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The information below has been kindly provided by the European Commission

The European Commission (Directorate General for Justice and Consumers) is establishing a new expert group which shall assist the Commission in the revision and the preparation of a possible initiative with regard to Regulation (EC) 1393/2007 on service of documents and Regulation (EC) 1206/2001 on taking of evidence. The group shall be composed of 20 members appointed in a personal capacity who are experts in the area of cross-border judicial co-operation in civil and commercial matters. The call for members is open until 27 November 2017. More information is available here and here.

Entries for the St Petersburg International Legal Forum Private Law Prize will close on 15 November 2017. The first prize, to the value of 10 million rubles, will be awarded to the author of the best research monograph or author(s) of a research article published on any topic of private law, private international law or comparative law. There is no word or page limit for monographs and articles. (Textbooks and academic commentaries are not eligible.)

Candidates’ monographs or articles must be nominated by one of the 81 universities and institutions listed on pages 8-11 of the competition guidelines, which are accessible here: https://spblegalforum.ru/cm/userfiles/file/SPBILF-2018_Award_eng.pdf.

The prize’s selection committee consists of experts many of whom are well-known to the readers of this blog, including Jürgen Basedow, Marta Pertegás, Michael Bonell, Roy Goode and Takeshi Kojima, to name a few.

The prize will be awarded at the VIII St Petersburg International Legal Forum in May 2018.

Further details on the conditions of the prize and the selection committee are available here: https://spblegalforum.ru/en/2018_SPBILF_Award.

On 2 and 3 November 2017, the Radboud University at Nijmegen hosted the 9th Transnational Commercial Law Teachers’ Meeting. In these meetings, teachers of transnational commercial law from all over the world gather to discuss fundamental issues and core instruments of unified or harmonized commercial law as laid down in the “bible” of transnational commercial law by Roy Goode, Herbert Kronke and Ewan McKendrick (see here), but also current trends and teaching methods.

This time, the meeting focused on “Transnational Commercial Law and Natural Resources”. After the opening by the President of the University Daniel Wigboldus, Herbert Kronke (Iran-US Claims Tribunal, emeritus of Heidelberg University, former Secretary-General of UNIDROIT) and Thomas Keijser (Radboud University), in a first panel chaired by Charles Mooney, University of Pennsylvania Law School, several speakers addressed the latest developments of UNIDROIT’s Cape Town Convention on International Interests in Mobile Equipment and its latest Protocol on Mining, Agriculture and Construction Equipment (MAC Protocol) as well as further potential areas of application such as e.g. renewable energy machinery but also with a view to other types of cross-border secured transactions (Howard Rosen, Rail Working Group, Benjamin von Bodungen, German Graduate School of Management and Law, Teresa Rodríguez de las Heras Ballell, Universidad Carlos III de Madrid, Ole Börger, Judge at the Oberlandesgericht at Bremen, Peter Winship, Southern Methodist University School of Law, Louise Gullifer, University of Oxford/Radboud University, Jeffrey Wool, Aviation Working Group, University of Washington School of Law, University of Oxford).

A second panel chaired by Anna Veneziano, Secretary-General of UNIDROIT ad interim, University of Teramo, dealt with UNIDROIT’s projects on contract farming, in particular its Legislative Guide, discussed by Henry Gabriel, Elon School of Law and Bruno Zeller, University of Western Australia.

In the following Athanassios Kaissis (Aristotle University and International Hellenic University of Thessaloniki) shortly presented the concept and the didactics of his LL.M. in Transnational and European Commercial Law, Mediation, Arbitration and Energy Law, and the author of these lines did likewise on the semester abroad program of EBS University in Wiesbaden “EBS Law Term: Transnational Commercial Law”.

Chaired by Herbert Kronke, Hector Tsamis (PhD student of the International Hellenic University), Hannah Buxbaum (Indiana, Maurer School of Law), and Charles Mooney presented legal and regulatory approaches towards sustainable finance and sustainability reporting and securities disclosure regimes. It became clear that sustainability is being more and more supported on all levels including capital markets regulation (financial disclosure requirements) and corporate governance (non-financial accounting standards). The first day closed with an inspiring dinner speech by Roy Goode.

The second day focused on private law in general in respect to responsibilities, liabilities and litigation. On the first panel chaired by Hannah Buxbaum, Hans van Loon (Former Secretary-General of the Hague Conference) presented principles and building blocks for a global legal framework for civil litigation in environmental matters. He referred to international instruments bringing about a shift of paradigm such as e.g. the UN 2030 Agenda for Sustainable Development or the Ruggie Principles taken up more and more in strategic litigation such as the law suit against RWE in Germany by a Peruvian farmer at the city of Huaraz on the delictual responsibility for contributing to climate change and thus threatening the livelihood of the claimant. This case (see e.g. the report by the NGO Germanwatch) will be decided upon appeal by the Upper Regional Court of Hamm on 13 November 2017, a timely moment during the UN Climate Change Conference in Bonn. Jaap Spier (retired Advocate-General in the Supreme Court of the Netherlands, Universities of Amsterdam and Stellenbosch) continued the topic with a view on enterprise principles. Marc Loth (Tilburg University) drew some lessons from the Urgenda case, a Dutch case raising the issue of state liability for climate change (Urgenda Foundation v. The State of the Netherlands, see e.g. here) and Jan van Dunné, Erasmus University Rotterdam, analyzed liability issues in gas and coal mining for damages caused by soil subsidence, earthquake and subsoil water management under Dutch law. Finally, Tedd Moya Mose (PhD student of Queen Mary University of London), presented on international financing of renewable energy.

After a second interlude on didactics by Camilla Anderson (University of Western Australia) and Caslav Pejovic (Kyushu University), Athanassios Kaissis took the chair for the afternoon panel on dispute resolution. Pauline Ernst (Radboud University) and Gerard Meijer (NautaDutilh) presented on experiences from practice on arbitration and energy sector, both commercial and investor-state. Anna Marhold (Tilburg University) reported on dispute resolution mechanisms and the role of the industry in European regulatory agencies for energy. Vesna Lazic (Utrecht University) spoke about the “enforcement” of annulled arbitral awards in light of the Pemex and (one of the several) Yukos cases. Finally, the author of these lines presented on a recent type of cases in environmental litigation in which claimants seek to draw the foreign, in particular African, subsidiaries of European groups of companies into European courts in order not only to get damages but also to get injunctive relief against the subsidiary to stop them from further pollution or to have them taking measures immediately to protect the local population.

The primary example at the moment is Royal Dutch Shell and its Nigerian subsidiary Shell Petroleum Development Company of Nigeria Ltd. In the UK, this is the case of Okpabi & Ors v Royal Dutch Shell Plc & Anor, [2017] EWHC 89 (TCC), 26 Jan 2017, appeal pending. Similar case against other UK parents are Lungowe & Ors v Vedanta Resources Plc & Anor, [2016] EWHC 975 (TCC), 27 May 2016, appeal dismissed 13 October 2017, [2017] EWCA Civ 1528, and AAA & Ors v Unilever Plc & Anor, [2017] EWHC 371 (QB), 27 February 2017. For the respective ligitation against Shell in the Netherlands see A.F. Akpan v. Royal Dutch Shell, plc, District Court of the Hague (Rechtbank), 30 January 2013, confirmed on the jurisdictional issues by the Court of Appeal (Gerechtshof) of the Hague, judgment of 17 December 2015). As opposed to most English decisions, the Dutch Court of Appeal signalled a willingness to further develop the applicable Nigerian tort law in light of (the similar) English law on the parent’s duties of care for its subsidiaries towards a liabililty, but the appeal on the merits is still pending. This evolving case law meets with legislative initiatives (e.g France, the Netherlands, Switzerland, EU in respect to conflict minerals) that seek to establish more clearly a direct delictual liability of the parent company that in turn is the key requisite for establishing “annex” jurisdiction (“forum connexitatis”) under a “real case” or proximity analysis for the foreign subsidiary located in third states to which Article 8 no. 1 Brussels Ibis Regulation does not apply, but rather the respective for a connexitatis under national jurisdictional law. Such forum connexitatis does not exist under German national procedural law which might be the explanation why this type of case has not arisen in Germany, but one might of course think of delictual jurisdiction for both the parent and the foreign subsidiary by mutual attribution of delictual actions as joint tortfeasors, a concept that is interpreted broadly under section 32 German Code of Civil Proceudre but of course again requires such a delictual claim against the parent under the applicable tort law in the first place.

After some input on space law by Frans van der Dunk (University of Nebraska-Lincoln, College of Law) the conference was closed by Dean Steven Bartels. The conference expressed its gratitude and appreciation to him and in particular to Thomas Keijser and his splendid team for inviting the 9th TCL Teachers’ Meeting to Radboud University and for the great hospitality of one of the best universities of the country (at [one of?] the oldest cities in what is today the Netherlands and a Member of the Hanse, i.e. the Hanseatic League, as of 1402).

The Permanent Bureau of the Hague Conference on Private International Law (HCCH) has issued a Preliminary Explanatory Report on the draft Convention on Judgments (Preliminary Document No 7 of October 2017) in both English and French for the attention of the Special Commission meeting of November 2017 on the Recognition and Enforcement of Foreign Judgments.

The Preliminary Explanatory Report was prepared by Professors Francisco J. Garcimartín Alférez, Universidad Autónoma de Madrid, Spain, and Geneviève Saumier, McGill University, Canada.

More information relating to the meeting is available at https://www.hcch.net/en/projects/legislative-projects/judgments/special-commission/.  As is evident from the Information Documents currently listed (some of which are available), the meeting will deal in particular with intellectual property rights and the extent to which they should be included in the scope of the draft Convention.

By way of comparison, it should be noted that intellectual property rights were discussed at length during the meetings of the Hague Convention of 30 June 2005 on Choice of Court Agreements (see Articles 2 n) and o) and 10(3)) and eventually, Article 21). This was, in my view, a good compromise.

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

Hart Publishing Ltd. (UK) has just announced the release of Cross-Border Litigation in Europe, edited by Paul Beaumont, Mihail Danov, Katarina Trimmings and Burcu Yüksel (ISBN 9781782256762, £90.00). The following description is drawn from the publisher’s flyer:

“This substantial and original book examines how the EU Private International Law (PIL) framework is functioning and considers its impact on the administration of justice in cross-border cases within the EU. It grew out of a major project (ie EUPILLAR: European Union Private International Law: Legal Application in Reality) financially supported by the EU Civil Justice Programme. The research was led by the Centre for Private International Law at the University of Aberdeen and involved partners from the Universities of Freiburg, Antwerp, Wroclaw, Leeds, Milan and Madrid (Complutense).
The contributors address the specific features of cross-border disputes in the EU by undertaking a comprehensive analysis of the Court of Justice of the EU (CJEU) and national case law on the Brussels I, Rome I and II, Brussels IIa and Maintenance Regulations. Part I discusses the development of the EU PIL framework. Part II contains the national reports from 26 EU Member States. Parts III (civil and commercial) and IV (family law) contain the CJEU case law analysis and several cross-cutting chapters. Part V briefly sets the agenda for an institutional reform which is necessary to improve the effectiveness of the EU PIL regime. This comprehensive research project book will be of interest to researchers, students, legal practitioners, judges and policy-makers who work, or are interested, in the field of private international law.”

For further details, please click here.

Attention scholars of international law: The registration for the 2018 summer courses of The Hague Academy of International Law has opened. Over the years, thousands of students and professionals have come to the Peace Palace in The Hague to acquire a deeper understanding of Public International Law and Private International Law. Have a look at the program here:

https://www.hagueacademy.nl/…/up…/2013/11/PROGRAMME-2018.pdf

And register here:

https://www.hagueacademy.nl/registration-forms/

Through two decisions (Civ. 1ère, 27 sept. 2017, n° 16-17198 et 16-13151) both issued on September 27th, The French Cour de cassation finally gave an answer to one of the most discussed question of French Succession law: Is la réserve héréditaire part of French international public policy?

The circumstances of both cases are very similar. Two French composers living in California, where they had most of their assets, got married respectively in 1984 and 1990. They put their assets in a trust and designated their wives as beneficiaries. In both cases, the settlers did not designate the children they had from previous relationships as beneficiaries of the trust. After the death of their fathers, the latter turned to French courts in order to obtain part of the inheritance. They argued that the Californian law applicable to the succession should be declared contrary to French international public policy for not including a réserve héréditaire for certain heirs.

According to Article 912 §1 of the French Civil Code, la réserve hérédiataire or the reserved portion « is that part of the assets and rights of the succession whose devolution, free of charge, the law assures to certain heirs, called forced heirs, if they are called to the succession and if they accept it ». In other words, under French succession law, a person cannot freely dispose of all of his or her assets. French law set boundaries by putting aside a reserved portion of the deceased’s property. However, he or she can freely dispose of the disposable portion (quotité disponible) which is defined as « that part of the assets and rights of the succession that is not reserved by law and of which the deceased can freely dispose by liberalities » (Article 912 § 2).

Whereas the Court of Cassation ruled that the reserved portion is mandatory in internal matters, the question of its imperative nature in international cases was yet unclear. Authors disagree. While some consider that the réserve héréditaire cannot be considered as such as part of French ordre public international, others consider that due to the fact that it is an expression of solidarity among family members as well as a guarantee of equality between heirs, it has to be part of French international public policy.

The controversy was aggravated in 2011 when the Conseil Constitutionnel condemned le droit de prélèvement for amounting to a discrimination based on nationality. The droit de prélèvement is another specific French mechanism. It allows French heirs that have been deprived of the reserved portion from the assets located abroad to deduct the equivalent of such reserved portion from the part of the deceased’s assets that are located in France. As a consequence of this decision, the reserved portion remained the only protection for heirs from the risk of disinheritance.

However, in both decisions, the Court found that the mere fact that the foreign law does not provide for a mechanism such as the reserved portion does not amount to a violation of French international public policy. The foreign law could nevertheless be disregarded, but only if its concrete application in a specific case leads to a situation that would be incompatible with French essential principles.

Giving the particulars circumstances of the cases, the Court found that in both cases the application of Californian law was not contrary to French public policy. First, the Court outlined that the deceased had lived in California for over thirty years and that most of their assets were located there. As a consequence, both situations were not strongly connected to the French forum. Then, the Court pointed out that the children living in France were adults and that their economic situation will not suffer from their being deprived of the succession.

These observations lead the Court to consider that, in these situations, the Californian law is not contrary to French international public policy even though it does not provide for a reserved portion. The Court emphasis on the particular circumstances of the case, namely that the situation was mainly located in California and that none of the claimants was in need or economically instable, indicates that these circumstances weighed strongly on the outcome. It does not exclude that, in different circumstances, a foreign law that would not provide for a reserved portion could be dismissed as contrary to public policy.

Prior to the coming into force of the Succession Regulation, the solution appears in accordance with its public policy provision. Stating that courts could only refuse to apply provisions that are manifestly incompatible with the forum’s international public policy, Article 35 allows that foreign laws be disregarded when their application could lead to serious consequences. It does not appear to be the case in the present situations.

The new discussed question is now: In which case the application of a foreign law not including a reserved portion could lead to a situation incompatible with French essential principles?

Readers may have noticed a surge in blog posts during the month of October. Indeed when I scheduled last night’s release I noticed I had effectively posted every working day (and some week-end days, too) in the past month. This is testimony to an exciting amount of developments in the areas on which I report, particularly in conflict of laws.

I cannot promise you’ll be treated to a post every day for November, too. Neither however will I trick you into having to wait too long for reporting on the many interesting cases I have in the queue.

Happy Halloween.

Geert.

On Friday, 15 December 2015, the Opening Ceremony of the Humboldt Consumer Law Clinic’s fifth cycle will take place. The ceremony will focus on current developments in the law of general terms and conditions which, from a legal perspective, create new challenges and pose numerous interesting and controversial questions.

“Fundamentals and latest challenges of the control of general terms and conditions”

Speaker: Prof. Dr. Phillip Hellwege, M.Jur. (Oxford), University of Augsburg and Vice President of the European Society for Comparative Legal History

Panelists:  Jutta Gurkmann, Federation of German Consumer Organisations, and Martin Freitag Association of the German Construction Industry.

The ceremony will start at 4 p.m. and take place at the Festsaal Luisenstraße 56, 10115 Berlin.

If you wish to participate please register here.

In [2017] NIQB 81 Townsend v Google Inc. & Anor the Northern Ireland High Court refused service our of jurisdiction in relation to a request for Google (UK and Inc.) to de-list a number of urls relating to reports on sexual and other criminal offences committed by plaintiff.

Plaintiff seeks an injunction inter alia requiring the defendants and each of them to withdraw and remove personal data relating to the plaintiff, making reference to or tending to reveal sexual offences committed by the plaintiff while a child, from their data processing and indexing systems and to prevent access to such personal data in the future. The Court references ia Vidal-Hall and Google Spain. I will leave readers to digest the ruling largely for themselves for there is a lot in there: consideration of Article 8 ECHR; Directive 95/46; aforementioned precedent; tort law etc.

Of particular note is Stephens J’s finding at 61 that ‘(t)here is a clear public interest in open justice. There is a clear right to freedom of expression. In such circumstances the processing was not unwarranted and that there is no triable issue in relation to any allegation that Google Inc. has not satisfied this condition.’

A judgment to add to the growing pile of internet, jurisdiction and balancing of interests in privacy considerations.

Geert.

In Fernandes v. Wal-Mart Canada  2017 MBCA 96 the Court of Appeal of Manitoba offers great material for comparative conflict of laws. I will leave the Canadian analysis to the experts, in particular Chloe Snider who alerted me to the case. Suffice to say here that the gist of the ruling is that where a corporation carries on business in the territory (here: Wal MArt operating stores), this suffices to establish jurisdiction (here: re an employment issue): no ‘real and substantive connection’ test needs to be separately established. (Cue comparative litigation: compare with ‘domicile’ and extended notions of domicile in EU conflicts law).

The action was eventually still stayed on forum non conveniens grounds in favour of Ontario (extra cue for comparative review here: for this was so held despite the fact that the Ontario limitation period had probably expired).

Geert.

The International Conference “Regulation and Enforcement in the Digital Age” will take place on 16 & 17 November in Nicosia, Cyprus.

The conference sessions are the following:

Copyright law in the digital era

Internet regulation and enforcement

Special issues in online data protection

Data protection and consumer rights

Emerging trends and challenges of e-commerce and consumer law

Cybersecurity and Internet regulation

PhD Students Special Session: Internet regulation: New challenges, new ideas.

For more info, press here

Bastian Brunk, research assistant and doctoral student at the Institute for Comparative and Private International Law at the University of Freiburg (Germany), has provided us with the following first thoughts on the CJEU’s groundbreaking Polbud judgment.

The Judgment

In its judgment in Polbud (C-106/16), the CJEU again took the work out of the EU legislature’s hands while further developing the freedom of establishment provided for in Articles 49 and 54 TFEU. The case was heard following a request for a preliminary ruling under Article 267 TFEU by the Sad Najwyzszy (Supreme Court of Poland). In short, the CJEU had to decide on the following questions:

(1) Are Articles 49 and 54 TFEU applicable to a transfer of the registered office of a company incorporated under the law of one Member State to the territory of another Member State with the purpose of converting its legal form, when the company has no intention to change the location of its real head office or to conduct real economic activity in the latter Member State?

(2) Is a national legislation that makes the removal of a company from the commercial register and, accordingly, the out-migration of that company conditional upon its liquidation compatible with the freedom of establishment?

Answering these questions, the CJEU made Polbud, the company at stake, a liberal gift and strengthened the mobility of companies within the European Single Market. First, the CJEU stated that the freedom of establishment applies to the transfer of the registered office of a company from one Member State to another even if no real business is intended to be conducted in the latter Member State. Secondly, the CJEU ruled out national legislation providing for the mandatory liquidation of a company if the company requests the removal from the initial commercial register in cases of outward migration.

The facts

In September 2011, the shareholders of Polbud, a limited liablity company established under Polish law, decided to transfer the company’s registered office from Poland to Luxembourg. The resolution made no reference to a simultaneous transfer of either the real head office or the place of real economic activity. Based on that resolution, the registry court in Poland recorded the opening of the liquidation procedure. In May 2013, following a resolution adopted by a shareholder meeting in Luxembourg, the registered office of Polbud was transferred to Luxembourg. Polbud was renamed to Consoil Geotechnik and its legal form was changed to the Société à responsabilité limitée (S. à r. l.), the Luxembourgish private limited liability company. Subsequently, Polbud lodged an application with the Polish registry court for its removal from the commercial register. This application was refused to be registered because, as the registry court stated, Polbud failed to provide evidence of the successful execution of a liquidation procedure. Polbud appealed against this decision, arguing that no liquidation was needed because the company continued to exist as a legal person incorporated under Luxembourgish law.

The precedents

Articles 49 and 54 TFEU provide for the freedom of establishment. According to the CJEU case-law, the concept of “establishment” within the meaning of these Articles is a very broad one, allowing a Union national to participate, on a stable and continuous basis, in the economic life of another Member State and to profit therefrom (CJEU in Gebhard, C-55/94, para. 25 and Almelo, C-470/04, para. 26). It involves the actual pursuit of an economic activity through a fixed establishment in another Member State for an indefinite period (CJEU in Factortame and Others, C-221/89, para. 20 and Commission v. United Kingdom, C-246/89, para. 21). In order to claim freedom of establishment, it is generally necessary to have secured a permanent presence in the host Member State (CJEU in Centro di Musicologia Walter Stauffer, C-386/04, para. 19 and Schmelz, C-97/09, para. 38). This case law can, generally speaking, be translated as “no freedom of establishment without establishment”.

On the other hand, the CJEU generously extended the application of Articles 49 and 54 TFEU to letterbox companies without “fixed establishment” and/or “permanent presence” in their home Member State. In Centros (C-212/97) the Court ruled that EU law is applied to the set-up of subsidiaries, branches and agencies in other Member States and, in that regard, it is immaterial that the company was formed in one Member State only for the purpose of establishing itself in another Member State, where its main, or indeed entire, business is to be conducted (Centros, para 17).

The CJEU then used its 2009 Cartesio judgment (C-210/06) as an opportunity to, obiter dictu, set guidelines for cross-border transfers of seat. It stated that, on the one hand, a Member state has the power to define both the connecting factor required of a company if it is to be regarded as incorporated under the law of that Member State and, as such, capable of enjoying the right of establishment, and that required if the company is to be able subsequently to maintain that status (thus treating companies as legal creatures of their country of origin). On the other hand, freedom of establishment comprises the right of a company to move from one Member State to another. If domestic legislation of the Member State of origin requires the liquidation of the company, thereby preventing it from converting itself into a legal person governed by the law of the target Member State, such a measure cannot be justified under the rules on freedom of establishment (Cartesio, paras. 110 ff.).

This jurisdiction was complemented by the CJEU in Vale (C-378/10) where the Court clarified the legal position of the Member State of destination. If a Member State allows for the conversion of companies governed by national law, it must also grant the same possibility to foreign EU companies (Vale, para. 46). In the absence of relevant EU-law, the target Member State may set up procedural rules to cover the cross-border conversion but must ensure that they are not less favourable than those governing similar domestic situations (principle of equivalence) and that they do not render impossible in practice or excessively difficult the exercise of rights conferred by the European Union legal order (principle of effectiveness) (Vale, para. 48).

The Opinion of AG Kokott

In her Opinion of 4 May 2017 (see here), AG Kokott took up a distinct position emphasizing the need for actual establishment for the application of Articles 49 and 54. This criterion is sufficiently met, as AG Kokott states, if, at least, the company intends to set up an actual establishment in the sense of conducting at least a nominal economic activity in the target Member State (Opinion, para 36). The AG underlines her position citing the above mentioned CJEU case-law in Factortame and Others (C-221/89), Commission v. United Kingdom (C-246/89), Centro di Musicologia Walter Stauffer (C-386/04) and Schmelz (C-97/09). She concludes that the freedom of establishment “gives economic operators in the European Union the right to choose the location of their economic activity, it does not give them the right to choose the law applicable to them” (Opinion, para. 38).

Implications of the Polbud judgment for the internal market

The CJEU now takes a different point of view: Once formed in accordance with the legislation of a Member State, companies enjoy the full range of that freedom. Nothing new, so far, as Geert van Calster suggests in his comment (see here). But what makes Polbud (r)evolutionary?

First, the CJEU creates legal certainty in an area that is particularly important for the functioning of the European Single Market. In its Cartesio judgment, the Court allowed for the cross-border conversion of EU companies in general but did little to shape the relationship between the involved Member States. Therefore, it was widely thought, that, just like AG Kokott propounds, the conversion of a company from one Member State to another required a genuine economic link with the State of destination. In Polbud, the CJEU clarifies that the regulatory power of a Member State ends when a company converts itself into a company governed by the law of another Member state. It is for the latter State to determine the legal and/or economic conditions that have to be satisfied by the company in order to bring the conversion into effect (paras 33 ff.). Under Articles 49 and 54 TFEU, the State of origin is only allowed to provide legislation for the protection of public interests (such as the protection of creditors, minority shareholders and employees) but cannot impose mandatory liquidation.

Secondly, the CJEU obliges the State of origin to observe the principle of equivalence. This principle, already known from the Vale decision (see above), was generally considered as obliging only the target Member State in cross-border conversion cases to legally treat domestic and foreign companies equally. By contrast, the State of origin was only thought to be bound by the general prohibition of restrictions (i.e. the prohibition of rules hampering or rendering less attractive the exercise of fundamental freedoms, see CJEU in Kraus, C-19/92, para. 32). In Polbud, the CJEU, without being explicit on this point, extends the scope of application of the principle of equivalence to the Member State of origin by stating that “the imposition, with respect to such a cross-border conversion, of conditions that are more restrictive than those that apply to the conversion of a company within that Member State itself” is not acceptable (para. 43).

Finally, recapitulating its jurisdiction in Daily Mail and National Grid Indus (C-371/10), the CJEU points out that exercising the freedom of establishment for the purpose of enjoying the benefit of the most favourable legislation, does not, in itself, amount to an abuse of rights (para. 62). The Court further explains its position saying that “the mere fact that a company transfers its registered office from one Member State to another cannot be the basis for a general presumption of fraud and cannot justify a measure that adversely affects the exercise of a fundamental freedom guaranteed by the Treaty” (para. 63).

Assessment

As already observed, Polbud encouragingly facilitates the cross-border mobility of companies but, on the other hand, leaves the reader with open questions.

It was high time to free cross-border conversions from the requirement of a genuine economic link with the Member State of destination. The legal situation before Polbud, that allowed letterbox companies to conduct their business in other Member States (which can be compared to initial choice of law) but prevented the formation of letterbox companies through the transfer of an existing company’s registered office to another Member State (which can be compared to subsequent choice of law), was somewhat arbitrary from a legal and economic point of view.

On the other hand, the extension of the scope of application of the principle of equivalence to the Member State of origin can only be seen as inconsistent with the legal doctrine of the freedom of establishment provided for in Articles 49 and 54 TFEU. Heretofore, only EU-foreigners could enjoy the right to non-discrimination, whereas, in regard to EU law, Member States were free to impose (relatively) stricter rules to its own citizens. This principle finds its expression, for example, in the above-mentioned treatment of companies as creatures of their state of origin that the CJEU established in its Cartesio judgment. As the principle of equivalence corresponds to the prohibition of discrimination, it is even more astonishing that the CJEU permits exemptions for overriding reasons in the public interest. These unwritten exemptions generally apply only in cases of restrictions of the freedom of movement (see Kraus, para. 32 and Gebhard, para. 37). On the contrary, discriminations require the strict observance of the catalogue of justifications set out in Article 52 TFEU. In future decisions, the CJEU should recall this clear distinction and cease to further the linguistic ambiguity.

Aspen Underwriting v Kairos Shipping et al [2017] EWHC 1904 illustrates the splintering of claims which may well occur when plaintiff chooses to ignore Brussels I’s core jurisdictional rule of domicile of the defendant. Evidently such splintering often is the strategic intention of a plaintiff and even if it does inconvenience them, having part of the claims settled by one court rather than another may still be its overall preference. The case however also highlights important crossed wires between the common law and EU law on the qualification of ‘tort’, and the relation between Rome II and Brussels I (Recast).

The vessel ATLANTIK CONFIDENCE  sank in the Gulf of Aden in 2013. It had earlier been held in a limitation Action commenced by her Owners, the First Defendant, that the Vessel was deliberately sunk by the master and chief engineer at the request of Mr. Agaoglu, the alter ego of the Owners. In the current action the Hull Underwriters of the Vessel, who paid out on the hull and machinery policy (“the Policy”) in August 2013 but who now consider, on further investigation, that the Vessel was deliberately cast away by her Owners, claim recovery of the insurance proceeds which were paid to Owners and the Vessel’s mortgagees, Credit Europe Bank NV, the Third Defendant (“the Bank”).

The Bank is domiciled in the Netherlands. and maintains that under the Brussels Regulation this court has no jurisdiction to hear and determine the claim against the Bank. It must be sued in the courts of the Netherlands where it is domiciled. The Hull Underwriters maintain that this court has such jurisdiction for three reasons. First, it is said that Bank is bound by a Settlement Agreement which confers exclusive jurisdiction on this court. Second, it is said that the Bank is bound by the exclusive jurisdiction clause in the Policy. Third, it is said that the claims brought against the Bank are matters which relate to tort, delict or quasi-delict and the harmful event occurred in England. This is the judgment of the court upon the Bank’s challenge to the jurisdiction.

Teare J rejected the first and second argument on the basis of analysis of the settlement. He then looks into Article 7(2) Brussels I Recast. The insurance heading of the Regulation does not apply as the relations concern those between two professional parties (at 72 the High Court refers to C-347/08 Voralberger; the CJEU confirmed later in C-521/14 Sovag).

Whether the claim of misrepresentation leading to the settlement, is one in tort or one in contract depends on how closely one finds it to be connected to the contract at issue (the Settlement). Plaintiff suggests that where such misrepresentations induce a contract, in this case the Settlement Agreement, the resulting claims are not matters relating to tort within the autonomous meaning of Article 7(2) but are matters relating to a contract within Article 7(1).

Teare J settles on the basis of the following convincing argument, at 76: ‘The court is concerned with a claim between the Hull Underwriters and the Bank. The Hull Underwriters allege that misrepresentations made by the Bank induced the Hull Underwriters to enter into the Settlement Agreement with the Owners. They seek to recover damages suffered by the Hull Underwriters as a result of the Bank’s misrepresentations. Whilst there is a factual connection between the claim and the Settlement Agreement I do not consider that that is enough to make the claim a matter relating to a contract and so within Article 7(1). Where there is a claim against the contracting party and it is alleged that the contract should be rescinded on the grounds of misrepresentations made by that party because such misrepresentations induced the contract it can sensibly be said that the subject-matter of the claim is the contract. But in the case of the claim against the Bank I do not consider that it can be fairly said that the subject-matter of the claim is the Settlement Agreement.‘

Oddly no reference here is made to relevant CJEU precedent including recently Granarolo and Kareda.

Now, the claim for damages based upon misrepresentation can be brought in England so long as the “harmful event” occurred in England (at 79; with reference to Bier /Mines de Potasse split into locus delicti commissi and locus damni). Jurisdiction for the claim based on misrepresentation can be brought fully in England because (at 79) ‘either the damage occurred in England (where Norton Rose Fulbright signed the Settlement Agreement and/or where the $22m. was paid to Willis’ bank account in London) or the event giving rise to the damage occurred in London (being the place where the misrepresentations were made and/or the place where the Hull Underwriters were induced).’

At 78 the High Court highlights the difficulty of the qualification viz conflict of laws of restitution based on unjust enrichment. The common law has the precedent of the House of Lords in Kleinwort Benson v Glasgow [1999] 1 AC 153.  Teare J summarises ‘In that case Lord Goff, with whom the other members of the court agreed on this point, said that a claim in restitution based upon unjust enrichment does not, save in exceptional circumstance, presuppose a harmful event and so is impossible to reconcile with the words of Article 7(2). He was not deterred from reaching this conclusion by the decision in Kalfelis. The claim for restitution in this case is based upon a mistake; it does not require a harmful event, though there might in fact be one as suggested by [plaintiff]. I consider that I am bound to follow the decision of the House of Lords and to hold that the claim in restitution based upon mistake is not within Article 7(2). It must follow that this court has no jurisdiction over that claim and that if it is to be pursued it must be pursued in the Netherlands where the Bank is domiciled.‘

The claim for unjust enrichment cannot be brought in England. Teare J observes the consequence of the Brussels I Regulation (at 80): ‘On case management grounds it is unsatisfactory to reach the conclusion that the tort claim may be brought in England but that the restitution claim may not be brought in England. However, this is the consequence of the Brussels Regulation as was accepted in Kalfelis. Of course, the entirety of the Hull Underwriters’ case against the Bank could be brought in the Netherlands but in circumstances where the Hull Underwriters’ case against the Owners and Managers is being brought in England that also is not satisfactory. The court cannot however base its jurisdictional decisions when applying the Brussels Regulation on considerations of forum conveniens.’

Of note finally is that Kleinwort Benson was issued post Kalfelis but prior to Rome II, which contains a specific heading on unjust enrichment. Notwithstanding its clear non-contractual nature (‘non-contractual’ being the generic title of Rome II which therefore encompasses more than just torts), it is not generally considered a tort: this continues to create issues in the application of Rome II.

A good case to illustrate the lasting challenges in distinguishing contracts from torts.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2.

It is our pleasure to announce the third edition of the International Association of Procedural Law (IAPL) – Max Planck Institute Luxembourg Summer-School, which will take place in Luxembourg from the 1st to the 4th of July 2018.

The 3rd edition of the Summer School has chosen to explore the topic of “Privatizing Dispute Resolution and its Limits”, where “privatizing” is understood in a broad sense. Different avenues can be envisaged thereto related. The first one focuses on the defense of public interests by means of private litigation; a second comprises the mechanisms for dispute resolution alternative to State justice; the third one deals with the commercialization of the judicial system. Applications under the first prong shall address the case of litigation in the interest of the broader (public) interest of the law: a regulatory approach that in Europe has been adopted in the context of competition law, intellectual property law, consumer protection, data protection and to some extent, also for the defense of the environment, in the search of avenues for the extraterritorial application of mandatory law. Under the second prong applications shall refer to commercial and investment arbitration, sports arbitration, consumer ADR, online dispute resolution for domain names controversies and the like. The third prong candidates shall focus on the development of private access to justice (litigation insurance, third party funding, etc), ”marketization” of the bar activity, emergence of new private actors with the legaltech, etc. Proposals must take into account that for different reasons all the  phenomena alluded to are subject to limits: to be feasible, the extraterritorial application of mandatory national or regional law requires procedural and substantial preconditions such as international jurisdiction over the defendant, or the support of an appropriately designed choice of law rule. As for alternative mechanisms of dispute resolution, in spite of their detachment from the control of State courts important interfaces remain, as demonstrated by the possibilities to apply for the annulment of the arbitral award or its non-recognition; or by the on-going contestation of CAS decisions before the ECHR. Finally, although schemes of third party funding and the like facilitate access to justice for single claims that wouldn’t be brought individually to the court, they raise many controversies and challenges while remaining unregulated.

All papers submitted to the 2018 Summer School should delve into one or several of these issues.

Up to 20 places will be available for applicants having procedural law and/or dispute resolution mechanisms as their main field of academic interest and meeting the conditions explained in the dedicated website.

Please follow this link for the online application.

Thank you Ben Zielinski for flagging Bank Leumi (UK) Plc v Screw Conveyor Ltd [2017] CSOH 129. I believe Ben is right in writing that this is the first formal acknowledgement that Scottish judicial authorities have no insolvency business in respect of an English registered company, and the same applies to English courts and Scottish companies,  in spite of the EU’s Insolvency Regulation.

Even if a company carries out its main activities in Scotland, internal UK jurisdictional rules will assign insolvency jurisdiction to the English judicial authorities. That is a result of, as Lord Doherty writes, the Insolvency Regulations designating the ‘Member State the courts of which may open insolvency proceedings’ however ‘territorial jurisdiction within that Member State is established by the Member State’s national law’ (at 9).

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.

When I reviewed Kokott AG’s Opinion in C-106/16 Polbud, I flagged that Ms Kokott concluded that the freedom of establishment provided for in Articles 49 and 54 TFEU only applies to an operation whereby a company incorporated under the law of one Member State transfers its statutory seat to another Member State with the aim of converting itself into a company governed by the law of the latter Member State, in so far as that company actually establishes itself in the other Member State, or intends to do so, for the purpose of pursuing genuine economic activity there. In other words she proposed a test along the lines suggested by Darmon AG in Daily Mail, but rejected by La Pergola AG in Centros.

The CJEU today held along La Pergola lines. It thus indeed facilitates forum /applicable (lex societatis) shopping for companies. The writing was very clearly on the wall when the Court (in Grand Chamber nota bene) started citing the old chestnuts of Daily Mail, Centros and Inspire Art. That no business is actually being conducted by Polbud in the host Member State is viewed by the court as irrelevant (at 37 ff). In the absence of harmonisation of EU law, the definition of the connecting factor that determines the national law applicable to a company or firm falls, in accordance with Article 54 TFEU, within the powers of each Member State (at 34).

Freedom of establishment is applicable (third question);  that freedom has been restricted (first question); and that restriction (transfer of the registered office of a company incorporated under the law of one Member State to the territory of another Member State, for the purposes of its conversion into a company incorporated under the law of the latter Member State, in accordance with the conditions imposed by the legislation of that Member State, is subject to the liquidation of the first company) is not justifiable (second question).

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 7.

The 15th edition of the leading text on private international law, Cheshire, North & Fawcett: Private International Law, has been released.

This new edition is edited by Paul Torremans, Uglješa Gruši?, Christian Heinze, Louise Merrett, Alex Mills, Carmen Otero García-Castrillón, Zheng Sophia Tang, Katarina Trimmings, and Lara Walker, with James J. Fawcett as the Consultant Editor. It provides comprehensive coverage of the full range of private international law topics; offers not only in-depth academic treatment of the principles, but also an examination of important commercial topics within the subject, such as the private international law treatment of contracts, jurisdiction and enforcement of judgments; and written by an expert team with a wealth of both academic and practical experience.

The new edition of this well-established and highly regarded work has been fully updated to encompass the major changes and developments in the law, including coverage of the Recast Brussels I Regulation which came into force in 2015. The book is invaluable for the practitioner as well as being one of the leading students’ textbooks in the field, giving comprehensive and accessible coverage of the basic principles of private international law.

It offers students, teachers and practitioners not only a rigorous academic examination of the subject, but also a practical guide to the complex subject of private international law. Written by an expert team of academics, there is extensive coverage of commercial topics such as the jurisdiction of various courts and their limitations, stays of proceedings and restraining foreign proceedings, the recognition and enforcement of judgments, the law of obligations with respect to contractual and non-contractual obligations. There are also sections on the various aspects of family law in private international law, and the law of property, including the transfer of property, administration of estates, succession and trusts.

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

P. Mankowski: The German Act on Same-Sex Marriages, its consequences and its European vicinity in private international law

Finally, Germany has promulgated its Act on Same-Sex Marriages. In the arena of private international law the Act calls for equal treatment of same-sex marriages and registered partnerships whereas in German substantive law it aligns same-sex marriages with traditional marriages and institutionally abandons registered partnerships pro futuro. In private international law the Act falls short of addressing all issues it should have addressed in light of its purpose. In particular, it lacks provisions on the PIL of kinship and adoption – and does not utter a single word on jurisdiction or recognition and enforcement of foreign judgments. In other respects it is worthwhile to have a closer look at its surroundings and ramifications in European PIL (Brussels IIbis, Rome III, Matrimonial Property, and Partnership Property Regulations), i.e. at the coverage which European PIL exacts to same-sex marriages.

P.F. Schlosser: Brussels I and applications for a pre-litigation preservation of evidence

The judgement is revealing a rather narrow finding. An application for a pre-litigation preservation of evidence is within the meaning of Art. 32 Brussels Ia Regulation not tantamount to “the document instituting the proceedings or an equivalent document”. The commentator is emphasizing that this solution cannot be subject to any reasonable doubt. He further explains, however, that the Regulation is applicable to such applications and the ensuing proceedings to the effect that the outcome of such a preservation of evidence must be recognized to the same degree as a domestic preservation is producing effects in the main proceedings. In particular is it clear for him, that such recognition must not be restricted by the German numerus clausus of legally recognized means of evidence.

T. Lutzi: Jurisdiction at the Place of the Damage and Mosaic Approach for Online Acts of Unfair Competition

Once again, the Court of Justice was asked to determine the place of the damage under Art. 5 No. 3 Brussels I (now Art. 7(2) Brussels Ia) for a tort committed online. The decision can be criticised both for its uncritical reception of the mosaic approach and for the way in which it applied the latter to the present case of an infringement of competition law through offers for sale on websites operated in other member states. Regardless, the decision confirms the mosaic approach as the general rule to identify the place of the damage for torts committed through the internet.

K. Hilbig-Lugani: The scope of the Brussels IIa Regulation and actions for annulment of marriage brought by a third party after the death of one of the spouses

The ECJ has decided that an action for annulment of marriage brought by a third party after the death of one of the spouses falls within the scope of Regulation (EC) No 2201/2003. But the third party who brings an action for annulment of marriage may not rely on the grounds of jurisdiction set out in the fifth and sixth indents of Art. 3(1)(a) of Regulation No 2201/2003. The ECJ does not differentiate between actions for annulment brought after the death of one of the spouses and an action for annulment brought by a third party. The decision raises several questions with regard to the application of Art. 3 of Regulation No 2201/2003.

J. Pirrung: Forum (non) conveniens – Application of Article 15 of the Brussels IIbis Regulation in Proceedings Before the Supreme Courts of Ireland and the UK

On a reference submitted by the Irish Supreme Court, the ECJ ruled that Art. 15 of Council Regulation (EC) No 2201/2003 (Brussels IIa) is applicable where a child protection application brought under public law concerns the adoption of measures relating to parental responsibility, (even) if it is a necessary consequence of a court of another Member State assuming jurisdiction that an authority of that other State thereafter commence proceedings separate from those brought in the first State, pursuant to its own domestic law and possibly relating to different factual circumstances. In order to determine that a court of another Member State with which the child has a particular connection is better placed, the court having jurisdiction must be satisfied that the transfer of the case to the other court is such as to provide genuine and specific added value to the examination of the case, taking into account the rules of procedure applicable in the other State. In order to determine that such a transfer is in the best interests of the child, the court having jurisdiction must be satisfied that the transfer is not liable to be detrimental to the situation of the child, and must not take into account, in a given case relating to parental responsibility, the effect of a possible transfer of the case to a court of another State on the right of freedom of movement of persons concerned other than the child, or the reason why the mother exercised that right, prior to the court being seised, unless those considerations are such that there may be adverse repercussions on the situation of the child. The judgment is juxtaposed to the decision of the UK Supreme Court – pronounced some months before that of the ECJ – in re N, an Art. 15 case concerning a different situation without freedom of movement questions. Both jurisdictions have found acceptable results, the UKSC, though happily much faster than the ECJ, perhaps not entirely without one or the other risk concerning its treatment of procedural questions

A.-R. Börner: News on the competence-competence of arbitral panels under German law – Simultaneously a note on the Federal High Court decision of August 9, 2016, I ZB 1/15

The Federal Court of Justice of Germany has decided that the arbitration clause even survives the insolvency of a party (severability), unless stipulated to the contrary or in case of the existence of reasons for the nullity or termination of the arbitral agreement, such reasons either existing separately or resulting from the main contract. Under the German Law of Civil Procedure, the challenge to the state court that – contrary to an early decision of the arbitration panel affirming its competency – the panel has no competency, must be raised within the very short timeframe of one month, otherwise the judicial review will be forfeited. The Federal Court of Justice had held until now that in case of a (supervening) final award the state court procedure ended and that the arguments against the competency had to be raised anew in the procedure on the enforceability of the award. The Court has now accepted the criticism by the scientific literature that this places an undue burden on the challenging party. So it now holds that the second procedure (on enforceability) will be stayed until the first procedure (on competency) is terminated, as its result takes precedence.

B. Köhler: Dual-use contracts as consumer contracts and no attribution of consumer status of a third party to the proceedings under Brussels-I Regulation

The determination of the scope of the provisions on jurisdiction over consumer contracts in Art. 15 to 17 Brussels I Regulation is one of the most controversial problems in international procedural law. The German Federal Supreme Court’s decision raises two interesting questions in this respect. The first controversial issue concerns the classification of contracts for both professional and private purposes as consumer contracts. In its judgment Gruber, the European Court of Justice had held that such a dual-purpose contract can only be considered a consumer contract if the role of the professional purpose is marginal. However, the European legislator adopted the criterion of predominant purpose in recital 17 to the Consumer Rights Directive (2011/83/EU). Regrettably, the German Federal Supreme Court missed an opportunity to clarify the classification of dual-purpose contracts within the Brussels I Regulation. The Court applied the criterion laid down by the ECJ in Gruber without further discussion. In a second step, the Court held – convincingly – that Art. 16 (2) Brussels I Regulation presupposes that the consumer is a party to the proceedings. The capacity of consumer of a third party cannot be attributed to a defendant who, him- or herself, is not a consumer.

L. Hübner: The residual company of the deregistered limited

The following article deals with the consequences of the dissolution of companies from a common law background having residual assets in Germany. The prevailing case law makes use of the so-called “Restgesellschaft” in these cases. By means of three judgments of the BGH and the Higher Regional Court of Brandenburg, this article considers the conflicts of laws solutions of these courts and articulates its preference for the application of German company law on the “Restgesellschaft”. It further analyses the subsequent questions as regards the legal form and the representation of the “Restgesellschaft“, and the implications of the restoration of the foreign company.

D. Looschelders: Temporal Scope of the European Succession Regulation and Characterization of the Rules on the Invalidity of Joint Wills in Polish Law

Joint wills are not recognized in many foreign legal systems. Therefore, in cross-border disputes the use of joint wills often raises legal problems. The decision of the Schleswig-Holstein Higher Regional Court concerns the succession of a Polish citizen, who died on 15 October 2014 and had drawn up a joint will along with his German wife shortly before his death. The problem was that joint wills are invalid under Polish law of succession. First, the court dealt with the question whether the case had to be judged according to the European Succession Regulation or according to the former German and Polish private international law. The court rightly considered that in Germany the new version of Art. 25 EGBGB does not extend the temporal scope of the European Succession Regulation. Hereafter the court states that the invalidity of joint wills under Polish law is not based on a content-related reason but is a matter of form. Therefore, the joint will would be valid under the Hague Convention on the Form of Testamentary Dispositions. This decision is indeed correct, but the court’s reasoning is not convincing in all respects.

C. Thomale: The anticipated best interest of the child – Strasburgian thoughts of season on mother surrogacy

The ECtHR has reversed its opinion on Art. 8 ECHR. The protection of private and family life as stipulated therein is subject to a margin of appreciation far wider than hitherto expected. In stating this view, the ECtHR also takes a critical stand towards mother surrogacy: Restricting the human right to procreate, national legislators are given room to protect the child’s best interest inter alia through deterrence against surrogacy. The article investigates some implications of this new landmark decision, which is being put into the context of ongoing debates on international surrogacy.

K. Thorn/P. Paffhausen: The Qualification of Same-sex Marriages in Germany under Old and New Conflict-of-law Rules

In its decision in case XII ZB 15/15 (20th April 2016) the German Federal Court of Justice recognized the co-motherhood of a female same-sex couple, registered in South Africa, for a child born by one of the women. While underlining that the result of the decision – the legal recognition of the parenthood – is right, the authors point out the methodological weaknesses of the reasoning. In their opinion, a same-sex marriage celebrated abroad had to be qualified as a “marriage” in Art. 13 EGBGB and not – as the Court held – as a “registered life partnership” in Art. 17b EGBGB (old version). Also, they demonstrate that the Court’s interpretation of Art. 17b para. 4 EGBGB (old version) as well as the reasoning for the application of Art. 19 para. 1 s. 1 EGBGB are not convincing. Following the authors’ opinion, the right way to solve the case would have been the legal recognition of the parenthood (as an individual case) because of Art. 8 ECHR. As Germany recently legalized same-sex marriage, the authors also show which impacts the new law will have on Germany’s international matrimonial law. In particular, they point out the new (constitutional) questions risen by the new conflict-of-law-rule for same-sex marriages in Art. 17b EGBGB (new version).

D. Martiny: Modification and binding effect of Polish maintenance orders

The two decisions of the German Courts of Appeal concern everyday problems in modifying maintenance orders given in the context of Polish divorce decrees. In both cases the Polish district courts ordered the fathers to pay child maintenance. At that point in time, the children already lived in Germany. The foreign orders did not state the grounds for the decision in respect of either the conflict-of-law issue or the substantive law issue. The recognition of the orders under the Maintenance Regulation in the framework of the German modification proceedings (§ 238 Family Proceedings Act – Familienverfahrensgesetz; FamFG) did not pose any difficulty. However, according to established German practice, foreign decisions have a binding effect as to their factual and legal basis. Whereas the Frankfurt court’s interpretation of the Polish decision concluded that it was based on German law, the Bremen court assumed in its proceedings that the foreign decision was based on Polish law. The Bremen court stated a binding effect existed even if the foreign decision applied the incorrect law. The Bremen court then gave some hints as to how the assessment of maintenance should be made in the German proceedings under Polish substantive law.

Thank you Peter Smith over at Tamimi for flagging [2017] DIFC ARB 003 Pearl v Kurdistan. Peter summarises as follows:

‘In 2007, Crescent Petroleum, the oldest privately-owned oil and gas company in the Middle East, agreed with Dana Gas, one the leading publicly-listed natural gas companies in the region, to create a joint venture called Pearl Petroleum (together, “the Consortium”). The Consortium entered into an agreement with the Kurdistan Regional Government (“KRG”) for the development of the Khor Mor and Chemchemal petrochemical fields in the Kurdistan region of Iraq. The KRG were and remain engaged in a political dispute with the Federal Government of Iraq, meaning that the Consortium were unable to export gas produced by the developed fields. As a result, the KRG became liable under its contract with the Consortium to pay a minimum guaranteed price, but it failed to make the required payments in full.’

Arbitration in London under LCIA rules ensued. The contract between the Consortium and the KRG was governed by English law and provided explicitly that “the KRG waives on its own behalf and that of [The Kurdistan Region of Iraq] any claim to immunity for itself and its assets”.

Cooke J held that whilst the UAE’s recognition of other states was a matter of foreign policy which the DIFC Courts could not rule on, construing the KRG’s waiver of immunity was a question of law and not public policy. In agreeing to arbitrate, a party agrees that the arbitration shall be effective in determining the rights of the parties (at 26). The waiver of any claim to immunity for itself and its assets must mean waiver of immunity from execution (at 28): any argument on that is blocked by issue estoppel (at 36).

Sovereign immunity therefore was not a trump which could be played at the time of enforcement: whatever immunity there might or might not have been had been contractually signed away.

An interesting and well argued judgment.

Geert.