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Dr. Marlene Brosch (Senior Research Fellow at the Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law) recently published a book on Choice of Law Agreements and Jurisdictional Agreements in EU International Family Law and Succession Law.

Here is a brief overview provided by the author:

Choice of Law Agreements and Choice of Court Agreements are fundamental legal instruments in Private International Law, expressing the parties’ autonomy to determine the applicable law and the competent court(s). In the field of Family Law and Succession Law, party autonomy has only recently taken root through the enactment of several EU Regulations that recognise limited party autonomy: Rome III, Brussels II-bis, Maintenance Regulation, Succession Regulation, as well as the Regulations on Matrimonial Property Regimes and Property Regimes of Registered Partnerships.

The book constitutes an in-depth comparison of the rules on party autonomy in the aforementioned legal instruments from a functional and systematic perspective. Special regard is given to the interrelations between applicable law and jurisdiction. This comparative analysis serves as the starting point for
assessing inconsistencies and deficiencies, which further lead to discussing reform proposals for a more coherent normative system.

More information can be found at https://www.mohrsiebeck.com/en/book/rechtswahl-und-gerichtsstandsvereinbarung-im-internationalen-familien-und-erbrecht-der-eu-9783161562730?no_cache=1 .

The UK has suspended its accession to the HCCH Convention of 30 June 2005 on Choice of Court Agreements (Choice of Court Convention) and its ratification to the HCCH Convention of 23 November 2007 on the International Recovery of Child Support and Other Forms of Family Maintenance (Child Support Convention) until 13 April 2019 or 23 May 2019 as the case may be in accordance with the European Council Decision. This takes effect as of 1 April 2019 (the scheduled date of their entry into force).

In the meantime, and as a Member State of the European Union,  European Union law, including the above-mentioned HCCH Conventions, will remain applicable to and in the United Kingdom.

Moreover, the UK adds with regard to the Choice of Court Convention: “As stated in the Note Verbale, in the event that the Withdrawal Agreement is signed, ratified and approved by the United Kingdom and the European Union, the United Kingdom will withdraw the Instrument of Accession which it deposited on 28 December 2018.”

And with respect to the Child Support Convention: “As stated in the Note Verbale, in the event that the Withdrawal Agreement is signed, ratified and approved by the United Kingdom and the European Union, the United Kingdom will withdraw the Instrument of Ratification which it deposited on 28 December 2018.”

Please note that a different set of declarations would apply if the UK instruments do enter into force. See here.

For more information, see here for the Choice of Court Convention and here for the Child Support Convention (Depositary’s website in both French and English).

I. Introduction

It was the 3rd of March 1989, when an announcement was published in the Official Gazette of the Hellenic Republic, stating that the Brussels Convention would finally enter into force on April 1, 1989. Why finally? Because it took the state nearly a decade after the accession to the EC [1.1.1981] to activate the Brussels Convention in the country. After a long hibernation time, Law Nr. 1814/1988 was published in November 11, 1988, marking the official ratification of the Convention. In less than a year, the Convention became operative in the Greek legal order. Since that time, a great number of judgments were published in the legal press, some of them with elucidating notes and comments. Commentaries and monographs paved the path for widespread knowledge and ease of access to the new means of handling cross border cases within the EC.

Almost 12 years later, Regulation 44/2001 replaced the Brussels Convention. On the whole, the application of the Regulation in the country can be described as satisfactory. Courts proved to be open minded in exequatur proceedings, thus fulfilling the mandate for a free circulation of judgments dictated by the EU. Only minor issues cause some skepticism, the majority of which could have been solved by means of an implementing act to the Regulation. Regrettably enough, Greek governments persistently omit to issue any such acts in the course of communitarization in civil and commercial matters. Consequently, primarily academics, and later courts, were called to find viable solutions to problems faced or potentially confronted in the future.

II. Problems faced / solutions given

A problem causing doubts and confusion in Greece was the exact definition of the term used under Art. 36 Brussels Convention. Unlike the English version, where the same terminology is used [“may be appealed”], the Greek text showed a discrepancy, causing contradictory rulings. The issue reached the Supreme Court, which finally clarified the problem in 2001. In particular, the wording used in Articles 36.1, 37-40 Brussels Convention did not make specific reference to an appeal. Instead, the terminus used was the equivalent of “recourse”. For the purposes of Art. 37 Brussels Convention, the Hellenic Government declared that the “recourse” shall be filed at the Court of Appeal. It is an elementary rule in Greek civil practice, that all remedies against first instance decisions are filed with the secretariat of the court rendering the decision challenged. In light of this fact, several lawyers lodged the “recourse” there, i.e. at the competent 1st instance court. In the ensuing process before the CoA however, they were in for a surprise: Many appellate courts in the country repeatedly dismissed the “recourse” as inadmissible, because it was not filed properly. As a result, courts followed different directions which can be summarized as follows: The first view considered the “recourse” as a blend of 1st and 2nd instance legal remedies; consequently it reached the conclusion that ordinary rules of appeal proceedings are to be used in the process at hand, with the exception that the “recourse” shall be filed with the secretariat of the CoA, which was the competent one according to Art. 37 Brussels Convention. Furthermore, given the fact that the appellant is not obliged to serve the appeal under Greek law, the terms set under Art. 36.2 Brussels Convention & 43.5 Brussels I Reg. relate to the act of filing, not serving the document. The opposite view however confers to the recourse the nature of third party proceedings, thus changing the procedural requirements. In particular, by adopting this position, the appellant is burdened with the duty to serve the document within the term of one or two months respectively. The latter view has finally prevailed.

Following the entry into force of the Brussels I Regulation, the above issue has been made redundant, given that the Greek wording was streamlined to that of the English text. The Greek version of the Brussels I bis Regulation follows suit.  However, it still affects the adjacent area of the Lugano Convention. A recent ruling of the Supreme Court bears witness to this assumption [SC 2078/2017, confirming Thessaloniki CoA 1042/2015, published in: Civil Procedure Law Review 2015, 351, note Anthimos: Filing does not suffice; service of the appeal to the appellee is imperative, otherwise the remedy is dismissed as inadmissible].

III. The Brussels I bis Regulation

Entering into the era of the Brussels I bis Regulation, we see however a remarkable absence of case law in regards to Chapter III on recognition and enforcement: For more than 4 years after the Regulation entered into force, there isn’t a single judgment reported in the country, most notably on Section 3, which established the new system of the application for refusal of recognition and enforcement [Articles 45 et seq.]. In the sole case found, the creditor followed erroneously the previous system of exequatur, which led the court to dismiss the application as inadmissible [lack of locus standi].

Hence, the question: Is Greece the sole exception to other Member States’ practice? I could associate the lack of case law with the devastating situation my country suffered over the last years: The Grexit-nightmare, financial instability and capital restrictions could serve as an explanation for this plunge.

However, to the extent of my ability to follow the German literature, I do not see any application of Chapter III in Germany either. It would be very interesting to find out by the readers of this blog, whether there’s already some ‘action’ in other Member States.

Absolutely brilliant analysis of the Brexit shambles by KJ Garnett over on EU Perspectives. A poor, poor game of contract bridge.

EU Perspectives

Putin, the old cliché goes, views the international world order as a game of chess where pawns, knights, bishops and queens are played off one against the other until there is only one outright winner: Russia. Putin’s strategy is to align both his and his opponent’s pawns (the mob) with the bishops and knights (the snob) to weaken and topple his rival. His tactic has been to whip his adversary’s pawns into a state of fury through the spread of misinformation, defamation and slander thereby undermining his adversary’s legitimacy and authority. On the face of it both his strategy and his tactic appear to be working. Across the European Union we see the rise of extremism, the victory of populists in democratic elections and the phenomenal rise of an out-raged right-wing media slamming the European project as a wicked “cabal of high-priests”.

Putin has every right to feel smug. He…

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The title of this piece is optimistic. Broadly defined many of the conflicts issues I address touch upon civil procedure of course. Yet I rarely address civil procedure pur sang (see here for an example). C-637/17 Cogeco was held by the European Court of Justice yesterday.

The Court held that the EU (competition law) damages Directive 2014/104 does not apply ratione temporis to the facts at issue.

The Directive includes two recitals on limitation periods:

Recital 36 argues

‘National rules on the beginning, duration, suspension or interruption of limitation periods should not unduly hamper the bringing of actions for damages. This is particularly important in respect of actions that build upon a finding by a competition authority or a review court of an infringement. To that end, it should be possible to bring an action for damages after proceedings by a competition authority, with a view to enforcing national and Union competition law. The limitation period should not begin to run before the infringement ceases and before a claimant knows, or can reasonably be expected to know, the behaviour constituting the infringement, the fact that the infringement caused the claimant harm and the identity of the infringer. Member States should be able to maintain or introduce absolute limitation periods that are of general application, provided that the duration of such absolute limitation periods does not render practically impossible or excessively difficult the exercise of the right to full compensation.’

Recital 49 adds

‘Limitation periods for bringing an action for damages could be such that they prevent injured parties and infringers from having sufficient time to come to an agreement on the compensation to be paid. In order to provide both sides with a genuine opportunity to engage in consensual dispute resolution before bringing proceedings before national courts, limitation periods need to be suspended for the duration of the consensual dispute resolution process.’

Article 10 then foresees expressis verbis

1.   Member States shall, in accordance with this Article, lay down rules applicable to limitation periods for bringing actions for damages. Those rules shall determine when the limitation period begins to run, the duration thereof and the circumstances under which it is interrupted or suspended.

2.   Limitation periods shall not begin to run before the infringement of competition law has ceased and the claimant knows, or can reasonably be expected to know:

(a) of the behaviour and the fact that it constitutes an infringement of competition law;

(b) of the fact that the infringement of competition law caused harm to it; and

(c) the identity of the infringer.

3.   Member States shall ensure that the limitation periods for bringing actions for damages are at least five years.

4.   Member States shall ensure that a limitation period is suspended or, depending on national law, interrupted, if a competition authority takes action for the purpose of the investigation or its proceedings in respect of an infringement of competition law to which the action for damages relates. The suspension shall end at the earliest one year after the infringement decision has become final or after the proceedings are otherwise terminated

Article 11 adds for joint and several liability

‘Member States shall ensure that any limitation period applicable to cases under this paragraph is reasonable and sufficient to allow injured parties to bring such actions.’

and finally Article 18(1) reads

‘Member States shall ensure that the limitation period for bringing an action for damages is suspended for the duration of any consensual dispute resolution process. The suspension of the limitation period shall apply only with regard to those parties that are or that were involved or represented in the consensual dispute resolution.’

Of note in my view is first of all the unavailing nature of much of the recitals quoted above. As the overview shows, the recitals are more or less verbatim repeated in the actual rules; or the other way around: the Articles’ provisions are copy /pasted into the recitals. To that there is not much point.

Further, the minimum period imposed by the Directive (not applicable, as noted, ratione temporis) is five years. (Compare in the mooted amendment of the motor insurance Directive  2009/103: minimum 4 years is being suggested – subject to gold plating). The Court could not evidently read that minimum period as being ius commune. However it did read much of the qualitative requirements of recitals and articles effectively as ius commune using the effective enforcement of EU competition law as an anchor. It held that the Portuguese limitation period of three years, which, first, starts to run from the date on which the injured party was aware of its right to compensation, even if the infringer is not known and, secondly, may not be suspended or interrupted in the course of proceedings before the national competition authority, renders the exercise of the right to full compensation practically impossible or excessively difficult.

I realise it is a bit of a stretch to see this as a move towards a European Ius Commune on limitation periods. Yet it might be a first cautious step.

Geert.

The Conclusions & Recommendations (C&R) of the governance body of the Hague Conference on Private International Law (HCCH) (i.e. the Council on General Affairs and Policy) are available in both English and French.

The conclusions that are more worthy of note are the following:

The Parentage/Surrogacy Project is going ahead. The Council endorsed the continuation of the work in line with the latest report of the Experts’ Group (see my previous post here). See C&R 7-12.

The Tourist and Visitors Project is also moving forward. See C&R 14-17.

A meeting of the Experts’ Groups on these respective topics will take place in the near future.

As regards the HCCH publications, it should be noted that there were two Guides on family law, one Guide on the Evidence Convention and one WIPO-HCCH Guide on intellectual property that were submitted for approval to Council; the full titles of which are:

• The revised draft Practical Guide on the cross-border recognition and enforcement of agreements reached in the course of family matters involving children
• The revised draft Guide to Good Practice on Article 13(1)(b) of the 1980 Child Abduction Convention
• The draft Guide to Good Practice on the Use of Video-link under the Evidence Convention
• The WIPO-HCCH Guide on “When Private International Law meets Intellectual Property Law – A Guide for Judges”

See also my previous posts here (Child Abduction) and here (Evidence Convention).

The Council approved only one: the WIPO-HCCH Guide. With regard to the other three, the Council decided instead to put into place a procedure to obtain further comments from Members.  Importantly, there were concerns expressed by Members regarding the two family law guides, which means that further work is needed. An important issue that might have played a role in these decisions is the massive amount of information that was submitted this year to Council.

Because of the complexity of the conclusions, I prefer to include some excerpts below:

“19. In light of concerns expressed, Council did not approve the revised draft Practical Guide [on the cross-border recognition and enforcement of agreements reached in the course of family law matters involving children]. Council asked that the draft Practical Guide be re-circulated to Members to provide additional comments within a three-month period. All comments received will be made available to other Members on the Secure Portal of the HCCH website. The draft Practical Guide would then be revised by the Experts’ Group with a view, in particular, to increasing its readability for a wider audience. The finalised draft Practical Guide would be circulated to Members for approval. In the absence of any objection within one month, the draft Practical Guide would be taken to be approved; in the case of one or more objections, the draft Practical Guide would be put to Council at its 2020 meeting, without any further work being undertaken. Council requested that the Permanent Bureau immediately notify the Members of any objections.”

“24. Council thanked the Working Group and stressed the importance of the Guide to Good Practice on Article 13(1)(b). In light of concerns expressed, Council did not approve the revised draft Guide. Council asked that the draft Guide be re-circulated to Members to provide additional comments within a two-month period. All comments received will be made available to other Members on the Secure Portal of the HCCH website. The draft Guide would then be revised by the Working Group. The finalised draft Guide would be circulated to Members for approval. In the absence of any objection within one month, the draft Guide would be taken to be approved; in the case of one or more objections, the draft Guide would be put to Council at its 2020 meeting, without any further work being undertaken. Council requested that the Permanent Bureau immediately notify the Members of any objections.”

Council was more lenient with regard to the Video-link Guide:

“38. Council welcomed the preparation of the draft Guide to Good Practice on the Use of Video-Link under the Evidence Convention and thanked the Experts’ Group. Council asked that the draft Guide be re-circulated to Members to provide additional comments within a one-month period. All comments received will be made available to other Members on the Secure Portal of the HCCH website. The draft Guide would then be revised by the Experts’ Group. The finalised draft Guide would be circulated to Members for approval. In the absence of any objection within one month, the draft Guide would be taken to be approved; in the case of one or more objections, the draft Guide would be put to Council at its 2020 meeting, without any further work being undertaken. Council requested that the Permanent Bureau immediately notify the Members of any objections.”

All this means that these three Guides are not final and readers must await the revised versions, which might or might not need to be submitted to the next meeting of the Council in March 2020. I advise you then to be patient.

The Court held today in C-60/18 AS Tallinna Vesi and agrees with its AG re the possibility of national criteria, yet unlike Ms Kokott does not see an obligation in the WFD for the Member States to have a proactive vetting and decision procedure. It does not give much specification to its reasoning, other than a reference to the ‘circumstances of the case’. This may refer, but I am speculating, to applicant wanting the authorities generally to sign off on its production method, rather than requesting an opinion on an individual stream.

If my interpretation is right it underscores what I have remarked elsewhere on the regulatory process, for instance in the case of circular economy: in a grey regulatory zone, we need to think of mechanisms to assist industry in embracing environmentally proactive solutions, rather than driving them into incumbent technologies or worse, illegality.

Geert.

Handbook of EU Waste law, 2nd ed. 2015, OUP, 1.166 ff and 1.189 ff.

Case C-129/18 SM v Entry Clearance Officer, UK Visa Section was held last Tuesday in Grand Chamber. It concerns the application of the EU’s main migration Directive, 2004/38 and essentially addresses the fear of the Member States (many of whom appeared before the court, all arguing a rather restrictive interpretation) that the islamic system of Kafala or Kefala hands human traffickers a means to support their trade.

As I flagged in an earlier post, in which I also referred to the case involving SM, kafala is clearly not equivalent to adoption. It is more akin to guardianship or custody in advance of adoption, or in the case of the Middle East, is even used as a form of visa et al sponsorship for migrant workers (hence leading to issues of slavery and the like).

In SM’s case, Mr and Ms M are two French nationals who married in the UK in 2001. They travelled to Algeria in 2009 to be assessed as to their suitability to become guardians of a child under Algerian kafala and were deemed ‘suitable’. SM, who was born in Algeria in June 2010, was abandoned by her biological parents at birth. In October 2011, Mr M returned to the UK where he has a permanent right of residence, for professional reasons. For her part, Ms M remained in Algeria with SM. In May 2012, SM applied for entry clearance for the UK as the adopted child of an EEA national. Her application was refused by the Entry Clearance Officer on the ground that guardianship under Algerian kafala was not recognised as an adoption under UK law and that no application had been made for intercountry adoption.

The Court essentially agrees with the Member States that the case does not fall under directive 2004/38’s heading on ‘direct descendants’ (‘blood’ relatives in e.g. the Dutch version) which the Court interprets (as do the Member States) as both biological and adopted direct descendants. This is a consequence of the qualification by the lex fori itself: unlike adoption, which is prohibited by Algerian law, the placing of a child under kafala does not mean that the child becomes the guardian’s heir. In addition, kafala comes to an end when the child attains the age of majority and may be revoked at the request of the biological parents or the guardian.

Yet the Court also finds that the Member States’ concerns over human trafficking are properly addressed by the Directive’s provisions for ‘other family Members’. Unlike the right to entry for direct descendants, other family members’ visa applications must be processed taking into account an extensive examination of their personal circumstances. At 69: in the case of minors, that assessment must take into consideration, inter alia, the age at which the child was placed under Algerian kafala system, whether the child has lived with its guardians since its placement under that system, the closeness of the personal relationship which has developed between the child and its guardians and the extent to which the child is dependent on its guardians, inasmuch as they assume parental responsibility and legal and financial responsibility for the child.

That the Algerian system of kafala guardian’s assessment clearly does not meet with the 1996 Hague Convention requirements for assessment of prospective adoptive parents and the interests of the child (to which Algeria is not a party but the Member States are) is not material: such assessment must be weighed against the factual elements identified by the Court at 69, see above.

Hague and Kafala at Kirchberg. Not an everyday occurrence.

Geert.

The International Business Courts saga continued: NCC First Judgment – BIBC Proposal unplugged

Written by Georgia Antonopoulou and Xandra Kramer, Erasmus University Rotterdam (PhD candidate and PI ERC consolidator project Building EU Civil Justice)

1. Mushrooming International Business Courts on the Eve of Brexit

Readers of this blog will have followed the developments on the international business courts and international commercial chambers being established around Europe and elsewhere. While many of the initiatives to set up such a court or special chamber date from before the Brexit vote, it is clear that the UK leaving the EU has boosted these and is considered to be a big game changer. Whether it really is remains to be seen, but in any case the creation of courts and procedures designed to deal with international commercial disputes efficiently is very interesting!

The Netherlands was one of the countries where, after the Senate came close to torpedoing the proposal (see our earlier blogpost), such an international commercial court (chamber) was created. The Netherlands Commercial Court (NCC) opened its doors on 1 January 2019, and it gave its first judgment on 8 March 2019 (see 2). Meanwhile, in Belgium the proposal for the Brussels International Business Court (BIBC) seems to be effectively unplugged due to lack of political support (see 3).

2. The First NCC Judgment

As reported earlier on this blog, on 18 February 2019 the Netherlands Commercial Court (NCC) held its first hearing (see here). The NCC’ s first case Elavon Financial Services DAC v. IPS Holding B.V. and others was held in summary proceedings and concerned an application for court permission to privately sell pledged shares under Article 3:251 (1) Dutch Civil Code. The NCC scheduled a second hearing on 25 February 2019, offering the interested parties that did not appear before court the opportunity to be heard. However, these notified the court about their intention not to their intention not to attend the hearing and leave the application uncontested. As a result, the NCC cancelled the planned hearing and gave its first judgment granting the requested permission on 8 March 2019 (see here). Our discussion will focus on the NCC’s judgment regarding the four main jurisdictional requirements and aims at offering offers a sneak preview on the Court’s future case law on the matter.

(a) Jurisdiction of the Amsterdam District Court

Unlike what the name suggests, the NCC is not a self-standing court but a chamber of the Amsterdam District Court (see the new Article 30r (1) Dutch Code of Civil Procedure (DCCP) and Article 1.1.1. NCC Rules). Therefore, the jurisdiction of the NCC depends on the jurisdiction of the Amsterdam District Court (Article 30r (1) DCCP  and Article 1.3.1. (a) and (c) NCC Rules). The Court confirmed its international and territorial jurisdiction based on a contractual choice-of-court agreement in favour of the Amsterdam District Court (Article 25 (1) Brussels Regulation Recast). With regard to the interested parties that were not a party to the agreement, the Court based its jurisdiction on the fact that they either entered an appearance or sent a notice to the Court acknowledging its jurisdiction without raising any objections (Article 26 (1) Brussels Regulation Recast and Article 25 Lugano Convention). Regarding the subject-matter jurisdiction of the Amsterdam District Court, Article 3:251 (1) Dutch Civil Code explicitly places applications for the private sell of pledged assets under the jurisdiction of the provisional relief judge of the District Court.

(b) Civil or commercial matter within the parties’ autonomy

Second, the dispute concerned a civil or commercial matter that lies within the parties’ autonomy (Article 30r (1) Dutch Code of Civil Procedure and Article 1.3.1. (a) NCC Rules).

(c) Internationality

Third, the NCC solely deals with international, cross-border disputes. So as to define the notion of internationality, the Explanatory Notes to Article 1.3.1. (b) NCC Rules entail a list of alternative, broad criteria that grants to the dispute the required internationality (see Annex I, Explanatory Notes). The application in question was filed by Elavon Financial Services DAC, a company established in Ireland, and some of the interested parties are Dutch subsidiaries of a Swiss parent company (Explanatory Notes to Article 1.3.1. (b)). Although, pursuant to the Explanatory Notes, these circumstances were sufficient to establish the matter?s international character, the court went on to address other cross-border elements present in the case. Based on a broad understanding of a dispute’s international character, the court underlined that some of the interested parties are internationally active, operate or at least plan to operate business abroad (see also The Hague Court of Appeal, ECLI:NL:GHSGR:2011:BR1381). Similar to the rules of other countries’ international commercial courts, he NCC Rules qualify a case as international when the dispute arises from an agreement prepared in a language other than Dutch. Since the documents related to the application were drafted in English, the NCC regarded the English language of the contract as another international element.

(d) NCC Agreement

The fourth  requirement for the NCC’s jurisdiction is that the parties should have expressly agreed in writing for the proceedings to be in English and according to the NCC Rules (Article 30r (1) Rv and Article 1.3.1. (d) NCC Rules). Since the NCC, unlike the rest of the Dutch courts, conducts proceedings entirely in English and applies its own rules of civil procedure the parties’ agreement justifies such a deviation and ensures that the parties wilfully found themselves before the newly established chamber. In the present matter, the parties signed a pre-application agreement and expressly agreed on the NCC’ s jurisdiction to hear their case. Although, two of the interested parties were not signatories to that agreement one of them appeared before the court leaving the NCC’ s jurisdiction uncontested and the other did not raise any objections against the chamber’ s jurisdiction in its communication with the court (see also Article 2.2.1 NCC Rules and the Explanatory Rules).

(3) The Fate of the Belgian BIBC Proposal

As reported on this blog, the proposal to create the Brussels International Business Court was brought before Parliament in May 2018. Interesting features of this proposal are that the rules of procedure are based on those of the UNCITRAL Model Law on International Commercial Arbitration and that cases are heard by three judges, including two lay judges. From the outset the proposal was criticized (see for some interesting initial thoughts Geert Van Calster’s blogpost). As in the Netherlands, many discussions evolved around the fear for a two-tiered justice system, giving big commercial parties bringing high value claims a preferential treatment over ordinary court cases (see for the discussions in the Netherlands our earlier blogpost). The Belgian Ministry of Justice and Prime Minister presented the English language court as an asset in times of Brexit and efforts were made to adjust the proposal to get it through.

Over the last week it became clear that there is insufficient political backing for the proposal after one of the big parties withdrew its support (see De Standaard). Other – mostly left-wing parties – had expressed their concerns earlier and the proposed court has been referred to as a ‘caviar court’ and a ‘court for the super rich’. But probably the most fierce opponent is the judiciary itself. Arguments range from principled two-tiered justice fears (including for instance by the First President of the Court of Cassation) to concerns about the feasibility to attract litigation in the Brussels courts and the costs involved in establishing this new ‘vip court’. The message seems to be: we have enough problems as it is. Referring to the Dutch NCC and the French International Commercial Chamber, the Minister of Justice, Koen Geens, said that withdrawing the BIBC proposal would be a missed opportunity and that he can counter the arguments against the establishment of the BIBC. However, as it looks now it seems highly unlikely that Belgium will be among the countries that will have an international business court in the near future.

Thank you Thomas Kendra and Thibaud Roujou de Boubée for signalling 16/25484 Cameroon v Projet Pilote Garoubé at the Paris Court of Appeal end of December 2018. The essence of the case is the Court confirming an arbitral award applying OHADA law. OHADA stands for ‘Organisation pour l’harmonisation en Afrique du droit des affaires’ – ie the Organisation for the Harmonization of Corporate Law in Africa.

Thomas and Thibaud analyse excellently – of note for this blog are the issue of non-State law as lex contractus (compare with Rome I), the recognition of same as trumping Cameronese law essentially as overriding mandatory law, and the rejection of the Cameronese argument that its wildlife laws qualify themselves as lois de police /overriding mandatory law and that the lack of recognition of same violates ordre public.

Interesting arbitration /conflicts material.

Geert.

The European Commission has just released some new factsheets and Q&A documents regarding the consequences of a no-deal Brexit here. Inter alia, the information given concerns the rights of consumers (including the applicable law and the enforcement of judgments), of EU citizens living in the UK, of UK citizens living in the EU, and the position of EU students enrolled at UK universities. However, the date for a hard Brexit mentioned in the documents is still 29 March 2019, which is in any event no longer accurate after last week’s summit (see our previous post here).

Kokott AG Opined in C-624/17 OM v Tronex end of February (I had flagged the case summarily earlier): whether consumer returns of electrical appliances some of which are no longer usable because defective, and residual stock are to be regarded as waste that may be exported only in accordance with the Waste Shipment Regulation. – Reminiscent of the issues in Shell: in that case in a B2B context.

Tronex’ export consignment that was stopped, consisted of appliances which had been returned by consumers under a product guarantee, on the one hand, and goods which, because of a change to the product range, for example, were or could no longer be sold (normally), on the other. A number of the boxes in which the appliances were packaged carried a notice stating their defects. The glass in some of the glass kettles was damaged. The shipment was to take place without notification or consent in accordance with the Waste Shipment Regulation.

The AG takes a sensible approach which distinguishes between consumer and collector. At 31 ff: The mere fact that objects have been collected for the purpose of reuse does not in itself necessarily support the assumption that they have been discarded. Indeed, it seems sensible, both economically and from the point of view of the efficient use of resources, to make appliances which can no longer be sold on the market for which they were originally intended available on other markets where they may still sell. Particularly in the case of residual stock which is still in its unopened original packaging, therefore, the request for a preliminary reference contains insufficient evidence to support the conclusion that there has been any discarding.

Returned appliances which, on account of serious defects, are no longer usable and can no longer be repaired at reasonable cost, on the other hand, must unquestionably be regarded as waste. Kokott AG suggests waste classification as the default position. At 39: in so far as there are doubts as to the reuse of the goods or substance in question being not a mere possibility but a certainty, without the necessity of using any of the waste recovery processes referred to in the Waste Directive prior to reuse, only the possibility of ‘prompt’ dispelling of the doubt by an inspection of the appliances, can shift the presumption of it being waste.

‘Repair’ is what the AG proposes as the distinctive criterion: at 40: if the inspection shows that the item is still capable of functional use, its status as waste is precluded. The same is true of goods with minor defects which limit functionality only negligibly, meaning that these goods can still be sold without repair, in some cases at a reduced price. At 41: ‘In so far as the inspection identifies defects which need to be repaired before the product is capable of functional use, however, that product constitutes waste, since there is no certainty that the retailer will actually carry out the repair. Whether the repair is less or more expensive cannot be decisive in this regard, since a product that does not work constitutes a burden and its intended use is in doubt.’ The same goes for goods (other than those in the original packaging, per above) which have not been inspected at all.

At 45 ff the AG supports this conclusion with reference to instruction in Annexes to the WEEE Directive. She also suggests that her interpretation, given the criminal law implications, be limited to those instances occurring after the eventual CJEU judgment.

Geert.

(Handbook of) EU Waste law, 2nd ed. 2015, Oxford, OUP, Chapter 1, 1.149 ff.

After last Thursday’s EU summit, which resulted in a double-barreled “flextension” of the date for Brexit, all cards are on the table again. Insofar, it is worth noticing that the German journalist Harald Martenstein, in his weekly column for the Berlin-based “Tagesspiegel”, has recently offered three innovative solutions for the Brexit dilemma:

The first one may be called the “one island, two countries” proposal: Great Britain would be split into two parts, one leaving the EU, the other remaining. All Britons would then be granted double citizenship and be free to make up their minds according to their preferences.

The second solution that the columnist proposes takes up the frequently raised demand for a second referendum that should overturn the first Brexit vote. Well, if there is going to be a second referendum, why not a third or even a fourth one? Thus, Martenstein suggests that, in the future, a referendum should be held every year on 2 January; for the remaining part of the year, the United Kingdom would then be either in or out of the EU.

Thirdly and finally, if all else fails, Martenstein argues that the UK might simply turn the tables and offer the other Member States the possibility of leaving the EU as well and joining the UK instead, which would then change its name to “Greatest Britain Ever”.

Obviously, the proposals made by the columnist are meant as a satirical comment. Yet, there are some elements of reality contained in his mockery: who knows whether, in case of a hard Brexit, Scotland (or Northern Ireland) would stay a part of the UK or whether a new referendum on seceding from the UK – and re-joining the EU – would be organized? And already today, numerous Britons are applying for a double citizenship in order to keep a foothold in the EU. Who knows whether a second referendum on Brexit will take place and whether it will actually settle the matter once and for all? And wasn’t the EU summit an attempt by the EU-27 to avoid the Brexit populist contagion from spreading to the continent via the impending EU parliamentary elections? In sum, the situation is increasingly reminiscent of a book title by Paul Watzlawick: hopeless, but not serious…

Written by John Coyle, the Reef C. Ivey II Term Professor of Law, Associate Professor of Law at the University of North Carolina School of Law

Over the past few decades, the concept of party autonomy has moved to the forefront of private international law scholarship.  The question of whether (and to what extent) private actors may choose the law that will govern their relationship has generated extensive commentary and discussion.  The result?  An ever-expanding literature on the role of party autonomy in private international law.

In this post, I want to call attention to a related issue that has attracted considerably less scholarly attention.  This is the issue of how to interpret the contractual language by which private actors exercise their autonomy to choose a governing law.  (I explored this issue in a recent article.)  Over the past several decades, the courts in the United States have developed several interpretive rules of thumb—canons of construction, to use a fancy term—that assign meaning to ambiguous words and phrases that frequently appear in choice-of-law clauses.  I discuss several of these interpretive rules—and the various ways in which parties can contract around them—after the jump.

The first, and arguably the least controversial, of these interpretive rules is the canon in favor of internal law.  When presented with a choice-of-law clause that selects the “laws” of a given jurisdiction, courts in the United States will generally interpret the word “laws” to refer to the internal law of the chosen jurisdiction (excluding its conflicts rules) rather than the whole law of the chosen jurisdiction (including its conflicts rules).  This interpretive rule is eminently sensible.  Since the entire point of a choice-of-law clause is to reduce legal uncertainty, it would defeat the purpose to interpret the clause to select the conflicts rules of the chosen jurisdiction, which could in turn result in the application of the law of a different jurisdiction.

The second interpretive rule is the canon in favor of federal inclusion and preemption.  This canon requires a bit of explanation for those not familiar with the U.S. legal system.  Most U.S. choice-of-law clauses select the laws of one of the fifty states (e.g. New York) rather than the nation (i.e. the United States).  When a clause selects the “laws” of New York, however, it is not clear whether the parties are selecting the laws of New York to the exclusion of any relevant provisions of federal law or whether they are selecting the laws of New York including any relevant provisions of federal law.  U.S. courts have consistently adopted the latter interpretation.  When the parties select the laws of New York, they are presumed to have also selected any applicable federal statutes and federal treaties.  In the event of a conflict between federal law and state law, moreover, the federal law will prevail.

As a practical matter, this interpretive rule is most often relevant in the context of international sales agreements.  The United States is a party to the United Nations Convention on Contracts for the International Sale of Goods (CISG), which covers much of the same ground as Article 2 of the Uniform Commercial Code (UCC).  When the parties to an international sales agreement select the “laws” of New York to govern their agreement, they may think that they are getting New York’s version of the UCC.  Instead, they will get the CISG.  This is because the “laws” of New York will be deemed to include any relevant provisions of federal law (including the CISG) and that treaty will, in turn, be deemed to preempt UCC Article 2.  (I discuss the relationship between choice-of-law clauses and the CISG in greater depth here.)

The third interpretive rule is the canon of linguistic equivalence.  This canon holds that a choice-of-law clause stating that the contract shall be “interpreted” or “construed” in accordance with the laws of a given state is the linguistic equivalent of a clause stating that the contract shall be “governed” by the laws of that state.  This conclusion is by no means inevitable.  Indeed, some court in the United States have declined to follow this canon.  Most U.S. courts, however, have reasoned that while there may technically be a linguistic distinction between the words “interpreted” and “construed,” on the one hand, and the word “governed,” on the other, most contracting parties are completely unaware of the distinction when it comes to their choice-of-law clauses.  Most courts have also reasoned that contracting parties rarely, if ever, intend to select one law to govern interpretive issues arising under the contract while leaving unanswered the question of what law will govern the parties’ substantive rights and obligations under that same contract.  Accordingly, they read the words “interpret” and “construe” to be the linguistic equivalent of “governed.”

I refer to the fourth collection of interpretive rules, collectively, as the canons relating to scope.  These canons help the courts determine whether a choice-of-law clause applies exclusively to contract claims brought by one contracting party against the other or whether that clause also selects the law for any tort and statutory claims that may be brought alongside the contract claims.  The highest court in New York has held that a generic choice-of-law clause—one which states that the agreement “shall be governed by the laws of the State of New York”—only covers contract claims.  The highest court in California, by comparison, has interpreted the same language to cover any contract, tort, or statutory claims brought by one party against the other.  Courts in Texas and Florida have followed New York’s lead on this issue.  Courts in Minnesota and Virginia have followed California’s lead.

To make things even more complicated, U.S. courts have yet to reach a consensus on how to select the relevant body of interpretive rules.  The courts in California have held one should apply the canons followed by the jurisdiction named in the clause to interpret the clause.  The courts in New York, by contrast, have held that one should apply the canons followed by the forum state to interpret the clause.  The California courts clearly have the better of the argument—there is absolutely no reason to deny the parties the power to choose the law that will be applied to interpret their choice-of-law clause—but several states have followed New York’s lead.  The result is a baffling and befuddling jurisprudence relating to the scope of generic choice-of-law clauses.

Sophisticated parties may, of course, contract around each of the interpretive default rules discussed above.  To preempt the canon in favor of internal law, they can include the phrase “without regard to conflict of laws” in their choice-of-law clause.  To preempt the canon of federal inclusion and preemption, they can state that “the CISG shall not apply” to their agreement.  To preempt the canon of linguistic equivalence, they can simply state that the contract shall be “governed” by the laws of the chosen state.  And to preempt the canons relating to scope, they can either state that claims “relating to” the contract shall be covered by the clause (if they want a broad scope) or that the clause only applies to “legal suits for breach of contract” (if they want a narrow scope).  To date, however, many U.S. parties have failed to update their choice-of-law clauses to account for these judicial decisions.

I recently reviewed the choice-of-law clauses in 351 bond indentures filed with the U.S. Securities and Exchange Commission (SEC) in 2016 that selected New York law.  I discovered that (a) only 55% excluded the conflicts rules of the chosen jurisdiction, (b) only 83% contained the phrase “governed by,” and (c) only 12% addressed the issue of scope.  Chris Drahozal and I also recently reviewed the choice-of-law clauses in 157 international supply agreements filed with the SEC between 2011 and 2015.  We discovered that (i) only 78% excluded the conflicts rules of the chosen jurisdiction, (ii) only 90% contained the phrase “governed by,” and (iii) only 20% addressed the issue of scope.  These findings suggest that the feedback loop between judicial decisions interpreting contract language and the lawyers tasked with drafting this language does not always function effectively.  Contract drafters, it would appear, do not always take the necessary steps to rework their choice-of-law clauses to account for judicial decisions interpreting language that commonly appears in these clauses.

Going forward, it would be fascinating to know whether any non-U.S. courts have developed their own interpretive rules that assign meaning to ambiguous words and phrases contained in choice-of-law clauses selecting non-U.S. law.  If anyone is aware of any academic papers that have explored this issue from a non-U.S. perspective, I would be very grateful if you could bring that work to my attention and the attention of the broader community in the Comment section below.

In [2019] EWHC 466 (Fam) V v M, Williams J refused both an application for a stay on the basis of forum non conveniens of English proceedings in favour of proceedings in India, and an anti-suit injunction. Applicant mother is V and the respondent is the father M. They are engaged in litigation in England and in India in respect of their son. The English limb of the proceedings is the mother’s application for wardship which was issued on or about the 16 October 2018, and which includes within it application for the summary return of the child from India to England.

India is (obviously) neither a Brussels IIa party nor the 1996 Hague child Protection Convention. Brussels IIa contains a forum non-light regime (as Brussels Ia now does, too): see e.g. Child and Family Agency v J.D. Whether more general forum non is excluded following Owusu v Jackson per analogiam, has not reached the CJEU however as Williams J notes at 22 ‘the trend of authority in relation to the ‘Owusu-v-Jackson’ points towards the conclusion that the power to stay proceedings on forum non-conveniens grounds continues to exist in respect of countries which fall outside the scheme of BIIa or the 1996 Hague Child Protection Convention.’

Given that eventually he upholds jurisdiction of the English courts, the point is moot however may be at issue in further cases.

At 48 ff the various criteria for forum non were considered:

i) The burden is upon the applicant to establish that a stay of the English proceedings is appropriate.

ii) The applicant must show not only that England is not the natural or appropriate forum but also that the other country is clearly the more appropriate forum.

iii) In assessing the appropriateness of each forum, the court must discern the forum with which the case has the more real and substantial connection in terms of convenience, expense and availability of witnesses. In evaluating this limb the following will be relevant;

a) The desirability of deciding questions as to a child’s future upbringing in the state of his habitual residence and the child’s and parties’ connections with the competing forums in particular the jurisdictional foundation

b) The relative ability of each forum to determine the issues including the availability of investigating and reporting systems. In practice, judges will be reluctant to assume that facilities for a fair trial are not available in the court of another jurisdiction but this may have to give way to the evidence in any particular case.

c) The convenience and expense to the parties of attending and participating in the hearing and availability of witnesses.

d) The availability of legal representation.

e) Any earlier agreement as to where disputes should be litigated.

f) The stage any proceedings have reached in either jurisdiction and the likely date of the substantive hearing.

g) Principles of international comity, insofar as they are relevant to the particular situation in the case in question. However public interest or public policy considerations not related to the private interests of the parties and the ends of justice in the particular case have no bearing on the decision which the court has to make.

h) The prospects of success of the applications.

iv) If the court were to conclude that the other forum was clearly more appropriate, it should grant a stay unless other more potent factors were to drive the opposite result; and

v) In the exercise to be conducted above the welfare of the child is an important (possibly primary), but not a paramount, consideration.

Conclusion is that on clear balance England is the natural and appropriate forum and India is not clearly the more appropriate forum.

At 50, the anti-suit injunction was considered premature (Williams J suggests that had it been a commercial matter, it may not have been): ‘Assuming that a stay application can be made and that some form of judicial liaison can be commenced to enable this court and the Indian court to work cooperatively to solve the riddle of competing applications in our respective courts, it is in my view wholly premature to grant such an injunction. That situation might fall to be reconsidered if no progress can be made and in particular if the father embarked upon a rear-guard action to play the Indian courts to delay the resolution of matters. However we are far from that position as yet.’

Note the comity considerations here, reflecting on the potential judicial co-operation between India and England, advanced here given the interest of the child (less likely for purely commercial cases, one assumes).

Geert.

Many thanks to Donna Williams for reporting and commenting on 1:18-cv-10798 Snöfrost AB v. Håkansson in the District Court of Massachusetts. Not all my blog posts relate to maverick cases, especially at the week-end perhaps. This one is a standard application of forum non conveniens in the US and a useful reminder of the application of the principle by US courts.

Snöfrost, a Swedish company, filed in the U.S. District Court for the District of Massachusetts against Susanne Håkansson, a Massachusetts resident, seeking to enforce an alleged share purchase agreement (“SPA”). The SPA required Håkansson to purchase shares in a Swedish company (Farstorps Gård AB) for 330 million Swedish Krona. Snöfrost alleged that Håkansson reneged on the deal “at the eleventh hour” by raising regulatory issues as an excuse.

Håkansson’s residence in the jurisdiction would have meant immediate dismissal of FNC under the Owusu rule, had this been a case before a court in the EU.

Jurisdiction dismissed: centre of gravity of the case is Sweden – Donna explains the relevant factors in her post.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.2.1.

Case C-658/17 WB is one of the first in which the annoying new rule on anonymisation at the CJEU kicks in. At issue is the characterisation of notaries as ‘court’ under the EU succession Regulation 650/2012.

Particularly with regard to succession law, notaries in the Member States carry out tasks which can be considered ‘judicial’. In some jurisdictions (especially in the Anglo-Saxon world) a court is involved in transferring the estate from the deceased to those inheriting. This is not the case in most Member States with a so-called ‘Latin’ office of notary. A private international law regulation concerning inheritance can therefore not solely be aimed at courts in the traditional sense of the word. In particular, notaries and registry offices, but also testamentary executors entrusted with judicial authority, need to be integrated.

The rules with regard to jurisdiction and applicable law included in the Regulation have to be complied with by all above-mentioned legal professions, though only to the extent that they exercise judicial functions. The Regulation therefore adopts, in Article 3(2), a functional approach of a ‘court’:

For the purposes of this Regulation, the term ‘court’ means any judicial authority and all other authorities and legal professionals with competence in matters of succession which exercise judicial functions or act pursuant to a delegation of power by a judicial authority or act under the control of a judicial authority, provided that such other authorities and legal professionals offer guarantees with regard to impartiality and the right of all parties to be heard and provided that their decisions under the law of the Member State in which they operate:

(a)     may be made the subject of an appeal to or review by a judicial authority; and

(b)    have a similar force and effect as a decision of a judicial authority on the same matter.

The Member States shall notify the Commission of the other authorities and legal professionals referred to in the first subparagraph in accordance with Article 79.

Outside of the exercise of judicial functions, notaries are not bound by the rules on jurisdiction, and the authentic instruments they issue circulate in accordance with the provisions on authentic instruments rather than ‘judgments’.

In accordance with Article 79 of the Regulation, the Commission (on the basis of notifications by the Member States) has established a list of the authorities and legal professions which need to be considered as ‘courts’ in accordance with this functional determination. This list will also be particularly interesting for internal national use.

However I have always emphasised to Member States compiling their lists, that unlike in the Insolvency Regulation, where the extent of cover of national proceedings is entirely in the hands of the Member States, for the Succession Regulation it is an autonomous EU  definition which drives cover by the Regulation.

Bot AG agrees (Opinion of 28 February; not available in English). whether or not a particular office and /or function is included in the national notification is not determinant. An EU definition of Court kicks in. He refers in particular to his overview in C-484/15 Zulfikarpašić. Reference is also made to Pula Parking. Applied to the case at issue, Polish notaries by virtue of Polish law may only issue the Polish (not: EU) certificate of succession if there is consensus among the parties and no disagreement e.g. re jurisdiction. No judicial functions therefore and the certificate travels as an authentic instrument, not a judgment.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 6, Heading 6.2.1.

I reported on Bot AG’s Opinion in  Case C-579/17 BUAK (Bauarbeiter-Urlaubs- u. Abfertigungskasse v Gradbeništvo Korana d.o.o.) here. He focussed on admissibility viz the preliminary review procedure. He left the questions on ‘civil and commercial’, and the social security exception unanswered, suggesting these are now acte claire. The Court at the end of February did answer all questions. (For completeness sake I already note that for the latter, the CJEU referred to secondary EU law to find the payment not to be one in social security).

First, on the issue of admissibility under Article 267 TFEU. In the absence of discussion by the original court on the applicability of Brussels Ia, by determining whether it is competent to issue the certificate under Article 53 Brussels Ia (replacing exequatur), the court of origin implicitly confirms that the judgment given in default which must be recognised and enforced in another Member State falls within the scope of application of that Regulation: for evidently the issue of the certificate is possible only on that condition. That procedure in those circumstances is judicial in character, with the result that a national court ruling in the context of such a procedure is entitled to refer questions to the Court for a preliminary ruling. (But only in those circumstances: for otherwise the issuing of the certificate becomes a potential anchor for stalling quick enforcement, via preliminary review to Luxembourg).

Next, on the issue of ‘civil and commercial’, some usual suspects are discussed including in particular Pula Parking. flyLAL, and Sapir (but not Fahnenbrock or Kuhn). What needs to be examined, is firstly the legal relationship between the parties to the dispute and secondly the basis and the detailed rules governing the bringing of the action.

As to the former, BUAK may be governed by public law however its calculations of wage supplements and annual leave, the formula for which is determined by decree, are superimposed upon wage negotiations which employers either negotiate entirely freely with employees or agree so on the basis of collective agreements between employers and employees to which employers freely consent. And at 54: ‘in so far as the employer’s obligation to pay the wage supplements is intrinsically linked with the rights, which are of a civil nature, of workers to annual leave pay, …BUAK’s claim and, therefore, an action for payment of that claim, is also of a civil nature.’ (Note that Eurocontrol, not too dissimilar in context (here too the root cause of the debt incurred is one of free will: whether to use certain airspace and airports or not), did lead to a finding of non-civil and commercial matters). I do not find this application straightforward at all; ‘the parties’ are the employer (Korana, a Slovenian company which had posted workers to Austria) and BUAK. Their legal relationship is removed from the contract and /or collective agreements negotiations.

As for the second criterion, the basis and the detailed rules governing the bringing of the action, unlike purely internal situations, in which BUAK may itself issue an execution title in the form of a statement of arrears, with respect to arrears relating to posted workers who do not have their habitual place of work in Austria it must initiate legal proceedings for the payment of unpaid wage supplements. However there is divergence of views between the referring court and Austria and the EC before the CJEU: the former maintains that its hands are tied and that it cannot pursue a de novo review of the application by BUAC; the latter suggest the court seized does carry out a full review of all of the elements of the application. The CJEU at 60 would seem to lean on the side of the referring court but leaves it to take the final decision.

I will turn to this again when I work on the third edition of the handbook this summer yet it is clear that the formula for deciding civil and commercial is still not entirely settled. The First chamber issued Fahnenbrock (Tizzano (Rapporteur), Rodin, Levits, Berger and Biltgen), and Kuhn (Silva de Lapuerta (Rapporteur), Bonichot, Regan, Fernlund and Rodin; the latter the only common denominator in both), which are arguably more like the Lechoritou formula, which in turn applies Eurcontrol: exclusion of certain legal actions and judicial decisions from the scope of Regulation No 1215/2012, by reason either of the legal relationships between the parties to the action or of the subject matter of the action.

The Second chamber (K. Lenaerts, A. Prechal, Toader, Rosas and Ilešič; quite a few conflicts scholars indeed including the President of the CJEU) now focuses on Sapir which was issued by the third Chamber, comprising at the time Toader (Rapporteur), Ilešič, Jarašiūnas, Ó Caoimh,  Fernlund. Toader and Ilešič are the common denominator with current judment in BUAK). Sapir has focus also firstly on the legal relationship between the parties to the dispute, but secondly the basis and the detailed rules governing the bringing of the action (not: the to my knowledge never applied criterion of ‘subject matter’ of the action).

To ponder over the summer.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.16.1.1.

The Australian common law does not require reciprocity for recognizing and enforcing foreign judgments. Therefore, although Chinese courts have never recognized and enforced an Australian monetary judgment, Australian courts have recognized and enforced Chinese judgments. Thus far, there have been two Chinese judgments recognized and enforced in Australia (both in the State of Victoria). In both cases, the Australian judges considered whether the Chinese courts had international jurisdiction based on the defendants’ citizenship/nationality. The first case is Liu v Ma.[1] The plaintiff sought to recognize and enforce a default Chinese judgment (worth RMB 3,900,000) against the defendants. The defendants defaulted in the Australian judgment recognition and enforcement (hereinafter ‘JRE’) proceedings. By applying Australian law, the Supreme Court of Victoria held that the Chinese court had international jurisdiction over the defendants because they were born in China and held a Chinese passport, they had substantial activities or financial affairs in China, and Chinese law does not recognize dual nationality. The second case, Suzhou Haishun Investment Management Co Ltd v Zhao & Ors, was rendered recently on 27 February 2019.[2] It is a summary judgment but, in contrast to Liu, the defendant thoroughly argued her case in the Australian JRE court. The plaintiff sought to recognize and enforce three Chinese judgments (worth RMB 20,000,000). The plaintiff brought Chinese proceedings against a Ms. Zhao and her company where she was the director and the sole shareholder. A few days before the Chinese proceeding was commenced, Ms. Zhao was informed that the plaintiff intended to sue her, and she left China with no intention to return. However, Ms. Zhao was still registered to an address in the Chinese court’s jurisdiction under the hukou system (China’s system of household registration). She possessed a Chinese identity card and held a Chinese passport. The plaintiff tried various ways to serve Ms. Zhao but was unsuccessful. Finally, the service was conducted by public announcement. Ms. Zhao defaulted in the Chinese proceedings. But at the first hearing, a man purporting to be an employee of Ms. Zhao’s company appeared before the Chinese judge. This man was asked by the Chinese judge whether he knew Ms. Zhao, to which he responded that she was ‘the boss.’ Although this man did not hold Ms. Zhao’s power of attorney, he nevertheless indicated that he had with him documents verifying that Ms. Zhao was diagnosed with depression which explained why she could not attend the hearing. The Chinese court held that Ms. Zhao was aware of the proceedings and service by the public announcement was effective. Chinese judgments were rendered against Ms. Zhao and her company. Her company had no assets in China, so the plaintiff went to Australia to locate Ms. Zhao. The Australian court held that service by the public announcement was legal according to Chinese Civil Procedural law and there was no denial of natural justice. The Australian court also held that the Chinese court had international jurisdiction. First, because the parties submitted to the Chinese court by a choice of court clause in the loan contracts. Second, Ms. Zhao was a citizen of China, possessed a Chinese passport, held an identity card and submitted to the jurisdiction of the Chinese Court by agreement, so it is not necessary to decide whether she was considered by Chinese law to be domiciled in China.

Although the defendant’s citizenship is not a ground for Australian courts to exercise direct jurisdiction, it remains to be ground in the Australian JRE proceedings to determine whether a foreign court has international jurisdiction. In Independent Trustee Services Ltd v Morris,[3] the plaintiff applied to enforce a UK judgment in Australia on the ground that the defendant had an active UK citizenship. The defendant was a UK citizen and held a UK passport issued in 2003 and current until 2013, and he used this passport to travel to Australia. The Supreme Court of New South Wales found that the defendant’s citizenship was not some relic of an early stage of his life but was an active part of his present situation on which he had relied for international travel and for other purposes. It held that the UK judgment should be recognized and enforced because citizenship of a foreign country means allegiance to the foreign country, and it is a recognized ground of international jurisdiction on which the effectiveness of foreign judgments is accepted under the common law. However, even the judge deciding Morris acknowledges the ‘absence of citation in the English authorities of any case in which this ground of jurisdiction has been contested and upheld after argument’.[4] Liu cites the English case Emanuel v Symon[5], which found that a foreign court has international jurisdiction if the defendant is a subject of the foreign country in which the judgment has been obtained. However, this is a dictum rather than a holding. As Dicey, Morris and Collins The Conflict of Laws indicates there is no actual decision in English common law which supports that the courts of a foreign country might have jurisdiction over a person if he was a subject or citizen of that country. Private International Law in Australia by Reid Mortensen and et al also considers active citizenship is a dubious ground of international jurisdiction.

The cases involving Chinese citizenship and Hukou are more complicated. First, the fact that China does not recognize dual citizenship does not mean China is necessarily a Chinese citizen’s domicile. A Chinese citizen automatically loses his/her Chinese citizenship only when a Chinese citizen has obtained foreign citizenship and resides overseas.[6] It is not uncommon that a Chinese citizen may reside overseas under a foreign permanent residency visa. Second, these groups of Chinese citizens still maintain a registered address in China (Hukou). This is because every Chinese citizen must have a Hukou even if s/he resides abroad. This Hukou may enable them to receive Chinese pension and voter registration. Third, under Chinese civil procedure law, a Chinese court has jurisdiction on a Chinese citizen when his or her Hukou is in its jurisdiction,[7] even if the Chinese citizen (defendant) is not present in China when the initiating process is commenced. If all other service methods are not successful, people’s courts can use a public announcement to effect service. The question is whether Australian courts recognize and enforce the consequent Chinese default judgment based on the defendant’s citizenship. I would suggest Australian courts to be cautious to follow Liu and Zhao regarding the issue of citizenship. The classical grounds for international jurisdiction are presence and submission. Service by a public announcement is hard to establish international jurisdiction on a defendant who is neither present nor submitted. Citizenship as a ground of international jurisdiction has been doubted by three English High Court judges[8] and rejected by the Irish High Court.[9] Additionally, Liu is a default judgment, so the citizenship issue has not been contested, and the defendant in Zhao submits to Chinese court by a choice of court clause.

[1] Liu v Ma & anor [2017] VSC 810.

[2] Suzhou Haishun Investment Management Co Ltd v Zhao & Ors [2019] VSC 110.

[3] Independent Trustee Services Ltd v Morris [2010] NSWSC 1218.

[4] Ibid, para 28.

[5] Emanuel v Symon[1908] 1 KB 302.

[6] Art. 9 of the Chinese Nationality Law, http://www.mps.gov.cn/n2254996/n2254998/c5713964/content.html.

[7] Under the Hague Service Convention, service on Hukou may not be upheld if the defendant can demonstrate that his habitual residence is different. If a Chinese citizen leaves its Hukou address and resides in another address continuously for more than one year, the latter address becomes his habitual residence and the court in that address also has jurisdiction.

[8] Blohn v Desser [1962] 2 Q.B. 116, 123; Rossano v Manufacturers’ Life Insurance Co Ltd [1963] 2 Q.B. 352, 382–383; Vogel v RA Kohnstamm Ltd [1973] Q.B. 133; see also Patterson v D’Agostino (1975) 58 D.L.R. (3d) 63(Ont). Dicey, Morris and Collins The Conflict of Laws (15th ed) 14-085.

[9] Rainford v Newell-Roberts [1962] I.R. 95.

At the moment this note is written, it is unclear whether there will be another vote in the House of Commons concerning Theresa May’s deal with the EU-27 at all (see here for the latest developments). Already on 18 January 2019, the European Commission recognized that “[i]n view of the uncertainties surrounding the ratification of the Withdrawal Agreement, all interested parties are reminded of legal repercussions which need to be considered when the United Kingdom becomes a third country”. In order to clarify matters, the Commission has published a so-called Preparedness Notice which is meant to give guidance to stakeholders with regard to the implications of a no-deal Brexit in the field of judicial cooperation and private international law. The full text of this notice is available here.