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

Beyond triggering global health crisis, the extremely rapid growth of COVID-19 pandemic has exacerbated significant disruptions for global order, as well as brought drastic effects on international commerce and trade. Interruptions in business transactions have become inevitable due to challenges in meeting contractual obligations, terminations and reliance on frustration or force majeure clauses. All these have given rise to considerable cross-border disputes and necessitated reasonable case management strategies.

Like other states the UK government has also taken several steps for fighting the spread of coronavirus and among other legislative measures recently adopted the Coronavirus Act 2020. The Act justifies giving extraordinary powers to the government in a broad spectrum of areas including the work of the courts and tribunals for navigating uncertainties and minimising potential risks for the judiciary. In the light of substantial significance of access to fair trial and administration of justice amid increasing coronavirus-related claims this post focusses on the implications of the outbreak for civil proceedings. While English courts would maintain ongoing or potential cases parties should expect the recent changes in procedural law and adapt new practices regarding filing the documents and attending the hearings.

On 19 March 2020, Lord Chief Justice delivered a message to the Civil and Family Courts about continuation of their work as a vital public service with a particular note that this would not be ‘business as usual’.  Following the nationwide lockdown that was officially declared across the UK on 23 March 2020 the Coronavirus Bill received Royal Assent on 25 March 2020 and became a Parliamentary Act. The key provisions affecting judicial proceedings are laid down in Sections 53-57 on expansion of video and audio technology by criminal and magistrates’ courts and public participation in live civil as well as criminal proceedings. As the Department of Health and Social Care has addressed these measures aim at keeping the courts open to the public, continuation of the proceedings without the need for the participants to attend in person and refraining delays in the administration of justice.

On the same day the HMCTS published an operational summary on avoiding physical hearings and arranging remote trials wherever possible, introduction of social distancing measures in courts and tribunals upon continuation of the ongoing proceedings. Since then there has been a daily summary of HMCTS operational position provided during the pandemic. With the purpose of consolidating the work of courts and tribunals into fewer buildings since 30 March 2020 there have been priority courts and tribunal buildings open to the public for essential face-to-face hearings, some staffed courts without being open to the public and temporarily suspended courts. The work of the courts and tribunals has been prioritised and divided into categories.

To further promote the use of technology by judiciary several pandemic-related updates were made to the Civil Procedure Rules. Practice Direction 51Y promotes audio and video hearings and open justice. It differentiates private hearings which can be recorded and accessed only in a manner directed by the court and public trials which are accessible by public and media representatives. It further states that the Direction ceases to have effect on the date on which the Coronavirus Act 2020 ceases to have effect according to Section 75 of that Act. Indeed, Section 89 determines the expiry date as the end of the 2 years’ period beginning with the day on which it is passed provided no alteration is made in this regard. Expecting audio and video hearings will still remain part of the procedure post-pandemic similar rules should be provided.

Practice Directions 51Z and 51ZA related to stay of possession proceedings and extension of time limits have been inserted into the CPR. Aiming at delaying possession proceedings, PD 51Z provides that they are stayed for a period of 90 days from 27 March 2020. The rules will cease to apply on 30 October 2020 which might not be reasonable taking into account the start date of the stay and its duration. If the rules apply only to those possession proceedings that have already been brought under CPR Part 55 and seeking to enforce an order for possession, would it be reasonable to set the expiry date of the PD as 30 October 2020? Put differently would the rules cover those claims that are brought between 27 March 2020 and 30 October 2020? Presumably yes, in spite of the current text of the direction lacks a clear indication.

PD 51ZA on the other hand enables the parties to agree an extension up to 56 days without formally notifying the court (rather than the current 28 days). Given that it has been agreed by the court any extension of more than 56 days is also possible. Similar to PD 51Z this Direction also ceases to have effect on 30 October 2020. Even if the Coronavirus Act is still in force for the initially determined two years’ period any extension between 30 October 2020 and 25 March 2022 would not be permitted which might bring controversies.

It should be emphasized that remote hearings and use of technology at trial is not entirely novel. Long before the pandemic and emergency act, English judges have already had wide discretion to hold the hearings and receive evidence by phone or other means of direct oral communication in civil proceedings. Video conferencing and telephone hearings in civil proceedings were introduced by the Access to Justice Act 1999 on the basis of Lord Woolf’s report reviewing civil justice system and discretionary powers of the judges to provide flexible, effective, less costly and less time-consuming litigation. Section 3.1(2) of the CPR determines case management powers of the judges and relevant procedure for telephone hearings and video conferencing is presented in Sections 6 and 7 of Practice Direction 23. The CPR also contains judicial guidance on the use of video conferencing in the civil courts (Annex 3 to the Practice Direction 29.1, which was referred by Barling J in Haider v Syed [2013] EWHC 4079 (Ch)).

It is also worth to recall Practice Direction 51V here which has established “the Video Hearings Pilot Scheme” running between 2 March 2020 and 30 November 2020. Regardless of its limited application only to the procedure setting aside default judgments by the court via an internet-enabled video link (“a video hearing”), together with the outcomes of the recent changes and gained experience they can contribute building a solid basis and practice for future proceedings.

Thus, notwithstanding familiarity with the use of technology in civil proceedings prior to the pandemic and Coronavirus Act, it was applied only to partial extent in relation to the receipt of the evidence from witnesses abroad and in person hearings have been encouraged as a traditional mode of conduct. Upon a sudden reversal of the circumstances face-to-face hearings are neither safe nor practically possible which endorses fully remote hearings. In his message on 19 March, Lord Chief Justice delivered that the procedural rules have already enabled flexible use of the telephone and video hearings by the civil and family courts, however, there might still be legal impediments. Therefore, the HMCTS is expanding availability of diverse technological means including phones, video facilities and Skype. As of the latest updates, besides Skype, Cloud Video Platform (CVP) and BT MeetMe have started to be used in some civil and family hearings.

In response to the COVID-19, the English Commercial Court had its very first fully remote hearing in the case National Bank of Kazakhstan the Republic of Kazakhstan v The Bank of New York Mellon SA/NV London & Ors [2020] EWHC 916 (Comm) on 19 March 2020. The virtual trial involving participants and witnesses from different jurisdictions lasted for four days, publicly accessible livestreaming and daily transcripts were provided in line with the legislation. Mr Justice Teare confirmed that the default position is to avoid adjournments where it is possible and in this regard parties’ cooperation and flexibility are extremely valuable.

As stated, “The courts exist to resolve disputes and, as I noted this morning, the guidance given by the Lord Chief Justice is very clear. The default position now, in all jurisdictions, must be that hearings should be conducted with one, more than one, or all participants attending remotely…” Such a policy aims at prevention of uncertainties arising out of the cases adjourned together with the filed ones which would have been waiting for the trials and getting hardly manageable.

The same approach was followed by the High Court in the case Re One Blackfriars Ltd, Hyde v. Nygate [2020] EWHC 845(Ch) where Mr John Kimbell QC refused the application of the claimants to adjourn, instead ordered the parties to prepare for trial. As commented, “The message is that as many hearings as possible should continue and they should do so remotely as long as that can be done safely”.

Advantages of technological development are evident owing to cost-effectiveness and time friendliness of the remote hearings.  It not only enables participation of the parties or witnesses who are not able to travel within or outside places of their residence but also avoids delays and unnecessary costs except those resulting from the use of technology.

Nevertheless, there are still many issues that might arise and become hurdles for the operation of the proceedings. One issue is related to the fact that not everybody would be able to apply software and cope with the technological means. Although different guidance notes on how to join telephone and video hearings have been provided this does not prevent issues arising from impossibility of using technology by some users due to their unawareness, incapacities or physical conditions. That necessitates sensitivity and presumably creativity for seeking further options. Mr Justice MacDonald highlighted the “Press Here Stupid” guidance as known in the IT circles and asserted that, besides the parties the judiciary also contains a cohort of judges who may not use the software or lack necessary equipment for the operation of a remote hearing.

The HMCTS has provided a local helpline for technical support to join an audio or video hearing. In this regard probably the SIAC or LMAA experience could also be applied and trainings of the remote technology specialists and staff could be designated.

Unpresented parties such as homeless, chaotic due to alcohol or drug use or having mental health issues may also have similar difficulties to attend proceedings remotely by video or telephone. Likewise, not all the participants might have suitable facilities, hard or software utilities.

Another issue arising out of the remote hearings is related to the potential risks for privacy of the parties, as well as judges. The Protocol dated to 20 March 2020 (slightly revised on 26 March 2020) regarding remote hearings considered the communication platforms as non-exhaustive which would enable parties and the court to negotiate in this regard. Yet, confidentiality and privacy of the hearings remain under the risk of detriment. Likewise, backlogs, loss of network and cut-offs in connection are irresistible obstacles for the process. These necessitate extra expenses on technology platform licencing, data protection and more effective equipments for remote hearings.

Different jurisdictions might have varying approaches towards the matter. Section 53 the Coronavirus Act 2020 determines that recording a broadcast from the court or transmission of the proceeding materials by the participants of the live hearings shall count for an offence. By Schedule 25, the Act further inserted special provisions on the use of live video or audio links, public participation and offences of recording to the Courts Act 2003 (Section 85A-85D) and Tribunals, Courts and Enforcement Act 2007 (Section 29ZA-29ZD).

As it had already been presented in section 32 of the Crime and Courts Act 2013, private hearings shall be recorded in a manner directed by the court and the court may decide the hearing to be broadcasted and recorded in a wholly audio or video manner. The recordings might be accessed by the application of any person with the consent of the court, otherwise making or attempting to make any unauthorised recording or transmission of an image or sound during in relation to the broadcast might bring an offence of a person. Except making or use of sound recordings for purposes of official transcripts of proceedings, such unauthorised recordings might bring a contempt of a court in accordance with Section 9 of the Contempt of Court Act 1981.

Regardless of these provisions nothing can guarantee that there will not be any unauthorized recording of the parties or judges or social media posts. Relevant to this, copyright status of the live stream is not entirely clear. This was also raised in National Bank of Kazakhstan case and can be found in the transcript of the second day of the remote hearings. Presumably the court owns copyright since any operation regarding the recordings or streaming needs to get authorization by that court. It would be necessary to get parties’ consent prior to the actual hearings potentially by a particular protocol while filing documents electronically.

The new way of the hearings will hardly remove the traditional charisma of the courts and in person trials. On the other hand, remote hearings might hardly be possible in complex cases containing mass documentations, third parties and cross-examination of many witnesses. Still, digitisation will presumably continue even after the crisis ends.

In this regard, encompassing actions and a solid strategy are crucial for fixing the discussed problems and achieving constant benefits of technology. Even though implementation of a new initiative would most probably take longer amid timely urgency of the matter lessons could be learned from the status quo as a testing stage, a reasonable action plan could be established and applied post-crisis to achieve long-term effectiveness.

The intense use of technology at trials will advance the already existing fundamental principle of open justice in judiciary even after the crisis. While taking new initiatives judiciary might consider benefits that have already been offered by the ODR procedures for facilitating settlement and resolution of the disputes. Besides creative use of technology, cooperation of the parties with the court and compromise to narrow the disputes would be encouraged.

Along with the legislative measures taken within the borders, a global mechanism providing guidelines on remote hearings and accessible by the states would be useful for certainty and uniform standards at an international level. In this regard, the arbitration community (e.g. ICC, SIAC, ICSID) has been quite rapid in drafting case management updates and guidance documents for minimizing the impact of the COVID-19.

Apart from coronavirus guidelines prepared by various arbitration organizations (e.g. ICC, SIAC), another step in this regard has been the recent Seoul Protocol on Video Conferencing in International Arbitration achieved by Korean Commercial Arbitration Board (KCAB). While looking for innovations particular attention should be placed on the European practice. Videoconferencing has been a widely used tool in Europe both at national and regional levels on the basis of different legal frameworks including the EU regulations and protocols. “Videoconferencing” project has become an integral part of the European e-Justice action plan and the Council and Commission regularly collect and publish good practice and examples of the Member States. These might be helpful while preparing a long-term action plan notwithstanding withdrawal of the United Kingdom from the Union.

Last but not least, the quote of the ancient Greek poet, Euripides is worth to recall here: “Nothing has more strength than dire necessity”. Although the pandemic has brought enormous impacts on the justice systems and resulted in significant uncertainties in the proceedings every cloud has a silver lining. As many others the UK government has also taken serious measures to combat the crisis and reduce its negative effects on judiciary. However, numerous challenges at the testing stage have been eye-openers for the government to gain more insight of the national, regional or international systems, generate more innovative and creative solutions and develop a strategic action plan for the advanced use of technology at trials. These will most likely lead to inevitable revisions of the CPR rules and related statutes in the near future.

The JURI Committee of the European Parliament has now released its draft report of 27 April 2020 (Draft report with recommendations to the Commission on a Civil liability regime for artificial intelligence, PE650.556v01-00). One notes Article 9 within the suggested Proposal for a regulation on liability for the operation of Artificial Intelligence-systems:

“National provisions on compensation and limitation period

Civil liability claims brought in accordance with Article 8(1) shall be subject, in relation to limitation periods as well as the amounts and the extent of compensation, to the laws of the Member State in which the harm or damage occurred”.

The Court of Justice delivered last week (7 May 2020) its judgment in Case C‑641/18 (LG and Others v Rina SpA, Ente Registro Italiano Navale), which is about Article 1(1) of Brussels I.

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

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

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

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

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

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

Key points of the reasoning: “the mere fact that certain powers are delegated by an act of a public authority does not imply that those powers are exercised iure imperii” (at 39), “the fact that certain activities have a public purpose does not, in itself, constitute sufficient evidence to classify them as being carried out iure imperii, in so far as they do not entail the exercise of any powers falling outside the scope of the ordinary legal rules applicable to relationships between private individuals” (at 41) and “the fact that, having regard to their objective, some acts are carried out in the interest of a State does not, in itself, result in the operations at issue in the main proceedings being carried out in the exercise of public powers” (at 42).

Source: here

The Court of Justice delivered last week (7 May 2020) its judgment in joined cases C‑267/19 and C‑323/19 (Parking d.o.o. v Sawal d.o.o. (C‑267/19), and Interplastics s. r. o. v Letifico d.o.o. (C‑323/19)). The judgment is available in all EU official languages (save Irish), albeit not in English. Here is the French version :

Question : « Il convient […] de comprendre que, par ses deux questions, qu’il y a lieu d’examiner ensemble, la juridiction de renvoi demande, en substance, si, dans l’hypothèse où les décisions qu’elle rendra relèvent du champ d’application du règlement no 1215/2012, l’article 18 TFUE et l’article 47 de la Charte doivent être interprétés en ce sens qu’ils s’opposent à une réglementation nationale habilitant les notaires, agissant dans le cadre des compétences qui leur sont dévolues dans les procédures d’exécution forcée sur le fondement d’un document faisant foi, à rendre des ordonnances d’exécution qui, ainsi qu’il ressort de l’arrêt du 9 mars 2017, Pula Parking  (C‑551/15, EU:C:2017:193), ne peuvent pas être reconnues et exécutées dans un autre État membre ».

Réponse : « L’article 18 TFUE et l’article 47 de la charte des droits fondamentaux de l’Union européenne doivent être interprétés en ce sens qu’ils ne s’opposent pas à une réglementation nationale habilitant les notaires, agissant dans le cadre des compétences qui leur sont dévolues dans les procédures d’exécution forcée sur le fondement d’un document faisant foi, à rendre des ordonnances d’exécution qui, ainsi qu’il ressort de l’arrêt du 9 mars 2017, Pula Parking (C‑551/15, EU:C:2017:193), ne peuvent pas être reconnues et exécutées dans un autre État membre ».

Source : here

I reported earlier on complex enforcement issues concerning SAS Institute v World Programming. In [2020] EWCA Civ 599 SAS Institute Inc v World Programming Ltd Flaux J gives an overview of the various proceedings at 4:

The dispute between the parties has a long history. It includes an action brought by SAS against WPL in this country in which SAS’s claims were dismissed; a decision by WPL, following an unsuccessful challenge on forum non conveniens grounds, to submit to the jurisdiction of the North Carolina court and to fight the action there on the merits; a judgment in favour of SAS from the North Carolina court for some US $79 million; an attempt by SAS to enforce the North Carolina judgment in this jurisdiction which failed on the grounds that enforcement here would be (a) an abuse of process, (b) contrary to public policy and (c) prohibited by section 5 of the Protection of Trading Interests Act 1980 (“the PTIA”); and a judgment from the English court in favour of WPL for over US $5.4 million, which SAS has chosen to ignore.’

A good case to use therefore at the start of a conflicts course to show students the spaghetti bowl of litigation that may occur in civil litigation. There are in essence English liability proceedings, decided in the end following referral to the CJEU (Case C-406/10); North Carolina liability proceedings, in which WPL submitted to jurisdiction after an earlier win on forum non grounds was reversed on appeal and the NC courts came to the same conclusions as the English ones despite a finding they were not (clearly) under an obligation to apply EU law; next, an SAS enforcement attempt in England which failed (with permission to appeal refused): my earlier post reviews it; next, enforcement proceedings of the NC judgment in California. That CAL procedure includes an assignment order and WPL sought an anti-suit injunction to restrain SAS from seeking assignment orders as regards “customers, licensees, bank accounts, financial information, receivables and dealings in England”: it was not given the injunction for there was at the time no CAL assignment order pending which could be covered by anti-suit. Currently, it seems, there is, and it is an anti-suit against these new assignment orders which is the object of the current proceedings.

At 59 ff follows a discussion of the situs of a debt; at 64 ff the same for jurisdiction re enforcement judgments, holding at 72

Applying these internationally recognised principles to the present case, the North Carolina and California courts have personal jurisdiction over WPL but do not have subject matter jurisdiction over debts owed to WPL which are situated in England. That is so notwithstanding that the losses for which the North Carolina court has given judgment were incurred by SAS in the United States. Nevertheless the effect of the proposed Assignment Order would be to require WPL to assign debts situated in England to SAS which would at least purport to discharge its customers from any obligation owed to WPL, while the effect of the proposed Turnover Order would be to require WPL to give instructions to its banks in England which would discharge the debts situated in England currently owed by the banks to WPL. In substance, therefore, the proposed orders are exorbitant in that they affect property situated in this country over which the California court does not have subject matter jurisdiction, thereby infringing the sovereignty of the United Kingdom.

Which is later confirmed at 83. Consequently the earlier order is overturned: at 89: ‘it follows also that the judge’s conclusion that the Assignment and Turnover Orders were not “markedly exorbitant” was based upon a mistaken premise.’

The anti-suit and anti-enforcement applications are dealt with in particular with reference to comity, and largely granted with some collateral notices of intention by SAS not to seek a particular kind of enforcement.

Someone somewhere must have made partner on this litigation.

Geert.

Professor (and co-editor of this blog) Gilles Cuniberti has published a new article on SSRN, entitled Signalling the Enforceability of the Forum’s Judgments Abroad, where he addresses the already well documented issue of the rise of international commercial courts (and chambers), from a very specific point of view – that of the recognition of the local judgments abroad.

The long, already substantial introduction starts with what may look like a banal recollection

Private international law has traditionally been concerned with the recognition and enforcement of foreign judgments in the forum. In contrast, private international law does not address the recognition and enforcement of the judgments rendered by the courts of the forum in other jurisdictions.

But proves to be the perfect way to open the rich elaboration of thoughts. Indeed, as the author goes on saying, the customary lack of PIL rules dealing with the export of local decisions does not mean that States do not care for the fate of their judgments in other jurisdictions; they do. And while the assertion may surprise if one looks only at the limited success of all efforts to get to a multilateral convention on the enforcement of judgements, the broader view proves it is right. This wider picture points to what the author calls “a shift of paradigm”, where the new international commercial courts feature as main actors:

(i)n many parts of the world, adjudication began to be perceived as a business; a number of states established new courts, or new divisions in their courts, for the purpose of attracting judicial business (…) While these courts have different aims and goals, they all have in common the need to market themselves to potential users. And many have concluded that the enforceability of their judgments abroad is an essential dimension of their marketability.

From this point on, after some paragraphs on the New York Convention on the enforcement of arbitral awards, rightly recalling that the Convention does not guarantee enforcement of such awards, the article proceeds to document and assess the efforts made by international commercial courts to signal the enforceability of their judgments abroad. In a nutshell, three strategies have been developed to that effect:

The first and most obvious one has been to try to enter into agreements providing for the mutual enforcement of judgments of contracting states, which could serve the same function as the 1958 New York Convention for arbitral awards.

Secondly, in light of the limited scope of the 2005 Hague Convention, and with the 2019 Hague Convention not yet in force, alternative strategies have been developed. In this context, several international commercial courts are actively pursuing the conclusion of non binding documents with other courts suggesting that the judgments of the own forum would be enforced by the courts of other states. The aim of these bilateral or even multilateral memoranda, which clearly declare they do not constitute any kind of legislation, is basically to promote the mutual understanding of the law of the participating courts on enforcement of foreign judgments.

In addition, documents suggesting enforceability of judgments abroad are sometimes sought from private actors knowledgeable in the law of foreign judgments, such as academics or law firms. However, as Professor Cuniberti correctly points out, what such guides can bring in terms of signalling the enforceability of one’s courts decisions abroad may be disputed, and a little bit more is required if documents authored by private actors are to be accorded any signalling power.

The third strategy, so far limited to the courts on the Dubai International Financial Center, consist of converting judgments into arbitral awards.

The article ends up with a reflection on remedies in case of deceptive practice: if international commercial adjudication has become a business, with a number of courts acting as service providers – and as such, marketing their services- it would not be acceptable that they adopt strategies misleading potential customers. The article leaves quite open what the remedies should be. There may be, thus, a follow up.

The final version of this publication is included in the next issue of the Rivista di Diritto Internazionale Privato e Processuale.

Written by Oliver Dörr, University of Osnabrück

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

I. Companies – responsibility

1. As for commercial entities, international law is concerned, above all, with transnational or multinational companies. The term basically describes the conglomerate of commercial entities that are acting separately in at least two different countries and which are tied together by a regime of hierarchical coordination.

2. In times of „global governance“ the international legal concept of responsibility is undergoing a process of de-formalization and, thus, encompasses the violation of social behavioural expectations, which for companies may result from international standards that are not legally binding. The resulting responsibility is a legal one insofar as the law adopts those standards and attaches negative consequences to their violation.

II. Private persons and the law of international responsibility

3. Private companies may be held responsible under international law to the extent that they are either themselves bound by primary legal obligations (direct responsibility), or their business activities are regulated by States which, in doing so, are fulfilling their own international legal obligations (indirect responsibility). A State may just as well impose such regulation without actually being under an obligation to do so (e.g. the US Alien Tort Statute).

Private persons as subjects of international legal obligations

4. Private persons being themselves bound by international legal obligations pertain to the process of de-medatization, which established the legal personality of the individual under international law.

5. Sovereign States can, by concluding international treaties, create legal obligations for private persons, including private companies, directly under international law. The personal scope of this comprehensive law-creating power of States is delimitated by their personal jurisdiction under international law. Whether an individual treaty itself gives rise to legal obligations for private persons, is, just as the creation of individual rights, a matter of treaty interpretation.

6. Genuine legal obligations have evolved for private persons under international criminal law: Here, detailed primary obligations of private persons have developed that are linked to a specific regime of individual responsibility, in particular under the Statute of the International Criminal Court.

7. In contrast, the extension of international human rights obligations to apply directly between private persons is not yet part of the international lex lata. Individual texts pointing in that direction (such as art. 29 para. 1 of the Universal Declaration of Human Rights) are merely of a programmatic nature.

8. Genuine international legal obligations of companies can today be found in the rules regulating deep sea-bed activities (arts. 137, 153 para. 2 UN Convention on the Law of the Sea) and in various treaties establishing regimes of civil liability.

9. Obligations of private persons under international law, including those having direct effect within UN Member States, may also be created by the UN Security Council through resolutions under arts. 39, 41 of the UN Charter.

10. It is fairly uncertain whether the initiative, currently being undertaken within the UN Human Rights Council, to adopt a „legally binding instrument“ encompassing direct human rights liability of private companies, will ever have a chance of becoming binding law.

11. To the extent that there actually are primary obligations of private persons under international law, a general principle of law requires their violation to result in a duty to make reparation. Only in exceptional circumstances could the rules of State responsibility be transferred to private persons.

Obligations to establish the responsibility of private persons

12. An indirect responsibility under international law applies to undertakings via the international legal obligation of States to criminalize certain activities, e.g. in respect of waste disposal, bribery in foreign countries, organized crime and corruption.

Responsibility of private persons under autonomous national law

13. Provisions in national law that autonomously sanction private acts for international law violations bridge with their own binding effect the fact that the private person is not itself bound by the international legal norm.

14. The French Law No. 399-2017 on the plan de vigilance is far too general and vague to serve as an example for an (indirect) international legal reporting responsibility. The same applies to the CSR directive of the European Union of 2014.

III. Responsibility on the basis of non-binding rules of conduct

Behavioural governance without legally binding effects

15. The values contained in certain international law principles shape some social behavioural expectations that are summarized today in concepts of corporate social responsibility (CSR). As a matter of substance, those expectations relate to human rights, the environment, conditions of labour and fighting corruption.

Processes of rule-making

16. The discussion is mainly focused on certain international, cross-sector corporate codes of conduct, such as the OECD Guidelines for Multinational Enterprises (1976), die ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (1977), the UN Global Compact (2000) and the UN Guiding Principles on Business and Human Rights (2011).

17. In particular, with regard to human rights and environment, those rules are extremely unspecific, which means that here, law merely serves as a backdrop in order to endow social behavioural expectations with moral authority.

Responsibility by reception

18. In order to adopt and implement those business-related standards, basically all instruments of law-making and application can be used, as long as they impose normative requirements on companies and their activities. Legal certainty standards under the rule of law, as well as the rules of international law on the jurisdiction of States, can limit the reception.

19. Non-binding standards could be implemented, for example, via the legal regimes of State aid (in particular with respect to export finance), public procurement, investment protection and the rules on civil liability. So far, however, the international standards on business conduct are rarely being implemented in a legally binding manner.

IV. Conclusion

20. If the distinction of law and non-law is to be maintained, responsibility of companies in international law is a theoretical possibility, but of little practical relevance: Only in very specific circumstances are private companies themselves subjected to international legal obligations; moreover, it is similarly rare that „soft“ international standards of conduct are being adopted by „hard“ law and thereby made into specific legal duties of companies.

21. Behavioural standards that determine the international debate on CSR assign a mere „backdrop function“ to the law, as they neither identify concretely the international legal norms referred to, nor differentiate them properly. In that context, companies are simply required to publicly declare their commitment to „the good cause“, which results in duties to take precautionary measures, to exercise transparency and to publish reports.

22. That is why environmental protection, human rights etc. in relation to the activities of private companies is still mainly the responsibility of States. Tools that exist in international law in this respect, such as the rules of attribution or protective duties, must be adapted and enhanced, in order to achieve adequate solutions for detrimental business conduct on the basis of State responsibility.

Full (German) version: Oliver Dörr, Unternehmensverantwortlichkeit im Völkerrecht, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 133 et seq.

Gathering (or rather e-gathering) professors and researchers from Brazil, Argentina, Uruguay, Mexico, Spain, and Portugal, a series of webinars is taking place from today until 22 May, under the general topic of PIL and Covid-19: Mobility, Commerce and Challenges in the Global Order.

Subtopics are:

I – PIL, International Institutions and Global Governance in times of Covid-19

II – Protecting persons in mobility and Covid-19: Human Rights, Families, Migrants, and Consumers

III – International Commerce and Covid-19: Global Supply Chains, Civil Aviation, Technologies & Labor

Full programme and more information: here.

The latest edition of the Brussels Agenda, published by the Joint Brussels Office of the Law Societies, features three interesting contributions concerning the impact of Brexit on Private International Law: Will the UK rely more on private international law in the future?, by Michael Clancy; Cross Border Mediation in a Post Brexit World, by Peter Causton; and Recognition and Enforcement of judgments in Civil and Commercial Matters, a note on the UK accession to the Lugano Convention and on further possible developments, namely with respect to the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgements in Civil and Commercial Matters.

The three papers are a very reliable source for the upcoming developments in the UK, given that they’re coming straight from the horse’s mouth.

With respect to the developments on a future access of the UK to the Lugano Convention, Matthias Lehmann has posted recently a piece on this blog (UK Applies for Accession to Lugano Convention). In addition, Giesela Rühl has uploaded an article on Private International Law Post-Brexit on SSRN, which was reported by Marion Ho Dac here.

The first issue of 2020 of the Rivista di diritto internazionale privato e processuale (RDIPP, published by CEDAM) was just released. It features:

Antonietta Di Blase, Professor at the University of Roma Tre, Sull’interpretazione delle convenzioni e delle norme dell’Unione europea in materia di diritto internazionale privato (‘On the Interpretation of the European Private International Law Conventions and Provisions’; in Italian)

• The paper provides an overview of the practice of international and national Courts relating to the interpretation of private international law conventions and EU rules, where uniform approach and autonomy from the national legal orders of Member States are construed as fundamental criteria. Some elements, especially drawn from the Court and the Italian practice, makes it evident that the national judicial organs have substantially endorsed the interpretation by the Court of Justice of the EU of the acts adopted within the framework of the judicial cooperation in civil matters. Possible gaps in EU rules could be overcome through interpretation – in keeping with the main human rights principles – taking into account that sometimes the legislation in force in the Member States follow a different approach, as in the case of family law. Finally, the paper addresses problems connected to the interpretation of conventions with Third States, also taking into account the consequences of the UK’s exit from the European Union.

Gilles Cuniberti, Professor at the University of Luxembourg, Signalling the Enforceability of the Forum’s Judgments Abroad (in English)

• The aim of this article is to document and assess the efforts made by international commercial courts to signal the enforceability of their judgments abroad. To that effect, three strategies were developed. The first and most obvious one was to enter into agreements providing for the mutual enforcement of judgments of contracting States which could serve the same function as the 1958 New York Convention for arbitral awards. Yet, as the 2005 Hague Convention has a limited scope and the 2019 Hague Convention is not yet in force, alternative strategies were identified. Several international commercial courts are actively pursuing the conclusion of non-binding documents with other courts or even law firms suggesting that the judgments of the forum would be enforced by the courts of other States. Finally, one international court has also explored how it could convert its judgments into arbitral awards.

Laura Baccaglini, Associate Professor at the University of Trento, L’esecuzione transfrontaliera delle decisioni nel regolamento (UE) 2015/848 (‘Cross-Border Enforcement of Decisions Pursuant to (EU) Regulation 2015/848’; in Italian)

• This paper addresses the cross-border enforcement of insolvency decisions in Europe. Notably, it examines how the claims brought in the interest of an insolvency proceeding opened in one Member State can be pursued in other Member States. The topic refers to EU Regulation 848/2015 that, as of 26 June 2017, replaced EC Regulation No 1346/2000 without introducing any significant new features as regards the circulation of such judgments, which remain subject to a system of automatic recognition. The reference made by such Regulation to Regulation No 1215/2012 makes the enforcement of those judgments equally automatic, without the need for prior exequatur by the court of the State addressed but only requiring the delivery of a certificate of enforceability by the court of the State of origin. The problem is examined by taking the liquidation procedure as a model, assuming that it was opened in a Member State other than Italy, where the insolvency practitioner needs to recover assets that have been disposed of by the debtor, after the opening of the procedure. The question is addressed as to how the insolvency practitioner can prevent the continuation of individual enforcement proceedings still pending and whether he can intervene to have the assets liquidated, withholding the proceeds. More generally, the problem arises as to which rules govern the liquidation of assets located in Italy and belonging to the debtor. In all these cases, the issue is whether the foreign judgment should be enforced and, if so, how it should be enforced.

The following comment is also featured:

Giovanna Adinolfi, Professor at the University of Milan, L’accordo di libero scambio tra l’Unione europea e la Repubblica di Singapore tra tradizione e innovazione (‘The Free Trade Agreement between the European Union and the Republic of Singapore between Tradition and Innovation’; in Italian)

• The Free Trade Agreement (FTA) with Singapore entered into force on 21 December 2019. It is one of the so-called new generation treaties negotiated and concluded by the European Union within the framework of the trade policy strategy launched in 2006. The FTA is complemented by the Investment Protection Agreement (IPA), signed in 2018 and whose entry into force requires the ratification by all EU Member States, in addition to the EU and Singapore. The overall purpose of the contribution is to assess to what extent the parties to the two agreements have not overlooked the dense network of other treaties and conventions that already govern their cooperation in economic matters. Indeed, the substantive provisions and the dispute settlement mechanisms established under the FTA and IPA have been inspired by these external sources and by their relevant case law. The analysis focuses, first, on the FTA provisions on trade in goods and services, establishment, subsidies, government procurement and intellectual property rights (para 2-6). Thereafter, the IPA is taken into consideration for the purposes of identifying possible overlaps with the FTA rules on establishment (para 7). Finally, focus is placed on the envisaged dispute settlement mechanisms, in view of the role they may play for a proper safeguard of the businesses’ interests (para 7). This issue arises because of the provisions included in both the FTA and the IPA excluding the direct effects of the two agreements in the parties’ legal order. Against this framework, the investor-State dispute settlement mechanism established under the IPA is called on to play a crucial role, also in the light of the detailed provisions on the enforcement of awards under art. 3.22 IPA.

In addition to the foregoing, this issue features the following book review by Angela Lupone, Professor at the University of Milan: Nora Louisa Hesse, Die Vereinbarkeit des EU-Grenzbeschlagnahmeverfahres mit dem TRIPS Abkommen, Mohr Siebeck, Tübingen, 2018, pp. XI-274.

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

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

Geert.

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

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

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

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

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

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

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

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

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

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

Geert.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Written by Tobias Lutzi, University of Cologne

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

General Issue

Issue 12.2 | Winter’20

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

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

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

Manuscripts may be submitted via e-mail or ExpressO. For further information about the Journal, please click here. For submission guidelines, please click here.

In case of any queries, please feel free to contact us at: editors@tradelawdevelopment.com

LAST DATE FOR SUBMISSIONS: 15 August, 2020

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

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

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

Geert.

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

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

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

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

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

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

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

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

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

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

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

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

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