Flux des sites DIP

Written by Dr. Meng Yu and Dr. Guodong Du, co-founders of China Justice Observer*

On 20 August 2023, China Justice Observer released the 2023 version of List of China’s Cases on Recognition of Foreign Judgments. To date, we have collected 98 cases involving China and 25 foreign States and regions. (Note: Foreign divorce judgments are excluded in the Case List.)

The Case List was issued on July 16, 2019, and is updated annually. The 2020 update and 2022 update were also posted on Conflictoflaws.net.

The full version of the 2023 List of China’s Cases on Recognition of Foreign Judgments is available here.

The key features of the updated list are:

• The List comprises 25 concise reports for each jurisdiction, together with a chart of bilateral judicial assistance treaties which China has concluded with 39 States, of which 35 bilateral treaties include judgment enforcement clauses.
• A total of nine newly added cases involve two treaty jurisdictions – France (one case) and Vietnam (one case) – and seven non-treaty jurisdictions, namely, Australia (one case), Canada (one case), Germany (one case), New Zealand (one case), South Korea (one case), the UK (one case), and the US (one case).
• Please note that in In re DAR (2022) Jing 01 Po Shen No. 786), the Beijing First Intermediate People’s Court ruled to recognize a German court’s bankruptcy ruling based on the principle of reciprocity. This is the second case involving de jure reciprocity -a new liberal reciprocity test for the recognition and enforcement of foreign judgments in China. The first of its kind was the Spar Shipping case reported in 2022, in which an English monetary judgment was recognized in China for the first time.
• Another noteworthy case is SD Biotechnologies Co. Ltd v. 99 Trade Co. Ltd (2019) Jing 04 Xie Wai Ren No.3, where the Beijing Fourth Intermediate People’s Court ruled to recognize and enforce a trademark judgment of the Korean Supreme Court. This case marks the first time that Chinese courts have recognized and enforced an intellectual property judgment.
• Other newly added cases, whether foreign judgments to be enforced in China or Chinese judgments to be enforced in foreign jurisdictions, provide a valuable comparative perspective on key issues in the eyes of courts from different jurisdictions, such as interim measures (China), limitation period (Australia), due process and public policy (Vietnam), finality (Canada), and the ground of systemic lack of due process (the US).
• Each case has been reviewed and more details, such as the grounds, the case numbers, and causes of action, have been added.
• Case analyses have been aggregated under the country tags since 2022, so it is now easier to track down relevant cases, together with their information and analyses, in each country/region report. For example, under the tag ‘US-China Judgments Recognition and Enforcement’, one can find relevant case analyses involving mutual recognition and enforcement of judgments between the US and China.

As always, we endeavor to collect all Chinese court decisions involving the recognition and enforcement of foreign judgments (“REFJ”), and foreign counterparts concerning the recognition and enforcement of Chinese judgments. The Case List is made available for our readers to build reasonable expectations on REFJ in China.

The Case List is continually updated with new reports. Case information, comments, and suggestions are most welcome. Please feel free to contact Ms. Meng YU via e-mail at meng.yu@chinajusticeobserver.com.

 

*We would like to thank the following persons/institutions that shared thoughts and valuable information with us:

Dr. Béligh Elbalti, Associate Professor, Graduate School of Law and Politics, Osaka University, Japan; Dr. ZHANG Wenliang, Associate Professor, School of Law, Renmin University of China; Dr. SU Xiaoling, Lawyer at Beijing DHH Law Firm; Mr. WANG Chengjie, Lawyer at Allbright Law Offices (Shanghai);Wonbanglaw; Ms. Renee M Wong, Attorney at Goldberger and Dubin PC (New York); Dr. WANG Yahan, Associate Professor, Henan University School of Law; Mr. Angus Ni, Litigation attorney at AFN Law PLLC (Seattle); Asian Business Law Institute; Ms. Dawei Gongsun, Partner at DGW Kramer LLP (New York).

On 13 April 2023, the University Paris Dauphine hosted a conference on State Immunity from Enforcement (L’immunité d’exécution de l’Etat).

Speakers included Philippe Théry (Univ. Paris Panthéon-Assas), Louis Perreau-Saussine (Univ. Paris Dauphine), Gilles Cuniberi (Univ. Luxembourg), Sophie Lemaire (Université Paris Dauphine), Nathalie Meyer-Fabre (Avocate au Barreau de Paris), Duncan Fairgrieve (Univ. Paris Dauphine), Fabrizio Marrella (Univ. Ca’ Foscari), David Pavot (Univ. Sherbrooke), Mathias Audit (Univ. Panthéon-Sorbonne), Juliette Morel-Maroger (Univ. Paris Dauphine), Jérôme Chacornac (Univ. Paris Panthéon-Assas), Hélène Tissandier (Univ. Paris Dauphine), Victor Grandaubert (Univ. Paris Nanterre), Renaud Salomon (Cour de cassation).

The videos of the conference of the various sessions of the conference are freely available and can be accessed here.

Guest Post by Chytanya S. Agarwal*

I. Introduction

Rising cross-border migration of people and concomitant increase in lawsuits relating to matrimonial disputes between couples brings to the forefront the issue of conflict of jurisdictional laws (219th Law Commission Report, ¶1.1-¶1.2). Mbatha v. Cutting is one such recent case that grapples with conflict of laws pertaining to divorce and division of matrimonial property when the spouses are domiciled in separate jurisdictions. In this case, the Georgian Court of Appeal dealt with competing claims from a couple who married in New York and had their matrimonial domicile in South Africa. The wife, domiciled in Georgia, USA, argued for the application of the matrimonial property regime of South Africa – their only (though temporary) common matrimonial domicile. In determining the applicable law, the Court upheld the traditional approach, which favours lex situs for real property and lex domicilii for personal property.

In this article, I contextualise Mbatha in the context of Indian litigants, particularly foreign-domiciled Non-Resident Indians (‘NRIs’) married under Indian personal laws and having their property located both within India and in foreign territory. Firstly, I analyse Mbatha by comparing it with the prevalent approaches in private international law. Secondly, I examine the Indian jurisprudence on the applicability of foreign judgements concerning matrimonial disputes. Thirdly, I submit that Mbatha complies with the Indian lex situs rule insofar as real property is concerned. However, by determining its subject-matter jurisdiction by solely considering Georgian law, Mbatha sets itself on a collision course with the Indian approach on the subject-matter jurisdiction of foreign courts. Lastly, I analyse the implications of this uncertainty regarding enforceability of foreign judgements on matrimonial property. In conclusion, I propose a solution that draws on public international law to resolve the challenge presented by conflicting rules on choice of law.

 II. Traditional Approach vs. Modern Approaches to Conflict of Laws

The primary source of private international law are municipal laws of nations. Their divergence in the face of potential applicability is the root cause of conflict of laws. In this section, I examine the approaches to conflict of laws from the perspective of mutability i.e., change in applicable personal laws of spouses during their marriage. It has three main approaches under private international law – the doctrines of immutability, mutability, and the partial mutability. The lex situs approach upheld in Mbatha falls under the “partial mutability” rule.

Under the “doctrine of immutability”, the personal law during marriage governs the property relations of spouses forever (Schuz, p.12). Once determined, this law stands ‘immutable’/unalterable. Strict immutability approach is favoured for predictability of applicable laws (p.45). It is also supported on the ground of legitimate expectations of the parties. In short, the parties can expect the personal law of their marriage to govern their relations unless they determine their choice of law through a separate agreement (p.29-30).

In “doctrine of mutability,” the applicable law never remains fixed. It can change depending on changes in forum, changes in religion, nationality, domicile, etc. For instance, under the lex fori approach followed in American states, the courts partition the entire matrimonial property by applying the law of the forum, regardless of where and when the said property was acquired (Wasserman, p.23). This approach is justified on the grounds of state interest because the greatest interest of the forum state in matrimonial cases is to ensure the application of its laws (Schuz, p.38). However, this approach poses the risk of “forum shopping” or the practice of filing claims in jurisdictions where lex fori favours the petitioner’s case.

The third approach is the “partial mutability” approach which finds an echo in Mbatha. As mentioned, the traditional approach in Mbatha favoured lex situs (i.e., the law of the jurisdiction where the real property is located) and lex domicilii (i.e., the law of the owner’s domicile at the time the personal property was acquired). In the doctrine of “partial mutability”, a change in matrimonial domicile would trigger a change in the governing laws without having any retroactive effect on already acquired property (Schuz, p.12). For instance, if a married couple buys property in Country X, then the laws of country X alone would govern this property. However, this does not prevent them from applying the laws of Country Y to a property situated in Country Y. Thus, the applicable matrimonial property law changes depending upon the location in which the spouses buy the matrimonial property without prejudicing vested rights. Its underlying rationale is protecting both state interests and legitimate expectations of the parties. This is because the state where the relevant property is situated has the greatest interest in ensuring that it is governed by its own laws. Additionally, parties have the reasonable expectation that the law governing the property should always be that at the time of the acquisition of that asset (Schuz, p.32).

 III.  Indian Jurisprudence on Foreign Judgements Concerning Personal Laws

While private international law has undeveloped jurisprudence in India, it has a growing trend due to the import of foreign laws and foreign judgements by NRIs who have emigrated from India (219th Law Commission Report, ¶2.1-¶2.2). In this section, I analyse the Indian judgements dealing under three issues concerning foreign verdicts on matrimonial relations recognised by the 65th Law Commission Report (¶3.2). These issues, equally pertinent in the context of matrimonial property relations, are (i) grounds for jurisdiction, (ii) choice of law, and (iii) law on recognition.

1.  Jurisdiction

Indian law has generally opposed the application of foreign judgements on the ground that the foreign forum did not possess sufficient jurisdiction under the personal law governing the parties. A plain reading of the text of the Indian Succession Act and the Hindu Succession Act shows that they only govern the devolution of immovable property situated in India irrespective of the domicile of the person who owned the property. The Acts extend only to the Indian territory and do not have extra-territorial application. As per the Code of Civil Procedure (‘CPC’), any suit for the partition of immovable property must be filed in the court within whose local jurisdiction the property is located.

Case laws have also supported this position consistently. In Duggamma v. Ganesha Keshayya (¶5-¶7, ¶14), it was held that the decision of a foreign court concerning title to Indian property would be devoid of legal effects. Harmindar Singh v. Balbir Singh held that disputes concerning any immovable property have to be decided not just by the laws of the country where the land is situated, “but also by the courts of that country.” Even if the parties had submitted to the jurisdiction of the foreign court, the foreign verdict is enforceable only to the extent it applies to property situated outside India. Conversely, Indian courts have upheld the disposition of overseas family property by foreign courts. Even in cases concerning other matrimonial disputes such as divorce, the Supreme court has held that the forum must have jurisdiction as per the law under which the parties married. For instance, foreign courts have been barred from annulling marriages between Indians. To summarise, Indian courts have generally disfavoured the adjudication of matrimonial disputes by foreign courts on the ground of lack of jurisdiction.

2.  Application of Indian Law

In the absence of legislative guidance, this sphere of private international law is heavily reliant on case laws (219th Law Commission Report, ¶3.2). A perusal of judgements (see here and here) shows that real property located in India can be governed only by Indian law (i.e., lex situs). At the same time, Indian courts have ruled that Indian law is inapplicable in foreign jurisdictions. In Ratanshaw v. Dhanjibhai, the Bombay High court upheld the English rule of lex situs for the succession of property situated in India. At the same time, Indian courts recognising lex situs have respected foreign judgements concerning overseas property, and have observed that foreign forums should also reciprocate by recognising Indian judgements concerning immovable property in India. In Y. Narasimha Rao v. Y. Venkata Lakshmi, the Supreme Court ruled that per Section 13(c) of the CPC, even if the parties submit to the jurisdiction of the foreign forum, the only law applicable in matrimonial disputes is the one under which the parties married. However, in Nachiappa Chettiar v. Muthukaruppan Chettiar, the Indian law was held inapplicable in the case of properties situated outside India. Per Nachiappa Chettiar, the family property cannot be deemed partible under the Hindu Succession Act since it was located outside the jurisdiction of Indian courts. In Dhanalakshmi v. Gonzaga (¶34-¶43), the Hindu joint family system was held inapplicable in Pondicherry due to the invalidity of the Hindu Succession Act’s extraterritorial application. So, Indian courts have also respected foreign lex situs with respect to foreign property.

3.   Recognition: Other preconditions

In addition to satisfying the requirements of jurisdiction and lex situs, there also exist procedural safeguards under CPC that must be satisfied for the foreign verdict to have a conclusive effect. Respect for principles of natural justice is one such prerequisite, entailing that judgements passed by forum non-conveniens are unenforceable in India. Additionally, fraud by one of the parties can also be a vitiating factor. For instance, in Satya, the husband “successfully tricked” a Nevada court to grant a divorce decree on the ground that hehad obtained the domicile of Nevada due to residence of 6 months. Here, the Chandrachud, J. held that the husband had no intention of permanently residing in Nevada and, this, the foreign verdict was unenforceable due to fraud. The need for procedural safeguards for the protection of the weaker party was also emphasised in Neeraja Saraph v. Jayant V. Saraph.

IV.  Mbatha’s Implications on NRIs

The Mbatha approach of lex situs is compatible with Indian law. However, I argue that by determining its overall jurisdiction based on the domicile of one of the spouses,[1] Mbatha erroneously conflated the jurisdiction to determine divorce with the jurisdiction to determine the partition of matrimonial property. As per Georgian law, the court had both the subject-matter jurisdiction and personal jurisdiction to decide the divorce petition since one of the spouses had resided in Georgia for more than 6 months.[2] However, the court cited no authority regarding the validity of its jurisdiction to adjudicate on the division of overseas matrimonial property. The effect of Mbatha is that the court would apply the domestic law of the place where the property is situated, even if such a place is beyond the court’s local limits. For example, the Court in Georgia may apply the laws of a foreign jurisdiction to partition the foreign matrimonial property. This principle, called renvoi in private international law, has limited application in the Indian context (the only case where it was invoked yet not applied is Jose Paul Coutinho v. Maria Luiza Valentina Pereira).

Additionally, the Court determined its subject-matter jurisdiction based on Georgian law. However, as mentioned earlier, the forum should have competent jurisdiction as per the law governing the parties. A foreign forum applying Indian law on Indian property lacks the jurisdiction to do so as per Indian law. Hypothetically, if a Georgian court were to apply the Indian Succession Act to properties situated in India, it lacks the jurisdiction to do so since neither the Act nor CPC confers any jurisdiction on foreign forums to partition Indian property. However, Mbatha nevertheless compels it to apply foreign law even if the foreign law does not grant it requisite jurisdiction.

Another issue is created by the absence of any matrimonial property regime in Indian personal laws. This might lead to rejection of Indian law in the foreign forum since it might consider the lack of rights in the matrimonial property as opposed to their public policy since it is discriminatory towards women. By combining renvoi with this public policy argument, courts can effectively nullify Indian lex situs. Such instances have happened in Israel, where courts have abstained from applying Islamic law on couples migrating from Islamic countries on the ground that the Islamic matrimonial property regime violates gender equality and is thus opposed to Israeli public policy.[3]

 V. A Public International Law Solution to Conflict of Laws?

As explained, while Mbatha’s lex situs rule protects state interests, it has the potential of frustrating parties’ legitimate expectations by subjecting NRIs to matrimonial property regimes of foreign forums, even when Indian personal laws do not contain the concept of matrimonial property. In this regard, public international law gives the solution of making the rules on choice of laws uniform through an overarching treaty like the Hague Conventions (see here and here). The enactment of a composite legislation on private international law along the lines of the 1978 Hague Convention on Matrimonial property regimes to prevent the misapplication of foreign law (219th Law Commission Report, ¶5.2) can go a long way in preventing future conflicts between matrimonial legal systems. This harmonising principles on choice of laws is also more feasible, and has less costs than the alternative of uniformising matrimonial property regimes altogether since such family law regimes are intrinsic to the cultural backdrop of specific legal systems. As shown by Mills (pp.7-10), private disputes are becoming increasingly enmeshed with public international law considerations. The adoption of such treaty is also consistent with the growing view on the intersection of public and private international law to resolve pitfalls in existing legal systems (Maier, pp.303-316).

 

*Chytanya S. Agarwal is a third-year B.A., LL.B. (Hons.) student at the National Law School of India University (NLSIU), Bangalore, and a Blog Editor at the Indian Journal of Law and Technology (IJLT). The author can be reached at chytanya.agarwal@nls.ac.in.

[1] Restatement of the Law, Conflict of Laws (2nd), ss70-72.

[2] Mbatha, pp.746-747.

[3] Also see Nafisi v Nafisi ACH (1996) PD 50(3) 573; Azugi v Azugi (1979) (III) 33 PD 1. Here, despite the “doctrine of immutability” endorsed by Israeli law, the court applied lex fori on an Iranian couple on the grounds, inter alia, of public policy and gender parity.

Florence Guillaume (Professor of Private International Law at the University of Neuchâtel, Switzerland, and Founder of the LexTech Institute) has made available on SSRN a draft version of a paper on Decentralized Autonomous Organizations (DAOs) Before State Courts. How can private international law keep up with global digital entities? that is forthcoming in a book edited by Madalena Perestrelo de Oliveira and Antonio Garcia on DAO Regulation: Principles and Perspective for the Future.

The abstract reads as follows:

This paper examines civil and commercial disputes involving Decentralized Autonomous Organizations (DAOs) and the complex questions of private international law that arise. The legal capacity of a DAO to be a plaintiff or defendant in court varies across jurisdictions, highlighting the need to determine the applicable law to a DAO. A distinction must be made between different types of DAOs. There are currently a few jurisdictions, notably in the United States, that have enacted DAO legislation defining a legal status for such entities. Those regulated DAOs are governed by both computer code and company law. In other jurisdictions, existing company structures can be used to offer a legal wrapper to DAOs. However, the vast majority of DAOs currently in existence are constituted and solely governed by code, posing challenges in bringing them before a state court.

The paper explores recent case law and the difficulties in identifying the appropriate party to sue when pursuing a DAO. Using Swiss law as a basis, it examines the qualification of DAOs under private international law and the challenges of anchoring a global digital entity to a specific jurisdiction. The article illustrates these challenges through three types of disputes: governance, contractual, and tort-related. Determining jurisdiction over a DAO-related dispute requires applying private international law rules. Although the paper assumes Swiss courts for convenience, the reasoning can be applied to different legal systems due to the similarities in conflict of jurisdiction rules. However, challenges persist even if a court has jurisdiction and renders a decision, as enforcement may prove difficult, especially on-chain. Additionally, initiating legal proceedings against a DAO presents issues with serving court documents. DAOs offer opportunities for innovative electronic methods of document service, but specific requirements and restrictions exist for international service of documents. Practical difficulties may arise, making it impractical or unattainable to serve court documents on the defendant.

The analysis concludes that state courts currently struggle to ensure reliable access to justice in disputes involving DAOs. As an alternative to state courts, opting for Alternative Dispute Resolution (ADR) mechanisms, such as Blockchain-based Dispute Resolution (BDR), can offer a simpler and more efficient solution depending on circumstances. In any case, entrusting dispute resolution to a BDR mechanism avoids the complexities associated with state court procedures.

Joseph Singer (Harvard Law School) has posted Conflict of Abortion Laws on SSRN.

The abstract reads:

When a resident of an anti-abortion state goes to a prochoice state to get an abortion, which law applies to that person? To the abortion provider? To anyone who helps them obtain the abortion? Since Dobbs v. Jackson Women’s Health Organization overruled Roe v. Wade, states have passed conflicting laws regarding abortion, and courts will need to determine whether anti-abortion states can apply their laws to persons or events outside their territory either through civil lawsuits or criminal prosecution. This article canvasses the major disputes likely to arise over conflicts of abortion law and the arguments on both sides in those cases. It addresses both common law analysis and the constitutional constraints on application of state law under the Full Faith and Credit Clause and the Due Process Clause, and it comes to some conclusions both about what laws should apply in different fact settings and how the choice of law analysis should proceed.

Since Dobbs focused on the “history and tradition” behind rights under the Due Process Clause, and because the constitutional test for “legislative jurisdiction” that regulates when a state can apply its law to a controversy is partly based on the Due Process Clause, we start with the prevalent approaches to conflicts of law available to judges at the time the Bill of Rights was adopted in 1791 and when the Fourteenth Amendment was adopted in 1868, focusing on the “comity” approach championed by Justice Joseph Story. We consider also the First Restatement’s vested rights approach in vogue between the end of the nineteenth century and the middle of the twentieth century. We then move to modern choice of law analysis to determine which law applies when a person leaves their state to obtain an abortion. We will consider the Second Restatement’s “most significant relationship” test, the “comparative impairment” approach, the “better law” and “forum law” approaches, as well as the emerging Third Restatement of Conflict of Laws rules being drafted right now by the American Law Institute.

One set of cases involves conduct that is wholly situated within the borders of the anti-abortion state. That state has full authority under the Constitution to regulate its internal affairs and to apply its laws to people who distribute or use anti-abortion medication there or who otherwise assist residents in violating its laws prohibiting or limiting access to abortion. Anti-abortion states have full authority to regulate conduct within their borders. However, the First Amendment protects people who provide information about the availability of abortion services in other states where it is legal, and the constitutional right to travel should protect those who transport someone out of state to get an abortion in a prochoice state or who subsidize the cost of such out-of-state travel.

A second set of cases concerns cross-border torts where conduct in a prochoice state has effects in an anti-abortion state. Courts traditionally apply the law of the place of injury to those cases if it was foreseeable that the conduct would cause the injury there. But there are traditional exceptions to the place of injury rule that should apply in the abortion context when the place of conduct defines the conduct as a fundamental right and immunizes the actor from liability or places a duty or an affirmative privilege on the abortion provider to provide the care. Courts should depart from the place of injury rule in those circumstances when conduct is wholly confined to the immunizing (prochoice) state, and that means that an anti-abortion state cannot legitimately punish an abortion provider in a prochoice state who provides care there in reliance on rules of medical ethics that require the care to be provided. Nothing would violate rule of law norms more severely than placing a person under a simultaneous duty to provide care and a duty not to provide that care. On the other hand, anti-abortion states have full authority to regulate out-of-state conduct that does spill over the border into the anti-abortion state, such as shipping abortion medication to a recipient there. Difficult issues of foreseeability and proximate cause arise when an abortion provider prescribes abortion medication in a prochoice state but knows or suspects that the patient will be taking the medication back to the anti-abortion state to ingest. In some fact settings, the foreseeability issue is significant enough that it may rise to a constitutional limitation on the powers of the anti-abortion state to apply its law to out-of-state conduct or to assert personal jurisdiction over the abortion provider. In other cases, the place of injury has the constitutional authority to apply its law to out-of-state conduct that the actor knows will cause unlawful harm across the border but it may or may not have personal jurisdiction over the nonresident provider.

A third set of cases involve bounty claims, tort survival lawsuits, or wrongful death suits that an anti-abortion state might seek to create by giving claims to one of its residents against the resident who left the state to get the abortion. Such cases may be viewed as “common domicile” cases by the anti-abortion state since both plaintiff and defendant reside in the anti-abortion state. That may tempt the anti-abortion state to apply its laws to an abortion that takes place in another state even though both conduct and injury occurred in a state that privileges the conduct and immunizes the defendant from liability. However, the law of the place of conduct and injury should apply in those cases since the prochoice law is a “conduct-regulating rule,” and choice of law analysis, traditional rules, and constitutional constraints on legislative jurisdiction all require deference to the law of the prochoice state in such cases. Courts sometimes apply the law of the common domicile when the law at the place of conduct and injury is not geared to regulating conduct there, but the opposite is true for laws directed at conduct, and this article will show why prochoice laws that define abortions as a fundamental right are conduct-regulating rules. The same is true for the question of criminal prosecution. An anti-abortion state has no legitimate authority to punish a resident who leaves the state to get an abortion in a state where abortion is protected as a fundamental right.

The paper is forthcoming in the Northeastern University Law Review.

Four years after the 8th JPIL conference in Munich, the global community of PIL scholars finally got another opportunity to exchange thoughts and ideas, this time at Singapore Management University on the kind invitation of our co-editor Adeline Chong.

The conference was kicked off by a keynote speech by Justice Philip Jeyaretnam (Singapore International Commercial Court), providing an in-depth analysis of the Court of Appeal’s decision in Anupam Mittal v Westbridge Ventures II [2023] SGCA 1 (discussed in more detail here).

The keynote  was followed by a total of 23 panels and four plenary sessions, a selection of which is summarised below by our editors.

Arbitration (Day 1, Panel 1)
Saloni Khanderia

The panel discussed various aspects of arbitration ranging from arbitration clauses to the recognition and enforcement of arbitral awards.

The session commenced with Dr. Ardavan Arzendeh of the National University of Singapore present his paper on ‘Jurisdiction and Arbitration Clauses in the Same Contract’, evaluating the treatment of jurisdiction and arbitration clauses in the same contract through the law of England and Wales. The speaker stated that there are 2 categories of such cases: 1) the clauses are naturally reconcilable through importance given either to the wording of the clauses or the intention of the parties; and 2) the clauses are not naturally reconcilable as the parties have included an exclusive jurisdiction and a mandatory arbitration clause in the agreement. The courts in these instances have typically given importance to the arbitration clause. The presentation suggested a more defensible course of action in such a situation: Courts should approve both the clauses and give a choice to the parties to pursue the matter either through litigation or arbitration. Hence, giving equal weight to the choices of the parties.

The second speaker, Ms. Ana Coimba Trigo of the NOVA School of law presented her paper on ‘Deference or Distrust? Recognizing Foreign Commercial Arbitration Awards in the US Against Procedural Fairness Concerns’. The presentation focused on Article V(1)(b) of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, 1958, that allows parties to oppose the recognition and enforcement of arbitral awards on very selected grounds. Frequently referred to as “procedural fairness”. However, the Convention is silent on the interpretation and application of this ground. Additionally, there is no indication of what law is appliable to this ground. This leads to uncertainty as to what standards the US courts apply in interpreting and applying Article V(1)(b) of the Convention. A reading of the existing empirical data allows us to understand whether the US courts cite other foreign courts and if they follow a comparative approach and what are the diverse standards (lex fori or another lenient approach) applied when distrust of foreign arbitrators is raised by the parties.

Following this, Dr. Priskila Pratita Penasthika from The Universitas Indonesia presented her paper on ‘CAS Arbitration Award: Its Jurisdictional and Enforcement Issues in Indonesia’. The Court of Arbitration for Sport (CAS) does not always require a specific arbitration agreement between the parties for conferring jurisdiction on it. Instead, the CAS may accept a sports related dispute if the statutes or regulations designate that it has jurisdiction. The presentation analysed whether sports- related arbitration would be covered under the ambit of commercial awards for them to be recognised and enforced in Indonesia under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.

The final speakers, Mr. Gautam Mohanty from Kozminski University and Dr. Wasiq Abass Dar from O.P. Jindal Global University presented their paper on ‘Strategic Leveraging of Party Autonomy in Private International Law: Determining the Limits in International Commercial Arbitration’. The presentation focused on demarcating the outer limits of party autonomy in private international law. It particularly focused on mandatory rules and public policy as they are limitations to party autonomy. It highlighted the impact of new dimensions of mandatory rules and public policy on party autonomy. The presentation analyses the conflict of laws situation when tribunals are faced with a situation of having to disregard the applicable law chosen by the parties on account of overriding mandatory norms. It also analyses the role and application of international and transnational public policy. The presentation analysed the theoretical approaches taken by tribunals in relation to mandatory norms such as contractual, jurisdictional and the hybrid approach.

Foreign Judgments (Day 1, Panel 2)
Tobias Lutzi

The first panel dedicated to foreign judgments began with Aygun Mammadzada (Swansea Law School) making the case for the UK and Singapore ratifying the 2019 HCCH Judgments Convention. Compared to the common-law rules on recognition & enforcement (to which many European judgments will also be subject in the UK post-Brexit), she argued the Convention offers an acceptable, more streamlined framework, e.g. because it does not require a judgment creditor to seek a domestic decision based on the judgment debt.

Anna Wysocka-Bar (Jagiellonian University) then looked in more detail at the exclusion of contracts of carriage from the 2019 Convention (Art 2(1)(f), putting it into the context of the specific treatment those contracts also receive in other contexts. According to the speaker, this peculiar treatment appears to be primarily driven by the existence of other, potentially conflicting conventions such as the CMR Convention. Looking at the specific provisions in those Conventions pertaining to foreign judgments, though, Anna convincingly demonstrated that the potential for conflict is actually very small, making it difficult to justify the exclusion.

Jim Yang Teo (Singapore Management University) finally discussed the problem of res judicata within the framework of the Belt & Road Initiative, contrasting the approach advocated by China (based on a triple-identity test and limited to claim preclusion, at the exclusion of issue exclusion) with the transnational approach of the Singaporean courts emerging from Merck Sharp & Dohme Corp v Merck KGaA [2021] SGCA 14. According to the speaker, this latter approach, which notably includes consideration of comity, may be particularly relevant interesting in the context of an inherently transnational project like the Belt & Road Initiative.

Plenary Session 2
Michael Douglas

The second plenary session, chaired by Ardavan Arzandeh (NUS), explored some interesting issues of direct and indirect jurisdiction. Stephen GA Pitel (Western University) kicked things off with a presentation that was right up my ally: ‘The Extraterritorial Impact of Statutory Jurisdiction Provisions’. He considered the example of a jurisdictional provision of a privacy statute of British Columbia in matters with a foreign element. The specific example provoked consideration of a broader question: how should a forum deal with an applicable foreign statute which includes a provision that actions under the statute must be heard in a certain court of that foreign statute’s local jurisdiction? See Douez v Facebook, Inc [2017] 1 SCR 751. The Canadian approach seems sensible; I wonder if it can neatly transpose to my native Australia, which includes an explicit US-style full faith and credit provision in the Constitution. (Over coffee, my compatriots wondered whether our messy Cross-vesting Scheme would have a role to play.)

The other three presentations of the plenary were also compelling. Junhyok Jang (Sungkyunkwan University) spoke on ‘Jurisdiction over the Infringement of Personality Rights via the Internet from a Korean Perspective – Effects Test as an Alternative to the Quantitative Dépeçage of Shevill’. The Korean perspective was comparative; the presentation compared the South Korean approach to those of the EU and the US. While the presentation offered a view on how approaches to the topic were converging between jurisdictions, diversity remains. Eg in Australia, the mere occurrence of some of the damage in the jurisdiction—which in the case of defamation, could involve hurt feelings in the forum when present there—could justify exercise of long-arm jurisdiction, no matter how many elements the matter otherwise features. The speech was another reminder of the ongoing challenges that digital subject matter pose for the traditional territorialism of private international law.

Yeo Tiong Min (SMU), a home-town hero whose monograph on choice of law for equity is must-read material for common (private international) lawyers, looked at the res judicata effects of foreign judgments for issue estoppel in a presentation on ‘Challenging Foreign Judgments for Errors of Law and the Common Law’. (I will have to go away and read Merck Sharp & Dohme Corp v Merck KGaA (2021) 1 SLR 1102 properly.) Louise Ellen Teitz (Roger Williams University) rounded out the plenary with her speech on ‘Judgment Recognition and Parallel Litigation: The Carrot and Stick’. The presentation informed me of how the issue has been playing out in the USA, comparing the situation there to the work done in international fora like the HCCH. All the talk of lis pendens got me lis peckish for some lunch. Fortunately, it was lunchtime after this plenary.

Choice of Law (Day 3, Panel 3)
Zheng Sophia Tang

The panel focuses on choice of law, chaired by Prof Sophia Tang. Assoc Prof Dr Philippine Blajan at Sorbonne School of Law, University Paris 1 presented ‘The Combination of Party Autonomies in the Private International Law of Contracts: Security, Virtuosity, Tyranny?’ She proposed that, in civil and commercial practices, parties of a contract should attach importance to the interactions between choice of jurisdiction and choice of law. Firstly, the effect of choice of law is uncertain until the lex fori is identified. Secondly, even if there is a choice of court clause, one party could still bring a suit in another court in breach of the jurisdiction clause, and evade the mandatory provisions of the forum state. Through combining their choices, the parties enhance their freedom of contract because they escape a mandatory provision. Thirdly, Prof Blajan listed various types of combination between choice of law and choice of court clauses, including choice of state law and choice of state court, choice of state law and choice of non-state court, choice of non-state law and choice of non-state court and so on.

The second speaker is Prof Saloni Khanderia at OP Jindal University, who presented ‘The Law Applicable to Documentary Letters of Credit in India: A Riddle Wrapped in an Enigma?’ Prof Khanderia points out that letters of credit has received negligible attention from Indian lawmakers, regardless of their significance in fostering international trade in India. As there is no specific legislation for letter of credit in India, the UCP might be the only choice for the parties and the court. But there are several exceptions to the application of the UCP, including the agreements that are expressly excluded from the application of the UCP, claims containing allegations of fraud and so on. In such a case, the Indian court would apply lex fori. On the other hand, in lack of any supreme principles of the interpretation of application of law, courts are given great discretion to the application of the UCP and other laws. Prof Khanderia proposed limiting the application of the lex fori to adjudicate claims on fraud, and replacing the lex fori with the lex loci solutions to identify the country with which the contract has the closest and most real connection.

The third speaker Asst Prof Migliorini at the Uni of Macau presented ‘Contracts for the Transfer of Personal Data in Private International Law — A European Perspective’. In data transactions where the seller established in the EU and the buyer a non-EU jurisdiction, the GDPR would be applied extraterritorially. The GDPR would be applied as overriding mandatory rules under the context of cross-border transaction, which would lead to the conflict with the proper law of the transaction contract. However, could data be treated as ‘property’ and subject to a commercial contract? Would status of a fundamental right hamper the commercial transfer of personal data? Prof Migliorini suggests that contracts for transfer of personal data should be qualified as transfer of license to use the personal data, so that the complicated issues of personal data trading and human rights shall not arise and mandatory provisions of the law governing the initial license (i.e. the GDPR) should apply.

—

Overall, the conference highlighted the range and wealth of current research on PIL. It is no surprise that participants are already looking forward to the next JPIL conference, which will take place at University College London in September 2025.

Professor Yeo Tiong Min (Singapore Management University – Yong Pung How School of Law) has recently published a seminal book entitled “Commercial Conflict of Laws” (Academy Publishing, 2023).

 

 

The book aims to introduce readers to “the concept, principles and techniques of the common law of Singapore in dealing with problems in the conflict of laws, with an emphasis on cross-border commercial transactions” (p. v). The book consists of 14 chapters dealing with the core issues of private international law (conflict of laws), i.e. international jurisdiction (Chapters 2 to 7), foreign judgments (Chapters 8 to 10) and choice of law (Chapters 11 to 14).

The book’s blurb reads as follows:

 

“Understanding of the principles of conflict of laws is essential to lawyers who aim to service the highly globalised and interconnected economy of Singapore. This book deals with the central principles, methodologies, and controversies in the subject, with focus on topics that are relevant to commercial transactions. It examines the jurisdiction of the Singapore courts (including the Singapore International Commercial Court) in cross-border litigation, the effect of foreign judgments in Singapore, choice of law methodologies and their particular application to contractual and non-contractual obligations and inter vivos property transactions. The common law principles are discussed in the context of the framework of Singapore legislation, including the Choice of Court Agreements Act implementing the Hague Convention on Choice of Court Agreements, the refreshed Reciprocal Enforcement of Foreign Judgments Act, as well as the new Rules of Court of 2021.”

 

The book, which is the result of many years of expertise, will certainly provide readers with important comparative law elements on how private international law operates in Singapore based on its common law and statutory regimes.

 

It should be noted that earlier this year, Professor Yeo Tiong Min also published the course he delivered at the Hague Academy of International Law (Summer Course of Private International Law of 2022). The course is entitled “Common Law, Equity and Statute: The Effect of Juridical Sources on Choice-of-Law Methodology”, Collected Courses of the Hague Academy of International Law, Vol. 431 (2023).

On 11 August 2023, the American Journal of Comparative Law, published an article online titled: “The Myth of Transnational Public Policy in International Arbitration”  The abstract reads as follows:

This Article traces the concept of transnational public policy as developed in the context of international arbitration at the intersection between legal theory and practice. The emergence of such a transnational public policy, it is claimed, would enable arbitrators to safeguard and ultimately to define the public interests that need to be protected in a globalized economy, irrespective of national laws. A historical contextualization of efforts to empower merchants and their practices in Germany and the United States in the nineteenth and early twentieth centuries highlights their reliance on the mythical lex mercatoria that shaped English commercial law. Further contextualization is offered by the postwar invocation of “general principles of law recognized by civilized nations,” to keep at bay the application of supposedly less civilized, parochial legal orders, and by the consequent emergence of the “new” lex mercatoria as conceptualized especially in France. These developments paved the way, on the theory side, for later conceptualizations of self-constitutionalizing law beyond the state, especially by Gunther Teubner, and, on the practice side, for the notion of transnational public policy developed by arbitrators, especially by Emmanuel Gaillard, culminating in jurisprudential claims of an autonomous arbitral legal order with a regulatory dimension. In all these constructions, the recourse to comparative law has been a crucial element. Against this rough intellectual history, the Article offers a critique of today’s construction of transnational public policy by probing into its constitutional dimension and the respective roles of private and public interests. This allows, in particular, to draw on parallels to historic U.S. constitutional debates on the allocation of regulatory powers in federalism.

The Department of Private International Law at the University of Groningen is looking for an assistant professor in the field of European private international law to strengthen education and research. Candidates from outside the Netherlands are expressly invited to apply.

The responsibilities include: teaching English language classes on private international law within the existing bachelor- and master programmes; supervising bachelor and master theses in the field of private international law; conducting research within the area of European private international law (in line with the Faculty’s research programme PIPR (Public Interests and Private Relationships); supervising PhD projects together with the Professor of Private International Law; engage in the development of research projects.

Applications must be filed by 31 August 2023, at the end of the day, through a dedicated form.

More information can be found here..

In Crane Bank Ltd & Ors v DFCU Bank Ltd & Ors [2023] EWCA Civ 886 core issue is the scope and application of the foreign act of state rule and of the limitations and exceptions to which it is subject. The foreign act of state rule in its narrow sense essentially holds that courts should not question the validity of acts taken by a foreign government within that government’s territory – see Reliance. [2] the facts:

The first appellant, Crane Bank Limited (“CBL”), was formerly a major commercial bank in Uganda. The second to seventh appellants are shareholders in CBL. In these proceedings the appellants assert that from about Spring 2016 senior Ugandan government officials and officials of the Bank of Uganda (“the BoU”) engaged in a corrupt scheme to take control of CBL, making improper use of statutory and regulatory powers to do so, and then to sell its assets for the benefit of the parties to the scheme. The appellants allege that the first respondent (“DFCU Bank”), another Ugandan commercial bank, joined the corrupt scheme as purchaser of CBL’s assets from the BoU (acting as receiver of CBL), that purchase being at a gross undervalue. DFCU Bank’s holding company (the second respondent) and certain current and former executives and directors of DFCU Bank (the third to fifth respondents) are also alleged to have joined the scheme

[5] appellants contend that the first instance Judge should have found that there was at least a serious issue to be tried (for the purpose of founding jurisdiction) that:

i) the sale by the BoU (as receiver) to DFCU Bank was commercial rather than sovereign in character, therefore falling outside the foreign act of state rule (“the Commercial Activity Exception”); and/or

ii) all of the executive acts in question engaged the English public policy of combatting and not giving legal protection to bribery and corruption, therefore falling outside the foreign act of state rule (“the Public Policy Exception”); and/or

iii) investigating the acts of bribery and corruption alleged against DFCU Bank in paragraph 69(m) of the Amended Particulars of Claim (“the APoC”) did not require the Court to inquire into or adjudicate on the legality of executive acts of the Ugandan state, and so would not infringe the foreign act of state rule (“the Kirkpatrick Exception”); and/or

iv) the application of the foreign act of state rule in this case would be incompatible with Article 6 of the European Convention on Human Rights and therefore contrary to s.6 of the Human Rights Act 1998 (“the Article 6 issue”).

The Foreign Act of State rule is expressed [13] as that courts “will not adjudicate or sit in judgment on the lawfulness or validity under its own law of an executive act of a foreign state, performed within the territory of that state”. It is different from foreign sovereign immunity:“Whereas immunity bars an otherwise good legal claim against a specific person, the foreign act of state rule provides that a claim which falls within it is not a good claim at all as a matter of English law, no matter the identity of the defendant” ([69]).

For his definition, Lord Justice Philipps refers to the Supreme Court in “Maduro Board” of the Central Bank of Venezuela v “Guaidó Board” of the Central Bank of Venezuela [2023] AC 156. Futher reference is made [14] to Yukos Capital for the exceptions:

Yukos Capital (No. 2) [2014] QB 458 at [68]-[115]. For the purposes of the appeal, the following are relevant:

(i) the Public Policy Exception:

“”[T]he doctrine will not apply to foreign acts of state which are in breach of clearly established rules of international law, or are contrary to English principles of public policy, as well as where there is a grave infringement of human rights”. (Oppenheimer v Cattermole [1976] AC 249, 277–278, per Lord Cross; Kuwait Airways Corpn v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883; Yukos Capital (No 2), paras 69-72.)”

(ii) the Commercial Activity Exception:

“The doctrine does not apply where the conduct of the foreign state is of a commercial as opposed to a sovereign character. (Empresa Exportadora de Azucar v Industria Azucarera Nacional SA (The Playa Larga) [1983] 2 Lloyd’s Rep 171; Korea National Insurance Corpn v Allianz Global Corporate & Specialty AG [2008] EWCA Civ 1355; [2008] 2 CLC 837; Yukos Capital (No 2), paras 92-94.)”

(iii) the Kirkpatrick Exception:

“The doctrine does not apply where the only issue is whether certain acts have occurred, as opposed to where the court is asked to inquire into them for the purpose of adjudicating on their legal effectiveness. (Kirkpatrick (1990) 493 US 400; Yukos Capital (No 2), paras 95-104.)”

The appeal was not allowed on the latter exception but it was on the other two, with Phillips LJ giving complete yet concise analysis of such good quality that there is little point in trying to summarise it here: please refer to the judgment.

I will say a little more about the A6 ECHR argument. The discussion here echoes the discussion in SKAT on Dicey Rule 3 and substantive v jurisdictional rules, and Belhaj v Straw [2017] UKSC 3: where Phillips LJ refers to distinction between domestic laws which excluded liability (which do not engage Article 6) and procedural bars (which do). [71] it is held that the result of foreign act of State is that  domestic law provides a complete defence to what would otherwise be an actionable (therefore A6 ECHR kosher) claim and [72] that, if a proportionality test were to be introduced in foreign act of State (so as to meet alleged A6 ECHR standards), “it would have a major impact on the rule and its applications”. That latter statement I would suggest does not cut much ice in light of a potential ECHR incompatibility.

There is undoubtedly more to be said however seeing as the appeal was largely successful, no more is to be expected from appellants at least on these issues.

Geert.

! scope & application of foreign act of state rule and of the limitations and exceptions to which it is subject.
Ia whether there is impact from A6 ECHR rights

Crane Bank Ltd & Ors v DFCU Bank Ltd & Ors [2023] EWCA Civ 886https://t.co/26BU9W9fOs

— Geert Van Calster (@GAVClaw) July 27, 2023

2024 applications for a 6-month internship in The Hague, Netherlands are now open for Australian law school graduates

The Australian Institute of International Affairs and the Australian Branch of the International Law Association call for applications for the 2024 Peter Nygh Hague Conference Internship.

Awarded annually, the Nygh internship offers a postgraduate student or graduate of an Australian law school the exciting opportunity to undertake a 6-month internship with The Hague Conference on Private International Law, in the Netherlands.

The successful applicant will have the chance to work with some of the world’s leading private international law practitioners and will be provided with finances to assist with travel costs and living expenses.

Previous Nygh interns have worked on projects in fields including: family law; evidence and access to justice; cross border flow of personal data; migration; civil liability for trans-boundary harm and commercial dispute resolution. For many interns, the opportunity to observe the negotiation of an international convention first-hand has been a highlight of their internship, all whilst living and working in the Netherlands.

English and French are the two working languages of the Hague Conference and Australian law graduates and final year law students with French language skills are encouraged to apply for the internship.

The Peter Nygh Hague Conference Internship was established in memory of the late Hon Dr Peter Nygh AM, a renowned international lawyer and former judge of the Family Court of Australia.

Applications for the 2024 Nygh Internship close on 30 September 2023. For further information and application instructions visit: http://www.internationalaffairs.org.au/youth-andcommunity/nygh-internship/ or email Nicola Nygh at nicola.nygh@rllawyers.com.au

Media enquiries: Natasha Eloise | Media & Communications (+61) (02) 6282 2133 | 0406 664 510 | natasha.eloise@internationalaffairs.org.au

The ILA Australian Branch is pleased to present the first seminar in its 2023 Early Career Seminar Series on topics in private international law.

The event will be an online lunch time discussion on Thursday, 17 August 2023 at 1.00pm AEST.

The panel will feature the speakers below.

Speakers and topics:

Dr Sarah McKibbin, University of Southern Queensland: The Australian Doctrine of Forum Non Conveniens in Practice

Rachel Van Der Veen, Australian Public Service: Fiduciary Duties and the 1985 Trusts Convention

Commentator: Dr Brooke Marshall, UNSW Sydney

Chair: Danielle Kroon, Marque Lawyers

 

Further details including registration are here.

Lawrence Collins (UCL, former Justice of the UK Supreme Court) has posted Reflections on the Law Governing Confidentiality in Arbitration on SSRN.

The abstract reads:

The paper considers the law governing confidentiality in international arbitration, and in particular where there is a binary choice between the law governing the arbitration agreement and the law of the seat of the arbitration. The paper concludes that not only is there no binary choice, but also that the solution may depend upon the forum in which the issue arises, and that it will be only very rarely that the issue will need to be addressed directly.

The paper was published in Brekoulakis et al (eds), Achieving the Arbitration Dream: Liber Amicorum for Professor Julian DM Lew (Wolters Kluwer, 2023).

Now published on SSRN, Paul Herrup and Ron Brand from the University of Pittsburgh School of Law have taken “A Further Look at a Hague Convention on Concurrent Proceedings.”

The current project of the Hague Conference on Private International Law has reached a critical juncture that requires careful consideration of the terms that delineate the scope of the proposed convention. Work to date has not followed the mandate of the Council on General Affairs and Policy to produce a convention that would deal with concurrent proceedings, understood as including pure parallel proceedings and related actions. In two previous articles they have addressed the practical needs that should be addressed by the concurrent proceedings project and the general architecture of such a convention. The process is now mired in terminological confusion that has hampered progress on a practical result. Differing interpretations of the directions given to those doing the work has led to situations in which the participants have been speaking past each other. In this article, they provide a reminder of the common law/civil law divergence of approaches to concurrent litigation; review the approach taken in the EU’s Brussels I (Recast) Regulation and the problems it has created; and offer suggestions regarding the proper scope and architecture of a global convention addressing the problem of concurrent proceedings.

As Peter Bert reports here, the German Federal Supreme Court or Bundesgerichtshof has held in Case v-ZR-112.22 X v Trustees of Max Stern estate, a case related to ‘Lost art’, that Article 26 Brussels Ia applies to claims against a non-EU domiciled defendant. The trustees had  objected to jurisdiction in first instance but had not formally repeated that upon appeal.

[9] the court finds support first of all in CJEU C-412/98 Group Josi Reinsurance in particular para [44] of that judgment: “Admittedly, under Article 18 of the Convention [=A26 BIa, GAVC], the voluntary appearance of the defendant establishes the jurisdiction of a court of a Contracting State before which the plaintiff has brought proceedings, without the place of the defendant’s domicile being relevant.”

Group Josi however concerned the position of the claimant: [33]: ‘whether the rules of jurisdiction laid down by the Convention apply where the defendant has its domicile or seat in a Contracting State, even if the plaintiff is domiciled in a non-member country.” In the discussion that followed, the CJEU emphasised the general absence in the Convention of attention being paid to the claimant’s domicile (let alone nationality), pointing out that instead the Convention focuses on the defendant’s domicile in a Convention State, with then [44] the concession that (now) Article 26 exceptionally does not pay any attention to the defendant’s domicile. That does not imply however that the CJEU dropped any condition for Convention-States domicile in Article 26. The Bundesgerichthof’s “Der Gerichtshof der Europäi-schen Union hat deshalb – wenngleich nicht tragend – schon in Bezug auf Art. 18 Satz 1 EuGVÜ angenommen, dass es auf den Wohnsitz des Beklagten nicht ankomme” lifts para 44 of Group Josi out off its context.

[10] the Bundesgerichtshof acknowledges that A6(1) BIa refers to A25 but not to A26: “1.   If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Article 18(1), Article 21(2) and Articles 24 and 25, be determined by the law of that Member State.” It suggests however a close relationship between A25 and A26, referring to CJEU Taser to emphasise A26’s character as impromptu choice of court, and focuses on the party autonomy element of both A25 and 26.

[11] BIa’s DNA of predictability is said to support a wide catchment area for A26, and [12] all of this is said to be acte claire hence not requiring CJEU referral.

Given the clear language of A6(1), I am not convinced.

Geert.

EU Private International Law, 3rd ed. 2021, 2.211. Fourth ed. forthcoming 2024.

Nb judgment is here https://t.co/6bg2FHOHaV pic.twitter.com/0dXjQdrSnL

— Geert Van Calster (@GAVClaw) August 4, 2023

The official website of the XVI ASADIP Conference is live, click here. The full program is available here.

This post was written by Ralf Michaels and Antonia Sommerfeld, Max Planck Institute for Comparative and International Private Law, and is also available via conflictoflaws.net.

The Draft for a Corporate Sustainable Due Diligence Directive currently contains no rules on jurisdiction. This creates inconsistencies between the scope of application of the Draft Directive and existing jurisdictional law, both on the EU level and on the domestic level, and can lead to an enforcement gap: EU companies may be able to escape the existing EU jurisdiction; non-EU companies may even not be subject to such jurisdiction. Effectivity requires closing that gap, and we propose ways in which this could be achieved.

The Proposal for a Directive on Corporate Sustainability Due Diligence

The process towards an EU Corporate Sustainability Due Diligence Directive is gaining momentum. The EU Commission published a long awaited Proposal for a Directive on Corporate Sustainability Due Diligence (CSDDD), COM(2022) 71 final, on 23 February 2022; the EU Council adopted its negotiation position on 1 December 2022; and now, the EU Parliament has suggested amendments to this Draft Directive on 1 June 2023. The EU Parliament has thereby backed the compromise textreached by its legal affairs committee on 25 April 2023. This sets off the trilogue between representatives of the Parliament, the Council and the Commission.

The current state of the CSDDD already represents a milestone. It not only introduces corporate responsibility for human rights violations and environmental damage – as already found in some national laws (e.g. in France; Germany; Netherlands; Norway; Switzerland; United Kingdom) – but also and in contrast (with the exception of French law – for more details see Camy) introduces civil liability. Art. 22 (1) CSDDD entitles persons who suffer injuries as result of a failure of a company to comply with the obligations set forth in the Directive to claim compensation. It thereby intends to increase the protection of those affected within the value chain, who will now have the prospect of compensation; it also intends to create a deterrent effect by having plaintiffs take over the enforcement of the law as “private attorney generals”. Moreover, the Directive requires that Member States implement this civil liability with an overriding mandatory application to ensure its application, Art. 22 (5) CSDDD. This is not unproblematic: the European Union undertakes here the same unilateralism that it used to criticize when previously done by the United States, with the Helms/Burton Act as the most prominent example.

That is not our concern here. Nor do we want to add to the lively discussion on the choice-of-law- aspects regarding civil liability (see, amongst others, van Calster, Ho-Dac, Dias and, before the Proposal, Rühl). Instead, we address a gap in the Draft Directive, namely the lack of any provisions on jurisdiction. After all, mandatory application in EU courts is largely irrelevant if courts do not have jurisdiction in the first place. If the remaining alternative is to bring an action in a court outside the EU, the application of the CSDDD civil liability regime is not, however, guaranteed. It will then depend on the foreign court’s conflict-of-law rules and whether these consider the CSDDD provisions applicable – an uncertain path.

Nonetheless, no mirroring provisions on international jurisdiction were included in the CSDDD, although such inclusion had been discussed. Suggestions for the inclusion of a new jurisdictional rule establishing a forum necessitatis in the Brussels I Regulation Recast existed (see the Study by the European Parliament Policy Department for External Relations from February 2019, the Draft Report of the European Parliament Committee on Legal Affairs with recommendations to the Commission on corporate due diligence and corporate accountability (2020/2129(INL) as well as the Recommendation of the European Groupe of Private International Law (GEDIP) communicated to the Commission on 8 October 2021). Further, the creation of a forum connexitatis in addition to a forum necessitatis had been recommended by both the Policy Department Study and the GEDIP. Nevertheless, the report of the European Parliament finally adopted, together with the Draft Directive of 10 March 2021, no longer contained such rule on international jurisdiction, without explanation. Likewise, the Commission’s CSDDD draft and the Parliament’s recent amendments lack such a provision.

Enforcement Gap for Actions against Defendants Domiciled within the EU

To assess the enforcement gap, it is useful to distinguish EU companies from non-EU companies as defendants. For EU companies, the Directive applies to companies of a certain size which are formed in accordance with the legislation of a Member State according to Art. 2 (1) CSDDD – the threshold numbers in the Commission’s draft and the Parliament amendments differ, ranging between 250–500 employees and EUR 40–150 million annual net worldwide turnover, with questions of special treatment for high-risk sectors.

At first sight, no enforcement gap seems to exist here. The general jurisdiction rule anchored in Art. 4 (1) Brussels I Regulation Recast allows for suits in the defendant’s domicile. Art. 63 (1) further specifies this domicile for companies as the statutory seat, the central administration or the principal place of business. (EU-based companies can also be sued at the place where the harmful event occurred according to Art. 7 (2) Brussels I Regulation Recast, but this will provide for access to an EU court only if this harmful event occurred within the EU.) The objection of forum non conveniens does not apply in the Brussels I Regulation system (as clarified in the CJEU’s Owusu decision). Consequently, in cases where jurisdiction within the EU is given, the CSDDD applies, including the civil liability provision with its mandatory application pursuant to Art. 22 (1), (5).

Yet there is potential leeway for EU domiciled companies to escape EU jurisdiction and thus avoid the application of the CSDDD’s civil liability. One way to avoid EU jurisdiction is to use an exclusive jurisdiction agreement in favour of a third country, or an arbitration clause. Such agreements concluded in advance of any occurred damage are conceivable between individual links of the value chain, such as between employees and subcontractors (in employment contracts) or between different suppliers along the chain (in purchase and supply agreements). EU law does not expressly prohibit such derogation. Precedent for how such exclusive jurisdiction agreements can be treated can be found in the case law following the Ingmar decision of the CJEU. In Ingmar, the CJEU had decided that a commercial agent’s compensation claim according to Arts. 17 and 18 of the Commercial Agents Directive (86/653/EEC) could not be avoided through a choice of law in favour of the law of a non-EU country, even though the Directive said nothing about an internationally mandatory nature for the purpose of private international law – as Art. 22 (5) CSDDD in contrast now does. The German Federal Court of Justice (BGH) extended this choice-of-law argument to the law of jurisdiction and held that jurisdiction clauses which could undermine the application of mandatory provisions are invalid, too, as only such a rule would safeguard the internationally mandatory scope of application of the provisions. Other EU Member State courts have shown a similar understanding not only with regard to exclusive jurisdiction agreements but also with regard to arbitration agreements (Austrian Supreme Court of Justice; High Court of Justice Queen’s Bench Division).

Common to Arts. 17 and 18 Commercial Agents Directive and Art. 22 CSDDD is their mandatory nature for the purpose of private international law, which established by the ECJ for the former and is legally prescribed for the latter in Art. 22 (5) CSDDD. This suggests a possible transfer of the jurisdictional argument regarding jurisdiction. To extend the internationally mandatory nature of a provision into the law of jurisdiction is not obvious; choice of law and jurisdiction are different areas of law. It also means that the already questionable unilateral nature of the EU regulation is given even more force. Nonetheless, to do so appears justified. Allowing parties to avoid application of the CSDDD would run counter to its effective enforcement and therefore to the effet utile. This means that an exclusive jurisdiction agreement in favour of a third country or an arbitration clause will have to be deemed invalid unless it is clear that the CSDDD remains applicable or the applicable law provides for similar protection.

Enforcement Gap for Actions against Defendants Domiciled Outside the EU

While the enforcement gap with regard to EU companies can thus be solved under existing law, additional problems arise with regard to non-EU corporations. Notably, the Draft Directive applies also to certain non-EU companies formed in accordance with the legislation of a third country, Art. 2 (2) CSDDD. For these companies, the scope of application depends upon the net turnover within the territory of the Union, this being the criterion creating a territorial connection between these companies and the EU (recital (24)). The Parliament’s amendments lower this threshold and thereby sharpen the scope of application of the Directive.

While application of the CSDDD to these companies before Member State courts is guaranteed due to its mandatory character, jurisdiction over non-EU defendants within the EU is not. International jurisdiction for actions against third-country defendants as brought before EU Member State courts is – with only few exceptions – generally governed by the national provisions of the respective Member State whose courts are seized, Art. 6 (1) Brussels I Regulation Recast. If the relevant national rules do not establish jurisdiction, no access to court is given within the EU.

And most national rules do not establish such jurisdiction. General jurisdiction at the seat of the corporation will usually lie outside the European Union. And the territorial connection of intra-EU turnover used to justify the applicability of the CSDDD does not create a similar basis of general jurisdiction, because jurisdiction at the place of economic activity (“doing business jurisdiction”) is alien to European legal systems. Even in the US, where this basis was first introduced, the US Supreme Court now limits general jurisdiction to the state that represents the “home” for the defendant company (BNSF Railroad Co. v. Tyrrell, 137 S.Ct. 1549 (2017); Daimler AG v. Bauman, 571 U.S. 117 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011)); whether the recent decision in Mallory v. Norfolk Southern Railway Co., 600 U.S. (2023) will re-open the door to doing business jurisdiction remains to be seen (see Gardner).

Specific jurisdiction will not exist in most cases, either. Specific jurisdiction in matters relating to tort will be of little use, as in value chain civil liability claims the place of the event giving rise to damages and the place of damage are usually outside the EU and within that third state. Some jurisdictional bases otherwise considered exorbitant may be available, such as the plaintiff’s nationality (Art. 14 French Civil Code) or the defendant’s assets (Section 23 German Code of Civil Procedure). Otherwise, the remaining option to seize a non-EU defendant in a Member State court is through submission by appearance according to Art. 26 Brussels I Regulation Recast.

Whether strategic joint litigation can be brought against an EU anchor defendant in order to drag along a non-EU defendant depends upon the national provisions of the EU Member States. Art. 8 (1) Brussels I Regulation Recast, which allows for connected claims to be heard and determined together, applies only to EU-defendants – for non-EU defendants the provision is inapplicable. In some Member States, the national civil procedure provisions enable jurisdiction over connected claims against co-defendants, e.g. in the Netherlands (Art. 7 (1) Wetboek van Burgerlijke Rechtsvordering), France (Art. 42 (2) Code de procédure civile) and Austria (§ 93 Jurisdiktionsnorm); conversely, such jurisdiction is not available in countries such as Germany.

Various Member State decisions have accepted claims against non-EU companies as co-defendants by means of joinder of parties. These cases have based their jurisdiction on national provisions which were applicable according to Art. 6 (1) Brussels I Recast Regulation: In Milieudefensie in December 2015, the Court of Appeal at the Hague held permissible an action against a Dutch anchor defendant that was joined with an action against a Nigerian company as co-defendant based on Dutch national procedural law, on the condition that claims against the anchor defendant were actually possible. The UK Supreme Court ruled similarly in its Vedanta decision in April 2019, wherein it found that English private international law, namely the principle of the necessary or proper party gateway, created a valid basis for invoking English jurisdiction over a defendant not domiciled in a Member State (with registered office in Zambia) who had been joined with an anchor defendant based in the UK. The claim was accepted on the condition that (i) the claims against the anchor defendant involve a real issue to be tried; (ii) it would be reasonable for the court to try that issue; (iii) the foreign defendant is a necessary or proper party to the claims against the anchor defendant; (iv) the claims against the foreign defendant have a real prospect of success; (v) either England is the proper place in which to bring the combined claims or there is a real risk that the claimants will not obtain substantial justice in the alternative foreign jurisdiction, even if it would otherwise have been the proper place or the convenient or natural forum. The UK Supreme Court confirmed this approach in February 2021 in its Okpabi decision (for discussion of possible changes in UK decisions after Brexit, see Hübner/Lieberknecht).

In total, these decisions allow for strategic joint litigation against third-country companies together with an EU anchor defendant. Nonetheless, they do not establish international jurisdiction within the EU for isolated actions against non-EU defendants.

How to Close the Enforcement Gap – forum legis

The demonstrated lack of access to court weakens the Directive’s enforceability and creates an inconsistency between the mandatory nature of the civil liability and the lack of a firm jurisdictional basis. On a substantive level, the Directive stipulates civil liability for non-EU companies (Art. 22 CSDDD) if they are sufficiently economically active within the EU internal market (Art. 2 (2) CSDDD). Yet missing EU rules on international jurisdiction vis-à-vis third-country defendants often render procedural enforcement before an intra-EU forum impossible – even if these defendants generate significant turnover in the Union. Consequently, procedural enforcement of civil liability claims against these non-EU defendants is put at risk. The respective case law discussed does enable strategic joint litigation, but isolated actions against non-EU defendants cannot be based upon these decisions. At the same time, enforceability gaps exist with respect to EU defendants: It remains uncertain whether the courts of Member States will annul exclusive jurisdiction agreements and arbitration agreements if these undermine the application of the CSDDD.

This situation is unsatisfactory. It is inconsistent for the EU lawmaker to make civil liability mandatory in order to ensure civil enforcement but to then not address the access to court necessary for such enforcement. And it is inadequate that the (systemic) question of judicial enforceability of civil liability claims under the Directive is outsourced to the decision of the legal systems of the Member States. National civil procedural law is called upon to decide which third-country companies can be sued within the EU and how the Ingmar case law for EU domiciled companies will be further developed. This is a problem of uniformity – different national laws allow for different answers. And it is a problem of competence as Member State courts are asked to  render decisions that properly belong to the EU level.

The CSDDD aims to effectively protect human rights and the environment in EU-related value chains and to create a level playing field for companies operating within the EU. This requires comparable enforcement possibilities for actions based on civil liability claims that are brought pursuant to Art. 22 CSDDD against all corporations operating within the Union. The different regulatory options the EU legislature has to achieve this goal are discussed in what follows.

Doing business jurisdiction

A rather theoretical possibility would be to allow actions against third-country companies within the EU in accordance with the former (and perhaps revived) US case law on doing business jurisdiction in those cases where these companies are substantially economically active within the EU internal market. This would be consistent with the CSDDD’s approach of stretching its scope of application based on the level of economic activity within the EU (Art. 2 (2) CSDDD). However, the fact that such jurisdiction has always been considered exorbitant in Europe and has even been largely abolished in the USA speaks against this development. Moreover, a doing business jurisdiction would also go too far: it would establish general jurisdiction, at least according to the US model, and thus also apply to claims that have nothing to do with the CSDDD.

Forum necessitatis and universal jurisdiction

Another possible option would be the implementation of a forum necessitatis jurisdiction in order to provide access to justice, as proposed by the European Parliament Policy Department for External Relations, the European Parliament Committee on Legal Affairs and the GEDIP. However, such jurisdiction could create uncertainty because it would apply only exceptionally. Moreover, proving a “lack of access to justice” requires considerable effort in each individual case. Until now, EU law provides for a forum necessitatis only in special regulations; the Brussels I Regulation Recast does not contain any general rule for emergency jurisdiction. Member State provisions in this regard generally require a certain connection with the forum to establish such jurisdiction – the exact prerequisites differ, however, and will thus not be easily agreed upon on an EU level (see Kübler-Wachendorff).

The proposal to enforce claims under Art. 22 CSDDD by means of universal civil jurisdiction for human rights violations, which could be developed analogously to universal jurisdiction under criminal law, appears similarly unpromising; it would also go further than necessary.

Forum connexitatis

It seems more promising to implement a special case of a forum connexitatis so as to allow for  litigation of closely connected actions brought against a parent company domiciled within the EU together with a subsidiary or supplier domiciled in a third country, as proposed by the European Parliament Policy Department for External Relations and the GEDIP. This could be implemented by means of a teleological reduction of the requirements of Art. 8 (1) Brussels I Regulation Recast with regard to third-country companies, which would be an approach more compatible with the Brussels Regulation system than the implementation of a forum necessitatis provision (such a solution has, for instance, been supported by Mankowski, in: Fleischer/Mankowski (Hrsg.), LkSG, Einl., para. 342 and the GEDIP). This would simultaneously foster harmonisation on the EU level given that joint proceedings currently depend upon procedural provisions in the national law of the Member States. Moreover, this could avoid “blame games” between the different players in the value chain (see Kieninger, RW 2022, 584, 589). For the implementation of such a forum connexitatis, existing Member State regulations and related case law (Milieudefensie, Vedanta, and Okpabi) can serve as guidance. Such a forum is not yet common practice in all Member States; thus, its political viability remains to be seen. It should also be borne in mind that the implementation of a forum connexitatis on its own would only enable harmonised joint actions that were brought against EU domiciled anchor defendants together with non-EU defendants; it would not enable isolated actions against third-country companies – even if they are economically active within the EU and fall within the scope of application of the CSDDD.

Best option: Forum legis

The best way to close the CSDDD enforcement gap would be introducing an international jurisdiction basis corresponding to the personal scope of application of the Directive. The EU legislature would need to implement a head of jurisdiction applicable to third-country companies that operate within the EU internal market at the level specified in Art. 2 (2) CSDDD. Effectively, special jurisdiction would be measured on the basis of net turnover achieved within the EU. This would procedurally protect the Directive’s substantive regulatory objectives of human rights and environmental protection within EU-related value chains. Moreover, this would ensure a level playing field in the EU internal market.

Other than a forum premised on joint litigation, this solution would allow isolated actions to be brought – in an EU internal forum – against non-EU companies operating within the EU. The advantage of this solution compared to a forum of necessity is that the connecting factor of net turnover is already defined by Art. 2 (2) CSDDD, thus reducing the burden of proof, legal uncertainty and any unpredictability for the parties. Moreover, this approach would interfere less with the regulatory interests of other states than a forum necessitatis rule, which for its part would reach beyond the EU’s own regulatory space.

A forum legis should not be implemented only as a subsidiary option for cases in which there is a lack of access to justice, because this would create legal uncertainty. The clear-cut requirements of Art. 2 (2) CSDDD are an adequate criterion for jurisdiction via a forum legis. On the other hand, it should not serve as an exclusive basis of jurisdiction, because especially plaintiffs should not be barred from the ability to bring suit outside the EU. The risk of strategic declaratory actions brought by companies in a court outside the EU seems rather negligeable, and this  can be avoided either by giving preference to actions for performance over negative declaratory actions, as is the law in Germany or through the requirement of recognisability of a foreign judgment, which would not be met by a foreign decision violating domestic public policy by not providing sufficient protection.

This leaves a problem, however: The CSDDD does not designate which Member State’s court have jurisdiction. Since a forum legis normally establishes adjudicatory jurisdiction correlating with the applicable law, jurisdiction lies with the courts of the country whose law is applied. This is not possible as such for EU law because the EU does not have its own ordinary courts. The competent Member State court within the EU must be determined. Two options exist with regard to the CSDDD: to give jurisdiction to the courts in the country where the highest net turnover is reached, or to allow claimants to choose the relevant court. The first option involves difficult evidentiary issues, the second may give plaintiffs an excessive amount of choice. In either case, non-EU companies will be treated differently from EU companies on the question of the competent court – for non-EU companies, net turnover is decisive in establishing the forum, for EU-companies, the seat of the company is decisive. This difference is an unavoidable consequence resulting from extension of the scope of application of the Directive to third-country companies on the basis of net turnover.

Implementation

How could this forum legis be achieved? The most straightforward way would be to include a rule on jurisdiction in the CSDDD, which would then oblige the Member States to introduce harmonised rules of jurisdiction into national procedural law. This would be a novelty in the field of European international civil procedure law, but it would correspond to the character of the special provision on value chains as well as to the mechanism of the CSDDD’s liability provision. An alternative would be to include in the Brussels I Regulation Recast a sub-category of a special type of jurisdiction under Art. 7 Brussels I Regulation Recast. This as well would be a novelty to the Brussels system, which in principle requires that the defendant be seated in a Member State (see also Kieninger, RW 2022, 584, 593, who favours reform of the Brussels I Regulation Recast for the sake of uniformity within the EU). This second option would certainly mesh with current efforts to extend the Brussels system to non-EU defendants (see Lutzi/Piovesani/Zgrabljic Rotar).

The implementation of such a forum legis is not without problems: It subjects companies, somewhat inconsistently with the EU legal scheme, to de facto jurisdiction merely because they generate significant turnover in the EU’s internal market. Yet such a rule is a necessary consequence of the extraterritorial extension of the Directive to third-country companies. The unilateral character of the CSDDD is problematic. But if the CSDDD intends to implement such an extension on a substantive level, this must be reflected on a procedural level so as to enable access to court. The best way to do this is by implementing a forum legis. The CSDDD demonstrates the great importance of compensation of victims of human rights and environmental damage, by making the cicil liability rule internationally mandatory. Creating a corresponding head of jurisdiction for these substantive civil liability claims is then necessary and consistent in order to achieve access to court and, thus, procedural enforceability.

An event will take place on Thursday 30 November 2023 at Maastricht University in the Netherlands concerning the Service, Evidence and Brussels I bis Regulations. More information is available here.

This event is being organised within the framework of the DIGI-GUARD project, which is co-funded by the European Union under the JUST-2021-JCOO program and which stands for Digital communication and safeguarding the parties’ rights: challenges for European civil procedure.

Among the topics to be discussed will be the electronic service of documents under the Service Regulation, the upcoming digitalisation regulation, and many other practicalities relating to the service of documents within the European Union. It will also discuss the Evidence Regulation and the latest case law under the Brussels I bis Regulation. Finally, it will include breakout sessions where practical examples will be discussed and led by practitioners.

Discussions will take place in Dutch. Participation in this event will confer 3 PO NOvA points to Dutch lawyers.

Please click here to register. Attendance is possible both online and in-person. Please find the program below.*

Actualiteiten EU-procesrecht –betekenen en procederen in burgerlijke en handelszaken in de EU

PROGRAMMA donderdag 30 november 2023

Universiteit Maastricht

Kapoenstraat, Maastricht of online

 

13:00 – 13:30 Ontvangst

13:30 – 13:50 Digitalisering in het EU-procesrecht: een stand van zaken

Pauline van der Grinten, Ministerie van Justitie en Veiligheid, Nederland

13:50 – 14:00 Het DIGI-GUARD project: relevantie voor de rechtspraktijk

Marta Pertegás Sender, Universiteit Maastricht

14:00 – 14:30 De Betekeningsverordening (Vo 2020/1784): een stand van zaken

Wannes Vandenbussche, Universiteit Gent

14:30 – 15:00 De Bewijsverordening (Vo 2020/1783): een stand van zaken

Cedric Vanleenhove, Universiteit Gent

15:00 – 15:30 Recente rechtspraak over de Brussel I bis-verordening (Vo 1215/2012)

Jona Israël, Universiteit Maastricht

15:30 – 16:00 Pauze

16:00 – 16:40 Praktische oefeningen

Rechterlijke bevoegdheid en de erkenning en de tenuitvoerlegging van beslissingen (Brussel I bis) Betekenen in het buitenland o.l.v.  Jona Israël, Universiteit Maastricht o.l.v. Bartosz Sujecki, Van Diepen Van der Kroef advocaten

16:40 – 17:00 Discussie (plenaire)

17:00 – 18:00 Borrel

Many other activities (mainly in English) are being held as part of the DIGI-GUARD project, click here for more information.

“Funded by the European Union. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Commission. Neither the European Union nor the European Commission can be held responsible for them.”

 

* This event was due to take place earlier on in June 2023 but because of extraordinary circumstances it had to be rescheduled.

The EU Sustainability Directive and Jurisdiction

The Draft for a Corporate Sustainable Due Diligence Directive currently contains no rules on jurisdiction. This creates inconsistencies between the scope of application of the Draft Directive and existing jurisdictional law, both on the EU level and on the domestic level, and can lead to an enforcement gap: EU companies may be able to escape the existing EU jurisdiction; non-EU companies may even not be subject to such jurisdiction. Effectivity requires closing that gap, and we propose ways in which this could be achieved.

 

(authored by Ralf Michaels and Antonia. Sommerfeld)

 

1. The Proposal for a Directive on Corporate Sustainability Due Diligence

The process towards an EU Corporate Sustainability Due Diligence Directive is gaining momentum. The EU Commission published a long awaited Proposal for a Directive on Corporate Sustainability Due Diligence (CSDDD), COM(2022) 71 final, on 23 February 2022; the EU Council adopted its negotiation position on 1 December 2022; and now, the EU Parliament has suggested amendments to this Draft Directive on 1 June 2023. The EU Parliament has thereby backed the compromise textreached by its legal affairs committee on 25 April 2023. This sets off the trilogue between representatives of the Parliament, the Council and the Commission.

The current state of the CSDDD already represents a milestone. It not only introduces corporate responsibility for human rights violations and environmental damage – as already found in some national laws (e.g. in France; Germany; Netherlands; Norway; Switzerland; United Kingdom) – but also and in contrast (with the exception of French law – for more details see Camy) introduces civil liability. Art. 22 (1) CSDDD entitles persons who suffer injuries as result of a failure of a company to comply with the obligations set forth in the Directive to claim compensation. It thereby intends to increase the protection of those affected within the value chain, who will now have the prospect of compensation; it also intends to create a deterrent effect by having plaintiffs take over the enforcement of the law as “private attorney generals”. Moreover, the Directive requires that Member States implement this civil liability with an overriding mandatory application to ensure its application, Art. 22 (5) CSDDD. This is not unproblematic: the European Union undertakes here the same unilateralism that it used to criticize when previously done by the United States, with the Helms/Burton Act as the most prominent example.

That is not our concern here. Nor do we want to add to the lively discussion on the choice-of-law- aspects regarding civil liability (see, amongst others, van Calster, Ho-Dac, Dias and, before the Proposal, Rühl). Instead, we address a gap in the Draft Directive, namely the lack of any provisions on jurisdiction. After all, mandatory application in EU courts is largely irrelevant if courts do not have jurisdiction in the first place. If the remaining alternative is to bring an action in a court outside the EU, the application of the CSDDD civil liability regime is not, however, guaranteed. It will then depend on the foreign court’s conflict-of-law rules and whether these consider the CSDDD provisions applicable – an uncertain path.

Nonetheless, no mirroring provisions on international jurisdiction were included in the CSDDD, although such inclusion had been discussed. Suggestions for the inclusion of a new jurisdictional rule establishing a forum necessitatis in the Brussels I Regulation Recast existed (see the Study by the European Parliament Policy Department for External Relations from February 2019, the Draft Report of the European Parliament Committee on Legal Affairs with recommendations to the Commission on corporate due diligence and corporate accountability (2020/2129(INL) as well as the Recommendation of the European Groupe of Private International Law (GEDIP) communicated to the Commission on 8 October 2021). Further, the creation of a forum connexitatis in addition to a forum necessitatis had been recommended by both the Policy Department Study and the GEDIP. Nevertheless, the report of the European Parliament finally adopted, together with the Draft Directive of 10 March 2021, no longer contained such rule on international jurisdiction, without explanation. Likewise, the Commission’s CSDDD draft and the Parliament’s recent amendments lack such a provision.

 

2. Enforcement Gap for Actions against Defendants Domiciled within the EU

To assess the enforcement gap, it is useful to distinguish EU companies from non-EU companies as defendants. For EU companies, the Directive applies to companies of a certain size which are formed in accordance with the legislation of a Member State according to Art. 2 (1) CSDDD – the threshold numbers in the Commission’s draft and the Parliament amendments differ, ranging between 250–500 employees and EUR 40–150 million annual net worldwide turnover, with questions of special treatment for high-risk sectors.

At first sight, no enforcement gap seems to exist here. The general jurisdiction rule anchored in Art. 4 (1) Brussels I Regulation Recast allows for suits in the defendant’s domicile. Art. 63 (1) further specifies this domicile for companies as the statutory seat, the central administration or the principal place of business. (EU-based companies can also be sued at the place where the harmful event occurred according to Art. 7 (2) Brussels I Regulation Recast, but this will provide for access to an EU court only if this harmful event occurred within the EU.) The objection of forum non conveniens does not apply in the Brussels I Regulation system (as clarified in the CJEU’s Owusu decision). Consequently, in cases where jurisdiction within the EU is given, the CSDDD applies, including the civil liability provision with its mandatory application pursuant to Art. 22 (1), (5).

Yet there is potential leeway for EU domiciled companies to escape EU jurisdiction and thus avoid the application of the CSDDD’s civil liability. One way to avoid EU jurisdiction is to use an exclusive jurisdiction agreement in favour of a third country, or an arbitration clause. Such agreements concluded in advance of any occurred damage are conceivable between individual links of the value chain, such as between employees and subcontractors (in employment contracts) or between different suppliers along the chain (in purchase and supply agreements). EU law does not expressly prohibit such derogation. Precedent for how such exclusive jurisdiction agreements can be treated can be found in the case law following the Ingmar decision of the CJEU. In Ingmar, the CJEU had decided that a commercial agent’s compensation claim according to Arts. 17 and 18 of the Commercial Agents Directive (86/653/EEC) could not be avoided through a choice of law in favour of the law of a non-EU country, even though the Directive said nothing about an internationally mandatory nature for the purpose of private international law – as Art. 22 (5) CSDDD in contrast now does. The German Federal Court of Justice (BGH) extended this choice-of-law argument to the law of jurisdiction and held that jurisdiction clauses which could undermine the application of mandatory provisions are invalid, too, as only such a rule would safeguard the internationally mandatory scope of application of the provisions. Other EU Member State courts have shown a similar understanding not only with regard to exclusive jurisdiction agreements but also with regard to arbitration agreements (Austrian Supreme Court of Justice; High Court of Justice Queen’s Bench Division).

Common to Arts. 17 and 18 Commercial Agents Directive and Art. 22 CSDDD is their mandatory nature for the purpose of private international law, which established by the ECJ for the former and is legally prescribed for the latter in Art. 22 (5) CSDDD. This suggests a possible transfer of the jurisdictional argument regarding jurisdiction. To extend the internationally mandatory nature of a provision into the law of jurisdiction is not obvious; choice of law and jurisdiction are different areas of law. It also means that the already questionable unilateral nature of the EU regulation is given even more force. Nonetheless, to do so appears justified. Allowing parties to avoid application of the CSDDD would run counter to its effective enforcement and therefore to the effet utile. This means that an exclusive jurisdiction agreement in favour of a third country or an arbitration clause will have to be deemed invalid unless it is clear that the CSDDD remains applicable or the applicable law provides for similar protection.

 

3. Enforcement Gap for Actions against Defendants Domiciled Outside the EU

While the enforcement gap with regard to EU companies can thus be solved under existing law, additional problems arise with regard to non-EU corporations. Notably, the Draft Directive applies also to certain non-EU companies formed in accordance with the legislation of a third country, Art. 2 (2) CSDDD. For these companies, the scope of application depends upon the net turnover within the territory of the Union, this being the criterion creating a territorial connection between these companies and the EU (recital (24)). The Parliament’s amendments lower this threshold and thereby sharpen the scope of application of the Directive.

While application of the CSDDD to these companies before Member State courts is guaranteed due to its mandatory character, jurisdiction over non-EU defendants within the EU is not. International jurisdiction for actions against third-country defendants as brought before EU Member State courts is – with only few exceptions – generally governed by the national provisions of the respective Member State whose courts are seized, Art. 6 (1) Brussels I Regulation Recast. If the relevant national rules do not establish jurisdiction, no access to court is given within the EU.

And most national rules do not establish such jurisdiction. General jurisdiction at the seat of the corporation will usually lie outside the European Union. And the territorial connection of intra-EU turnover used to justify the applicability of the CSDDD does not create a similar basis of general jurisdiction, because jurisdiction at the place of economic activity (“doing business jurisdiction”) is alien to European legal systems. Even in the US, where this basis was first introduced, the US Supreme Court now limits general jurisdiction to the state that represents the “home” for the defendant company (BNSF Railroad Co. v. Tyrrell, 137 S.Ct. 1549 (2017); Daimler AG v. Bauman, 571 U.S. 117 (2014); Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011)); whether the recent decision in Mallory v. Norfolk Southern Railway Co., 600 U.S. (2023) will re-open the door to doing business jurisdiction remains to be seen (see Gardner).

Specific jurisdiction will not exist in most cases, either. Specific jurisdiction in matters relating to tort will be of little use, as in value chain civil liability claims the place of the event giving rise to damages and the place of damage are usually outside the EU and within that third state. Some jurisdictional bases otherwise considered exorbitant may be available, such as the plaintiff’s nationality (Art. 14 French Civil Code) or the defendant’s assets (Section 23 German Code of Civil Procedure). Otherwise, the remaining option to seize a non-EU defendant in a Member State court is through submission by appearance according to Art. 26 Brussels I Regulation Recast.

Whether strategic joint litigation can be brought against an EU anchor defendant in order to drag along a non-EU defendant depends upon the national provisions of the EU Member States. Art. 8 (1) Brussels I Regulation Recast, which allows for connected claims to be heard and determined together, applies only to EU-defendants – for non-EU defendants the provision is inapplicable. In some Member States, the national civil procedure provisions enable jurisdiction over connected claims against co-defendants, e.g. in the Netherlands (Art. 7 (1) Wetboek van Burgerlijke Rechtsvordering), France (Art. 42 (2) Code de procédure civile) and Austria (§ 93 Jurisdiktionsnorm); conversely, such jurisdiction is not available in countries such as Germany.

Various Member State decisions have accepted claims against non-EU companies as co-defendants by means of joinder of parties. These cases have based their jurisdiction on national provisions which were applicable according to Art. 6 (1) Brussels I Recast Regulation: In Milieudefensie in December 2015, the Court of Appeal at the Hague held permissible an action against a Dutch anchor defendant that was joined with an action against a Nigerian company as co-defendant based on Dutch national procedural law, on the condition that claims against the anchor defendant were actually possible. The UK Supreme Court ruled similarly in its Vedanta decision in April 2019, wherein it found that English private international law, namely the principle of the necessary or proper party gateway, created a valid basis for invoking English jurisdiction over a defendant not domiciled in a Member State (with registered office in Zambia) who had been joined with an anchor defendant based in the UK. The claim was accepted on the condition that (i) the claims against the anchor defendant involve a real issue to be tried; (ii) it would be reasonable for the court to try that issue; (iii) the foreign defendant is a necessary or proper party to the claims against the anchor defendant; (iv) the claims against the foreign defendant have a real prospect of success; (v) either England is the proper place in which to bring the combined claims or there is a real risk that the claimants will not obtain substantial justice in the alternative foreign jurisdiction, even if it would otherwise have been the proper place or the convenient or natural forum. The UK Supreme Court confirmed this approach in February 2021 in its Okpabi decision (for discussion of possible changes in UK decisions after Brexit, see Hübner/Lieberknecht).

In total, these decisions allow for strategic joint litigation against third-country companies together with an EU anchor defendant. Nonetheless, they do not establish international jurisdiction within the EU for isolated actions against non-EU defendants.

 

4. How to Close the Enforcement Gap – forum legis

The demonstrated lack of access to court weakens the Directive’s enforceability and creates an inconsistency between the mandatory nature of the civil liability and the lack of a firm jurisdictional basis. On a substantive level, the Directive stipulates civil liability for non-EU companies (Art. 22 CSDDD) if they are sufficiently economically active within the EU internal market (Art. 2 (2) CSDDD). Yet missing EU rules on international jurisdiction vis-à-vis third-country defendants often render procedural enforcement before an intra-EU forum impossible – even if these defendants generate significant turnover in the Union. Consequently, procedural enforcement of civil liability claims against these non-EU defendants is put at risk. The respective case law discussed does enable strategic joint litigation, but isolated actions against non-EU defendants cannot be based upon these decisions. At the same time, enforceability gaps exist with respect to EU defendants: It remains uncertain whether the courts of Member States will annul exclusive jurisdiction agreements and arbitration agreements if these undermine the application of the CSDDD.

This situation is unsatisfactory. It is inconsistent for the EU lawmaker to make civil liability mandatory in order to ensure civil enforcement but to then not address the access to court necessary for such enforcement. And it is inadequate that the (systemic) question of judicial enforceability of civil liability claims under the Directive is outsourced to the decision of the legal systems of the Member States. National civil procedural law is called upon to decide which third-country companies can be sued within the EU and how the Ingmar case law for EU domiciled companies will be further developed. This is a problem of uniformity – different national laws allow for different answers. And it is a problem of competence as Member State courts are asked to  render decisions that properly belong to the EU level.

The CSDDD aims to effectively protect human rights and the environment in EU-related value chains and to create a level playing field for companies operating within the EU. This requires comparable enforcement possibilities for actions based on civil liability claims that are brought pursuant to Art. 22 CSDDD against all corporations operating within the Union. The different regulatory options the EU legislature has to achieve this goal are discussed in what follows.

Doing Business Jurisdiction 

A rather theoretical possibility would be to allow actions against third-country companies within the EU in accordance with the former (and perhaps revived) US case law on doing business jurisdiction in those cases where these companies are substantially economically active within the EU internal market. This would be consistent with the CSDDD’s approach of stretching its scope of application based on the level of economic activity within the EU (Art. 2 (2) CSDDD). However, the fact that such jurisdiction has always been considered exorbitant in Europe and has even been largely abolished in the USA speaks against this development. Moreover, a doing business jurisdiction would also go too far: it would establish general jurisdiction, at least according to the US model, and thus also apply to claims that have nothing to do with the CSDDD.

Forum Necessitatis and Universal Jurisdiction

Another possible option would be the implementation of a forum necessitatis jurisdiction in order to provide access to justice, as proposed by the European Parliament Policy Department for External Relations, the European Parliament Committee on Legal Affairs and the GEDIP. However, such jurisdiction could create uncertainty because it would apply only exceptionally. Moreover, proving a “lack of access to justice” requires considerable effort in each individual case. Until now, EU law provides for a forum necessitatis only in special regulations; the Brussels I Regulation Recast does not contain any general rule for emergency jurisdiction. Member State provisions in this regard generally require a certain connection with the forum to establish such jurisdiction – the exact prerequisites differ, however, and will thus not be easily agreed upon on an EU level (see Kübler-Wachendorff).

The proposal to enforce claims under Art. 22 CSDDD by means of universal civil jurisdiction for human rights violations, which could be developed analogously to universal jurisdiction under criminal law, appears similarly unpromising; it would also go further than necessary.

Forum connexitatis

It seems more promising to implement a special case of a forum connexitatis so as to allow for  litigation of closely connected actions brought against a parent company domiciled within the EU together with a subsidiary or supplier domiciled in a third country, as proposed by the European Parliament Policy Department for External Relations and the GEDIP. This could be implemented by means of a teleological reduction of the requirements of Art. 8 (1) Brussels I Regulation Recast with regard to third-country companies, which would be an approach more compatible with the Brussels Regulation system than the implementation of a forum necessitatis provision (such a solution has, for instance, been supported by Mankowski, in: Fleischer/Mankowski (Hrsg.), LkSG, Einl., para. 342 and the GEDIP). This would simultaneously foster harmonisation on the EU level given that joint proceedings currently depend upon procedural provisions in the national law of the Member States. Moreover, this could avoid “blame games” between the different players in the value chain (see Kieninger, RW 2022, 584, 589). For the implementation of such a forum connexitatis, existing Member State regulations and related case law (Milieudefensie, Vedanta, and Okpabi) can serve as guidance. Such a forum is not yet common practice in all Member States; thus, its political viability remains to be seen. It should also be borne in mind that the implementation of a forum connexitatis on its own would only enable harmonised joint actions that were brought against EU domiciled anchor defendants together with non-EU defendants; it would not enable isolated actions against third-country companies – even if they are economically active within the EU and fall within the scope of application of the CSDDD.

Forum legis

The best way to close the CSDDD enforcement gap would be introducing an international jurisdiction basis corresponding to the personal scope of application of the Directive. The EU legislature would need to implement a head of jurisdiction applicable to third-country companies that operate within the EU internal market at the level specified in Art. 2 (2) CSDDD. Effectively, special jurisdiction would be measured on the basis of net turnover achieved within the EU. This would procedurally protect the Directive’s substantive regulatory objectives of human rights and environmental protection within EU-related value chains. Moreover, this would ensure a level playing field in the EU internal market.

Other than a forum premised on joint litigation, this solution would allow isolated actions to be brought – in an EU internal forum – against non-EU companies operating within the EU. The advantage of this solution compared to a forum of necessity is that the connecting factor of net turnover is already defined by Art. 2 (2) CSDDD, thus reducing the burden of proof, legal uncertainty and any unpredictability for the parties. Moreover, this approach would interfere less with the regulatory interests of other states than a forum necessitatis rule, which for its part would reach beyond the EU’s own regulatory space.

A forum legis should not be implemented only as a subsidiary option for cases in which there is a lack of access to justice, because this would create legal uncertainty. The clear-cut requirements of Art. 2 (2) CSDDD are an adequate criterion for jurisdiction via a forum legis. On the other hand, it should not serve as an exclusive basis of jurisdiction, because especially plaintiffs should not be barred from the ability to bring suit outside the EU. The risk of strategic declaratory actions brought by companies in a court outside the EU seems rather negligeable, and this  can be avoided either by giving preference to actions for performance over negative declaratory actions, as is the law in Germany or through the requirement of recognisability of a foreign judgment, which would not be met by a foreign decision violating domestic public policy by not providing sufficient protection.

This leaves a problem, however: The CSDDD does not designate which Member State’s court have jurisdiction. Since a forum legis normally establishes adjudicatory jurisdiction correlating with the applicable law, jurisdiction lies with the courts of the country whose law is applied. This is not possible as such for EU law because the EU does not have its own ordinary courts. The competent Member State court within the EU must be determined. Two options exist with regard to the CSDDD: to give jurisdiction to the courts in the country where the highest net turnover is reached, or to allow claimants to choose the relevant court. The first option involves difficult evidentiary issues, the second may give plaintiffs an excessive amount of choice. In either case, non-EU companies will be treated differently from EU companies on the question of the competent court – for non-EU companies, net turnover is decisive in establishing the forum, for EU-companies, the seat of the company is decisive. This difference is an unavoidable consequence resulting from extension of the scope of application of the Directive to third-country companies on the basis of net turnover.

 

5. Implementation

How could this forum legis be achieved? The most straightforward way would be to include a rule on jurisdiction in the CSDDD, which would then oblige the Member States to introduce harmonised rules of jurisdiction into national procedural law. This would be a novelty in the field of European international civil procedure law, but it would correspond to the character of the special provision on value chains as well as to the mechanism of the CSDDD’s liability provision. An alternative would be to include in the Brussels I Regulation Recast a sub-category of a special type of jurisdiction under Art. 7 Brussels I Regulation Recast. This as well would be a novelty to the Brussels system, which in principle requires that the defendant be seated in a Member State (see also Kieninger, RW 2022, 584, 593, who favours reform of the Brussels I Regulation Recast for the sake of uniformity within the EU). This second option would certainly mesh with current efforts to extend the Brussels system to non-EU defendants (see Lutzi/Piovesani/Zgrabljic Rotar).

The implementation of such a forum legis is not without problems: It subjects companies, somewhat inconsistently with the EU legal scheme, to de facto jurisdiction merely because they generate significant turnover in the EU’s internal market. Yet such a rule is a necessary consequence of the extraterritorial extension of the Directive to third-country companies. The unilateral character of the CSDDD is problematic. But if the CSDDD intends to implement such an extension on a substantive level, this must be reflected on a procedural level so as to enable access to court. The best way to do this is by implementing a forum legis. The CSDDD demonstrates the great importance of compensation of victims of human rights and environmental damage, by making the cicil liability rule internationally mandatory. Creating a corresponding head of jurisdiction for these substantive civil liability claims is then necessary and consistent in order to achieve access to court and, thus, procedural enforceability.

The author of this post is Lydia Lundstedt, a Senior Lecturer at the Stockholm University.

By a ruling of 17 May 2023 (No 13504), the Corte Suprema di Cassazione (Italian Supreme Court) held that the Italian courts lacked jurisdiction over an action concerning the non-infringement of an international design right. The decision raises several interesting issues concerning the application of the rules on jurisdiction set out in the Brussels I bis Regulation to infringements of intellectual property rights.

Facts

The German company Bulthaup is the holder of an international design right for a tap valid for inter alia Germany and Italy. Bulthaup sent a warning letter to another German company, Nobilia-Werke, demanding that it cease selling the tap “Alila” claiming that it was a copy of Bulthaup’s design. The Alila tap is manufactured by an Italian company, Gessi. When Gessi learned that Bulthaup had sent a warning letter to its customer, Nobilia-Werke, Gessi wrote to Bulthaup and denied infringement. After communication between Gessi and Bulthaup’s lawyers, Gessi sued Bulthaup and the related company Bulthaup Italia Srl (Bulthaup Italia) before the Tribunale di Milano (Court of Milan). In addition, Nobilia-Werke was made a party to the proceedings.

Gessi requested that the Court of Milan declare that the Italian part of the international design was invalid. In addition, Gessi requested inter alia a declaration that the production and marketing of the Alila tap did not infringe the industrial property rights of Bulthaup and/or Bulthaup Italia and that its and Nobilia-Werke’s activities did not constitute acts of unfair competition. Bulthaup and Bulthaup Italia objected to the Court of Milan’s jurisdiction on the basis that the claims “concern German territory only”, with the exception of the invalidity claim concerning the Italian part of the design. Nobilia-Werke did not contest jurisdiction. The Court of Milan set a hearing to clarify and Gessi appealed to the Supreme Court.

The Supreme Court’s decision

The Supreme Court held that the Court of Milan had jurisdiction over the invalidity claim concerning the Italian part of the design in accordance with Article 24(4) of Brussels I bis Regulation. With regard to the other claims concerning inter alia a declaration of non-infringement of design rights and a declaration of non-violation of unfair competition rules, the Supreme Court held that the Court of Milan did not have jurisdiction.

First, the Supreme Court held that Article 4 of the Brussels I bis Regulation could not provide a basis for jurisdiction because both Bulthaup and Nobilia-Werke were domiciled in Germany, not Italy.

Second, the Supreme Court examined whether Article 7(2) of Brussels I bis Regulation could provide a basis for jurisdiction. With references to the case law of the Court of Justice of the European Union (CJEU), the Supreme Court observed that Article 7(2) was applicable to actions for negative declarations and that a plaintiff could sue either at the place of the causal act or the place of (direct) damage. The Supreme Court recalled the CJEU’s decision in Wintersteiger (C‑523/10) holding that in cases of trademark infringement, damage occurs in the Member State where the right is protected. The Supreme Court observed that this ruling was relevant for infringements of design rights. The Court found however that this decision did not provide a basis for jurisdiction because the right at issue was the German part of the international design.

In addition, the Supreme Court rejected Gessi’s assertion that damage occurred in Italy in accordance with the CJEU’s interpretation of Article 7(2) in Bolagsupplysningen (C-194/16).  It can be recalled that the CJEU held that a legal person claiming that its personality rights have been infringed by the publication of incorrect information on the internet can sue where it has its centre of interests because that is where the damage to its reputation is most keenly felt. The Supreme Court stated that Bolagsupplyningen concerned “a completely different” situation specific to internet, whereas in the case at hand, the damage alleged by Gessi, namely, interference with its contractual relationship with Nobilia-Werke, occurred in Germany. Indeed, the Court explained that damage from a warning letter sent by a German company (Bulthaup) to another German company (Nobilia-Werke) about activity in Germany in alleged violation of a right protected in Germany could only occur in Germany. In addition, the Court rejected Gessi’s assertion that Bulthaup had sent another warning letter addressed to Gessi concerning Gessi’s conduct in Italy. The Supreme Court explained that this so-called warning letter was in fact a letter from Bulthaup’s lawyer in reply to a letter from Gessi’s lawyer concerning a possible settlement. As a lawyer’s letter seeking an amicable settlement could not be a basis for damage, the Supreme Court held that the Court of Milan did not have jurisdiction on the basis of Article 7(2).

Lastly, the Supreme Court examined whether Article 8(1) of the Brussels I bis Regulation could provide a basis for jurisdiction in light of the fact that Gessi had also sued Bulthaup Italia, which is domiciled in Italy. Pursuant to Article 8(1), a defendant domiciled in a Member State may be sued, when he or she is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

The Supreme Court recalled the CJEU’s decision in Roche Nederland (C-539/03) that the application of Article 8(1) does not apply to alleged infringements of different parts of a European patent because each part is a separate and independent right which must be assessed under national law so there is no risk for irreconcilable judgments. Thus, the Supreme Court noted that the claim concerning the invalidity of the Italian part of the design was not relevant for establishing jurisdiction over for the claims for non-infringement.

Thereafter, the Supreme Court noted that while Gessi’s action for negative declaratory relief was justified in so far as it related to Bulthaup’s accusation of infringement in Germany of the German part of the design right, the Supreme Court held that jurisdiction could not be fictitiously established by bringing a claim against a “silent” and “disinterested” defendant (Bulthaup Italia). The Supreme Court explained that Bulthaup Italia was not the holder of the design right and had not asserted the right so there was therefore no plausible reason for involving it in the dispute. Consequently, the Supreme Court held that the Court of Milan did not have jurisdiction on the basis of Article 8(1).

Analysis

The Supreme Court’s ruling does not clearly separate the question of jurisdiction from the question of admissibility under national procedural law. As the defendant Bulthaup Italia is domiciled in Italy, it may be sued in Italy for any claim within the scope of the Brussels I bis Regulation except for where there is exclusive jurisdiction. Thus, the Court of Milan should have jurisdiction over Bulthaup Italia in accordance with Article 4 Brussels I bis Regulation in respect of the negative declaratory claims concerning infringement and unfair competition. It is a separate question that these claims are inadmissible under national procedural law because Gessi had no legitimate interest in bringing a claim against Bulthaup Italia.

In addition, while I agree with the Supreme Court that Article 7(2) would not provide a basis for jurisdiction over Bulthaup for the negative declaratory claims concerning Germany, Gessi’s claims appear to refer also to Italy. Indeed, Gessi requests a declaration that “the production and marketing” of the tap does not infringe industrial property rights. The production of the tap, which likely takes place in Italy, concerns the Italian part of the international design. As the Supreme Court rightly noted, in Wintersteiger, the CJEU held that jurisdiction lies in the Member State where the right is protected, and Bulthaup’s right is protected (also) in Italy. Thus, the Court of Milan should have jurisdiction over Bulthaup in accordance with Article 7(2) Brussels I bis Regulation in respect of the claim for non-infringement of the Italian part of the international design. Again, it is a separate question whether this claim is admissible under national procedural law in light of the fact that Bulthaup had not sent any warning letter to Gessi concerning Italy.

Concerning Article 8(1) of the Brussels I bis Regulation, I agree with the Supreme Court that the invalidity claim was not relevant for establishing jurisdiction over the non-infringement claims, but for an additional reason not mentioned by the Court. The invalidity claim was brought against Bulthaup, not Bulthaup Italia. Clearly, Bulthaup cannot be used as an anchor defendant to bring additional claims against Bulthaup.

In contrast, the negative declaratory claims were brought against both Bulthaup and Bulthaup Italia so the latter could serve as an anchor defendant. That said, the Supreme Court’s conclusion that Article 8(1) was not applicable in cases of abuse is arguably in line with Freeport (C‑98/06). In that case, the CJEU held that if the requirements of (what is now) Article 8(1) are fulfilled, there is no further need to establish separately that the claims were not brought with the sole object of ousting the jurisdiction of the courts of the Member State where one of the defendants is domiciled. This decision has been understood to mean that the claims are either sufficiently connected or there is abuse. In this case, the Supreme Court found that there was abuse because there was no plausible reason for involving Bulthaup Italia in a dispute concerning the German part of the design right.

As noted above, however, Gessi’s negative declaratory claims appear to concern Italy as well. There would be a plausible reason for involving Bulthaup Italia in a dispute concerning the Italian part of the design right. This raises two issues. First, could Bulthaup Italia be used as an anchor defendant even though the claims against Bulthaup Italia were likely inadmissible under Italian procedural law for lack of a legitimate interest? In Reisch Montage (C‑103/05), the CJEU held that (what is now) Article 8(1) applies even when an action brought against the anchor defendant (here Bulthaup Italia) is inadmissible pursuant to a provision of national law already at the time it is brought.

Second, are the negative declaratory claims against Bulthaup Italia concerning Italy connected to the claims against Bulthaup concerning Germany in the meaning of Article 8(1)? The CJEU’s decision in Roche Nederland which was cited by the Supreme Court, deals with patents. In a later case, Painer (C-145/10), which deals with copyright infringement, the CJEU did not exclude the application of article 8(1) in relation to defendants accused of infringing copyright protected in different Member States when the national laws on which the claims were based were “substantially identical”. In light of the fact that national design rights have been harmonized in accordance with Directive 98/71/EC on the legal protection of designs, the question arises whether the approach in Roche or Painer should be followed.