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I had earlier reviewed Bot AG’s Opinion in C-308/17 Leo Kuhn, in which the Court held on Thursday. The case concerns the retrofit introduction of CACs – Collective Action Clauses, in Greek bonds, allowing the amendment to the initial borrowing terms by decisions adopted by a qualified majority, of the remaining capital owed and applying also to the minority.

Along the lines suggested by the AG, the Court finds the litigation not to relate to civil and commercial matters (likely also leading to a finding on the basis of national law, of sovereign immunity).

Extensive reference is made of course to Fahnenbrock , among others. Yet the Court pays lip service only to Fahnenbrock: in that judgment, it launched the ‘direct and immediate’ formula: in that case it found it was the bondholders’ vote, which led directly and immediately to changes to the financial conditions of the securities in question, not the public authorities’ actions essentially dictating it: therefore that litigation was held not to be actum iure imperii, and it was found to be subject to the service of documents Regulation.

In Kuhn, Brussels I Recast is engaged and here the Court would seem to be inclined to follow (also) Bot AG’s Opinion in Fahenbrock (where he was not so followed): there, Bot AG had opined that the Greek State’s intervention in the contracts was direct and not at a distance from the contract. His focus was more on the circumstances of the case than on the legal nitty-gritty. There are certainly many similarities between Fahnenbrock and Kuhn: in the latter, the crammed-down haircut was formally the result of a majority decision of bondholders to accept the restructuring offer made by the Greek State. Not unlike Fahnenbrock were as noted it was also a bondholders’ vote which was the formal trigger.

In Kuhn, the Court emphasises the context, like Bot to no avail had done in Fahnenbrock: after a succinct tour d’horizon of the debt crisis leading to the CACs, the Court concludes ‘It follows that, having regard to the exceptional character of the conditions and the circumstances surrounding the adoption of Law 4050/2012, according to which the initial borrowing terms of the sovereign bonds at issue in the main proceedings were unilaterally and retroactively amended by the introduction of a CAC, and to the public interest objective that it pursues, the origin of the dispute in the main proceeding stems from the manifestation of public authority and results from the acts of the Greek State in the exercise of that public authority, in such a way that that dispute does not fall within ‘civil and commercial matters’ within the meaning of Article 1(1) of Regulation No 1215/2012.’

I suggested at the time that ‘direct and immediate effect’ is not a criterion which is easy to handle. Yet in solely emphasising context, the Court now casts the net too wide in my view, and at the very least leads to more speculation (pun intended) in the litigation context of sovereign debt.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Heading 2, Heading 2.2, Heading 2.2.9.

 

The pauliana rings extensively at Kirchberg these days and months.

Two days ago the Court held in C‑296/17 Wiemer & Trachte. Following Wahl AG’s Opinion (which is not available in English), the Court has confirmed exclusive jurisdiction for set aside (pauliana) actions, of the courts of the Member State within the territory of which insolvency proceedings have been opened (COMI or secondary proceedings). Not therefore jurisdiction under the Brussels I Recast for the State of domicile of the defendant.

The need to avoid forum shopping (a strong leading principle in the insolvency Regulation) in particular, led Wahl AG and now the Court to insist on exclusive jurisdiction. The alternative reading (defended, I understand, inter alia by the Commission) relied on the altogether limiting wording of the relevant articles in the Regulation (both the previous and current versions), and also on an efficiency argument: particularly the insolvency practitioner ought to be able to forum shop so as to ensure the best outcome for the collective creditors (particularly by pursuing parties who have benefitted from avoidance actions, in their domicile). Wahl AG confessed sympathy for that practical reason (not unlike some of the arguments in the common law against say Owusu or West Tankers), yet emphasised the CJEU’s direction on vis attractiva concursus: rather a magnetic direction.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5 Heading 5.4.1. Chapter 2 Heading 2.2.2.10.1

 

I earlier posted a guest blog on the qualification of the Dutch Peeters /Gatzen suit, a damages claim based on tort, brought by a liquidator against a third party having acted wrongfully towards the creditors. Bobek AG opined two weeks back in C-535/17 NK (insolvency practitioner for a baillif practice) v BNP Paribas Fortis.

His Opinion is of relevance not just for the consideration of jurisdiction, but perhaps even more so (for less litigated so far) for the analysis of applicable law.

Roel Verheyden has commented on the Opinion in Dutch here, and Sandrine Piet had earlier contextualised the issues (also in Dutch) here. She clarifies that the suit was introduced by the Dutch Supreme Court in 1983, allowing the insolvency practitioner (as EU insolvency law now calls them) to claim in tort against third parties whose actions have diminished the collective rights of the creditors, even if the insolvency person or company at issue was not entitled to such suit. The Advocate General himself, in his trademark lucid style, summarises the suit excellently.

Importantly, the Peeters /Gatzen is not a classic pauliana (avoidance) suit: Bobek AG at 16: ‘The power of the liquidator to bring a Peeters-Gatzen action is not limited to cases where the third party belongs to the circle of persons who, based on a Paulian (bankruptcy) claim .. would be liable for involvement in allegedly detrimental acts. The liquidator’s competence relates more generally to the damage caused to the general body of creditors by the wrongful act of a third party involved in causing that damage. The third party need not have caused the damage or have profited from it: it is sufficient that that third party could have prevented the damage but cooperated instead.’

In the case at issue, the third party is BNP Paribas Fortis, who had allowed the sole director of the company to withdraw large amounts of cash from the company’s account.

Firstly, on the jurisdictional issue, Nickel /Goeldner and Nortel had intervened after the interim judgments of the Dutch courts, creating doubt in their minds as to the correct delineation between the Insolvency and Brussels I Recast Regulation. The Advocate-General’s approach in my view is the correct one, and I refer to his Opinion for the solid arguments he deploys. In essence, the DNA of the suit are the ordinary rules of civil law (re: tort). That it be introduced by the insolvency practitioner (here, the liquidator) and that it is the case-law on liquidation proceedings which has granted that right to the liquidator, is not materially relevant. Note that the AG correctly adds in footnote 40 that even if the suit is not subject to the Insolvency Regulation, that Regulation does not disappear from the litigation. In particular, given that liquidation proceedings are underway, the lex concursus determines the ius agendi of the liquidator to bring the suit in tort, in another Member State (Belgium, on the basis of Article 7(2) or 4 Brussels I Recast).

Now, for applicable law, the AG first of all completes the analysis on the basis of the Insolvency Regulation, in the unlikely event the CJEU were not to follow him on the jurisdictional issue. Here (para 85 ff) the referring court wishes to know whether, if the Peeters-Gatzen action is covered by the Insolvency Regulation, such a claim would be governed, pursuant to Article 4(1) of that Regulation, by the law of the Member State where the insolvency proceedings were opened as regards both the power of the liquidator to bring that claim and the substantive law applicable to that claim. This question seeks to determine whether it is possible to follow the approach of the second-instance court in the main proceedings, and separate the law governing the powers of the liquidator (ius agendi) from the law applicable to the merits of the claim. The powers of the liquidator would then be governed by the lex fori concursus (Dutch law, per Article 4(2)(c) Insolvency Regulation). That article states that ‘the law of the State of the opening of proceedings … shall determine in particular … the respective powers of the debtor and the liquidator’. However, the merits of the claim would then be governed by the law applicable by virtue of the general (non-insolvency) conflict of law rules. In the present case that would lead to application of residual Dutch conflict of law rules, because the Rome II Regulation does not apply ratione temporis as the AG further explains. These rules lead to Belgian law being the lex causae.

Within the assumption of the Insolvency Regulation determining jurisdiction (for see footnote 40 as reported above, re ius agendi) the AG emphasises the Regulation’s goal of Gleichlauf: at 89: If the Peeters-Gatzen action were covered by the Insolvency Regulation, all its elements would be governed exclusively by the conflict of law rules of that regulation.

(Current) Article 16’s exception such as in Nike and Lutz does not come into play for as Bobek AG notes at 94, ‘It is difficult to see how the Peeters-Gatzen action at issue in the main proceedings could be qualified as a rule ‘relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors’, in the sense of Article 4(2)(m) [old, GAVC] of the Insolvency Regulation. The purpose of such an action is not a declaration of the voidness, voidability or unenforceability of an act of the third party, but the recovery of damages based on the wrongful behaviour of that third party towards the creditors. Therefore, as Article 4(2)(m) [old, GAVC] of the regulation would not apply in the main proceedings, the exception in Article 13 [old, GAVC] could not apply either.’

The AG finally discusses the referring court’s question whether if the Peeters-Gatzen action is exclusively subject to the lex fori concursus, it would be possible to take into account, whether directly or at least by analogy, and on the basis of Article 17 Rome II read in conjunction with Article 13 (now 16) of the Insolvency Regulation, the security regulations and codes of conduct applicable at the place of the alleged wrongful act (that is to say, in Belgium), such as financial rules of conduct for banks. Article 17 Rome II reads ‘In assessing the conduct of the person claimed to be liable, account shall be taken, as a matter of fact and in so far as is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability.‘

I have argued before that Article 17 Rome II does not have the rather extensive impact which some attribute to it. The AG, after signalling that the Article is yet to be applied by the CJEU, notes that Rome II does not apply here ratione temporis. He then concludes with an aside (it is not articulated as a proper argument – which is just as well for it is circular I suppose): at 104: ‘the more pertinent question is… whether it is really necessary to have recourse to a cumbersome legal construction, in this case the application of rules by analogy, outside of their material and temporal scope, in order to reach a solution (the application of Belgian law) which solves a problem (the applicability of Netherlands law by virtue of the Insolvency Regulation) that should not have been created in the first place (since the Peeters-Gatzen claim at hand should fall within the scope of the Brussels I Regulation). In any event, I am of the view, also in this regard, that these questions by the referring court rather confirm that there is no close connection between that action and the insolvency proceedings.’

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.4.1, Heading 5.7.

 

 

Yesterday, on 14 November 2018, the UK cabinet, after five hours of deliberation, accepted the Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, as agreed at negotiators’ level on the same day. The text (TF 50 [2018] 55) contains provisions on judicial cooperation in civil and commercial matters in Articles 66 to 69. Pursuant to Article 66(a) of the Draft Agreement, the Rome I Regulation shall apply in the UK in respect of contracts concluded before the end of the transition period, which will be on 31 December 2020 (Article 126 of the Draft Agreement). Under Article 66(b) of the Draft Agreement, the Rome II Regulation shall apply in the UK in respect of events giving rise to damage, where such events occurred before the end of the transition period. The remaining EU Member States will continue to apply the Rome I and II Regulations in EU-British relations anyway following the principle of universal application (Article 2 Rome I, Article 3 Rome II).

Article 67 of the Draft Agreement deals with jurisdiction, recognition and enforcement of judicial decisions, and related cooperation between central authorities. This article reads as follows

“1. In the United Kingdom, as well as in the Member States in situations involving the United Kingdom, in respect of legal proceedings instituted before the end of the transition period and in respect of proceedings or actions that are related to such legal proceedings pursuant to Articles 29, 30 and 31 of Regulation (EU) No 1215/2012 of the European Parliament and of the Council, Article 19 of Regulation (EC) No 2201/2003 or Articles 12 and 13 of Council Regulation (EC)  No 4/2009, the following acts or provisions shall apply:

(a) the provisions regarding jurisdiction of Regulation (EU) No 1215/2012;

(b) the provisions regarding jurisdiction of Regulation (EU) 2017/1001, of Regulation (EC)  No 6/2002, of Regulation (EC) No 2100/94, of Regulation (EU) 2016/679 of the European Parliament and of the Council and of Directive 96/71/EC of the European Parliament and of the Council;

(c) the provisions of Regulation (EC) No 2201/2003 regarding jurisdiction;

(d) the provisions of Regulation (EC) No 4/2009 regarding jurisdiction.

 

2. In the United Kingdom, as well as in the Member States in situations involving the United Kingdom, the following acts or provisions shall apply as follows in respect of the recognition and enforcement of judgments, decisions, authentic instruments, court settlements and agreements:

(a) Regulation (EU) No 1215/2012 shall apply to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period, and to authentic instruments formally drawn up or registered and court settlements approved or concluded  before the end of the transition period;

(b) the provisions of Regulation (EC) No 2201/2003 regarding recognition and enforcement shall apply to judgments given in legal proceedings instituted before the end of the transition period, and to documents formally drawn up or registered as authentic instruments, and agreements concluded before the end of the transition period;

(c) the provisions of Regulation (EC) No 4/2009 regarding recognition and enforcement shall apply to decisions given in legal proceedings instituted before the end of the transition period, and to court settlements approved or concluded, and authentic instruments established before the end of the transition period;

(d) Regulation (EC) No 805/2004 of the European Parliament and of the Council shall apply to judgments given in legal proceedings instituted before the end of the transition period, and to court settlements approved or concluded and authentic instruments drawn up before the end of the transition period, provided that the certification as a European Enforcement Order was applied for before the end of the transition period.

 

3. In the United Kingdom, as well as in the Member States in situations involving the United Kingdom, the following provisions shall apply as follows:

(a) Chapter IV of Regulation (EC) No 2201/2003 shall apply to requests and applications received by the central authority or other competent authority of the requested State before the end of the transition period;

(b) Chapter VII of Regulation (EC) No 4/2009 shall apply to applications for recognition or enforcement as referred to in point (c) of paragraph 2 of this Article and requests received by the central authority of the requested State before the end of the transition period;

(c) Regulation (EU) 2015/848 of the European Parliament and of the Council shall apply to insolvency proceedings, and actions referred to in Article 6(1) of that Regulation, provided that the main proceedings were opened before the end of the transition period;

(d) Regulation (EC) No 1896/2006 of the European Parliament and of the Council shall apply to European payment orders applied for before the end of the transition period; where, following such an application, the proceedings are transferred according to Article 17(1) of that Regulation, the proceedings shall be deemed to have been instituted before the end of the transition period;

(e) Regulation (EC) No 861/2007 of the European Parliament and of the Council shall apply to small claims procedures for which the application was lodged before the end of the transition period;

(f) Regulation (EU) No 606/2013 of the European Parliament and of the Council shall apply to certificates issued before the end of the transition period.”

 

Article 68 of the Draft Agreement concerns ongoing judicial cooperation procedures, in particular within the framework of the EU Regulations on cross-border service of documents and the taking of evidence. Article 69 of the Draft Agreement contains miscellaneous provisions dealing, inter alia, with legal aid, mediation, and relations with Denmark.

The full text of the Draft Agreement is available on the Commission’s website here and in the press, e.g. via the Guardian’s website here. It remains to be seen, however, whether the British Parliament will ratify this text (see here). Stay tuned!

Legal Aid Reform in the Netherlands: LASPO 2.0?

By Jos Hoevenaars, Erasmus University Rotterdam (postdoc researcher ERC project Building EU Civil Justice)

Early November, the Dutch Minister of Legal Protection Sander Dekker presented his plans for the overhaul of the Dutch system for subsidized legal aid. In his letter of 9 November 2018 to Parliament Dekker cites the increasing costs of subsidized legal aid over the past two decades (42% in 17 years) as one of the primary reasons underlying the need for reform.

The proposed intervention in legal aid follows after years of research and debate. Last year, the Van der Meer Committee, the third committee in 10 years, concluded that the legal aid system is functioning well, but that it was suffering from ‘overdue maintenance’ and that especially the fees for legal aid professionals are no longer up to date. Currently, lawyers miss out on about 28 per cent of the hours they work on legal aid cases. According to said Committee, an additional 127 million euros would be needed annually to compensate for that gap in income. Such an increase in expenditure seems off the table given that the coalition agreement of the current government stipulates that ‘the legal aid system will be revised within the current budgetary framework’. A budget that has come under additional pressure due to recent failed attempts at digitizing Dutch procedure under the Quality and Innovation Program (KEI) (see this blogpost).

Strikingly, these reform plans coincide with alarming criticism from the Dutch judiciary as to the current state of affairs in the Dutch justice system. On 8 November, in an unprecedented move, a group of concerned judges and counsellors sent a letter to Parliament expressing their concerns about the conditions under which they have to work and the perceived threat to the future independence of the judiciary and in which they denounce the exclusive focus on finances.

Those with an international outlook will recognise these suggested reforms as part of an international trend in constricting public spending on the civil justice system in general and subsidized legal aid specifically. Especially the fairly recent reforms in England and Wales following the Legal Aid Sentencing and Punishment of Offenders Act (LASPO) of 2012 may provide a cautioning example for other jurisdictions.

The proposed changes to the Dutch legal aid system, as well as the rhetoric used to justify such reforms, closely resembles developments in the English civil justice system over the past two decades. As Dame Hazel Genn analysed in 2008, looking back at the beginning of transformative changes in England and Wales proposed in the infamous Woolf report on Access to Justice in 1995: “On the one hand the report seeks to break down barriers to justice, while on the other it sends a clear message that diversion and settlement is the goal, that courts exist only as a last resort and, perhaps, as a symbol of failure.” Similarly, the current Dutch government has as one of its aims to stimulate out-of-court dispute resolution, and the proposed reforms are geared significantly towards pre-judicial triage, (online) information and advice, and out-of-court settlement.

In many ways the problem analysis presented by the Minister mirrors those made in England at the end of the 20th Century: the ever-increasing cost of legal aid (now over 400 million annually) is seen as unsustainable and perverse incentives in the current system encourage misuse by lawyers. However, the Minister also looks closer to home and concludes that the government is the counterparty in the majority (about 60 percent) of the cases in which subsidized legal aid is used. Most of these cases include criminal law and asylum law, but also (almost 11 percent) other administrative procedures with government bodies and municipalities. This is often based on complex legislation, or legislation in which much of the details are deliberately left to practice, with court proceedings as a result. The implicit call for de-judicialization is therefore accompanied by a call for de-juridification.

If the discussed English reforms are any gauge of what we can expect in the Netherlands, those with their eye on the access to justice ball are paying attention. The reforms in England included drastic cuts to legal aid, which saw entire categories of litigants, especially in family law, suddenly unable to access legal aid. As a result the English system today is filled with litigants without legal representation.

While such a dramatic increase in litigants in person is not likely to present itself in the Netherlands – the Dutch system has mandatory legal representation for all but sub-district courts – the reforms are bound to leave some portions of potential justice-seekers out in the cold. The Minister’s proposal includes the creation of so-called ‘legal aid packages’ aimed at a more holistic approach to legal issues, and with much more focus on self-reliance of the citizen, seemingly underplaying the fact that those citizens that rely on legal aid are generally less self-reliant.

What may provide a sense of cautious optimism is that the proposal includes a commitment to ongoing and iterative review of the measures and experiments that are part of the overhaul. In that sense, the proposed reforms to the Dutch system, at least as far as legal aid is concerned, do not seem to be destined to make the mistake made in other jurisdictions, where sweeping reforms were implemented in the absence of any research or understanding of the dynamics of civil justice.

Much hinges on the degree to which this commitment finds meaningful and consequential follow-up. The proposed reforms will be discussed in the Dutch Parliament on 19 November 2018

More information on this topic? Don’t hesitate to contact us (hoevenaars@law.eur.nl).

I have reported twice before on the BIBC – once viz the initial version and a second time with my short report for the Parliamentary Hearing. I have now had a minute to review the Council of State’s comments on the amended version – among others with a view to preparing for next week’s conference on hybrid courts in Doha. Note that the Council of State here acts in its advisory function: essentially its opinions aim to improve draft statute so as to avoid future litigation.

What is clear from these recent comments is that the Council does not at all embrace the regulatory competition incentives which lie at the heart of the proposal, in particular in its view on how a matter may be made ‘international’ so as to justify engagement of the BIBC. Its view (let alone the Justice Council’s fear for forum shopping?!: encouraging such shopping being the very raison d’etre of the Act) contradicts the CJEU’s flexible stance on the issue as apparent eg in Vinyls Italia. As I noted in my comments before the Committee, it is a rather odd indeed parochial requirement to insist on parties having used English in their correspondence, before they can validly engage the BIBC. Even the suggested amendment that the use of languages other than Belgium’s three official ones (French, Dutch, German) should suffice, is not convincing to the Council. One hopes the drafters will ignore the Council’s hesitation at this point.

The Council does not of course engage in the political discussions surrounding the proposal: in particular, whether in a country in which the court system arguably does not operate to satisfaction, the creation of an international commercial court may compound, rather than remedy issues.

Geert.

 

The University of Milan will recruit a postdoctoral researcher in Private International Law or Civil Procedure or European Private law, starting in January 2019, for a duration of 21 months (renewable once).

The researcher will work on the project “Facilitating cross-border family life: towards a common European understanding – EUFam’s II”.

Eligible candidates must hold a doctorate in law (preferably private international law or international civil procedural law or European private law) or have comparable research experience. They must have an excellent command of English. Good command of Italian is required.

More details can be found here

Deadline for applications 4 December 2018

The third issue of the Belgian Journal on Private International Law has been published and is available for free here.

The Journal contains case law by Belgian Courts in Dutch and French as well as recent case law of the CJEU.

This issue includes Court of Cassation cases on contracts, torts and evidence.

The Journal also contains one article in English:

Isabelle  Bambust,  Jan  De  Meyer,  Valerie  De  Ruyck,  Sarah  Den  Haese,  Laura Deschuyteneer,  Erinda  Mehmeti and Jinske  Verhellen  (Ghent University): Cross-Border  Proceedings  in  Family  Law  Matters  before  National  Courts  and the CJEU: National Report Belgium

and two in Dutch:

1. Veerle Van Den Eeckhout (Max Planck Instituut Luxemburg): Regels van internationale bevoegdheid in de context van de “tweede generatie” verordeningen. Enkele beschouwingen vanuit het perspectief van bescherming van zwakke partijen (Rules of International Jurisdiction in the context of the “Second Generation” Regulations. Some Reflections from the Perspective of Protection of Weak Parties)
The English abstract reads:

In this paper, the author analyses in a non-exhaustive way the rules of international jurisdiction in the context of the second generation regulations, i.e. the European Enforcement Order Regulation, the European Order for Payment Regulation, the European Small Claims Regulation, and the European Account Preservation Order Regulation. The author explores the extent to which protection is given to weak parties in this context.”

Regarding recent developments, the following might be worth noting: in the paper, a short indication of recent case law of the CJEU regarding the Directive on unfair terms in consumer contracts (in national proceedings; see particularly the case Karel de Grote (C-147/16, 17 May 2018)) is used by the author as a stepping stone to the analysis of the protection of weak parties in the “second generation” regulations regarding issues of international jurisdiction. Special attention is given thereby to the European Order for Payment Regulation. As the paper has been updated up to the beginning of September 2018, even more recent case law on consumer protection regarding unfair terms in consumer contracts in national proceedings, such as the judgment of the CJEU in the case Profi Credit Polska (C-176/17, 13 September 2018) and Eos Ksi Slovensko (C-448/17, 20 September 2018)  is not included. Noteworthy is that most recently, two new preliminary questions on the European Order for Payment have been published in the Official Journal (OJ of 22 October 2018), including the issue of the Directive on unfair terms in consumer contracts in its interaction with the European Order for Payment Regulation itself: C-453/18 and C-494/18!

2. Jinske Verhellen (Universiteit Gent): De Belgische transgenderwet in een internationale context (The Belgian Act on Transgenders in international context)

Thank you Nicolas Contis and Leonardo Pinto for reporting  judgments by the French Supreme Court (Cour de Cassation) 16-19-731 Ergo Versicherung v Volker and 16-27.913, Haras des Coudrettes v X, both held on 14 March 2018.

The judgments concern the interpretation of Article 35 Brussels I Recast c.q. Article 31 of the Lugano Convention (the second case concerned a defendant domiciled in Switzerland) on provisional measures.

Please refer to Nicolas and Leonardo for a summary of the facts the judicial proceedings in the case. In neither cases do the French courts have subject-matter jurisdiction: in Ergo, the German courts do by virtue of choice of court; in Haras des Coudrettes, the Swiss courts do by virtue of Article 5(3) Lugano (locus delicti commissi being there; and direct damage also having occurred there hence leaving only indirect, financial damage with the French owner of the horse at issue, even if the exact nature and size of those direct injuries could only be later established in France).

In Ergo, the Supreme Court held that ‘la juridiction française (est) compétente pour ordonner, avant tout procès, une mesure d’expertise devant être exécutée en France et destinée à conserver ou établir la preuve de faits dont pourrait dépendre la solution du litige. Appointing an expert to assess any damages caused to a solar plant, and to explore liabilities for such damage, falls within Article 35 Brussels I Recast. I would agree with such a wide reading as I have discussed before in my review of the Belo Horizonte case. The Supreme Court does not consider relevant to the outcome claimants’ argument, that under Article 2 Brussels I Recast, provisional measures only enjoy free movement under the Regulation when ordered by a court with subject-matter jurisdiction. Indeed in view of the Supreme Court the Court of Appeal need not even consider whether it has such jurisdiction. Given that the form Annexed to the Regulation includes a box requiring exactly that, this may seem odd. One assumes the Court held so given that the forensic measures ordered, can be rolled out entirely in France: no need for any travel at all.

In Haras des Coudrettes, the Supreme Court annulled because the Court of Appeal had established subject-matter jurisdiction for the Swiss courts, and had subsequently not entertained the possibility of provisional measures, even though the object at issue (the mare: ‘la jument’) is in France: ‘Qu’en statuant ainsi, alors qu’elle relevait que la mesure sollicitée avait pour objet notamment d’examiner la jument située en France, la cour d’appel, qui n’a pas tiré les conséquences légales de ses propres constatations, a violé les textes susvisés.‘

and  ‘une mesure d’expertise destinée à conserver ou établir la preuve de faits dont pourrait dépendre la solution du litige, ordonnée en référé avant tout procès sur le fondement du second de ces textes, constitue une mesure provisoire au sens du premier, qui peut être demandée même si, en vertu de cette Convention, une juridiction d’un autre Etat lié par celle-ci est compétente pour connaître du fond’:

expert findings which aim at maintaining or establishing facts upon which the eventual solution of the litigation may depend, fall within the scope of provisional measures and may be ordered even before any entertainment of subject-matter jurisdiction. Again, the fact that for the effective roll-out of the provisional measures no other State need be engaged, must have relevance in this assessment.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.15.

 

 

 

Current policy discussions on ADR/ODR in France: towards greater regulation for the Legaltech?

By Alexandre Biard, Erasmus University Rotterdam (postdoc researcher ERC project Building EU Civil Justice)

In April 2018, the French government published a new draft legislation aimed at reforming and modernizing the French Justice system (Projet de loi de programmation 2018-2022 et de réforme pour la Justice). Among other things, the proposal is likely to trigger some significant changes in the French ADR/ODR landscape, and may have important consequences for the future development of the legaltech. The proposal is currently discussed before the French Parliament and Senate. The following elements should be noted:

• A generalisation of compulsory mediation (tentative de médiation obligatoire) for small claims (Article 2 of the draft legislation). It should be noted that France has already launched several pilot projects with the intent to experiment compulsory mediation in several areas, including in family law and for certain administrative matters.
• A new certification scheme for ODR platforms (Article 3 of the draft legislation). As a result of the European Directive 2013/11/EU (the Consumer ADR Directive), France has already established a certification scheme applying to consumer ADR providers. Consumer ADR entities seeking certification must show compliance with several quality criteria listed in the Consumer ADR Directive, and transposed in France by Ordinance 2015-1033 of 20 August 2015 and two additional implementing decrees. A new ad hoc public entity – Commission d’Evaluation et de Contrôle de la Médiation de la Consommation (CECMC) closely linked to the General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF, a branch of the Ministry of Economy) is in charge of certifying consumer ADR providers. CECMC must also verify that Consumer ADR providers comply with the quality criteria listed in the Directive and the national legislation on an on-going basis. Under the new draft legislation, the proposed certification scheme will apply to all ODR systems. While noticing the development of ODR services, a previous draft legislation of 25 October 2017 suggested to introduce a certification scheme for private ODR platforms, and, in parallel, also aimed to create a free public ODR system (Service public gratuit en ligne d’aide à la résolution amiable des litiges, see Article 8 of the proposal). However, the development of this public ODR system was finally discarded for budgetary reasons. Interestingly, whereas the initial proposal from the Government made certification non-compulsory and voluntary, amendments adopted by the French Senate have made certification compulsory for all ODR providers. Senate has also designated the Ministry of Justice as competent authority in charge of certifying ODR providers. At the time of writing, it remains unclear whether certification will ultimately be compulsory or not (an amendment from the National Assembly dated 6 November 2018 reintroduced the voluntary/non-compulsory nature of certification). A decree from the State Council (Conseil d’Etat) will specify the details of the certification procedure. As a general rule, to be certified, ODR platforms will have to show that they comply with data protection rules and confidentiality, and prove that they are independent, impartial, and that their procedures are fair and efficient. Importantly, rules also provide that ODR system cannot be based solely on algorithms or automated systems. In other words, human intervention will remain necessary and compulsory. If the ODR platform uses algorithms, it will have to inform parties beforehand, and will have to collect their informed consent. The draft legislation also provides that consumer ADR entities already certified by the CECMC will automatically benefit from the new certification scheme.

The draft proposal has been criticized as a step towards ‘a privatisation of justice’. It remains to be seen how the new proposed certification scheme will be implemented.

More information on this topic? Don’t hesitate to contact us (biard@law.eur.nl)

 

 

 

The International Academy of Comparative Law is launching a new journal in 2019 to foster scientific discussion about the use of comparative law. The Ius Comparatum Journal (ICJ) is dedicated to the methodological aspects of comparative law. It covers all fields of law where the methods and techniques of comparative law are at stake.

The editorial board of the journal welcomes abstracts from scholars as well as practitioners, including staff of arbitral institutions. Papers will be published in French or English online before the publication in print of the first issue of the Journal at the end of summer 2019.

The deadline for submissions is 6 January 2019.

The full text of the call is available here.

The latest issue of the Zeitschrift für Europäische Privatrecht has just been released. It contains the following articles:

Thomas Ackermann, Sektorielles EU-Recht und allgemeine Privatrechtssystematik

In the German tradition, private law is considered as a system of consistent rules that can be reduced to a unity formed by a small number of axioms. This idea has been the driving force behind huge efforts to overcome the fragmentation of EU private law. However, the concept of a private law system is unsuitable for a democratic polity whose supranational level is formed by the EU. Instead, the systematic quest for unity and consistency should aim at positioning private law rules in the entirety of our legal order. This leads to a better understanding of European legislation and case-law in the field of private law.

Jürgen Basedow, Sektorielle Politiken und allgemeine Privatrechtssystematik

Following Ackermann the author elaborates on the distinction of horizontal and vertical EU legislation. The problems caused by the latter aggravate by the increasing use of regulations (instead of directives) and by the progressive adoption of rules on liability in acts aiming at market regulation. The author advocates renewed work on a Common Frame of Reference and the creation of a unit within the Commission that would be tasked with the survey of coherence of provisions of the private law acquis.

Brigitta Lurger, Die Dominanz zwingenden Rechts – die vermeintlichen und tatsächlichen Schattenseiten des EU-Verbraucherschutzrechts

EU private law, in particular EU consumer law, has encountered heavy criticism: It was, for instance, accused of being one-dimensional – ie only market functional – or to transform contract law into a set of mostly inadequate or inefficient mandatory rules. The article analyses this criticism by creating links between several discourses: (behavioral) law and economics, paternalism, fundamental rights, competences, contract law versus regulatory law, and the conflict between self-interest and social responsibility.

Gerhard Wagner, Zwingendes Vertragsrecht

Modern contract law, as applied between businesses and consumers, operates in the form of mandatory law. This pattern dominates not only in Europe, but also in the United States. It is supported by strong normative reasons. However, it is time to rethink the relationship between mandatory law and court control over standard business terms: Court control over standard terms does better than mandatory law in reconciling consumer protection and private autonomy, and should thus be preferred.

Pietro Sirena, Die Rolle wissenschaftlicher Entwürfe im europäischen Privatrecht

The article deals with the projects of a European private law, which have been drafted in black letter rules, and their influence upon the laws of the Member States as well as that of the European Union. The author points out that a genuine European private law could not overlook the best developments of the national legal cultures, which have been flourishing in the last two centuries on the basis of the national codifications of civil law and the judge-made common law.

Reinhard Zimmermann: Die Rolle der wissenschaftlichen Entwürfe im europäischen Privatrecht

The creation of various sets of „model rules“, „restatements“, or „non-legislative codifications“, particularly concerning contract law, is one of the most remarkable phenomena in the field of comparative private law over the last fourty years. The present essay argues that one important function of these model rules is to facilitate the discussion of legal problems beyond national borders and thus to stimulate the development of a truly European legal doctrine. They can thus help to achieve what Professor Sirena in his lecture is aiming for.

Horst Eidenmüller: Collateral Damage: Brexit’s Negative Effects on Regulatory Competition and Legal Innovation in Private Law

This article attempts to assess the consequences of Brexit for English and European private law. More specifically, I am interested in how the level of legal innovation in private law will be influenced by Brexit. I argue that Brexit will reduce the level of efficiency-enhancing legal innovation in Member States’ and European private law. Brexit will eliminate the UK as a highly innovative competitor on the European market for new legal products in private law, reducing the beneficial effects of regulatory competition. Further, private law-making on the European level will no longer benefit from the UK’s efficiency-enhancing influence. I substantiate and illustrate the main thesis of this article with examples taken mostly from contract law and dispute resolution, company law and insolvency law.

Marc-Philippe Weller/Chris Thomale/Susanne Zwirlein, Brexit: Statutenwechsel und Acquis communautaire

The Brexit will have considerable consequences for international private and procedural law. From an individual point of view, there will be changes to the applicable law that can be managed with the methods of the PIL. At a general and abstract level, the shape of the acquis will change in several respects.

Lado Chanturia, Die Ausdehnung des Europäischen Privatrechts auf Drittstaaten am Beispiel Georgiens

Georgia signed an Association Agreement with the EU on 27.6.2014. According to the Association Agreement (AA) the reform of private law should be considered as further development of the Europeanization of Georgian law, which began in the early 1990s. The political decision in favor of the Europeanization of law is now turning into an obligation of legal harmonization. The pertinent areas as per the agreement are electronic commerce, intellectual property rights, competition, company law, accounting and auditing, corporate governance and consumer policy.

Reiner Schulze, Die Ausdehnung des Europäischen Privatrechts auf Drittstaaten

Following the article by Lado Chanturia (‘Die Ausdehnung des Europäischen Privatrechts auf Drittstaaten am Beispiel Georgiens’, in this issue, page 919), this contribution analyses different ways of third countries adopting European Private Law beyond the institutionalized forms of approximation of law. In particular, it deals with the reception of the law of the Member States and the „acquis commun“ alongside the Acquis communautaire and criticizes the concept of a „legal transplant“ of European law in third countries.

On 19-20 November 2018, the conference: Challenge Accepted! Exploring Pathways to Civil Justice in Europe funded by the European Research Council takes place at Erasmus University Rotterdam. It focuses on artificial intelligence, ADR and ODR, self-representation, and court specialization in the context of improving access to and the quality of civil justice. Keynote speakers include Judith Resnik (Yale University) and Ruth de Bock (Advocate-General Dutch Supreme Court).

Further information on the program and registration is available here.

Find the description of the panels below.

Panel 1: The computer as the court

Artificial Intelligence (AI) research is fast advancing on new frontiers, which promise to make computers replicate traits of human intelligence. In the near future, we might see robots or machines that handle legal cases and might even replace humans as judges. We might see the computer as the court. However, AI is a term that encompasses many technologies with as many applications. This panel aims at providing an overview of the different AI technologies and their benefits. Furthermore, it explores what ethical issues are raised by replacing judges with AI units. It will try to map near?future AI innovations in the court system.

Panel 2: Consumer ADR/ODR: Justice behind closed doors? ADR (and its digital incarnation, ODR) are commonly presented as tools facilitating informal, accessible, fast and cost?effective access to justice for consumers while preserving public resources. However, such new forms of privatised Justice have raised a number of questions relating, among others, to their transparency, effects on due process or accountability. Representatives of ADR providers from several Member States and academics will critically discuss the role and potential of ADR/ODR in 21st century justice systems.

Panel 3: Access to civil justice: Taking lawyers out of the equation?

Richard Susskind’s ‘The End of Lawyers?’ underscored the existential need of the legal profession to adapt to an ever?changing landscape of legal services under the influence of the increased use of information technology, commoditisation, outsourcing, and so on. Not only are lawyers subject to change in the way they work, lately we see that, in attempts at making the administration of justice cheaper, faster and accessible, lawyers may not be part of the equation at all. Increasing possibility for self?representation in the Netherlands and the drastic cuts to legal aid in the UK provide the backdrop for a discussion about the changing landscape of civil justice and representation. This panel focuses the discussion on the relevance of legal assistance for effective dispute resolution and critically assesses the impact of the diminishing role of lawyers on the administration of justice.

Panel 4: Court specialization: Turning the tide of the ‘vanishing trial’?
Court specialization may enhance the efficiency of civil justice, provide expertise and, as a result, improve the quality and uniformity of court decisions. However, one cannot turn a deaf ear to the concerns expressed. Specialized courts may impair the geographical proximity of justice, put in question the independence and impartiality of the judiciary, establish stereotype procedures and lastly lead to a proliferation of forums resulting in a judicial labyrinth. Although specialized courts have long existed, recent legislative initiatives signal a shift towards an even greater court specialization. Courts specializing in international commercial cases, patent or company matters are only some to mention. By mapping the risks and benefits of specialized courts this panel assesses the impact court specialization has on access to justice on a European level.

When is a court ‘seized’ under EU civil procedure /private international law? The question is highly relevant in light of the application of the lis alibi pendens principle: the court seized second in principle has to cede to the court seized first. Williams J in [2018] EWHC 2035 (Fam) MB v TB notes the limited attempt at harmonisation under EU law and hence the need for the lex fori to complete the procedural jigsaw.

On 8 July 2016 MB (the wife) issued a divorce petition seeking a divorce from TB (the husband). On 16 August 2016 the husband issued a divorce petition against the wife out of the Munich Family Court. On the 22 August 2016 the husband filed an acknowledgement of service to the wife’s petition asserting that the German court was first seized because it was ‘not accepted England is first seized, owing to failures to comply with art. 16 and 19 of Council Regulation (EC 2201/2003) and relevant articles of the EC Service Regulation (EC 1393/2007).

At issue were two considerations: whether seizure of the English courts had been effected; and whether the wife’s issuing of the petition on 8 July 2016 is an abuse of process on the basis that the wife did not at that time consider the marriage to have irretrievably broken down but was issuing a petition simply to secure the English jurisdiction in the event that a divorce was needed? This latter element amounts to disciplining a form of fraus, on which I have reported before – eg here that there is very little EU law.

In Regulation ‘Brussels IIa’ (2201/2003) – concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, as in the other Regulations, ‘seising of a Court’ is defined as:

1. A court shall be deemed to be seised: 

(a) at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the applicant has not subsequently failed to take the steps he was required to take to have service effected on the respondent;

or

(b) if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the applicant has not subsequently failed to take the steps he was required to take to have the document lodged with the court.

These ‘steps required’ are not further defined under EU law and hence rest with national law. Under relevant English law, Williams J held that the husband was aware of the wife’s petition before it was validly served on him, and that this was enough for the English courts to have been validly seized.

Geert.

Thank you 20 Essex Street for flagging (and analysing)  [2018] EWHC 3009 (Comm) Qingdao Huiquan, granting anti-suit against a foreign litigant who is not a party to an exclusive choice of forum agreement (in particular: arbitration agreed in a settlement agreement). The third party, SDHX, is engaging in proceedings in China, and is related to one of the parties to the settlement agreement.

SDHX appeal to privity of contract is tainted by its invoking elements of the settlement agreement in the Chinese proceedings. Under relevant authority, this was ground for Bryan J to issue aint-suit against it.

A classic cake and eating it scenario, one could say: at 36: ‘I have had particular regard to the fact that it is clear from the Settlement Agreement that SDHX is indeed seeking to rely upon the terms of the Settlement Agreement in advancing its claims in the Chinese proceedings and that, in doing so, therefore, it has to take the burden of the arbitration clause, if an arbitration clause be a burden,..as well as the benefits that it seeks to derive from that agreement.’

Evidently Brussels I Recast is not engaged.

Geert.

European private international law, second ed. 2016, Chapter 2, Heading 2.2.2.10.

The media have been reporting on a considerable class action lawsuit, underway in the English courts, in the Corporate Social Responsibility /mass torts category.

The class action case was filed against Anglo-Australian company BHP Billiton on behalf of 240,000 individuals, 24 municipal governments, 11,000 businesses, a Catholic archdiocese and about 200 members of the Krenak indigenous community. It concerns victims of the Samarco dam collapse in Mariana three years ago.

I am reporting the case simply to ensure complete overview of the CSR /jurisdiction /applicable law issues reported on the blog. For as I am co-counsel acting for the applicants, I am not in a position to comment on the case until and if legal analysis will be in the public domain.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.

Another case in my backlog for some time, and thank you Sarah McKibbing for flagging, some time back, [2017] VSC 810 Liu v Ma,

A recent VSC decision, Liu v Ma, held that nationality is sufficient to found international jurisdiction for the recognition of a Chinese judgment at common law. A highly doubtful conclusion… See Liu v Ma here: https://t.co/7cMMtjnYQY #conflictoflaws #privateinternationallaw

— Sarah McKibbin (@SarahMcKib) August 17, 2018

 

At 6 Mukhtar AJS notes ‘There is sufficient authority for the view that Australian Courts will enforce a foreign judgment where the defendant is a subject of the foreign country in which the judgment was obtained.  That view has its critics (footnote omitted, GAVC) and it may have its difficulties especially if the citizenship is inactive.  Nevertheless, it is founded on a line of English authority exemplified by the statement of Buckley LJ in Emanuel v Symon‘.

Many would argue that at the very jurisdictional level nationality as a ground is parochial /exorbitant. At the same time that at the level of recognition, one should show restraint in refusing to recognise judgments based on such flimsy jurisdictional grounds.

For those wanting to dig deeper, prof Andrew Dickinson has critical review of the relevant case-law in (2018) 134(July) LQR 426-449 (‘Schibsby v Westenholz and the recognition and enforcement of judgments in England’).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.4. for a discussion of ‘parochial’ jurisdiction in the EU context).

 

Issue 14. 3 of the Journal of Private International Law has just been released. It contains the following articles:

Maria Caterina Baruffi, A child-friendly area of freedom, security and justice: work in progress in international child abduction cases, pp. 385-420

The protection of children’s rights constitutes the subject matter of various private international law instruments within both the international and the EU frameworks. The paper focuses on their relevant provisions regarding child abduction, which pose a number of problematic issues as to their interpretation and practical application. Against the existing background, future legislative developments are assessed with a view to proposing a provisional evaluation as to their effectiveness and actual improvement.

Charlotte Mol & Thalia Kruger, International child abduction and the best interests of the child: an analysis of judicial reasoning in two jurisdictions, pp. 421-454

The Hague Child Abduction Convention aims to secure the speedy return of abducted children. Judges can use a limited number of grounds for refusal. They may not make an in-depth assessment of the merits of any custody issue. The Convention on the Rights of the Child provides that the best interests of the child shall be a primary consideration in all actions concerning children. This article analyses the use that judges make in their decisions on the concept of “the best interests of the child”. For this purpose it scrutinizes the case law on international child abduction of the Netherlands and England and Wales. By using software designed for qualitative research, the authors are able to make an objective and systematic analysis. This article confirms the hypothesis that the concept of the best interests of the child is often used without substance, and sometimes only to endorse conclusions that would have possibly been reached in any event.

Hayk Kupelyants, Recognition and enforcement of foreign judgments in the absence of the debtor and his assets within the jurisdiction: reversing the burden of proof, pp. 455-475

The article examines the recognition and enforcement of foreign judgments in the absence of the defendant and his assets within the jurisdiction. While at first sight a seemingly futile tactic, it opens a whole array of potential benefits to the judgment creditor. Under English law, to enforce a foreign judgment in the absence of the debtor and his assets, the judgment creditor needs to establish a reasonable prospect of legitimate benefit arising from the enforcement. The article challenges this view and argues that the position in English law is needlessly onerous: the burden should be on the judgment debtor to establish that the enforcement of the foreign judgment is an abuse of process. The paper also draws analogies to other legal regimes, both in the UK and outside.

Aleksandrs Fillers, Implications of Article 81(1) TFEU’s recognition clause for EU conflict of laws rules, pp. 476-499

The last decades have been marked by the extensive Europeanisation of conflict of laws rules. Traditionally, national conflict of laws rules in Continental Europe were aimed at determining the closest connection between the legal relation and the putatively applicable law. This universal objective was often combined with more local objectives: the achievement of certain substantive policies of the forum through conflictual mechanisms. The Europeanisation of conflict of laws rules poses a legitimate question: do EU conflict of laws rules pursue identical or similar policies as national conflict of laws rules? The issue may be approached using different methods. One approach is inductive – the analysis of conflict of laws rules found in EU secondary law and their comparison with national conflict of laws rules. Another approach is deductive – the analysis of the Treaty basis for EU conflict of laws rules, in order to identify whether this constitutional framework prescribes certain policies that may be different from those used in national conflict of laws rules. This contribution is devoted to the second method and analyses whether the recognition clause found in Article 81 TFEU has any meaningful influence on the nature and scope of EU conflict of law rules.

Mukarrum Ahmed, The nature and enforcement of choice of law agreements, pp. 500-531

This article seeks to examine the fundamental juridical nature, classification and enforcement of choice of law agreements in international commercial contracts. At the outset, it will be observed that the predominance of jurisdictional disputes in international civil and commercial litigation has pushed choice of law issues to the periphery. The inherent dialectic between the substantive law paradigm and the internationalist paradigm of party autonomy will be harnessed to provide us with the necessary analytical framework to examine the various conceptions of such agreements and aid us in determining the most appropriate classification of a choice of law agreement. A more integrated and sophisticated understanding of the emerging transnationalist paradigm of party autonomy will guide us towards a conception of choice of law agreements as contracts, albeit contracts that do not give rise to promises inter partes. This coherent understanding of both the law of contract and choice of law has significant ramifications for the enforcement of choice of law agreements.

Diletta Danieli, Mixed contracts under the Brussels Ia Regulation: searching for a “jurisdictional identity”, pp. 532-548

This paper addresses the debated application of the jurisdictional regime in contractual matters provided in the Brussels Ia Regulation to cases involving mixed contracts, which comprise elements of a sale of goods, as well as a provision of services, and are not expressly regulated by that legal instrument. The starting point of the assessment is a recent Italian Supreme Court ruling, which is further compared with the relevant CJEU and national case law. Then, some broader considerations are proposed with regard to the actual desirability of specific provisions concerning these types of contracts within the Brussels system.

Torsten Bjørn Larsen, The extent of jurisdiction under the forum delicti rule in European trademark litigation, pp. 549-561

This contribution compares the extent of jurisdiction of two different forum delicti rules namely that under Article 7(2) of the Brussels Ia Regulation, which applies in national trademark litigation, with that under Article 125(5) of the EU Trade Mark Regulation, which applies in EU trade mark litigation. The former has been interpreted to cover both the place of acting and the place of effect and it seems likely that both places have limited jurisdiction. The latter covers only the place of acting which also seems likely to have limited jurisdiction.

Looking at my back queue for blog postings, [2018] EWHC 2186 (Ch) Videology is one I do wish to bring to the attention of my readers. Snowden J refused to recognise proceedings under Chapter 11 of the US Bankruptcy Code (“Chapter 11”) in relation to Videology Ltd as a foreign main proceeding under Article 17 of the UNCITRAL Model Law on Cross-Border Insolvency (“the Model Law”) as incorporated into English law in Schedule 1 to the Cross-Border Insolvency Regulations 2006 (the “CBIR”). He did so because he was not satisfied that the centre of main interests (“COMI”) of the Company was in the US where the Chapter 11 proceedings are taking place. He did, however, grant recognition of the Chapter 11 proceedings as a foreign non-main proceeding.

The Judgment is a master class on COMI determination.  Of note are

• at 28 the rejection of, for so long as the UK remains a party to the Recast EIR,  any different approach in relation to the concept of COMI under the CBIR/Model Law and the Recast EIR;
• the emphasis on a basket of criteria required to displace the presumption of COMI in place of the registered office;
• at 42 ff the rejection of a narrow focus on, or attachment of overriding importance to, the location in which the directors and senior management act;
• Snowden J’s rejection at 46 ff of the Head Office approach as being determinant under EU law (see also Handbook heading 5.6.1.2.4); and
• the factors referred to eventually to uphold the presumption: at 72: ‘In addition to being the place of its registered office, the UK is where the Company’s trading premises and staff are located, where its customer and creditor relationships are established, where it administers its relations with its trade creditors on a day-to-day basis using those premises and local staff, and where its main assets (the receivables and cash at bank) are located. All of those factors will be visible and immediately ascertainable by the customers, and in particular by the trade creditors, of the Company. The UK is also, importantly, where representations were made to the Company’s main finance creditor that its COMI was situated.’

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1 (specifically also 5.6.1.2.4 for the Head Office discussion).

The most recent issue of the Zeitschrift für Vergleichende Rechtswissenschaft (German Journal of Comparative Law; Vol. 117 [2018], No. 3) features the following contributions:

Die Leistungskraft der österreichischen Privatstiftung für Familienunternehmen

Susanne Kalss*

ZVglRWiss 117 (2018) 221–245

The family can be an essential factor for entrepreneurs. However, family can also cause conflicts, as different roles and interests collide. There is no ideal legal form for a family business. Rather, a legal solution based on the specific needs has to be found for each individual entrepreneur. It should be kept in mind that temporary arrangements tailored to specific situations often fail and might not be able to respond to changing market circumstances. Private foundations are suitable to ensure that the assets will not be split up in case of succession and can therefore provide a legal basis to assign the foundation benefits to the family. By establishing a private foundation, a family-owned company can substantially reduce the influence of family members on management decisions in favor of an independent foundation board. This in turn reduces significantly the attractiveness of this chosen structure.

Liechtenstein Trust Enterprises as Instruments for Corporate Structuring

Hanno Merkt*

ZVglRWiss 117 (2018) 246–259

Although trusts are usually associated with intra-family wealth transfers, the importance of trusts in capital markets is rising steadily. Due to their flexibility and the high degree of privacy they provide, the Liechtenstein trust enterprise (trust reg.) can be a suitable instrument for corporate structuring and planning. Nevertheless, there remain some open questions with regard to the liability of the beneficiaries and settlors, especially if they issue continuous instructions to the trustee, or if one of them makes use of their power of dismissal against the trust management for the sole purpose of exercising influence on the trust enterprise management. In order to enhance the attractiveness of trust law for corporate structuring, an amendment of the law, that addresses the mentioned unsettled questions might be desirable.

A German View on Trusts: Selected Aspects of Trusts and their Possible Impact on the Recognition of Trusts by German Courts under Civil Law

Jonas Hermann*

ZVglRWiss 117 (2018) 260–282

When it comes to the recognition of trusts by German courts under civil law, there are several uncertainties and obstacles to overcome. The more the features of a trust are aligned with features that can also be found in German entities and other legal structures, the less risks in regard to aspects of public policy will occur. Unusual clauses (from a German point of view), like spendthrift clauses or anti-duress clauses will increase the likelyhood that a trust and its legal consequences will not be recognised.

New Trust Legislation in Civil Law Jurisdictions

Paolo Panico*

ZVglRWiss 117 (2018) 283–302

Outside the common law world, there are different approaches to replicate the functions of the English Trust or to grant them recognition in the respective jurisdiction. In this context, the ratification of the Hague Trust Convention is of particular interest. Other jurisdictions – such as Liechtenstein – have introduced trusts and trust-like arrangements into their legal system by way of special legislation. One of the main difficulties with trusts in civil law and mixed jurisdictions lies in the peculiar nature of beneficial interests, which cannot easily be categorized in either rights in rem or in personam. Scotland, for example, addresses this problem with the dual patrimony theory.

Compelling Trustees to Exercise Their Discretion: A Principle of Non-Intervention?

Tang Hang Wu*

ZVglRWiss 117 (2018) 303–317

Due to their inherent flexibility, discretionary trusts are a very popular way for wealth structuring. The present paper deals with the judicial control of a trustee’s discretion and addresses the limits of the so-called principle of non-interference. It can be concluded that the courts should intervene whenever a trustee is using his discretion in an abusive way, including situations where the trustee is misinformed, acts in mala fide or with improper motives, as well as when he fails to exercise his discretion at all.

Reforms in Hong Kong Trust Law and their Impact

Lusina Ho*

ZVglRWiss 117 (2018) 318–326

Although Hong Kong has never been an typical offshore jurisdiction, i. e. a financial centre with only a relatively small domestic economy, it has established itself as a centre for succession and asset planning by means of trusts and other legal structures. Recent developments and modernizations of Hong Kong trust law intend to attract offshore trust business to Hong Kong and to bring the Trustee Ordinance in line with modern trust statutes in onshore common law jurisdictions.

Trustee Liability for Breach of Trust in the Common Law World

Oonagh B. Breen*

ZVglRWiss 117 (2018) 327–348

When is a trustee liable? This article reviews trustee liability for breach of trust in the common law system. In Part I the author gives an introduction into the traditional trustee liability, continuing with general measures in Part II, before exploring the 2013 UK Supreme Court judgment in Futter v HMRC and its implications for trustees. Furthermore the paper considers the issue of limited or excluded liability.

Trustee Liability in Selected Civil Law Jurisdictions

Stephan Ochsner*

ZVglRWiss 117 (2018) 349–359

Since entry into force of the Hague Trust Convention on 1 July 2007, the trust has been officially recognised in Switzerland. But there is no Swiss legislation or case law dealing with the the liability of trustees, even when the trustee is based in Switzerland. A trustee runs the risk of aiding and abetting tax evasion if he or she knows or should know that the assets endowed have not been taxed. Beyond the domain of taxation, the liability risk for trustees is continuously increasing. The general increase in litigiousness in the financial services sector can probably be seen as a reason. Trustees are therefore advised to know their risks and to take measures to mitigate these risks.

Liechtenstein Trusts in International Corporate Structuring

Johanna Niegel*

ZVglRWiss 117 (2018) 360–383

Under Liechtenstein law, there are two types of trust, which can be used for corporate structuring: (a) the trust settlement as known in Anglo-Saxon law and (b) the trust enterprise (trust reg.). While a trust settlement does not enjoy legal personality, the trust enterprise can be set up with or without legal personality and fulfil various purposes. Both these types of Liechtenstein trust fall into the general category of fiduciary relationships, as they both contain an element of trust. Trust enterprises can be structured like a corporation or similar to a foundation. On the other hand, a classic example of a trust settlement would be the family trust whose objects and purposes can be compared to those of a family foundation.

The Use of Trusts for Corporate Structuring in Common Law Jurisdictions

Marcus Staff*

ZVglRWiss 117 (2018) 384–393

In this paper a typical instance is identified in which a trust is used to hold shares in an “orphan” company for the benefit of the company’s bondholders; a use to which it has been put precisely because the persons with the right to execute or enforce the trust have no valuable interest in exercising their rights. That instance is then used as an introduction to discuss the differences between execution and enforcement of a trust, including (i) trusts for persons and (ii) trusts for abstract and impersonal objects for public purposes, namely charitable trusts. There is then a description of deliberately designed trust-like arrangements for private purposes (provided for by statute in various jurisdictions) which employ representative enforcers, and problems are mentioned that may arise with the enforcement and execution of such arrangements.

Modernes Stiftungsrecht im Lichte grenzüberschreitender Stiftungstätigkeit

Alexandra Butterstein*

ZVglRWiss 117 (2018) 394–404

Globalisation is allowing „worlds to merge“ and at the same time is harmonizing the legal systems of the European states. Due to these adjustment processes, cross-border structuring options and associated issues of conflicts of law have become increasingly important in the field of asset and estate structuring. The cross-border dimension of a foundation (Stiftung) becomes particularly evident when considering the possible geographical distribution of its assets, its opportunities to participate in companies operating globally and its associated income opportunities. Founders can strategically integrate these strengths into “their“ foundation purpose. A foundation’s potential for cross-border structuring is, however, contingent up on the foundation’s recognition as a legal entity, including its identity preserving characteristics, beyond the jurisdiction in which the foundation was established.

* Univ.-Prof. Dr. Susanne Kalss, LL.M. (Florenz), Institut für Zivil- und Unternehmensrecht, Wirtschaftsuniversität Wien.

* Prof. Dr. Hanno Merkt, LL.M. (Univ. of Chicago) Direktor des Instituts für Ausländisches und Internationales Privatrecht der Universität Freiburg, Richter am OLG Karlsruhe.

* Dr. Jonas Hermann, Rechtsanwalt (D) und Head of Legal and Compliance Central Europe, BASF Österreich GmbH, Wien.

* Dr. Paolo Panico is Chairman and Managing Director of Private Trustees SA, Luxembourg, and Adjunct Professor, University of Luxembourg.

* Prof. Dr. Hang Wu Tang, LL.B. (NUS), LL.M., Ph.D. (Cantab), Professor and Director, Centre for Cross-Border Commercial Law in Asia, School of Law, Singapore Management University, Singapore.

* Prof. Lusina Ho, B.A. (Oxon), B.C.L., Harold Hsiao-Wo Lee Professor in Trust and Equity, Faculty of Law, University of Hong Kong, Hong Kong. Research for this article was funded by the RGC General Research Fund 2017–2018 (project number 17610217).

* Prof. Dr. Oonagh Breen, B.C.L. (NUI), LL.M. (NUI), LL.M. (Yale), J.S.D. (Yale), B.L., Professor, University College Dublin.

* Dr. Stephan Ochsner, LL.M., Rechtsanwalt (CH), europäisch niedergelassener Rechtsanwalt (FL) und Chairman des Ochsner Consulting Establishment, Vaduz.

* Dr. Johanna Niegel, LLM (Columbia University), TEP, Allgemeines Treuunternehmen (ATU), Vaduz, Liechtenstein.

* Marcus Staff, B.A. (York), Barrister, XXIV Old Buildings, Lincoln’s Inn, London.

* Ass.-Prof. Dr. Alexandra Butterstein, LL.M., Rechtsanwältin (D) und Assistenzprofessorin am Lehrstuhl für Gesellschafts-, Stiftungs- und Trustrecht der Universität Liechtenstein.