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In July 2018, Professors Claudia Schubert (then University of Bochum, now Hamburg), Yuanshi Bu and Jan von Hein (both University of Freiburg) organised a comparative, Chinese-German symposium on the recent codification of the general principles of Chinese private law and their implications for freedom of contract (including choice of law) in Freiburg. The contributions to this conference have now been published in a special edition of the German Journal of Chinese Law (Zeitschrift für Chinesisches Recht [ZChinR]) Vol. 26 No. 1 (2019). The full issue is available (for subscribers) here. All the articles are in German, but the authors have kindly provided the following English abstracts:

Franz Jürgen Säcker: The Development of Civil Law in Accordance with the Constitutional and Economic Order (§ 1 General Part of the Chinese Civil Code)

The article compares the General Part of the German Civil Code with the General Part of the Chinese Civil Code. The author positively assesses the fundamental-rights-related provisions at the top of the Chinese Civil Code, their serving as ideal guiding principles on interpretative matters. Further, he welcomes the inclusion of intention and fault as relevant bases of obligations. The structure and system of the General Part of the Chinese Civil Code is very similar to that of the German Civil Code. However, legal uncertainties and doubts remain here as well, as shown by the example of regulations on usury.

BU Yuanshi: The Principle of Legal Equality

The legal equality of all civil law subjects in China has been codified in § 2 of the General Part of the People’s Republic of China’s Civil Code. The article conveys the significance of the codification by detailing the difficulties in finding a consensus and agreeing upon a choice of words for § 2 GPCL on the one hand and §§ 4 and 113 GPCL on the other. The purpose and content of the codification are clarified in particular by a comparison to the earlier General Principles of Civil Law. Since the principle of legal equality was already entailed in the General Principles of Civil Law, the main function of § 2 GPCL is one of consolidation. Such a function also appears to be of greater significance in light of China’s legislative history. The codification of § 2 GPCL is criticized with regard to the separation of civil and administrative law. However, a comparison to foreign codifications justifies such a separation. The true significance of § 2 GPCL lays in both its “ripple effect” on other codifications as well as in its justiciability. The principle of legal equality has penetrated into various laws, whereas the application of the principle of equality by courts is still debated in legal literature. Nonetheless, the principle has served as grounds for various judgements, some of which were announced by the SPC itself.

Andreas Engert: Contractual Freedom vs. Contractual Justice – §§ 5 and 6 of the General Part of the Civil Code of the People’s Republic of China

The article examines the relationship between the principles of contractual freedom and justice as enshrined in the new General Part of the Chinese Civil Code. To this end, it considers the contract theory of German legal scholar Walter Schmidt-Rimpler. According to this theory, contractual freedom is merely a means of creating a “correct” (just) regulation of a contractual exchange between parties. However, the free bargaining process does not guarantee that the resulting contract will be perfectly just. Therefore, it seems obvious at first glance that the contract should be subject to comprehensive judicial review. Schmidt-Rimpler objected to such far-reaching interventions as a serious threat to legal certainty. The article elaborates on this claim in more detail. It thus provides a reason why judicial review of a contract must remain narrowly limited even if freedom of contract is only a means to the end of contractual justice.

ZHANG Shuanggen: The Principle of Good Faith in Chinese Civil Law

The article focuses on two aspects in relation to the topic of good faith. First, the state of the current commentary on the Chinese ATZR is briefly presented and evaluated against the yardstick of German legal commentary. Second, individual questions typical of the commentary on § 7 ATZR and the principle of good faith are addressed, such as whether a “special rights relationship” is a prerequisite for the application of Section § 7 ATZR, and how the relationship between the principle of good faith and other individual legal institutions should be understood.

Claudia Schubert: The Principle of Good Faith and Fair Dealing (§§ 6, 7 AT ZGB)

Good faith and fair dealing is a basic principle in German and Chinese civil law. Whereas the German Civil Code does not expressly regulate the principle and relies instead on a general clause in paragraph 242, Chinese law specifies the principle and its manifestations. In both countries the principle of good faith limits the exercise of rights and creates individual justice on the basis of a balancing of interests. Unlike German law, the Chinese Civil Code includes a separate principle of iustitia commutativa. Therefore, the principle of good faith and fair dealing is not completely congruent in both countries.

FENG Jieyu: Public Law Limitations on the Freedom of Contract – A Commentary on § 8 General Part of the Chinese Civil Code

In § 8 of the General Part of the Chinese Civil Code (GPCC), which originated from § 8 of the General Principles of Chinese Civil Law and § 7 of the Contract Law, illegality and public morality are regulated. Compared to the German BGB, it is a special feature of § 8 GPCC that illegality and immorality are regulated in the same paragraph. This reflects the discussion in China about the relationship between prohibitive legal rules and public morality. As a principle, § 8 GPCC is specified in the field of contract law by § 52 No. 4 and 5 Contract Law. The interpretation of “law” in the sense of § 8 GPCC and § 52 No. 5 Contract Law encountered problems in the application of law. Legal theory and legal interpretations in China seek to limit the scope of legal prohibitions. In order to assess the validity of a contract, recent Chinese theory creates a flexible system comprising eight evaluative elements, e.g. the degree to which a contract has been fulfilled.

WANG Hongliang: Public Morality and Contractual Penalties

This article first discusses the principle of public morality. Any legal transaction which violates public morality is void. Thereafter, it is analysed how the principle of public morality affects the concept of contractual penalties. In the view of the legislature, only penalties having the nature of a sanction are compatible with the principle of public morality. However, penalties having a punitive character are not prohibited, instead being only limited. Thirdly, the article considers how an agreed contractual penalty may be reduced. If the contractual penalty that the parties have agreed to is excessive, the judge can reduce it on application of a party. However, not infrequently the judges in China will apply the principle of public morality to a contractual penalty ex officio. In addition, the article looks at legislative provisions limiting usury and the permissible annual interest rate for loan agreements.

Jan Lieder / Philipp Pordzik: Environmental Protection as a Limitation of the Freedom of Contract

With § 9 of the General Part of the Civil Code of the People’s Republic of China, an obligation to protect the environment was incorporated into Chinese civil law. Henceforth, when legal entities conduct legal transactions, they must contribute to the conservation of resources and protect the ecological environment. This article considers the extent to which § 9 limits the contractual freedom guaranteed in § 5 of the General Part of the Civil Code. For this purpose, the content and scope of the provision will be subject to a critical-constructive analysis with recourse to comparable provisions in German law.

HE Jian: The Green Principle and Law and Economics in Chinese Civil Law

Article 9 of the General Provisions of the Chinese Civil Code (the green principle) aims not only at protecting the environment but also at preserving resources. Although environmental protection is a crucial part of the green principle, this aspect of the principle can rarely be applied in the context of public law or private law. The notion of preserving resources can be interpreted in different ways. A single dimension interpretation is quite common in practice, but it is erroneous. A comprehensive interpretation is synonymous with a minimization of social costs or a maximization of social wealth and leads to a law and economics approach. This must be the future of the green principle.

Phillip Hellwege: The Role of Common Practices under the General Part of the Chinese Civil Code

According to § 10 of the Chinese General Part of the Civil Code, a court may refer to common practices only where there are gaps in the law. Although on its face an easily grasped provision, its interpretation raises a number of problems. The present contribution formulates an interpretation from a comparative perspective. This viewpoint suggests that § 10 uses the term common practices in the meaning of customary law. Furthermore, it would be preferable to interpret § 10 such that customary law is of equal rank to statutory law, thereby allowing customary law to also trump non-mandatory statutory law.

ZHUANG Jiayuan: Draft-Commentary on § 79 Contract Law – An Excerpt

This article presents an excerpt from a commentary on § 79 Contract Law regarding the assignment of claims. In principle, legal claims constitute an important property asset and therefore can be assigned freely. Such an assignment transfers a legal right, which thus requires the assignor to hold legal title of the transferred claim. Reasons for limiting or prohibiting assignment can stem from the content of the claim at hand, the underlying circumstances or societal policies. In addition, parties often agree on the non-assignability of a certain claim. It is pointed out in this article that a prohibition or limitation of assignment also serves to limit the content of the claim itself. The doctrines of relative validity and similar theories are discussed, with focus also placed on the legal status of an assignor, an assignee and a debtor as well as on liquidity and the interests of third parties.

Jan von Hein: Limitations to Contractual Freedom in Private International Law (§ 12 General Part of the Chinese Civil Code)

Although the principle of territoriality has been codified in section 12, 1st sentence, of the General Part of the Chinese Civil Code (GPCC), it merely serves as a default rule in legal practice because, pursuant to the 2nd sentence of section 12 GPCC, the provisions of the Chinese Act on Private International Law and the judicial interpretation by the Supreme People’s Court take precedence. In the present article, the rules governing party autonomy in Chinese international contract law are compared with their counterparts in the Rome I Regulation and the Hague Principles on Choice of Law in International Commercial Contracts. Although EU and Chinese PIL differ in some technical details, their general approach to party autonomy and the laws that may be chosen is quite similar. Substantial differences exist with regard to consumer and individual employment contracts, but their practical impact appears to be limited. Insofar, the Hague Principles do not offer any guidance for further harmonisation because their scope is limited to B2B scenarios. Both the EU and the Chinese PIL rules are characterised by gaps and uncertainty as far as foreign overriding mandatory rules are concerned.

ZHU Xiaozhe: Party Autonomy and its Limitation when Determining the Law Applicable Law to Foreign Related Civil Relations

12 of the General Part of the new Chinese Civil Code originates from § 8 of the former General Principles of Civil Law. Specifying an absolute principle of territoriality, and thereby reflecting a traditional emphasis on sovereignty, the provision has been heavily criticized in terms of both theory and its legal application. In the view of the legislature, this problem should be remedied by China’s Code on Private International Law (PIL Code) taking precedence over § 12. China’s PIL Code states that the parties can exercise party autonomy so as to agree on the applicable law before or even after the formation of legal relationships. While the menu of eligible laws traditionally encompassed laws having a “substantial connection”to the case at hand, this requirement has been relaxed in § 7 of the Supreme People’s Court interpretive guidelines. Nonetheless, party autonomy is limited by overriding mandatory rules, public policy and notions of consumer protection.

In [2019] EWHC 1391 (QB) Percival v Moto Novu LLC Murray J considers the ins and outs of Article 38 Brussels Ia.

The dispute arose out of an aborted property transaction in Italy. Mr Teruzzi and Ms Puthod are husband and wife. La Fattoria was a “pass-through” company incorporated under Italian law and owned by Mr Teruzzi and Ms Puthod through which the property at the centre of the dispute was temporarily owned. It has since been dissolved.

By an Assignment of Rights of Judgment dated 28 March 2011 (but signed by the parties on 29 June 2011) and governed by the laws of the Commonwealth of Massachusetts (“the 2011 Assignment”), Mr Teruzzi assigned to the respondent, Motu Novu LLC (“Motu Novu”), a Delaware limited liability company, all of his right, title and interest in the Tribunal Judgment and the CA Milan Judgment. There is a dispute between the parties as to whether the 2011 Assignment was also effective to transfer the right, title and interest of Ms Puthod and La Fattoria in those judgments or, if not, whether that fact is relevant to the effectiveness of the registration.

At 8: Title III (the recognition and enforcement Title) involves two stages: i) under Article 39 of the Regulation, a first stage involving only the applicant, who must be an “interested party” and who applies ex parte to the relevant “court or competent authority” listed in Annex II to the Regulation to obtain an order for registration of the foreign judgment in order to permit enforcement locally; and ii) under Article 43 of the Regulation, a second stage, inter partes, during which the respondent (the judgment debtor) has the opportunity to raise certain limited objections by lodging an “appeal” (under English CPR rules this would be an application to set aside the order).

Under Article 44 of the Regulation, the order made on appeal under Article 43 is subject to a single further appeal on a point of law.

At 11: The ex parte stage of the registration process is governed by Articles 38 to 42 of the Regulation. The inter partes stage is governed by Articles 43 to 47. The remainder of section 2 of chapter III of the Regulation, Articles 48 to 52, deals with miscellaneous points that do not arise in this case, other than in relation to Article 48 (undue delay).

The process is further described in detail in the judgment. This is most helpful. Unless one has done one of these oneself, in all Member States the actual procedure is often shrouded in various levels of fog.

Of longer term authority interest is the discussion of the mistake made at an earlier stage, to register all 3 Italian judgments even though under Italian law only one of them was actually enforceable. At 44 Murray J in my view justifiably excuses this error: there is nothing ‘in the Regulation, or otherwise, (that) limits an applicant’s registration of a foreign judgment to the proportion to which he is entitled. I have seen no authority for that proposition.’

What is also of note is the concept of ‘interested party’. At 45:

The term “interested party” is not defined in the Regulation, but a person who is the assignee of a named judgment creditor, even where there are other named judgment creditors, is clearly an interested party. It seems to me fundamentally incompatible with the deliberately limited and mechanical nature of the registration process under chapter III of the Regulation that the registering court or competent authority should be required to enquire into the nature and extent of an applicant’s interest in a judgment, beyond what is necessary to establish prima facie that the applicant is an interested party.

I believe this is right. That the proceedings leading to the Italian Judgment were served on the Original Claimants on 17 January 2011, pre-dating the 2011 Assignment by over two months has therefore become irrelevant (at 48).

Intricate detail of Title III is not often litigated. This judgment is noteworthy.

Geert.

(Handbook of) EU private international law 2nd ed. 2016, Chapter 2, Heading 2.2.16.

Yesterday the Council of the European Union adopted the Council regulation on jurisdiction, the recognition and enforcement of decisions in matrimonial matters and the matters of parental responsibility, and on international child abduction (recast) (Brussels IIa regulation). For more information, see here.

As indicated on the Council’s website, the new rules will apply 3 years after the publication of the regulation in the Official Journal of the European Union.

For an English version of the regulation, see here (dated 24 May 2019). A Spanish version is available here (dated 24 June 2019).

The Institute for International Business Law of the University of Münster (Germany) will be hosting a conference on “Kollisionsrecht 4.0 – Künstliche Intelligenz, smart contracts und Bitcoins als Herausforderungen für das Internationale Privatrecht” on 8 November 2019 in Münster (Germany). The conference will examine the conflict of laws challenges arising from artificial intelligence and blockchain phenomena. Wolfgang Prinz (Fraunhofer Institute for Applied Information Technology FIT), will provide the indispensible technical background.

Speakers are Stefan Arnold, Bettina Heiderhoff, Matthias Lehmann, Jan Lüttringhaus, Gerald Mäsch and Michael Stürner. Further information and registration (before October 24th) at https://zivindico.uni-muenster.de/e/kollisionsrecht.

Not all of [2019] EWHC 1579 (Fam) RJ v Tigipko is easily understood. Detail is kept private and proceedings were conducted in camera for evident reasons. The case concerns an earlier order to return a child from the Ukraine, which was followed up by an unsuccessful appeal to the Ukrainian courts to recognise this order under the 1996 Hague convention. Application in England now is to beef up the return order.

What is of interest to the blog is the consideration of action against the maternal grandfather. From the little detail in the judgment one can infer that he is complicit in the parental kidnapping. What exactly is being asked from him is not made clear however it is not quite like an anti-suit but rather (at 21) ‘a mandatory injunction requiring a party to commence and act in a foreign suit in a certain way, which is an order.’ Here, at 20, Mostyn J would seem to be minded to apply CJEU C-159/02 Turner v Grovit to Hague Convention States.

That, I would suggest, is a bold move not supported by either authority or spirit of EU law. Full argument on it will be heard later.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.1.

In [2019] EWHC 960 (Ch) New Look Secured Issuer and New Look Ltd, Smith J at H applies the standing rules on jurisdiction over the scheme and other companies which I also signalled in Algeco and Apcoa (with further reference in the latter post). Against the scheme companies jurisdiction is straightforward: they are England incorporated.  Against the scheme creditors, English courts apply the jurisdictional test viz the Brussels I Recast (‘a’) Regulation arguendo: if it were to apply (which the English Courts have taken no definitive stance on), would an English court have jurisdiction? Yes, it is held: under Article 8 (anchor defendants). (Often Article 25 is used as argument, too).

At 48 Smith J signals the ‘intensity’ issue: ‘In some cases it has been suggested that it may not be enough to identify a single creditor domiciled in the United Kingdom, and that the court should consider whether the number and size of creditors in the UK are sufficiently large: see Re Van Gansewinkel Groep, [2015] EWHC 2151 (Ch) at [51]); Global Garden Products at [25]; Re Noble Group Ltd [2018] EWHC 3092 (Ch) at [114] to [116].’ Smith J is minded towards the first, more liberal approach: at 49. He refers to the liberal anchoring approach in competition cases, both stand-alone (think Media Saturn) and follow-on (think Posten /Bring v Volvo, with relevant links there).

At 51 he also discusses the ‘substantial effects’ test and classifies it under ‘jurisdiction’:

‘As well as showing a sufficient jurisdictional connection with England, it is also necessary to show that the Schemes, if approved, will be likely to have a substantial effect in any foreign jurisdictions involved in or engaged by the Schemes. This is because the court will generally not make any order which has no substantial effect and, before the court will sanction a scheme, it will need to be satisfied that the scheme will achieve its purpose: Sompo Japan Insurance Inc v Transfercom Ltd, [2007] EWHC 146 (Ch); Re Rodenstock GmbH, [2011] EWHC 1104 (Ch) at [73]-[77]; Re Magyar Telecom BV, [2013] EWHC 3800 (Ch) at [16].’ 

This is not quite kosher I believe. If, even arguendo, jurisdiction is established under Brussels Ia, then no ‘substantial effects’ test must apply at the jurisdictional stage. Certainly not vis-a-vis the scheme companies. Against the scheme creditors, one may perhaps classify it is a means to test the ‘abuse’ prohibition in Article 8(1)’s anchor mechanism.

A useful reminder of the principles. And some doubt re the substantial effects test.

Geert.

(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 5.

The latest issue of the „Praxis des Internationalen Privat- und Verfahrensrechts (IPRax)“ features the following articles:

S.A. Kruisinga: Commercial Courts in the Netherlands, Belgium, France and Germany – Salient Features and Challenges

A new trend is emerging in continental Europe: several states have taken the initiative to establish a new commercial court which will use English as the language of the proceedings. Other states have provided that the English language may be used in civil proceedings before the existing national courts. Several questions arise in this context. Will such a new international (chamber of the) court only be competent to hear international disputes, or only a specific type of dispute? Will there be a possibility for appeal? Will extra costs be involved compared to regular civil proceedings? Which provisions of the law of procedure will the court be required to follow? These questions will be answered in relation to developments in the Netherlands, Belgium, France and Germany. For example, in Belgium, a draft bill, which is now being discussed in Parliament, provides for the establishment of a new court that is still to be established: the Brussels International Business Court. In the Netherlands, as of 1 January 2019, the Netherlands Commercial Court has been established, which will allow to conduct civil proceedings in the English language.

K. de la Durantaye: Same same but different? Conflict rules for same sex-marriages in Germany and the EU

Conflict rules for same-sex marriages are as hotly disputed as the legal treatment of such marriages in general. The German rules on the topic contain multiple inconsistencies. This is true even after the latest amendments to the relevant statute (EGBGB) entered into force in January 2019. Things become even more problematic when the German rules are seen in conjunction with Rome III as well as the two EU Regulations on matrimonial property regimes and on property consequences of registered partnerships, both of which are applicable since January 29, 2019. Some instruments do treat same-sex marriages as marriages, others – notably the EGBGB – do not. Curiously, this leads to a preferential treatment vis-à-vis opposite-sex marriages. The EU Regulation on matrimonial property regimes does not define the term marriage and provides for participating member states to do so. At the same time, the ECJ extends its jurisdiction on recognition of personal statuses to marriages. Given all these developments, one might want to scrutinize the existing conflict rules for marriages as provided for in the EGBGB.

T. Lutzi: Little Ado About Nothing: The Bank Account as the Place of the Damage?

The Court of Justice has rendered yet another decision on the place of the damage in the context of prospectus liability. In addition to the question of international jurisdiction, it also concerned the question of local competence under Art. 5 No. 3 Brussels I (now Art. 7 No. 2 Brussels Ia) in a case where the claimant held multiple bank accounts in the same member state. The Court confirms that under certain circumstances, the courts of the member state in which these banks have their seat may have international jurisdiction, but avoids specifying which bank account designates the precise place of the damage. Accordingly, the decision adds rather little to the emerging framework regarding the localization of financial loss.

P.-A. Brand: International jurisdiction for set-offs – Procedural prohibition of set-off and rights of retention in domestic litigation where the jurisdiction of a foreign court has been agreed for the claims of the Defendant

The question whether or not a contractual jurisdiction clause entails an agreement of the parties to restrict the ability to declare a set-off in court proceedings to the forum prorogatum has been repeatedly dealt with by German courts. In a recent judgement – commented on below – the Oberlandesgericht München in a case between a German plaintiff and an Austrian defendant has held that the German courts may well have international jurisdiction under Article 26 of the Brussels Ia-Regulation also for the set-off declared by the defendant, even if the underlying contract from which the claim to be set-off derived contained a jurisdiction clause for the benefit of the Austrian courts. However, the Oberlandesgericht München has taken the view that the jurisdiction clause for the benefit of the Austrian courts would have to be interpreted to the effect that it also contains an agreement of the parties not to declare such set-off in proceedings pending before the courts of another jurisdiction. That agreement would, hence, render the set-off declared in the German proceedings as impermissible. The judgment seems to ignore the effects of entering into appearance according to Article 26 of the Brussels Ia-Regulation. That provision must be interpreted to the effect that by not contesting jurisdiction despite a contractual jurisdiction clause for the claim to be set-off, any effects of the jurisdiction clause have been repealed.

P. Ostendorf: (Conflict of laws-related) stumbling blocks to damage claims against German companies based on human rights violations of their foreign suppliers

In an eagerly awaited verdict, the Regional Court Dortmund has recently dismissed damage claims for pain and suffering against the German textile discounter KiK Textilien und Non-Food GmbH („KiK“) arising out of a devastating fire in the textile factory of one of KiK’s suppliers in Pakistan causing 259 fatalities. Given that the claims in dispute were in the opinion of the court already time-barred, the decision deals only briefly with substantial legal questions of liability though the latter were upfront hotly debated both in the media as well as amongst legal scholars. In contrast, many conflict-of-laws problems arising in this setting were explicitly addressed by the court. In summary, the judgment further stresses the fact that liability of domestic companies for human rights violations committed by their foreign subsidiaries or independent suppliers is – on the basis of the existing framework of both Private International as well as substantive law – rather difficult to establish.

M. Thon: Overriding Mandatory Provisions in Private International Law – The Israel Boycott Legislation of Arab States and its Application by German Courts

The application of foreign overriding mandatory provisions is one of the most discussed topics in private international law. Article 9 (3) Rome I- Regulation allows the application of such provisions under very restrictive conditions and confers a discretionary power to the court. The Oberlandesgericht Frankfurt a.M. had to decide on a case where an Israeli passenger sought to be transported from Frankfurt a.M. to Bangkok by Kuwait Airways, with a stop over in Kuwait City. The Court had to address the question whether to apply such an overriding mandatory provision in the form of Kuwait’s Israel-Boycott Act or not. It denied that because it considered the provision to be “unacceptable”. However, the Court was not precluded from giving effect to the foreign provision as a matter of fact, while applying German law to the contract. Since the air transport contract had to be performed partly in Kuwait, the Court considered the performance to be impossible pursuant to § 275 BGB. The judgement of the Court received enormous media coverage and was widely criticized for promoting discrimination against Jews.

C.F. Nordmeier: The inclusion of immoveable property in the European Certificate of Succession: acquisition resulting from the death and the scope of Art. 68 lit. l) and m) Regulation (EU) 650/2012

The European Certificate of Succession (ECS) has arrived in legal practice. The present article discusses three decisions of the Higher Regional Court of Nuremberg dealing with the identification of individual estate objects in the Certificate. If a transfer of title is not effected by succession, the purpose of the ECS, which is to simplify the winding up of the estate, cannot be immediately applied. Therefore, the acquisition of such a legal title in accordance with the opinion of the OLG Nuremberg is not to be included in the Certificate. In the list foreseen by Art. 68 lit. l and m Regulation 650/2012, contrary to the opinion of the Higher Regional Court of Nuremberg, it is not only possible to include items that are assigned to the claimant „directly“ by means of a dividing order, legal usufruct or legacy that creates a direct right in the succession. Above all, the purpose of the ECS to simplify the processing of the estate of the deceased is a central argument against such a restriction. Moreover, it is not intended in the wording of the provision and cannot constructively be justified in the case of a sole inheritance under German succession law.

J. Landbrecht: Will the Hague Choice of Court Convention Pose a Threat to Commercial Arbitration?

Ermgassen & Co Ltd v Sixcap Financials Pte Ltd [2018] SGHCR 8 is the first judicial decision worldwide regarding the Hague Choice of Court Convention. The court demonstrates a pro-enforcement and pro-Convention stance. If other Contracting States adopt a similar approach, it is likely that the Convention regime will establish itself as a serious competitor to commercial arbitration.

F. Berner: Inducing the breach of choice of court agreements and “the place where the damage occurred”

Where does the relevant damage occur under Article 7 (2) of the Brussels I recast Regulation (Article 5 (3) of the Brussels I Regulation), when a third party induces a contracting party to ignore a choice of law agreement and to sue in a place different from the forum prorogatum? The UK Supreme Court held that under Article 5 (3) of the Brussels I Regulation, the place where the damage occurs is not the forum prorogatum, but is where the other contracting party had to defend the claim. This case note agrees, but argues that the situation is now different under the Brussels I recast Regulation because of changes made to strengthen choice of court agreements. Thus, under the recast Regulation, the place where the damage occurs is now the place of the forum prorogatum. Besides the main question, the decision deals implicitly with the admissibility for claims of damages for breach of choice of law agreements and injunctions that are not antisuit injunctions. The decision also raises questions about the impact of settlement agreements on international jurisdiction.

D. Otto: No enforcement of specific performance award against foreign state

Sovereign immunity is often raised as a defence either in enforcement proceedings or in suits against foreign states. The decision of the U.S. District Court for the District of Columbia deals with a rarely discussed issue, whether an arbitration award ordering a foreign state to perform sovereign acts can be enforced under the New York Convention. The U.S. court held that in general a foreign state cannot claim immunity against enforcement of a Convention award, however that a U.S. court cannot order specific performance (in this case the granting of a public permit) against a foreign state as this would compel a foreign state to perform a sovereign act. Likewise, enforcement of an interest or penalty payment award has to be denied for sovereign immunity reasons if the payment does not constitute a remedy for damages suffered but is of a nature so as to compel a foreign state to perform a sovereign act. Whilst some countries consider sovereign immunity to be even wider, the decision is in line with the view in many other countries.

A. Anthimos: No application of Brussels I Regulation for a Notice of the National Association of Statutory Health Insurance Physicians

The Greek court refused to declare a Notice of the National Association of Statutory Health Insurance Physicians in Rhineland-Palatinate enforceable. The Greek judge considered that the above order is of an administrative nature; therefore, it falls out of the scope of application of the Brussels I Regulation.

C. Jessel-Holst: Private international law reform in Croatia

This contribution provides an overview over the Private International Law Act of the Republic of Croatia of 2017, which applies from January 29, 2019. The Act contains conflict-of-law rules as well as rules on procedure. In comparison to the previous Act on Resolution of Conflicts of Laws with Provisions of Other States in Certain Matters which had been taken over after independence from former Yugoslavia in 1991, nearly everything is new. Full EU-harmonization was a key purpose of the reform. The 2019 Act also refers to a number of Hague Conventions. Habitual residence has been introduced as a main connecting factor. Renvoi is as a rule excluded. Many issues are addressed for the first time. For the recognition of foreign judgments, the reciprocity requirement has been abandoned.

G. Ring/L. Olsen-Ring: New Danish rules of Private International Law applying to Matrimonial Property Matters

The old Danish Law on the Legal Effects of Marriage, dating back to the year 1925, has been replaced by a new Law on Economic Relations Between Spouses, which was passed on May 30, 2017. The Law on Economic Relations Between Spouses entered into force on January 1, 2018. There is no general statutory codification of private international law in Denmark. The Law on Economic Relations Between Spouses, however, introduces statutory rules on private international law relating to the matrimonial property regime. The Danish legislature was inspired by the EU Matrimonial Property Regulation, but also developed its own approach. The EU Matrimonial Property Regulation is not applied in Denmark, as Denmark does not take part in the supranational cooperation (specifically the enhanced cooperation) in the field of justice and home affairs, and no parallel agreement has been concluded in international law between the European Union and Denmark. The rules set out in the Danish Law on Economic Relations Between Spouses are based on the principle of closest connection. The main connecting factor is the habitual residence of both spouses at the time when their marriage was concluded or the first country in which they both simultaneously had their habitual residence after conclusion of the marriage. The couple is granted a number of choice-of-law options. In case both spouses have had their habitual residence in Denmark within the last five years, Danish law automatically applies.

A late flag following my much earlier Tweet on [2019] EWHC 325 (Comm) Pipia v BGEO. Moulder J had to consider, as I put it in the tweet, a combination of conflict of laws and EU external relations law. Under CPR 25.12 security for costs must not be sought against parties covered by Brussels Ia or the Lugano Convention. The issue is whether the EU-Georgia association agreement is tantamount to those Conventions.

Article 21 headed “Legal cooperation” specifically refers to the Hague Convention and states that: “1. The Parties agree to develop judicial cooperation in civil and commercial matters as regards the negotiation, ratification and implementation of multilateral conventions on civil judicial cooperation and, in particular, the conventions of the Hague Conference on Private International Law in the field of international legal cooperation and litigation as well as the protection of children.” Article 21 merely refers to “developing judicial cooperation” as regards the ratification and implementation of the Hague Convention. The stated aims of the Association Agreement are set out in broad terms in Article 1. They include: “(f) to enhance cooperation in the area of freedom, security and justice with the aim of reinforcing the rule of law and the respect for human rights and fundamental freedoms”.

The Association Agreement does not therefore provide for the enforcement of judgments either on a bilateral basis or through the Hague Convention. At 10 Moulder J therefore does not accept that there is any basis on which the Association Agreement can be interpreted as falling within the express terms of CPR 25.13 (2)(a)(ii). (re: residence in BRU1a /Lugano State).

Neither in her view can the general non-discrimination requirement of the Agreement be read to have an impact on the issue.

Geert.

Nice combination of external relations law and PIL.
[2019] EWHC 325 (Comm) Pipia v BGEO.
CPR rules, security for costs. May not be sought against Brussels Ia or Lugano parties. Whether EU-Georgia association agreements qualifies as tantamount (answer: no)https://t.co/nfncju3jet

— Geert Van Calster (@GAVClaw) March 11, 2019

In [2019] EWHC 1359 (Comm) National Union of Mineworkers v Organisation Internationale de l’energie et des mines defendant is French-domiciled and represented by its chair, Arthur Scargill. That’s right, many of us whether Brits or not will remember him from the 1970s and 1980 mine strikes.

Of more immediate relevance for the blog is the discussion at 19 ff on jurisdiction and applicable law.

Defendant is an international body to which a number of trade unions are affiliated. Those unions operate in different countries but all represent workers engaged in the fields of mining and/or energy supply. The name the Defendant uses in English is the International Energy and Mineworkers’ Organisation (“the IEMO”) and it is the successor to the International Mineworkers’ Organisation (“the IMO”) following a merger in 1994.

The proceedings relate to the parties’ respective rights in relation to sums recovered by the Defendant from Mr. Roger Windsor in August 2012 after prolonged legal proceedings in the French Republic and in England. Those proceedings were undertaken in the name of the Defendant but funded in part by the Claimant. There is a shortfall between the sums recovered and the amounts of the principal debt and the legal costs of the proceedings. The parties are in dispute as to the distribution of the sums recovered from Mr. Windsor; as to which should bear any shortfall between the sums recovered and the costs incurred in the proceedings; and as to the amounts which each has paid by way of costs in those proceedings.

The underlying indebtedness which resulted in recovery being made against Mr. Windsor derived from a loan of £29,500 which the Claimant made to him in 1984. He was then the Claimant’s Chief Executive Officer and the loan was made by way of assistance with house purchase following the relocation of the Claimant’s headquarters from London to Sheffield in 1983. There was a repayment of that loan in November 1984 but it is common ground that to the extent that there was such a repayment it came from funds which had been lent to Mr. Windsor. In 1986 the right to recover payment from Mr. Windsor (either of the original loan or of the subsequent loan) was assigned to the IMO.

Claimant argues the courts of England and Wales have jurisdiction by reason of Articles 7(1) and 25(1)(b) Brussels Ia (by virtue of an agreement made in 1990), and that in any event defendant is to be treated as having accepted that the court has jurisdiction to try this matter (an Article 26 ‘prorogation’, ‘submission’ or ‘voluntary appearance’ in other words).

Eyre J at 24 agrees that submission has taken place: CPR rules (Pt11) provide the details the procedure to be followed by a defendant contesting jurisdiction. Defendant did make an application to the court within 14 days of filing the acknowledgement of service, as requested by CPR 11. However, it expressly accepted that the application was to be regarded as relating to the questions of limitation and of the effect of the Release Agreement. In its application it made extensive reference to Brussels Ia but did so in that context. In particular that material was put forward in support of the contention that the claim was statute-barred either by reference to the Limitation Act 1980 or by reference to the French limitation provisions. There was in other words no wider or more fundamental challenge to the court’s jurisdiction and the realisation probably in hindsight that jurisdiction may not be that straightforward, cannot impact on that original application.

Had there not been submission, interesting discussions could have ensued I suspect on the place of performance of the agreement (unless clear choice of court had been made), England as a forum contractus, and I for one shall be using the case in my classes as a good illustration of the ‘conflicts method’ (looking over the fence)

Attention then turns to the issue of applicable law for the time-barred argument: at 26: ‘Defendant also argued that the proceedings were to be regarded as subject to French law and in particular the French limitation provisions which impose a time limit of three years for claims. The Defendant made reference to the Civil Jurisdiction and Judgments Act 1982 and the Foreign Limitation Periods Act 1984. The contention was that French law was applicable because the judgments against Mr. Windsor were obtained in France and then registered in England and Wales. That argument was misconceived. Such an argument might have relevance if the issue were one of the enforcement of the judgments against Mr. Windsor though I make no finding on that question. The current proceedings are not concerned with the enforcement of the judgments against Mr. Windsor but with the distribution of the sums which have been received by the Defendant as a result of the litigation against Mr. Windsor. It follows that the provisions to which the Defendant made reference can have no relevance to the current proceedings. The Defendant made passing reference to the fact that it is domiciled in France but this was not the principal basis of the contention that French law was applicable and without more it would not cause the parties’ dealings to be governed by French law. In those circumstances the parties’ rights and liabilities are to be determined by reference to the law of England and Wales and any questions of limitation are governed by the Limitation Act 1980.‘

I am not privy to the submissions on applicable law, but I am assuming that there must have been some discussion of the impact of the 1980 Rome Convention. Not the Rome I Regulation which would not have applied ratione temporis. That Regulation like Rome II has not altogether straightforward provisions (as I have noted on other occasions) on procedure being covered by the lex contractus. Whether Eyre J classifies the limitation issue as being covered by English law per lex fori or alternatively as lex causae (lex contractus of the 1990 agreement) is not clear.

Back in the 80s I would have never dreamed of bumping into Mr Scargill again in the context of an interesting conflict of laws issue.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 1, Heading 1.3.1, Chapter 2, Heading 2.2.7.

The University Paris II Panthéon-Assas is hosting, in the context of the Investment Law Initiative, a Colloquium on Actors in International Investment Law: Beyond Claimants, Respondents and Arbitrators, which will take place on 26 and 27 September 2019, in Paris, France.

The Colloquium is jointly organized by the CERSA, research centre of the French National Centre for Scientific Research (CNRS) and of the University Paris II Panthéon-Assas (France); the University of Zaragoza (Spain) and its Faculty of Law; the Athens Public International Law Center (Athens PIL) of the National and Kapodistrian University of Athens Faculty of Law (Greece). These academic and research institutions joined forces in 2016 and established the Investment Law Initiative, an international collaboration aimed at strengthening research and systemic analysis of international investment law. The Colloquium is convened by Dr Katia Fach Gómez (University of Zaragoza, Faculty of Law), Dr Anastasios Gourgourinis (National and Kapodistrian University of Athens, Faculty of Law; Athens PIL), and Dr Catharine Titi (CNRS-CERSA, University Paris II Panthéon-Assas).

Registration information and a provisional program is available here

In a dispute between two Cypriot citizens and the Republic of Turkey concerning the enforcement of a European Enforcement Order issued by a Cypriot court, the Thessaloniki CoA was confronted with the question, whether the refusal of the Thessaloniki Land Registry to register a writ of control against property of the Turkish State located in Thessaloniki was in line with the EEO Regulation.

I. THE FACTS

The dispute began in 2013, when two Cypriot citizens filed a claim for damages against the Republic of Turkey before the Nicosia Disctrict Court. The request concerned compensation  for deprivation of enjoyment of  their property since July 1974 in Kyrenia, a city occupied by the Turkish military forces during the 1974 invasion on the island. The Kyrenia District Court (Eparchiakó Dikastírio Kerýneias), which operates since July 1974 in Nicosia, issued in May 2014 its ruling, granting damages to the claimants in the altitude of 9 million €. Almost a year later, the latter requested the same court to issue a certificate of European Enforcement Order. The application was granted. Within the same year, the claimants filed an application before the Athens Court of first Instance for the recognition and enforcement of the Cypriot judgment. Prima facie it seems to be a useless step, however there was a rationale behind it; I will come back to the matter later on. The Athens court granted exequatur (Athens CFI 2407/2015, unreported).

Following almost a year of  inactivity, the claimants decided to proceed to the execution of their title by attaching property of the Turkish State in Thessaloniki. Pursuant to domestic rules, the enforcement agent serves the distraint order to the debtor; afterwards, (s)he requests the order to be registered at the territorially competent land registry. Both actions are imperative by law. At this point, the chief officer of the land registry refused to proceed to registration, invoking Article 923 Greek Code of Civil Procedure (CCP) which reads as follows: Compulsory enforcement against a foreign State may not take place without a prior leave of the Minister of Justice. The claimants challenged the registrar’s refusal by filing an application pursuant to Article 791 CCP, which aims at the obligation of the registrar to proceed to registration by virtue of a court order. The Thessaloniki 1. Instance court dismissed the application (Thessaloniki CFI 8363/2017, unreported). The claimants appealed.

II. THE RULING

The Thessaloniki CoA dismissed the appeal, confirming the first instance ruling in its entirety. It began from the right of the land registrar to a review of legality, thus the right to examine the request beyond possible formality gaps. It then referred to Articles 6.1 ECHR, 1 of the 1. Additional Protocol to the ECHR, and Articles 2.3 (c) and 14 of the 1966 International Covenant on Civil and Political Rights, in order to support the right to enforcement against a foreign State. The appellate court continued by analyzing Article 923 CCP and its importance in the domestic legal order. It emphasized the objective of the provision, i.e. to estimate potential repercussions and to avoid possible tensions with the foreign State in case of execution. The court founded its analysis on two ECHR rulings, i.e. the judgments in the Kalogeropoulou and Others v. Greece and Germany (59021/00), and Vlastos v. Greece (28803/07) cases, adding two rulings of the Full Bench of the Greek Supreme Court from 2002. Finally, the court concluded that there has not been a violation of the EEO Regulation, stating that the process under Article 923 CCP is not to be considered as part of intermediate proceedings needed to be brought in the Member State of enforcement prior ro recognition and enforcement; hence, the rule in Article 1 of the EEO Regulation is not violated.

III. COMMENTS

In general terms, one has to agree with the outcome of the case. Nevertheless, there are a number of issues to be underlined, so that the reader gets the full picture of the dispute.

• The claim before the Kyrenia District Court bears some similarities with the ruling of the ECJ in the Apostolidis/Orams case: The Court decided then that: The suspension of the application of the acquis communautaire in those areas of the Republic of Cyprus in which the Government of that Member State does not exercise effective control, provided for by Article 1(1) of Protocol No 10 on Cyprus to the Act concerning the conditions of accession [to the European Union] … does not preclude the application of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters to a judgment which is given by a Cypriot court sitting in the area of the island effectively controlled by the Cypriot Government, but concerns land situated in areas not so controlled. In both cases, the property under dispute was located in the Kyrenia district. The difference lies in the defendants: Unlike the Orams case, the respondent here was a foreign State. Article 4 Brussels I Regulation grants the right to claimants to avail themselves of domestic rules of jurisdiction, which is presumably what the claimants did in the case at hand.
• The issue of the EEO certificate seems to run contrary to Article 2.1 EEO Regulation. The matter was not examined by the Thessaloniki courts, which focused on the subject matter, i.e. the refusal of the land registrar on the grounds of Article 923 CCP.
• The exequatur proceedings in Greece seem to be superfluous, given that a EEO may be enforced without the need for a declaration of enforceability (Article 5 EEO Regulation). One reason which possibly triggered additional exequatur proceedings might have been the fact that, unlike the EEO Regulation, the acta iure imperii clause was not included in the Brussels I Regulation (see Article 1.1). Still, the matter was examined in the Lechouritou case even before the entry into force of the Brussels I bis Regulation. Hence, it would not have made a difference in the first place.
• The appellate court focused on the compatibility of Article 923 CCP with the EEO Regulation. However, the claimants carried out the execution in Greece on the grounds of the Cypriot judgment, not the EEO certificate.

Finally, two more points which should not be left without a comment.

• Throughout the proceedings, the Turkish State demonstrated buddhistic apathy. There was not a single remedy brought forward, neither in Cyprus nor in Greece. It was a victory in absentia. A reason for this stance was surely the following: The property of the Turkish state in Thessaloniki hosts one of its General Consulates in Greece. This is not just another Turkish Consulate around the globe: It is built upon the place where the father of the Turkish Republic (Mustafa Kemal Atatürk) was born. It also includes the house where he was raised.
• The Thessaloniki CoA emphasized that a potential refusal of the Greek Minister of Justice to grant leave for execution would not harm the essence of the Cypriot judgment: Enforceability and res iudicata remain untouched; hence, the claimants may seek enforcement of the judgment in the foreign country, i.e. Turkey… The argument was ‘borrowed’ by the ruling of the ECJ in the Krombach case (which is cited in the text of the decision); therefore, it is totally alien to the case at hand. Even if the claimants were to find any assets of the Turkish Republic in the EU, like the Villa Vigoni in Italy, the ruling of the ICJ in the case Germany v. Italy: Greece intervening) would serve as a tool to grant jurisdictional immunity to the Turkish state.

IV. CONCLUSION

Article 923 CCP is the first line of defence for foreign states in Greece. In the unlikely event that the Greek Minister of Justice grants leave for execution, a judgment creditor will be confronted with a second hurdle, if (s)he’s aiming at the seizure of property similar to the case discussed here: the maxim ne impediatur legatio (ad hoc see Greek Supreme Court, 29 November 2017, decision no. 1937/2017, reported in English here). Hence, the chances to capitalize on the enforceable title are close to zero.

Written by Renato Mangano, Professor of Commercial Law at the University of Palermo (Italy).

Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings failed to provide a definition of COMI (centre of main interests), either in Article 2, which was specifically devoted to definitions, or in Article 3, which regulated international jurisdiction.

For its part, Article 3(1) merely provided that “the courts of the Member State within the territory of which the centre of a debtor’s main interests is situated shall have jurisdiction to open insolvency proceedings”. Article 3(1) further stipulated that “in the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary.”

Recital 13 specified that “the ‘centre of main interests’ should correspond to the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties”, but different views have been expressed as regards, in particular, the relation between the concept of ‘administration’ and the concept of ‘ascertainability by third parties’.

As a result, Article 3 of Regulation No 1346/2000 gave rise a number of disputes and was the object of several requests to the European Court of Justice (ECJ) for preliminary rulings, with Eurofood being the first case in point.

Eventually, Regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings (Recast) laid down new rules on COMI — a definition of COMI was introduced; the presumption aiming at better ascertaining COMI was extended to individuals as well; the judicial rule of thumb that evaluated negatively a debtor who had moved his/her/its COMI shortly before the request to open insolvency proceedings was incorporated into a mandatory rule; and eleven recitals, aiming at making this framework clearer and more easily applicable, were introduced (Recitals 25 to 34, and 53).

However, one may doubt whether these efforts have succeeded. The many disputes involving NIKI Luftfahrt GmbH are illuminating. NIKI was an insolvent company under Austrian law incorporated in Austria. However, NIKI was also a subsidiary of the Air Berlin PLC & Co. Luftverkehrs KG, better known as Air Berlin. This is a company under German law incorporated in Germany.

Therefore, the crucial question was: which Member State had jurisdiction to open main insolvency proceedings against NIKI? Did Austria or Germany have jurisdiction? The question was clear-cut but the answers to this question were various and contradictory. The NIKI dispute has at long last been settled, but the dynamic of the NIKI case is intriguing because it demonstrates that the new COMI rules still give rise to doubts as regards both the relation between the two elements constituting the COMI definition (i.e.between “the place where the debtor conducts the administration of its interests on a regular basis” and the place “which is ascertainable by third parties”), and the relation between the definition of COMI and the presumptions that are provided to make it easier to apply this definition.

Moreover, some legal counsels maintain that the new COMI rules could facilitate fraudulent COMI relocations. A company could move its registered office to another Member State which is less favourable towards its creditors; make the transfer public,e.g.by using the new address in correspondence; await the expiration of the three-month period laid down by the time limit to the presumption; and apply for a fraudulent, but a ‘legally authorized’ opening of insolvency proceedings in the new jurisdiction.

Mutatis mutandis, a similar idea is proposed as regards individuals. To our knowledge there is no evidence of cases where these proposals have facilitated fraudulent COMI relocations. However, the proposal to circumvent the new COMI rules deserves attention because it leverages some prescriptions which were conceived precisely to prevent a debtor from circumventing the COMI rules.

The problems with the new COMI rules do not end here, as I have demonstrated in a recent paper titled The Puzzle of the New European COMI Rules: Rethinking COMI in the Age of Multinational, Digital and Glocal Enterprises.

In fact, sometimes the investigation about ‘ascertainability by third parties’ could prove problematic. The more complex a business organization is, the more often this situation arises. This is because the more complex a business organization is, the easier it becomes for a firm to be split into many ‘units’ (the term is intentionally non-technical) which, on the one hand, are located in different countries and, on the other hand, are in contact with different groups of creditors: case by case, these groups of creditors may have differing perceptions as to where the firm is located.

Undoubtedly, problems of this nature may arise when insolvency occurs within a group of companies – Recital 53 of Regulation 2015/848 allows one single court to open one single set of insolvency proceedings concerning several companies belonging to the same group. But the investigation about ‘ascertainability by third parties’ could prove equally challenging when a firm conducts its relationships with suppliers and customers through digital networks, and even more so if this firm runs a business which is glocal, in the sense that it is characterized by both global and local considerations. The domain name “.com” gives no indication as to where a business is located and, even where the domain name uses a country code such as “.de” or “.fr”, there is no guarantee that the firm is established in that country, since it is relatively common practice to keep web servers geographically separated from the actual location of the enterprise.

It is highly probable that these shortcomings will result again in requests for preliminary rulings; it is also highly desirable that the ECJ provide an interpretation of the COMI rules which would prove crucial in resolving those specific issues that gave rise to such requests.

Arguably, this situation is less serious as regards the flaw affecting the rules which lay down the time limits to the applicability of the COMI presumptions – this flaw could probably be fixed by means of interpretation. However – as regards the flaw concerning the prerequisite of ‘ascertainability by third parties’– it is highly improbable that the ECJ will be able to solve this problem at the roots and, consequently, prevent subsequent litigation.

Even the most enthusiastic supporters of ECJ activism must admit that the European Court is not allowed to interpret the new COMI rules in a way that proves to be against both the letter and the spirit of the legal framework, for this power belongs to the regulator alone. To be more precise, this statement implies that the ECJ will be unable either to rule that the prerequisite ‘ascertainability by third parties’ would be unnecessary whenever this presence was de facto incompatible with that of ‘administration on a regular basis’, or to rule that the application of the COMI presumptions might disregard the COMI definition. Both rulings would infringe not only the letter of the new COMI rules but also the clearly traceable intention of the regulator.

Further, the ECJ might certainly rule that the COMI of a company X is located in a country Y by putting the COMI of that company into a system of relations with some elements which are considered as relevant to the case. However, since ascertainment of the COMI is case-sensitive and since the one-to-one relation between these factors and the debtor’s exact location cannot be established in a universal way, this ruling will not provide the interpreter with a general criterion that would hold good for any future cases.

The Brussels Court of Appeal held early May in a lengthy and scholarly judgment that it sees no ground in either public international law, or European law, for jurisdiction of the Belgian courts against Facebook Ireland and Facebook Inc (Palo Alto, California). I reported on the litigation inter alia here. I believe the Court is right, as readers of the blog know from my earlier postings.

Belgium’s Data Protection Authority (DPA) does not signal the rejection of jurisdiction against FB Ireland and FB Inc in its press release, however even its 3 page extract from the 121 page judgment clearly shows it (first bullet-point).

The questions which the Court of Appeal has sent up to Luxembourg concern Facebook Belgium only. The Court in the full judgment does not qualify FB Belgium’s activities as data processing. However it has very specific questions on the existence and extent of powers for DPAs other than the leading authority under the GDPR, including the question whether there is any relevance to the fact that action has started prior to the entry into force of the GDPR (25 May 2018). The Court is minded to interpret the one-stop shop principle extensively however it has doubt given the CJEU’s judgment in Fanpages. 

Crucial and so far, I believe, fairly unreported. (My delay explained by the possibility for use as an essay exam question – which eventually I have not).

Geert.

(Handbook of) EU private international law, 2nd ed.2016, chapter 2, Heading 2.2.8.2.5.

The International Law Association and New South Wales Young Lawyers association are hosting a half-day conference next week. It will cover a range of topical issues of international law in the settlement of international disputes, including international commercial arbitration. A copy of the programme is available here. Interested attendees may register via this link.

Private International Law in Australia
The 4th edition of this leading book authored by Professors Reid Mortensen, Richard Garnett and Mary Keyes has been published with Lexis Nexis and is available for purchase as a paperback or an eBook here. Significant recent developments in the private international law of Australia, including legislative reforms and important case law, are examined in this edition. In addition to a detailed analysis of the principles applicable to jurisdiction, choice of law and the recognition and enforcement of foreign judgments, the authors give dedicated attention to international arbitration, family law and company law. This edition also features a brand-new chapter on the choice of law rules applicable to equitable claims and trusts. This book will be a valuable addition to the library of anyone with an interest in the private international law principles applicable in common law jurisdictions, particularly in Australia.

Commercial Issues in Private International Law: A Common Law Perspective
This collection, edited by Mr Michael Douglas and Professors Vivienne Bath, Mary Keyes and Andrew Dickinson, has just been published in Hart Publishing’s series, Studies in Private International Law. It is the culmination of the successful and enjoyable conference held at the University of Sydney in February of last year. The authors include judges, scholars and practitioners from Australia, New Zealand, Singapore and the United Kingdom. Their chapters deal with a range of contemporary topics, including rules for service out of the jurisdiction; case management stays; rules governing the recognition and enforcement of foreign judgments and their relationship with jurisdiction; arbitration; (overriding) mandatory rules; proof of foreign law and party autonomy, among others. The Honourable William MC Gummow, a retired justice of Australia’s highest court, remarks in the foreword that “Legal advisers, advocates, judges, scholars and students will find in these pages much to engage them and stimulate further thought.”. The book is available for purchase as a hardback or an eBook here.

I have waited a little while to discuss (I had tweeted it earlier)  [2019] EWHC 1028 (QB) Bonnie Lackey v Mallorca Mega Resorts. It is a good case for an exam essay question and that is what I used it for this morning (albeit in simplified form, focusing on the consumer title).

Defendant is domiciled in Spain, and is hereafter referred to as ‘the Hotel’. Claimant was one of a group of friends who went on holiday to Magaluf in Mallorca, Spain. The booking was made in May 2017 by Ms Donna Bond, who was one of the party and a friend of Bonnie Lackey. The Agency’s Booking Conditions stated

‘references to “you” and “your” include the first named person on the booking and all persons on whose behalf a booking is made …’.

Section A, applicable to all bookings stated:

“By making a booking, you agree on behalf of all persons detailed on the booking that you have read these terms and conditions and agree to be bound by them”.

In my exam question I have left the agency out of the factual matrix. Its presence is immaterial for the case for the agency acts, well, as an agent: contract is between clients and the hotel direct.

The group were staying at the site owned and operated by the Hotel. It is agreed between parties that the Agency’s and Hotel’s marketing meets with the Pammer Alpenhof criteria, in other words that they direct their activity at England. Claimant, Ms Lackey, who is domiciled in England, was seriously injured in the ‘wave’ pool and is now tetraplegic. Damages application is for £9 million given the high cost of care for the now 41 year old claimant.

A first discussion concerned the insurance section (not part of the exam essay)(15 ff). Generali (of Spain) were the hotel’s insurers and had already accepted jurisdiction for the English courts. Their liability though was capped at an absolute max of 0.45 Million Euros – far off the claim. Claimant’s hope was that Article 13(3) Brussels Ia as Clyde point out, might be used for a claim anchored unto Generali. Here, the High Court followed the authority of Hoteles Pinero Canarias SL v Keefe [2015] EWCA Civ 598, see references to EU law there. That case went up to the Supreme Court and thence to the CJEU where it was taken off the roll following settlement. In any event, following Keefe, Davison M in Bonnie Lackey held that jurisdiction was conferred on the English courts by Articles 11 and 13 BIa, (contained in Section 3) which permit a claim here against the insurer and the joinder of the hotel to that claim. Master Davison rejected suggestions for the need of a CJEU reference among others because he also upheld jurisdiction under the consumer title. The essential question here was whether there is a need for complete identity between the consumer referred to in Article 17(1) and the consumer referred to in Article 18(1) BIa.

Davison M suggests there need not, referring in particular to the Regulation’s aims to protect the weaker party, and to rule out as much as possible the risk of irreconcilable judgments.

Defendant’s reference to Schrems was considered immaterial. At 39: ‘Plainly, the consumer bringing the claim must be a beneficiary of the consumer contract or at least within its ambit. That does not mean that she personally must have concluded it. To borrow again from the judgment of Gloster LJ in Keefe, there would be no linguistic or purposive justification for such a restrictive interpretation.’ I am not sure I agree, not at any rate without proper discussion of ‘within its ambit’. The CJEU’s case-law on the protected categories does evidently aim to protect weaker categories and interpretation of same must serve that purpose. However the CJEU at the same time also emphasises the fact that these sections are an exception to the general rule and therefore must not be applied too widely, either.

Master Davison cuts short too extensive a discussion of the ‘ambit’ issue, by referring to the General Terms and Conditions – GTCS: the consumer who booked, accepted these GTCS ‘on behalf of all persons detailed in the booking’. At 40: ‘The hotel deployed no evidence of any kind to displace the effect of these terms, (which, I would add, are standard terms to be expected in a contract of this kind). A person who contracts through an agent has still “concluded” a contact. Thus, all argument about the need for complete identity between the consumer referred to in Article 17.1 and the consumer referred to in Article 18.1 is redundant. In each case it was the claimant, Ms Lackey.’ Whether counsel should have made more noise about this issue I do not know, however I would have expected discussion here of the general respect the Regulation has for privity of contract (which I discuss repeatedly on the blog).

I do not think this case will settle the matter. Its outcome evidently is positive (particularly considering that for Ms Lackey it will really not be straightforward to attend trial in Spain). However its legal reasoning cuts a few corners.

I would expect my students to discuss the need for effective protection of consumers ‘v’ the exceptional character of the section; and privity of contract which the CJEU flags on several occasions. Each with proper case-law references.

Geert.

The Diplomatic Session (basically a global meeting to negotiate a treaty(ies)) on the future convention on the recognition and enforcement of foreign judgments in civil or commercial matters will begin today and will end on 2 July 2019. This marks a milestone for the Hague Conference on Private International Law (HCCH) as the latest meeting of the Diplomatic Session was held more than 10 years ago, in 2007, on the Child Support Convention and its Protocol.

Not all preparatory documents are publicly available but the ones that are can be consulted here. See in particular the document on common courts, which refers to the Benelux Court of Justice and the future Unified Patent Court. The European Union has rightly clarified that the Court of Justice of the European Union is not a common court for the purposes of this Convention because the European Union would be able to join the treaty as a Regional Economic Integration Organisation (see Art. 27 of current draft), and hence its judgments would be within the scope of the Convention (see Annex II, paras 17 et seq.).

Please note that the meeting above-mentioned is  open only to delegates or experts designated by the Members of the Hague Conference, invited non-Member States and International Organisations that have been granted observer status.

On 10 June 2019, the US Supreme Court granted certiorari in the case of Monasky v. Taglieri. By doing so, the US Supreme Court will finally resolve the split in the US Circuits regarding the standard of review and the best approach to follow in determining the habitual residence of a child under the HCCH Convention of 25 October 1980 on the Civil Aspects of International Child Abduction (Child Abduction Convention).

The questions presented are:

1. Whether a district court’s determination of habitual residence under the Hague Convention should be reviewed de novo, as seven circuits have held, under a deferential version of de novo review, as the First Circuit has held, or under clear-error review, as the Fourth and Sixth Circuits have held.
2. Where an infant is too young to acclimate to her surroundings, whether a subjective agreement between the infant’s parents is necessary to establish her habitual residence under the Hague Convention.

Regarding the first question, it is important to note that findings of facts are reviewed for clear error and issues of law are reviewed de novo. This is of crucial importance as this would determine the extent to which the decision of the US district court can be reviewed by the US court of appeals, as these standards confer greater deference for findings of fact. The question then arises as to whether the determination of habitual residence is a mixed question of law and fact or only a question of fact.

The second question, and despite its simplicity, will deal with the current split in the US circuits regarding the extent to which courts can rely on the parents’ last shared intent or the child’s acclimatization or both in determining the habitual residence of a child.

This is well summed up by the Seventh Circuit Court of Appeals in Redmond v. Redmond (2013): “In substance, all circuits – ours included – consider both parental intent and the child’s acclimatization, differing only in their emphasis. The crux of disagreement is how much weight to give one or the other, especially where the evidence conflicts.”

In my personal opinion, the hybrid approach, that is relying on both shared parental intent and the child’s acclimatization (without placing more emphasis on one or the other, except perhaps for the case of newborns or very young infants), is the right approach to follow. This would avoid that parents create artificial jurisdictional links in a State and thus engage in forum shopping. The flip side of this argument is that this would necessarily mean less party autonomy in these matters. By following this approach, the United States would align itself to case law in Canada (Balev case – Canadian Supreme Court, see our previous post here), the European Union (Mercredi v. Chaffe, confirmed in O.L.v. P.Q.) and the United Kingdom (A. v. A. (Children: Habitual Residence)).

To conclude with the words of the Balev case: “[…] the hybrid approach to habitual residence best conforms to the text, structure, and purpose of the Hague Convention. There is no reason to decline to follow the dominant trend in Hague Convention jurisprudence. The hybrid approach should be adopted in Canada”.

In [2019] EWCA Civ 830 the Court of Appeal has dismissed the appeal against Yukos v Merinson which I reviewed here – review which readers may need to appreciate the judgment. Three issues were considered by Gross LJ at the Court of Appeal:

1. Are the Damages Claims and/or the Annulment Claims “matters relating to [an] individual contract of employment” within the meaning of Article 20(1)?>>>Salter DJ’s answer at the High Court was YES. I suggested in my review that that finding should not have been made without considering the lex causae of the employment contract: Rome I in my view should have been engaged here. Both Salter DJ and Gross LJ (at 27 ff) were persuaded however by the highly material nexus between the annulment claims – whether considered together with or separately form the damages claims (Gross LJ distinguished Aspen Underwriting in the process).

2. If so, is the Settlement Agreement “an agreement .. entered into after the dispute has arisen” within the meaning of Article 23(1)?>>>Salter DJ’s answer was negative, on the basis of extensive reference to the Jenard Report and Convention and Regulation scholarship. Gross LJ agrees – I continue to find that conclusion unconvincing.

3. Further, is the English court, in any event, precluded from entertaining the Annulment Claims by Chapter IV of the Recast Judgments Regulation? >>>Here the Court of Appeal made the High Court’s reasoning its own, much more succinctly than its entertaining of the other questions.

Plenty to discuss here for the 3rd ed of the Handbook.

Geert.

Professor Yeo Tiong Min, SC (honoris causa), Yong Pung How Professor of Law at Singapore Management University, has kindly provided the following report:

“The Singapore Court of Appeal has recently affirmed the significance of giving effect to party autonomy in the enforcement of choice of court agreements under the common law in three important decisions handed down in quick succession, on different aspects of the matter: the legal effect of exclusive choice of court agreements, the interpretation and effect of non-exclusive choice of court agreements, and the effect of exclusive choice of court agreements on anti-suit injunctions.

In Vinmar Overseas (Singapore) Pte Ltd v PTT International Trading Pte Ltd [2018] SGCA 65, proceedings were commenced in Singapore in respect of an alleged breach of a commercial sale contract containing an exclusive choice of English court agreement. The agreement was dated before the Hague Convention on Choice of Court Agreements took effect in English law, so the Convention was not engaged. Like many other common law countries, the Singapore courts would give effect to the agreement unless strong cause can be demonstrated by the party seeking to breach the agreement. A complication arose because there had been four previous decisions of the Court of Appeal in the shipping context where proceedings had been allowed to continue in Singapore in the face of an exclusive choice of foreign court agreement because the court had found that the defence was devoid of merits. The claimant’s argument that based on these decisions the Singapore court should hear the case because there was no valid defence to its claim succeeded before the High Court.

Sitting as a coram of five on the basis of the significance of the issue, the Court of Appeal unanimously reversed the decision. It decided that the merits of the case were not a relevant consideration at the stage where the court was determining whether to exercise its jurisdiction, and departed from its previous decisions to the extent that they stood to the contrary. While affirming the continuing validity of the strong cause test, the court placed considerable emphasis on the element of contractual enforcement. Thus, factors that were reasonably foreseeable at the time of contracting would generally carry little or no weight. In particular, the court recast one of the traditional factors in the strong cause test, “whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages”, as an inquiry into whether the party seeking to enforce the choice of court agreement was acting abusively in the context of cross-border litigation. In the view of the court, the genuine desire for trial in the contractual forum has been adequately expressed in the choice of court agreement itself, and it is legitimate to seek the procedural advantages in the contractual forum. The court considered that strong cause would generally need to be established by either proof that the party seeking trial in the contractual forum was acting in an abusive manner (which is said to be a very high threshold), or that the party evading the contractual forum will be denied justice in that forum (ignoring the foreseeable factors), for example if war had broken out in that jurisdiction.

The court left open the question whether the same approach would be taken if the choice of court agreement had not been freely negotiated, taking cognisance of situations, especially in the shipping context, where contracting parties may find themselves bound by clauses the contents of which they have had no prior notice. The court expressed the tentative view that as a matter of consistency, the same approach should be adopted.

In Shanghai Turbo Enterprises Ltd v Liu Ming [2019] SGCA 11, the Court of Appeal was faced with an unusual clause: “This Agreement shall be governed by the laws of Singapore/or People’s Republic of China and each of the parties hereto submits to the non-exclusive jurisdiction of the Courts of Singapore/or People’s Republic of China.” The High Court found the choice of law agreement to be meaningless as a purported floating choice of law, and that the choice of court agreement was invalid as it could not be severed from the choice of law agreement. The court then applied the natural forum test and declined to exercise jurisdiction on the basis that China was the clearly more appropriate forum for the dispute. On appeal, the Court of Appeal agreed with the finding that the choice of law agreement was invalid, but held that the choice of court agreement could be severed from the choice of law agreement.

In a prior decision, the Court of Appeal in Orchard Capital I Ltd v Ravindra Kumar Jhunjhunwala [2012] SGCA 16, had considered a non-exclusive choice of court clause to be relevant at the very least as a factor in the natural forum test, and that the weight to be accorded to the factor depended on the circumstances of each case. It also considered that there was another possible approach to such clauses based on contractual enforcement principles, which it did not fully endorse as the parties had not raised arguments based on contractual intentions.

In Shanghai Turbo, the Court of Appeal had to face this issue squarely, and affirmed that if there is a contractual promise in the non-exclusive choice of court clause, the party seeking to breach the agreement had to demonstrate strong cause why it should be allowed to do so. The court went on to hold that, generally, where Singapore contract law is applicable, the “most commercially sensible and reasonable” construction of an agreement to submit, albeit non-exclusively, to a court is that the parties have agreed not to object to the exercise of jurisdiction by the chosen court. This inference does not depend on there being an independent basis for the chosen court to assume jurisdiction (eg, by way of choice of law agreement), or on the number of courts named in the clause. Conversely, there is generally no inference that the parties have agreed that the chosen court is the most appropriate forum to hear the case.

Thus, practically, where there is a non-exclusive choice of Singapore court clause, in general the Singapore will hear the case unless strong cause (the same test elucidated in Vinmar) is demonstrated by the party objecting to the exercise of jurisdiction by the Singapore court, but where there is a non-exclusive choice of foreign court clause, this is merely a factor in the natural forum test, as the party seeking trial in Singapore is not in breach of any agreement. On the facts, the court held that jurisdiction should be exercised because the defendant could not demonstrate strong cause.

It is to be noted these are canons of construction under Singapore law. Under Singapore private international law, the choice of court agreement is governed by the law that governs the main contract unless the parties have indicated otherwise. However, Singapore law will apply in default of proof of foreign law. Moreover, canons of construction may be displaced by evidence of contrary intention. The court left open the question – expressing no tentative view – whether the same approach would be taken for contracts which are not freely negotiated. However, as this is a question of interpretation, the context of negotiation could be a relevant indication of the true meaning of contractual terms.

The third case is on arbitration, but the Court of Appeal also made comments relevant to choice of court agreements. In Sun Travels & Tours Pvt Ltd v Hilton International (Maldives) Pvt Ltd [2019] SGCA 10, an injunction was sought to prevent reliance on a foreign judgment obtained in proceedings commenced in breach of an arbitration agreement. The court correctly identified the remedy sought as an anti-enforcement injunction, but nevertheless also discussed the anti-suit injunction because the case was argued on the basis that the injunction sought followed from an entitlement to an anti-suit injunction. The court clarified that an anti-suit injunction would generally be granted to enforce a choice of court agreement unless strong cause is demonstrated why it should be denied, and that there is no need to demonstrate vexatious or oppressive conduct independently. Thus, the law in this area is the mirror image of Vinmar. This case is particularly significant for Singapore because statements in the previous Court of Appeal decision in John Reginald Stott Kirkham v Trane US Inc [2009] SGCA 32 could be read as suggesting that the breach of contract is merely one factor to consider in determining whether the conduct of foreign proceedings abroad was vexatious.

These common law developments are highly significant in bringing greater consistency with developments elsewhere where party autonomy has come to assume tremendous significance. One is the Hague Convention on Choice of Court Agreements which took effect in Singapore law on 1 October 2016. Two critical aspects of this Convention are that a choice of the court of a Contracting State is deemed to be exclusive unless there are express provisions to the contrary, and that the chosen court should assume jurisdiction unless the choice of court clause is invalid. The second is the Singapore International Commercial Court (SICC) established in 2015. Where there is a choice (whether exclusive or not) of SICC clause, the SICC will assume jurisdiction unless the case is not an appropriate one having regard to the court’s character as an international commercial court. In addition, under the Rules of Court, a choice of the Singapore High Court made on or after 1 October 2016 is presumed to include the SICC unless expressly indicated otherwise. In both situations, the common law is not relevant, and to that extent, the practical effects of Vinmar and Shanghai Turbo will be limited. However, the extent to which anti-suit injunctions will be consistent with the Hague Convention on Choice of Court Agreements remains an open question, and it is certainly an area for watch for further developments.”

A more detailed discussion of the cases mentioned above can be found at: https://cebcla.smu.edu.sg/sites/cebcla.smu.edu.sg/files/Paper2019.pdf