Droit international général

Professor Yeo Tiong Min (Singapore Management University – Yong Pung How School of Law) has recently published a seminal book entitled “Commercial Conflict of Laws” (Academy Publishing, 2023).

 

 

The book aims to introduce readers to “the concept, principles and techniques of the common law of Singapore in dealing with problems in the conflict of laws, with an emphasis on cross-border commercial transactions” (p. v). The book consists of 14 chapters dealing with the core issues of private international law (conflict of laws), i.e. international jurisdiction (Chapters 2 to 7), foreign judgments (Chapters 8 to 10) and choice of law (Chapters 11 to 14).

The book’s blurb reads as follows:

 

“Understanding of the principles of conflict of laws is essential to lawyers who aim to service the highly globalised and interconnected economy of Singapore. This book deals with the central principles, methodologies, and controversies in the subject, with focus on topics that are relevant to commercial transactions. It examines the jurisdiction of the Singapore courts (including the Singapore International Commercial Court) in cross-border litigation, the effect of foreign judgments in Singapore, choice of law methodologies and their particular application to contractual and non-contractual obligations and inter vivos property transactions. The common law principles are discussed in the context of the framework of Singapore legislation, including the Choice of Court Agreements Act implementing the Hague Convention on Choice of Court Agreements, the refreshed Reciprocal Enforcement of Foreign Judgments Act, as well as the new Rules of Court of 2021.”

 

The book, which is the result of many years of expertise, will certainly provide readers with important comparative law elements on how private international law operates in Singapore based on its common law and statutory regimes.

 

It should be noted that earlier this year, Professor Yeo Tiong Min also published the course he delivered at the Hague Academy of International Law (Summer Course of Private International Law of 2022). The course is entitled “Common Law, Equity and Statute: The Effect of Juridical Sources on Choice-of-Law Methodology”, Collected Courses of the Hague Academy of International Law, Vol. 431 (2023).

On 11 August 2023, the American Journal of Comparative Law, published an article online titled: “The Myth of Transnational Public Policy in International Arbitration”  The abstract reads as follows:

This Article traces the concept of transnational public policy as developed in the context of international arbitration at the intersection between legal theory and practice. The emergence of such a transnational public policy, it is claimed, would enable arbitrators to safeguard and ultimately to define the public interests that need to be protected in a globalized economy, irrespective of national laws. A historical contextualization of efforts to empower merchants and their practices in Germany and the United States in the nineteenth and early twentieth centuries highlights their reliance on the mythical lex mercatoria that shaped English commercial law. Further contextualization is offered by the postwar invocation of “general principles of law recognized by civilized nations,” to keep at bay the application of supposedly less civilized, parochial legal orders, and by the consequent emergence of the “new” lex mercatoria as conceptualized especially in France. These developments paved the way, on the theory side, for later conceptualizations of self-constitutionalizing law beyond the state, especially by Gunther Teubner, and, on the practice side, for the notion of transnational public policy developed by arbitrators, especially by Emmanuel Gaillard, culminating in jurisprudential claims of an autonomous arbitral legal order with a regulatory dimension. In all these constructions, the recourse to comparative law has been a crucial element. Against this rough intellectual history, the Article offers a critique of today’s construction of transnational public policy by probing into its constitutional dimension and the respective roles of private and public interests. This allows, in particular, to draw on parallels to historic U.S. constitutional debates on the allocation of regulatory powers in federalism.

The Department of Private International Law at the University of Groningen is looking for an assistant professor in the field of European private international law to strengthen education and research. Candidates from outside the Netherlands are expressly invited to apply.

The responsibilities include: teaching English language classes on private international law within the existing bachelor- and master programmes; supervising bachelor and master theses in the field of private international law; conducting research within the area of European private international law (in line with the Faculty’s research programme PIPR (Public Interests and Private Relationships); supervising PhD projects together with the Professor of Private International Law; engage in the development of research projects.

Applications must be filed by 31 August 2023, at the end of the day, through a dedicated form.

More information can be found here..

In Crane Bank Ltd & Ors v DFCU Bank Ltd & Ors [2023] EWCA Civ 886 core issue is the scope and application of the foreign act of state rule and of the limitations and exceptions to which it is subject. The foreign act of state rule in its narrow sense essentially holds that courts should not question the validity of acts taken by a foreign government within that government’s territory – see Reliance. [2] the facts:

The first appellant, Crane Bank Limited (“CBL”), was formerly a major commercial bank in Uganda. The second to seventh appellants are shareholders in CBL. In these proceedings the appellants assert that from about Spring 2016 senior Ugandan government officials and officials of the Bank of Uganda (“the BoU”) engaged in a corrupt scheme to take control of CBL, making improper use of statutory and regulatory powers to do so, and then to sell its assets for the benefit of the parties to the scheme. The appellants allege that the first respondent (“DFCU Bank”), another Ugandan commercial bank, joined the corrupt scheme as purchaser of CBL’s assets from the BoU (acting as receiver of CBL), that purchase being at a gross undervalue. DFCU Bank’s holding company (the second respondent) and certain current and former executives and directors of DFCU Bank (the third to fifth respondents) are also alleged to have joined the scheme

[5] appellants contend that the first instance Judge should have found that there was at least a serious issue to be tried (for the purpose of founding jurisdiction) that:

i) the sale by the BoU (as receiver) to DFCU Bank was commercial rather than sovereign in character, therefore falling outside the foreign act of state rule (“the Commercial Activity Exception”); and/or

ii) all of the executive acts in question engaged the English public policy of combatting and not giving legal protection to bribery and corruption, therefore falling outside the foreign act of state rule (“the Public Policy Exception”); and/or

iii) investigating the acts of bribery and corruption alleged against DFCU Bank in paragraph 69(m) of the Amended Particulars of Claim (“the APoC”) did not require the Court to inquire into or adjudicate on the legality of executive acts of the Ugandan state, and so would not infringe the foreign act of state rule (“the Kirkpatrick Exception”); and/or

iv) the application of the foreign act of state rule in this case would be incompatible with Article 6 of the European Convention on Human Rights and therefore contrary to s.6 of the Human Rights Act 1998 (“the Article 6 issue”).

The Foreign Act of State rule is expressed [13] as that courts “will not adjudicate or sit in judgment on the lawfulness or validity under its own law of an executive act of a foreign state, performed within the territory of that state”. It is different from foreign sovereign immunity:“Whereas immunity bars an otherwise good legal claim against a specific person, the foreign act of state rule provides that a claim which falls within it is not a good claim at all as a matter of English law, no matter the identity of the defendant” ([69]).

For his definition, Lord Justice Philipps refers to the Supreme Court in “Maduro Board” of the Central Bank of Venezuela v “Guaidó Board” of the Central Bank of Venezuela [2023] AC 156. Futher reference is made [14] to Yukos Capital for the exceptions:

Yukos Capital (No. 2) [2014] QB 458 at [68]-[115]. For the purposes of the appeal, the following are relevant:

(i) the Public Policy Exception:

“”[T]he doctrine will not apply to foreign acts of state which are in breach of clearly established rules of international law, or are contrary to English principles of public policy, as well as where there is a grave infringement of human rights”. (Oppenheimer v Cattermole [1976] AC 249, 277–278, per Lord Cross; Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883; Yukos Capital (No 2), paras 69-72.)”

(ii) the Commercial Activity Exception:

“The doctrine does not apply where the conduct of the foreign state is of a commercial as opposed to a sovereign character. (Empresa Exportadora de Azucar v Industria Azucarera Nacional SA (The Playa Larga) [1983] 2 Lloyd’s Rep 171; Korea National Insurance Corpn v Allianz Global Corporate & Specialty AG [2008] EWCA Civ 1355; [2008] 2 CLC 837; Yukos Capital (No 2), paras 92-94.)”

(iii) the Kirkpatrick Exception:

“The doctrine does not apply where the only issue is whether certain acts have occurred, as opposed to where the court is asked to inquire into them for the purpose of adjudicating on their legal effectiveness. (Kirkpatrick (1990) 493 US 400; Yukos Capital (No 2), paras 95-104.)”

The appeal was not allowed on the latter exception but it was on the other two, with Phillips LJ giving complete yet concise analysis of such good quality that there is little point in trying to summarise it here: please refer to the judgment.

I will say a little more about the A6 ECHR argument. The discussion here echoes the discussion in SKAT on Dicey Rule 3 and substantive v jurisdictional rules, and Belhaj v Straw [2017] UKSC 3: where Phillips LJ refers to distinction between domestic laws which excluded liability (which do not engage Article 6) and procedural bars (which do). [71] it is held that the result of foreign act of State is that  domestic law provides a complete defence to what would otherwise be an actionable (therefore A6 ECHR kosher) claim and [72] that, if a proportionality test were to be introduced in foreign act of State (so as to meet alleged A6 ECHR standards), “it would have a major impact on the rule and its applications”. That latter statement I would suggest does not cut much ice in light of a potential ECHR incompatibility.

There is undoubtedly more to be said however seeing as the appeal was largely successful, no more is to be expected from appellants at least on these issues.

Geert.

! scope & application of foreign act of state rule and of the limitations and exceptions to which it is subject.
Ia whether there is impact from A6 ECHR rights

Crane Bank Ltd & Ors v DFCU Bank Ltd & Ors [2023] EWCA Civ 886https://t.co/26BU9W9fOs

— Geert Van Calster (@GAVClaw) July 27, 2023

2024 applications for a 6-month internship in The Hague, Netherlands are now open for Australian law school graduates

The Australian Institute of International Affairs and the Australian Branch of the International Law Association call for applications for the 2024 Peter Nygh Hague Conference Internship.

Awarded annually, the Nygh internship offers a postgraduate student or graduate of an Australian law school the exciting opportunity to undertake a 6-month internship with The Hague Conference on Private International Law, in the Netherlands.

The successful applicant will have the chance to work with some of the world’s leading private international law practitioners and will be provided with finances to assist with travel costs and living expenses.

Previous Nygh interns have worked on projects in fields including: family law; evidence and access to justice; cross border flow of personal data; migration; civil liability for trans-boundary harm and commercial dispute resolution. For many interns, the opportunity to observe the negotiation of an international convention first-hand has been a highlight of their internship, all whilst living and working in the Netherlands.

English and French are the two working languages of the Hague Conference and Australian law graduates and final year law students with French language skills are encouraged to apply for the internship.

The Peter Nygh Hague Conference Internship was established in memory of the late Hon Dr Peter Nygh AM, a renowned international lawyer and former judge of the Family Court of Australia.

Applications for the 2024 Nygh Internship close on 30 September 2023. For further information and application instructions visit: http://www.internationalaffairs.org.au/youth-andcommunity/nygh-internship/ or email Nicola Nygh at nicola.nygh@rllawyers.com.au

Media enquiries: Natasha Eloise | Media & Communications (+61) (02) 6282 2133 | 0406 664 510 | natasha.eloise@internationalaffairs.org.au

The ILA Australian Branch is pleased to present the first seminar in its 2023 Early Career Seminar Series on topics in private international law.

The event will be an online lunch time discussion on Thursday, 17 August 2023 at 1.00pm AEST.

The panel will feature the speakers below.

Speakers and topics:

Dr Sarah McKibbin, University of Southern Queensland: The Australian Doctrine of Forum Non Conveniens in Practice

Rachel Van Der Veen, Australian Public Service: Fiduciary Duties and the 1985 Trusts Convention

Commentator: Dr Brooke Marshall, UNSW Sydney

Chair: Danielle Kroon, Marque Lawyers

 

Further details including registration are here.

Lawrence Collins (UCL, former Justice of the UK Supreme Court) has posted Reflections on the Law Governing Confidentiality in Arbitration on SSRN.

The abstract reads:

The paper considers the law governing confidentiality in international arbitration, and in particular where there is a binary choice between the law governing the arbitration agreement and the law of the seat of the arbitration. The paper concludes that not only is there no binary choice, but also that the solution may depend upon the forum in which the issue arises, and that it will be only very rarely that the issue will need to be addressed directly.

The paper was published in Brekoulakis et al (eds), Achieving the Arbitration Dream: Liber Amicorum for Professor Julian DM Lew (Wolters Kluwer, 2023).

Now published on SSRN, Paul Herrup and Ron Brand from the University of Pittsburgh School of Law have taken “A Further Look at a Hague Convention on Concurrent Proceedings.”

The current project of the Hague Conference on Private International Law has reached a critical juncture that requires careful consideration of the terms that delineate the scope of the proposed convention. Work to date has not followed the mandate of the Council on General Affairs and Policy to produce a convention that would deal with concurrent proceedings, understood as including pure parallel proceedings and related actions. In two previous articles they have addressed the practical needs that should be addressed by the concurrent proceedings project and the general architecture of such a convention. The process is now mired in terminological confusion that has hampered progress on a practical result. Differing interpretations of the directions given to those doing the work has led to situations in which the participants have been speaking past each other. In this article, they provide a reminder of the common law/civil law divergence of approaches to concurrent litigation; review the approach taken in the EU’s Brussels I (Recast) Regulation and the problems it has created; and offer suggestions regarding the proper scope and architecture of a global convention addressing the problem of concurrent proceedings.

As Peter Bert reports here, the German Federal Supreme Court or Bundesgerichtshof has held in Case v-ZR-112.22 X v Trustees of Max Stern estate, a case related to ‘Lost art’, that Article 26 Brussels Ia applies to claims against a non-EU domiciled defendant. The trustees had  objected to jurisdiction in first instance but had not formally repeated that upon appeal.

[9] the court finds support first of all in CJEU C-412/98 Group Josi Reinsurance in particular para [44] of that judgment: “Admittedly, under Article 18 of the Convention [=A26 BIa, GAVC], the voluntary appearance of the defendant establishes the jurisdiction of a court of a Contracting State before which the plaintiff has brought proceedings, without the place of the defendant’s domicile being relevant.”

Group Josi however concerned the position of the claimant: [33]: ‘whether the rules of jurisdiction laid down by the Convention apply where the defendant has its domicile or seat in a Contracting State, even if the plaintiff is domiciled in a non-member country.” In the discussion that followed, the CJEU emphasised the general absence in the Convention of attention being paid to the claimant’s domicile (let alone nationality), pointing out that instead the Convention focuses on the defendant’s domicile in a Convention State, with then [44] the concession that (now) Article 26 exceptionally does not pay any attention to the defendant’s domicile. That does not imply however that the CJEU dropped any condition for Convention-States domicile in Article 26. The Bundesgerichthof’s “Der Gerichtshof der Europäi-schen Union hat deshalb – wenngleich nicht tragend – schon in Bezug auf Art. 18 Satz 1 EuGVÜ angenommen, dass es auf den Wohnsitz des Beklagten nicht ankomme” lifts para 44 of Group Josi out off its context.

[10] the Bundesgerichtshof acknowledges that A6(1) BIa refers to A25 but not to A26: “1.   If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Article 18(1), Article 21(2) and Articles 24 and 25, be determined by the law of that Member State.” It suggests however a close relationship between A25 and A26, referring to CJEU Taser to emphasise A26’s character as impromptu choice of court, and focuses on the party autonomy element of both A25 and 26.

[11] BIa’s DNA of predictability is said to support a wide catchment area for A26, and [12] all of this is said to be acte claire hence not requiring CJEU referral.

Given the clear language of A6(1), I am not convinced.

Geert.

EU Private International Law, 3rd ed. 2021, 2.211. Fourth ed. forthcoming 2024.

Nb judgment is here https://t.co/6bg2FHOHaV pic.twitter.com/0dXjQdrSnL

— Geert Van Calster (@GAVClaw) August 4, 2023

The official website of the XVI ASADIP Conference is live, click here. The full program is available here.

This post was written by Ralf Michaels and Antonia Sommerfeld, Max Planck Institute for Comparative and International Private Law, and is also available via conflictoflaws.net.

The Draft for a Corporate Sustainable Due Diligence Directive currently contains no rules on jurisdiction. This creates inconsistencies between the scope of application of the Draft Directive and existing jurisdictional law, both on the EU level and on the domestic level, and can lead to an enforcement gap: EU companies may be able to escape the existing EU jurisdiction; non-EU companies may even not be subject to such jurisdiction. Effectivity requires closing that gap, and we propose ways in which this could be achieved.

The Proposal for a Directive on Corporate Sustainability Due Diligence

The process towards an EU Corporate Sustainability Due Diligence Directive is gaining momentum. The EU Commission published a long awaited Proposal for a Directive on Corporate Sustainability Due Diligence (CSDDD), COM(2022) 71 final, on 23 February 2022; the EU Council adopted its negotiation position on 1 December 2022; and now, the EU Parliament has suggested amendments to this Draft Directive on 1 June 2023. The EU Parliament has thereby backed the compromise textreached by its legal affairs committee on 25 April 2023. This sets off the trilogue between representatives of the Parliament, the Council and the Commission.

The current state of the CSDDD already represents a milestone. It not only introduces corporate responsibility for human rights violations and environmental damage – as already found in some national laws (e.g. in France; Germany; Netherlands; Norway; Switzerland; United Kingdom) – but also and in contrast (with the exception of French law – for more details see Camy) introduces civil liability. Art. 22 (1) CSDDD entitles persons who suffer injuries as result of a failure of a company to comply with the obligations set forth in the Directive to claim compensation. It thereby intends to increase the protection of those affected within the value chain, who will now have the prospect of compensation; it also intends to create a deterrent effect by having plaintiffs take over the enforcement of the law as “private attorney generals”. Moreover, the Directive requires that Member States implement this civil liability with an overriding mandatory application to ensure its application, Art. 22 (5) CSDDD. This is not unproblematic: the European Union undertakes here the same unilateralism that it used to criticize when previously done by the United States, with the Helms/Burton Act as the most prominent example.

That is not our concern here. Nor do we want to add to the lively discussion on the choice-of-law- aspects regarding civil liability (see, amongst others, van Calster, Ho-Dac, Dias and, before the Proposal, Rühl). Instead, we address a gap in the Draft Directive, namely the lack of any provisions on jurisdiction. After all, mandatory application in EU courts is largely irrelevant if courts do not have jurisdiction in the first place. If the remaining alternative is to bring an action in a court outside the EU, the application of the CSDDD civil liability regime is not, however, guaranteed. It will then depend on the foreign court’s conflict-of-law rules and whether these consider the CSDDD provisions applicable – an uncertain path.

Nonetheless, no mirroring provisions on international jurisdiction were included in the CSDDD, although such inclusion had been discussed. Suggestions for the inclusion of a new jurisdictional rule establishing a forum necessitatis in the Brussels I Regulation Recast existed (see the Study by the European Parliament Policy Department for External Relations from February 2019, the Draft Report of the European Parliament Committee on Legal Affairs with recommendations to the Commission on corporate due diligence and corporate accountability (2020/2129(INL) as well as the Recommendation of the European Groupe of Private International Law (GEDIP) communicated to the Commission on 8 October 2021). Further, the creation of a forum connexitatis in addition to a forum necessitatis had been recommended by both the Policy Department Study and the GEDIP. Nevertheless, the report of the European Parliament finally adopted, together with the Draft Directive of 10 March 2021, no longer contained such rule on international jurisdiction, without explanation. Likewise, the Commission’s CSDDD draft and the Parliament’s recent amendments lack such a provision.

Enforcement Gap for Actions against Defendants Domiciled within the EU

To assess the enforcement gap, it is useful to distinguish EU companies from non-EU companies as defendants. For EU companies, the Directive applies to companies of a certain size which are formed in accordance with the legislation of a Member State according to Art. 2 (1) CSDDD – the threshold numbers in the Commission’s draft and the Parliament amendments differ, ranging between 250–500 employees and EUR 40–150 million annual net worldwide turnover, with questions of special treatment for high-risk sectors.

At first sight, no enforcement gap seems to exist here. The general jurisdiction rule anchored in Art. 4 (1) Brussels I Regulation Recast allows for suits in the defendant’s domicile. Art. 63 (1) further specifies this domicile for companies as the statutory seat, the central administration or the principal place of business. (EU-based companies can also be sued at the place where the harmful event occurred according to Art. 7 (2) Brussels I Regulation Recast, but this will provide for access to an EU court only if this harmful event occurred within the EU.) The objection of forum non conveniens does not apply in the Brussels I Regulation system (as clarified in the CJEU’s Owusu decision). Consequently, in cases where jurisdiction within the EU is given, the CSDDD applies, including the civil liability provision with its mandatory application pursuant to Art. 22 (1), (5).

Yet there is potential leeway for EU domiciled companies to escape EU jurisdiction and thus avoid the application of the CSDDD’s civil liability. One way to avoid EU jurisdiction is to use an exclusive jurisdiction agreement in favour of a third country, or an arbitration clause. Such agreements concluded in advance of any occurred damage are conceivable between individual links of the value chain, such as between employees and subcontractors (in employment contracts) or between different suppliers along the chain (in purchase and supply agreements). EU law does not expressly prohibit such derogation. Precedent for how such exclusive jurisdiction agreements can be treated can be found in the case law following the Ingmar decision of the CJEU. In Ingmar, the CJEU had decided that a commercial agent’s compensation claim according to Arts. 17 and 18 of the Commercial Agents Directive (86/653/EEC) could not be avoided through a choice of law in favour of the law of a non-EU country, even though the Directive said nothing about an internationally mandatory nature for the purpose of private international law – as Art. 22 (5) CSDDD in contrast now does. The German Federal Court of Justice (BGH) extended this choice-of-law argument to the law of jurisdiction and held that jurisdiction clauses which could undermine the application of mandatory provisions are invalid, too, as only such a rule would safeguard the internationally mandatory scope of application of the provisions. Other EU Member State courts have shown a similar understanding not only with regard to exclusive jurisdiction agreements but also with regard to arbitration agreements (Austrian Supreme Court of Justice; High Court of Justice Queen’s Bench Division).

Common to Arts. 17 and 18 Commercial Agents Directive and Art. 22 CSDDD is their mandatory nature for the purpose of private international law, which established by the ECJ for the former and is legally prescribed for the latter in Art. 22 (5) CSDDD. This suggests a possible transfer of the jurisdictional argument regarding jurisdiction. To extend the internationally mandatory nature of a provision into the law of jurisdiction is not obvious; choice of law and jurisdiction are different areas of law. It also means that the already questionable unilateral nature of the EU regulation is given even more force. Nonetheless, to do so appears justified. Allowing parties to avoid application of the CSDDD would run counter to its effective enforcement and therefore to the effet utile. This means that an exclusive jurisdiction agreement in favour of a third country or an arbitration clause will have to be deemed invalid unless it is clear that the CSDDD remains applicable or the applicable law provides for similar protection.

Enforcement Gap for Actions against Defendants Domiciled Outside the EU

While the enforcement gap with regard to EU companies can thus be solved under existing law, additional problems arise with regard to non-EU corporations. Notably, the Draft Directive applies also to certain non-EU companies formed in accordance with the legislation of a third country, Art. 2 (2) CSDDD. For these companies, the scope of application depends upon the net turnover within the territory of the Union, this being the criterion creating a territorial connection between these companies and the EU (recital (24)). The Parliament’s amendments lower this threshold and thereby sharpen the scope of application of the Directive.

While application of the CSDDD to these companies before Member State courts is guaranteed due to its mandatory character, jurisdiction over non-EU defendants within the EU is not. International jurisdiction for actions against third-country defendants as brought before EU Member State courts is – with only few exceptions – generally governed by the national provisions of the respective Member State whose courts are seized, Art. 6 (1) Brussels I Regulation Recast. If the relevant national rules do not establish jurisdiction, no access to court is given within the EU.

And most national rules do not establish such jurisdiction. General jurisdiction at the seat of the corporation will usually lie outside the European Union. And the territorial connection of intra-EU turnover used to justify the applicability of the CSDDD does not create a similar basis of general jurisdiction, because jurisdiction at the place of economic activity (“doing business jurisdiction”) is alien to European legal systems. Even in the US, where this basis was first introduced, the US Supreme Court now limits general jurisdiction to the state that represents the “home” for the defendant company (BNSF Railroad Co. v. Tyrrell, 137 S.Ct. 1549 (2017); Daimler AG v. Bauman, 571 U.S. 117 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011)); whether the recent decision in Mallory v. Norfolk Southern Railway Co., 600 U.S. (2023) will re-open the door to doing business jurisdiction remains to be seen (see Gardner).

Specific jurisdiction will not exist in most cases, either. Specific jurisdiction in matters relating to tort will be of little use, as in value chain civil liability claims the place of the event giving rise to damages and the place of damage are usually outside the EU and within that third state. Some jurisdictional bases otherwise considered exorbitant may be available, such as the plaintiff’s nationality (Art. 14 French Civil Code) or the defendant’s assets (Section 23 German Code of Civil Procedure). Otherwise, the remaining option to seize a non-EU defendant in a Member State court is through submission by appearance according to Art. 26 Brussels I Regulation Recast.

Whether strategic joint litigation can be brought against an EU anchor defendant in order to drag along a non-EU defendant depends upon the national provisions of the EU Member States. Art. 8 (1) Brussels I Regulation Recast, which allows for connected claims to be heard and determined together, applies only to EU-defendants – for non-EU defendants the provision is inapplicable. In some Member States, the national civil procedure provisions enable jurisdiction over connected claims against co-defendants, e.g. in the Netherlands (Art. 7 (1) Wetboek van Burgerlijke Rechtsvordering), France (Art. 42 (2) Code de procédure civile) and Austria (§ 93 Jurisdiktionsnorm); conversely, such jurisdiction is not available in countries such as Germany.

Various Member State decisions have accepted claims against non-EU companies as co-defendants by means of joinder of parties. These cases have based their jurisdiction on national provisions which were applicable according to Art. 6 (1) Brussels I Recast Regulation: In Milieudefensie in December 2015, the Court of Appeal at the Hague held permissible an action against a Dutch anchor defendant that was joined with an action against a Nigerian company as co-defendant based on Dutch national procedural law, on the condition that claims against the anchor defendant were actually possible. The UK Supreme Court ruled similarly in its Vedanta decision in April 2019, wherein it found that English private international law, namely the principle of the necessary or proper party gateway, created a valid basis for invoking English jurisdiction over a defendant not domiciled in a Member State (with registered office in Zambia) who had been joined with an anchor defendant based in the UK. The claim was accepted on the condition that (i) the claims against the anchor defendant involve a real issue to be tried; (ii) it would be reasonable for the court to try that issue; (iii) the foreign defendant is a necessary or proper party to the claims against the anchor defendant; (iv) the claims against the foreign defendant have a real prospect of success; (v) either England is the proper place in which to bring the combined claims or there is a real risk that the claimants will not obtain substantial justice in the alternative foreign jurisdiction, even if it would otherwise have been the proper place or the convenient or natural forum. The UK Supreme Court confirmed this approach in February 2021 in its Okpabi decision (for discussion of possible changes in UK decisions after Brexit, see Hübner/Lieberknecht).

In total, these decisions allow for strategic joint litigation against third-country companies together with an EU anchor defendant. Nonetheless, they do not establish international jurisdiction within the EU for isolated actions against non-EU defendants.

How to Close the Enforcement Gap – forum legis

The demonstrated lack of access to court weakens the Directive’s enforceability and creates an inconsistency between the mandatory nature of the civil liability and the lack of a firm jurisdictional basis. On a substantive level, the Directive stipulates civil liability for non-EU companies (Art. 22 CSDDD) if they are sufficiently economically active within the EU internal market (Art. 2 (2) CSDDD). Yet missing EU rules on international jurisdiction vis-à-vis third-country defendants often render procedural enforcement before an intra-EU forum impossible – even if these defendants generate significant turnover in the Union. Consequently, procedural enforcement of civil liability claims against these non-EU defendants is put at risk. The respective case law discussed does enable strategic joint litigation, but isolated actions against non-EU defendants cannot be based upon these decisions. At the same time, enforceability gaps exist with respect to EU defendants: It remains uncertain whether the courts of Member States will annul exclusive jurisdiction agreements and arbitration agreements if these undermine the application of the CSDDD.

This situation is unsatisfactory. It is inconsistent for the EU lawmaker to make civil liability mandatory in order to ensure civil enforcement but to then not address the access to court necessary for such enforcement. And it is inadequate that the (systemic) question of judicial enforceability of civil liability claims under the Directive is outsourced to the decision of the legal systems of the Member States. National civil procedural law is called upon to decide which third-country companies can be sued within the EU and how the Ingmar case law for EU domiciled companies will be further developed. This is a problem of uniformity – different national laws allow for different answers. And it is a problem of competence as Member State courts are asked to  render decisions that properly belong to the EU level.

The CSDDD aims to effectively protect human rights and the environment in EU-related value chains and to create a level playing field for companies operating within the EU. This requires comparable enforcement possibilities for actions based on civil liability claims that are brought pursuant to Art. 22 CSDDD against all corporations operating within the Union. The different regulatory options the EU legislature has to achieve this goal are discussed in what follows.

Doing business jurisdiction

A rather theoretical possibility would be to allow actions against third-country companies within the EU in accordance with the former (and perhaps revived) US case law on doing business jurisdiction in those cases where these companies are substantially economically active within the EU internal market. This would be consistent with the CSDDD’s approach of stretching its scope of application based on the level of economic activity within the EU (Art. 2 (2) CSDDD). However, the fact that such jurisdiction has always been considered exorbitant in Europe and has even been largely abolished in the USA speaks against this development. Moreover, a doing business jurisdiction would also go too far: it would establish general jurisdiction, at least according to the US model, and thus also apply to claims that have nothing to do with the CSDDD.

Forum necessitatis and universal jurisdiction

Another possible option would be the implementation of a forum necessitatis jurisdiction in order to provide access to justice, as proposed by the European Parliament Policy Department for External Relations, the European Parliament Committee on Legal Affairs and the GEDIP. However, such jurisdiction could create uncertainty because it would apply only exceptionally. Moreover, proving a “lack of access to justice” requires considerable effort in each individual case. Until now, EU law provides for a forum necessitatis only in special regulations; the Brussels I Regulation Recast does not contain any general rule for emergency jurisdiction. Member State provisions in this regard generally require a certain connection with the forum to establish such jurisdiction – the exact prerequisites differ, however, and will thus not be easily agreed upon on an EU level (see Kübler-Wachendorff).

The proposal to enforce claims under Art. 22 CSDDD by means of universal civil jurisdiction for human rights violations, which could be developed analogously to universal jurisdiction under criminal law, appears similarly unpromising; it would also go further than necessary.

Forum connexitatis

It seems more promising to implement a special case of a forum connexitatis so as to allow for  litigation of closely connected actions brought against a parent company domiciled within the EU together with a subsidiary or supplier domiciled in a third country, as proposed by the European Parliament Policy Department for External Relations and the GEDIP. This could be implemented by means of a teleological reduction of the requirements of Art. 8 (1) Brussels I Regulation Recast with regard to third-country companies, which would be an approach more compatible with the Brussels Regulation system than the implementation of a forum necessitatis provision (such a solution has, for instance, been supported by Mankowski, in: Fleischer/Mankowski (Hrsg.), LkSG, Einl., para. 342 and the GEDIP). This would simultaneously foster harmonisation on the EU level given that joint proceedings currently depend upon procedural provisions in the national law of the Member States. Moreover, this could avoid “blame games” between the different players in the value chain (see Kieninger, RW 2022, 584, 589). For the implementation of such a forum connexitatis, existing Member State regulations and related case law (Milieudefensie, Vedanta, and Okpabi) can serve as guidance. Such a forum is not yet common practice in all Member States; thus, its political viability remains to be seen. It should also be borne in mind that the implementation of a forum connexitatis on its own would only enable harmonised joint actions that were brought against EU domiciled anchor defendants together with non-EU defendants; it would not enable isolated actions against third-country companies – even if they are economically active within the EU and fall within the scope of application of the CSDDD.

Best option: Forum legis

The best way to close the CSDDD enforcement gap would be introducing an international jurisdiction basis corresponding to the personal scope of application of the Directive. The EU legislature would need to implement a head of jurisdiction applicable to third-country companies that operate within the EU internal market at the level specified in Art. 2 (2) CSDDD. Effectively, special jurisdiction would be measured on the basis of net turnover achieved within the EU. This would procedurally protect the Directive’s substantive regulatory objectives of human rights and environmental protection within EU-related value chains. Moreover, this would ensure a level playing field in the EU internal market.

Other than a forum premised on joint litigation, this solution would allow isolated actions to be brought – in an EU internal forum – against non-EU companies operating within the EU. The advantage of this solution compared to a forum of necessity is that the connecting factor of net turnover is already defined by Art. 2 (2) CSDDD, thus reducing the burden of proof, legal uncertainty and any unpredictability for the parties. Moreover, this approach would interfere less with the regulatory interests of other states than a forum necessitatis rule, which for its part would reach beyond the EU’s own regulatory space.

A forum legis should not be implemented only as a subsidiary option for cases in which there is a lack of access to justice, because this would create legal uncertainty. The clear-cut requirements of Art. 2 (2) CSDDD are an adequate criterion for jurisdiction via a forum legis. On the other hand, it should not serve as an exclusive basis of jurisdiction, because especially plaintiffs should not be barred from the ability to bring suit outside the EU. The risk of strategic declaratory actions brought by companies in a court outside the EU seems rather negligeable, and this  can be avoided either by giving preference to actions for performance over negative declaratory actions, as is the law in Germany or through the requirement of recognisability of a foreign judgment, which would not be met by a foreign decision violating domestic public policy by not providing sufficient protection.

This leaves a problem, however: The CSDDD does not designate which Member State’s court have jurisdiction. Since a forum legis normally establishes adjudicatory jurisdiction correlating with the applicable law, jurisdiction lies with the courts of the country whose law is applied. This is not possible as such for EU law because the EU does not have its own ordinary courts. The competent Member State court within the EU must be determined. Two options exist with regard to the CSDDD: to give jurisdiction to the courts in the country where the highest net turnover is reached, or to allow claimants to choose the relevant court. The first option involves difficult evidentiary issues, the second may give plaintiffs an excessive amount of choice. In either case, non-EU companies will be treated differently from EU companies on the question of the competent court – for non-EU companies, net turnover is decisive in establishing the forum, for EU-companies, the seat of the company is decisive. This difference is an unavoidable consequence resulting from extension of the scope of application of the Directive to third-country companies on the basis of net turnover.

Implementation

How could this forum legis be achieved? The most straightforward way would be to include a rule on jurisdiction in the CSDDD, which would then oblige the Member States to introduce harmonised rules of jurisdiction into national procedural law. This would be a novelty in the field of European international civil procedure law, but it would correspond to the character of the special provision on value chains as well as to the mechanism of the CSDDD’s liability provision. An alternative would be to include in the Brussels I Regulation Recast a sub-category of a special type of jurisdiction under Art. 7 Brussels I Regulation Recast. This as well would be a novelty to the Brussels system, which in principle requires that the defendant be seated in a Member State (see also Kieninger, RW 2022, 584, 593, who favours reform of the Brussels I Regulation Recast for the sake of uniformity within the EU). This second option would certainly mesh with current efforts to extend the Brussels system to non-EU defendants (see Lutzi/Piovesani/Zgrabljic Rotar).

The implementation of such a forum legis is not without problems: It subjects companies, somewhat inconsistently with the EU legal scheme, to de facto jurisdiction merely because they generate significant turnover in the EU’s internal market. Yet such a rule is a necessary consequence of the extraterritorial extension of the Directive to third-country companies. The unilateral character of the CSDDD is problematic. But if the CSDDD intends to implement such an extension on a substantive level, this must be reflected on a procedural level so as to enable access to court. The best way to do this is by implementing a forum legis. The CSDDD demonstrates the great importance of compensation of victims of human rights and environmental damage, by making the cicil liability rule internationally mandatory. Creating a corresponding head of jurisdiction for these substantive civil liability claims is then necessary and consistent in order to achieve access to court and, thus, procedural enforceability.

An event will take place on Thursday 30 November 2023 at Maastricht University in the Netherlands concerning the Service, Evidence and Brussels I bis Regulations. More information is available here.

This event is being organised within the framework of the DIGI-GUARD project, which is co-funded by the European Union under the JUST-2021-JCOO program and which stands for Digital communication and safeguarding the parties’ rights: challenges for European civil procedure.

Among the topics to be discussed will be the electronic service of documents under the Service Regulation, the upcoming digitalisation regulation, and many other practicalities relating to the service of documents within the European Union. It will also discuss the Evidence Regulation and the latest case law under the Brussels I bis Regulation. Finally, it will include breakout sessions where practical examples will be discussed and led by practitioners.

Discussions will take place in Dutch. Participation in this event will confer 3 PO NOvA points to Dutch lawyers.

Please click here to register. Attendance is possible both online and in-person. Please find the program below.*

Actualiteiten EU-procesrecht –betekenen en procederen in burgerlijke en handelszaken in de EU

PROGRAMMA donderdag 30 november 2023

Universiteit Maastricht

Kapoenstraat, Maastricht of online

 

13:00 – 13:30 Ontvangst

13:30 – 13:50 Digitalisering in het EU-procesrecht: een stand van zaken

Pauline van der Grinten, Ministerie van Justitie en Veiligheid, Nederland

13:50 – 14:00 Het DIGI-GUARD project: relevantie voor de rechtspraktijk

Marta Pertegás Sender, Universiteit Maastricht

14:00 – 14:30 De Betekeningsverordening (Vo 2020/1784): een stand van zaken

Wannes Vandenbussche, Universiteit Gent

14:30 – 15:00 De Bewijsverordening (Vo 2020/1783): een stand van zaken

Cedric Vanleenhove, Universiteit Gent

15:00 – 15:30 Recente rechtspraak over de Brussel I bis-verordening (Vo 1215/2012)

Jona Israël, Universiteit Maastricht

15:30 – 16:00 Pauze

16:00 – 16:40 Praktische oefeningen

Rechterlijke bevoegdheid en de erkenning en de tenuitvoerlegging van beslissingen (Brussel I bis) Betekenen in het buitenland o.l.v.  Jona Israël, Universiteit Maastricht o.l.v. Bartosz Sujecki, Van Diepen Van der Kroef advocaten

16:40 – 17:00 Discussie (plenaire)

17:00 – 18:00 Borrel

Many other activities (mainly in English) are being held as part of the DIGI-GUARD project, click here for more information.

“Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Commission. Neither the European Union nor the European Commission can be held responsible for them.”

 

* This event was due to take place earlier on in June 2023 but because of extraordinary circumstances it had to be rescheduled.

The EU Sustainability Directive and Jurisdiction

The Draft for a Corporate Sustainable Due Diligence Directive currently contains no rules on jurisdiction. This creates inconsistencies between the scope of application of the Draft Directive and existing jurisdictional law, both on the EU level and on the domestic level, and can lead to an enforcement gap: EU companies may be able to escape the existing EU jurisdiction; non-EU companies may even not be subject to such jurisdiction. Effectivity requires closing that gap, and we propose ways in which this could be achieved.

 

(authored by Ralf Michaels and Antonia. Sommerfeld)

 

1. The Proposal for a Directive on Corporate Sustainability Due Diligence

The process towards an EU Corporate Sustainability Due Diligence Directive is gaining momentum. The EU Commission published a long awaited Proposal for a Directive on Corporate Sustainability Due Diligence (CSDDD), COM(2022) 71 final, on 23 February 2022; the EU Council adopted its negotiation position on 1 December 2022; and now, the EU Parliament has suggested amendments to this Draft Directive on 1 June 2023. The EU Parliament has thereby backed the compromise textreached by its legal affairs committee on 25 April 2023. This sets off the trilogue between representatives of the Parliament, the Council and the Commission.

The current state of the CSDDD already represents a milestone. It not only introduces corporate responsibility for human rights violations and environmental damage – as already found in some national laws (e.g. in France; Germany; Netherlands; Norway; Switzerland; United Kingdom) – but also and in contrast (with the exception of French law – for more details see Camy) introduces civil liability. Art. 22 (1) CSDDD entitles persons who suffer injuries as result of a failure of a company to comply with the obligations set forth in the Directive to claim compensation. It thereby intends to increase the protection of those affected within the value chain, who will now have the prospect of compensation; it also intends to create a deterrent effect by having plaintiffs take over the enforcement of the law as “private attorney generals”. Moreover, the Directive requires that Member States implement this civil liability with an overriding mandatory application to ensure its application, Art. 22 (5) CSDDD. This is not unproblematic: the European Union undertakes here the same unilateralism that it used to criticize when previously done by the United States, with the Helms/Burton Act as the most prominent example.

That is not our concern here. Nor do we want to add to the lively discussion on the choice-of-law- aspects regarding civil liability (see, amongst others, van Calster, Ho-Dac, Dias and, before the Proposal, Rühl). Instead, we address a gap in the Draft Directive, namely the lack of any provisions on jurisdiction. After all, mandatory application in EU courts is largely irrelevant if courts do not have jurisdiction in the first place. If the remaining alternative is to bring an action in a court outside the EU, the application of the CSDDD civil liability regime is not, however, guaranteed. It will then depend on the foreign court’s conflict-of-law rules and whether these consider the CSDDD provisions applicable – an uncertain path.

Nonetheless, no mirroring provisions on international jurisdiction were included in the CSDDD, although such inclusion had been discussed. Suggestions for the inclusion of a new jurisdictional rule establishing a forum necessitatis in the Brussels I Regulation Recast existed (see the Study by the European Parliament Policy Department for External Relations from February 2019, the Draft Report of the European Parliament Committee on Legal Affairs with recommendations to the Commission on corporate due diligence and corporate accountability (2020/2129(INL) as well as the Recommendation of the European Groupe of Private International Law (GEDIP) communicated to the Commission on 8 October 2021). Further, the creation of a forum connexitatis in addition to a forum necessitatis had been recommended by both the Policy Department Study and the GEDIP. Nevertheless, the report of the European Parliament finally adopted, together with the Draft Directive of 10 March 2021, no longer contained such rule on international jurisdiction, without explanation. Likewise, the Commission’s CSDDD draft and the Parliament’s recent amendments lack such a provision.

 

2. Enforcement Gap for Actions against Defendants Domiciled within the EU

To assess the enforcement gap, it is useful to distinguish EU companies from non-EU companies as defendants. For EU companies, the Directive applies to companies of a certain size which are formed in accordance with the legislation of a Member State according to Art. 2 (1) CSDDD – the threshold numbers in the Commission’s draft and the Parliament amendments differ, ranging between 250–500 employees and EUR 40–150 million annual net worldwide turnover, with questions of special treatment for high-risk sectors.

At first sight, no enforcement gap seems to exist here. The general jurisdiction rule anchored in Art. 4 (1) Brussels I Regulation Recast allows for suits in the defendant’s domicile. Art. 63 (1) further specifies this domicile for companies as the statutory seat, the central administration or the principal place of business. (EU-based companies can also be sued at the place where the harmful event occurred according to Art. 7 (2) Brussels I Regulation Recast, but this will provide for access to an EU court only if this harmful event occurred within the EU.) The objection of forum non conveniens does not apply in the Brussels I Regulation system (as clarified in the CJEU’s Owusu decision). Consequently, in cases where jurisdiction within the EU is given, the CSDDD applies, including the civil liability provision with its mandatory application pursuant to Art. 22 (1), (5).

Yet there is potential leeway for EU domiciled companies to escape EU jurisdiction and thus avoid the application of the CSDDD’s civil liability. One way to avoid EU jurisdiction is to use an exclusive jurisdiction agreement in favour of a third country, or an arbitration clause. Such agreements concluded in advance of any occurred damage are conceivable between individual links of the value chain, such as between employees and subcontractors (in employment contracts) or between different suppliers along the chain (in purchase and supply agreements). EU law does not expressly prohibit such derogation. Precedent for how such exclusive jurisdiction agreements can be treated can be found in the case law following the Ingmar decision of the CJEU. In Ingmar, the CJEU had decided that a commercial agent’s compensation claim according to Arts. 17 and 18 of the Commercial Agents Directive (86/653/EEC) could not be avoided through a choice of law in favour of the law of a non-EU country, even though the Directive said nothing about an internationally mandatory nature for the purpose of private international law – as Art. 22 (5) CSDDD in contrast now does. The German Federal Court of Justice (BGH) extended this choice-of-law argument to the law of jurisdiction and held that jurisdiction clauses which could undermine the application of mandatory provisions are invalid, too, as only such a rule would safeguard the internationally mandatory scope of application of the provisions. Other EU Member State courts have shown a similar understanding not only with regard to exclusive jurisdiction agreements but also with regard to arbitration agreements (Austrian Supreme Court of Justice; High Court of Justice Queen’s Bench Division).

Common to Arts. 17 and 18 Commercial Agents Directive and Art. 22 CSDDD is their mandatory nature for the purpose of private international law, which established by the ECJ for the former and is legally prescribed for the latter in Art. 22 (5) CSDDD. This suggests a possible transfer of the jurisdictional argument regarding jurisdiction. To extend the internationally mandatory nature of a provision into the law of jurisdiction is not obvious; choice of law and jurisdiction are different areas of law. It also means that the already questionable unilateral nature of the EU regulation is given even more force. Nonetheless, to do so appears justified. Allowing parties to avoid application of the CSDDD would run counter to its effective enforcement and therefore to the effet utile. This means that an exclusive jurisdiction agreement in favour of a third country or an arbitration clause will have to be deemed invalid unless it is clear that the CSDDD remains applicable or the applicable law provides for similar protection.

 

3. Enforcement Gap for Actions against Defendants Domiciled Outside the EU

While the enforcement gap with regard to EU companies can thus be solved under existing law, additional problems arise with regard to non-EU corporations. Notably, the Draft Directive applies also to certain non-EU companies formed in accordance with the legislation of a third country, Art. 2 (2) CSDDD. For these companies, the scope of application depends upon the net turnover within the territory of the Union, this being the criterion creating a territorial connection between these companies and the EU (recital (24)). The Parliament’s amendments lower this threshold and thereby sharpen the scope of application of the Directive.

While application of the CSDDD to these companies before Member State courts is guaranteed due to its mandatory character, jurisdiction over non-EU defendants within the EU is not. International jurisdiction for actions against third-country defendants as brought before EU Member State courts is – with only few exceptions – generally governed by the national provisions of the respective Member State whose courts are seized, Art. 6 (1) Brussels I Regulation Recast. If the relevant national rules do not establish jurisdiction, no access to court is given within the EU.

And most national rules do not establish such jurisdiction. General jurisdiction at the seat of the corporation will usually lie outside the European Union. And the territorial connection of intra-EU turnover used to justify the applicability of the CSDDD does not create a similar basis of general jurisdiction, because jurisdiction at the place of economic activity (“doing business jurisdiction”) is alien to European legal systems. Even in the US, where this basis was first introduced, the US Supreme Court now limits general jurisdiction to the state that represents the “home” for the defendant company (BNSF Railroad Co. v. Tyrrell, 137 S.Ct. 1549 (2017); Daimler AG v. Bauman, 571 U.S. 117 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011)); whether the recent decision in Mallory v. Norfolk Southern Railway Co., 600 U.S. (2023) will re-open the door to doing business jurisdiction remains to be seen (see Gardner).

Specific jurisdiction will not exist in most cases, either. Specific jurisdiction in matters relating to tort will be of little use, as in value chain civil liability claims the place of the event giving rise to damages and the place of damage are usually outside the EU and within that third state. Some jurisdictional bases otherwise considered exorbitant may be available, such as the plaintiff’s nationality (Art. 14 French Civil Code) or the defendant’s assets (Section 23 German Code of Civil Procedure). Otherwise, the remaining option to seize a non-EU defendant in a Member State court is through submission by appearance according to Art. 26 Brussels I Regulation Recast.

Whether strategic joint litigation can be brought against an EU anchor defendant in order to drag along a non-EU defendant depends upon the national provisions of the EU Member States. Art. 8 (1) Brussels I Regulation Recast, which allows for connected claims to be heard and determined together, applies only to EU-defendants – for non-EU defendants the provision is inapplicable. In some Member States, the national civil procedure provisions enable jurisdiction over connected claims against co-defendants, e.g. in the Netherlands (Art. 7 (1) Wetboek van Burgerlijke Rechtsvordering), France (Art. 42 (2) Code de procédure civile) and Austria (§ 93 Jurisdiktionsnorm); conversely, such jurisdiction is not available in countries such as Germany.

Various Member State decisions have accepted claims against non-EU companies as co-defendants by means of joinder of parties. These cases have based their jurisdiction on national provisions which were applicable according to Art. 6 (1) Brussels I Recast Regulation: In Milieudefensie in December 2015, the Court of Appeal at the Hague held permissible an action against a Dutch anchor defendant that was joined with an action against a Nigerian company as co-defendant based on Dutch national procedural law, on the condition that claims against the anchor defendant were actually possible. The UK Supreme Court ruled similarly in its Vedanta decision in April 2019, wherein it found that English private international law, namely the principle of the necessary or proper party gateway, created a valid basis for invoking English jurisdiction over a defendant not domiciled in a Member State (with registered office in Zambia) who had been joined with an anchor defendant based in the UK. The claim was accepted on the condition that (i) the claims against the anchor defendant involve a real issue to be tried; (ii) it would be reasonable for the court to try that issue; (iii) the foreign defendant is a necessary or proper party to the claims against the anchor defendant; (iv) the claims against the foreign defendant have a real prospect of success; (v) either England is the proper place in which to bring the combined claims or there is a real risk that the claimants will not obtain substantial justice in the alternative foreign jurisdiction, even if it would otherwise have been the proper place or the convenient or natural forum. The UK Supreme Court confirmed this approach in February 2021 in its Okpabi decision (for discussion of possible changes in UK decisions after Brexit, see Hübner/Lieberknecht).

In total, these decisions allow for strategic joint litigation against third-country companies together with an EU anchor defendant. Nonetheless, they do not establish international jurisdiction within the EU for isolated actions against non-EU defendants.

 

4. How to Close the Enforcement Gap – forum legis

The demonstrated lack of access to court weakens the Directive’s enforceability and creates an inconsistency between the mandatory nature of the civil liability and the lack of a firm jurisdictional basis. On a substantive level, the Directive stipulates civil liability for non-EU companies (Art. 22 CSDDD) if they are sufficiently economically active within the EU internal market (Art. 2 (2) CSDDD). Yet missing EU rules on international jurisdiction vis-à-vis third-country defendants often render procedural enforcement before an intra-EU forum impossible – even if these defendants generate significant turnover in the Union. Consequently, procedural enforcement of civil liability claims against these non-EU defendants is put at risk. The respective case law discussed does enable strategic joint litigation, but isolated actions against non-EU defendants cannot be based upon these decisions. At the same time, enforceability gaps exist with respect to EU defendants: It remains uncertain whether the courts of Member States will annul exclusive jurisdiction agreements and arbitration agreements if these undermine the application of the CSDDD.

This situation is unsatisfactory. It is inconsistent for the EU lawmaker to make civil liability mandatory in order to ensure civil enforcement but to then not address the access to court necessary for such enforcement. And it is inadequate that the (systemic) question of judicial enforceability of civil liability claims under the Directive is outsourced to the decision of the legal systems of the Member States. National civil procedural law is called upon to decide which third-country companies can be sued within the EU and how the Ingmar case law for EU domiciled companies will be further developed. This is a problem of uniformity – different national laws allow for different answers. And it is a problem of competence as Member State courts are asked to  render decisions that properly belong to the EU level.

The CSDDD aims to effectively protect human rights and the environment in EU-related value chains and to create a level playing field for companies operating within the EU. This requires comparable enforcement possibilities for actions based on civil liability claims that are brought pursuant to Art. 22 CSDDD against all corporations operating within the Union. The different regulatory options the EU legislature has to achieve this goal are discussed in what follows.

Doing Business Jurisdiction 

A rather theoretical possibility would be to allow actions against third-country companies within the EU in accordance with the former (and perhaps revived) US case law on doing business jurisdiction in those cases where these companies are substantially economically active within the EU internal market. This would be consistent with the CSDDD’s approach of stretching its scope of application based on the level of economic activity within the EU (Art. 2 (2) CSDDD). However, the fact that such jurisdiction has always been considered exorbitant in Europe and has even been largely abolished in the USA speaks against this development. Moreover, a doing business jurisdiction would also go too far: it would establish general jurisdiction, at least according to the US model, and thus also apply to claims that have nothing to do with the CSDDD.

Forum Necessitatis and Universal Jurisdiction

Another possible option would be the implementation of a forum necessitatis jurisdiction in order to provide access to justice, as proposed by the European Parliament Policy Department for External Relations, the European Parliament Committee on Legal Affairs and the GEDIP. However, such jurisdiction could create uncertainty because it would apply only exceptionally. Moreover, proving a “lack of access to justice” requires considerable effort in each individual case. Until now, EU law provides for a forum necessitatis only in special regulations; the Brussels I Regulation Recast does not contain any general rule for emergency jurisdiction. Member State provisions in this regard generally require a certain connection with the forum to establish such jurisdiction – the exact prerequisites differ, however, and will thus not be easily agreed upon on an EU level (see Kübler-Wachendorff).

The proposal to enforce claims under Art. 22 CSDDD by means of universal civil jurisdiction for human rights violations, which could be developed analogously to universal jurisdiction under criminal law, appears similarly unpromising; it would also go further than necessary.

Forum connexitatis

It seems more promising to implement a special case of a forum connexitatis so as to allow for  litigation of closely connected actions brought against a parent company domiciled within the EU together with a subsidiary or supplier domiciled in a third country, as proposed by the European Parliament Policy Department for External Relations and the GEDIP. This could be implemented by means of a teleological reduction of the requirements of Art. 8 (1) Brussels I Regulation Recast with regard to third-country companies, which would be an approach more compatible with the Brussels Regulation system than the implementation of a forum necessitatis provision (such a solution has, for instance, been supported by Mankowski, in: Fleischer/Mankowski (Hrsg.), LkSG, Einl., para. 342 and the GEDIP). This would simultaneously foster harmonisation on the EU level given that joint proceedings currently depend upon procedural provisions in the national law of the Member States. Moreover, this could avoid “blame games” between the different players in the value chain (see Kieninger, RW 2022, 584, 589). For the implementation of such a forum connexitatis, existing Member State regulations and related case law (Milieudefensie, Vedanta, and Okpabi) can serve as guidance. Such a forum is not yet common practice in all Member States; thus, its political viability remains to be seen. It should also be borne in mind that the implementation of a forum connexitatis on its own would only enable harmonised joint actions that were brought against EU domiciled anchor defendants together with non-EU defendants; it would not enable isolated actions against third-country companies – even if they are economically active within the EU and fall within the scope of application of the CSDDD.

Forum legis

The best way to close the CSDDD enforcement gap would be introducing an international jurisdiction basis corresponding to the personal scope of application of the Directive. The EU legislature would need to implement a head of jurisdiction applicable to third-country companies that operate within the EU internal market at the level specified in Art. 2 (2) CSDDD. Effectively, special jurisdiction would be measured on the basis of net turnover achieved within the EU. This would procedurally protect the Directive’s substantive regulatory objectives of human rights and environmental protection within EU-related value chains. Moreover, this would ensure a level playing field in the EU internal market.

Other than a forum premised on joint litigation, this solution would allow isolated actions to be brought – in an EU internal forum – against non-EU companies operating within the EU. The advantage of this solution compared to a forum of necessity is that the connecting factor of net turnover is already defined by Art. 2 (2) CSDDD, thus reducing the burden of proof, legal uncertainty and any unpredictability for the parties. Moreover, this approach would interfere less with the regulatory interests of other states than a forum necessitatis rule, which for its part would reach beyond the EU’s own regulatory space.

A forum legis should not be implemented only as a subsidiary option for cases in which there is a lack of access to justice, because this would create legal uncertainty. The clear-cut requirements of Art. 2 (2) CSDDD are an adequate criterion for jurisdiction via a forum legis. On the other hand, it should not serve as an exclusive basis of jurisdiction, because especially plaintiffs should not be barred from the ability to bring suit outside the EU. The risk of strategic declaratory actions brought by companies in a court outside the EU seems rather negligeable, and this  can be avoided either by giving preference to actions for performance over negative declaratory actions, as is the law in Germany or through the requirement of recognisability of a foreign judgment, which would not be met by a foreign decision violating domestic public policy by not providing sufficient protection.

This leaves a problem, however: The CSDDD does not designate which Member State’s court have jurisdiction. Since a forum legis normally establishes adjudicatory jurisdiction correlating with the applicable law, jurisdiction lies with the courts of the country whose law is applied. This is not possible as such for EU law because the EU does not have its own ordinary courts. The competent Member State court within the EU must be determined. Two options exist with regard to the CSDDD: to give jurisdiction to the courts in the country where the highest net turnover is reached, or to allow claimants to choose the relevant court. The first option involves difficult evidentiary issues, the second may give plaintiffs an excessive amount of choice. In either case, non-EU companies will be treated differently from EU companies on the question of the competent court – for non-EU companies, net turnover is decisive in establishing the forum, for EU-companies, the seat of the company is decisive. This difference is an unavoidable consequence resulting from extension of the scope of application of the Directive to third-country companies on the basis of net turnover.

 

5. Implementation

How could this forum legis be achieved? The most straightforward way would be to include a rule on jurisdiction in the CSDDD, which would then oblige the Member States to introduce harmonised rules of jurisdiction into national procedural law. This would be a novelty in the field of European international civil procedure law, but it would correspond to the character of the special provision on value chains as well as to the mechanism of the CSDDD’s liability provision. An alternative would be to include in the Brussels I Regulation Recast a sub-category of a special type of jurisdiction under Art. 7 Brussels I Regulation Recast. This as well would be a novelty to the Brussels system, which in principle requires that the defendant be seated in a Member State (see also Kieninger, RW 2022, 584, 593, who favours reform of the Brussels I Regulation Recast for the sake of uniformity within the EU). This second option would certainly mesh with current efforts to extend the Brussels system to non-EU defendants (see Lutzi/Piovesani/Zgrabljic Rotar).

The implementation of such a forum legis is not without problems: It subjects companies, somewhat inconsistently with the EU legal scheme, to de facto jurisdiction merely because they generate significant turnover in the EU’s internal market. Yet such a rule is a necessary consequence of the extraterritorial extension of the Directive to third-country companies. The unilateral character of the CSDDD is problematic. But if the CSDDD intends to implement such an extension on a substantive level, this must be reflected on a procedural level so as to enable access to court. The best way to do this is by implementing a forum legis. The CSDDD demonstrates the great importance of compensation of victims of human rights and environmental damage, by making the cicil liability rule internationally mandatory. Creating a corresponding head of jurisdiction for these substantive civil liability claims is then necessary and consistent in order to achieve access to court and, thus, procedural enforceability.

The author of this post is Lydia Lundstedt, a Senior Lecturer at the Stockholm University.

By a ruling of 17 May 2023 (No 13504), the Corte Suprema di Cassazione (Italian Supreme Court) held that the Italian courts lacked jurisdiction over an action concerning the non-infringement of an international design right. The decision raises several interesting issues concerning the application of the rules on jurisdiction set out in the Brussels I bis Regulation to infringements of intellectual property rights.

Facts

The German company Bulthaup is the holder of an international design right for a tap valid for inter alia Germany and Italy. Bulthaup sent a warning letter to another German company, Nobilia-Werke, demanding that it cease selling the tap “Alila” claiming that it was a copy of Bulthaup’s design. The Alila tap is manufactured by an Italian company, Gessi. When Gessi learned that Bulthaup had sent a warning letter to its customer, Nobilia-Werke, Gessi wrote to Bulthaup and denied infringement. After communication between Gessi and Bulthaup’s lawyers, Gessi sued Bulthaup and the related company Bulthaup Italia Srl (Bulthaup Italia) before the Tribunale di Milano (Court of Milan). In addition, Nobilia-Werke was made a party to the proceedings.

Gessi requested that the Court of Milan declare that the Italian part of the international design was invalid. In addition, Gessi requested inter alia a declaration that the production and marketing of the Alila tap did not infringe the industrial property rights of Bulthaup and/or Bulthaup Italia and that its and Nobilia-Werke’s activities did not constitute acts of unfair competition. Bulthaup and Bulthaup Italia objected to the Court of Milan’s jurisdiction on the basis that the claims “concern German territory only”, with the exception of the invalidity claim concerning the Italian part of the design. Nobilia-Werke did not contest jurisdiction. The Court of Milan set a hearing to clarify and Gessi appealed to the Supreme Court.

The Supreme Court’s decision

The Supreme Court held that the Court of Milan had jurisdiction over the invalidity claim concerning the Italian part of the design in accordance with Article 24(4) of Brussels I bis Regulation. With regard to the other claims concerning inter alia a declaration of non-infringement of design rights and a declaration of non-violation of unfair competition rules, the Supreme Court held that the Court of Milan did not have jurisdiction.

First, the Supreme Court held that Article 4 of the Brussels I bis Regulation could not provide a basis for jurisdiction because both Bulthaup and Nobilia-Werke were domiciled in Germany, not Italy.

Second, the Supreme Court examined whether Article 7(2) of Brussels I bis Regulation could provide a basis for jurisdiction. With references to the case law of the Court of Justice of the European Union (CJEU), the Supreme Court observed that Article 7(2) was applicable to actions for negative declarations and that a plaintiff could sue either at the place of the causal act or the place of (direct) damage. The Supreme Court recalled the CJEU’s decision in Wintersteiger (C‑523/10) holding that in cases of trademark infringement, damage occurs in the Member State where the right is protected. The Supreme Court observed that this ruling was relevant for infringements of design rights. The Court found however that this decision did not provide a basis for jurisdiction because the right at issue was the German part of the international design.

In addition, the Supreme Court rejected Gessi’s assertion that damage occurred in Italy in accordance with the CJEU’s interpretation of Article 7(2) in Bolagsupplysningen (C-194/16).  It can be recalled that the CJEU held that a legal person claiming that its personality rights have been infringed by the publication of incorrect information on the internet can sue where it has its centre of interests because that is where the damage to its reputation is most keenly felt. The Supreme Court stated that Bolagsupplyningen concerned “a completely different” situation specific to internet, whereas in the case at hand, the damage alleged by Gessi, namely, interference with its contractual relationship with Nobilia-Werke, occurred in Germany. Indeed, the Court explained that damage from a warning letter sent by a German company (Bulthaup) to another German company (Nobilia-Werke) about activity in Germany in alleged violation of a right protected in Germany could only occur in Germany. In addition, the Court rejected Gessi’s assertion that Bulthaup had sent another warning letter addressed to Gessi concerning Gessi’s conduct in Italy. The Supreme Court explained that this so-called warning letter was in fact a letter from Bulthaup’s lawyer in reply to a letter from Gessi’s lawyer concerning a possible settlement. As a lawyer’s letter seeking an amicable settlement could not be a basis for damage, the Supreme Court held that the Court of Milan did not have jurisdiction on the basis of Article 7(2).

Lastly, the Supreme Court examined whether Article 8(1) of the Brussels I bis Regulation could provide a basis for jurisdiction in light of the fact that Gessi had also sued Bulthaup Italia, which is domiciled in Italy. Pursuant to Article 8(1), a defendant domiciled in a Member State may be sued, when he or she is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

The Supreme Court recalled the CJEU’s decision in Roche Nederland (C-539/03) that the application of Article 8(1) does not apply to alleged infringements of different parts of a European patent because each part is a separate and independent right which must be assessed under national law so there is no risk for irreconcilable judgments. Thus, the Supreme Court noted that the claim concerning the invalidity of the Italian part of the design was not relevant for establishing jurisdiction over for the claims for non-infringement.

Thereafter, the Supreme Court noted that while Gessi’s action for negative declaratory relief was justified in so far as it related to Bulthaup’s accusation of infringement in Germany of the German part of the design right, the Supreme Court held that jurisdiction could not be fictitiously established by bringing a claim against a “silent” and “disinterested” defendant (Bulthaup Italia). The Supreme Court explained that Bulthaup Italia was not the holder of the design right and had not asserted the right so there was therefore no plausible reason for involving it in the dispute. Consequently, the Supreme Court held that the Court of Milan did not have jurisdiction on the basis of Article 8(1).

Analysis

The Supreme Court’s ruling does not clearly separate the question of jurisdiction from the question of admissibility under national procedural law. As the defendant Bulthaup Italia is domiciled in Italy, it may be sued in Italy for any claim within the scope of the Brussels I bis Regulation except for where there is exclusive jurisdiction. Thus, the Court of Milan should have jurisdiction over Bulthaup Italia in accordance with Article 4 Brussels I bis Regulation in respect of the negative declaratory claims concerning infringement and unfair competition. It is a separate question that these claims are inadmissible under national procedural law because Gessi had no legitimate interest in bringing a claim against Bulthaup Italia.

In addition, while I agree with the Supreme Court that Article 7(2) would not provide a basis for jurisdiction over Bulthaup for the negative declaratory claims concerning Germany, Gessi’s claims appear to refer also to Italy. Indeed, Gessi requests a declaration that “the production and marketing” of the tap does not infringe industrial property rights. The production of the tap, which likely takes place in Italy, concerns the Italian part of the international design. As the Supreme Court rightly noted, in Wintersteiger, the CJEU held that jurisdiction lies in the Member State where the right is protected, and Bulthaup’s right is protected (also) in Italy. Thus, the Court of Milan should have jurisdiction over Bulthaup in accordance with Article 7(2) Brussels I bis Regulation in respect of the claim for non-infringement of the Italian part of the international design. Again, it is a separate question whether this claim is admissible under national procedural law in light of the fact that Bulthaup had not sent any warning letter to Gessi concerning Italy.

Concerning Article 8(1) of the Brussels I bis Regulation, I agree with the Supreme Court that the invalidity claim was not relevant for establishing jurisdiction over the non-infringement claims, but for an additional reason not mentioned by the Court. The invalidity claim was brought against Bulthaup, not Bulthaup Italia. Clearly, Bulthaup cannot be used as an anchor defendant to bring additional claims against Bulthaup.

In contrast, the negative declaratory claims were brought against both Bulthaup and Bulthaup Italia so the latter could serve as an anchor defendant. That said, the Supreme Court’s conclusion that Article 8(1) was not applicable in cases of abuse is arguably in line with Freeport (C‑98/06). In that case, the CJEU held that if the requirements of (what is now) Article 8(1) are fulfilled, there is no further need to establish separately that the claims were not brought with the sole object of ousting the jurisdiction of the courts of the Member State where one of the defendants is domiciled. This decision has been understood to mean that the claims are either sufficiently connected or there is abuse. In this case, the Supreme Court found that there was abuse because there was no plausible reason for involving Bulthaup Italia in a dispute concerning the German part of the design right.

As noted above, however, Gessi’s negative declaratory claims appear to concern Italy as well. There would be a plausible reason for involving Bulthaup Italia in a dispute concerning the Italian part of the design right. This raises two issues. First, could Bulthaup Italia be used as an anchor defendant even though the claims against Bulthaup Italia were likely inadmissible under Italian procedural law for lack of a legitimate interest? In Reisch Montage (C‑103/05), the CJEU held that (what is now) Article 8(1) applies even when an action brought against the anchor defendant (here Bulthaup Italia) is inadmissible pursuant to a provision of national law already at the time it is brought.

Second, are the negative declaratory claims against Bulthaup Italia concerning Italy connected to the claims against Bulthaup concerning Germany in the meaning of Article 8(1)? The CJEU’s decision in Roche Nederland which was cited by the Supreme Court, deals with patents. In a later case, Painer (C-145/10), which deals with copyright infringement, the CJEU did not exclude the application of article 8(1) in relation to defendants accused of infringing copyright protected in different Member States when the national laws on which the claims were based were “substantially identical”. In light of the fact that national design rights have been harmonized in accordance with Directive 98/71/EC on the legal protection of designs, the question arises whether the approach in Roche or Painer should be followed.

Conventions & Instruments

On 1 July 2023, the 2000 Protection of Adults Convention entered into force for Malta. The Convention currently has 15 Contracting Parties. More information is available here.

 

Meetings & Events

On 12 June 2023, the kick-off meeting of the Central Bank Digital Currencies (CBDCs) Project was held online. During the meeting experts laid the foundation for the preparatory and exploratory work relating to the CBDCs Project, which will study the private international law implications of CBDCs. More information is available here.

 

Publications & Documentation

The report of the first meeting of the Working Group on the Financial Aspects of Intercountry Adoption is now available online. The mandate of the Working Group is to take stock of current practices, identify possible coordinated, targeted, practical approaches, and to prioritise them with the aim of raising standards.

 

Upcoming Events

Registration is now open for HCCH Asia Pacific Week 2023. The conference’s sixth edition will be held from 11 to 14 September in Hong Kong SAR, China, with the generous support of the Department of Justice of Hong Kong SAR and the University of Hong Kong. Participation from 12 to 14 September is open to the public, in person or online. More information is available here.

Save-the-date: On 5 October 2023, the Permanent Bureau of the HCCH will organise an online colloquium on the private international law implications of Central Bank Digital Currencies (CBDCs). More information is available here.

 

These monthly updates are published by the Permanent Bureau of the Hague Conference on Private International Law (HCCH), providing an overview of the latest developments. More information and materials are available on the HCCH website.

On 28 June 2023, the European Commission presented a package consisting of three proposals regarding the Euro currency. It includes a proposal for a regulation on the legal tender of Euro banknotes and coins, a proposal for a regulation on the establishment of the digital euro, accompanied by a proposal for a regulation of on the provision of digital Euro services by payment services providers incorporated in Member States whose currency is not the Euro.

While ensuring that individuals and businesses can continue to access and pay with Euro banknotes and coins across the Euro area, the package aims to set out a framework for a possible new digital form of the Euro that the European Central Bank could choose to issue in the future, as a complement to cash.

The package is not concerned, as such, with private international law. However, it appears to have some implications for private international law, which will be briefly discussed below.

Background

Digitalisation and new technology are progressively influencing the lives of Europeans and the European economy. As the European economy becomes more digital, Europeans are increasingly using private digital payment methods to transact. Banknotes and coins, the only existing forms of central bank money with legal tender available to the general public (including individuals, governments, and corporations), cannot support the EU’s economy in the digital age.

As online transactions expand and payment habits of the general public migrate to the wide range of private digital payment methods available in the EU, their use in payments declines. The lack of a widely available and useable form of central bank money that is technologically fitted to the digital era may also erode trust in commercial bank money, and eventually in the Euro itself.

In this context, the issuing of a retail CBDC (Central Bank Digital Currency) has acquired substantial attention in recent years: a retail CBDC, like cash, would be an official form of central bank money that is directly available to the general public and has the legal tender status. And attention would like to turn into reality also in the EU.

Indeed, many central banks across the world have started looking at the possibility of introducing CBDCs. They, like the European Central Bank, have been conducting research and piloting programmes to better understand their potential advantages and drawbacks. Sweden, for instance, began a research on the viability of an e-krona within the EU. Outside of the EU, the United Kingdom has published multiple consultations and begun research towards a digital pound, akin to the European Central Bank’s technical inquiry into a digital euro. China has previously produced a digital yuan outside of Europe, which is already accessible for payment in an increasing number of places, with major banks and payment service providers facilitating the process. The United States, then, is looking at the possibility of a digital dollar but has not yet concluded if it is necessary.

However, some underlying choices need to be faced. For example, CBDC can be of two different types: (a) Account-based: before allowing a user to make a payment, an account-based approach often entails the use of a trusted third party to authenticate the identification of the account holder and the check on account balance; the accounts are then debited and credited accordingly; or (b) Token-based: a form of money issued by a central bank whereby the monetary claim on the central bank is incorporated in a digital token and the transfer of the token equals transfer of the claim, without current-account relationship between the central bank and the holder.

To conclude this overall background, it is useful to clarify that it is not a matter of crypto-assets and blockchain. Crypto assets, indeed, are purely digital assets that use public ledgers over the internet to prove ownership. They use cryptography, peer-to-peer networks and a distributed ledger technology (DLT) – such as blockchain – to create, verify and secure transactions. While the digital euro, unlike crypto-assets, would be central bank money. The European Central Bank would guarantee its safety, stability, and ability to be exchanged for Euro currency at face value. In contrast, the value of crypto-assets might vary substantially, and their conversion into Euro currency or even commercial bank money cannot be guaranteed.

Proposal on Digital Euro

The goal of the proposal on digital Euro is to keep central bank money with legal tender status available to the general public, while also providing a cutting-edge and cost-effective payment method, ensuring a high level of privacy in digital payments, maintaining financial stability, and promoting accessibility and financial inclusion.

As a result, they offer the essential legal framework to guarantee the successful use of the digital Euro as a single currency throughout the eurozone, addressing the demands of users in the digital age, and supporting competitiveness, efficiency, innovation, and resilience in the EU’s digitalizing economy. They offer the essential legal framework to guarantee the successful use of the digital Euro as a single currency throughout the eurozone, addressing the demands of users in the digital age, and supporting competitiveness, efficiency, innovation, and resilience in the EU’s digitalizing economy.

Subject Matter, Establishment and Issuance of the Digital Euro

‘Digital euro’ means the digital form of the single currency available to natural and legal persons for the purpose of retail payments. It may be issued by the European Central Bank and, if authorised by the European Central Bank, by eurozone national central banks. This means that it would be public money or central bank money. Like Euro banknotes and coins, the digital Euro will be a direct liability of the European Central Bank or of eurozone national central banks vis-à-vis digital Euro users, i.e. those making use of a digital Euro payment service in the capacity of payer, payee, or both.

Several rules are being proposed to integrate the digital Euro into the current legal framework. In particular, digital Euro payment transactions shall be subject to Payment Services Directive (PSD2, as will be replaced by proposed PSD3 and PSR), the Cross-Border Payments Regulation (as will be amended by the proposed accompanying Regulation), the Anti-Money Laundering Directive (AMLD5, as will be replaced by proposed AMLD6 and AMLR) and the Funds Transfer Regulation.

Legal Tender

The digital Euro will have legal tender status, which means that it must be accepted at face value with the ability to satisfy a payment obligation; this is not the case for existing electronic means of payments provided by commercial banks. Surcharges will be prohibited. To guarantee the effective preservation of the digital euro’s legal tender status as a unified currency throughout the eurozone, as well as the acceptance of digital Euro payments, provisions on sanctions for infringements will be adopted and implemented in the Member States.

Payees are entitled to refuse payment in digital Euro under the circumstances indicated in Article 9.
The digital Euro will be convertible in the same way as Euro banknotes and coins, scriptural money, and electronic money are. Where both digital Euro and Euro cash acceptance is required, the payer may choose between the two.

Distribution

(Private) Payment service companies would act as intermediaries for the digital euro. Banks and other payment service providers, indeed, would be in charge and in responsibility of distributing digital euros and providing payment services to natural and legal persons, primarily via offering a variety of digital Euro payment services (without the need for an extra licence). These services include first of all enabling users to access and use digital euro; persons, indeed, would be able to open a digital Euro account at any commercial bank or any other payment service provider, such as payment institutions and electronic money institutions. Then, other digital Euro payment services included cover initiating and receiving digital Euro payment transactions, managing their digital Euro payment accounts (which function similarly to digital wallets and have a unique account number), providing users with digital Euro payment instruments, and conducting funding (i.e., acquiring digital Euro in exchange for cash or other funds) / defunding operations.

There is also a list of basic digital Euro payment services that must be provided to individuals for free, such as opening and maintaining digital Euro payment accounts, funding/defunding from/into cash, initiating and receiving digital Euro payment transactions (person-to-person, person-to-government, government-to-person, or point of interaction including point-of-sale and e-commerce) via an electronic payment instrument, or providing such instruments. Users using digital euros can have one or more digital Euro payment accounts with the same or other payment services providers.

Access, Use and its Limits, Technical Features and Privacy

The proposal provides also other rules.

Chapter six, devoted to the access side, deals with the use of the digital Euro outside the Euro area, which depend on whether natural and legal persons reside or are established in a non-Euro area Member States or in a third country. It will be possible, subject to described conditions under Articles 18 to 21.

Technical features are also taken into account under chapter seven, where it is indicated that the digital Euro should be developed in a way that makes it easy to use for the general public, including financially excluded or at-risk individuals, those with impairments, functional limits, or inadequate digital skills, and the elderly. In order to achieve this aim, digital Euro users will not be needed to have a non-digital Euro payment account. And the digital Euro should be available for digital Euro payment transactions both offline and online as of the first issuance of the digital Euro and should allow for conditional payment transactions. Users may use the European Digital Identity Wallets established under the proposed Regulation on a European Digital Identity, described on this blog, to onboard and make payments. The digital Euro should enable digital users to switch their digital Euro payment accounts to another payment services provider at the request of the digital Euro user.

Finally, privacy and data protection issues are addressed.

Private International Law Implications

CBDCs are not free from private international law implications. Payment currency, indeed, is a component that private international law cannot ignore.

Basically, the problem of problems, which then concerns all the classic private international law issues, is that relating to the connecting factors to be used for this currency. Can the criteria of the locus rei sitae and lex rei sitae have any weight? And if so, where is this currency located? If not, what other criteria to use?

And, generally related to the latter, also the role of private autonomy and its possible limits is to be addressed. For instance, if the CBDC is included in a contract with cross-border elements, how do you provide for party autonomy? Should boundaries to CBDC, and the contract, be established?

In jurisdiction matter, it follows that identifying the court to deal with it is relevant, among intermediaries and account holders.

But also for the applicable law the problems are no less: opening CBDC accounts, holding, transactions, payments, settlements, and other aspect such as data flow can be dealt with.

An impact, also, in terms of recognition and enforcement, imagining having a judgement including CBDC matters to be recognized and enforced in different countries.

History tends to repeat itself: what to do then? Adapt existing rules, if they resist this tool, or devise new ones?

Surely a good starting point is to refer to the contribution in progress in this field, such as the Proposal for Exploratory Work: Private International Law Aspects of Central Bank Digital Currencies (CBDCs) by the Hague Conference on Private International Law. Perhaps the HCCH is also the place to regulate these private international law issues at international level (so, with non-EU countries) on these topics?

Finally, since we are talking about dematerialized assets, can some help come from the system developed under the Convention of 5 July 2006 on the Applicable Law to Certain Rights in Respect of Securities held with an Intermediary (Securities Convention)?

Rishi Gulati, Associate Professor in International Law and Barrister, is hosting a new podcast series focusing on hot topics in international and transnational law, as well as domestic law developments with transnational impact. Significant developments impacting the legal profession are also discussed from time to time.

The podcasts are not only designed for a legal audience but also for the broader public using accessible language. They are also intended to be a teaching tool with the 50 or so minute episodes delving systematically on the issues discussed. Each episode invites a highly knowledgeable guest who can bring a unique perspective to the issue. A special attempt is made to include voices from all regions of the world.

Series 1 has now wrapped up and has seven episodes. The first three episodes concern challenges faced by the International Criminal Court, WTO and UN Human Rights Treaty Bodies respectively. The fourth episode discusses the impact of AI on the legal profession, a highly topical issue given the rise of generative AI. The fifth episode discusses the UK’s new subsidy control regime and the Levelling Up agenda. The sixth episode discusses animal rights law, with the final episode in Series 1 dealing with AI and international law from a substantive perspective. Series 2 will return after a short break!

You can subscribe to the podcast in various ways, including via SoundCloud, Spotify, and Google Podcasts

By Dr Johannes Ungerer, University of Oxford

The sunset of retained EU law in the UK has begun: the Retained EU Law (Revocation and Reform) Act 2023 received Royal Assent at the end of June. The Act will revoke many EU laws that have so far been retained in the UK by the end of 2023.

The good news for the conflict of laws is that the retained Rome I and II Regulations are not included in the long list of EU legal instruments which are affected by the mass-revocation. Both Regulations have been retained in the UK post-Brexit by section 3 of the European Union (Withdrawal) Act 2018 and were modified by the Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019 (as amended in 2020). The retained (modified) Rome I and II Regulations will thus be part of domestic law beyond the end of 2023. Yet this retained EU law must not be called by name anymore: it will be called “assimilated law” according to section 5 of the Retained EU Law (Revocation and Reform) Act 2023 (although the title of this enactment, like others, will strangely continue to contain the phrase “Retained EU Law” and will not be changed to “Assimilated Law”, see section 5(5)).

Equally, the special conflict of laws provision in regulation 1(3) of the Commercial Agents (Council Directive) Regulations 1993 (as amended in 1998) is not revoked either. This is particularly interesting because these Regulations have not been updated since Brexit, which means they still refer, for instance, to “the law of the other member State”.

Although international jurisdiction of UK courts is largely determined by domestic law these days, which replaced the Brussels I Recast Regulation, the Regulation’s rules on jurisdiction in consumer and employment matters have been autonomously transposed into sections 15A–D of the Civil Jurisdiction and Judgments Act 1982 by the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 (as amended in 2020). The mass-revocation will not affect them either, which means that they will continue to benefit consumers and employees in UK courts beyond the end of 2023.

However, a significant difference to the current situation will arise with regard to how strictly courts will continue to follow precedent on the interpretation of the “assimilated law”. This matters for decisions by the Court of Justice of the EU (CJEU) as well as for UK court decisions on the interpretation of the Rome I and II Regulations (and the Commercial Agents Directive/Regulations). The concern is that continuing to apply the EU law which will not be sunsetted, but without continuing to strictly follow the established interpretations, has the potential of increasing the risk of uncertainty or, metaphorically speaking, sunburn.

So far, the risk of sunburn has been mitigated by section 6(3), (4)(a), and (5) of the European Union (Withdrawal) Act 2018 as amended by the European Union (Withdrawal Agreement) Act 2020: the existing body of CJEU decisions has remained binding post-Brexit on the Supreme Court to the same extent as the Supreme Court’s own decisions. The Supreme Court can, like previously the House of Lords, depart from precedent in line with the Practice Statement [1966] 1 WLR 1234 (see Austin v Mayor and Burgesses of the London Borough of Southwark [2010] UKSC 28, at [25]), but the Supreme Court is very hesitant to do so in order to maintain legal certainty and predictability. The Court of Appeal has been given a similar power to divert from CJEU case law, section 6(4)(b)(i) and (5A) of the amended European Union (Withdrawal) Act 2018. Decisions of the CJEU handed down after 2020 have in any event not been binding anymore on UK courts, section 6(1) of the amended European Union (Withdrawal) Act 2018, but it has been permitted to take them into account in the UK (“may have regard”, section 6(2)).

The Retained EU Law (Revocation and Reform) Act 2023 will change how UK courts can deviate from CJEU case law and their own precedent. This will reduce the protection from uncertainty (or sunburn), which has been maintained so far.

• A UK court will in principle still be obliged to interpret “assimilated law” as established by the CJEU’s “assimilated case law” (only the “retained general principles of EU law” have been omitted in the new section 6(3)(a)).
• However, the Supreme Court and the Court of Appeal will not anymore be restricted by the ordinary domestic rules on deviation from precedent as mentioned above. Rather, according to the new section 6(5), CJEU case law will be treated like “decisions of a foreign court”, which in principle are not binding. When deviating from “assimilated case law” by the CJEU, UK courts are solely instructed to have regard to “any changes of circumstances which are relevant to the retained EU case law, and the extent to which the retained EU case law restricts the proper development of domestic law.”
• Furthermore, according to the newly inserted section 6(5ZA), a UK court will be permitted to depart from its own “assimilated domestic case law” (which means UK case law on “assimilated law” in contrast to “assimilated case law” by the CJEU) without the usual domestic restrictions on deviation from domestic precedent. Instead, when deviating from its own case law, the UK court will only have to consider “the extent to which the assimilated domestic case law is determined or influenced by assimilated EU case law from which the court has departed or would depart; any changes of circumstances which are relevant to the assimilated domestic case law; and the extent to which the assimilated domestic case law restricts the proper development of domestic law.”

Departing from CJEU and UK case law on the Rome Regulations (and the Commercial Agents Directive) will thus become a lot easier, at the expense of “assimilated” legal certainty and predictability. The time at which the change by the Retained EU Law (Revocation and Reform) Act 2023 will become effective has yet to be determined in line with its section 22(3).

Interestingly, in the above-mentioned Civil Jurisdiction and Judgments Act 1982, section 15E(2) explicitly prescribes that the jurisdictional rules for consumers and employees in sections 15A–D are to be interpreted with regard to CJEU principles on consumer and employee jurisdiction under the Brussels regime. More precisely, “regard is to be had to any relevant principles laid down” before the end of 2020 by the CJEU in connection with the Brussels jurisdictional rules; by contrast, the phrases “retained EU law” or “retained case law” are not mentioned. Since the Retained EU Law (Revocation and Reform) Act 2023 does not revoke any rules of the Civil Jurisdiction and Judgments Act 1982 or the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019, this specific mandate to have regard to CJEU principles when interpreting the retained jurisdictional rules will be maintained in its own right beyond the end of 2023. And since the Civil Jurisdiction and Judgments Act 1982 does not use the technical language of retained EU law or retained case law, whose binding character would be affected by the Retained EU Law (Revocation and Reform) Act 2023, the retained jurisdictional rules should not suffer from uncertainty and sunburn. Yet, despite this reasoning, the interpretation of the consumer and employee jurisdictional rules might in practice be condemned to the same fate as the assimilated case law that will be up for grabs.

Many thanks to Professor Andrew Dickinson for his comments on an earlier draft.

The Dickson Poon School of Law is seeking to appoint three outstanding candidates with research and teaching expertise in Intellectual Property (IP) law or Private International Law/Conflict of Laws (PIL/CoL) to Lectureships. The successful candidate/s will have a primary research interest in either IP law or PIL/CoL and the ability to produce internationally excellent research in this area.

This post will be offered on an indefinite contract (subject to a probation period). This is a full-time post.

Applications close on 10 August 2023.

Further information is available here.

Finally!!! A yearbook dedicated to public and private international law in the Arab world has recently been established by BRILL and is expected to be launched in the fall of 2024 called “The Arab Yearbook of Public & International Law” (the Yearbook).

One can only warmly welcome this initiative. It will certainly provide a space for fruitful discussions and a forum where experts from the Arab world and abroad can exchange views, all for the sake of the further development of these areas of law in the Arab region.

The Yearbook’s official website provides the following description:

The Arab Yearbook of Public & Private International Law is dedicated to exploring questions of public international law and private international law throughout the Arab World. The Yearbook has a broad intellectual agenda. It publishes high-quality scholarship submitted by authors both from the Arab region and across the world. The Yearbook publishes articles on any questions that relate to general public international law and its sub-fields, such as the law governing the use of force, international humanitarian law, human rights law, international economic law, the law of the sea, environmental law, and the law and practice of international organizations. The Yearbook also welcomes submissions on any topic of private international law, conflicts of laws, investor-state arbitration, and commercial arbitration.

 The Yearbook publishes scholarship that applies various jurisprudential and methodological perspectives. In addition to doctrinal scholarship, the Yearbook publishes research that explores legal questions from economic, critical, historical, feminist, and sociological perspectives, or that uses a diverse range of methodologies, such as empirical research and inter-disciplinary approaches that explore intersections between law & political science, law & international relations, and law & religion.

 The Yearbook publishes primary materials on international law in the Arab World. It provides a forum to preserve a permanent record of official positions of Arab governments, Arab inter-governmental and sub-regional organizations, international organizations active in the Arab region, in addition to materials, reports, and documents prepared by civil society and non-governmental organizations on questions of international law. In addition, the Yearbook publishes judicial materials that relate to international law in the region, including judgments of international courts and quasi-judicial bodies, such as human rights monitoring bodies, decisions of arbitral tribunals, including from investor-state and commercial arbitration panels, and judgments of national courts.

 

For its inaugural volume, the Yearbook has issued a call for submission:

Submission Deadline: October 1st.

Word limits: 10,000-15,000 words for articles;

7,000-10,000 words for notes or comments;

2,000-3,000 words for book or case reviews

(all word counts are inclusive of footnotes).

 Submission Address: helal.18@osu.edu

 

For details, please check the Yearbook’s website here and here.

 

Best wishes and good luck to the initiators of this wonderful project.