Flux des sites DIP

This post has been written by Anna Bleichenbacher, MLaw, University of Basel, Nievergelt & Stoehr Law and Notary Office (Switzerland).

The Swiss Federal Supreme Court (Bundesgericht) published a leading decision on recognition and public certification of foreign conversions of ancient law pay paternities (Zahlvaterschaften) into paternities with civil status effects on June 15th, 2023 (decision of Swiss Federal Supreme Court 5A_81/2022 of May 12th, 2023).

Respondent in the present case was a German citizen, living in Germany (respondent). She was born out of wedlock in 1967 and acknowledged by her father (father) in the same year, both in Germany. The acknowledgement included only a pay paternity. A pay paternity was a legal institution with an obligation to pay maintenance. The pay paternity did not include a legal child relationship recorded in the civil register.

According to the German law on the legal status of children born out of wedlock of August 19th, 1969 (law on children born out of wedlock), a father who has acknowledged his obligation to pay maintenance for a child in a public deed or an enforceable debt certificate, is seen as a legal father to child, recorded in the civil register, after the enforcement of the law on children born out of wedlock. In short, Germany knows the ipso iure conversion of the pay paternity into the paternity with civil status effects.

Switzerland also knows the legal institution of the pay paternity. However, Swiss law did not provide for ipso iure conversion of the pay paternity into a paternity with civil status effects.

The respondent’s father was a Swiss citizen, living in Switzerland. In 2016, he died, not only leaving behind the respondent, but also his wife and a common daughter (born in wedlock; appellants). In 2017, the respondent appealed to the Swiss civil status authorities, claiming the registration and public certification of the birth in Germany as well as the legal child relationship to the father. After exhaustion of the intra-cantonal appeal process, the appellants reach the Swiss Federal Supreme Court with two main arguments against the registration and public certification of the respondent’s legal child relationship to the father:

(1) Applicability of the Swiss Federal Act on Private International Law (PILA) in the present case

The PILA entered into force on January 1st, 1989. The appellants claimed that recognition and enforcement in the present case are governed by the respective law in force at the time of the respondent’s birth in 1967. This would be the Federal Act on Civil Law Relations of Settled Persons and Residents of June 25th, 1891. The Swiss Federal Supreme Court made clear that the date of the foreign decision or other legal act (i.e. the acknowledgment of the child) is irrelevant. The time at which the question of recognition and enforcement arises is decisive.

Therefore, the PILA is applicable for the present case.

(2) Violation of the Swiss Ordre Public in case of recognition and public certification

The PILA supports the recognition and enforcement of foreign decisions and other legal acts by the principle “in favorem recognitionis”. A foreign child acknowledgment is recognized in Switzerland if it is valid in form and content in one of the jurisdictions named in Art. 73 para. 1 PILA. These include the state of the child’s habitual residence, the child’s state of citizenship or the state of domicile or of citizenship of the mother or the father.

As mentioned above, the legal child relationship between the respondent and the father is based on the acknowledgment of the father in 1967 and the ipso iure conversion of the pay paternity into a paternity with civil status effects. The validity of this conversion in Germany has been proven by German civil status documents of the respondent.

Since Germany is a jurisdiction in the sense of Art. 73 para. 1 PILA, and the child acknowledgment is valid there, Switzerland will only refuse the recognition and public certification in case of violation of Swiss Ordre Public.

The Swiss Federal Supreme Court stated that, just because Swiss law does not provide for ipso iure conversion of the pay paternity, a German legal act on paternity valorization does not violate Swiss Ordre Public. This is mainly because both jurisdictions aim for a similar purpose, namely the equality of children born out of wedlock. In an obiter dictum, the Swiss Federal Supreme Court even doubts the conformity of Swiss regulation with fundamental rights.

In summary, the recognition and public certification of a German ipso iure converted pay paternity into a paternity with civil status effects does not violate the Swiss Ordre Public. In application of the PILA, Swiss civil status authorities are obliged to carry out the post-certification of such legal child relationship.

The latest issue of RabelsZ has just been released. It contains the following contributions:

OBITUARY

Eva-Maria Kieninger, Ralf Michaels: Jürgen Basedow * 29.9.1949 † 6.4.2023, pp. 229–235, DOI: 10.1628/rabelsz-2023-0051

ESSAYS

Felix Berner: Implizite Qualifikationsvorgaben im europäischen Kollisionsrecht, pp- 236–263, DOI: 10.1628/rabelsz-2023-0028

Implicit Characterization in European Conflict of Laws. – Most German scholars assume that problems of characterization in European choice of law are to be resolved by means of functional characterization. This essay challenges that assumption. Quite often, European choice-of-law rules themselves require a certain treatment of a characterization problem. This can follow from the rules or recitals of European regulations. In such cases, the required approach is more or less explicitly given. However, the required analysis can also be implicitly established, especially when it is derived from the purpose of certain choice-of-law rules. The approach towards characterization is of both practical and theoretical significance. In practice it determines the outcome of a characterization inquiry. On a theoretical level, the approach towards characterization embodies a conceptual change: The more rules on characterization there are, the more the classic problem of characterization is marginalized. Questions of characterization turn into questions of “simple statutory interpretation”.

Frederick Rieländer: Die Anknüpfung der Produkthaftung für autonome Systeme, pp. 264–305, DOI: 10.1628/rabelsz-2023-0032

The Private International Law of Product Liability and AI-related Harm. – As the EU moves ahead with extensive reform in all matters connected to artificial intelligence (AI), including measures to address liability issues regarding AI-related harm, it needs to be considered how European private international law (PIL) could contribute to the EU’s objective of becoming a global leader in the development of trust-worthy and ethical AI. To this end, the article examines the role which might be played in this context by the conflict-of-law rule concerning product liability in Article 5 of the Rome II Regulation. It shows that the complex cascade of connecting factors in matters relating to product liability, although providing legal certainty for market players, fails to consistently support the EU’s twin aim of promoting the up-take of AI, while ensuring that injured persons enjoy the same level of protection irrespective of the technology employed. Assessing several options for amending the Rome II Regulation, the article calls for the introduction of a new special rule concerning product liability which allows the claimant to elect the applicable law from among a clearly defined number of substantive laws. Arguably, this proposal offers a more balanced solution, favouring the victim as well as serving the EU’s policies.

Tim W. Dornis: Künstliche Intelligenz und internationaler Vertragsschluss, pp. 306–325, DOI: 10.1628/rabelsz-2023-0043

Artificial Intelligence and International Contracting. – Recently, the debate on the law applicable to a contract concluded by means of an AI system has begun to evolve. Until now it has been primarily suggested that the applicable law as regards the “legal capacity”, the “capacity to contract” and the “representative capacity” of AI systems should be determined separately and, thus, that these are not issues falling under the lex causae governing the contract. This approach builds upon the conception that AI systems are personally autonomous actors – akin to humans. Yet, as unveiled by a closer look at the techno-philosophical foundations of AI theory and practice, algorithmic systems are only technically autonomous. This means they can act only within the framework and the limitations set by their human users. Therefore, when it comes to concluding a contract, AI systems can fulfill only an instrumental function. They have legal capacity neither to contract nor to act as agents of their users. In terms of private international law, this implies that the utilization of an algorithmic system must be an issue of contract conclusion under art. 10 Rome I Regulation. Since AI utilization is fully subject to the lex causae, there can be no separate determination of the applicable law as regards the legal capacity, the capacity to contract or representative capacity of such systems.

Peter Kutner: Truth in the Law of Defamation, pp. 326–352, DOI: 10.1628/rabelsz-2023-0038

This article identifies and examines important aspects of truth as a defence to defamation liability in common law and “mixed” legal systems. These include the fundamental issue of what must be true to establish the defence, whether the defendant continues to have the burden of proving that a defamatory communication is true, the condition that publication must be for the public benefit or in the public interest, “contextual truth” (“incremental harm”), and the possibility of constitutional law rules on truth that are different than common law rules. The discussion includes the emergence of differences among national legal systems in the operation of the truth defence and evaluation of the positions that have been adopted.

 

BOOK REVIEWS

As always, this issue also contains several reviews of literature in the fields of private international law, international civil procedure, transnational law, and comparative law (pp. 353–427).

Diamedica Therapeutics Inc v Pharmaceutical Research Associates Group BV NCC22/018 ECLI:NL:RBAMS:2023:2540 highlights the IMHO troubled Rome I implications for property rights as opposed to contractual rights. The judgment was issued by the NCC, the Netherlands Commercial Court. (The NCC origin also explains the judgment already being available in English).

The claim is one for revindication by PRA of documents and digital data pertaining to the clinical trials regarding a medicine developed by DiaMedica. The court held that whereas the contractual relationship between the parties is governed by the laws of the State of New York as the lex voluntatis (the law parties chose to apply to the contract), Dutch law governs the question whether a property right can be created on documents and data situated in the Netherlands.

In discussing the applicable law issues, the court in my view lacks the clarity of approach required in this area, particularly seeing as a State’s approach towards digital data clearly is an important element in the attractiveness of its contract law for the sector.

[4.5] the Court holds that per Article 3(1) Rome I, the lex voluntatis, the laws of New York, covers the interpretation of the agreement. This includes the existence of a right to suspend contractual obligations, here: whether PRA may retain the Documents or suspend surrendering the Documents in order to secure payment of its final invoice. It equally holds however that the existence of a property right (footnotes omitted)

is not a matter of contract but a matter of property law. The Rome I Regulation is not applicable. As there is no treaty or regulation guiding this issue, the rules of Dutch domestic private international law apply. Under Article 10:127(1) of the Dutch Civil Code (DCC) the property law regime relating to things, as a rule, is the law of the state in whose territory the thing is situated (the lex rei sitae). The ‘thing’ in question are the Documents which are situated in the Netherlands. Therefore, Dutch law governs the manner in which rights in rem arise, whether such rights can be created, and if so, what the requirements are for a transfer or creation of rights (Article 10:127(4) DCC). Also, the question whether a revindication claim can be initiated, and if so by whom, is governed by the lex rei sitae. Hence: Dutch law.

, leading to a finding in favour of DiaMedica on the basis of Dutch law.

The merits of the case are not of interest to this blog: the identification of applicable law to the property rights, is. The NCC’s analysis shows the difficulty with the in my view unsatisfactory, if seemingly solidly rooted (see the Guiliano-Lagarde Report most succinctly p.10; Dicey 33-033 and 33-054; other standard works pay less attention to the issue) conclusion that ‘property’ rights are not caught by the Regulation, only contractual rights. See here nota bene for an Opinion of Vlas AG for the Dutch Supreme Court, flagging that in restitution cases the analysis may be more complicated than the NCC in current case suggests.

In the discussion of digital assets in particular (see eg here re UNIDROIT work on same, and here for the UK Law Commission paper), the property rights element surely is essential. This in my view gives those States with lex voluntatis also covering the property aspects (such as arguably Belgium’s residual private international law rules) an edge when it comes to regulatory competition in the area.

Nota bene just this morning, professor Lehmann posted a paper on the wider issue, calling for people to drop focus on the property analysis. Rebus sic stantibus however, the issue of relevance in the case here, remains: parties in my view would do well to identify a lex contractus which encompasses property rights in party autonomy. Unusually perhaps and most probably not by design, this makes laws such as those of Belgium, a clear winner (whether as lex contractus for the whole contract of merely, by way of dépeçage, for the property aspects only).

Geert.

May personal data be subject to property rights?
Challenging 1st instance decision A'dam

Revindication of documents and data. Ownership over digital data in clinical trials
Held despite NY law as lex contractus per Rome I to be subject to NL property law https://t.co/pC6N9sAuZ3

— Geert Van Calster (@GAVClaw) April 28, 2023

Matthias Lehmann (University of Vienna) has made available on SSRN a new paper with the title Who Owns Bitcoin? Private Law Facing the Blockchain.

The abstract reads as follows:

Blockchain, or “distributed ledger” technology, has been devised as an alternative to the law of finance. While it has become clear by now that regulation in the public interest is necessary, for example to avoid money laundering, drug dealing or tax evasion, the particularly thorny issues of private law have been less discussed. These include, for instance, the right to reverse an erroneous transfer, the ownership of stolen coins and the effects of succession or bankruptcy of a bitcoin holder. All of these questions require answers from a legal perspective because the technology ignores them.
Particular difficulties arise when one tries to apply a property analysis to the blockchain. Surprisingly, it is far from clear how virtual currencies and other crypto assets are transferred and acquired. The traditional requirements posed by private law, such as an agreement between the parties and the transfer of possession, are incompatible with the technology. Moreover, the idea of a “void” or “null” transfer is hard to reconcile with the immutability that characterizes the blockchain.
Before any such questions can be answered, it is necessary to determine the law governing blockchain transfers and assets. This is the point where conflict of laws, or “private international law”, comes into play. Conflicts lawyers are used to submitting legal relations to the law of the country with the most significant connection. But seemingly insurmountable problems occur because decentralized ledgers with no physical connecting factors do not lend themselves to this type of “localization” exercise.
The issue of this paper therefore is: How can blockchain be squared with traditional categories of private law, including private international law? The proposal made herein avoids the recourse to a newly fashioned “lex digitalis” or “lex cryptographica”. Rather, it is suggested that the problems can be solved by using existing national laws, supplemented by an international text. At the same time, the results produced by DLT should also be accepted as legally protected and corrected only where necessary under the applicable national rules. In this way, a symbiosis between private law and innovative technology can be created.

Written by Phoebe Winch, Secretary of International Law Association (ILA) Australian Branch.

 

The Australian Branch is now calling for submissions for the 2023 Brennan Essay Prize in Public International Law and the Nygh Essay Prize in Private International Law.

The prizes are awarded for essays that demonstrate outstanding scholarship and make a distinct contribution to the field of public international law and private international law (conflict of laws), respectively. Essays for the prize to be awarded in 2023 should be sent to the email address of the Secretary of the Australian Branch at secretary@ila.org.au.

Further details (including conditions of entry) are available here. The deadline for submission is: 15 July 2023.

The results will be made available on the website of the ILA (www.ila.org.au) on approximately 31 August 2023. Winners will be notified by email. 

Tobias Lutzi (University of Augsburg), Ennio Piovesani (University of Turin), Dora Zgrabljic Rotar (University of Zagreb) edited a book titled Jurisdiction Over Non-EU Defendants – Should the Brussels Ia Regulation be Extended?, with Bloomsbury.

The book is the result of the third project of the EAPIL Young Research Network.

This book looks at the question of extending the reach of the Brussels Ia Regulation to defendants not domiciled in an EU Member State. The Regulation, the centrepiece of the EU framework on civil procedure, is widely recognised as one of the most successful legal instruments on judicial cooperation. To provide a basis for the discussion of its possible extension, this volume takes a closer look at the national rules that currently govern the question of jurisdiction over non-EU defendants in each Member State through 17 national reports. The insights gained from them are summarised in a comparative report and critically discussed in further contributions, which look at the question both from a European and from a wider global perspective. Private international lawyers will be keen to read the findings and conclusions, which will also be of interest to practitioners and policy makers.

The table of contents is available here.

The Ministry of Justice of Japan (MOJ), Civil Affairs Bureau, in cooperation with the Japan Commercial Arbitration Association (JCAA) and supported by CIArb East Asia Branch, Japan Association of Arbitration (JAA), Japan International Dispute Resolution Center (JIDRC), is organizing an international symposium (hybrid format) on the “Future Prospects of International Arbitration and Mediation: How does the Judiciary Assist?”.

This event could not have been more timely as the House of Councillors (the upper house of the Japanese Diet) unanimously passed and enacted into law on 21 April of this year the amendments to the Arbitration Act and the “Act for the Implementation of Settlement Agreements Resulting from Mediation” (the “Singapore Mediation Convention Implementation Act”). These enactments aim to promote international arbitration and mediation in Japan and to make Japan an attractive hub for international dispute resolution in competition with other leading centers in the region.

 

Date, Venue & Formats:

July 7 (Fri.), 2023, 9am-12:30 pm (JST)

Hotel New Otani Tokyo?ONSITE / Online?

Language: English

English-Japanese consecutive interpretation available

Program (see link below):

Keynote Speeches

Panel Sessions

Registration: free

Sign up on the Official Website of the Forums

by 6pm, JUNE 26 (Mon.) for ONSITE participation,

by noon, JULY 3 (Mon.) for Online participation

 

Details of registration and the program can be found here.

In Kvist v GippsAero Pty Ltd & Anor [2023] VSC 275, Dixon J refused an application for forum non conveniens in a judgment that is good material for the comparative conflict of laws binder.

On 14 July 2019, at Storsandskar near Umeå in Sweden, a small plane being used for skydiving crashed, resulting in the deaths of the pilot and all eight passengers on board. Claimants are relatives of some of the victims of the crash, and they claim damages from the defendants for negligence. None of the claimants reside in Australia. Apart from 2, who are American, all claimants are Swedish. Defendants are incorporated in Australia and carry on business in Gippsland, Victoria. The first defendant (Gippsareo) manufactured the Airvan GA8-TC 320 in 2012. Second defendant GA8 Airvan holds the ‘Type Certificates’ that certify the Airvan meets the requisite standards for airworthiness. Certificates were issued to the second defendant by the Australian Civil Aviation Safety Authority, the European Safety Authority, and the US Federal Aviation Authority in respect of the aircraft.

Gippsaero sold the Airvan to a Swedish company, GCC Capital, a financier, on 17 May 2013. The parent companies of GCC Capital AB were placed in liquidation on 2 December 2021. At the time of the crash, the Airvan was owned by a Swedish company called Skydive Umea AB (a customer of GCC Capital). Skydive Umea AB was placed in liquidation on 5 October 2022. It held, apparently, a policy of insurance in respect of the plane. The Airvan was being used by Umeå Parachute Club from Umeå airport in Sweden. The Umeå Parachute Club is a non-profit association.

An earlier Swedish claim (seemingly wrongly invoking the Montreal Convention) was withdrawn, meaning there are no competing Swedish proceedings afoot. Claimants allege the defendants were negligent in failing to include critical information in an operating manual supplied with the aircraft at the time of purchase and in failing to ensure the aircraft was suitable for parachuting operations. Passengers in the aircraft moving rearwards preparing to skydive altered the weight distribution in the aircraft in a manner that required a critical response from the pilot, a response the pilot did not adequately provide.

[11-12] the Australian proceedings are used to take advantage of common law discovery rules. Preliminary expert evidence indicates an Australian judgment might not be enforceable in Sweden (odd, I find) however could be used for evidentiary purposes in subsequent Swedish proceedings.

[19] ff the factors suggesting forum non are listed. This includes the suggestion that Victoria is a clearly inappropriate forum because the lex loci delicti indicates that the lex causae is Swedish law. This is directly contradicted by claimants [32] ff,  who argue the lex loci delicti is Victoria.

The judge discusses [42] ff, insisting ia [46] that the distinction between the English ‘more appropriate forum’ test [the away forum being a more appropriate forum, GAVC]  and the ‘clearly inappropriate forum’ test applicable in Australia [whether the home, Australian forum is clearly inappropriate, GAVC] is important. [56] ia evidentiary advantages to claimant are listed as kosher for jurisdictional purposes. [78] Swedish ‘advice’ that Swedish law will be the lex causae is dismissed, seemingly for it was utterly incomplete and without much justification. [82] the Airvan was built in Australia and intended for worldwide use. All of the manuals and certifications originated from Australia and have just been adapted where required to ensure registration was permissible in Europe or America, wherever the aircraft might be. [84] The relevant actions of the defendants were antecedent to the sale and to the characteristic of the sale on which the defendants rely for their contentions. The aircraft was designed, the manual was written, and in relevant respects, the fit out of the aircraft was set, well before the sale of the Airvan to Sweden.

[89] The judge concludes that at this point [for the purposes of the forum non analysis, GAVC] he is satisfied that the substantive law of the (Australian) forum is the lex causae.

A good illustration of the role of the likely lex causae in forum non.

Geert.

Claimants allege defendants' negligence in failing to include critical information in operating manual at time of purchase and in failing to ensure the aircraft was suitable for parachuting operations.
Lively lex causae discussions expected at trial. https://t.co/pkRAibZMNd

— Geert Van Calster (@GAVClaw) June 5, 2023

The Council of the European Union adopted on 9 June 2023 a political agreement on the proposal for a directive on the protection of persons who engage in public participation from manifestly unfounded or abusive court proceedings, also known as strategic lawsuits against public participation (SLAPPs).

Based on this common position, the Council will now start discussions with the European Parliament with a view to settling on the final text of the directive.

The text resulting from the Council’s general approach departs from the initial proposal (analysed by Marta Requejo in a previous post on this blog), in various respects. The suggested changes have been presented as underlying a concern for  more balanced solutions, and for increased discretion left to national courts, but have been criticised by some stakeholders as involving a watered-down compromise.

The most significant innovations include the following.

The Council, while agreeing that the future directive should apply only to matters with cross-border implications,  advocates the suppression of the provision in the Commission’s proposal that defined what matters should be considered to have such implications.

According to Article 4 of the proposal, a matter ought to be considered to have cross-border implications “unless both parties are domiciled in the same Member State as the court seised”. The proposal added that, where both parties are domiciled in the same Member State, the matter would still be deemed to have cross-border implications if (a) the act of public participation targeted by the SLAPP “is relevant to more than one Member State”, or (b) the claimant have initiated concurrent or previous proceedings against the same defendants in another Member State.

The rule providing early dismissal of manifestly unfounded claims should, according to the Council, be rephrased as follows: 

Member States shall ensure that courts may dismiss, after appropriate examination, claims against public participation as manifestly unfounded at the earliest possible stage, in accordance with national law.

The proposed rewording includes language that was not in the initial proposal (“after appropriate examination”, “at the earliest possible stage, in accordance with national law”). Conversely, the Council’s text fails to retain the paragraph in the initial proposal according to which “Member States may establish time limits for the exercise of the right to file an application for early dismissal”, provided that such time limits are “proportionate and not render such exercise impossible or excessively difficult”.

The Council further suggests the deletion of the provision in the proposal which asked Member States to “ensure that if the defendant applies for early dismissal, the main proceedings are stayed until a final decision on that application is taken”.

According to the Council, the provision on compensation in the Commission’s proposal should likewise be suppressed (arguably, because it was considered to be unnecessary, in light of the existing law). It read as follows:

Member States shall take the necessary measures to ensure thata natural or legal person who has suffered harm as a result of an abusive court proceedings against public participation is able to claim and to obtain full compensation for that harm.

The Council also seeks to modify the wording of the provision in the initial proposal whereby Member States should deny recognition to judgments given in a third State in the framework of a SLAPP brought against natural or legal person domiciled in the Union. The amended version of the provision no longer refers to violation of public policy as the reason for non-recognition.

As regards jurisdiction, the text agreed by the Council retains the rule whereby those targeted by a SLAPP brought in a third State should be able to seek compensation in the Member State of the courts of their domicile, for the damages and the costs incurred in connection with the proceedings in the third country, but adds that Member States “may limit the exercise of the jurisdiction while proceedings are still pending in the third country”.

Finally, according to the Council’s general approach, the Member States should be given three years, instead of two as initially contemplated, to implement the directive in their legal systems.

While doing research on a choice of law article, I found it necessary to consult a book generally co-edited by Professors Daniel Girsberger, Thomas Graziano, Jan Neels on Choice of Law in International Commercial Contracts (‘Girsberger et al’). The book was officially published on 22 March 2021. I began reading sections of the book related to tacit choice of law sometime in December 2022 and found the work truly global and compelling. At the beginning of June this year, I decided to read the whole book and finished reading it today. It is 1376 pages long!

To cut the whole story short, the book is the bible on choice of law in international commercial contracts. It covers over 60 countries, including regional and supranational bodies’ rules on choice of law. Professor Symoen Symeonides had previously written a single authored award winning book on Codifying Choice of Law Around the World, but that work did not cover as much as Girsberger et al’s book in terms of the number of countries,  and regional and supranational instruments (or principles) covered.

The book arose from the drafting of the Hague Principles on Choice of Law in International Commercial Contracts, headed by Professor Girsberger and commissioned by Professor Marta Partegas. The central aim of the Hague Principles is to promote party autonomy, as the Hague Principles does not touch on the law applicable in the absence of choice.

The book starts with a general comparative outline of choice of law around the world and its comparison to the Hague Principles. This outline is derived from the works of many other scholars in the book. In other preliminary chapters, there are discussions devoted to party autonomy, provenance of the Hague Principles, roadmap to promoting the Hague Principles, international commercial arbitration, and perspectives from UNIDROIT and UNCITRAL.

The essential part of the book focuses on regional and national reports of countries around the world, with a focus on comparison to the Hague Principles. The format used is consistent, and easy to follow for all the reports in this order: introduction and preamble, scope of the principles, freedom of choice, rules of law, express and tacit choice of law, formal validity of the choice of law, agreement on the choice of law and battle of forms, severability, exclusion of renvoi, scope of the chosen law, assignment, overriding mandatory rules and public policy, establishment, law applicable in the absence of choice, and international commercial arbitration.

The Hague Principles has been successful so far given the regional or supranational bodies such as Asia,[1] and Latin America[2] that have endorsed it. From 31st May to 3 June 2023, the Research Centre for Private International Law in Emerging Countries in University of Johannesburg held a truly Pan-African Conference on the African Principles on Choice of Law in International Commercial Contracts.[3] Many African scholars (including myself) and some South African government officials were present and spoke in this very successful conference. The African Principles also draws some inspiration from the Hague Principles, which involved the participation of African scholars like Professors Jan Neels and Richard Frimpong Oppong.

Girsberger et al’s book and the Hague Principles success so far may be due to the more inclusive approach it took, rather than other Hague Conventions that are not fully representative of countries around the world, especially African stakeholders.

More please.

[1] Asian Principles on Private International Law 2018.

[2] Guide of the Organization of American States on the Applicable Law to International Commercial Contracts 2019

[3] See generally JL Neels and EA Fredericks, “An Introduction to the African Principles of Commercial Private International Law”(2018) 29 Stellenbosch Law Review 347; JL Neels, ‘The African Principles on the Law Applicable to International Commercial Contracts – A First Drafting Experiment’ (2021) 25 Uniform Law Review 426, 431; JL Neels and EA Fredericks, ‘The African Principles of Commercial Private International Law and the Hague Principles’ in Girsberger et al  paras 8.09-8.11.

 

This post was written by Cécile Pellegrini who is Associate Professor at Lyon Catholic University (UCLy). It summarises a contribution to Metaverse and the Law, edited by L. Di Mateo and M. Cannarsa, Edward Elgar Publishing, forthcoming.

The Metaverse Beyond Real Life

Beyond the world as we know it, often referred to by the acronym “IRL” (for “In Real Life”, stands the so-called “Metaverse”, a concept that private international lawyers are only beginning to embrace.

Coined 30 years ago in the prophetic “Snow Crash” dystopic novel by Neil Stephenson, this Janus, both fearsome and full of promises, was described as a “form of human life and communication in a virtual three-dimensional space through a digital avatar”. Since the digital twins of Second Life (i.e. a free access software allowing users to embody virtual characters in a world created by the residents themselves) Metaverse has taken many shapes. Beyond its known main use as an online multiplayer 3D game (such as Fortnite and Roblox) empowered by virtual and augmented reality (“VR” and “AR”), it has already found numerous applications evolving from being “a place” to shop, work, advertise, buy virtual land, be educated or trained, get a doctor’s appointment, get married, attend a court hearing, travel, be entertained, trade and use cryptocurrencies, sell real-world goods virtually or create and use nonfungible tokens (“NFTs”). The list could go on.

Despite its growing importance, highlighted with the recent rebranding of Meta, the Metaverse is neither defined nor  regulated. Attempts to streamline common features differ from one expert to another (for e.g., see here, here and here). However, all retain the persistence of identity and objects, a shared environment, the use of avatars, synchronization, being three-dimensional, interoperability, and a user experience that is interactive, immersive, and social. For now, the word “Metaverse” itself appears as a catchall term for advanced technologies that point to these types of immersive virtual experiences accessible from anywhere in the world. In consequence, it calls for a more precise and common definition, especially in the perspective of its regulation.

The Metaverse Beyond Borders

Considering the international intrinsic nature of Metaverse litteraly located “beyond the universe”, conflict of laws questions are necessarily in order. Especially considering that such a transnational cyberspace is destined to become the privileged place of many international transactions bringing ineluctably their lots of conflicts. In the absence of international substantial regime, conflict of laws rules are called upon to play a decisive part in the identification of the applicable legal regime to those transactions.

The Metaverse or Several Metaverses?

Yet, when trying to consider the applicable law, there is no certainty on whether to address the Metaverse as a whole, the metaverses’ operators (many metaverses’ iterations exist, such as Decentraland, Sandbox, Roblox, or Horizon World) or the various situations arising from, or in the Metaverse. Indeed, a metaverse could either be seen as an online platform or as the future generation of our internet, i.e. the forthcoming Web3, following Web1 (accessing static webpages) and Web2 (interactive social experiences). Web3, which is a work in progress, will be about digital ownership within an open, decentralized environment and orchestrated with tokens. Whether we are looking at one single Metaverse (with a capital letter like “the Internet”) or at several metaverses (with a lower case as it refers to the technology) depends essentially on the metaverses’ interoperability. Several projects are working in that direction (such as Open Metaverse Interoperability Group, the web standardization body W3C, or Metaverse Standards Forum). If the various existing metaverses become interoperable in a close future, it will inter alia  allow for any transaction taking place in a given virtual world to be transferred in another. Enabling users to switch between multiple virtual reality platforms while “carrying” online properties together will become important, as users will be able to seamlessly switch between various platforms. This will facilitate users to engage in various projects that are taking place on multiple platforms. For instance, a user buying virtual items in the form of NFTs and obtaining titles in one virtual world will technically hold the same items in another virtual world. An avatar with a digital identity in one place would be the same in the other, and he/she could go from a work meeting in one virtual place to another.

For now, the single “Metaverse”, called for by all the prophetic dystopias and the Silicon Valley behemoths has given way to many growing virtual worlds unconnected one to another. There might still be a long way to go to develop the necessary access technologies before we can affirm the existence of a global Metaverse but its future existence seems ineluctable. Hence, the applicable legal framework to Metaverse depends on whether we consider the actual various existing metaverses as online platforms or if we take a prospective view, and already consider the upcoming unique “Metaverse”.  Based on those two scenarios, the conflict of laws solutions differ.

Metaverse as a Platform: The Growing Importance of the “Directed Activity Criterion” and its Inadequacy

Most of the metaverses behave like online platforms. As such, they feature a contract-based architecture where accepting general terms and conditions (“GTCs”) is most of the time a prerequisite to access their services. Far from being an extraterritorial creation with its private own rules – as called for by proponents of Lawrence Lessig – such terms and conditions, whenever the contract is concluded with a European user-consumer, may trigger the application of EU protective rules for consumers, regardless of the defendant’s domicile outside the Union.

This scenario is increasingly frequent since the exchange of personal data is deemed equivalent to a price and constitutes consideration (in particular based on Directive (EU) 2019/770 regarding the supply of digital content and digital services, Art. 3.1). As a consequence, the contractual relationship between the services’ provider and the user answers to the European definition of a B2C contract. It will especially be the case when the activity of the platform is directed toward European consumers-users. Such rules are far from being ignored by large players.

For example, Meta’s T&C’s choice of jurisdiction clause conforms with EU consumer protection as it cares to distinguish conditions for businesses from conditions for consumers  especially when they are in the EU. The Brussels I Recast Regulation helds the protective forum of the consumers domicile competent, whenever the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, (Brussels I Recast, Art. 17 & 18). In the same time, any choice of jurisdiction clause is strictly regulated (Brussels I Recast, Art. 19). A choice of law in Metaverse’s T&C is also limited by the protective rules of Rome I Regulation and especially, Article 6 on Consumer contracts, which also resorts to the “directed activity” criterion as interpreted by the Pammer and Alpenhof case law (see Rome I Reg., Recital 24).

With this view, all the difficulties already encountered to define connecting factors regarding applicable law to online service operators are not new. As an example (outside the B2C legal sphere), we can just think of the difficulty to establish the place of performance of an immaterial service in a metaverse. The “directed activity” criterion can be criticised for its imprecision and growing inadequacy with the development of worldwide websites intended for a global audience. Pushed to the extreme, this criterion becomes completely irrelevant in the case of a unique interoperable Metaverse, that, contrary to a website which can answer to indications as to whether it addresses to a specific national audience, addresses a worldwide audience with no distinction. We can observe that the inadequacy of this “directed activity” criterion is progressively leading to a shift toward “unilateral extraterritorial European protection” (as already noticed on this blog in the context of the Digital Services Act).

EU Regulation of Metaverses’ Platforms Operators

Depending on the metaverse in question and the way it operates, the definition of platform could well be retained for the purposes of applying European Regulations. When they answer the definition, platforms operators are facing growing EU substantial-law regulations with extraterritorial effects, whether it is the P2B platform (see esp. Recital 9), the GDPR (Art. 3), the recent “European constitution for the Internet” combining the DSA (Art. 2.1) and DMA (Art. 1.2), the proposed ePrivacy Regulation (Art. 3.1) or the proposed Data Act (Art 1.2).

These EU instruments follow a strict “marketplace” approach  subjecting every service aimed at people located within EU territory to their provisions, independently of where the service operator is established or administered. This clearly reflects the will of the European legislator to ensure the primacy of EU internal market law and the protection of EU fundamental rights, underpinned by the European values in the digital space. Worldwide service providers aiming at the European market should be held under high European standards such as a high level of consumer protection and personal data protection. But in the future, metaverses’ operators could well be merged into a unique Metaverse and in that case, the question of applicable law will appear somehow differently.

Metaverse Considered as the Future Web3: A Methodology Shift?

No unique legal category applies to Internet as such. EU Private International Law rules rather approach each legal situation/relationship arising out of this “cyberterritory” (see eg here). In that view, it could be considered that determining the law applicable to online situations in the Metaverse merely bring the same difficulties already met with Internet’s situations ‘immateriality’. For example, it is difficult to resort to the “place of provision of service” connecting factor to determine the applicable law to an online contract of provision of service or the use of the “place of the harmful event” connecting factor in order to locate the law of the damage when a tortious situation is committed online that is everywhere at the same time on the globe.

These difficulties are known of PIL experts and sometimes found solutions. In order to answer these new digital situations, conflict of laws rules adapted progressively. In the absence of tangible material elements, the classic solutions have consisted in detaching localisation from material reality. Fictitious location have been favored considering that it remains possible to give a territorial account of immaterial phenomena still marked by some tangible elements. For instance, the difficulties of locating harmful situations in digital spaces has led to shift toward more personal connections as fictional localisations to identify the seat of digital situations. These connections often favor thevictim’s or plaintiff’s center of interests and such a tendency is particularly spreading in the area of cybertorts (see the Roundtable on the method of localisation in digital space). However, such adaptation is reaching its limits. With the upcoming Metaverse, even the few existing tangible connections disappear,with the new underlying use of the blockchain technology, often seen as the bedrock on which Metaverse will rest.

Blockchain as the Metaverse’s Bedrock

The question of how the different blockchains will be able to become technically interoperable is not yet settled, but blockchain technology will contribute to the interoperable development of the Metaverse and to generate a virtual economy where nonfungible tokens (NFTs) are traded. For all the new possibilities it bring, blockchain technology will be the privileged way within metaverses to make all type of transactions, using cryptocurrencies, tokens and associate the later with smart contracts.

The use of crypto-currencies has already given rise to questions about the identification of the applicable law and resulted in Europe in the recent “MICA” Regulation. For crypto assets left out of the text, and in expectation for some States to adopt the recent Unidroit Principles on Digital Assets and Private Law, it is it far from clear how they are acquired and transferred and what law governs such transactions in a transnational Metaverse. Characterisation and transfer of property still need to be addressed and raise many concerns (see the upcoming joint Project between UNIDROIT and HCCH here and the work of the EAPIL Working Group here).

Real conflict of laws difficulty lies with decentralized public blockchains (i.e. open and permissionless as opposed to consortium or private blockchains) that will mostly be in use in the Metaverse. With blockchain, the extensive degree of immateriality undermines the ability to resort to connecting factors actually in use. Seemingly insurmountable problems occur because decentralized ledgers with no physical connecting factors are reluctant to any localisation exercise. Blockchain offers few useful connection points in PIL either through traditional connecting factors or even through the use of fictitious connections. There are no first place of distribution or place of registration. There are also no intermediaries or account providers.

Although, that last affirmation could be nuanced.  Even if it is often claimed that blockchain ‘disintermediates’ the economy, this remains to be seen as, for the time being, more intermediaries (the cryptos and NFTs’ platforms are multipying) have been created by the technology than replaced. Here, one solution would maybe lie in setting obligations on the intermediary secondary platforms creating and exchanging NFTs and giving access to metaverses. However, even this would only partially bring solutions as the usual links to the territory of a State, however tenuous, do not even exist in the case of blockchain where transactions are anonymous.  This is why, behind the avatars, digital civil identity is becoming a major stake for the national sovereignty of States (on that question, see here). Hence, from known difficulties encountered to locate the seat of a situation in the Metaverse as a cyberspace, we move forward to major difficulties regarding the identification of parties to Metaverses’ transactions. With user’s anonymity in public blockchains, the lack of any grip between the situation and any national legal system, seat location becomes completely fictitious. The unseen immateriality, decentralization and anonymity characteristics of blockchain in the Metaverse are therefore calling for a change of regulatory approach.

Oxford University Press officially released the recent book authored by Dr Ugljesa Grusic (Associate Professor at UCL Laws) titled Torts in UK Foreign Relations.

The book offers a comprehensive account of private international law aspects of tortious claims arising out of the external exercise of British executive authority.

Can English courts hear tortious claims for wrongs allegedly committed by British armed forces and security services during their overseas operations? Should English courts hear such claims? What law governs issues raised by such claims? Can foreign judgments given on such claims be recognised and enforced in the UK?

 

Many questions such as these have arisen in relation to cases dealing with the tortious liability of the UK government and its officials for extraterritorial public acts committed during the conflicts in Kosovo, Afghanistan, and Iraq, and the ‘war on terror’. Torts in UK Foreign Relations examines the English courts’ treatment of such issues and offers a better understanding of this contested area of private international law. It shows that a defining characteristic of such tortious claims is that they are often subjected to the choice-of-law process and lead to the application of foreign law. Further, Dr Grusic clarifies the nature of the doctrines operating in this field, maps out the relationship between different jurisdictions and rules that are engaged, and criticises the current approach to choice-of-law, while arguing that English tort law should play a more prominent role.

 

Torts in UK Foreign Relations will appeal widely to academics, practitioners, and students in the fields of private international law, foreign relations law, tort law, and public law.

 

Torts in UK Foreign Relations:

• Offers the first comprehensive account of private international law aspects of tortious claims arising out of the external exercise of British executive authority
• Segregates issues raised by such tortious claims and clarifies the principles, rules and practice that determine the law governing these issues
• Maps out the relationship between different jurisdictions and rules that are engaged
• Discusses important developments and case law affecting the field, including the Supreme Court judgments in Rahmatullah, Belhaj, Maduro and Brownlie

 

Torts in UK Foreign Relations is available to order on the OUP website.

The University of Lancaster has organised a workshop on Challenges in Contemporary International Litigation on Wednesday, 21 June 2023, 12.30 – 5 pm UK time (in person and online via Teams). Some well established and emerging experts will discuss cutting edge issues of practical significance in private international law (broadly understood).

The programme for the workshop is as follows:

12.30 pm

Welcome remarks by Dr Mukarrum Ahmed and Professor David Milman (Co-chairs – University of Lancaster)

Professor Paul Beaumont FRSE (University of Stirling), ‘HCCH Jurisdiction Project’

Professor Paul Torremans (University of Nottingham), ‘CJEU case law on Article 7.2 Brussels I Regulation and its application to online copyright cases’

Dr Kirsty Hood KC (Discussant)

1.45 pm – 3.00 pm

Professor Zheng Sophia Tang (Wuhan University), ‘The challenge of emerging technology to International litigation’

Professor Veronica Ruiz Abou-Nigm (University of Edinburgh), ‘Sustainability and Private International Law’

Dr Mihail Danov (University of Exeter), ‘Private International Law and Competition Litigation in a Global Context’

3.00 pm – 3.15 pm Break

3.15 pm – 5.00 pm

Dr Jayne Holliday (University of Stirling), ‘The non-recognition of transnational divorces’

Dr Chukwuma Okoli (University of Birmingham), ‘Implied Jurisdiction Agreement in International Commercial Contracts’

Dr Michiel Poesen (University of Aberdeen), ‘The interaction between UK private international law and liability arising out of the use of artificial intelligence’

Mr Denis Carey (University of Lancaster), ‘The Consultation on the Reform of the Arbitration Act 1996’

The workshop is free to attend, but registration is required via email. A Teams link will be provided for remote attendees.

On 7 March 2023, the Italian Court of Cassation rendered a judgment (No 6723/2023) on the public policy exception as a ground for refusing, pursuant to Articles 45 and 46 of the Brussels I bis Regulation, the recognition and enforcement in Italy of a decision rendered by a Danish Labour Court.

In its judgment, the Court of Cassation addressed (and sometimes dodged) a number of questions concerning the interplay between, on the one hand, the uniform regime of the public policy exception set out by the Brussels I bis Regulation and, on the other hand, Italian procedural law, read in the light of the case law of the CJEU and of the ECtHR.

Facts and Procedure(s)

On 8 December 2017, a Labour Court in Denmark, sitting in a single-judge formation and as a judge of first and last instance, ascertained that a company established in Italy had violated a number of provisions of Danish employment law. Said Italian company had seconded a group of construction workers in Denmark, whose working conditions were regulated by a collective agreement concluded between this company and Danish trade unions.  Subsequently, however, the Italian company breached the obligations stemming therefrom, by omitting to pay salaries, pension insurance contributions, holiday remuneration and other social benefits in accordance with the conditions set by said agreement. Based on these grounds, the Danish Labour Court condemned the company to pay (to the trade unions) a total amount of € 1.900.000,00 ca. This amount was calculated by taking into account the making of budgetary savings unlawfully realized by the company (essentially, by underpaying its workers and omitting to comply with social security obligations) complemented by a 7% increase for deterrence (ca. € 129.000,00). In Danish law, this fine (bod) finds its legal basis in Article 12 of Act. No 106 of 2008.

The Danish trade unions subsequently sought to enforce that judgment in Italy. At this stage, the Italian company filed an application under Articles 45 and 46 of the Brussels I bis Regulation, claiming, inter alia, a breach of the Italian public policy stemming from:

1. an alleged lack of impartiality of the Danish judge, based on the remark that “the majority of the members of the deciding court were designated by one of the trade unions who were parties to the procedure”.
2. the Danish court’s refusal to submit a preliminary reference to the CJEU concerning the interpretation of a number of provisions of (primary and secondary) EU law, deemed relevant for the resolution of the dispute(notably, the freedom to provide services, the principle of non-discrimination based on nationality, Article 12 of the Charter, Article 3 of Directive 96/71/CE and Article 6 of Directive 98/49/CE).
3. the “criminal” nature of the fine (bod) imposed by the Danish Tribunal and/or its non-conformity with the criteria set by the Combined Civil Sections of the Cassation itself for the recognition and enforcement in Italy of punitive damages.

The Italian Court of first instance (Tribunale di Siracusa) refused the recognition and enforcement of the Danish decision, deeming that the sanction inflicted by the Labour Court was indeed criminal in nature, in application of the Engel criteria.

The Court of Appeal of Catania reversed this ruling and granted recognition and enforcement, holding that this sanction aimed at compensating the trade union for a breach of contract, consistently with the ordinary function of civil liability. While the Court of Appeal acknowledged that the 7% increase (bod) might have an inhibiting or repressive purpose, it found it in compliance with the criteria established by the Court of Cassation for the recognition of punitive damage in Italy.

Called by the applicant to assess whether the lower courts had correctly interpreted and applied the law, the Court of Cassation came back to questions 1), 2) and 3), mentioned above.

Unpacking the Cassation’s Ruling

The Cassation’s judgment addresses a number of legal questions, which should be separately assessed.

a. On the Possibility of Raising the Public Policy Exception Ex Officio

This issue was brought to the attention of the Court of Cassation in connection with the alleged lack of impartiality of the Danish judge, who – according to the applicant – had been unilaterally appointed by one of the trade unions who were parties to the dispute (Danish law, it seems, allows the parties to labour disputes to appoint the members of the deciding panel). The fact that the Danish legal order offered no possibility of appealing the decision rendered by this judge constituted, in the applicant’s view, an additional violation of the right to a fair trial, having particular regard to the ‘criminal’ nature of the inflicted sanction

The Court of Appeal had refused to rule on this allegation, deeming that this claim had not been (adequately) substantiated by the applicants in the original application submitted before the court of  first instance. It should therefore be regarded as a new claim raised first the first time on appeal and dismissed as inadmissible. According to the applicant, however, this ground of refusal (contrariety to public policy for the lack of impartiality of the deciding panel) should have been raised ex officio by the first instance judge.

The Court of Cassation briefly considers this line of argument in an obiter, where it acknowledged that this way of reasoning would lead to an additional legal question. It should be determined, in particular, whether the Italian judge

is empowered to raise ex officio a breach of the substantive or procedural public policy of the forum, in application of the domestic procedural rules that usually allow for this possibility (in Italy, Article 112 of the code of civil procedure), or whether, conversely, this ex officio control is precluded by the favor that [the Brussels I Bis] Regulation expresses towards the recognition [of foreign judgments], in that it explicitly requires the party who has an interest in not having that judgment enforced in the forum to take appropriate steps to that end [free translation by the author of this post].

To answer this question, the Court of Cassation would have had to take a stance on the interplay between the uniform procedural regime established (sometimes implicitly) by the Brussels I bis Regulation and the domestic rules of procedure of the forum, as well as on the leeway granted to the latter by the principle of procedural autonomy. Regrettably, the Court of Cassation decided to “dodge” this question. In fact, it continues its reasoning by remarking that: “even admitting that the applicant had properly raised the claim concerning the partiality of the deciding panel at the first instance” (as the company was also alleging), the terms in which this claim was formulated would be too generic and unsubstantiated. This claim was solely grounded in the letter of the Danish law, which allows for the abstract possibility that the trade unions appoint the members of the deciding panel under specific conditions. However, this was not what happened in that concrete case, since the case file evidenced that the judge who issued the contested judgment had been chosen (through a different procedure) among those serving at the Danish Supreme Court. Moreover, it had never been recused by the applicant in the proceedings in the issuing State.

The Court of Cassation also rejected the applicant’s argument whereby the sheer existence of a provision allowing for the appointment of the judicial panel by trade unions who are parties to the dispute could amount to a “structural deficiency” of the Danish legal order. To this end, the Italian Court reminded that the notion of “public policy” under the EU PIL Regulations shall not be construed with reference to purely internal values, but rather according to a broader international perspective. In this vein, the Court of Cassation remarked that many foreign states establish similar systems of judicial appointment and that , in any case,

it is not for the judge called to decide on a cause of non-recognition of a judgment issued by a court of a EU Member State to investigate about systemic deficiencies in legal order of the State of origin (‘structural deficiencies’), in the light of the respect and consideration paid to this State (specifically, Denmark) at the pan-European level.

b. On the Breach of the Obligation to Request a Preliminary Ruling and the Public Policy Exception

This issue was solved in a rather straightforward manner by the Court of Cassation. The applicant claimed that, as the judge of first and last resort, the Danish court should have referred a preliminary question to the CJEU, since the interpretation of a number of provisions of EU law was, in his view, essential for the resolution of the dispute. The non-respect of the obligation established by the CILFIT case law would then result in legal impossibility of recognizing and enforcing the ensuing foreign judgment, this being contrary to the public policy of the requested State.

The Court of Cassation evoked, in this respect, the case law of both the ECtHR and the CJUE. In Ullens dr Schooten, the former held that a national court’s refusal to grant the applicants’ requests to refer to the Court of Justice preliminary questions on the interpretation of EU law, that they had submitted in the course of the proceedings, does not violate Article 6 of the ECHR if this refusal has been duly reasoned. In Consorzio Italian Management, the CJEU specified that

if a national court or tribunal against whose decisions there is no judicial remedy under national law takes the view… that it is relieved of its obligation to make a reference to the Court under the third paragraph of Article 267 TFEU, the statement of reasons for its decision must show either that the question of EU law raised is irrelevant for the resolution of the dispute, or that the interpretation of the EU law provision concerned is based on the Court’s case-law or, in the absence of such case-law, that the interpretation of EU law was so obvious to the national court or tribunal of last instance as to leave no scope for any reasonable doubt (§ 51).

Against this backdrop, the Court of Cassation deemed that the Danish Court had sufficiently explained the reasons behind its refusal to refer a preliminary question to Luxembourg. It also added that this assessment should be made solely on the basis of the reasoning developed in the judgment whose recognition is sought: any further assessment on this point, extending to the correctness of the interpretation given to the Danish provisions and their application to the facts of the case, would amount to a review on the merits, explicitly forbidden under the Brussels regime.

c. On the Allegedly Criminal Nature of the Danish Fine (Bod)

Concerning the disputed nature of the fine inflicted with the judgment whose recognition was sought, the Court of Cassation aligned with the view expressed by the Court of Appeal. It noted that, in the Danish legal order, the bod is characterized as a financial penalty (sanzione pecuniaria) belonging to the toolbox of civil liability. It can be inflicted solely for breaches of collective work agreements and pursues a double objective: on the one hand, strengthening the binding effects of these contracts (whose purpose would be defeated if, in case of non-compliance, the compensation granted by the court was limited to the damage effectively suffered by the trade union) and, on the other hand, fighting social dumping. The Cassation therefore recognizes that the bod combines the functions typically vested in civil liability with a deterrent effect typical of criminal law, aiming at the preservation of the general welfare. However, this “duality of functions” of the bod cannot, as such, serve as a basis to qualify this financial penalty as a criminal sanction.

For the purposes of a correct characterization of a fine as being “criminal” in nature, the Court of Cassation pointed to the judgment No. 43 of 2017 of the Italian Constitutional Court, which in turn refers to the Engel criteria. Accordingly, a fine may be recognized as being criminal in nature – even despite a different explicit characterization in positive law – if (a) it affects the population at large; (2) pursues aims that are not merely reparatory, but also punitive and preventative; (3) has punitive character, its consequences being able to reach a significant level of severity (§ 3.3).

Assessed from this standpoint, the Court of Cassation concluded that the Danish bod could not be regarded as being criminal in nature. Its (partially) “punitive” function should rather be ascribed to the system of civil liability.

In Italy, the recognition of foreign (civil) judgments awarding punitive damages is regulated by a ruling of the Combined Sections of the Court of Cassation of 2017 (No. 16601). Therein, that Court admitted, for the first time, that punitive damages could be compatible with Italian public policy under specific conditions: (1) they shall comply, first and foremost, with the principle of legality and the principle that there must be a legal basis, pursuant to which conduct giving rise to the imposition of punitive damages must be defined beforehand in legislation; (2) secondly, and relatedly, punitive damages damages shall be foreseeable; and (3) their amount should not be disproportionate, ie grossly excessive in nature. Having regard to these criteria, the Cassation concluded that the Danish bod could be recognized in Italy, given that: it found a sufficiently specific legal basis in Danish law (ie in the provisions of Act. No 106 of 2008); the application of these provisions was adequately foreseeable, also as concerns the determination of the amount of the fine, given that Danish courts have issued specific guidelines for these purposes; the damage awarded for “punitive purposes” was not grossly disproportionate in relation to the amount of the prejudice effectively suffered by the trade unions and their members (7% thereof).

Based on these arguments, the Court of Cassation finally gave the green-light to the recognition and enforcement of the Danish judgment in Italy, thus rejecting the claimant’s application under Articles 45 and 46 of the Brussels I bis Regulation.

In Yin v Wu [2023] VSCA 130, the Court of Appeal of the Supreme Court of Victoria set aside a judgment[1] which had affirmed the enforcement a Chinese judgment by an Associate Justice of the Supreme Court.[2] This was a rare instance of an Australian court considering the defence to enforcement of a foreign judgment on the basis that the judgment debtor was denied natural justice—or procedural fairness—before the foreign court.

Background

The dispute concerned a payment made by a Chinese national living in China, Di Wu, to a Chinese national living in Australia, Ke Yin. The payment was made pursuant to a foreign exchange agreement: Yin had promised to pay Wu a sum of US Dollars in exchange for Wu’s Chinese RMB.

The arrangement was made unusually through a series of Telegram and WhatsApp messages, from accounts with different numbers and aliases. (In Australia, we would say that the arrangement sounded ‘suss’.) The agreement was seemingly contrary to Chinese law, which may have contributed to the clandestine character of communications underlying the agreement; see [30].

After Wu transferred the funds—RMB ¥3,966,000—Yin denied that the full sum was received and did not transfer any sum of US Dollars to Wu. Yin eventually returned RMB ¥496,005 but not the balance of what Wu had paid. Wu went to the police on the basis he had been ‘defrauded’; they refused to act. Meanwhile, while broadcasting video under a pseudonym on Twitter, Yin suggested that his accounts had been frozen at the instigation of Wu’s cousin and with the participation of ‘communists’.

On 13 October 2017, Wu commenced a proceeding against Yin in the Ningbo People’s Court. The Court characterised the foreign exchange agreement as ‘invalidated and unenforceable’, but nonetheless provided judgment and costs to Wu for RMB ¥3,510,015 (‘Chinese Judgment’).

The Chinese Judgment recorded that: ‘[t]he defendant [Yin] failed to attend despite having been legally summoned to attend. As such, the court shall enter default judgment according to the law. … Any party dissatisfied with this judgment may, within 15 days from the date of service of the written judgment, file an appeal …’: [27].

Wu commenced enforcement proceedings in China. An affidavit in those proceedings recounted that Yin’s whereabouts were then unknown, but Yin had been served according to relevant procedure of the Chinese forum, which allowed service ‘by way of public announcement’: [31]. The ‘Public Notice’ provided as follows (see [32]):

‘In relation to the private loan dispute between the plaintiff Wu Di and defendant Yin Ke, you are now, by way of public notice, served with the Complaint and a copy of the evidence, notice to attend, notice to adduce evidence, risk reminder, summons to attend court, notice of change of procedure, civil ruling and the letter of notice. You are deemed to have been served with the said documents after sixty days from the date of this public notice.’

 

Recognition and enforcement sought in Australia

Wu filed an originating motion in the Supreme Court of Victoria, seeking an order for enforcement of the Chinese Judgment, or alternatively, reimbursement of the sum paid to Yin.

The latter and alternative order may be understood in terms of an order seeking the recognition of the obligation created by the Chinese Judgment, to be given effect through the remedial powers of the Australian forum: see Kingdom of Spain v Infrasructure Services Luxembourg S.À.R.L.  (2023) 97 ALJR 276; [2023] HCA 11, [43]–[46]; Schibsby v Westenholz (1870) LR 6 QB 155, 159.

Australia has a fragmented regime for recognition and enforcement of foreign judgments; see generally Michael Douglas, Mary Keyes, Sarah McKibbin and Reid Mortensen, ‘The HCCH Judgments Convention in Australian Law’ (2019) 47(3) Federal Law Review 420. New Zealand judgments are treated with deference under the Trans-Tasman Proceedings Act 2010 (Cth); judgments of various other jurisdictions are easily registered under the Foreign Judgments Act 1991 (Cth), where the relevant court is identified in the Foreign Judgments Regulations 1992 (Cth) on the basis of reciprocal treatment of Australian judgments in the relevant foreign jurisdiction. For other in personam money judgments, recognition and enforcement may occur pursuant to common law principles.

At common law, a foreign judgment may be recognised and enforced if four conditions are satisfied—subject to defences:

‘(a)           the foreign court must have exercised jurisdiction that Australian courts will recognise;

(b)           the foreign judgment must be final and conclusive;

(c)           there must be an identity of the parties; and

(d)           the judgment must be for a fixed sum or debt’: Doe v Howard [2015] VSC 75, [56].

Here, the Chinese Judgment was assessed according to the common law principles.

In his defence, Yin pleaded (among other things) that he was not served with the documents commencing the foreign proceeding which produced the Chinese Judgment, or any other documents relevant to the foreign proceeding while it was on foot. He also pleaded that he was unaware of the existence of the Chinese Judgment until the Australian proceeding was commenced. As an extension of that plea, Yin said that enforcement of the Chinese Judgment should be refused on the basis of public policy, or because there was a failure by the Chinese court to accord Yin natural justice: [6].

Wu sought summary judgment on the basis that Yin’s defence had no prospects of success. On 22 October 2021, summary judgment was entered in favour of Wu by an Associate Justice of the Supreme Court: Wu v Yin (Supreme Court of Victoria, Efthrim AsJ, 22 October 2021); see Wu v Yin [2022] VSC 729, [5].

The Associate Justice referred (at [33]) to Boele v Norsemeter Holding AS [2002] NSWCA 363, [28], where Giles JA of the New South Wales Court of Appeal held as follows:

‘In determining whether due notice has been given regard will be had to the notice provisions of the foreign court: for example, notification not by personal service but in accordance with the rules of the foreign court may be held to be consistent with affording natural justice even if not in accord with notice provisions of the forum (see Jeannot v Fuerst (1909) 25 TLR 424; Igra v Igra (1951) P 404; Terrell v Terrell (1971) VR 155).’

Efthrim AsJ considered that the statement in the Chinese Judgment that Yin had ‘been legally summoned to attend’ was enough to defeat the natural justice defence: [2022] VSC 729, [74]–[79]. Although the ‘public notice’ service underlying the Chinese Judgment would generally be insufficient for service within Australia under Australian law, it was considered sufficient for the purposes of overcoming the defence.

Yin appealed to the Supreme Court’s trial division on the ground (among others) that Efthrim AsJ erred in holding that Yin’s defence that he was not accorded natural justice in the Chinese proceeding had no prospect of success. Tsalamandris J rejected this ground, and Yin’s appeal: [2022] VSC 729, [124], [133]. Yin applied for leave to appeal the decision of Tsalamandris J to the Court of Appeal.

Before the Court of Appeal

The Court of Appeal overturned the decision of Tsalamandris J, granting leave to appeal and allowing the appeal on the following ground (see [79]):

Ground 1: the judge erred in upholding the associate justice’s conclusion that the defence to the enforcement claim had no real prospect of success, and in doing so erred by imposing an onus on Yin to adduce evidence about applicable Chinese law relating to service by public announcement and why that method of service had not been properly invoked in this case. Further, the judge erred by relying on the Wang affidavit [the affidavit in the Chinese enforcement proceeding, mentioned above] which was not in evidence, or not relied on by Wu, on the hearings before either the associate justice or the judge.

The Court of Appeal’s decision turned on the available evidence. Yin deposed that he was not served with any documents in connection with the Chinese proceedings. That evidence was uncontradicted: [90]. In these circumstances, ‘the associate justice and the judge erred in placing the onus on Yin to establish that there was no valid service on him by alternative means permitted by Chinese law’: [84]. Yin’s evidence raised a prima facie case that he had been denied natural justice in the Chinese proceedings: [91].

In obiter, the Court of Appeal also considered that even if it were assumed ‘that the evidence was sufficient to establish that Yin had been “legally summoned”, the evidence as a whole [did] not establish that the public notice procedure apparently adopted complied with the requirements of natural justice in the circumstances of the case’: [84]; [95].

The Court of Appeal cited (at [96]–[99])) Terrell v Terrell [1971] VR 155, which was also cited in Boele, [28]. Terrell was about a petition for divorce by an American husband who had left his wife in Australia and returned to the US. The husband obtained a decree if divorce in the US. The Australian court considered a forum statute that would give effect to foreign decrees if they would be recognised under the law of the domicile. But the statute provided that a foreign decree would not be recognised ‘where, under the common law rules of private international law, recognition of it[s] validity would be refused on the ground that a party to the marriage had been denied natural justice’; see [96].

Barber J considered that ‘natural justice’ was ‘not a term of great exactitude, but in this context probably refers to the need for the defending party to have notice of the proceedings and the opportunity to be heard’: Terrell, 157. A foreign judgment produced in circumstances where the respondent to the foreign proceedings had no notice of them or an opportunity to be heard would be amenable to a natural justice defence. Barber J considered an exception to that position, which was inapplicable in the circumstances as the husband had withheld the wife’s address from the foreign court (see Terrell, 157):

‘To this basic rule there is an exception, that where the foreign court has power to order substituted service or to dispense with service, and that power has been properly exercised upon proper material, even where the respondent was not in fact made aware of the proceedings, such proceedings cannot be held to be unjust, as similar powers are available to our courts. However, there must have been some attempt to effect personal service: Grissom v Grissom, [1949] QWN 52. Moreover, if the order for substituted service is based on a false statement that the petitioner did not know the respondent’s whereabouts, or where a false statement is made as to the respondent’s address for service, the decree will not be recognized as valid: Norman v Norman (No2) (1968) 12 FLR 39; Grissom v Grissom, supra; Macalpine v Macalpine, [1958] P35; [1957] 3 All ER 134; Brown v Brown (1963) 4 FLR 94; [1963] ALR 817;Middleton v Middleton, [1967] P 62; [1966] 1 All ER 168.

After considering Terrell and other authorities, the Court of Appeal concluded as follows (at [107]):

… even if Wu had established by admissible evidence that service of the Chinese proceeding was legally effected on Yin by some form of public notice — albeit one which did not come to Yin’s attention — the Court should not have recognised the Chinese judgment on a summary basis. This is because at the time Wu commenced the Chinese proceeding he well knew of a number of alternate means of giving notice of the proceeding to Yin, namely, by Twitter, WhatsApp and Telegram. Indeed, Wu’s case in the Chinese proceeding and in this Court was based on money paid under an alleged contract made by these means. In these circumstances, there is a case to be investigated at trial as to whether Wu informed the Chinese court of these alternative means of giving notice of the Chinese proceeding to Yin.

The Court then provided (at [108]) some helpful dicta on the future application of the natural justice defence to enforcement of foreign judgments, considering the following proposition in Nygh’s Conflict of Laws (LexisNexis, 10th ed, 2020) at 990 [40.84]:

It matters not that the forum would not have dispensed with notice in the same situation, although a line would have to be drawn somewhere as in the case where the rules of a foreign court dispensed with the need of giving a foreign defendant any form of personal notification even in peacetime.

The Court opined (at [109]):

In our view, in considering whether natural justice has been provided, modern courts should move with the times in their assessment of the sufficiency of foreign modes of service which do not aim to give defendants personal notification by the many electronic means now commonly available. Courts should draw the line and look unfavourably on modes of service by foreign courts which do not attempt to give notice by such means where a defendant’s physical whereabouts are unknown but electronic notice in some form is possible.

Yin failed on his other grounds of appeal. As the underlying decision also provided summary judgment for Wu’s restitution claim, the Court of Appeal characterised the restitution claim as separate to the enforcement claim: [111]. The Court of Appeal affirmed the decision that Yin’s defence that he did not know Wu went ‘nowhere’: [118]. Wu ultimately succeeded: he obtained summary judgment for the restitution claim, together with interest: [158].

Some takeaways

Yin v Wu provides a few insights for the natural justice defence to recognition and enforcement of foreign judgments in common law courts.

The first concerns the onus of proof. The onus of making out a defence to recognition of a foreign judgment would ordinarily fall on a defendant: Stern v National Australia Bank [1999] FCA 1421, [133].  The Court of Appeal’s decision demonstrates how burdens may shift in the practical operation of private international law in the context of litigation. (On the difference between legal and evidentiary burdens, and how they may shift, see Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27.) Once Yin had produced evidence he was not served, it was up to Wu to contradict that evidence. The omission may be understood on the basis that the underlying decision was one for summary judgment.

Second, the decision is notable for framing enforceability in terms of a natural justice defence rather than in terms of the first criterion for recognition or enforcement: ‘the foreign court must have exercised jurisdiction that Australian courts will recognise’. This element is often framed as a requirement of ‘international jurisdiction’. Yin was not within the territorial jurisdiction of the Chinese court at any relevant time, and nor did he submit to the foreign court. International jurisdiction was seemingly predicated on Yin’s nationality. Arguably, this is insufficient for recognition and enforcement at common law in Australia (but see Independent Trustee Services Ltd v Morris (2010) 79 NSWLR 425, cf Liu v Ma (2017) 55 VR 104, [7]). The focus on natural justice defence rather than international jurisdiction would be a product of how the parties ran their cases.

Third, although the Court of Appeal allowed the appeal as regards the natural justice defence, the judgment supports the orthodox view that this defence should have a narrow scope of operation. As Kirby P opined in Bouton v Labiche (1994) 33 NSWLR 225, 234 (quoted at [73]), courts should not be ‘too eager to criticise the standards of the courts and tribunals of another jurisdiction or too reluctant to recognise their orders which are, and remain, valid by the law of the domicile’. Australian courts provide for substituted service in a variety of circumstances; it would be odd if a foreign court’s equivalent procedure was held to engage the natural justice defence.

Finally, the case serves as a warning for litigants seeking to enforce a judgment of a Chinese court in Australia: relying purely on the ‘public notice’ mechanism of the Chinese forum, without taking further steps to bring the proceeding to the attention of the defendant, may present problems for enforcement. The same can be said for transnational litigation in any jurisdiction that does not require ‘personal service’ in the sense understood by common law courts.

Dr Michael Douglas is Senior Lecturer at the University of Western Australia and a Consultant at Perth litigation firm, Bennett.

 

[1] Wu v Yin [2022] VSC 729 (Tsalamandris J).

[2] Wu v Yin (Supreme Court of Victoria, Efthrim AsJ, 22 October 2021).

This note has been kindly provided by Dr. Samuel Vuattoux-Bock, LL.M. (Kiel), University of Freiburg (Germany).

On 8 June 2023, the Swiss Federal Supreme Court (Bundesgericht) pronounced a judgment on the removal of gender markers of a person according to German Law and denied the recognition of this removal in Switzerland.

Background of the judgment is the legal and effective removal 2019 of the gender information of a person with swiss nationality living in Germany. Such removal is possible by a declaration of the affected person (accompanied by a medical certificate) towards the Registry Office in accordance with Sect. 45b para. 1 of the German Civil Status Act (Personenstandsgesetz, PStG). The claimant of the present judgment sought to have the removal recognized in Switzerland and made a corresponding application to the competent local Swiss Office of the Canton of Aargau. As the Office refused to grant the recognition, the applicant at the time filed a successful claim to the High Court of the Canton of Aargau, which ordered the removal of the gender markers in the Swiss civil and birth register.

The Swiss Federal Office of Justice contested this decision before the Federal Supreme Court. The highest federal Court of Switzerland revoked the judgment of the High Court of the Canton of Aargau and denied the possibility of removing gender information in Switzerland as it is not compatible with Swiss federal law.

According to Swiss private international law, the modification of the gender indications which has taken place abroad should be registered in Switzerland according to the Swiss principles regarding the civil registry (Art. 32 of the Swiss Federal Act on the Private International Law, IPRG). Article 30b para. 1 of the Swiss Civil Code (ZGB), introduced in 2022, provides the possibility of changing gender. The Federal Supreme Court notes that the legislature explicitly refused to permit a complete removal of gender information and wanted to maintain a binary alternative (male/female). Furthermore, the Supreme Court notes that the legislature, by the introduction in 2020 of Art. 40a IPRG, neither wanted to permit the recognition of a third gender nor the complete removal of the gender information.

Based on these grounds, the Federal Supreme Court did not see the possibility of the judiciary to issue a judgment contra legem. A modification of the current law shall be the sole responsibility of the legislature. Nevertheless, the Supreme Court pointed out that, due to the particular situation of the affected persons, the European Court of Human Rights requires a continual review of the corresponding legal rules, particularly regarding social developments. The Supreme Court, however, left open the question of whether the recognition of the removal of gender information could be a violation of Swiss public policy. The creation of a limping legal relationship (no gender marker in Germany; male or female gender marker in Switzerland) has not been yet addressed in the press release.

Currently, only the press release of the Federal Supreme Court is available to the public (in French, German and Italian). As soon as the written grounds will be accessible, a deeper comment of the implications of this judgment will be made on ConflictOfLaws.

This year’s annual meeting of the German Branch of the International Law Association will take place at the Goethe-University in Frankfurt (Main) on Friday, 7 July 2023. The subject will be “Regional Developments in International Law in Africa and Latin America”. The list of distinguished speakers includes Prof. Dr. Thoko Kaime, University of Bayreuth, Alan Diego Vogelfanger, LL.M., University of Bonn/Universidad de Buenos Aires, Kholofelo Kugler, LL.B., M.A., University of Lucerne (Switzerland), and Priv.-Doz. Dr. Jan Peter Schmidt, Max-Planck-Institute for Comparative and International Private Law. The full program can be found here. For registration, please click here. A passive attendance via Zoom will be possible.

In MF Tel Sarl v Visa Europe Ltd [2023] EWHC 1336 (Ch), Marsh M admirably summarises the extensive authorities both English and CJEU (and almost all of them discussed on this blog) on ‘purely economic damage’, in the case at issue at the applicable law level with a view to identifying overcharging on card transaction services. The claim is non-contractual for claimant operated through a ‘sponsor’, RRS, a London-based bank.

[55] Visa’s primary case is that the direct damage occurred at the time when Visa messaged RRS with transaction amounts that are said to be incorrect. Visa invites the court to follow a line of cases dealing with negligent misstatement. In a case of negligent misrepresentation it is said the damage will occur at the place where the misstatement is received and relied upon (compare the discussion in Kwok v UBS). Visa’s alternative case is that direct damage occurred when RRS failed to collect an Optional Issuer Fee – OIF, as a result of the defendant’s inaccurate messaging, for onward transmission to the claimant in France. [57] On either case the defendant says that damage occurred in England being the “direct” damage resulting from the wrong and that the loss felt ultimately in the claimant’s bank account in France is indirect damage.

the judge [68-5] holds that

where the claim is for the non-receipt of OIFs, the wrong only has a direct economic effect upon the claimant by non-receipt of OIFs. That effect is likely to have been felt by the claimant in France. It is not at all obvious that the effect of the wrong as it resonated in financial terms should be seen as an indirect consequence of the previous events.

The case of course once again shows the intricate difficulty of the (in)direct damage distinction and I agree with Master Marsh  that certainly at the level of an application for strike-out, Visa’s arguments are not convincing to blow the suggestion of French law being the applicable law, out off the water.

Geert.

Failed application to strike out the applicable law part of a claim as being French law
Discussion on applicable law for purely economic damage, A4 Rome II, must go to trial

MF Tel Sarl v Visa Europe Ltd [2023] EWHC 1336 (Ch)https://t.co/AAQRDh4yrM

— Geert Van Calster (@GAVClaw) June 6, 2023

One my of students, Jules Culot, has excellent analysis of the recent Belgium Supreme Court’s turnaround (T BV v S-O GmbH – what is with the anonymisation?!) on Belgium’s rule for dispute resolution in the context of exclusive distribution agreements: see here. I am a great believer in progress via (acknowledged) assimilation and I am happy largely to refer to Jules.

As Jules notes, the Supreme Court has taken a similar approach as the final Court of Appeal ruling in the infamous Unamar case: the granted concessions for exclusive distribution are said primarily to safeguard “private interests” and consequently not to qualify as specific mandatory laws under Article 9(1) Rome I. It is by far certain that for national laws to qualify as lois de police or as the Belgians call it, lois d’application immédiate, they necessarily must safeguard general interests.

With our head librarian, Christoph Malliet, I share the frustration that the appealed judgment of the Antwerp Court of Appeal of 10 March 2021, is not available anywhere – but I shall not start raging about the so 1950s approach to publication of case-law in Belgium: I want to start the week-end later with positive vibes.

Geert.

EU Private International Law, 3rd ed. 2021, 3.88.

Great primer by @TheLegalSmeagol on the Belgian Supreme Court reversing half a century of authority on arbitration and exclusive distribution (re: lois de police, overriding mandatory law) https://t.co/ovCCgkG4M7 pic.twitter.com/JgwSkC8fXR

— Geert Van Calster (@GAVClaw) May 26, 2023

Edward Elgar Publishing has just published an Advanced Introduction to Cross-Border Insolvency Law, authored by Reinhard Bork (University of Hamburg).

The book is meant both for students who study company, commercial and private international law, and to practitioners who are not specialists of insolvency law. In its approach it provide both in-depth information for advance readers and accessible information for beginners and follows a comparative law approach to explore some of the most important issues of insolvency law.

The blurb of the book reads as follows:

The Advanced Introduction to Cross-Border Insolvency Law provides a clear and concise overview of cross-border insolvency law with particular focus on the rules governing insolvency proceedings that occur between and across countries. Increasingly, such proceedings have an international dimension, which may involve, for example, debtors with assets abroad, foreign creditors, contractual agreements with counterparties in different jurisdictions, or companies with offices or subsidiaries in a different country. The book expertly steers the reader through the complex interactions between national and supra-national rules, international model laws, and the principles that underpin them.