Droit international général

The extensive ruling by Foster J in Roberts (a minor) v Soldiers, Sailors, Airmen and Families Association & Ors [2020] EWHC 994 (QB) is clearly related to Soole J’s 2019 ruling which I reviewed here. Yet exactly how is not clear to me. No reference at all is made to the 2019 ruling (there is reference to an earlier Yoxall M 2018 ruling) in current judgment. Current ruling treats partially related issues of limitation and applicable law, Rome II is not engaged ratione temporis. The English rules’ general lex causae provision (pointing to locus delicti commissi), summarised at 112-113, Foster J finds, should not be displaced with a ‘substantially more appropriate’ rule in the circumstances. However she does find that the implications of the German statute of limitation should be set aside on ordre public grounds, for they would otherwise cause ‘undue hardship’.

Elijah Granet has extensive review here and I am happy to refer.

Geert.

 

 

The most recent issue of the Zeitschrift für Vergleichende Rechtswissenschaft (German Journal of Comparative Law; Vol. 119 [2020], No.1) contains the following articles:

Ahmad Natour, Hebrew University, and Talia Einhorn, Ariel University (Israel): The Application of Islamic Law in Israel – Issues of Filiation between Secular and Religious Law, ZVglRWiss 119 (2020) 1–40

This article (in English) presents a critical study of the application of Islamic law in Israel with respect to the establishment of filiation and its effects on Muslim families in Israel considering in particular the interplay between religious and secular law.

Sebastian Omlor, University of Marburg (Germany): Digitales Eigentum an Blockchain-Token – rechtsvergleichende Entwicklungslinien, ZVglRWiss 119 (2020) 41–58

The process of digitalization involves classical and analogue fields of law like property law and object-related legal institutions like property. The paper analyses the openness and flexibility of different jurisdictions concerning the absolute (inter omnes) status of blockchain tokens by a legal comparison of, inter alia, England, California, Germany, and Liechtenstein.

Chris Thomale, University of Vienna (Austria): Herstellerhaftungsklagen – Internationaler Deliktsgerichtsstand und anwendbares Recht bei reinen Vermögensschäden wegen versteckter Produktmängel, ZVglRWiss 119 (2020) 59–110

Product liability has evolved to become an important building block of modern consumer protection. Recent lawsuits, notably surrounding the Dieselgate scandal of German car manufacturers, show that such liability claims typically involve crossborder elements. This paper explores the international procedural and conflict of laws aspects of such lawsuits. It is aimed at raising awareness for victim protection as the overarching principle of both special jurisdiction for tort claims and the conflict of tort laws rule.

In addition, this issue – ZVglRWiss 119 (2020) 111–119 – contains a very elaborate essay of Felix M. Wilke, University of Bayreuth, who reviews “How European is European Private International Law?”, edited by Jan von Hein, Giesela Rühl and Eva-Maria Kieninger (2019). On this book, see also our previous post here.

I had already reported in March on the first application of the CJEU C-18/18 Eva Glawischnig-Piesczek v Facebook ruling in an update to my post on the latter. I thought I’ld add a separate post on the ruling for it, well, deserves it: the court held that orders based on Austrian copyright are limited to Austria (given copyright’s territorial limitations), but if they are based on personal rights, the claimant has to specify the requested territorial reach (so potentially global).

IPKat have further analysis here. As one or two of us discussed at the time of the CJEU ruling: the infringement of personality rights angle is an important one.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2, Heading 2.2.8.2.5.

The author of this post is Caterina Benini, a PhD student at the Catholic University of the Sacred Heart in Milan. This is the fourth in a series of posts aimed to explore the impact of the coronavirus crisis on the phenomena of mobility and exchange that form the constituent elements of private international law, and to discuss the responses that private international law rules provide to the challenges posed by the crisis itself (see the previous contributions by Giovanni Chiapponi, Matthias Lehmann and Tomaso Ferando). The EAPIL blog welcomes further contributions on these topics, either in the form of comments to the published posts or in the form of guest posts. Those interested in proposing a guest post for publication are encouraged to contact the blog’s editorial team at blog@eapil.org.  

Article 46 of the Italian Decree-Law of 17 March 2020

The Italian government enacted on 17 March 2020 a Decree-Law, i.e. a piece of urgent legislation, in an effort to mitigate the economic and social consequences of the Covid-19 pandemic. The Italian Parliament later endorsed the Decree-Law and converted it into Law.

The Decree-Law sets forth a broad range of measures, some of which relate to employment contracts. In particular, Article 46 of the Decree-Law provides, among other things, that, for a period of 60 days after its entry into force (that is, between 17 March 2020 and 18 May 2020), no employment contract may be terminated on grounds of a failure by the employee to perform his or her obligations, or on objective grounds such as a drop in the demand for the employer’s goods or services.

From the standpoint of private international law, Article 46 gives rise to a set of interpretative problems whenever employment contracts featuring a cross-border element are concerned.

A mandatory rule providing a minimum standard of protection for employees

Article 46 of the Decree-Law applies in principle to all employment relationships governed by Italian law, regardless of whether Italian law is the law chosen by the parties or rather applies to the contract objectively.

In the Member States of the European Union, Article 46 may also come into play, by virtue of Article 8(1) of the Rome I Regulation, in contracts that the parties agreed to submit to a law other than Italian law.

In fact, if the contract would have been governed by Italian law pursuant to Article 8(2), (3) or (4) of the Regulation, the choice of a different law by the parties may not have the result of depriving the employee of the protection afforded to him or her by Article 46. This means, for example, that if an employee who habitually carries out his work in Italy is dismissed during the above stated period, he or she will be able to rely on Article 46, regardless of whether the employer is entitled, under the law chosen by the parties, to terminate the contract.

Given that Article 46 finds hardly any equivalent in other legal systems, Article 8(1) of the Rome I Regulation will almost invariably interfere with the chosen law whenever the issue arises, in a Member State, of an employment contract connected with Italy in the way described in Article 8(2), (3) or (4).

An overriding mandatory provision?

Article 46 of the Decree-Law, it is submitted, further qualifies as an overriding mandatory provision of the Italian legal order within the meaning of Article 9(1) of the Rome I Regulation.

The characterisation of Article 46 as an overriding mandatory provision stems from the fact that it satisfies the two requirements mandated under Article 9(1) of the Regulation: (i) it aims to protect a public interest, and (ii) it is meant to apply to any situation within its own scope, irrespective of the law otherwise applicable to the contract.

As to the first requirement, it is argued that, through the prohibition set out in Article 46, the Italian government aims to protect the stability of social and economic relationships of Italy. Indeed, as mentioned in a press release of 16 March 2020, by adopting a set of measures in support of employment, the government intended to prevent businesses from reacting to the pandemic and any related restriction by suddenly terminating a large number of employment contracts, as this might result, in turn, in social unrest. The fact that in the draft of the new Decree-Law Article 46 is extended for three further months, appears to confirm that the ban on dismissals is part of a broader strategy aimed at preventing conflicts which could possibly arise throughout the coronavirus crisis.

Turning to the second requirement, it is submitted that Article 46 implicitly provides its own scope of application, within which it intends to be applied irrespective of the law otherwise applicable under the relevant conflict-of-law rules.

Lacking any geographical limitation in Article 46 itself, regard should be given to other provisions of the Decree-Law which suggest that the various measures adopted therein are in principle meant to apply only territorially.

The preamble, for instance, makes it clear that the Decree-Law addresses the impact of Covid-19 on the “national social-economic reality”, meaning business, workers and households located in Italy. Furthermore, the scope of some provisions is explicitly limited to the territory of Italy. This holds true for provisions on social security, featured in Chapter I of Title II (“Measures in support of employment”). Article 46, though included in a different chapter of the same title, presents itself as part of the overall strategy adopted to support workers. Arguably, its scope should be geographically limited to situations connected with Italy in the same way as the other measures pursuing that goal.

The qualification of Article 46 as an overriding mandatory rule entails that, pursuant to Article 9(2) of the Rome I Regulation, Article 46 of the Decree-Law will be applied by Italian courts, no matter the law specified by the Regulation itself, to any cross-border employment relationship centred in Italy. In such a scenario, any dismissal justified by the employer’s financial difficulties or by the employee’s impossibility to perform his or her activity would be considered invalid and without effect.

What if the cross-border employment relationship brought before the Italian court is governed by a foreign law and is not connected with Italy? Should Article 46 be applied as an overriding mandatory provision of the forum?

It is argued that in such scenario an Italian court should not apply Article 46 of the Decree-Law, since relationships entirely disconnected from Italy do not fall among the cases to which this provision is meant to apply. Indeed, being Article 46 addressed to situations immediately and directly affected by the Covid-19 crisis and the measures adopted by the Italian government to face it, only cross-border relationships having a genuine connection with Italy – such as when the employee is asked to predominantly perform his or her activity in Italy, or when the employer’s establishment in charge of managing the relationship is situated in Italy – qualify to fall within its scope of application.

Another question of greater complexity is whether an Italian court ought to apply Article 46 of the Decree-Law when the employment relationship displays only a minimum connection with Italy, for instance because the employee was hired in Italy although in fact he or she never worked there.

To solve this issue, it is necessary to understand how intense the connection with the territory of Italy must be for Article 46 to be triggered. Considering the above analysis on the rationale of Article 46, it is argued that cases presenting a minimal connection with Italy fall outside the scope of application of Article 46.

Indeed, if the rationale of Article 46 is to protect the social and economic relations of Italy, there is no reason to apply such rule to employment relationships whose real seat – identified by the place of the employee’s predominant performance or the employer’s establishment – is not located in Italy, so that their termination does not jeopardise the Italian social order.

An overriding mandatory rule of the State of performance of the obligations?

A different issue is whether, and subject to which conditions, Article 46 may be given effect in a Member State other than Italy pursuant to Article 9(3) of the Rome I Regulation, that is, as an overriding mandatory rule of a country than is neither the forum nor the country whose law applies to the contract.

Article 9(3) provides that “[e]ffect may be given to the overriding mandatory provisions of the law of the country where the obligations arising out of the contract have to be or have been performed, in so far as those overriding mandatory provisions render the performance of the contract unlawful”.

Three requirements must be met by a rule of a third State in order to fall within Article 9(3): (i) it must be an overriding mandatory rule pursuant to Article 9(1); (ii) it must be a rule of the country where the contractual obligations have to be or have been performed and (iii) it must render the contractual performance unlawful.

Having already explained why Article 46 is an overriding mandatory rule pursuant to Article 9(1), this section will focus on whether Article 46 can satisfy the remaining requirements.

With respect to the second requirement, for Article 46 to qualify as a rule of the country of the contractual performance, there are two interrelated questions that must be answered: (i) is an act of dismissal an act of performance of a contractual obligation? (ii) If so, where does it take place?

Adhering to the restrictive interpretation given to Article 9 by the ECJ in Nikiforidis, the answer to the first question should be negative: an act of dismissal cannot be strictly defined as an act of performance of whatever obligation arising out of the employment contract. Rather, the dismissal is the act by which the employer exercises the right to unilaterally terminate the contract, precluding the employee from performing his or her obligations towards the employer. As a result of this, Article 46 of the Decree-Law should be denied the effect prescribed by Article 9(3) of the Rome I Regulation.

This conclusion, although aligned with the case-law of the ECJ, does not seem fully satisfactory.

If the main goal of giving effect to the overriding mandatory rules of a third State is to render a decision which is fair because it takes into account the rules of the legal order with which the situation is most closely connected, by interpreting narrowly the notion of “performance of contractual obligations”, such goal cannot be pursued in all those cases where the dispute does not concern the performance of an obligation, but rather the exercise of a right.

It is argued that, if contractual rights and obligations are the two sides of the same coin, it would be unreasonable to consider the place of performance of the contractual obligations as the only place relevant for the purposes of Article 9(3) of the Rome I Regulation, to the detriment of the place of exercise of a contractual right. According to the circumstances of the case, both these places may share a close connection with the relationship at stake so to justify the consideration of their overriding mandatory rules pursuant to Article 9(3) of the Rome I Regulation.

However, as things currently stand, in a dispute concerning the validity of the employer’s exercise of its right to terminate the contract, the court of a Member State, seized of the matter, may give effect, pursuant to Article 9(3) of the Rome I Regulation, to the overriding mandatory rules of the State where the employee performs his or her contractual obligations – which in a cross-border employment relationship is likely not to coincide with the State where the right of dismissal was exercised – with which the issue of the dismissal is not strictly connected.

To avoid such a short circuit, a flexible interpretation of the concept “performance of contractual obligations” should be adopted for the purposes of Article 9(3) of the Rome I Regulation.

An overture to this effect can be seen in the AG Szpunar’s Opinion in the Nikiforidis case. Leveraging on the genuine meaning of the mechanism of overriding mandatory rules of third States – i.e. preserving the connection with the legal order to which the relationship is more strictly connected – AG Szpunar favoured a broad interpretation of the notion “performance of contractual obligations”, as to encompass not only the obligation consisting in characteristic performance, but any obligation arising from the contract (§ 93), irrespective of whether directly defined by the parties in the contract or imposed by law (§ 94).

The step forward to AG Szpunar’s interpretation would be to endorse a contextualized interpretation of the entire notion of “performance of contractual obligations”, so that when the dispute concerns only the credit side of the relationship – which by definition does not encompass the performance of an obligation – the exercise of a right should be understood as equivalent to the performance of an obligation for the purposes of Article 9(3). Along the lines of what AG Szpunar argued, this should hold true both for the exercise of rights conferred by the contract and the exercise of rights conferred directly by the governing law.

As to the place where the creditor’s right is exercised, it is reasonable to localize it at the same place where the creditor is established. This means that in case of an act of dismissal, said place will coincide with the place of establishment of the employer.

Building on such interpretation, Article 46 appears to fulfil the second requirement provided for under Article 9(3) of the Rome I Regulation, being a rule of the country where the statutory right of termination has been or is to be exercised by the employer based in Italy.

The compliance of Article 46 with the unlawfulness requirement set out above is more straightforward. As Article 46 renders unlawful the dismissals of employees on the grounds of the Covid-19 financial difficulties encountered by their employers, also the third requirement set out above is satisfied.

The above is without prejudice to the fact that the decision of whether to give effect to Article 46 of the Decree-Law will be taken by the court seized on the basis of its own discretionary assessment of the nature, purpose and consequences deriving from the application or non-application of such provision.

When performing such assessment, which is political in nature, the court will evaluate whether the rationale underpinning Article 46 can be welcomed as convergent with the values of the forum. In essence, the court will assess whether, on the basis of the policies of its own legal order – including solidarity with other EU Member States – the rule of conduct prescribed by Article 46 of the Italian Decree-Law can be considered justified by the protection of interests that the forum wants to safeguard with the same or a similar degree of intensity adopted by the Italian legislator in Article 46 of the Decree-Law.

This ultimately shows that the application of overriding mandatory rules of third States falling within the category of Article 9(3) of the Rome I Regulation, to put it with AG Szpunar, “creates for the [seized] court the possibility of giving a decision which is fair and at the same time has regard to the need to balance the competing interests of the States involved” (§ 74).

Seen from this perspective, the consideration of the overriding mandatory rules of a third State is an opportunity for the judge to give a decision which is considered fair because aligned with its own values not only by the State enacting the overriding mandatory provision but also by the forum itself. Hence, the broad interpretation of Article 9(3) of the Rome I Regulation above proposed should be welcomed as increasing the cases where such possibility can be granted.

Written by Tobias Lutzi, University of Cologne

One of the biggest winners of the current pandemic (other than toilet paper producers, conspiracy theorists, and the climate) seems to be the former Silicon Valley startup Zoom, whose videoconferencing solutions have seen its number of daily users increase about thirtyfold since the end of 2019. While the company’s success in a market otherwise dominated by some of the world’s wealthiest corporations has taken many people – including investors – by surprise, it can be attributed to a number of factors – arguably including its software’s highly popular virtual-background feature.

With more and more people using the cockpit of the Millennium Falcon, the couch from The Simpsons, and other iconic stills from movies or TV series as virtual backgrounds in their private and professional Zoom meetings and webinars, the question arises as to whether this may not constitute an infringement of copyright.

Unsurprisingly, this depends on the applicable law. Whereas using a single frame from a movie as a virtual background may often qualify as ‘fair use’ under US copyright law even in a professional setting (and thus require no permission from the copyright holder), no such limitation to copyright will be available in many European legal systems, with any ‘communication to the public’ in the sense of Art 3 of the Information Society Directive 2001/29/EC potentially constituting a copyright infringement under the domestic copyright laws of an EU Member State.

As far as copyright infringements are concerned, the rules of private international law differ significantly less than the rules of substantive law. Under the influence of the Berne Convention, the so-called lex loci protectionis principle has long become the leading approach in most legal systems, allowing copyright holders to seek protection under any domestic law under which they can establish a copyright infringement. For infringements committed through the internet, national courts have given the principle a notoriously wide application, under which the mere accessibility of content from a given country constitutes a sufficient basis for a copyright holder to seek protection under its domestic law. Accordingly, using an image on Zoom without the copyright holder’s permission in a webinar that is streamed to users in numerous countries exposes the user to just as many copyright laws – regardless of whether the image is used by the host or by someone else sharing their video with the other participants.

Interestingly, the fact that the image is only displayed to other users of the same software is unlikely to mitigate this risk. While Zoom’s (confusingly numbered) terms & conditions unsurprisingly prohibit infringements of intellectual property (clause 2.d.(vi)) and – equally unsurprisingly – subject the company’s legal relationship with its users to the laws of California (clause 22/20.1), courts have so far been slow to attach significance to such platform choices of law as with regard to the relationship between individual users. In fact, the EU Court of Justice held in Case C-191/15 Verein für Konsumenteninformation v Amazon (paras. 46–47) that even with regard to a platform hosts own liability in tort,

the fact that [the platform host] provides in its general terms and conditions that the law of the country in which it is established is to apply to the contracts it concludes cannot legitimately constitute […] a manifestly closer connection [in the sense of Art. 4(3) Rome II].

If it were otherwise, a professional […] would de facto be able, by means of such a term, to choose the law to which a non-contractual obligation is subject, and could thereby evade the conditions set out in that respect in Article 14(1)(a) of the Rome II Regulation.

While the escape clause of Art. 4(3) Rome is not directly applicable to copyright infringements anyway, the decision illustrates how courts will be hesitant to give effect to a platform host’s choice of law as far as the relationship between users – let alone between users and third parties – is concerned. This arguably also applies to other avenues such as Art. 17 Rome II and the concept of ‘local data’.

The liability risks described above are, of course, likely to remain purely theoretic. But they are also easily avoidable by not using images without permission from the copyright holder in any Zoom meeting or webinar that cannot safely be described as private under the copyright laws of all countries from where the meeting can be joined.

The issue 38/1 2020 of the Netherlands Journal of Private International Law (NIPR – Nederlands Internationaal Privaatrecht) has just been published. This issue of the NIPR is available here. It includes an Editorial and the following three articles (with abstracts) devoted to the new Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, concluded on 2 July 2019 (not yet in force see here):

1. Towards a global Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, by Hans van Loon

“This article describes the background and context of the ‘Hague Judgments Project’. Apart from earlier attempts, three stages may be distinguished in the history of this project: a first stage, dominated by the dynamics of the early European integration process, with the result that the 1965 and 1971 Hague Conventions on choice of court and recognition and enforcement of judgments, although providing inspiration for the 1968 Brussels Convention, remained unsuccessful; a second stage, very much determined by the transatlantic dimension, with differing strategic objectives of the EU and the USA notably regarding judicial jurisdiction, resulting in the lack of success of the ‘mixed’ convention proposal; and a third stage, where negotiations took on a more global character, resulting in the 2015 Choice of Court Convention and the 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters.

“The article discusses the interaction between the global Hague and the regional EU negotiations on jurisdiction and enforcement of judgments, the impact of domestic judicial jurisdiction rules (the claim/forum relationship versus the defendant/forum link) on the Hague negotiations and other (in some cases: recurrent) core issues characterizing each of the aforementioned three stages, and their influence on the type (single, double, ‘mixed’) and form of convention that resulted from the negotiations.”

2. Comment on the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. Is the Hague Convention of 2 July 2019 a useful tool for companies who are conducting international activities? By Catherine Kessedjian

“The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, adopted on 2 July 2019, gives some certainty to worldwide trade relations outside regional systems such as the EU, when disputes are submitted to national courts instead of arbitration or mediation. The Convention avoids the difficult issue of ‘direct’ jurisdictional bases and limits itself to ‘indirect’ jurisdictional bases. This choice of policy was one of the keys to its adoption. Another one was the exclusion of many problematic areas of the law where differences in legal systems are too deep to allow consensus. A third one was to allow States becoming Parties to the Convention to make a number of declarations including some to protect their own acts, which may have been considered as acta jure gestionis under international law. Consequently, the Convention has a fairly narrow scope of application. This may induce more States to become a Party, without which the Convention would not have any more success than the old Hague Convention of 1971 which is still on the books, particularly because it still includes a bilateralisation system, albeit an easier one than that included in the 1971 Convention.”

3. The 2019 Hague Judgments Convention through European lenses, by Michael Wilderspin and Lenka Vysoka

“The European Union is an important actor in the field of international judicial cooperation and in the Hague Conference on Private International Law. It is itself a member of the Conference, and at the same time represents 27 States that are also members. Because of the EU’s own internal rules, where the matters being negotiated at international level are already the subject of EU rules, the EU speaks on behalf of its Member States. Furthermore, if the EU accedes to an international convention in such circumstances, the all or nothing principle applies. Either the EU accedes as a bloc or not at all.

“The 2019 Judgments Convention has the potential to facilitate the worldwide recognition and enforcement of judgments in civil and commercial matters. The approach taken by the negotiators has, particularly in the light of the failure of earlier, more ambitious projects, been to aim for a more modest convention, with the objective of encouraging as many States as possible to become Contracting Parties to the Convention.”

Moreover, the issue contains an article written in Dutch on preliminary questions submitted to the CJEU by the Supreme Court of the Netherlands in SHAPE/Supreme: on garnishment and immunity (HR 21 December 2018, ECLI:NL:HR:2018:2361 and HR 22 February 2019, ECLI:NL:HR:2019:292, NIPR 2019, 64), by A. F. Veldhuis

“The Supreme Group initiated proceedings in the Netherlands against two NATO bodies (SHAPE and JFCB) with regard to the alleged non-fulfilment of payment obligations under a contract relating to the supply of fuel to SHAPE for NATO’s mission in Afghanistan. On the basis of a Dutch order for garnishment, Supreme levied a garnishment on an escrow account in Belgium. SHAPE then initiated proceedings for interim relief before the Dutch courts, invoked immunity from enforcement and sought (i) to lift the garnishment and (ii) to prohibit Supreme from attaching the escrow account in the future. Both the court at first instance and the appellate court ruled that the seizure could be lifted. However, the Supreme Court questioned whether the Dutch courts had jurisdiction to adjudicate this dispute. Article 24(5) Brussels I-bis provides that the courts of the Member State in which the judgment has been or is to be enforced have exclusive jurisdiction regarding procedures concerning the enforcement of that judgment. As the garnishment was levied on the basis of an order for garnishment by a Dutch court on an account in Belgium, the question here is whether Article 24(5) Brussel I-bis also covers SHAPE’s application to the Dutch court to have the attachment lifted. Since there may be reasonable doubt as to the interpretation of Article 24(5) Brussels I-bis, the Supreme Court decided to refer the matter to the Court of Justice for a preliminary ruling. Before going into this question, the Supreme Court must first examine whether the claims fall within the material scope of Brussels Ibis. The fact that SHAPE has based its requests on immunity from enforcement raises the question of whether, and if so to what extent, this case is a civil or commercial matter within the meaning of Article 1(1) Brussels Ibis. In this respect, too, the Supreme Court saw sufficient grounds for submitting preliminary questions. This case has raised thought-provoking questions which navigate along the thin line between private international law and public international law.”

Written by Giesela Rühl, University of Jena/Humboldt-University of Berlin

Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of all contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.

1. Corporate social responsibility has been the subject of lively debates in private international law for many years. These debates revolve around the question of whether companies domiciled in countries of the Global North can be held liable for human rights violations committed by foreign subsidiaries or suppliers in countries of the Global South (so-called supply chain liability).

2. According to the majority view in the public international law literature, companies are not, at least not directly bound by human rights. Although numerous international law instruments, including the UN’s 2011 Guidelines for Business and Human Rights (Ruggie Principles), also address companies, liability for human rights violations is, therefore, a matter of domestic law.

3. The domestic law applicable to liability for human rights violations must be determined in accordance with the provisions of (European) private international law. Direct recourse to the lex fori, in contrast, is not possible. The legal situation in Europe is, therefore, different from the United States where actions which are brought on the basis of the Alien Tort Claims Act (ATCA) are governed by US-American federal (common) law.

4. Claims for human rights violations committed abroad will usually be claims in tort. Under (European) private international law it is, therefore, the law of the place where the damage occurs (Article 4(1) Rome II Regulation) and, hence, foreign law which governs these claims. Exceptions apply only within narrow limits, in particular if domestic laws can be classified as overriding mandatory provisions (Article 16 Rome II Regulation) or if application of foreign law violates the ordre public (Article 26 Rome II Regulation).

5. In addition to tort law, claims for human rights violations may also be based on company law, namely when directors are directly held liable for torts committed by a foreign subsidiary. According to the relevant private international law provisions of the Member States these claims are governed by the law of the (administrative or statutory) seat of the foreign subsidiary. As a consequence, claims in company law are also subject to foreign law.

6. The fact that (European) private international law submits liability for human rights violations to foreign law is very often criticized in the private international law literature. Claiming that foreign law does not sufficiently protect the victims of human rights violations, a number of scholars, therefore, attempt to subject liability claims de lege lata to the domestic law of the (European) parent or buyer company.

7. These attempts, however, raise a number of concerns: first, under traditional (European) private international law, substantive law considerations do not inform the determination of the applicable law. Second, the wish to apply the domestic law of a European country is mostly driven by the wish to avoid poorly functioning court systems and lower regulatory standards in countries of the Global South. Neither of these aspects, however, has anything to do with the applicable tort or company law. Regulatory standards, for example, are part of public law and, therefore, excluded from the reach of private international law. Finally, the assumption that the domestic law of the (European) parent or buyer company provides more or better protection to the victims of human rights violations does not hold true de lege lata. Since parent and buyer companies are legally independent from their foreign subsidiaries and suppliers, parent and buyer companies are only in exceptional cases liable to the victims of human rights violations committed abroad by their foreign subsidiaries or suppliers (legal entity principle or principle of entity liability).

8. The difficulties to hold (European) parent and buyer companies de lege lata liable for human rights violations committed by their foreign subsidiaries or suppliers raises the question of whether domestic laws should be reformed and their application ensured via the rules of private international law? Should domestic legislatures, for example, introduce an internationally mandatory human rights due diligence obligation and hold companies liable for violations? Proposals to this end are currently discussed in Germany and in Switzerland. In France, in contrast, they are already a reality. Here, the Law on the monitoring obligations of parent and buyer companies (Loi de vigilance) of 2017 imposes human rights due diligence obligations on bigger French companies and allows victims to sue for damages under the French Civil Code. The situation is similar in England. According to a Supreme Court decision of 2019 English parent companies may, under certain conditions, be held accountable for human rights violations committed by their foreign subsidiaries.

9. The introduction of an internationally mandatory human rights due diligence obligation at the level of national law certainly holds a number of advantages. In particular, it may encourage companies to take measures to prevent human rights violations through their foreign subsidiaries and suppliers. However, it is all but clear whether, under the conditions of globalization, any such obligation will actually contribute to improving the human rights situation in the countries of the Global South. This is because it will induce at least some companies to take strategic measures to avoid the costs associated with compliance. In addition, it will give a competitive advantage to companies which are domiciled in countries that do not impose comparable obligations on their companies.

10. Any human rights due diligence obligations should, therefore, not (only) be established at the national level, but also at the European or – even better – at the international level. In addition, accompanying measures should ensure that the same rules of play apply to all companies operating in the same market. And, finally, it should be clearly communicated that all these measures will increase prices for many products sold in Europe. In an open debate it will then have to be determined how much the Global North is willing to invest in better protection of human rights in the Global South.

 

Full (German) version: Giesela Rühl, Unternehmensverantwortung und (Internationales) Privatrecht, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 89 et seq.

 

Posted at the request of Sahil Verma, Managing Editor, Trade, Law and Development

General Issue

Issue 12.2 | Winter’20

The Board of Editors of Trade, Law and Development are pleased to invite original, unpublished manuscripts for publication in the Winter ’20 Issue of the Journal (Vol. 12, No. 2) in the form of ‘Articles’, ‘Notes’, ‘Comments’ and ‘Book Reviews’.

Manuscripts received by August 15th, 2020, pertaining to any area within the purview of international economic law will be reviewed for publication in the Winter ’20 issue.

Founded in 2009, the philosophy of Trade, Law and Development has been to generate and sustain a constructive and democratic debate on emergent issues in international economic law and to serve as a forum for the discussion and distribution of ideas. Towards these ends, we have published works by noted scholars such as WTO DDG Yonov F. Agah, Dr. Prof. Ernst Ulrich Petersmann, Prof. Steve Charnovitz, Prof. Petros Mavroidis, Prof. Mitsuo Matsuhita, Prof. Raj Bhala, Prof. Joel Trachtman, Gabrielle Marceau, Simon Lester, Prof. Bryan Mercurio, and Prof. M. Sornarajah among others. TL&D also has the distinction of being ranked the best journal in India across all fields of law for seven consecutive years by Washington and Lee University, School of Law.

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LAST DATE FOR SUBMISSIONS: 15 August, 2020

A quick note on (thank you, Michael Douglas, for flagging) [2020] NSWCA 82 Inghams v Hannigan, in which the New South Wales Court of Appeal had to untangle a messy alternative dispute resolution (ADR) clause in a contract. I have actually included ‘messy’ as a tag for this post.

The Headnote to the judgment summarises the contractual clauses that needed proper construction. The case is a good illustration of how ADR clauses can lead parties straight into a right pickle, when different obligations to make recourse to mediation and /or (in this case: either /and /or) arbitration and indeed ultimately litigation in the courts at ordinary apply to separate parts of the contract. It forces parties to consider what part of the contract they actually have issue with and for the courts to try and untangle what ADR obligations follow.

A definite case of less can be more and of fancy ADR clauses not always giving wings to contractual interpretation. (The case concerns supplies of chickens. Bad pun. It’s a Saturday morning. I shall keep schtum for the rest of the day).

Geert.

 

Written by Nico Krisch, Graduate Institute for International and Development Studies, Geneva

Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of all contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.

1. The conceptual framework of jurisdictional boundaries in international law continues to be dominated by the principle of territoriality and its exceptions, even if calls for a reorientation have grown in recent years.

2. The principle of territoriality leads today to far wider jurisdictional claims than in the past, and its limits are being redefined through ‘territorial extensions’ in a number of areas.

3. These extensions are rarely questioned by states, and clear and consistent jurisdictional boundaries remain hard to define. Contestation arises primarily when states seek to use extraterritorial measures to counteract important policy choices of other states.

4. The result is a far-reaching overlap of different jurisdictional spheres which, if seen in conjunction with the multiple forms of transnational regulation existing today, leads to a multi-layered ‘jurisdictional assemblage’.

5. So far, there are no accepted rules governing the relationship of competing jurisdictional spheres in this assemblage. The effective exercise of jurisdiction depends, in large part, on the political and economic power of a country in a given issue area and market.

6. The wider options for action that result from this territorial extension allow for more effective responses to existing societal challenges, especially with a view to the provision of (national and global) public goods, albeit in a limited way.

7. The new jurisdictional regime accentuates hierarchies between countries, interferes with the autonomy of weaker states, and subverts the principle of sovereign equality. Yet under certain circumstances, it also allows actors in weaker states to compensate for their otherwise limited ability to hold multinational companies to account.

8. Existing procedural and substantive proposals only have limited promise for alleviating the tensions resulting from the power imbalance in the exercise of jurisdiction.

9. The territorial principle in the law of jurisdiction has always been sufficiently limited not to overly impede powerful states’ pursuit of their interests.

10. Territoriality today appears less as a principle of effective limitations than as the basis of different strategies and tactics through which states seek to hold mobile actors to account and through which they pursue their political aims in a global context.

 

Full (German) version: Nico Krisch, Entgrenzte Jurisdiktion: Die extraterritoriale Durchsetzung von Unternehmensverantwortung, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 11 et seq.

Written by Anatol Dutta, University of Munich

Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of the contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.

1. The question of the reach of courts’ jurisdiction is highly significant for claims against transnational enterprises based on human rights violations or environmental damages abroad. It does not only determine the applicable law but also the access to a particular justice system.

2. Universal jurisdiction of national courts for human rights and environmental damages claims against enterprises cannot be established, neither on the basis of existing law nor from a legal policy perspective. Rather, such claims have to be handled under the traditional jurisdictional mechanisms.

3. From a global perspective, a remarkable shift regarding jurisdiction can be noted: Whereas the courts in the United States are increasingly limiting access to their justice system in cases with foreign elements, jurisdictional limits are no significant hurdle for human rights and environmental damages claims in the European Union.

4. Domestic enterprises can be sued at their seat. Yet, the forum non conveniens doctrine allows US courts – and perhaps soon English courts as well – to decline jurisdiction, also for human rights and environmental damages claims.

5. Yet, human rights and environmental damages claims against foreign enterprises can also only be brought under certain circumstances in the EU.

6. Claims against foreign enterprises for human rights violations and environmental damages abroad can only rarely be brought before domestic courts based on special jurisdiction related to specific subject matters, for example the jurisdiction for tort claims at the place where the harmful event occurred.

7. If human rights and environmental damages claims are simultaneously directed against a domestic enterprise, for example a mother company or a buyer company in the EU, at least partially, foreign subsidiaries and suppliers can be sued on the basis of special jurisdiction over multiple defendants which can be used strategically.

a) If foreign enterprises have their seat in a third State outside the European Union, the jurisdiction of the domestic courts over the foreign co-defendant is governed by the national law of the forum Member State.

b) However, the current trend to establish a separate liability of domestic enterprises, for example, by extending human rights and environment-related duties of care for the supply chain, could endanger this special jurisdiction over multiple defendants, which, on the other hand, could lose significance.

8. Extending the general jurisdiction at the domicile of the defendant by relying on a personal criterion different to the seat of the defendant enterprise is not a viable solution.

a) Today US courts refuse to exercise jurisdiction based solely on the foreign enterprise ‘doing business’ within the territory. In some EU Member States, for claims against foreign enterprises at least with a seat in a third State, exorbitant jurisdiction can be established, for example, based on assets of the foreign defendant enterprise within the territory.

b) At the most from a policy perspective, for claims against foreign subsidiaries of a domestic enterprise the introduction of an enterprise jurisdiction could be considered.

9. For claims against foreign enterprises jurisdiction of the domestic courts can often only be based on a forum necessitatis if proceedings cannot reasonably and effectively be brought or conducted abroad; the hurdles for such an exceptional jurisdiction are, however, high.

10. To hear human rights and environmental damages claims against enterprises lies within the powers of the domestic courts.

a) Foreign enterprises do not enjoy State immunity even if they violate human rights or damage the environment abroad in collaboration with foreign States.

b) The power to adjudicate is also not limited by the fact that a decision of the court on human rights and environmental damages claims potentially has implications on the foreign policy relations of the forum State.

c) The domestic courts are often even not barred from deciding on human rights and environmental damages claims of foreign States against enterprises.

 

Full (German) version: Anatol Dutta, Internationale Zuständigkeit für privatrechtliche Klagen gegen transnational tätige Unternehmen wegen der Verletzung von Menschenrechten und von Normen zum Schutz der natürlichen Lebensgrunlagen im Ausland, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 39 et seq.

Felix M. Wilke has published a well-researched, innovative and thought-provoking book titled A Conceptual Analysis of Private International Law (Intersentia, 2019). In it, he makes a strong plea for the establishment of a general notions, methodologies and principles for conflict of laws on the European level.

This book is much more than the repeated calls, mainly from Germany, for the development of “general principles” of EU PIL or a “Rome 0 Regulation“. It provides a sort of “anatomy” European Private International Law, laying bare its underlying structures.

Particularly intriguing is that Wilke is not merely looking at EU regulations. Instead, he adopts a comparative perspective, taking into account the domestic law of all EU Member States. Yes, you read that right, Malta – all Member States.

The result is a very useful overview of private international laws across the EU. Do not expect, however, detailed country reports. Wilke focuses on the functioning of the PIL system, in the sense required by functional comparative law. This functioning largely depends on concepts, such as renvoi, preliminary questions or overriding mandatory rules.

Wilke examines the operation of these concepts throughout Europe, crosscutting specialised EU regulations as well as national conflicts laws. In doing so, he distills the gist of EU Private International Law and brings much needed clarity to often squiggly debates.

Praise for the new book is also provided by Ralf Michaels‘ foreword. Here is an excerpt:

This is a thoroughly researched work that is both comparative-empirical and prescriptive in nature, a study that both surveys existing law and makes proposals on the basis of its findings. The comparison is more doctrinal than functional in nature, which seems adequate for its topic of a conceptual analysis: Wilke is interested in establishing techniques, not resolving concrete cases, so a functional approach would not have been of much use to him. He analyses not just the existing EU instruments for what they reveal regarding general issues; in addition, his study relies on a comparison of the existing domestic private international law systems, both codified and uncodified, in all EU member states. Wilke thus departs from his earlier view that only a few domestic models exist – he finds, in fact, that general issues are more thoroughly discussed and regulated in domestic legislation than in European law, and therefore finds the existing material most helpful for European concepts. He even includes the United Kingdom – despite Brexit, and despite the differences one should expect between a common law approach in England and the civil law approaches of most other member states.

The result is an impressive survey of approaches concerning these questions; and Wilke’s results are surprising and interesting. …

You heard it from the Max Planck Institute’s mouth: Highly recommended!

Personal injury cases never make for light reading and Fletcher v Estee Lauder and Clinique is not an exception to that rule. Mrs Fletcher, aged 45, claims that her lifelong  use of the Estee Lauder talc and face powder and Clinique loose face powder, starting with puffs of powder purchased by her mother in New York in 1976, followed by regular purchases in the city in later years, caused her to develop mesothelioma.

Thank you Leigh Day, who represent Mrs Fletcher, for reporting on the case. In a preliminary ruling, Justice Mendez rejected a forum non conveniens argument made by the cosmetics giants, who had argued that England is a more natural and suitable forum for the case.

The case is interesting for my readers who follow my reports in the ‘comparative’ binder, for it is not that routine for judges to list arguments against the suitability of England as a forum.

Arguments made pro forum non are on p.2, claimant’s arguments on p.3, and Mendez J’s criteria to dismiss (having earlier established per authority that the burden of proof to dismiss is necessarily high for defendants with a substantial presence in New York) on p.5. Note his reference to the absence of no win no fee (and claimant’s limited resources); absence of jury trial; limited and expensive discovery; and a general hesitation of the legal profession in bringing cases like these (non-occupational exposure claims) against manufacturers.

Most relevant and interesting.

Geert.

 

In April 2019 the German Society of International Law (Deutsche Gesellschaft für Internationales Recht) held its 36th biannual conference at the University of Vienna. Organised by August Reinisch (University of Vienna) in cooperation with Eva Maria Kieninger (University of Würzburg) and Anne Peters (Max Planck Institute Heidelberg), the conference  discussed the concept of „Corporate social responsibility“ from both a public and a private international law perspective. Presentations were given by Tanja Domej (University of Zurich), Oliver Dörr (University of Osnabrück), Anatol Dutta (University of Munich), Peter Hilpold (University of Innsbruck), Stefan Huber (University of Tübingen), Nico Krisch (Graduate Institut of Geneva), Giesela Rühl (University of Jena/Humboldt-University of Berlin) and Silja Vöneky (University of Freiburg).

Over the course of the next days conflictoflaws.net will present the main findings of the contributions in a series of blogposts. The full (German) contributions can be found in the conference proceedings that have just been published by C.F. Müller.

The Choice of Court Convention is already close to its 5th year of application. Case law is still scarce. A Greek court tackled with the question, whether to apply the Convention or not. It decided that it should apply, but at the end it considered that the agreement was asymmetric, therefore outside the scope of the Convention.

 

THE FACTS

The claimant is a ship owner company registered in Monrovia, Liberia. While the claimant’s ship was on its way to Novorossiysk, Russia, the claimant agreed with a company registered in Hong Kong [defendant], having however a branch in Piraeus, to buy a quantity of petrol, to be delivered at the port of the Russian city. A few days later, both the ship and the fuel were in Novorossiysk. During bunkering, the 1st engineer of the ship requested the interruption of the supply. He was suspicious that petrol was not of the agreed quality. A technical inspection a couple days later proved that the engineer was right. As a result, litigation ensued before the Piraeus courts. The defendant did not challenge the court’s international jurisdiction. At the same time, he filed an interpleader action against the petrol supplier. The latter, a company registered in Monaco, challenged the jurisdiction of the Greek court, by invoking a choice of forum agreement between the parties, stipulated on the invoice issued as a standard term of the deal.

 

THE RULING

The court engaged in a thorough analysis of the issue: It confirmed that the agreement was falling under the scope of the convention both ratione temporis and ratione materiae. The agreement was signed after the entry into force of the Convention (1/10/2015) and concerned a genuinely commercial dispute. It then examined the content of the choice of forum clause, and considered that the agreement was asymmetric, i.e. unilaterally in favor of the seller, and to the detriment of the buyer. As a second step, the court found that the Brussels Ia Regulation was also not applicable, because the conditions provided by Article 25, lit. a – c were not met. Following the above, the court resumed to domestic provisions of the Greek Code of Civil Procedure, in order to establish its international jurisdiction (Article 31, similar actions).

 

COMMENT

The wording of the choice of court clause reads as follows: The contract is governed by English law; the contracting parties accept the exclusive jurisdiction of English courts for the resolution of any dispute related to the present contract [translated by the author]. I don’t think I need to say anything here; there’s nothing asymmetric in this clause. I will just reproduce a passage from the Explanatory Report prepared by Professors Hartley and Dogauchi:

105 Asymmetric agreements. Sometimes a choice of court agreement is drafted to be exclusive as regards proceedings brought by one party but not as regards proceedings brought by the other party. International loan agreements are often drafted in this way. A choice of court clause in such an agreement may provide, “Proceedings by the borrower against the lender may be brought exclusively in the courts of State X; proceedings by the lender against the borrower may be brought in the courts of State X or in the courts of any other State having jurisdiction under its law.”

 

The final point I want to make is that the court shouldn’t go that far with the examination of the matter. As mentioned above, the parties in question were registered in Hong Kong and Monaco. Both countries are not signatory members to the Hague Convention. Hence, the analysis was unnecessary.

 

Conclusion: Bad publicity is still publicity. There are of course drawbacks in the court’s analysis; still, on the other side, it is very fortunate that the court examined the facts from the Hague Convention’s point of view too. The worst case scenario would have been to ignore completely the Convention’s existence, which regrettably occurs occasionally, both for Hague Conventions and sometimes for EU Regulations as well.

 

[Piraeus Court of First Instance nr. 3106/2019, available (in Greek) here]

Today, the ECJ decided in case C-641/18 –  LG and Others v. Rina SpA, Ente Registro Italiano Navale, on the concepts of ‘civil and commercial matters’ and ‘administrative matters’ under Article 1 Brussels I Regulation.

The case arose from the following facts:

14      LG and Others — relatives of the victims and survivors of the sinking of the Al Salam Boccaccio’98 vessel in the Red Sea on 2 and 3 February 2006, in which more than 1 000 people lost their lives — brought an action before the Tribunale di Genova (District Court, Genoa, Italy) against the Rina companies — ship classification and certification societies — whose seat is in Genoa.

15      LG and Others claim compensation for the pecuniary and non-pecuniary losses stemming from the Rina companies’ civil liability, arguing that the classification and certification operations for the Al Salam Boccaccio’98 vessel, carried out by the Rina companies under a contract concluded with the Republic of Panama, for the purposes of obtaining that State’s flag for that vessel, were the cause of that sinking.

16      The Rina companies contend that the referring court lacks jurisdiction, relying on the international-law principle of immunity from jurisdiction of foreign States. In particular, according to those companies, the classification and certification operations which they conducted were carried out upon delegation from the Republic of Panama and, therefore, are a manifestation of the sovereign powers of the delegating State.

17      According to LG and Others, by contrast, given that the Rina companies have their seat in Italy and the dispute at issue in the main proceedings is civil in nature, within the meaning of Article 1 of Regulation No 44/2001, the Italian courts have jurisdiction under Article 2(1) of that regulation. In addition, LG and Others submit that the plea of immunity from jurisdiction, relied on by the Rina companies, does not cover activities that are governed by non-discretionary technical rules which are, in any event, unrelated to the political decisions and prerogatives of a State.

18      The referring court raises the question of the jurisdiction of the Italian courts in so far as, while it is common ground that the Rina companies have their seat in Italy, it is claimed that they acted upon delegation from the Republic of Panama.

19      In that regard, the referring court refers, in its request for a preliminary ruling, to the case-law of the Corte costituzionale (Constitutional Court, Italy) and of the Corte Suprema di Cassazione (Supreme Court of Cassation, Italy) concerning immunity from jurisdiction. In accordance with the case-law of those supreme courts, recognition of immunity from jurisdiction is precluded only in respect of the acts of foreign States consisting in war crimes and crimes against humanity or where such recognition undermines the principle of judicial protection.

The Court held that

Article 1(1) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that an action for damages, brought against private-law corporations engaged in the classification and certification of ships on behalf of and upon delegation from a third State, falls within the concept of ‘civil and commercial matters’, within the meaning of that provision, and, therefore, within the scope of that regulation, provided that that classification and certification activity is not exercised under public powers, within the meaning of EU law, which it is for the referring court to determine. The principle of customary international law concerning immunity from jurisdiction does not preclude the national court seised from exercising the jurisdiction provided for by that regulation in a dispute relating to such an action, where that court finds that such corporations have not had recourse to public powers within the meaning of international law.

The full text of the judgment is here.

The CoL post on the Opinion of Advocate General Szpunar in this case is here.

The Organization of American States (OAS) has announced that it is launching a weekly virtual forum entitled “Inter-American law in times of pandemic”.  It begins on Monday 11 May at 11:00 am (EDT, local time in Washington, D.C.).  The first session “Challenges to Inter-American Law” will be held in Spanish, with no simultaneous interpretation. Registration is free but space is limited. The agenda is available here.

As announced, “the topics to be discussed in relation to the impact of the pandemic in the Americas will include: the challenges to Inter-American law; the importance of access to public information; protection of privacy and personal data; the fight against corruption; legal cooperation against cyber-crime; food security as a specific challenge; the difficulties for private international law; among others.”

The list of virtual fora is available here. On Monday 29 June 2020, a forum will be held on “New Challenges for Private International Law.” Apparently, the sessions will be recorded and will be available on video later on the OAS website.

In addition, the Hague Conference on Private International Law (HCCH) has published a COVID-19 Toolkit, which is available in both English and French.

My colleague Hélène Peroz has reported on this interesting judgment delivered on 4 March 4 2020 by the French Supreme Court for private and criminal matters (Cour de cassation).

The Court applied an old principle of the French law of international jurisdiction. Unfortunately, it does not seem that the applicability of EU Regulations of private international law was raised.

Background

A German company sought to enforce an arbitral award against a man domiciled in Algeria. The man jointly owned an immoveable property near Paris, France. The co-owner was his wife, who was also domiciled in Algeria. The German creditor initiated proceedings before the family division of the high court of Paris and applied for a judicial order to divide the property. The goal was to ultimately receive half of the proceeds.

Jurisdiction of French Courts in Family Matters

The Algerian spouses challenged the jurisdiction of the Paris court. They argued that, outside of the scope of international conventions and EU instruments, jurisdiction in family matters lied with the court of the residence of the family pursuant to Article 1070 of the French code of civil procedure.

In a judgment of 18 December 2018, the Paris Court of Appeal accepted the argument and declined jurisdiction on the ground that the family resided in Algeria.

Extending the Application of Domestic Rules of Jurisdiction to International Cases

The French lawmaker has adopted very few rules of international jurisdiction. French courts have thus long held that, in principle, rules of domestic jurisdiction may also be used to define the international jurisdiction of French courts. Article 1070 of the Code of Civil Procedure defines the domestic jurisdiction of French courts in family matters. So the Paris  Court of Appeal had simply applied Article 1070 to assess its international jurisdiction.

The French Supreme Court has long identified two exceptions to the principle of extension of domestic rules of jurisdiction: enforcement and actions related to real property. In both cases, the rule of international jurisdiction has typically been straightforward: French courts have jurisdiction over actions related to enforcement carried out in France and actions related to immovables situated in France. In this judgment, the Court ruled more widely that, while the principle was to extend the application of domestic rules of jurisdiction, it might be necessary to “adapt them to the particular needs of international relations”.

The Court then ruled that it would not be appropriate to apply Article 1070 (and thus grant jurisdiction to the court of the residence of the family) to define the jurisdiction of French court in this case, “both for practical reasons of proximity and pursuant to the effectivity principle”.

The reference to effectivity seems to mean that the court cared about the future enforcement of the decision which, quite clearly, was meant to take place in France, where the apartment is located. Indeed, and although the action was based on a rule of property law, the chances that the property would be attached and sold judicially for the purpose of actually implementing the rule was high.

What about EU Regulations?

It is clear that the French Supreme Court ruled on the understanding that no EU Regulation applied. Was that really the case?

Regulation 2016/1103 on Property Regimes does not apply to proceedings initiated before 29 January 2019. It is unclear, however, whether it would apply should the same case arise today.

The territorial scope of the jurisdictional rules of the Property Regimes Regulation is not limited to actions initiated against defendants domiciled within participating Member States, so the issue would not be so much that the defendants were domiciled in a third state.

Rather, the issue is whether the action was one related to matrimonial property regimes. The property was co-owned by two spouses, but their matrimonial property regime was separation of property. This means that their marriage was not relevant to the action (which was based on a general provision of property law). In fact, Regulation 2016/1103 defines ‘matrimonial property regimes’ as sets of rules ‘concerning the property relationships between the spouses and in their relations with third parties, as a result of marriage or its dissolution’ (Article 3(1)(a), emphasis added). 

So one wonders whether the action would not rather have fallen within the material scope of the Brussels I bis Regulation. Indeed, the CJEU once defined the exception to the scope of the Brussels Convention as covering “any proprietary relationships resulting directly from the matrimonial relationship or the dissolution thereof” (De Cavel, 1979). In the present case, the proprietary relationship between the spouses did not result from their marriage.

And if the case fell within the material scope of the Brussels I bis Regulation, then Article 24 of that Regulation (which applies irrespective of the domicile of the parties) would apply. It is not absolutly clear whether the relevant provision would be Article 24(1) (in rem rights over immoveables) or Article 24(5) (enforcement), but in both cases, it would have granted exclusive jurisdiction to French courts. 

In Mastermelt v Siegfried Evionnaz [2020] EWHC 927 (QB), at issue is negative declaratory relief on contractual performance. 

Claimant Mastermelt is an English company specialising in the reclamation of precious metals. The defendant, Siegfried Evionnaz SA (“Siegfried”), is a Swiss company. There is a dispute between the parties over the quality of Mastermelt’s performance. Siegfried’s standard terms and conditions of contract (“STC”) include a clause stating that the governing law is Swiss law and that the Swiss courts have exclusive jurisdiction.

Relevant pending proceedings, are: very shortly after Siegfried had informed Mastermelt that it was going to issue proceedings against Mastermelt in Switzerland, Mastermelt issued the present claim in England on 5 February 2019. It seeks negative declaratory relief against Siegfried. Proceedings were subsequently issued by Siegfried against Mastermelt in the Zurich Commercial Court on 23 July 2019. Meanwhile, on 24 May 2019, Siegfried applied to the High Court in London for a declaration that it had no jurisdiction to try Mastermelt’s claim and so the Claim Form and service should be set aside, alternatively stayed. Further, on 29 January 2020 Mastermelt applied to the Swiss court (1) for a stay of those proceedings pending the UK decision, or (2) for the Swiss proceedings to be limited at that stage to a consideration of the court’s own jurisdiction there and nothing else, or (3) an extension of time for service of a response to Siegfried’s claim. By an order of 4 February 2020, the Swiss court rejected all three applications. On 7 February Mastermelt filed an appeal to the Federal Supreme Court of Switzerland which initially suspended enforcement of the Zurich Commercial Court’s decision pending the appeal. However, on 13 February Siegfried objected to any such suspension. The Supreme Court directed Mastermelt to file any response to that objection by 9 March. As far as the English courts know, that has been done but at the moment the Supreme Court has not given its decision on the suspension issue, let alone any substantive appeal, nor has there been any decision yet on the jurisdiction or otherwise of the Swiss court to hear the claim.

Siegfried argues, and has convinced the Swiss courts, that A27 Lugano needs to be applied ‘in harmony’ with A31(2) Brussels Ia: this now provides that regardless of which court was seised first, the court which was the subject of the putative exclusive jurisdiction clause, must decide the question of its jurisdiction first and the other proceedings must be stayed in the meantime. At 13 Waksman J refers to the Swiss court’s reasoning, where it takes an expansionist view of the Lugano Convention‘s protocol no2, that the Lugano States shall take ‘due account’ of each other’s courts decisions. The Swiss court suggests that in principle it should follow CJEU authority in Gasser (which introduced the torpedo mechanism by giving strict interpretation to the lis alibi pendens rule, even in case of choice of court) but that it has reasonable justification to deviate from Gasser given that the judgment has become ‘obsolete’ following A31(2) BIa.

Waksman J is first invited to accept the Swiss court’s reasoning as res iudicata, per CJEU C-456/11 Gothaer. (I did say at the time the CJEU may find its ruling in Gothaer would come back to haunt it). This he finds is a stretch of that authority but also not applicable given the limited findings of the Swiss court at any rate: ‘here the actual and only decision of the Swiss court thus far is simply to refuse to stay its own proceedings’.

He then discusses how A27 Lugano needs to be applied. A first reference is to the Court of Appeal’s most problematic view in Privatbank, to my mind, of applying Article 28 Lugano reflexively to third States. At 23-24 Waksman J distinguishes Privatbank (clearly he cannot hold it no relevant authority should he think so); then holds correctly that Gasser is not entirely obsolete following BIa; and finally at 30 that the harmonised regime per Lugano’s Protocol does not mean that one should now interpret Article 27 Lugano like 31.2 and (b) i Brussels Ia.

I agree most firmly. Note this has Brexit implications: one of the routes post Brexit, as readers know, is for the UK to become part of Lugano. In doing so it will surrender BIa’s forum non-light regime (Articles 33-34) in favour of Lugano which most dedinitely does not have a forum non application – as well as, as is at issue here, re-arming the Italian torpedo.

This leaves the issue of the putative choice of court agreement. England is the forum contractus per Article 5(1)a Lugano, hence will have jurisdiction less choice of court stands. Authority is well-known and recently applied in Pan Ocean, referred to here at 85. After much factual consideration it is accepted to a good arguable case standard that the parties contracted on the basis of the STC for the obligations concerned.

In conclusion therefore the action is stayed.

Quite a few relevant issues here. I for one note the cautious approach of the Court, in handling the Court of Appeal’s Privatbank authority.

Geert.

Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2.

 

Application for negative declaratory relief on contractual performance.
Jurisdiction.
Lis pendens and choice of court under the Lugano Convention.
Concurrent claim by defendant in Switzerland. https://t.co/F80LoWJvps

— Geert Van Calster (@GAVClaw) April 21, 2020

Giesela Rühl (Friedrich-Schiller-University Jena & Humboldt-University of Berlin) has posted Private International Law Post-Brexit: Between Plague and Cholera on SSRN.

The abstract reads:

Over the course of the last two decades, the European legislature has adopted a large number of regulations dealing with private international law. As long as the UK was a member of the EU these regulations were also applicable in the UK. However, now that Brexit has actually taken place, they only apply by virtue of the Withdrawal Agreement whereas they will cease to apply as soon as the transition period provided for in the Withdrawal Agreement expires. The following contribution takes this finding as an opportunity to take a closer look at the future relationship between the EU and the UK in private international law. It analyses the corresponding British proposals and argues that the relatively best option for both the UK and the EU would be the adoption of a new bilateral agreement that either provides for continued application of the existing EU instruments or closely replicates these instruments.

The paper is forthcoming in the Revue de Droit Commercial Belge/Tijdschrift voor Belgisch Handelsrecht.