Droit international général

Triggered by recent events, notably the Dieselgate scandal, collective redress is now back on the EU civil justice agenda (see here). It is also the subject matter of requests for preliminary rulings addressed to the CJEU (see, concerning a situation with cross-border implications, the currently pending case C-709/19, Vereniging van Effectenbezitters).

A conference on the topic, organised by the Max Planck Institute Luxembourg for Procedural Law in cooperation with ERA – Academy of European Law, will take place on 16 and 17 April 2020 in Trier.

The conference will: introduce the proposed EU Directive on representative action; provide a platform for debate on topical issues of this key Directive; analyse major case law of the CJEU and national Supreme Courts on collective redress; look at the mismatch of EU law and collective redress; present the most recent hands-on experience with collective redress; debate funding issues, namely contingency fees and third-party funding.

The event is chiefly meant for legal practitioners specialised in the field of consumer law and policy, litigators involved in mass damage cases, representatives of business and consumer organisations, ministry officials, and academics.

For more information please see here.

In [2020] UKUT 0001 (TCC) Devon Waste Management, Biffa and Veolia v Inland Revenue, the tax and chancery chamber of the Upper Tribunal discussed the classification of ‘fluff’ as waste. The fluff at issue is not the type one may find in one’s pockets (or, dare I say, belly button). Rather, the “black bag” waste material that is disposed of at landfill sites and used by operators as a geomembrane liner and geotextile protection layer.

As Constantine Christofi at RPC reports, (see also UKUT at 22) the first tier tribunal – FTT had earlier found that that the use made of the material disposed of was only an indicator of whether there was an intention to discard the material, and that use was not conclusive in determining whether it was discarded. In the view of the FTT, the use of such material as a protective layer was not sufficient to negate an intention to discard it as it was destined for landfill in any event and because there was no physical difference between that material and the other general waste disposed of at the landfill sites. The FTT therefore held that the disposal of the waste was a taxable disposal by way of landfill: not everything that could be characterised as “use” was sufficient to negate an intention to discard.

The FTT had (UKUT does not at all) considered EU law precedent. UKUT relied on English authority and overturned the FTT’s finding on the basis of the FTT having fallen into the “once waste, always waste” trap (at 74). In deciding like this, UKUT itself in my view may have fallen into the alternative  ‘once someone’s waste not that of another’ trap. At 52: ‘An owner of material does not discard it, within the meaning of the statutory provisions, if he keeps and uses it for his own purposes’. Making use of materials for the site operator’s purposes connected with regulatory compliance, when they are deposited in the cell, is use that is necessarily inconsistent with an intention to discard the materials.

This arguably is the kind of single criterion test which when it comes to (EU and UK) waste law has been rejected.

Geert.

 

 

[2020] EWHC 93 (Fam) MM v NA is a great primer for family law conflict of laws. Roberts J discussed formal validity (subject under English PIL to lex loci celebrationis, as is the case in many jurisdictions); ‘material” aka ‘essential’ validity aka capacity (in the common law subject to lex domiciliae: the domiciliary laws of the individual parties at the time of the marriage. Note that in the civil law this is often subject instead to lex patriae); finally: recognition, which here was complicated for Somaliland is not a State recognised by the UK. Recognition was granted. Geert.

On 29 January 2020, the Rechtbank Rotterdam (a Dutch court of first instance) ruled on the law applicable to claims by investors against the Brazilian company Petrobas. The case concerns the long-disputed localisation of financial or economic loss under Article 4(1) of the Rome II Regulation on the law applicable to non-contractual obligations. The Dutch court has added a new piece to the puzzle by adopting a market-based approach.

Background

The claims of the investors are related to the so-called Petrolāo scandal (Portuguese for “big oil”, also known as “operation car wash” because it was first exposed by the owner of a car wash service with money exchange), which has shattered Latin America and involves well-known figures, such as the former Brazilian president Lula da Silva.

The allegations centre on money laundering and endemic corruption in Petrobas, which has led to a steep fall in its share price. The investors try to recoup their corresponding losses. The litigation has a global dimension given that Petrobas’ securities are listed around the world, including in Argentina, Germany, Luxembourg, Spain, and the United States (in the form of American Depository Receipts – ADR).

Procedure

The proceedings before the Rechtbank Rotterdam had been preceded by litigation in the US, where the District Court for the Southern District of New York threw out the claims of investors who had bought securities listed outside the United States as early as 2015. After that, a Dutch foundation (“stichting“) was created to pursue the claims of these investors in the Netherlands. No Petrobas shares were traded there: The choice of venue was entirely attributable to the favourable attitude of the Dutch legal system towards collective actions. By a decision of 19 September 2018, the Rechtbank Rotterdam accepted international jurisdiction over the foundation’s claim against Petrobas. Now it had to decide over the applicable law to the claims of the investors’ litigation vehicle.

Application of Dutch law

The facts underlying the claim stretched over a period of ten years (2004-2014). Due to the inapplicability of the Rome II Regulation to events before 12 January 2009 (see Articles 31 and 32 and the CJEU decision in Homawoo), these were submitted to the Dutch Private International Law, more precisely to the Dutch Act on Conflict of Laws for Torts (Wet Conflictenrecht Onrechtmatige Daad – WCOD).

As Article 3(1) of WCOD refers to the place where the unlawful conduct occurred, the Rotterdam court ruled that Brazilian law applies to the entirety of the facts occurring before 12 January 2009.

Application of the Rome II Regulation

Events occurring on or after 12 January 2009 are subject to the Rome II Regulation. To determine the applicable law, the Dutch court looked to Article 4 of Rome II, the first paragraph of which refers to the country in which the damage occurs. Thus, the court was facing the well-known problem of locating purely economic loss.

Case law of the CJEU (Kolassa and Universal Music)

The court reviewed two decisions of the CJEU in Kolassa and Universal Music (leaving aside Löber). These cases concerned jurisdiction under the Brussels I bis Regulation but had to be consulted as well under the Rome II Regulation under the paradigm of parallel interpretation (see Recital 7 of Rome II).

In Kolassa, the CJEU had to determine the place where the damage occurs in case of investments made on the basis of a misleading prospectus. The CJEU had ruled that the damage occurred at the place of establishment of the bank managing the account from which the investor has payed the securities.

However, the Rotterdam court saw the importance of Kolassa as being severely limited by the decision in Universal Music. In the latter case, the court had held that the Kolossa decision was made in the specific context which gave rise to that judgment and that purely financial damage which occurs directly in the applicant’s bank account cannot, in itself, be qualified as a relevant connecting factor (CJEU, Universal Music, margin nos 37 and 38).

Market-Based Approach

The Rotterdam court in Petrobas instead preferred a completely different approach. In its view, the closest connection of the claim is with the place where the securities acquired by the investors are listed and traded offered. In the opinion of the court, it was there that the investors suffered property damage because their assets were directly affected by an unlawful act. The application of the law in force at this place would also serve the dual objectives of certainty and predictability because the law so identified would be foreseeable for both the issuer and the investors of the securities.

This “market-based theory” has been discussed for quite some time and enjoys strong support in the literature (see e.g. T Arons, (2008) Nederlands Internationaal Privaatrecht 481, 486; H Kronke, (2000) 286 Recueil des cours 245, 308-12; F Garcimartín Alférez, (2011) Law and Financial Markets Review 449, 453; Sarah Sánchez Fernández, El folleto en las ofertas públicas de venta de valores negociables (OPV) y responsabilidad civil: ley aplicable (La Ley, Madrid: 2015, p. 330–339)).

Evaluation

The market theory’s advantage is that it concentrates the applicable law in one country or – in case of dual listings – in a few jurisdictions. This is especially important in case of collective actions, which would be utterly unmanageable if each claim were governed by the law of the place of the investor’s bank account. While the market-based approach is clearly preferable from a policy perspective, it is less clear whether it can be justified under Art 4(1) Rome II, at least in its current interpretation by the CJEU.

First, it is doubtful whether the investors really suffer direct loss at the place where the securities are listed or traded. Investors usually do not purchase their securities directly on the exchange, but through intermediaries. It is also not sure that the sell them at the exchange after suffering loss – they can equally decide to keep them. The connection to the market where the securities are traded is therefore a more abstract one.

Second, it seems that the Rechtbank Rotterdam overly restricts the importance of the Kolassa decision. After all, this judgment arose from a case of wrong capital markets disclosure, which is  much more similar to the subject matter of Petrobas than the fact pattern in Universal Music, which concerned a failed calculation in a precontractual negotiation. Moreover, in both Kolassa and Petrobas, the investors had voluntarily paid the price of the securities, which afterwards declined in value, while in Universal Music the wrong information tainted the payment by the victim (on this point, see Johannes Ungerer, 24 (2017) Maastricht Journal of European and Comparative Law 448, 452).

In Kolassa, the CJEU decided implicitly against the market-based theory by ruling in favour of the localisation of the invidividual investor’s loss. The reasoning in Universal Music is not different on that point. The Rotterdam Rechtbank would therefore have done well to submit a question for a preliminary ruling, rather than simply trust its own opinion. Such a reference would have helped clarify the authorities of the CJEU in this currently uncertain area of law.

Applying Article 4(1) of Rome II has the further downside that the exception of Article 4(2) of Rome II must be respected, which results in the application of a different law to the claims of those parties that are domiciled in the same country as the defendant (in the case at hand: Brazilian investors). This illogical result could have been avoided by adopting the market theory under the escape clause (Article 4(3) of Rome II). Such an approach would however have its own problems because it could be seen as contradicting the need for a restrictive interpretation of the escape clause.

Conclusion

Overall, the market-based solution suggested by the Rechtbank Rotterdam could be a useful innovation for locating purely economic loss under Rome II. It would have been interesting to see how the CJEU will position itself in this respect. Unfortunately, the court has missed the opportunity to submit a reference for a preliminary ruling. Perhaps a recent submission by the Hoge Raad in the case VEB v BP concerning investor claims under Article 7(2) of Brussels I bis will bring some clarification for the Rome II Regulation as well.

This week the Hague Conference on Private International Law (HCCH) announced that there are two Legal Officer vacancies and noted that their “duties will include general assistance in various areas of the work programme of the HCCH as determined by the Council on General Affairs and Policy (CGAP). Areas of priority include international commercial litigation / civil procedure and child support (maintenance) matters.”

The deadline for applications is Wednesday 25 March 2020 (12.00 a.m. CET).

More information is available here.

The Permanent Bureau of the Hague Conference on Private International Law (HCCH, head office in The Hague, the Netherlands) is seeking legal interns for the period July to December 2020. Applications are now open!

The deadline for applications is Friday 27 March 2020 (18:00 CET).

More information is available here.

Thank you Huib Berendschot for alerting me to a CJEU judgment which had escaped me. In C-678/18 Procureur Generaal bij de Hoge Raad der Nederlanden (Re: Spin Master Ltd) at issue is Regulation 6/2002 on Community designs.

The Regulation provides among others (Article 81) that Community design courts (as appointed in the individual jurisdictions) have exclusive jurisdiction for infringement actions. At issue was whether Member States may extend the exclusivity to provisional measures (Article 90). The Netherlands had done so, however as Huib explains more extensively, the CJEU has now given speed at the level of provisional measures, priority over specialisation: at 41: ‘ whilst the pursuit of that objective of uniform interpretation is entirely justified in the case of court proceedings the substance of which concerns infringement or invalidity actions, the EU legislature also pointed out, in recital 29 of Regulation No 6/2002, that the exercise of the rights conferred by a design must be enforced in an efficient manner throughout the territory of the European Union. The EU legislature was therefore able to ensure that, in the case of requests for provisional measures, including protective measures, concerning infringement or invalidity, the requirements of proximity and efficiency should prevail over the objective of specialisation.’

A most interesting judgment.

Geert.

 

The era of globalization is characterized by the dynamic movement of people across borders and migration in various parts of the world. The juxtaposition and coexistence of different ethnic, cultural or religious groups within society poses the challenge of accommodating divergent legal, religious and customary norms. Of key concern is how far the fundamental values of the receiving state ought to be imposed on all persons on the soil, and to what extent the customs, beliefs and the cultural identity of individuals belonging to minority groups should be respected. This challenge arguably requires reconsidering and reevaluating the conventional methods of private international law that are grounded in the territorial “localization” of legal relationships. Against this background, Yuko Nishitani (Professor at Kyoto University, Japan) envisaged studying various conflict of laws issues from the viewpoint of cultural identity in private international family law and delivered a lecture at the Hague Academy of International Law on “Identité culturelle en droit international privé de la famille”, which has been published in Recueil des cours, Vol. 401 (2019), pp. 127-450.

In her lecture, Nishitani first analyzes the notion and meaning of cultural identity in private international law, after comparatively delineating legal developments in major legal systems (Chapter I). The author posits that, while the notion of cultural identity should not be understood as its own legal category, it serves as a guiding principle and theoretical foundation in justifying certain solutions in private international law (Chapter II).

In multiethnic and multicultural societies, the belonging of individuals to states, regions, communities or other groups is gradually relativised and redefined. In light of the recent effects of globalization, the author contemplates the appropriate methods for determining the personal law to cater for the cultural identity of individuals, overcoming the conventional dichotomy between the principle of nationality and the principle of habitual residence (Chapter III). Considering the multiplication of relevant legal and social norms, the author also considers the interaction between state law and customary, religious or cultural non-state norms to seek solutions for “conflict of norms” in a broader sense (Chapter IV).

On the other hand, for the sake of coherence and security of the legal system, the state exercises control, where necessary, to preclude effects of foreign legal institutions. It is essential to define the functioning of public policy and fundamental rights so as to set limits to respect for cultural identity (Chapter V). Finally, the author reflects on alternative conflict of laws methods geared toward administrative and judicial cooperation between sovereign states, with a view to accommodating the cultural identity of individuals (Chapter VI).

At the end of her lecture, the author highlights the importance of constructive dialogue between different cultures, given that humanity has a long history of success in mutually developing, exchanging and enriching its diverse cultures.

More information about the author and the book are available here (in French).

The proceedings of the symposium held in June 2019 on the Paris international commercial chambers were published in a special issue of the Revue Lamy Droit des Affaires which can be freely download on the website of the Paris Court of Appeal.

The presentations were made in French, and the proceedings are written in the same language.

The Court has provided the following summary in English:

Opening of the Symposium

A little more than a year after the signature of the procedural protocols establishing the international commercial chambers in the Commercial Court and the Paris Court of Appeal, the symposium was opened to a large audience by Mrs Chantal Arens, First President of the Paris Court of Appeal, who, among other things, announced the forthcoming publication of a bilingual procedural guide before these chambers, with the aim of presenting the proceedings in a detailed and didactic manner, and called for the regulatory consolidation of the jurisdiction of the Paris Court of Appeal.

Mr Gille Cuniberti, Law Professor at the University of Luxembourg and moderator of the roundtables, pointed out that the creation of international commercial chambers forms part of an international competition between courts from which one of the issues at stake is the attractiveness of French law.

The creation of the Paris International Commercial Chambers

After a reminder of the origins of the commercial chambers by Mr Guy Canivet, Honorary First President of the Court of Cassation, and of the options chosen by the Ministry of Justice presented by Mr Thomas Andrieu, Director of Civil Affairs for the French Ministry, Ms Marie-Aimée Peyron, Chairman of the Paris Bar Association, went back on the support of the Paris bar in the creation of these chambers.

Students at the Sciences Po Law school of Paris (Mr Félix Briant, Ms Auriane Clement, Mr Mathieu Larroque, Ms Charlotte Muller) presented the fruit of their work done during one year with the International Commercial Chamber of the Court of Appeal by providing an overview of the choices made abroad in the creation of international commercial courts in Europe and in the world.

Roundtables

This symposium allowed to set out how to access to the international chambers in France, their jurisdiction and the applicable procedure, stressing in particular the desire to give greater importance to predictability in the conduct of the trial, the orality of the proceedings, the possible use of foreign languages and, in particular, the use of the English language.

Mr François Ancel, Ms Fabienne Schaller and Ms Laure Albert, all three judges in the International Commercial Chamber of the Paris Court of Appeal intervened to develop these various points, as have the President of the International Commercial Chamber at the Paris Commercial Court, Mr Philippe Bernard, and Mr François Vaissette, Avocat Général representing the General Public Prosecutor’s Office of the Paris Court of Appeal , which was able to clarify the role of the Public Prosecutor’s Office in these chambers.

Mr Alban Caillemer du Ferrage and Ms Emilie Vasseur, members of the Paris Bar, stressed the important role of the creation of these chambers and the will of the bar to promote the stipulation of clauses conferring jurisdiction to the benefit of the Paris courts (in particular in the choice of ISDA to open its Master Agreement to the jurisdiction of French courts and French law) and inisted also on the judicial administration of evidence and the voluntary appearance of the parties and witnesses.

Finally, scientific insight was given by Ms Marie-Elodie Ancel, Law Professor at the University of Paris Est Créteil on the first decisions handed down by the International Chamber of the Court of Appeal and by Professor François Mailhé, Deputy-Dean of the Faculty of Law and Political Science of the Picardie Jules Verne University, who asked in particular how to meet the needs of economic stakeholders (use of the English language, set up of a procedural timetable; compulsory production of evidence; cross-examination).

Closing speech

During his executive summary, Mr Emmanuel Gaillard, Visiting Professor at the Yale Law School and at the Harvard Law School, called for pursuing the movement initiated by the creation of these chambers, in particular in favour of the use of the English language without translation and by implementing an adequate communication to raise awareness of these chambers, considering that France could usefully offer a high-quality public service of justice within a reasonable time and in accordance with international standards.

In Oakfield Foods v Zaklad Przemyslu Miesnego Biernacki SP Z O O [2020] EWHC 250 (QB), Kimbell DJ granted a writ of control for £149,100.43 (monies to be paid into court) on the basis of the European orders for payment and their enforcement (EOPs) Regulation 1896/2006. The order for payment was issued in June 2018 by the Regional Court in Poznan.

In the simmering dispute on jurisdiction, it is Oakfield’s position that the court in Poland did not have jurisdiction because, under the terms of the sales agreement between it and Biernacki, there was choice of court for the courts of England and Wales. The position Biernacki in their application for the EPO is that the meat that was sold from Biernacki to Oakfield, was delivered in each case on Incoterms CIF/CIP under cover of CMR notes, and delivery took place in Poland.

Article 20 EOP provides for a system of review of the order. Oakfield argue that the time-limit included in it has not even begun running for service was not properly done. Oakfield have also launched proceedings in Poland challenging the EOP. Those proceedings were issued on 1 July 2019.

Kimbell DJ after discussing the service issues (incl the relation between the EOP and the Service Regulation) granted a writ of control (shielding therefore Biernacki from the risk of non-payment), stayed further enforcement until the litigation in Poland will be resolved, and also, at 98, ordered that Oakfield notify Biernacki’s English solicitors every four to six weeks of progress in the application challenging the EOP so as to avoid the claim being warehoused.

The substantial debate on jurisdiction in Poland clearly will involve the usual discussions on GTCs as well as Incoterms and choice of court.

Geert.

 

 

European orders for payment and their enforcement (EOPs) Regulation 1896/2006.
Writ of control granted for £149,100.43.
The underlying jurisdictional issue remains: forum contractus following Incoterms CIF/CIP under cover of CMR notes with delivery taking place in Poland. https://t.co/UE0nwfQ2DG

— Geert Van Calster (@GAVClaw) February 11, 2020

The fourth research seminar of the IFITIS Research Project, led by Jean-Sylvestre Bergé, will take place in Nice on 13 March 2020.

The IFITIS Project explores, generally, a phenomenon that the project leaders call “full movement beyond control”.

The expression refers to the movement of persons, goods, services etc. across territories. The phenomenon is understood to have a “full” dimension in that it calls for the attention and action of public and private actors (States, companies, individuals) at local, national and international levels. And it is regarded as “beyond control” in the sense that, in specific or short-term situations, like those of crisis, institutions with responsibility for such movement do not have full control over it.

The seminar, titled Antecedent and Modal Approaches to Circulation, is concerned with the understanding and representations of the notion of movement and with the modalities of movement in different areas of knowledge.

Speakers include Christian Rinaudo (Univ. of Nice), Jeremy Heymann (Univ. Jean Moulin – Lyon 3), Alain Strowel (Catholic Univ. of Louvain), Philippe Billet (Univ. Jean Moulin – Lyon 3), Marina Teller (Univ. of Nice), Jean-Yves Carlier (Catholic Univ. of Louvain), Sophie Robin-Olivier (Univ. Paris 1 – Panthéon Sorbonne) and Jean-Sylvestre Bergé (Univ. of Nice).

See here for further information.

The first issue of the Journal du droit international for 2020 has just been released. It contains two articles and several casenotes relating to private international law.

In the first article, Johanna Guillaumé (University of Rouen) explores the obligation of notaries to apply rules of private international law (L’office du notaire en droit international privé).

The English abstract reads:

The notary is more and more confronted with the presence of foreign elements and, consequently, with the implementation of conflict of law rules. Studies generally focus on the content of these rules and how they are to be implemented. However, this presupposes the resolution of a preliminary question : Is the notary obliged to implement the rules of private international law ? This is the question of the notary’s obligations when faced with a foreign element. No text provides an answer to this question. Case law is also very rare. The article attempts to define the office of the notary in private international law. The analogical approach is first taken, in order to see whether the obligations of the judge or the office of the civil registrar, which are better defined, can be extended to the notary. As the notary does not exercise the judicial mission of the former and does not have the bureaucratic dimension of the latter, the answer is negative. Therefore, only a functional approach can define the obligations of the notary in private international law, that is, an approach which takes into account the obligations that characterize the notarial activity : the obligation to draw up legal and effectives deeds on the one hand, and the obligation to issue instruments on the other. What is the scope of these obligations if there is a foreign element ?

The second article, authored by Guillaume Kessler (University of Chambery), discusses the evolution of the private international law of parentage in new family configurations (Le droit international privé à l’épreuve du renouveau de la filiation).

The abstract reads:

In recent years, parentage law has been undergoing a disruption due to the combined effect of major social and technological developments that have led to the emergence of new family configurations such as co-maternity, multiple parenthood, surrogate motherhood, parentage without sexuality or same-sex adoption. French private international law has not yet really taken note of this renewal and continues to be based on rules that were already open to criticism in their time and that can now be considered obsolete. A change of connecting factor, with a preference given to the law of domicile rather than that of nationality, would be a first step towards resolving some of the difficulties created by this ongoing revolution. The development of the recognition when the status has been established abroad would be a second one. However, the importance of the issue and the complexity of the problems may require an even more radical methodological change and make it necessary to strengthen international cooperation in an area that might seem resistant to multi-state agreements.

A full table of contents can be downloaded here.

Professor Ron Brand has just published a new article in the Journal of Dispute Resolution that arose from his presentation at the 2019 Annual Meeting of the American Society of Comparative Law. In it, he applies comparative method to international litigation from the perspective of a U.S.-trained lawyer, and particularly one who has been involved for over 25 years in the negotiations that produced both the 2005 Hague Convention on Choice of Court Agreements and the 2019 Hague Convention on the Recognition and Enforcement of Judgments in Civil or Commercial Matters.

The article is available here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3532035

On 29 November 2019, the Council of the European Union adopted a general approach regarding the recast of Regulation 1393/2007 on the service of judicial and extrajudicial documents abroad. On 7 February a new Council document was published, featuring the Annexes of the future Recast Regulation.

The new Regulation, which will likely be adopted in the Summer or Autumn of 2020, is not expected to bring about major changes to the current legal landscape.

A comparison is provided below between some key features of the Commission’s proposal of 31 May 2018, on the one hand, and the corresponding solutions envisaged in the compromise text elaborated by the Council, on the other.

1. The Commission proposed to clarify by an additional paragraph in Article 1 that the Regulation does not apply “to service of a document on the party’s authorised representative in the Member State where the proceedings are taking place regardless of the place of residence of that party”, thereby moving to the body of the Regulation what was already stated in Recital 8 of the 2007 Regulation. Concurrently, the Commission envisaged to introduce a new provision – Article 7a – requiring the recipient to appoint a representative for the purpose of service in the forum State for all documents following the one introducing proceedings. The Council took the view that both innovations should be dropped.

2. The Commission Proposal aimed to enhance electronic communication between Transmitting and Receiving Authorities, suggesting the establishment of national IT systems (Article 3a). This provision was partially amended, following the concerns of national delegations with respect to the sustainability of a decentralized mechanism.

3. The Proposal introduced a new provision, aiming at a more active assistance of Member States authorities towards a smoother and more efficient search of the whereabouts of the defendant (Article 3c). The provision underwent minor amendments by the Council.

4. The Proposal added two paragraphs to Article 8. One was meant to extend the delay by which the recipient may refuse service, while the other intended to specify the duty of the court of the forum to examine whether the refusal was founded. The Council’s compromise text retained the former suggestion, while rejecting the latter.

5. The Proposal introduced two additional paragraphs in Article 14 on service by post, suggesting the use of a specific acknowledgment of receipt, and deeming postal service as validly effected when served to adult persons living in the same house with the recipient. The Council rejected the proposed amendments. With reference to Article 14, two additional points should be stressed: first, the wording of the provision has changed in a way that leads to the conclusion that postal service does not have to pass through transmitting authorities / court channels; second, postal service may be resorted to not only for persons domiciled, but also for those who are merely present in the country of destination.

6. The Commission Proposal attempted to pose an obligation to all Member States to provide information on professions or competent persons permitted to effect direct service. The Council deleted this part of the proposal almost in its entirety. The efforts of the Commission towards extending direct service in all Member States met with the adamant refusal of the Council.

7. The Proposal introduced a provision on electronic service (Article 15a). The Council adopted in principle the proposal as Article 14a, slightly modifying its wording. It also stated the obligation of Member States to specify the conditions under which electronic service will be accepted.

8. The Commission proposed two innovations on Article 19, regarding the situation where the defendant fails to enter an appearance: an additional tool of communication for the purposes of Article 19(2), i.e. sending an e-mail or a message to an address or an account known to the court seised, and a streamlined approach to the delay within which an application for relief must be filed with the court (2 years following the date of the judgment). Both proposals were discarded by the Council.

As a general conclusion, it may be stated that the innovative steps proposed by the Commission were met with reservation both by the European Parliament and the Council. What hopefully will improve is the cooperation between Member States authorities in the preliminary field of transmission. This will of course depend on the willingness and preparedness of Member States.

Regarding actual service of process, the situation remains the same. A divide among Member States will continue to exist in regards to direct service; e-service will heavily depend on the conditions set out by Member States; a unified approach regarding the term within which an application for relief was rejected; finally, the obligation of the claimant to serve everything abroad will continue to exist, save for the exceptions provided for by the Regulation (legal representative and unknown residence), confirmed by the CJEU in the Alder case.

I reviewed the High Court’s decision (refusal of anti-suit) in Gray v Hurley here. The Court of Appeal [2019] EWCA Civ 2222 has now referred to Luxembourg.

As I noted at the time, the High Court discussed the matrimonial exception of Brussels Ia, as well as the exclusive jurisdictional rule of Article 24(1), and (briefly) Article 25’s choice of court. The appeal however only concerns the application of Article 4’s domicile rule. Was Mr Hurley domiciled in England on 26 March 2019, when the court was seized?  Article 62(1) Brussels Ia refers to the internal law. Lavender J decided that Mr Hurley was not domiciled in England, however that Lindner should be read as extending to the defendant’s last known domicile in a case where the Court: (1) is unable to identify the defendant’s place of domicile; and (2) has no firm evidence to support the conclusion that the defendant is in fact domiciled outside the European Union. I suggested at the time that this is a very relevant and interesting reading of Lindner, extending the reach of Brussels Ia as had been kickstarted by Owusu, with due deference to potential New Zealand jurisdiction (New Zealand domicile not having been established).

Note also that Mr Hurley had initially also relied on A34 BI1 however later abandoned this line. Article 34 is however cross-referenced in the discussion on Article 4’s domicile rule.

The Court of Appeal has concluded that the meaning of Article 4(1) and its applicability in this case is not acte clair and has referred to Luxembourg. The focus of the discussion was not whether or not Ms Gray was domiciled in England (see however my doubts as to the extension of Linder in the case at issue). Rather, the focus is on anti-suit and Article 4: Ms Gray submits that Article 4(1) provides her with a right not to be sued outside England, where she is domiciled, and that the court is obliged to give effect to this right by the grant of an anti-suit injunction to restrain proceedings in a third State.

As the Court of Appeal notes, the consequences of her arguments are that an EU-domiciled tortfeasor who was being sued only in a third State could require the court of his domicile to grant an anti-suit injunction – in contrast to the ‘flexible mechanism’ under Articles 33 and 34 in cases where the same or related proceedings exist in both jurisdictions. By the same token, if there are proceedings in a Member State, the defendant could seek an anti-suit injunction to prevent the claimant from taking or continuing unrelated proceedings in a third State. And, as appears from the present case, it is said that it makes no difference that the claimant’s case is not one that the courts of the Member State could themselves entertain, meaning that the ‘right’ said to be conferred on the claimant by Article 4(1) would have no content.

Yet again therefore interesting issues on the use of anti-suit to support EU (rather than: a particular Member State) jurisdiction. The Court of Appeal is minded not to side with Ms Gray, for comity reasons (anti-suit being a serious meddle in other States’ jurisdictional assessment) and because the use of anti-suit here would not serve the Regulation’s objectives of sound and harmonious administration of justice. At 52 it suggests the MS Gray line of reasoning would have profound consequence which would be expected to be explicit in the Regulation and not to be arrived at sub silentio – but refers to the CJEU for certainty.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2 practically in its entirety.

 

The EAPIL founding conference, scheduled to take place in Aarhus on 14, 15 and 16 May 2020, is fast approaching.

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Which rules are more important to determine the protection of weaker parties in financial disputes – the Brussels I bis Regulation on jurisdiction and the recognition and enforcement of judgments, or the Markets in Financial Instruments Directive (MiFID)?

That is, in a nutshell, the question faced by the CJEU in Petruchová v. FIBO Group Holdings, a case decided on 3 October 2019.

Mrs Petruchová, a Czech resident, had entered into a framework agreement with a Cypriot brokerage company, allowing her to conclude highly speculative transactions in the market for foreign exchange (FOREX). The agreement contained a clause giving jurisdiction for any dispute under the contract to Cypriot courts. When a trade went awry, Mrs Petruchová nevertheless sued the brokerage company in the Czech Republic.

The solution seemed straightforward. It seemed obvious that Mrs Petruchová was a consumer in the broad sense, as defined by Article 17(1) of Brussels I bis, given that she had speculated outside her trade and profession for her private account. Under Article 25(4) of Brussels I bis, forum selection agreements with consumers are valid only where they meet the conditions set out in Article 19, which was not the case.

However, there was a nagging problem. MiFID provides for a much more nuanced protection of weaker parties to financial transactions than Brussels I bis. Not only does it distinguish between three different categories of investors (retail investors, professional investors, and eligible counterparties), it also uses different criteria to determine the investor’s sophistication. Among them are the client’s wealth, the number of trades she has previously executed, and any experience she might have in the financial industry. In addition, the investor can to some extent choose to upgrade or downgrade her categorisation.

In Petruchová v. FIBO Group Holdings, the CJEU gave priority to Brussels I bis. It stressed that the knowledge and information that a person possesses in a certain field do not matter for the purposes of determining whether she requires consumer protection (para 55-56). Nor do the value of her transactions, the risks associated with them, or her active conduct (para 59).

The Justices admitted the need for consistency of EU law, which could involve taking into account other legislative provisions when defining the “consumer” (para 61). Yet, the parallel concept of the retail investor in MiFID did not appeal to them. Their ‘killer argument’ was that the definition under MiFID also covers legal persons – a major ‘no-no’ for consumer protection (para 71).

The CJEU also did not follow a parallel to Article 6(4) of the Rome I Regulation on the law applicable to contractual obligations, which the Czech court of first instance had invoked to exclude disputes over financial instruments from the scope of consumer protection. To overcome this point, the CJEU distinguishes between the purposes of Rome I and Brussels I bis (para 64).

Instead of this complex and debatable argument, the Court of Justice could have relied on a proper reading of Article 6(4)(d) of Rome I, which excludes rights and obligations which constitute a financial instrument only “in so far as these activities do not constitute provision of a financial service”. FIBO Group Holdings had clearly rendered a financial service to Mrs Petruchová.

The upshot of the case is that the concept of the consumer in the Brussels Ia Regulation remains uniform and does not differ in financial disputes. This result has the benefit of clarity.

But one may reasonably ask why an investor defined as a ‘professional’ for the purposes of MiFID is permitted to ignore jurisdiction agreements she has entered into. Are not the latter much easier to understand than the obligations under complex financial instruments? Perhaps one could argue that the investor is only a “part professional”: professional in financial matters but an amateur in legal matters, such as forum selection clauses.

Regretfully, the CJEU has not entered into this discussion.

Thank you Filbert Lam for yet again flagging an important case. In [2020] EWCA Civ 6 Kabab-Ji SAL v Kout Food Group Flaux LJ extensively discussed the application of Sulamerica as to the governing law of an arbitration agreement which provides for arbitration in Paris but which is contained in a main agreement which is expressly governed by English law; and as to whether the respondent became a party to the main agreement and/or the arbitration agreement notwithstanding the presence of No Oral Modification provisions in the main contract.

Parties’ choice of English law for the underlying contract was found to also be an express choice of the law governing the arbitration agreement. This meant there was no need to consider the implications (particularly viz a possible implied choice of law) of a choice of Paris as seat or other aspects of the Sulamérica test. The award applying French law was set aside.

Jonathan Lim suggests here that the judgment is a departure from the understanding of separability in previous CA decisions, although the ensuing discussion on his feed also suggests that the factual interpretation of the clauses might suggest the exact opposite. I tend to agree with Jonathan: the generic nature of the clauses and the lack of (reported at least) other strong indications seem to suggest the finding of express choice of law was optimistic.

Geert.

 

On 10 February 2020, the European Commission announced its intention to open a process of consultation to get feedback from citizen and stakeholders on whether the EU should join the Hague Convention of 2 July 2019 on the recognition and enforcement of foreign judgments in civil or commercial matters (the Hague Judgments Convention). 

In the words of the Commission, the EU has put in place a highly developed internal acquis for the cross-boder recognition and enforcement of judgments, as a necessary complement to its single market. By way of contrast, at the international level the recognition and enforcement of judgments in civil and commercial matters has, until recently, not been successfully regulated, even if some bilateral agreements between States exist.

Currently, civil or commercial judgments rendered by courts in the European Union can be recognised and enforced in a third country only in a limited number of situations, namely: (i) based on the 2005 Choice of Court Convention, which has a limited scope; (ii) in Iceland, Norway and Switzerland based on the Lugano Convention; (iii) based on a limited number of bilateral treaties between individual Member States and third States; (iv) based on multilateral treaties related to particular matters; or (v) on the basis of the national law of third States, sometimes subject to reciprocity. 

The Commission believes that the adoption in July 2019 of the Hague Judgments Convention may change the situation just described. Moreover, it claims that a future proposal for EU accession to the Judgments Convention would be in line with the objectives set out in the Political Guidelines for the European Commission (2019-2024), in particular related to “An economy that works for people”.

The policy objectives of the EU accession to the Judgments Convention would be: to enhance access to justice for EU businesses and citizens through a system that facilitates the recognition and enforcement of judgments everywhere in the world where the debtor happens to have assets; to increase legal certainty for those involved in international trade and investment; to reduce costs for businesses and citizens involved in international dealings or in international dispute resolution; to allow the recognition and enforcement of third-country judgments in the EU only where fundamental principles of EU law are respected, such as for instance the right to a fair trial, and which do not affect the EU acquis related to the internal recognition and enforcement of judgments.

As for the policy options, the Commission puts forward the following:

Option 0: Baseline scenario: no policy change. The Union will thus not accede to the Judgments Convention and the current status quo will continue. However, given the EU’s active involvement in these negotiations and the fact that its results reflect EU’s policy interests, this scenario is taken into account mainly as a benchmark in order to assess the other options.

Option 1a: The Union will accede to the Judgments Convention without making any declaration.

Option 1b: The Union will accede to the Judgments Convention, excluding certain matters reflecting the EU’s policy objective of protecting weaker parties, such as consumers, employees or, in matters relating to insurance, the policyholder, the insured or the beneficiary, or/and certain matters falling under the exclusive jurisdiction of EU courts, for instance with regard to disputes relating to tenancies or commercial lease of immovable property.

Option 1c: The Union will accede to the Judgments Convention excluding State entities from the application of the Convention

Option 1d: A combination of options 1b and 1c

The Commission’s preliminary assessment of acceding to the Convention points to a positive outcome in economic terms, coupled with an improvement of growth and investment, thus of employment (the Commission acknowledges nontheless that as trade and investment of companies from outside the EU might also increase, some negative economic impacts in the short term cannot be excluded for EU competitors).

From the point of view of access to justice, signing the Convention would have postive implications as well. In terms of administrative burdens, the Commission is once again optimistic: although some Member States with a simple system for recognition and enforcement would face some negative impact if the new system based on the Judgments Convention is implemented, the Commission believes that such possible negative impacts would be offset by the important economic benefits.

The public consultation on the above-mentioned policy objectives and options, and on the likely impacts of signing the Convention, will be launched in March/April 2020 and run for a minimum period of 12 weeks. It will be available via the Commission’s central public consultations page; the questionnaires will be available in English, French and German but the replies can be made in any of the 24 official languages.

An in-depth Study on the Hague Judgements Convention Draft of November 2017, requested by the JURI Committee of the EU Parliament, to a large extent, still valid under the final version, can be downloaded here; it includes a chapter devoted to the relationship with the EU rules, and policy recommendations on the position of the EU vis-à-vis the Convention. A detailed explanation of the Convention as adopted is provided by A. Bonomi (Professor at the University of Laussane) and C. Mariottini (Senior Research Fellow, Max Planck Institute Luxembourg) at the Yearbook of Private International Law, vol. 20 (2018/2019), pp. 537-567. 

The 12th edition of the leading French treatise on private international law of Prof. Pierre Mayer (Panthéon-Sorbonne University) is out. The book is now primarily updated  by Vincent Heuzé (Panthéon-Sorbonne University) and Benjamin Remy (Cergy Pontoise University).

The book covers all traditional dimensions of the conflict of laws and, in keeping with the French tradition, the law of citizenship and immigration.

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