 7 of the Rome II Regulation gives the claimant a choice between the law of the place of the damage and the law of the place of the causal event. Although this rule seems favourable to the claimants, the definition of the terms “causal event” gives rise to many questions. Is the causal event necessarily the material act that triggered the environmental damage or could one consider that decisions and environmental policy can constitute the causal event?

For other types of damage, the general rule in Article 4, and therefore the law of the place of the damage, applies. This means that in situations where one cannot consider that the local law is identical to the law of the domicile of the mother company, the choice of law question might be problematic.

In the light of these considerations, it appears that the discussion about the modification of the Rome II regulation proposed by the Committee on legal affairs of the European Parliament and rejected last week was a very important one (Although, the suggested rule was far from perfect, the idea of introducing such a rule was, to say the least, worth considering. On this modification see among others O. Boskovic, ‘La loi applicable aux «actions pour violations des droits de l’homme en matière commerciale»’, Recueil Dalloz 2021, p. 252).

Even though courts are starting to address these questions with existing tools (It is worth noting that the first appeals decision resulting in a victory on the merits for the victims in a foreign direct liability case was rendered on 29 January 2021 by the Hague Court of Appeal in the case of Four Nigerian Farmers and Milieudefensie v. Shell), a well drafted European choice of law rule would be very welcome. The same could be said of a European approach of mass tort litigation, the risk of which is raised by this decision. But this is yet another story.

Based on the priorities defined for the Portuguese Presidency of the Council of the European Union in the area of Justice, the Ministry of Justice of Portugal will host on 30 March 2021 a conference under the title Protecting Vulnerable Adults Across Europe – The Way Forward.

The relevance of private international law – and, specifically, the Hague Convention on the International Protection of adults – to the realisation of the fundamental rights of adults with disabilities features among the key topics of the conference.

Speakers include Salla Saastamoinen (Directorate-General for Justice and Consumers, European Commission), Zampia Vernadaki (Secretariat of the JURI Committee, European Parliament), Philippe Lortie (First Secretary, Hague Conference on Private International Law), and Jean-François de Montgolfier (Ministry of Justice, France).

Older persons, people with physical, intellectual, sensory or psychosocial impairments, and victims of hate crime or gender-based violence are among those adults who may face particular challenges in exercising their rights, defending their interests and accessing justice in civil and criminal proceedings.

Cross-border situations may further exacerbate these issues by creating additional obstacles with respect to language, representation and differences in national legal systems. This can particularly affect ‘vulnerable’ adults wishing to exercise their right of freedom of movement within the Union. In addition, the COVID-19 pandemic has increased the difficulties that this population faces.

These challenges affect a significant proportion of the European Union’s population. European societies are ageing and Eurostat expects that, by 2050, one-fifth people in the EU will have some form of impairment. This is likely to result in an increase in the numbers of people who may need support to protect their interests and participate on an equal basis with others in civil and criminal proceedings.

Since 2008, initiatives in the area of civil law have promoted the ratification of the 2000 Convention on the International Protection of Adults and discussed how to improve its application. Yet the overall situation in the EU remains far from satisfactory.

In the area of criminal law, the new EU Strategy on Victims’ Rights 2020-25 recognises the need to explore how to enhance the protection of adults in vulnerable situations.

In addition, since 2018, all EU Member States – and the EU itself – are States Parties to the UN Convention on the Rights of Persons with Disabilities.

As the protection of ‘vulnerable’ adults is one of the priorities of the Portuguese Presidency of the Council of the EU in the area of Justice, the Portuguese Ministry of Justice, the European Commission and the European Union Agency for Fundamental Rights (FRA) are organising a virtual High-Level Conference on 30 March 2021.

This event provides an opportunity to reflect on the current situation and look ahead to what steps are necessary to ensure that all members of our diverse societies can enjoy their fundamental rights, including equal access to justice, in practice.

Attendance is free. The practical information to attend may be found here. See here for general information on the event, including the detailed programme.

EFFORTS (Towards more EFfective enFORcemenT of claimS in civil and commercial matters within the EU) is an EU-funded Project conducted by the University of Milan (coord.), the Max Planck Institute Luxembourg for Procedural Law, the University of Heidelberg, the Free University of Brussels, the University of Zagreb, and the University of Vilnius.

The EFFORTS Project tackles, notably, the Brussels Ibis Regulation and the Regulations on the European Enforcement Order, the European Small Claims Procedure, the European Payment Order, and the European Account Preservation Order. By investigating the implementation of these Regulations in the national procedural law of, respectively, Belgium, Croatia, France, Germany, Italy, Lithuania, and Luxembourg, the Project aims at enhancing the enforcement of claims through more efficient procedures, case management, and cooperation in cross-border disputes.

The first edition of the EFFORTS Newsletter was just issued and is available here.

 

 

 

 

 

Project JUST-JCOO-AG-2019-881802

With financial support from the Civil Justice Programme of the European Union

Gustavo Cerqueira and Nicolas Nord have edited a collection of essays, mostly in French, on the ascertainment of foreign law, titled La connaissance du droit étranger: à la recherche d’instruments de coopération adaptés. The book was published by the Société de législation comparée in late 2020.

The editors have kindly provided the following presentation in English.

Foreign law occupies an increasing place in practice not only for the judge, but also for other legal professions: notary, civil registrar, lawyer in particular. The most apparent causes for this increase are the proliferation of European Union regulations in private international law and the development of jurisdictions or specialized chambers in international litigation and the application of foreign law. A real competition has appeared in this regard for several years. Beyond the only aspect of litigation conventionally considered, the taking into account and the application of foreign law becomes essential for other perspectives: obligation of advice, non-contentious matters, drafting of acts, asset optimization, planning of international corporate transactions, among others.
The stakes are therefore crucial and the search for suitable cooperation instruments for a good knowledge of foreign law is essential.
This book contributes to the reflections on this subject. It thus includes an important inventory which makes it possible to update the diversity of regimes in the legal orders studied and the heterogeneity of professional practices. Concrete solutions are also proposed. They are the result of cross-discussions and round tables during the conference held at the French Cour de cassation on 28 November 2019.
While the apparent objective may be to achieve the adoption of a general instrument with the widest possible geographical scope, it quickly appeared vain to try to favor such an approach at present. On the one hand, each profession has different needs, on the other hand, the level of development of the different systems compared is not the same. While some are lagging behind and are struggling to adopt satisfactory rules in this area, others are at the forefront and therefore are really in demand for a cooperation instrument whose usefulness does not seem obvious to them. The various contributions and debates made it possible to consider paths for reflection as numerous as diverse, ranging from the revitalization of old instruments to the creation of specialized institutions at internal, international or European level, including the establishment of specific mechanisms or the use of artificial intelligence. Such an abundance shows the crucial nature of the issue and the vitality of the reflections carried out on it, but also the relevance of having debated it and the need to continue to do so.
In this sense, the next stage of this debate could be that of the opportunity of adopting a European regulation on the matter.

The book comes with a preface by Hélène Gaudemet-Tallon. The authors include, in addition to the editors themselves: Cyril Nourissat, François Ancel, Cyril Roth, Dominique Foussard, Olivier Berg, Nicolas Nord, Jochen Bauerreis, Guillermo Palao Moreno, Lukas Heckendorn Urscheler, Gustavo Ferraz De Campos Monaco, Patrick Kinsch, Maria Rosa Loula, Jean-Noël Acquaviva, Jean-Louis Van Boxstael, Marie Vautravers, Rodrigo Rodriguez, Wolfgang Rosch, and Françoise Monéger.

For more information, including the table of contents, see here.

Applications are now open for three- to six-month legal internships at our Permanent Bureau in The Hague, for the period from July to December 2021.

Interns work with our legal teams in the areas of Family and Child Protection Law, Legal Cooperation, Dispute Resolution, Commercial and Financial Law. It’s a great way to gain practical experience, deepen your knowledge of private international law, and to understand how the HCCH functions.

Due to the current global situation and the associated travel limitations and restrictions, the Permanent Bureau of the HCCH may consider the possibility that internships be carried out remotely. Interns may also be eligible for a monthly stipend.

We encourage you to share this opportunity with law students and graduates within your networks.

Applications should be submitted by 2 April 2021. For more information, please visit the Internships section of the HCCH website.

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

The transdisciplinary research project on  gender and private international law, which held its kickoff meeting in November 2019 followed by a reading group in Hamburg, will now hold its (postponed) big workshop on May 6-7, 2021. Over the past two years we have worked to create a transdisciplinary field of study at the intersection of feminist and gender studies and private international law. The workshop will establish cross-teaching between disciplines. It will consist of discussion groups covering the pressing topics of transnational surrogacy, the interaction between Western and Islamic family law, and the transnational regulation of queer families. Cyra Choudhury (Florida International University), Susanne Gössl (Kiel), Vanja Hamzi? (SOAS London), Elisabeth Holzleithner (Vienna), and Nadjma Yassari (MPI Hamburg) have agreed to be the convenors.

If you are interested in joining us in May, please send your application by April 2, 2021 at gender@mpipriv.de. You can find the full Call for Applications here:.  For more information about the project, please visithttps://www.mpipriv.de/gender.https://www.mpipriv.de/michaels

Please don’t hesitate to contact us at gender@mpipriv.de if you have any further questions.

We look forward to seeing you at the workshop!

Ivana Isailovi? (University of Amsterdam) & Ralf Michaels (MPI Hamburg)

On 5 February 2021, a seminar entitled ‘The Netherlands, a forum conveniens for collective redress?’ was organised by the Amsterdam, Maastricht and Tilburg Universities, together with the Open University. A brief account of the seminar will appear in the Dutch Journal on PIL, NIPR. Experts addressed procedural and private international law features in European and particularly Dutch mass claims.

One panel discussed PIL instruments needing rules on collective actions and settlements as featured in an earlier post on this blog. Another panel reviewed legal standing under the Directive on representative actions in the cross-border context (Directive 2020/1828) and was moderated by Ianika Tzankova (hereinafter, IT).

Paulien van den Grinten (PG) from the Dutch Ministry of Security and Justice, Axel Halfmeier (AH) from Leuphana University and Vincent Smith (VS) from BIICL participated in the panel discussion. Below follows a shortened record of their exchange.

Introduction

IT: The Dutch approach to certification or admissibility in collective redress comprises two distinct questions:

1. Who has standing to sue? The answer is: In general, designated and ad hoc entities that meet strict criteria (stricter perhaps than some of the criteria that the designated entities need to meet under the Directive in terms of governance, conflict of interest and financial capabilities); and
2. Is the entity admissible? Note that both ad hoc established and designated entities are subject to the test that relates to their ‘admissibility’ in relation to the particular matter.

Since ad hoc entities play an important role in collective redress in the Netherlands also in the international context the question is, how the new Directive will impact the activities of these entities. One could think of several points that arise:

– When could Dutch ad hoc established and certified organisations be acknowledged before the courts of other Member State (MS)?

– The Dutch admissibility test seems to be more onerous than the Directive’s requirements. Will that impact the admissibility of foreign designated entities in the Netherlands?

– Will judgments in collective redress obtained by Dutch ad hoc established and court approved entities be recognised abroad?

Ad hoc Entities

IT: A central role in the Directive is given to so-called ‘qualified entities’. Perhaps we should first explain what ‘cross border’ and ‘designated entities’ mean in the context of the Directive…What is a ‘cross border action’ under the Directive? And what is a ‘designated entity’?

PG: Designated entity in the Directive refers both to entities designated in advance to be placed on the list and to the entities designated via acceptance by the court in a specific collective action.

AH: Cross-border action is defined in Article 3(7) Directive 2020/1828 and has nothing to do with other facts of the case. It is defined as a situation where a qualified entity sues in a MS that is not the MS in which that entity has been designated. For example, if a German entity files in the Netherlands against a Dutch company in the interest of Dutch consumers, this is a ‘cross-border action’.

IT: Apparently there was little support at EU level to incorporate the Dutch model of collective redress, where ad hoc entities play an important role, including in collective matters with an international dimension (Trafigura, Petrobras, VW, Salesforce, Shell, Fortis, Converium etc). The philosophy was to follow in that respect the Injunctions Directive, where only ‘designated entities’ placed on a list were given a role in cross border matters. What do you think of that approach?

VS: One of the major issues with this would be under the Brussels Ibis Regulation. If a national court (e.g. in Amsterdam) appoints an ad hoc entity then, under Brussels Ibis, although the judgment of the Dutch court is supposed to be recognised in all other MSs (and if there is no equivalent procedure, a MS has to provide one), judgments can be refused recognition on public policy grounds. So, a foreign judge could refuse to give full effect to the Dutch judgment, because the ad hoc entity (stichting) was not properly representative of the (international) class, and thus limit recognition (for example), for only Dutch residents were bound by the action, and not those in his forum State. The Directive avoids this by requiring recognition, but only for prequalified entities and only (outside the entity’s home State) on an opt-in basis.

PG: If the concept of recognition and enforcement under Brussels Ibis would be changed and become stricter due to the concept of a cross-border action under the Directive, that would have wide implications. This was surely not envisaged by the European legislator. The aim of limiting cross-border representative actions to actions started by entities placed on a list designated in advance was to prevent so-called ad hoc entities starting a representative action in another MS. The majority in the Council saw this as a way of protecting their courts. It had, however, nothing to do with a rejection of the Dutch national system with ad hoc entities as such. On the contrary, recital 28 of the Directive makes it clear that at a national level ad hoc organisations for a specific representative action designated by way of acceptance are allowed under Article 4 of the Directive. I do not see that courts in another MS could refuse the recognition and enforcement of a judgment resulting from such action based on public policy.

IT: How often (to your knowledge) have the ‘designated entities’ under the Injunction directive in your respective jurisdictions made use of their powers to file actions in cross-border matters? And do you think we should be optimistic about the role of these entities under the Directive?

PG: Not aware of any. We do not know whether claiming monetary damages in a representative action under the Directive will lead to more cross-border cases.

 VS: (1) Not aware. In UK there are few designated entities; most consumer associations are campaigning bodies not equipped to litigate. The competition collective actions regime was amended in 2015 so that representative bodies no longer had to be pre-approved by the Minister before they could bring collective competition claims. Before then, only one organization (Which) had applied for designation under the previous (2002) regime, and had only brought one claim (unsuccessfully).

(2) One issue is the body’s objects (purpose). The likely candidates are mostly charities, the UK charities regulator requires them to adhere to their objects and many of them are limited to UK actions. In UK competition ‘class actions’ so far all the representatives have been individuals (with litigation funding). In contrast to other common law ‘class action’ jurisdictions, however, they have generally been individuals with significant practical/professional experience related to consumer protection. For example, the current Mastercard collective action is headed by a Chief Financial Services ombudsman.

AH: Cross-border actions are rare in Germany. A remarkable recent exception was the action brought by an Italian consumer association (Verbraucherzentrale Südtirol) against Volkswagen in the interest of Italian buyers of cars in the Diesel emissions scandal. However, this is not an injunctions action, but one brought under the German ‘model declaratory action.’ The German consumer association (VZBV) had used this instrument in their own action on behalf of German consumers but had explicitly refused to represent foreign consumers.

Pre-approved (Designated) Entities

IT: So, what you are all saying is that there is no reason to believe that the designated entities will be active in practice. That is not a cheerful news for consumers. However, there must be good reasons why the EU has done this. Let us explore the advantages and disadvantages of granting standing in collective redress in cross-border actions only to pre-approved (designated) entities.

Advantages:

PG: MS courts know that every entity from another MS starting a procedure before its courts meets the harmonised requirements for designated entities, thus making mutual recognition of such entities less problematic.

PG: MS of origin is best placed to test whether an entity meets the harmonized requirements.

Disadvantages:

PG: Some requirements are difficult to test in theory without a collective claim.

PG: It might lead to circumvention of national requirements, as they are stricter.

VS: Many such entities will need to amend their objects.

IT: The Dutch experiences with collective actions (25 years) show that there may not always be such pre-existing entities, when needed, willing to fund such actions in which case the ad hoc established ones fill in that gap. Absent such entities there might be an access to justice deficit.

Funding

IT: And what about funding of designated entities and of collective redress? Articles 10 and 20 of the Directive deal with that, the first one dealing with TPF and the second one with lifting financial restrictions for designated entities.

IT @ PG: You assisted the Dutch government with the Directive and must have some insight. Why are there two separate articles on a related topic? How are non-profit organisations supposed to file this type of (costly) action in their jurisdictions?

PG: The original Commission proposal contained an Article 7 on funding and an Article 15 on assistance of qualified entities. Even though Article 7 was deleted and Article 15 was redrafted, a new provision on funding was reinstated as Article 7, but became Article 10 (and Article 15 became Article 20) in the final text. The importance of Article 10 is twofold: for those in favour of allowing third party litigation funding for representative actions, Article 10 makes it clear that funding is allowed under the Directive on strict conditions. For those against allowing third party litigation funding for representative actions, the wording of Article 7 serves to restrict the conditions under which such funding is allowed. Still, the wording is opaque for those who did not participated in the negotiations. Especially the reference made to in Article 10(2)(b) that a third party funder may not fund a representative action against a defendant which is a competitor of the funder or against a defendant on whom the funder is dependent, gives rise to interpretation questions. What is the rationale behind these provisions? Recital 52 gives clues about the rule prohibiting the funding against a competitor. A trader acting in the same market is considered to have a conflict of interest “since the competitor could have an economic interest in the outcome of the representative action, which would not be the same as the consumers’ interest”. The concern of the European legislator was that the representative action might become an instrument to harm a competitor rather than serve the interests of the consumers. As regards the funder, who is dependent on the defendant the concern of the European legislator is the reverse: such funder might be so dependent on the defendant that its actions are based on the interests of the defendant rather than the interest of the affected consumers.

IT @ AH: what is the view and position on funding of designated entities in Germany?

AH: In Germany, the “Verbraucherzentralen” are maybe the most active designated entities, including their federal association, the VZBV. These are mainly government-funded. In particular, the VZBV received extra money and extra funding of staff to specifically bring the new ‘model declaratory actions.’ So, we are looking at entities that are formally private law associations, which are more like outsourced parts of the government administration. We will see whether this will create future conflicts of interests. Hitherto government financing has not stopped them from bringing cases against (partly) State-owned companies such as VW, but this action was politically supported. There are close ties between the VZBV and the German government.

IT: This is interesting, but this potential issue was apparently not addressed in the Directive. It looks like the focus on potential conflicts of interest in the Directive is entirely on actions that are TPF-ed. Correct?

PG: yes, this seems to be the case. The Directive is limited to actions by consumers for infringements of EU-instruments placed on the list of Annex 1. Representative actions under the Directive will be between a qualified entity as claimant and a trader as the defendant. With the exception of the GDPR, the government is not a likely party in such actions. Conflicts of interest regarding the government were not seen as a point of concern in the negotiations for most MS or the Commission/EP. However, for the Netherlands it was in fact, a point of concern both regarding the designation of qualified entities and financial support to qualified entities. This concerned the broad scope of the Dutch mechanism for collective redress which is not limited to consumer actions. In the Netherlands around 40 % of all representative actions are against the Dutch government as defendant.

Insight into the Negotiations

IT @ PG: What considerations brought us to where we are and what were the most controversial issues during these negotiations? I am puzzled by the fact that actual experience does not seem to count for much in such negotiations: the MS have on the one hand no or disappointing experiences with the system of ‘designated entities’ under the Injunctions Directive and there are better experiences under the Dutch regime, that allows both type of entities (for over 25 years). Did this play any role in the negotiations? What evidence was produced?

PG: At the start of the negotiations in 2018, some MS had a collective redress system in place, others were working on it and some MS did not have any mechanism for collective redress. Throughout the negotiations more MS started legislative projects on collective redress in various shapes and forms. The Netherlands had pending legislation when the negotiations started. In the preparation for Parliamentary process we unearthed many issues relevant to the Directive. Real experience was largely irrelevant in the negotiations – it was easier for us with a collective redress mechanism to indicate difficulties in the Directive. By the late 2019, the Dutch WAMCA had become law. The result of this was that the Directive and the Dutch WAMCA are compatible. The Directive leaves enough room to accommodate MS’s national systems, e.g. designating ad hoc entities as qualified entities and the possibility for both opt out and opt in mechanisms. For some other aspects the provisions of the Directive match those of the WAMCA perfectly, e.g. the court can reject a claim at inception if it is manifestly unfounded, can be found both in Article 7(7), of the Directive and in Article 1018c, par. 5 (c). Therefore, the WAMCA will be the Dutch collective redress mechanism under the Directive without having to change. However, we do have to provide for a procedure for entities to be placed on the list predesignated for cross border actions. The Article 10 funding provisions seem to be more detailed than the WAMCA. We may have to exclude competitors or someone dependent on the defendant to acts as funder.

 AH:  Little of the discussion about collective actions is evidence-based. ‘Abusive’ litigation seems unlikely. On the contrary, the experience in Germany shows that almost all such actions are well-founded and not frivolous. Even if we look at the empirical data in the U.S., we clearly do not find the ‘abuse’ scenario that is often painted on the wall.

IT @ PG: What were you most proud of in the negotiations? What were you most frustrated by, also in view of the fact that Dutch ad hoc spv’s seem to need to meet much stricter criteria than the EU ‘designated entities’ in terms of governance, conflict of interest and funding capabilities and yet they are being perceived as somehow of a ‘lower rank’ in cross-border matters? Who will be in charge in the Netherlands in appointing designated entities?

PG: The biggest achievement was European legislative result on collective redress at all, obliging every MS in Europe to have a collective redress mechanism for consumers. Making a distinction between national collective and cross-border collective redress brought a breakthrough in the negotiations. Accepting that for cross border cases we have to work with a list of entities designated in advance with harmonised criteria, meant that the Netherlands – and others, like Germany – could preserve their national system. Even though the harmonised criteria may look different or less strict than the criteria under the WAMCA, the rationale behind the criteria are very similar. There are practically no criteria in the WAMCA which do not meet one of the criteria in Article 4 of the Directive. E.g. the obligation in Article 3:305a (2) of the WAMCA to have a governance structure with a supervisory board can be seen as the implementation of the obligation in Article 4, par. 3, (e) to be independent and to prevent a conflict of interest. We intend to make the Dutch ministry of Justice and Security responsible for the list of entities designated in advance for cross border actions. One of the more difficult issues in the negotiations in the Council was that of the concept of standing of a qualified entity on the one hand and the civil procedural concept of the admissibility of a specific representative action on the other. To underline that distinction the Directive contains several references to the procedural autonomy of MS and the room for courts to perform an admissibility test in accordance with their national law, e.g. in Recital 12 and Article 7(3).

Non-Dutch Perspectives on the Directive – And on Dutch Collective Redress

IT: Apparently one can speak of ‘Dutch exceptionalism’ in the context of EU collective redress. Let us hear non-Dutch perspectives on the EU Directive and on Dutch collective redress.

IT @ AH and VS: What is your take on the issues? In view of the sectoral approach in your respective countries versus the Dutch horizontal one? Are there any other issues that you identify in that context?

AH: I think there are some open issues regarding the EU Directive’s rules on standing on the one hand and individual Member States’ rules on admissibility of collective actions on the other. For example, if Dutch law would be restrictive in allowing foreign designated entities to sue, this could possibly violate Article 6(1) of the Directive that basically requires Member States to accept cases brought by designated entities from other Member States. For example, if a designated entity from EU Member State X sues a Dutch company before a Dutch court, but with respect to that company’s activities in Member State X and in the interest of consumers in Member State X, I think that the Dutch court would have to hear the case. It is also interesting that the Directive in its Article 5(4) allows the defendant trader to raise objections against the legitimacy of the designated entity with regard to the Directive’s criteria. But the Directive is silent on the procedure in such a case: Should the action be stayed until the home Member State of the designated entity has decided about such concerns? With regard to Germany, the German government worked hard to avoid ad hoc entities in the Directive and has succeeded in this regard. But there may be some more room now for foreign entities to sue in Germany under the Directive.

PG: As regards AH’s example, I think a Dutch court would accept that this foreign entity has standing. Accordingly the new Directive is no different from the current one for actions to obtain injunctions, be it that the foreign authorities at least have had to apply the harmonised criteria in order to place this entity on the list. In that respect it offers a better safeguard than now. Furthermore, accepting legal standing does not mean that the admissibility of the specific claim cannot be tested by the court. E.g. the Dutch court may still check whether the claim brought by the designated entity sufficiently safeguards the interests of the claimants and whether the entity has means to finance the claim.

VS: UK experience with the sectoral regime for collective competition (anti-trust) claims is still young, but developing. However, there are some clearly emerging issues which will also likely arise when implementing and applying the Directive:

It is modelled on the (horizontally applicable) Canadian regime, so we have a model to follow for the tricky questions. Even though there are differences between the EU and Dutch regimes, the Dutch experience will still be valuable for MS courts wanting to find an answer to issues not expressly dealt with in the Directive or national implementing legislation. The Dutch regime has many similarities with what is required under the Directive and, I think is likely to be used as a model by others.

A ‘class’ action doesn’t work so well for non-economic loss (eg injury due to clinical negligence etc) due to widely differing circumstances, whereas the Dutch settlement element was set up to deal with exactly that situation.

A sectoral approach could lead to borderline cases — e.g. claims pretending to be about consumer law, when they are in reality competition law cases, which are not covered by the Directive.

Also, it may be difficult to tell in many cases whether a case is about breach of EU law or national law. For example, in the consumer protection and environmental protection fields, EU law is mostly contained in Directives which are then implemented by the MS. So, the ‘consumer’ (claimant) will only immediately see a breach of legal norms in his national legislation. For many, working out whether their claim is in fact based on EU law may be unnecessarily difficult.

PG: Yes, to me this is a key observation and is why we want the Dutch WAMCA to be our system under the Directive, meaning that there will still be only one system in the Netherlands.

Is the Directive a Threat to Dutch Cross-Border (Consumer) Actions?

IT @ all: To circle back at the beginning of our discussion, do you think that the limitation on standing to pre-approved entities in the new EU Directive is a threat to Dutch cross border (consumer) actions, what is your final word on that?

VS: In my view the ‘threats’ to cross-border actions by qualified entities are mainly that they do not have the experience in doing this and that their purpose may be national rather than international. The EU level umbrella bodies might be better placed (e.g. BEUC) but they would have to be recognized by a national authority (lots of applications for designation to the Belgian authorities in Brussels?). So, the most important aspects I think are willingness of national authorities to recognize the few international ‘entities’ who might want to do this – not specific to the Dutch situation, I think, and a willingness/expertise in acting cross-border.

PG: I agree. Let’s not forget that since the entering into force of the Injunctions Directive not a single cross border action was ever started in the Netherlands or elsewhere until last year’s action against VW. It is cumbersome and might be very expensive having to start a case in another jurisdiction, working with foreign lawyers etc.

AH: One of the areas in which the Directive is really a step forward is third-party funding of litigation. In Germany, there is considerable uncertainty after some court decisions that prohibited this as being immoral in relation to a certain type of consumer associations’ actions. We now have the language in Article 4(3) e of the Directive, which certainly is a compromise, but at least shows that TPF cannot be completely prohibited, but needs to be regulated and looked at in more detail. In general, I think that the Dutch courts will remain an attractive forum for cross-border collective actions, and I expect that the Netherlands will remain the innovation leader in this field.

IT: Thank you very much for sharing your views and insights on this fascinating and challenging topic.