Droit international général

In C-548/18 BNP Paribas v TeamBank, the CJEU held on the issue whether the Rome I Regulation can be interpreted as determining the applicable law with regard to the third-party effects of an assignment of a claim in the case of multiple assignments, for the purpose of determining the holder of that claim.

The factual matrix is very recognisable: a debtor gets into debt with multiple creditors, and assigns each of them the attachable share of current and future claims to wages and salary, including in particular claims to pension benefits. One of the creditors, first to have been assigned, is a German bank (TeamBank). The employer was not told of the assignment. The second creditor is a Luxembourg bank that does inform the employer as they are bound to under Luxembourg law.

The Amtsgericht Saarbrücken (Germany) opens insolvency proceedings against the debtor. The appointed trustee in insolvency received, from the debtor’s employer in Luxembourg, a share of her salary, in the amount of EUR 13 901.64, and deposited that amount with the District Court. The trustee was uncertain as to the identity of the creditor of the said amount, each of the two parties to the main proceedings asserting preferential rights relating, in the case of TeamBank, to a claim of EUR 71 091.54 and, in the case of BNP, EUR 31 942.95. TeamBank and BNP brought, respectively, an action and a counterclaim before the Landgericht Saarbrücken, requesting the lifting of the lodgement in respect of the entire amount of EUR 13 901.64. That court upheld TeamBank’s action and dismissed BNP’s counterclaim.

Jurisdiction is not at issue, Article 26 Bru Ia applies.

Can Article 14 Rome I Regulation (see text below) be interpreted as determining the applicable law with regard to the third-party effects of an assignment of a claim in the case of multiple assignments, for the purpose of determining the holder of that claim? Or should its silence on same be interpreted as having been intentional (excluding such cover, leaving it to residual national conflicts rules).

The CJEU first of all observes that the wording of Article 14 of the Rome I Regulation does not refer to the third-party effects of an assignment of a claim.

Further, at 32, it reviews the context in which Article 14 Rome I is set. It refers to recital 38 which states that ‘matters prior to’ an assignment of a claim, such as a prior assignment of the same claim in the context of multiple assignments, despite the fact that they may represent a ‘property aspect’ of the assignment of the claim, do not fall within the concept of a ‘relationship’ between the assignor and the assignee within the meaning of Article 14(1) of that regulation. That recital specifies that the term ‘relationship’ should be strictly limited to those aspects which are directly relevant to the assignment in question.

(Note that recitals are qualified merely as context, therefore. Readers are aware that I often take issue with material conflict of laws rules being included in recitals of EU Regulations).

At 33, the CJEU further refers to the legislative history: the EC had proposed a rule re third-party effect however that rule did not make it into the final text, indeed the Commission per Article 27(2) Rome I was required to submit ‘a report on the question of the effectiveness of an assignment or subrogation of a claim against third parties’ and, if appropriate, ‘a proposal to amend the [Rome I Regulation] and an assessment of the impact of the provisions to be introduced’. That proposal materialised in 2018.

In conclusion, under EU law as it currently stands, the absence of rules of conflict expressly governing the third-party effects of assignments of claims is a choice of the EU legislature. Residual rules take over.

Geert.

(Handbook of) EU Private International Law, 2nd ed 2016. Chapter 3.

Article 14

Voluntary assignment and contractual subrogation

1.   The relationship between assignor and assignee under a voluntary assignment or contractual subrogation of a claim against another person (the debtor) shall be governed by the law that applies to the contract between the assignor and assignee under this Regulation.

2.   The law governing the assigned or subrogated claim shall determine its assignability, the relationship between the assignee and the debtor, the conditions under which the assignment or subrogation can be invoked against the debtor and whether the debtor’s obligations have been discharged.

3.   The concept of assignment in this Article includes outright transfers of claims, transfers of claims by way of security and pledges or other security rights over claims.

With judgment of 17 October 2019 (III ZR 42/19) the German Federal Supreme Court held that a contracting party may be entitled to compensation for the costs incurred through the violation of a choice of court agreement. The basic facts and the main reasoning of the Court is summarized below. The full press release (in German) is available here.

Facts of the case:

The parties involved in the litigation were telecommunications companies. The defendant was domiciled in Bonn (Germany) and the plaintiff was domiciled in Washington, D.C. (United States). They were linked through an “Internet Peering Agreement” according to which they were mutually required to receive the data traffic of the other party at so-called peering points, to transport it on their network to the customers connected via the network and to provide the necessary transmission capacity at the peering points within their networks. The contract provided for application of German law and jurisdiction in Bonn (Germany).

In 2016, after the plaintiff’s efforts to achieve the (free) increase in transmission capacity had failed, it filed a lawsuit in a District Court in the United States. requesting the creation of additional capacity. The District Court dismissed the claim for lack of jurisdiction pointing to the choice of forum clause in the contract. The plaintiff, therefore, filed a lawsuit with the Bonn Regional Court whereas the defendant filed a counterclaim demanding reimbursement of the costs it incurred through the proceedings in the United States.

The Bonn Regional Court dismissed the main lawsuit, but granted the counterclaim which, however, was rejected upon appeal of the plaintiff by the Court of Appeal. The Federal Supreme Court with its judgement of 17 October 2019 reversed the Court of Appeal judgment and held that the defendant is, in fact, entitled to reimbursement of its costs.

Legal reasoning:

The Federal Supreme Court argues that the parties’ agreement, notably the choice of court and the choice of law clause, is to be interpreted as meaning that the parties are required to bring actions only in Bonn and failing that – at least to the extent that the court seized, such as the District Court, recognizes the lack of jurisdiction – to reimburse the other party for the costs incurred thereby. The parties, through the choice of court and choice of law clause, expressed their interest in making legal disputes foreseeable both from a substantive and a procedural point of view. It was the parties’ aim to create legal certainty and to make the (economic) risk associated with litigation calculable. By specifying a place of jurisdiction, they aimed to prevent forum shopping and to avoid costly disputes about jurisdiction. This goal the Federal Supreme Court argues, can only be achieved if the aggrieved party is entitled to reimbursement of its costs.

On 3rd October, the amendments to the Reciprocal Enforcement of Foreign Judgments Act (“REFJA”) came into force. REFJA is based on the UK Foreign Judgments (Reciprocal Enforcement) Act 1933, but in this recent round of amendments has deviated in some significant ways from the 1933 Act. The limitation to judgments from “superior courts” has been removed. Foreign interlocutory orders such as freezing orders and foreign non-money judgments now fall within the scope of REFJA. So too do judicial settlements, which are defined in identical terms to the definition contained in the Choice of Court Agreements Act 2016 (which enacted the Hague Convention on Choice of Court Agreements into Singapore law).

In relation to non-money judgments, such judgments may only be enforced if the Singapore court is satisfied that enforcement of the judgment would be “just and convenient”. According to the Parliamentary Debates, it may not be “just and convenient” to allow registration of a non-money judgment under the amended REFJA if to do so would give rise to practical difficulties or issues of policy and convenience. The Act gives the court the discretion to make an order for the registration of the monetary equivalent of the relief if this is the case.

An interlocutory judgment need not be “final and conclusive” for the purposes of registration under REFJA. The intention underlying this expansion is to allow Singapore courts to enforce foreign interlocutory orders such as asset freezing orders. This plugs a hole as currently Mareva injunctions are not regarded as free-standing relief under Singapore law. It has recently been held by the Court of Appeal that the Singapore court would only grant Mareva injunctions in aid of foreign proceedings if: (i) the Singapore court has personal jurisdiction over the defendant and (ii) the plaintiff has a reasonable accrued cause of action against the defendant in Singapore (Bi Xiaoqing v China Medical Technologies Inc [2019] SGCA 50).

New grounds of refusal of registration or to set aside registration have been added: if the judgment has been discharged (eg, in the event of bankruptcy of the judgment debtor), the damages are non-compensatory in nature, and if the notice of the registration had not been served on the judgment debtor, or the notice of registration was defective.

It is made clear that the court of origin would not be deemed to have had jurisdiction in an action in personam if the defendant voluntarily appeared in the proceedings solely to invite the court in its discretion not to exercise its jurisdiction in the proceedings. Henry v Geoprosco [1976] QB 726 would thus not apply for the purposes of REFJA although its continued applicability at common law is ambiguous (see WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka [2002] 1 SLR(R) 1088).

All along, only judgments from the superior courts of Hong Kong SAR have been registrable under REFJA. The intention now is to repeal the Reciprocal Enforcement of Commonwealth Judgments Act (“RECJA”; based on the UK Administration of Justice Act 1920) and to transfer the countries which are gazetted under RECJA to the amended REFJA. The Bill to repeal RECJA has been passed by Parliament.

The amended REFJA may be found here: https://sso.agc.gov.sg/Act/REFJA1959

The research on the cross-border collection of debts (in particular through the unified procedures in the EU) in the EC²BE project has produced interesting results. Here is a summary of the Belgian results. For those who want to know more, don’t forget to enrol to our final conference, which will address the matter in various EU States.

(This blog has also referred you to the various national seminars – for an overview, see here or contact one of the partners.)

EXECUTIVE SUMMARY

Written by Fieke van Overbeeke, translated from Dutch by Albert Kruger

A    INTRODUCTION

‘By nature advocates and judges appear to adopt a conservative approach. They are generally averse to changes or reforms in the field of procedure. The apathy of legal practitioners regarding the adoption of new legal provisions concerning civil procedure is widely known. (…) New procedural routes are not followed. Some novelties do not get entrenched.’ [J. Laenens e.a., Handboek Gerechtelijk Recht, 2016, p. 9 and 26 (own translation)].

Research by the University of Antwerp shows that EU legislation concerning civil procedure, specifically the European Enforcement Order (EEO 2004), the European Payment Order (EPO 2006), the European Small Claims Procedure (ESCP 2007) and the European Account Preservation Order (EAPO 2016) are seldom applied in Belgian legal practice. These Regulations nevertheless have the common feature that they all strive to provide simpler, cheaper, faster and more efficient procedures in the European judicial area. In that framework the EU Regulations provide favourable procedures for international claims. This has an added value for Belgian legal practitioners seeking to enforce such claims.

The crucial question that arises is whether the lack of enthusiasm for these Regulations can be explained with reference to the general situation regarding “new” procedural rules in Belgium, or whether there are additional reasons that can be addressed in order to guarantee the added value of these Regulations in Belgium. The University of Antwerp examined this question during the period from the beginning of 2018 up to the end of 2019. The results and recommendations of that study are published in Dutch in Tijdschrift@ipr.be (2019 issue 3), of which this executive summary gives the main traits.

The approach of the research is a classical method of qualitative legal analysis, where the sources legislation, case law and legal literature are at the core. All the decided cases were uploaded to a special data base, where central aspects and a summary of each case can be consulted free of charge: www.ic2be.eu. Here the reader will also find similar information about Germany, France, Italy, Luxembourg, The Netherlands, Poland, Spain and case law of the Court of Justice of the EU. This information was gathered by our project partners namely the University of Freiburg, the University of Milan, Erasmus University Rotterdam, the University of Worclaw, the Complutense University of Madrid, and the Max Planck Institute in Luxembourg for Procedural Law. The research was co-funded by the European Commission.

To complement this classical legal research, we conducted semi-structured interviews with legal practitioners from four target groups: judges, advocates/attorneys, corporate lawyers and consumers’ organisations.

In what follows we start by setting out a number of issues concerning the application of the Regulations, such as the extent to which the Regulations are known, the course of the actual procedure, technical questions and the protection of (weaker) procedural parties. Thereafter we provide some highlights of the research results for each of the Regulations investigated. Finally conclusions and recommendations are provided.

B  INVESTIGATION RESULTS

B.1. Urgent problems

a) Acquaintance with the Regulations

It appears that the general acquaintance with the Regulations is relatively low in Belgium. The interview participants unanimously stated that many judicial institutions (presiding officers and registrars), advocates and bailiffs are generally unaware of, and have little knowledge of the Regulations. At the same time it was determined that acquaintance with EU Regulations is a general problem in Belgium. Various participants said that the average Belgian presiding officer or advocate has problems in “reading and understanding” EU law and, as a result, interest for it is low.

In this context the question was asked whether sufficient information about the Regulation exists. Some participants stated that it is difficult to obtain reliable information, while others said that adequate information can be found if practitioners take the trouble to find it. Often reference is made to the European Judicial Atlas. The participants agreed that the Belgian government does little to make information available and distribute it.

b) Problems related to procedure

Under problems related to procedure the following were classified: the language, the speed of the procedure, the costs of the procedure, the notice or service of documents, the standard formulas and the use of modern information technology.

The interviews indicate that these issues were indeed problematic in Belgian legal practice. This has a negative impact on the application of the procedures. The article contains a detailed discussion of the extent of these problems and how some difficulties are avoided or resolved in practice.

1. c) Technical problems

Under technical problems are classified: the scope of the Regulations, the area of application, the determination of the judge with international and internal capacity. From the interviews it appears that uncertainty exists concerning scope of the EPO-Regulation, which is only applicable to cross-border claims. The question is whether creative constructions that aim to bring legal relationships that were initially purely Belgian within the scope of the Regulation are permissible. Opinions on this matter differ widely.

In addition, particularly concerning the domestic jurisdiction, there are a number of problems. It was seen that the complex Belgian jurisdiction rules can refer to a big merry-go-round of judges who may be able to hear the case. Some participants raised questions as to whether this situation conforms with EU rules because ‘it can hardly be expected from a foreign party to understand the complex Belgian competence rules’. Another point emerging from the interviews is that the large number of courts that may have jurisdiction could have a negative impact on the quality of the decisions because it can occur a judge with no, or only very little, experience with the Regulation or who do not properly understand it have to apply it.

d) Problems connected with the protection of parties

Problems connected with the protection of parties include consumer protection, the protection of the defendant against fraudulent or abusive procedures and the absence of a public policy test.

Problems concerning consumer protection arise in Belgium particularly in the EPO procedure. Many Belgian judges take a negative view of the system and the rules of the EPO-Regulation, particularly from the point of view of consumer protection (in particular the so-called inversion du contentieux – inversion of the procedure -, the low requirements regarding proof and the uncertain methods of service). According to one participant all Justices of the Peace are in principle opposed to an EPO procedure in B2C disputes. This attitude can be seen clearly in the various additional requirements that judicial officers impose in EPO procedures. This obviously reduces the attractiveness of these procedures, as is confirmed by various interviewed advocates and corporate lawyers, who criticise this situation severely and point to serious inroads on the EPO-Regulation.

B.2. The application of the Regulations in the Belgian legal practice

a) EEO-Regulation

The research has pointed out two problems in relation to the EEO: 1. The absence of a review procedure, as is described in the minimum standards of the EEO-Regulation; 2. The meaning of allowing a default for the possibility to dispute a claim or not.

The issue regarding the possibility of review is very serious, particularly because it is at present not even clear whether a decision can be certified as an EEO. Obviously this has a very negative effect on the application of the EEO-Regulation in Belgium, as has become apparent in the Imtech judgment of the Court of Justice EU (C-300/14) and the subsequent judgment of the Court of Appeal of Antwerp of 27 February 2017. The Court of Appeal found that the result of the Imtech judgment is that Belgian procedural law does not conform to the minimum standards set by the EEO-Regulation and that EEOs can therefore not be issued.

Having regard to these reasonably serious problems, many participants stated that they try to avoid using the EOO-Regulation. They rather opt for a national procedure in combination with the Brussel Ibis-Regulation because ‘the abolition of the exequatur in that instrument has the same effect’.

b) EPO-Regulation

From the investigation it appears that there is a fairly diverse legal practice in Belgium on the application of the EPO procedure, which has a negative effect on the success of the procedure. Without being exhaustive the following can be mentioned: the concepts ‘uncontested claim’ and ‘description of evidence’, the acceptance of the signing of the request by the bailiff, who has to serve the payment order, the time periods stipulated in the Regulation, the circumstances under which a review can take place, the requirements for compensation for legal costs and the divergent attitudes surrounding the EPO procedure itself.

The divergent practice can have far-reaching effects. For example, the concept of ‘uncontested claim’ permits the interpretation that the claim is initially (seriously) contested; the mere delivery of the plea causes the claim to be contested within the meaning of the EPO-Regulation. Some judges apply this correctly, while on the other hand a judge described the fact that the claim had previously been contested as ‘misleading’ the court, which resulted in the success of the review application.

c) ESCP-Regulation

It appears from the investigation that the ESCP procedure is seldom applied in Belgium. This means that this procedure has the same fate as in many other Member States. From earlier research it appeared that the causes are i.a. the lack of awareness of the procedure, the high translation costs and absence of clear rules regarding service and the actual enforcement.

Some participants in addition pointed out that there is a diversity between on the one hand the parties wanting to start the ESCP procedure and on the other hand the specialists dealing with cross-border disputes. The latter in principle do not concern themselves with minor claims, while the local advocate who is asked for advice is not necessarily aware of the ESCP procedure and furthermore does not derive much financial gain from conducting such proceeding.

Moreover consumer organisations point out that consumers still run the risk of high procedural costs when commencing a ESCP procedure.

d) EAPO-Regulation

It appears from the investigation that the EAPO-Regulation is seldom applied in Belgium, but this can be explained by its recent entry into force.

It is however important to note that it seems that the Belgian legislator made a mistake in the implementing act regarding the conditions under which the claimant has to provide security. Article 12 EAPO-Regulation requires that the claimant has to put up security in an amount that is sufficient to avoid abuse in the situation where the claimant does not yet have title. By means of the implementing act this has now been turned on its head in the Belgian Code of Civil Procedure, where the claimant who does have a title must provide security while the claimant who does not have a title clearly does not have to provide security. This must obviously be an error, because there is no logic to this provision.

C. CONCLUSIONS AND RECOMMENDATIONS

The main conclusion is that there is great variation in the application of the investigated Regulations in Belgian legal practice. Apart from the EAPO-Regulation, Belgium has not passed supplementary legislation to embed the Regulations in the Belgian legal order, whereas Belgian procedural law conflicts with the Regulations on various points. The absence of domestic legislation leads to many problems with regard to the efficacy of the procedure in Belgium and this has a substantial effect on the choices parties make between the different procedural routes.

It appears from the interviews that many legal practitioners experience problems when they invoke the Regulations. Some have given up the Regulations, while others use the Regulations but in doing so pay close attention to the specific legal practice at the court. The EPO procedure is comparatively used the most but, as one participant put it, it should have been used ‘millions and millions of times’.

Apart from the internal Belgian problems, it appears that the effectiveness of the procedures is still strongly influenced by the lack of harmonisation regarding the service of documents and the execution phase of the payment of the debt. Many participants said in the interviews that these two missing elements were the ‘Achilles heel’ in every cross-border case. One participant stated that ‘it could be very easy to obtain an enforceable title, but then there are paradoxically no EU rules for the actual enforcement phase’.

The low application of the Regulations in Belgium is thus not (only) caused by the general reservation by practitioners to use new procedural rules. A targeted approach can improve the success of these Regulations.

The article contains several detailed recommendations.

At a Belgian level these are mainly:

• embedding the Regulations in the Belgian legal order via legislation; and
• improving the judicial organisation.

At EU level these concern:

• EU action regarding cross-border service of documents and the enforcement phase;
• more support and stimuli for Member States to embed Regulations adequately in their national systems;
• the adaptation of the courts’ duty to serve documents.

The latest issue of Cuadernos de Derecho Transnacional, an open-access online journal focusing on private international law, is out. It can be downloaded here.

The fifty papers included in this issue (written in Spanish, English, French, Portuguese and Italian) address a broad range of topics, including the recognition of registered partnerships, jurisdiction over contractual disputes, the law applicable to donations, surrogate motherhood and the recognition of declaratory arbitral awards.

The next issue is due to be out in March 2020. Submissions will be considered if received before 15 December 2019.

The conference represents the final event of the project “C.L.A.S.S.4EU – 4EU training sessions on family law regulations for Cross-border Lawyers And Social Services” (JUST-JTRA-EJTR-AG-2016-763874, www.univr.it/class4eu), coordinated by the University of Verona in partnership with the University of Milano-Bicocca, University of Minho (Braga), Eötvös Loránd University (Budapest) and the Law Institute of Lithuania.

After the opening speech by Maria Caterina Baruffi (Professor at the University of Verona and Project Scientific Coordinator), selected aspects of cross-border family disputes, in light of new Regulation 2019/1111 (Brussels IIa Recast) and marking the 10th anniversary of the EU Charter of fundamentals rights becoming legally binding and the 30th anniversary of the UN Convention on the rights of the child, will be addressed by Paolo Bruno (JHA Counsellor at the Permanent Representation of Italy to the EU), Miloš Ha?apka (JHA Counsellor at the Permanent Representation of Slovakia to the EU), Jean Ayoub (Secretary General of ISS – International Social Service), Cinzia Calabrese (President of AIAF – Italian Family Lawyers Association), Agne Limante (Senior Researcher at the Law Institute of Lithuania), Orsolya Szeibert (Professor at the Eötvös Loránd University), Anabela Gonçalves (Professor at the University of Minho) and Costanza Honorati (Professor at the University of Milano-Bicocca).

The programme and more information on the event are available here.

The registration form is available here.

[2019] NSWCA 243 Wigmans v AMP concerns the challenging application of fraus /abuse / vexatious and oppressive proceedings principles to multiplicity of proceedings. Fraus or abuse is not easily applied in civil procedure let alone conflict of laws context. See e.g. my critique of Pablo Star but equally other postings; search tag ‘abuse’ or ‘fraus’ should help locate them. Neither is the common law Aldi rule requiring claimants to bring grouped cases together easy to consider.

Following testimony given by executives of AMP in the (Australian) Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, five class actions were commenced within a short time of each other on behalf of shareholders in AMP who had made investments during periods of time in which it was said that AMP ought to have disclosed certain information to the market. Four of the five class actions were commenced in the Federal Court but were transferred to the Supreme Court. Two of the sets of proceedings then consolidated so that five became four. Each of the respective plaintiffs of the remaining four pending proceedings brought applications to stay each of the other sets of proceedings. AMP, whilst not filing a stay application, supported an outcome in which it would face only one set of proceedings.

Unclear principles on the issue have led to considerations of ‘beauty parades’ (which legal team might best lead the class action) as well as third party funding implications.

The primary judge ordered, pursuant to ss 67 and 183 of the Civil Procedure Act 2005 (NSW) and the inherent power of the Court, that the representative proceedings commenced by 3 of the 4 be permanently stayed. Each of these 3 fell within the definition of group member in the 4th, the ‘Komlotex’ proceedings. Ms Wigmans, one of the 3, made an application for leave to appeal that decision.

The issue in respect of which leave to appeal was granted (but appeal eventually refused) related to the principles applicable to applications to stay and counter-stay multiple open representative action proceedings.

The case therefore does not strictly relate to conflict of laws, rather to civil procedure and case management. However multiplicity of proceedings is clearly an issue viz conflicts, too (think lis alibi pendens; forum non etc.) hence I thought it worthwhile to flag the case; in which Bell P quotes conflicts handbooks; and in which 85 he expressly considers forum non and Cape v Lubbe. The House of Lords in that case had refused to stay proceedings which had been commenced in England where it was said that South Africa was the natural or more appropriate forum, in circumstances where it was held that the proceedings could only be handled efficiently and expeditiously on a group basis in England where appropriate funding was available. The lack of means available in South Africa to prosecute the claims required the application for a stay of proceedings to be refused.

An interesting case in which conflict of laws principles inspired domestic civil procedure rules, and where relevant considerations have an impact on e.g. the Article 33-34 Brussels Ia discussions.

Geert.

The Institute for German and International Civil Procedure at the Rheinische Friedrich Wilhelms University of Bonn, Germany, is looking for a highly skilled and motivated PhD candidate and fellow (Wissenschaftliche/r Mitarbeiter/in) to work in the fields of Private International Law and International Civil Procedure on a part-time basis (50%) as of 1 April 2020.

The successful candidate must hold the First or Second German State Examination in law with distinction (“Prädikat”) and is interested in the international dimensions of private law, in particular private international law and international civil procedure.

The fellow will be given the opportunity to conduct his/her PhD project (according to the Faculty’s regulations) under the supervision of the Director of the Institute Prof Dr Matthias Weller, Mag.rer.publ. (https://www.jura.uni-bonn.de/professur-prof-dr-weller/professor-dr-weller-magrerpubl/). The position is paid according to the German public salary scale E-13 TV-L, 50% (about 1,300 Euro net per month). The initial contract period is one year at least and up to three years, with an option to be extended. Responsibilities include supporting research and teaching on Private International Law and International Civil Procedure as well as a teaching obligation of two hours per week during term time.

If you are interested in this position, please send your application (cover letter in German; CV; and relevant documents and certificates, notably university transcripts and a copy of law degree) to Prof Dr Matthias Weller (weller@jura.uni-bonn.de). The University of Bonn is an equal opportunity employer.

I reported earlier on Lloyd v Google at the High Court. The case involves Google’s alleged unlawful and clandestine tracking of iPhone users in 2011 and 2012 without their consent through the use of third party cookies.

The Court of Appeal in [2019] EWCA Civ 1599 has now overturned the High Court’s approach, nota bene just a day before the CJEU’s Eva Glawischnig-Piesczek v Facebook judgment.

Warby J in  [2018] EWHC 2599 (QB) Lloyd v Google (a class action suit with third party financing) had rejected jurisdiction against Google Inc (domiciled in the US) following careful consideration (and distinction) of the Vidal Hall (‘Safari users) precedent. In essence, Warby J held that both EU law (reference is made to CJEU precedent under Directive 90/314) and national law tends to suggest that “damage” has been extended in various contexts to cover “non-material damage” but only on the proviso that “genuine quantifiable damage has occurred”. This did not mean that misuse of personal data could not be disciplined under data protection laws (typically: by the data protection authorities) or other relevant national courses of action. But where it entails a non-EU domiciled party, and the jurisdictional gateway of ‘tort’ is to be followed, ‘damage’ has to be shown.

The Court of Appeal has now overturned. A first question it considered was whether control over data is an asset that has value. Sir Geoffrey Vos C at 47 held ‘a person’s control over data or over their BGI (browser-generated information, GAVC) does have a value, so that the loss of that control must also have a value’. Sir Geoffrey did not even have to resort to metanalysis to support this:  at 46: ‘The underlying reality of this case is that Google was able to sell BGI collected from numerous individuals to advertisers who wished to target them with their advertising. That confirms that such data, and consent to its use, has an economic value.’ And at 57: ‘the EU law principles of equivalence and effectiveness (‘effet utile’, GAVC) point to the same approach being adopted to the legal definition of damage in the two torts which both derive from a common European right to privacy.’

(The remainder of the judgment concerns issues of reflection of damage on the class).

Conclusion: permission granted to serve the proceedings on Google outside the jurisdiction of the court.

All in all an important few days for digital media corporations.

Geert.

(Summary of the conference by Dulce Lopes, University of Coimbra, and Massimo Foglia, University of Bergamo)

Elisabetta Bani, Viviana Molaschi and Massimo Foglia, that welcomed the participants and emphasized the importance of the subject in the currant law debate, opened the Conference, that was immediately followed by a first session chaired by Radek Strugala. In this session some general issues were discussed, detailed and exemplified such as the autonomous interpretation of GDPR concepts (Agnieszka Guzewicz, University of Wroclaw) and the international law implications of the GDPR in several subjects such as private international law and international administrative law (Dulce Lopes and Geraldo Rocha Ribeiro, University of Coimbra). Federica Persano (University of Bergamo) followed and pointed out the insufficiencies of the GDPR in what regards children that are the most vulnerable group but also the main actor in the digital era.
The Second Session chaired by Dulce Lopes, continued with a two-fold debate on Patients and Privacy, both in Italy (Massimo Foglia, University of Bergamo) and in the Czech Republic (Petr Šustek, Tomáš Holçapek, Martin Šolc, Charles University). Data concerning health and the role of consent in medical records, clinical practice and biobanks were analysed crossing EU demands with national legislations and practices, showing that clarification in some areas is a necessity. Simon Taylor (University of Paris Nanterre) ensued directing the discussion to the private enforcement of the GDPR, giving note of some recent case law in the UK on non-pecuniary losses (one of which from the day previous to the Conference, Lloyd v. Google [2019] Court of Appeal, 2 October). Discussion that was resumed by Jonas Knetsch (University Jean-Monnet of Saint-Étienne) that focused on article 82.º of the GDPR, considering it to be a directly applicable provision but whose contours are ambiguous mainly in what refers to the assessment of the amount of damages, and called for a de minimis rules
On the second day of the Conference, under the moderation of Jonas Knetsch, Radoslaw Strugala (University of Wroclaw) decomposed the segments of article 82.º, concluding that the responsibility envisaged is irrespective of fault, but stated that responsibility imposed on the controller for acts of the processor is too burdensome and may lead to over deterrence. Albert Ruda-Gonzalez (University of Girona), pointed out that big data is “the new oil” full of possibilities but also challenges and analysed the current trend towards collective redress (for instance with the Cambridge Analytica case). Shaira Thobani (University of Torino) reflected on the privacy paradox (the fact that theoretically people care about data but do few to protect it) and asked therefore which should be the role of consent in data protection and if some questions should not be considered more of a consumer type issues and not a fundamental rights one.
The last session, chaired by Simon Taylor, was devoted to specific subjects that go beyond the RGDP but that influence or are influenced by it: Pelopidas Donos (Data Protection Officer of the European Investment Bank) analysed the influence of the mirror Regulation (EU) 2018/1725 on the organisation and practices of the BEI; Marco Rizzuti (University of Florence) debated the role of the right to be forgotten in legal history and contemporary legal though, analysing relevant case law that demonstrate that this right is nor permanent nor absolute; and Luca Ballerini (University of Trieste) dwelled on the post mortem protection of personal data, not included in the protection accorded by the GDPR.
All the sessions were highly debated and a publication is envisaged in a Special Issue of the European Journal of Privacy Law and Technologies (http://www.ejplt.tatodpr.eu).

Seminar: Instruments and solutions for a more effective cross-border debt recovery in the EU/“Strumenti e soluzioni per un più efficace recupero transfrontaliero dei crediti”.

On 8 November 2019, the University of Milan (Università degli Studi di Milano) will host a second national seminar in the framework of the research project “Informed Choices in Cross-Border Enforcement” (IC2BE-JUSTAG-2016-02) funded by the Justice Programme (2014-2020) of the European Commission.

The project – coordinated by the University of Freiburg and conducted by a consortium comprising the Max Planck Institute Luxembourg for Procedural Law and the Universities of Antwerp, Madrid (Complutense), Milan, Rotterdam and Wroclaw – aims to assess the functioning in practice of the “second generation” of EU Regulations on procedural law for cross-border cases, i.e. the European Enforcement Order (“EEO”), the European Order for Payment (“EPO”), the European Small Claims (as amended by Regulation (EU) 2015/2421) (“ESCP”) and the European Account Preservation Order (“EAPO”) Regulations.

The seminar will mark the occasion for the Italian team (Prof. Dr. Francesca C. Villata, Prof. Dr. Lidia Sandrini, Prof. Dr. Elena D’Alessandro, Dr. Gabriele Molinaro, Dr. Marco Farina, Dr. Valeria Giugliano) to present the findings of the research and discuss them with experts from legal practice and academics, with the aim of assessing and improving the application of these instruments and their interface with the Brussels I-bis and Insolvency Regulations in Italy.

The working language is Italian. Practitioners and academics interested in cross-border litigation are invited to participate (free of charge) in this event. More information on the program and on the registration is available here.

(With thanks to Dr. Valeria Giugliano for the tip-off)

by Thomas Pfeiffer, University of Heidelberg

EUFams II is a study funded by the European Commission with the objective of assessing the functioning and the effectiveness of European family and succession law. The project is coordinated by the Institute for Comparative Law, Conflict of Laws and International Business Law of Heidelberg University (Prof. Dr. Dr. h.c. Thomas Pfeiffer). Project partners are the Universities of Lund, Milan, Osijek, Valencia and Verona as well as the MPI Luxemburg. The two-year project entails various conferences and research activities, which will be completed by 31 August 2020.

A survey conducted in the first phase of EUFams II generated responses of approximately 1,400 professionals from 17 Member States. The main findings of the survey are presented in a report (with executive summary) drafted by Quincy C. Lobach and Tobias Rapp (Heidelberg University).

The results show a striking lack of overall familiarity with the instruments of European family and succession law. Respondents indicated that the legal framework is characterized by a high degree of complexity due to the multitude of instruments. Further matters include private divorces, party autonomy, and the impact of global migration flows and the so-called refugee crisis.

More information on EUFams II and its future research outputs can be found on the project’s website.

This project was funded by the European Union’s Justice Programme (2014-2020). The content of this study represents the views of the authors only and is their sole responsibility. The European Commission does not accept any responsibility for use that may be made of the information it contains.

The progressive global establishment of international commercial courts has marked a defining moment in the growth of the legal services sector in international commercial dispute resolution. By offering litigants the option of having their disputes adjudicated by experienced and specialized judges, often from both civil law and common law traditions, these courts have resulted in the jurisdictions that embraced them become a choice destination for foreign trade and investment dispute resolution. In this regard, see in particular this publication by Prof. Dr. Marta Requejo Isidro.

Contextualizing the establishment of international commercial courts – duly taking into account, in this framework, the role of Luxemburg as a dispute resolution hub – and investigating the impact of current national and global events on international commercial litigation, with a particular focus on the consequences potentially arising from Brexit, the Max Planck Institute Luxembourg for Procedural Law will host, on 14 October 2019, a conference on The New Litigation Landscape: International Commercial Courts and the Coordination of Cross-Border Proceedings.

The Conference will focus, in particular, on the following four major topics:

• The establishment of commercial courts around the globe specializing in cross-border disputes of high value;
• The new framework of global traditional cooperation established by the Hague Conference on Private International Law;
• The impact of Brexit on commercial cross-border litigation in Europe;
• The role of Luxembourg in the new litigation landscape.

More information on this event is available here.

My interest in C-18/18 Eva Glawischnig-Piesczek v Facebook as I noted in my short first review of the case, concerns mostly the territorial reach of any measures taken by data protection authorities against hosting providers. The Court held last week and o boy did it provoke a lot of comment.

The case to a large degree illustrates the relationship between secondary and primary law, and the art of reading EU secondary law. Here: Article 15 of the e-commerce Directive 2001/31 which limits what can be imposed upon a provider; and the recitals of the Directive which seem to leave more leeway to the Member States. Scant harmonisation of tort law in the EU does not assist the Institutions in their attempts to impose a co-ordinated approach.

The crucial issue in the case was whether Article 15 prohibits the imposition on a hosting provider (Facebook, in this case) of an obligation to remove not only notified illegal content, but also identical and similar content, at a national or worldwide level? The Court held the Directive does not as such preclude such order, and that as to the worldwide injunctive issue, EU law has not harmonised and that it is up to the Member States to direct in any such orders in compliance with public international law.

The judgment to a large degree concerns statutory interpretation on filtering content, which Daphne Keller has already reviewed pre the judgment succinctly here, Dan Svantesson post the judgment here, as did Lorna Woods, and a frenzied Twitter on the day of the judgment e.g. in this thread. A most balanced analysis is provided by Andrej Savin here. e-Commerce law is not the focus of this blog, neither my professed area of expertise (choices, choices). I do want to emphasise though

• that as always it pays to bear in mind the CJEU’s judicial economy. Here: the need to interpret its judgment in line with the circumstances of the case. As Steve Peers noted, the Austrian court had ruled that the post was defamatory, which is a recognised basis for limiting freedom of expression; see also at 40: ‘In that regard, it should be made clear that the illegality of the content of information does not in itself stem from the use of certain terms combined in a certain way, but from the fact that the message conveyed by that content is held to be illegal, when, as in the present case, it concerns defamatory statements made against a specific person.‘ Nota bene, the same need to read the judgment in context goes for the earlier Google v CNIL case, applying Directive 95/46 and the GDPR, which I review here.
• that speaking strictly as a member of the public who has seen the devastating effect of ‘social’ media on people close to me, the technical discussions on filtering (‘what filter does the CJEU think might possibly ever be available to FB to remove content in the way the Court wishes’) are emphatically beside the point. The public justifiably are not interested in the how. A service is offered which clearly has negative effects on EU citisens. Remedy those effects, or remove the service from those citisens. That is true for the negative impacts of goods (in 25 years of regulatory Bar practice I have seen plenty of that). There is no reason it should be any less true for services.

The jurisdictional issues are what interest me more from the blog’s point of view: the territorial scope of any removal or filtering obligation. In Google viz the GDPR and the data protection Directive, the Court confirmed my reading, against that of most others’, of Szpunar AG’s Opinion. EU law does not harmonise the worldwide removal issue. Reasons of personal indemnification may argue in specific circumstances for universal jurisdiction and ditto reach of injunctive relief on ‘right to be forgotten’ issues. Public international law and EU primary law are the ultimate benchmark (Google V CNIL). It is little surprise the Court held similarly in Eva Glawischnig-Piesczek, even if unlike in Google, it did not flag the arguments that might speak against such order. As I noted in my review of Google, for the GDPR and the data protection Directive, it is not entirely clear whether the Court suggests EU secondary law simply did not address extraterritoriality or decided against it. For the e-commerce Directive in Eva Glawischnig-Piesczek the Court notes at 50-52

Directive 2000/31 does not preclude those injunction measures from producing effects worldwide. However, it is apparent from recitals 58 and 60 of that directive that, in view of the global dimension of electronic commerce, the EU legislature considered it necessary to ensure that EU rules in that area are consistent with the rules applicable at international level.  It is up to Member States to ensure that the measures which they adopt and which produce effects worldwide take due account of those rules.

In conclusion, Member States may order a host provider to remove information covered by the injunction or to block access to that information worldwide within the framework of the relevant international law. To my knowledge, the Brussels Court of Appeal is the only national court so far to consider public international law extensively viz the issue of jurisdiction, and decided against it, nota bene in a case against Facebook Inc.

Any suggestion that the floodgates are open underestimates the sophisticated engagement of national courts with public international law.

In general, the CJEU’s approach is very much aligned with the US (SCOTUS in particular) judicial approach in similar extraterritoriality issues (sanctions law; export controls; ATS;…). There is no madness to the CJEU’s approach. Incomplete: sure (see deference to national courts and the clear lack of EU law-making up its legislative mind on the issues). Challenging and work in progress: undoubtedly. But far from mad.

Geert.

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

The 6th Petar Sarcevic International Scientific Conference titled “Intellectual Property Rights in the EU: Going Digital” will be held in Zagreb, Croatia, on 18 and 19 October 2019. The conference is structured in three sessions and will gather EU and national judges, practitioners and academics to discuss current topics in copyright, trademarks and designs, along with the issues in IP enforcement. The conference is co-organised by the Croatian IP Office,the Faculty of Law of the University of Rijeka and the Croatian Comparative Law Association, while the main supporter is the EUIPO.

The conference is in Croatian and English with simultaneous translation.

More information is available at the conference web page: ps6conference.law.hr or at ikunda@pravri.hr.

Authors: Jie (Jeanne) Huang and Winston Ma

Following the promulgation of the judicial interpretation by the Supreme People’s Court (“SPC”) on 26 September 2019, Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region (“Arrangement”) signed by Mainland China and Hong Kong on 2 April 2019 came into effect in Mainland China from 1 October 2019. This Arrangement provides mutual recognition and enforcement of interim measures between Hong Kong and Mainland China. It has generated broad coverage.[1] This post tries to add to the discussion by providing the first case decided under the Arrangement on 8 October 2019, and more broadly, the reflections on the continuing protests in Hong Kong and arbitration under “One Country, Two Systems’.

1. Mutual recognition and enforcement of interim measures between Hong Kong and Mainland China

Hong Kong Arbitration Ordinance has long been allowing parties to arbitral proceedings in any place to apply to the courts of Hong Kong for interim measures. Interim measures include injunction and other measures for the purpose of maintaining or restoring the status quo pending determination of the dispute; taking action that would prevent, or refraining from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral proceedings; preserving assets; or preserving evidence that may be relevant and material to the resolution of the dispute. However, in contrast to the liberal Hong Kong counterpart, people’s courts in Mainland China are conservative. Chinese law limits interim measures to property preservation, evidence preservation and conduct preservation. More important, Mainland courts generally only enforce interim measures in support of arbitration administered by domestic or foreign-related arbitration institutions of the People’s Republic of China (PRC). This is because Article 272 of Chinese Civil Procedure Law provides that where a party applies for a preservation measure, the foreign-related arbitral institution of PRC shall submit the party’s application to the intermediate people’s court at the place of domicile of the respondent or at the place where the respondent’s property is located. Article 28 of Chinese Arbitration Law states that if one of the parties applies for property preservation, the arbitration commission shall submit to a people’s court the application of the party in accordance with the relevant provisions of the Civil Procedure Law. Article 10 of Chinese Arbitration Law restricts arbitration institutions to those registered with the judicial administrative department of the relevant province, autonomous region or municipalities directly under the Central Government.[2]

There are few exceptions to the Mainland conservative approach. First, since 2017, ad hoc arbitration has been permitted in China’s pilot free trade zones.[3] Therefore, Mainland courts are likely to issue interim measures in support of such ad hoc arbitration. Second, a party to a maritime arbitration seated outside of Mainland China can apply for property preservation to the Chinese maritime court of the place where the property is located.[4] However, the property to be preserved was limited to vessels, cargos carried by a vessel, and fuel and supplies of a vessel.[5]

The third exception is created by the recent Arrangement. Arbitral proceedings commenced both before and after 1 October 2019 are potentially caught by the Arrangement, under which property, evidence and conduct preservation orders could be granted by the courts in Mainland China to assist the Hong Kong arbitration.

The scope of the Arrangement confines to arbitral proceedings seated in Hong Kong and administered by institutions or permanent offices meeting the criteria under Article 2 of the Arrangement. Six qualified institutions have been listed on 26 September 2019, being Hong Kong International Arbitration Centre (“HKIAC”), ICC Hong Kong, CIETAC Hong Kong, Hong Kong Maritime Arbitration Group, eBRAM International Online Dispute Resolution Centre and South China International Arbitration Centre (Hong Kong). Future applications will also be considered and the list may be subject to alteration.

Articles 3-5 of the Arrangement set out the procedural requirements for applying to the courts in Mainland China for interim measures. Since time is of essence, application can be made by a party to the arbitration directly to the relevant Mainland Chinese court before an arbitration is accepted by an arbitration institution.[6] If the arbitration has been accepted, the application should be submitted by the arbitration institution or representative office.[7]

Article 8 of the Arrangement further reflects the importance of timeliness by demanding the requested court to make a decision after examining the application “expeditiously”. Nevertheless, the Arrangement is silent on the specific time limit applicable to the court’s examination process. Pursuant to Article 93 of the Chinese Civil Procedure Law, the court is to make an order within 48 hours after receiving an application for property preservation prior to the commencement of arbitration; Furthermore, Article 4 of the Provisions of the SPC on Several Issues concerning the Handling of Property Preservation Cases by the People’s Courts demands the court to make an order within 5 days after the security is provided, and within 48 hours in cases of emergency.

The first case decided under the Arrangement demonstrates how “expeditiously” a people’s court can make a decision. In the morning of 8 October 2019, the Shanghai Maritime Court received a property preservation application submitted by HKIAC. In this case, the arbitration applicant is a maritime company located in Hong Kong and the respondent is a company in Shanghai. They concluded a voyage charter party which stated that the applicant should provide a vessel to transport coal owned by the respondent from Indonesia to Shanghai. However, the respondent rescinded the charter party and the applicant claimed damages. Based on the charter party, they started an ad hoc arbitration and ultimately settled the case. According to the settlement agreement, the respondent should pay the applicant USD 180,000. However, the respondent did not make the payment as promised. Consequently, the respondent brought an arbitration at the HKIAC according to the arbitration clause in the settlement agreement. Invoking the Arrangement, through the HKIAC, the applicant applied to the Shanghai Maritime People’s Court to seize and freeze the respondent’s bank account and other assets. The Shanghai Court formed a collegial bench and issued the property preservation measure on the same date according to the Arrangement and Chinese Civil Procedure Law.

2. Protests in Hong Kong

As the first and so far the only jurisdiction with the special Arrangement through which parties to arbitration can directly apply to Mainland Chinese courts for interim measures, Hong Kong has been conferred an irreplaceable advantage while jockeying to be the most preferred arbitration seat for cases related to Chinese parties. Arbitration that is ad hoc or seated outside Hong Kong cannot enjoy the benefits of the Arrangement. Parties to an arbitration seated in Hong Kong are encouraged to select one of the listed institutions to take advantage of the Arrangement. Meanwhile, the Arrangement also attracts prominent international arbitration institutions to establish permanent offices in Hong Kong.

One may argue that the Arrangement is the necessary consequence of the “One Country, Two Systems” principle and the increasingly close judicial assistance between Mainland China and Hong Kong. Especially in the context of China’s national strategy to develop the Greater Bay Area, the notion of “one country, two systems, three jurisdictions” makes Hong Kong the only common-law jurisdiction to deal with China-related disputes.[8]

However, to what extent may the recent protests negatively impact on the arbitration industry in Hong Kong? Notably, London and Paris have also experienced legal uncertainly (Brexit in the UK) and protests (Yellow vests movement in France) in recent years. Nevertheless, the Hong Kong situation is more severe than its western counterparts in two aspects. First, currently, the protestors have impacted on the traffic inside Hong Kong. Last month, they even blocked the Hong Kong airport. It is not surprising that parties may want to move the hearings outside of Hong Kong just for the convenience of traffic, if the arbitration is still seated in Hong Kong. Second, the continuation of protests and the uncertainty of the Chinese government’s counter-measures may threaten parties’ confidence in choosing Hong Kong as the seat for arbitration. The Arrangement brings an irreplaceable advantage to Hong Kong to arbitrate cases related with Chinese parties. However, this significance should not be over-assessed. This is because by choosing a broad discovery and evidence rule, parties and tribunals have various means to deal with the situation where a party wants to hide a key evidence. Arbitration awards can be recognized and enforced in all jurisdictions ratified the New York Convention. Therefore, the value of the Arrangement is mainly for cases where the losing party only has assets in Mainland China for enforcement.

The flourish of arbitration in Hong Kong is closely related to Mainland China. However, Hong Kong, if losing its social stability due to the protests, will lose its arbitration business gradually. In the Chinese Records of the Grand Historian (Shiji by Han dynasty official Sima Qian), there is a famous idiom called “cheng ye xiao he bai ye xiao he”.[9] It means the key to one’s success is also one’s undoing. It is the hope that Mainland China and Hong Kong can find a solution quickly so that the arbitration industry in Hong Kong can continue to be prosperous. This is more important than the implementation of the Arrangement.

Authors:

Jie (Jeanne) Huang is an associate professor at University of Sydney Law School, Australia, jeanne.huang@sydney.edu.au.

Winston Ma is an LLB student at University of Sydney Law School, Australia

[1] E.g. http://arbitrationblog.kluwerarbitration.com/2019/07/24/arrangement-concerning-mutual-assistance-in-court-ordered-interim-measures-interpretations-from-a-mainland-china-perspective-part-i/?_ga=2.249539525.310814453.1570572449-887368654.1570572449.

[2] There are different opinions regarding whether Article 10 and 28 of Chinese Arbitration Law restrict the interim measures to arbitration administered by Chinese arbitration institutions. See the judgment of [2016] E 72 Cai Bao No. 427 issued by Wuhan Maritime Court. In this case, the Ocean Eleven Shipping Corporation initiated an arbitration in HKIAC against Lao Kai Yuan Mining Sole Co., Ltd. The applicant was a company in South Korea and the respondent a Chinese company. The parties had disputes over a voyage charter party. In order to ensure the enforcement of the coming award in Mainland China, the applicant applied to Wuhan Maritime Court to freeze USD 300,000 in the respondent’s bank account or seizure, impound or freeze other equivalent assets. The People’s Insurance Company provided equivalent insurance for the applicant’s property preservation application. Wuhan Maritime Court permitted the property preservation application according to Article 28 of Chinese Arbitration Law and Article 103 of the Civil Procedure Law. However, this case is inconsistent with majority cases where Chinese courts rejected to issue interim measures for arbitration administered by ad hoc or arbitration institutions registered outside of Mainland China.

[3] SPC Opinions on Providing Judicial Safeguard for the Building of Pilot Free Trade Zones, Fa Fa [2016] No. 34, http://www.court.gov.cn/fabu-xiangqing-34502.html.

[4] Art. 21(2) of the Interpretation of the SPC on the Application of the Special Maritime Procedure Law of the PRC, Fa Shi [2003] No. 3.

[5] Ibid., art. 18.

[6] Art. 3 of the Arrangement.

[7] Ibid., art. 2.

[8] China has made the economic integration between the Grater Bay Area a national strategy. The Grater Bay Area includes Hong Kong, Macao and Guangdong Province https://www.bayarea.gov.hk/sc/outline/plan.html.

[9] https://en.wiktionary.org/wiki/%E6%88%90%E4%B9%9F%E8%90%A7%E4%BD%95%EF%BC%8C%E8%B4%A5%E4%B9%9F%E8%90%A7%E4%BD%95.

China is one of few countries that permits the parties to choose the applicable law governing cross-border infringement of intellectual property disputes. Article 50 of the Chinese Law Applicable to Foreign-Related Civil Relations 2010 (Conflicts Act) provides that the parties could choose Chinese law (lex fori) after dispute has arisen to derogate from the default applicable law, i.e. lex loci protectionis, in IP infringement disputes.

This choice of law rule was applied by the Beijing IP Court in its 2017 decision on Xiang Weiren v  Peng Lichong (“Drunken Lotus”), (2015) Jing Zhi Min Zhong Zi 1814. The claimant published his painting “Drunken Lotus” in 2007. In 2014, the defendant exhibited his artwork entitled “Fairy in Lotus” in Mosco and Berlin, which allegedly had infringed the claimant’s copyrights. Although the parties did not enter into an explicit choice of law agreement, both parties submitted their legal arguments based on Chinese Copyright Law, which was deemed an “implied” ex post choice of Chinese law. Beijing IP Court thus applied Chinese law to govern the infringement dispute.

This case reveals a number of interesting points. Party autonomy may provide a practical alternative to lex loci protectionis in infringements occurring in multiple jurisdictions. In the Drunken Lotus case, applying lex loci protectionis would result in the application of two foreign laws, Russian and German law, respectively to the infringement occurred in Russia and Germany. In the even worse scenario, where a copyright is infringed in the internet, the territoriality nature of copyrights may result in multiple, similar but independent, infringements occurring in all countries where the online information is accessed, causing more difficulties for the claimant to enforce their rights based on multiple applicable laws.

However, there may be no convincing argument to limit the choice to the lex fori. If party autonomy is justifiable in IP infringement, which is controversial, it would be appropriate for the parties to choose any law. The only justification of such a limitation probably sterns from judicial efficiency and pragmatism. It would be more convenient for the court to apply its own law. Also in practice, it is very common that when the litigation is brought in China and especially where both parties are Chinese, the parties naturally rely on Chinese law to support their claims or defences without being aware of the potential choice of law questions. It renders “implied” ex post choice exist very frequently and make it legitimate for Chinese court to apply Chinese law in most circumstances. It is also likely that allowing the parties to choose the lex fori could be an attractive reason for the claimants, especially those in multi-jurisdiction infringement disputes, to bring the action in China, granting Chinese court a competitive advantage versus other competent jurisdictions.

Furthermore, the Chinese law only permits party autonomy in infringement of IPRs. Any issues concerning substance of IPRs, including ownership, content, scope and validation, are exempt from party autonomy (Art 48 of Contracts Act). These issues are usually classified as the proprietary perspective of IPRs, exclusively subject to the lex protectionis to the exclusion of party autonomy. However, before a court could properly consider the infringement issue, it is inevitable to know at least the content and scope of the disputed IPR in order to ascertain parties’ rights and obligations. In other words, the substance and infringement of IPRs are two different, but closely related, issues. Applying party autonomy means the court should apply two different laws, one for the substance and the other infringement, causing depacage. The necessity to decide the content of IPRs may largely reduce the single law advantage brought by party autonomy in multi-jurisdictional infringements. In the Drunken Lotus case, Chinese court simply applied Chinese law to both the content and infringement issues, without properly considering substance and infringement classification.

Conference on Due Process in International Commercial Arbitration will be held on 18 Oct 2019 at the New York University Lester Pollack Colloquium Room, organised by NYU Centre for Transnational Litigation, Arbitration and Commercial Law.

This event will discuss the topics addressed in the national reports drafted on the basis of a questionnaire prepared by Professors Franco Ferrari, Dietmar Czernich, and Friedrich Rosenfeld. The ultimate goal behind the national reports and the discussion that will take place at the conference is to provide the necessary background information for the preparation of a set of guidelines on due process in international arbitration. The purpose of these guidelines is twofold. On the one hand, they will identify the appropriate standard of due process that arbitrators should apply in international arbitration proceedings. On the other hand, they will contain recommendations on how arbitrators can respond to misuses of due process by recalcitrant parties. To this end, they will identify appropriate case management techniques that help to ensure the efficiency of the proceedings. For further information, please find the Due Process Conference Program October 2019.

Parties’ names alone in Elena Tsareva et al v Dimitri Ananyev et al [2019] EWHC 2414 (Comm) clearly indicate the attraction of England in international forum shopping. As Baker J notes at 5:

‘I infer that the choice of this jurisdiction as a venue for the claimants’ claims has been led by the lawyers (Russian and English) who have engaged themselves in assisting the claimants as disappointed investors. Indeed, I think it unlikely it would have occurred to the claimants, unless so led, to try to sue here. The most natural targets for any claim are PSB and (possibly) the first defendant, so the most natural venues for any litigation (all things being equal) are Russia and (perhaps) Cyprus. But none of that means that this court does not have jurisdiction.’

One, as always, wonders where these cases might go should following Brexit (if any) the English courts will regain full authority to apply forum non conveniens.

The Ananyevs are Russian nationals who were domiciled and resident in Russia in 2017. One of them, when the Claims were commenced in 2018, was domiciled and resident in Cyprus, where he has had a dual citizenship since June 2017. They are, or at all events they were in 2017, well-known in Russia as successful and very wealthy businessmen. They were the ultimate beneficial owners together of a number of businesses and assets, including Promsvyaz Bank – PSB, of whom claimants were clients. The core allegation underlying the claimants’ claims is that they were induced to invest in Notes by mis-selling on the part of PSB employees to the effect that the Notes were personally guaranteed by the Ananyevs and/or that they were safe investments. It is alleged that PSB was in a parlous financial condition rendering it highly likely the Notes would default, as in due course they did; and that the misselling was directed by the Ananyevs in a conspiracy to enrich themselves and/or their businesses at the expense of the claimants.

Some of the corporate defendants are English companies, although ‘tax-resident’ in Ireland in 2017, in Cyprus from some time later (and still now). The English companies cannot and do not challenge jurisdiction (but they are struck out nevertheless given the absence of foundation to the claims). Promsvyaz is a Dutch company, the Issuer is a Cayman Islands company, and Peters International is a Dutch Antilles company. Other defendants are Cypriot companies.

There are a great many claimants with varying suggested gateways for jurisdiction, and one best read the judgment to get the full picture. In short, however, the gateways relevant to the Brussels regime (this blogpost does not focus on the English rules) are Article 4, 7(2), and 8(1). At 29, Baker J emphasises that for the anchor claim under Article 8(1), unlike in the English CPR rules, there cannot be a merits claim. But there can be abuse, per CJEU Reisch Montage, and CDC, as recently also applied in Privatbank v Kolomoisky. Unlike in the latter case, Article 34 is not engaged here. Baker J concludes after considerate yet concise analysis that there is no good arguable case against the English defendants, the claim against them is hopeless, and therefore the anchor mechanism is abused. As always in these cases, walking the rope between merits analysis and ‘good arguable case’ is not straightforward yet the judgment shows again how the English courts deploy creativity to ensure the anchor mechanism of Article 8(1) is not abused.

At 51, the tort gateway of Article 7(2) against the non-English EU defendants is dismissed with reference to Lober. Claimants suffered loss by parting with their funds deposited with PSB in Russia (or, perhaps, by contracting with PSB in Russia to do so); there is no indication of links to England, as required by Lober (applying Universal Music).

The above only narrates the essence of the Brussels Ia analysis. There is quite a bit more in the judgment of relevance to the CPR rules.

Geert.

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

Starting with the infamous and fundamentally flawed Laws of Fear by Cass Sunstein, Europe’s precautionary principle has been under constant attack by industry both within and outside of the EU. My postings on the principle here and the section on it in my Handbook of EU environmental law with Leonie Reins attempt to show that despite industry propaganda against it, the principle has never been a blind ‘when in doubt, don’t do it’ approach to risk management.

In C-616/17 Blaise and others, the Court once again shows its measured approach. Defendants in national criminal proceedings, argued that they should be let off in a criminal damage prosecution. They are environmental activists and are charged with causing criminal damage to containers of herbicidal products (specifically ‘Roundup’) containing the chemical glyphosate. In their defence, they argue that the products present an unacceptable potential risk to human health and the environment and that the EU approval process is defective and therefore unlawful.

The Court found that the approval process on the basis of EU law is entirely in line with EU law, including the precautionary principle. Steptoe have excellent overview here and I am happy to refer entirely.

Geert.

EU environmental law (with Leonie Reins), Edward Elgar, 2018, p.28 ff.