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A new law on international commercial arbitration was published on the 4th of February in Greece. It is the fruit of the efforts by a committee established by the Ministry of Justice. The previous law nr. 2735/1999 is abolished.

The new law nr. 5016/2023 consists of 59 articles, whereas the predecessor had only 37 articles. Both laws are based on the UNCITRAL Arbitration Rules. The main novelties of the recent law are the following:

• Article 11 covers the issue of the validity of the arbitration agreement.
• Article 16 introduces a provision for multiparty arbitration.
• Article 22 regulates the issue of the arbitrator’s liability.
• Article 24 introduces a provision for the unification of multiple arbitrations.
• Article 35 contains a special rule for the production of documents and the submission of evidence.
• Last but not least, Article 46 sets the stage for the foundation of Arbitration Centers by private companies or public law corporations, such as Bar Associations. Some of them have already established Arbitration Centers (mostly if not exclusively for purely domestic disputes) in the major cities of the country, such as Athens and Thessaloniki. The new law grants them access to international commercial disputes.

In a decision of November 2022, the Swedish Labour Court held that Qatar had, at least in part, the right to invoke state immunity from jurisdiction in connection with proceedings relating to an employment matter.

Background

An employee at the Qatari embassy in Stockholm was summarily dismissed in September 2021. He filed a lawsuit against the State of Qatar in the Stockholm District Court requesting invalidation of, and compensation for, unfair dismissal. Qatar objected to Swedish jurisdiction by invoking State immunity under international law.

Decision

In a preliminary decision, the Stockholm District Court granted Qatar State immunity regarding the invalidation claim, but denied it with respect to the claim for compensation. The Labour Court, which was the court of appeal and last instance in the matter, agreed with the District Court’s conclusion.

In its decision, the Labour Court held that the dispute had such a “close connection” to Sweden that Swedish courts should be able to assert jurisdiction, unless Qatar had the right to invoke state immunity. The court continued by stating that whether or not state immunity from jurisdiction should be respected is dependent on customary international law. In this regard, the court held that the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property is representative of customary international law.

Article 11 of the 2004 UN Convention deals with employment law matters. The provision contemplates several exceptions to State immunity in this field, i.e., situations where a State, as a defendant before the courts of another State, are not entitled to immunity.

Article 11(2)(c) sets out that States are immune from jurisdiction whenever “the subject-matter of the proceeding is the recruitment, renewal of employment or reinstatement of an individual”. Although this provision does not explicitly deal with the invalidation of a dismissal, the Swedish Labour Court concluded that such invalidation is equivalent to reinstatement. With references to the European Court of Human Rights’ (ECtHR’s) judgments Naku v. Lithuania and Sweden and Cudak v. Lithuania, the Labour Court found that granting State immunity does not amount to a violation of the employee’s right to a fair trial under Article 6 in the European Convention of Human Rights (ECHR).

In its examination of the ECtHR’s judgments, the Labour Court noted that Naku had requested both reinstatement and damages and that the ECtHR had found that it was wrong to grant State immunity in that case. The Labour Court noted that the ECtHR made a point that an employee under Lithuanian law could be given severance pay instead of reinstatement. There is no possibility for a court to do so under Swedish law when a former employee has pleaded invalidation of an employer’s dismissal. Therefore, the Labour Court concluded that granting State immunity for Qatar was not a violation of Article 6 in the ECHR.

Analysis

The Swedish Labour Court’s decision is, in my opinion, problematic and can be criticized for at least three reasons. First, the Labour Court makes no references to EU private international law. Second, the Labour Court’s formalistic approach to public international customary law is erroneous. Third, the Labour Court only – selectively – referred to ECtHR case law on the balance of state immunity and the right to a fair trial. In the following, I will develop those three points of critique.

EU Private International Law Determines Jurisdiction

Whether or not a Swedish court has jurisdiction in an international employment law matter follows from the Brussels I bis Regulation.

Under Article 1, the Regulation shall apply in “civil and commercial matters.” This concept has, on several occasions, been interpreted by the Court of Justice of the European Union (CJEU) as including actions by public authorities, as long as they do not exercise public powers. Further, it is clear that this also extends to embassy employment cases (see, e.g., ZN, C-280/20, paras 26–28, and Mahamdia, C-154/11, para 56). Even under the old Brussels I Regulation, it was clear that the regulation was applicable to third countries’ embassies, as they are to be considered “establishments” (Mahamdia, p. 41). Under the Brussels I bis Regulation, Article 6 has been extended to apply to all matters in which an employee habitually carries out his or her work in the EU, regardless of where the employer is domiciled. In such cases, the Regulation must be applied in the EU Member States (Roi Land Investments, C-604/20 para 48).

With this in mind, it is misleading that the Swedish Labour Court seemingly applies the jurisdictional standard of “Swedish interest of adjudication” that is used against defendants domiciled in third countries, without mentioning the Brussels I bis Regulation.

The 2004 UN Convention Does Not Reflect International Customary Law

The Labour Court oversimplifies customary international law by referring mechanically to the 2004 UN Convention.

Customary international law is defined by its constantly evolving nature and the fact that it must be derived from state practice. Therefore, international customary law cannot ever really be codified. The convention may serve as one of many pieces of public international customary law, but cannot be applied mechanically.

When using the 2004 convention, one shall bear in mind that there were some controversies about the content of the convention when it was adopted and that it still has not gathered enough support to enter into force. Further, since the convention was drafted nearly 20 years ago, important case law development has been made by i.a. both the CJEU and the ECtHR regarding State immunity in embassy employment disputes. As case law from these courts is to be applied by Swedish courts, irrespective of customary international law, it is questionable that this case law was not taken into consideration. This leads me to my third point of critique: that the Labour Court did not correctly refer to relevant EU and ECtHR case law.

The Labour Court Did Not Correctly Refer to Relevant ECtHR and CJEU Case law

Over the last 15 years, the ECtHR has developed a unanimous approach to State immunity in embassy employment law cases. This approach is made clear in the 2019 judgment Ndayegamiye-Mporamazina v. Switzerland. In this judgment, the ECtHR makes clear that an important feature for granting state immunity from jurisdiction is that the employee can access courts elsewhere. In Ndayegamiye-Mporamazina v. Switzerland, the employee could initiate proceedings in the embassy state of Burundi. Access to courts elsewhere in the world has long been a cornerstone in the evaluation of upholding state immunity (see Prince Hans-Adam II of Liechtenstein v. Germany). In the Swedish Labour Court’s decision, the access to courts in Qatar was not assessed at all.

Concluding Remarks

In my opinion, it is a pity that the Labour Court did not pay attention to neither the EU private international law aspect nor the relevant case law developments from the ECtHR. For the development of customary international law regarding state immunity in embassy employment matters, well-motivated case law is needed. Due to the flaws described above, the Swedish Labour Court’s decision can hardly be seen as a contribution to the development of customary international law.

Wang Jingru, Wuhan University Institute of International Law

 

Background

In November 2022, Beijing Fourth Intermediate People’s Court delivered the landmark decision in Ruili Airlines Co. Ltd. and Others v. CLC Aircraft Leasing (Tianjin) Co., Ltd. For the first instance, the Chinese court confirmed the legitimacy of third-party funding in arbitration and clarified the standard of review regarding the challenge towards it.

In 2021, the CIETAC rendered an arbitral award addressing the dispute arising from an aircraft leasing agreement. In this case, the claimant, CLC Aircraft Leasing (Tianjin) Co., Ltd., was funded by a third-party funder, IMF Bentham Limited. The respondents, Ruili Airlines Co. Ltd. (Ruili Airlines), Yunnan Jingcheng Group Co., Ltd. and Dong Lecheng, opposed enforcement of the award before Wuxi Intermediate People’s Court .[i] After being dismissed by the Wuxi Court, the respondents challenged the arbitral award before Beijing Fourth Intermediate People’s Court and were again dismissed.[ii]

Legal Issues

The respondents challenged the arbitral awards based on four grounds: first, the composition of the tribunal was not in accordance with the arbitration rules; second, the claimant and the tribunal breached the principle of confidentiality for disclosing information to the third-party funder; third, the tribunal failed to bear the parties fair opportunity to present the case; fourth, the arbitral award infringed the social public interest.[iii] The court reviewed the challenge under Article 281 of the Chinese Civil Procedure Law, which dealt with the challenge to foreign-related arbitral awards. Given our focus on third-party funding, this note only discussed the first two grounds.

Composition of the Tribunal

The respondents submitted that Rollin Chan, the arbitrator appointed by the claimant, was affiliated with the Nixon Peabody CWL, a Hong Kong law firm which had a significant relationship with the funder, IMF Bentham Limited. The Nixon Peabody CWL Law Firm had provided legal services to HSBC Group and JP Morgan Group, which were actual controllers of IMF Bentham Limited’s two main shareholders, HSBC Custody Nominees (Australia) Limited and JP Morgan Nominees Australia Limited. The respondents argued that this relationship fell within the arbitrator’s obligation to disclose. However, neither did Rollin Chan disclose the relationship nor did he resign, which raised justifiable doubts about his independence and impartiality.

The court first pointed out that the current law did not prohibit third-party funding arbitration. The third-party funding and the funder’s relationship with the arbitrator are related to the credibility of arbitration and the integrity of the award. Therefore, the court’s analysis focused on the challenge to the arbitrator and the disclosure of the third-party funder.

As explained by the court, the mechanism of challenge to arbitrators intended to eliminate the arbitrators with conflicts of interest which might undermine the fair trial and decision. The disclosure obligation requires the arbitrators to disclose any fact within their knowledge regarding their relationship with the case, the parties, members of the tribunal or other situations which may raise justifiable doubts about their independence and impartiality to the parties and the arbitration institution. Meanwhile, the court stressed that the arbitrators’ obligation to disclose should be based on their knowledge of potential conflicts of interest which may give rise to justifiable doubts about their independence and impartiality. Arbitrators could be challenged based on grounds specified by law or arbitration rules. If the relations were not known to the arbitrators and were insufficient to undermine the independence and impartiality of the arbitration, the arbitrator would not breach the duty for not disclosing the relationship. Likewise, there would be no violation against the provision of challenge to arbitrators.

In this case, the court found that Rollin Chan was a consultant of Nixon Peabody CWL instead of an associate or a partner who got dividends. He was based in Shanghai instead of Hong Kong. He did not engage in office matters and did not know about the dealings between Nixon Peabody CWL and IMF’s shareholders, as well as their actual controllers. Also, it was confirmed that none of them had been Nixon Peabody CWL’s clients. While they could connect with Nixon Peabody law firms in other regions, those law firms were independent of Nixon Peabody CWL. Nixon Peabody was an international lawyer network. Law firms within the network were separate entities subject to respective supervision of different jurisdictions. These law firms did not share client information or financial income. The respondents presented evidence to expose the business relationship between Nixon Peabody LLP (US) and HSBC (US), JP Morgan (US). However, the evidence mistook Nixon Peabody LLP (US) for Nixon Peabody CWL (HK). Also, HSBC (US) and JP Morgan (US) were different from the funder’s shareholders, HSBC Custody Nominees (Australia) Limited and JP Morgan Nominees Australia Limited. Therefore, the court concluded that the evidence was insufficient to prove the conflicts of interest or create a ground for challenge.

The court confirmed that the civil party had the legitimate right to accept third-party funding. Such a choice shall be respected as long as the arrangement does not breach the law or undermine the integrity of the award. In the absence of guidance on the disclosure of third-party funding, it is encourageable for the party to disclose the existence of third-party funding, which assists the parties in exercising their right based on the information.

Confidentiality

The respondents submitted that the third-party funder got information on the procedure and merits of the case. Considering that the funder was a listed company, the outcome of the case could be disclosed to the public. Therefore, the claimant and the tribunal breach the principle of confidentiality.

As acknowledged by the claimant, information including the procedural arrangement and the arbitral award was shared with the funder. For this issue, the court clarified that the key to confidentiality was withholding the information from the public so as to protect the parties’ commercial secrets and social image. While the arbitration rules prohibit disclosure to the “outsider”, information can be shared with the people concerned. In practice, the people concerned, such as the secretary of the tribunal and the parties’ shareholders who had significant interest in the case, could gain information about the arbitration, even though such disclosure was not explicitly allowed by the arbitration rules. Since the current rules did not preclude third-party funders from sponsoring the parties to engage in arbitration, the establishment of a funding relationship did not violate the principle of confidentiality.

Comments

Supporters of third-party funding argue that this mechanism could promote access to justice for impecunious parties and help the parties to overcome liquidity issues,[iv] which makes it an essential complement to the arbitration market. However, despite the fact that the third-party funding in arbitration has somewhat become a common phenomenon, worries about its adverse influence on arbitration are not unfounded. Third-party funders are stimulated by the economic interest directly connected to the outcome of the arbitration. To secure the recovery and maximize the profit, third-party funders may recommend counsel or arbitrators with whom they are familiar to the parties. They may also precipitate the “claim inflation” which exceeds the real loss of the funded party.[v] The third-party funding raises debate on its legitimacy and brings novel questions to be answered.

In this case, the Chinese court directly clarified the legitimacy of third-party funding and the standard of review. With the ambition to build up an attractive arbitral seat, China takes a rather friendly position to embrace this fast-growing mechanism. The court confirmed that third-party funding was not forbidden by the current law. Accordingly, it is natural to disclose relevant information to the third-party funder which is not viewed as a breach of confidentiality. The challenge to third-party funding will be assessed case by case. The arbitral award can only be set aside if third-party funding hinders the arbitration proceedings or undermine the integrity of the arbitral awards. The decision also shed some light on procedural control over third-party funding arbitration. The court held that the relationship between the arbitrator and third-party funder could also give rise to justifiable doubts about the arbitrator’s independence and impartiality. Besides, without explicit guidance of law, the court encouraged the funded party to disclose the existence of third-party funding, which was consistent with the common anticipation of arbitration practitioners.[vi] Whilst a single decision is not required to address everything, the way forward remains to be seen.

 

[i] See Ruili Airlines Co. Ltd. and Others v. CLC Aircraft Leasing (Tianjin) Co., Ltd. (2022) Su 02 Zhi Yi No. 14.

[ii] See Ruili Airlines Co. Ltd. and Others v. CLC Aircraft Leasing (Tianjin) Co., Ltd. (2022) Jing 04 Min Te No. 368.

[iii] Ibid.

[iv] See Marie Stoyanov and Olga Owczarek, ‘Third-Party Funding in International Arbitration: Is it Time for Some Soft Rules?’ (2015) 2(1) BCDR International Arbitration Review 171, 172.

[v] See John Beechey, ‘The Pandora’s Box of Third-Party Funding: Some Practical Suggestions for Arbitrators in Light of Recent Developments’ (2019) 20 ICCA Congress Series 558, 573.

[vi] See School of International Arbitration at Queen Mary University of London, 2015 Improvements and Innovations in International Arbitration, available at: https://arbitration.qmul.ac.uk/research/2015/index.html.

On Tuesday, February 14, 2023, the Hamburg Max Planck Institute will host its 30th monthly virtual workshop Current Research in Private International Law at 11:00 a.m. – 12:30 p.m. (CET). Tobias Helms (Universität Marburg) will speak, in German, about the topic

the Proposal for a Council Regulation on Jurisdiction, Applicable Law, Recognition of Decisions and Acceptance of Authentic Instruments in Matters of Parenthood.

The presentation will be followed by open discussion. All are welcome. More information and sign-up here.

If you want to be invited to these events in the future, please write to veranstaltungen@mpipriv.de.

The European Commission is adopting a package of infringement decisions due to the absence of communication by Member States of measures taken to transpose EU directives into national law. Among these, the Representative Actions Directive (EU) 2020/1828, whose description can be found in this blog.

Since the Representative Actions Directive entered into force in December 2020, Member States had two years to transpose it into their national law and to inform the Commission, with a further six months for the new provisions to come into effect.

While there is work ongoing in most Member States on adopting the laws, a large number of Member States failed to notify national measures fully transposing the Representative Actions Directive by the deadline set for 25 December 2022 and will therefore be receiving letters of formal notice: Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Luxembourg, Malta, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden.

Member States concerned now have two months to reply to the letters of formal notice and complete their transposition, or the Commission may decide to issue a reasoned opinion.

On December 30, 2022, the Chinese legislator, the Standing Committee of the National People’s Congress, published a draft of the Civil Procedure Law Amendment for public consultation. The draft suggested important amendments to procedures in foreign-related cases including jurisdiction, service, taking evidence, forum non-convenience, lis pendens, and judgment recognition and enforcement.

The Berkeley Center for Law and Technology organized a panel discussion on the draft. The program is now available to watch for free on its B-CLE platform. Linked below is access to the program’s recording:

https://bk.webcredenza.com/program?id=85027

 

In February 2023, the Court of Justice of the European Union will publish two decisions and one opinion, all three on Thursday 16.

The expected judgments concern case C-393/21, Lufthansa Technik AERO Alzey, and C-638/22 PPU, Rzecznik Praw Dziecka e.a. (Suspension de la décision de retour).

In C-393/21, the Lietuvos Aukščiausiasis Teismas (Lithuania) is asking the Court to interpret Article 23 of Regulation No 805/2004, as well as Article 36(1) and Article 44(2) of Regulation No 1215/2012.

1. How, taking into account the objectives of Regulation No 805/2004, inter alia the objective of accelerating and simplifying the enforcement of judgments of Member States and effective safeguarding of the right to a fair trial, must the term ‘exceptional circumstances’ in Article 23(c) of Regulation No 805/2004 be interpreted? What is the discretion that the competent authorities of the Member State of enforcement have to interpret the term ‘exceptional circumstances’?
2. Are circumstances, such as those in the present case, related to judicial proceedings in the State of origin which decide a question regarding the setting aside of the judgment on the basis of which a European Enforcement Order was issued to be regarded as relevant when deciding on the application of Article 23(c) of Regulation No 805/2004? According to what criteria must the appeal proceedings in the Member State of origin be assessed and how comprehensive must the assessment of the proceedings taking place in the Member State of origin that is carried out by the competent authorities of the Member State of enforcement be?
3. What is the subject matter of the assessment when deciding on the application of the term ‘exceptional circumstances’ in Article 23 of Regulation No 805/2004: must the impact of the respective circumstances of the dispute when the judgment of the State of origin is challenged in the State of origin be assessed, must the possible potential benefit or harm of the respective measure specified in Article 23 of the regulation be analysed, or must the debtor’s economic abilities to implement the judgment, or other circumstances, be analysed?
4. Under Article 23 of Regulation No 805/2004, is the simultaneous application of several measures specified in that article possible? If the answer to this question is in the affirmative, what criteria must the competent authorities of the State of enforcement rely on when deciding on the merits and proportionality of the application of several of those measures?
5. Is the legal regime laid down in Article 36(1) of Regulation (EU) No 1215/2012 … on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters to be applied to a judgment of the State of origin regarding the suspension (or cancellation) of enforceability, or is a legal regime similar to that specified in Article 44(2) of that regulation applicable?

I summarized the facts of the main proceedings here. AG Pikamäe made his opinion public on October 20, 2022. There is no English translation available so far. A non-official one could be:

1. Article 23 of Regulation (EC) No. 805/2004 … must be interpreted in the sense that the expression “exceptional circumstances”, for the purposes of this provision, includes the serious and irreparable damage that would be caused to the debtor by the immediate execution of the resolution certified as a European enforcement order, which (the damage) characterizes an urgent situation that corresponds to the debtor to demonstrate. If proven, it will be for the court or competent authority of the executing Member State to weigh the interests at stake in the light of all the relevant circumstances of the specific case.

Only the measures limiting the enforcement procedure, referred to in article 23, letters a) and b), of said Regulation may be subject to a combined application.

2. Articles 6 and 11 of Regulation No. 805/2004 shall be interpreted as meaning that where the enforceability of the decision certified as a European enforcement order in the Member State of origin has been suspended and the certificate provided for in Article 6(2) of that Regulation has been transmitted to the competent authority in the executing Member State, the latter will be obliged, within the framework of the application of the applicable national rules, to guarantee the full effectiveness of article 11 of said Regulation by means of the suspension of the enforcement procedure.

The deciding Chamber is composed by judges Lycourgos, Rossi, Bonichot, Rodin, and Spineanu-Matei acting as reporting judge.

My summary of the facts corresponding to Case C-638/21 PPU can be read here. The opinion of AG Emiliou, available only in a few languages – not English – were published on January 12. My translation would be:

On the one hand, Article 11(3) of Council Regulation (EC) No 2201/2003, read in conjunction with Articles 2 and 11 of the 1980 Hague Convention on the Civil Aspects of International Child Abduction, as well as, of the other hand, Articles 7 and 47 of the Charter of Fundamental Rights of the European Union, should be interpreted in the sense that they are opposed to national legislation entailing the suspension by operation of law, on a simple unsubstantiated request from certain authorized public entities, of the execution of a final decision to return pronounced at the end of two ordinary instances, during a first two-month period these entities dispose of to lodge an appeal in cassation and, as the case may be, for the entire duration of this appeal.

The decision will be taken by a Chamber of five judges, namely Safjan, Piçarra, Jääskinen, Gavalec and Jürimäe, with the latter as reporting judge.

Finally, AG Pikamäe will hand in the opinion in case C-567/21, BNP Paribas, a request from the Cour de Cassation (France). The main proceedings relate to an action for payment of various sums, brought in France against a French company by one of its former employees in connection with his dismissal . Previously, he had initiated proceedings in London, his last place of work, and he had obtained a judgment ordering that company to pay him compensation for unfair dismissal. The French courts must now determine if the previous decision (i.e. the English one) has any bearing in the admissibility of the claim filed with them.

1. Must Articles 33 and 36 of Council Regulation (EC) No 44/2001 (…) be interpreted as meaning that, where the legislation of the Member State of origin of the judgment confers on that judgment authority such as to preclude a new action being brought by the same parties for determining the claims that could have been raised in the initial proceedings, the effects which that judgment has in the Member State in which enforcement is sought preclude a court of that latter State, whose legislation, as applicable ratione temporis, provided in employment law for a similar obligation of concentration of claims, from adjudicating on such claims?
2. If the first question is answered in the negative, must Articles 33 and 36 of Council Regulation No 44/2001 be interpreted as meaning that an action such as a claim of unfair dismissal in the United Kingdom has the same cause of action and the same subject matter as an action such as a claim of dismissal without actual and serious cause in French law, so that the employee’s claims for damages for dismissal without actual and serious cause, compensation in lieu of notice, and compensation for dismissal before the French courts are inadmissible after the employee has obtained a decision in the United Kingdom declaring that there has been an unfair dismissal and making a compensatory award in that respect? Is it necessary in that regard to distinguish between, on the one hand, the damages for dismissal without actual and serious cause that might have the same cause of action and the same subject matter as the compensatory award and, on the other, the compensation for dismissal and compensation in lieu of notice which, in French law, are payable where the dismissal is based on an actual and serious cause, but are not payable in the event of dismissal based on serious misconduct?
3. Likewise, must Articles 33 and 36 of Council Regulation No 44/2001 be interpreted as meaning that an action such as a claim of unfair dismissal in the United Kingdom and an action for payment of bonuses or allowances provided for in the contract of employment have the same cause of action and the same subject matter when those actions are based on the same contractual relationship between the parties?

The decision on this case will be rendered by a Chamber of five judges – Jürimäe, Safjan, Piçarra, Jääskinen and Gavalec, this time with Judge Jääskinen reporting.

This event is presented by Private International Law and Law & Technology interest groups of the American Society of International Law and the Sydney Centre for Asian and Pacific Law at the University of Sydney.

Online event | 11am-12pm, Fri 3 March

National security has increasingly become a concern for cross-border data flow. In this panel discussion, we will survey the conflicts and potential collaboration between protecting national security and enhancing digital trade.

Our distinguished panel will cover relevant laws and practices in big (the US and China), medium (the UK), and small (Vietnam and Taiwan) jurisdictions.

Time
11am-12pm AEDT (Thu 2 March, 7-8pm EST)

Registration
Complimentary, however registration is essential.

Register here.

Written by Jidong Lin, Wuhan University Institute of International Law

1. Background

Separability is a world-recognized doctrine in commercial arbitration. It means that an arbitration clause is presumed to be a separate and autonomous agreement, reflecting contractual commitments that are independent and distinct from its underlying contract.[1] Such a doctrine is embraced and acknowledged by numerous jurisdictions and arbitral institutions in the world.[2]

However, there are different views on the consequences of separability. One of the most critical divergences is the application of separability in the contract formation issue. Some national courts and arbitral tribunals held that in relatively limited cases, the circumstances giving rise to the non-existence of the underlying contract have also resulted in the non-existence of the associated arbitration agreement, which is criticized as an inadequacy of the doctrine of separability.[3] On the contrary, other courts hold the doctrine of separability applicable in such a situation, where the non-existence of the underlying contract would not affect the existence and validity of the arbitration agreement. This divergence would directly affect the interest of commercial parties since it is decisive for the existence of the arbitration agreement, which is the basis of arbitration.

Two contrary judgements were recently issued by two jurisdictions. The Chinese Supreme People’s Court (hereinafter “SPC”) issued the Thirty-Sixth Set of Guiding Cases, consisting of six guiding cases concerning arbitration. In Guiding Case No. 196 Yun Yu v. Zhong Yun Cheng, the SPC explains the Chinese version of separability should apply when the formation of the underlying contract is in dispute.[4] Although the SPC’s Guiding Cases are not binding, they have an important persuasive effect and Chinese courts of the lower hierarchy are responsible for quoting or referring to the Guiding Cases when they hear similar cases. On the other hand, the English Court of Appeal also issued a judgement relating to separability, holding this doctrine not applicable in the contractual formation issue.[5]

 

2. Chinese judgment

The Chinese case concerns a share transfer transaction between Yun Yu Limited. (hereinafter “YY”) and Shenzhen Zhong Yuan Cheng Commercial Investment Holding Co. Limited. (hereinafter “ZYC”). On 9th May 2017, YY sent the Property Transaction Agreement (hereinafter “PTA”) and the Settlement of Debts Agreement (hereinafter “SDA”) to ZYC. The PTA was based on the Beijing Stock Exchange (hereinafter “BSE”) model agreement. PTA and SDA included a dispute resolution clause in which the parties agreed that the governing law should be Chinese law and the dispute should be submitted to Beijing Arbitration Commission. On 10th May 2017, ZYC returned the PTA and SDA to YY with some revisions, including a modification on the dispute resolution clause, which changed the arbitration institution to the Shenzhen Court of International Arbitration. On 11st May 2017, YY commented on the revised version of the PTA and SDA but kept the dispute resolution clause untouched. In the accompanying email, YY stated, “Contracts confirmed by both parties would be submitted to Beijing Stock Exchange and our internal approval process. We would sign contracts only if we got approval from BSE and our parent company.” On the same day, ZYC returned the PTA and SDA with its stamp to YY. On 27th October 2017, YY announced to ZYC that the negotiation was terminated. On 4th April 2018, ZYC commenced arbitration based on the dispute resolution clause in PTA and SDA.

The SPC held that separability means the arbitration agreement could be separate and independent from the main contract in its existence, validity and governing law. To support its opinion, the SPC refers to Article 19 of the People’s Republic of China’s Arbitration Law (hereinafter “Arbitration Law”), which stipulates that: “An arbitration agreement shall exist independently, the amendment, rescission, termination or invalidity of a contract shall not affect the validity of the arbitration agreement.” SPC submits that the expression “(t)he arbitration agreement shall exist independently” is general and thus should cover the issue of the existence of the arbitration agreement. This position is also supported by the SPC’s Interpretation of Several Issues concerning the Application of Arbitration Law (hereinafter “Interpretation of Arbitration Law”), [6]Article 10 of which stipulates: “Insofar as the parties reach an arbitration agreement during the negotiation, the non-existence of the contract would not affect the validity of the arbitration agreement.” Thus, the SPC concluded that the existence of an arbitration clause should be examined separately, independent from the main contract. Courts should apply the general rules of contractual formation, to examine whether there is consent to arbitrate. If the court found the arbitration clause formed and valid, the very existence of the main contract should be determined by arbitration, unless it is “necessary” for the court to determine this matter. The SPC concludes that the PTA and SDA sent by YY on 11st May 2017 constituted an offer to arbitrate. The stamped PTA and SDA sent by ZYC on the same day constituted an acceptance and came into effect when the acceptance reached YY. Thus, there exists an arbitration agreement between the parties. It is the arbitral tribunal that should determine whether the main contract was concluded.

 

3. English judgment

The English case concerns a proposed voyage charter between DHL Project & Chartering Limited (hereinafter “DHL”) and Gemini Ocean Shipping Co. Limited (hereinafter “Gemini”). The negotiations were carried on through a broker. On 25th August 2020, the broker circulated what was described as the Main Terms Recap. It is common ground that the recap accurately reflected the state of the negotiations thus far. Within the Recap, both parties agreed that the vessel would be inspected by Rightship. This widely used vetting system aims to identify vessels suitable for the carriage of iron ore and coal cargoes. Also, both parties agreed that the dispute should be submitted to arbitration. There was an attached proforma, including a provision that the vessel to be nominated should be acceptable to the charterer. Still, that acceptance in accordance with detailed requirements set out in clause 20.1.4 “shall not be unreasonably withheld”. By 3rd September, however, Rightship approval had not been obtained. DHL advised that “(p)lease arrange for a substitute vessel” and finally, “(w)e hereby release the vessel due to Rightship and not holding her any longer.” In this situation, the attached proforma was not approved by DHL, and there is no “clean” fixture, [7]which means the parties did not reach an agreement. After that, Gemini submitted that there is a binding charter party containing an arbitration clause and commenced arbitration accordingly.

The Court of Appeal made a detailed analysis of separability. Combining analysis of numerous cases, including Harbour v. Kansa, [8]Fiona Trust, [9]BCY v. BCZ[10] and Enka v. Chubb, [11]and analysis of International Commercial Arbitration written by Prof. Gary Born, the Courts of Appeal concluded that separability should not be applied if the formation of the underlying contract is in dispute. Separability applies only when the parties have reached an agreement to refer a dispute to arbitration, which they intend (applying an objective test of intention) to be legally binding. In other words, disputes as to the validity of the underlying contract in which the arbitration agreement is contained do not affect the arbitration agreement unless the ground of invalidity impeaches the arbitration agreement itself. But separability is not applicable when the issue is whether an agreement to a legally binding arbitration agreement has been reached in the first place. In this case, the parties agreed in their negotiations that if a binding contract were concluded as a result of the subject being lifted, that contract would contain an arbitration clause. However, based on the analysis of the negotiation and the commercial practice in the industry, the Court of Appeal concludes that either party was free to walk away from the proposed fixture until the subject was lifted, which it never was. Thus, there was neither a binding arbitration agreement between the parties.

 

4. Comments

Before discussing the scope of the application of separability, one thing needed to be clarified in advance: Separability does not decide the validity or existence of the arbitration agreement in itself. Separability is a legal presumption based on the practical desirability to get away from a theoretical dilemma. However, separability does not mean the arbitration agreement necessarily exists or is valid. It only means the arbitration agreement is separable from the underlying contract, and it cannot escape the need for consent to arbitrate.[12] Therefore, the existence of the arbitration agreement should not be considered when discussing the scope of application of the arbitration agreement.

The justification of the doctrine of separability should be considered when discussing its scope of application. The justification for the doctrine of separability can be divided into three factors: (a) The commercial parties’ expectations. Parties to arbitration agreements generally “intended to require arbitration of any dispute not otherwise settled, including disputes over the validity of the contract or treaty. (b) Justice and efficiency in commerce. Without the separability doctrine, “it would always be open to a party to an agreement containing an arbitration clause to vitiate its arbitration obligation by the simple expedient of declaring the agreement void.” and (c) Nature of the arbitration agreement.[13] The arbitration agreement is a procedural contract, different from the substantive underlying contract in function. If these justifications still exist in the contract formation issue, the doctrine of separability should be applied.

It is necessary to distinguish the contract formation issue and contract validity issue, especially the substantive validity issue, when discussing the applicability of those justifications. The contract formation issue concerns whether parties have agreed on a contract. The ground to challenge the formation of a contract would be that the parties never agree on something, or the legal condition for the formation is not satisfied. The contract substantive validity issue is where the parties have agreed on a contract, but one party argue that the agreement is invalidated because the true intent is tainted. The grounds to challenge the substantive validity would be that even if the parties have reached an agreement, the agreement is not valid because of duress, fraud, lack of capacity or illegality. The formation and validity issues are two different stages of examining whether the parties have concluded a valid contract. The validity issue would only occur after the formation of the contract. In other words, an agreement can be valid or invalid only if the agreement exists.

It is argued that separability should be applicable to the formation of contract. Firstly, separability satisfies the parties expectation where most commercial parties expect a one-stop solution to their dispute, irrespective of whether it is for breach of contract, invalidity or formation. Furthermore,  the application of separability would achieve justice and efficiency in commerce. Separability is necessary to prevent the party from vitiating the arbitration obligation by simply declaring a contract not concluded. In short, since the justifications still stand in the issue of contract formation, separability should also apply in such an issue.

The English Court of Appeal rejected the application of separability in the formation of contract holding the parties’ challenge to the existence of the main contract would generally constitute a challenge to the arbitration clause. However, the same argument may apply for invalidity of the underlying contract. Since the arbitration agreement is indeed concluded in the same circumstances as the underlying contract the challenging to the validity of the contract may also challenge the validity of the arbitration clause, while separability still applies. On the contrary, the Chinese approach probably is more realistic. The SPC ruled that separability applies where the formation of the underlying contract is disputed. But before referring the dispute to arbitration, the SPC separately considered the formation of the arbitration clause. Only after being satisfied the arbitration clause is prima facie concluded, the court declined jurisdiction and referred the parties to arbitration.

 

[1] Ronan Feehily, Separability in international commercial arbitration; confluence, conflict and the appropriate limitations in the development and application of the doctrine, 34 Arbitration International 355 (2018), p. 356.

[2] See Blackaby Niegel, Constantine Partasides et al., Redfern and Hunter on International Arbitration, Kluwer Law International; Oxford University Press 2015, pp. 104–107.

[3] See Gary B. Born, International Commercial Arbitration (3rd edition), Kluwer Law International 2021, pp. 492-493.

[4] The Guiding Case No. 196: Dispute in Validity of Arbitration Agreement between YunYu Limited and Shenzhen ZhongYuanCheng Commercial Investment Holding Co. Limited.

[5] DHL Project & Chartering Ltd v Gemini Ocean Shipping Co Ltd [2022] EWCA Civ 1555 (24 November 2022)

[6] SPC’s Interpretation of Several Issues concerning the Application of Arbitration Law, Fa Shi?2006?No. 7.

[7] Clean Fixture is a concept in the maritime area. It means the Parties’ confirmation that the contract has been concluded and that there are no further Subjects and/or restrictions to the execution of the agreed Contract. The Fixture is not clean until both parties have waived their subjects/restrictions.

[8] Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd [1993] QB 701.

[9] Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40, [2007] 4 All ER 951.

[10] BCY v BCZ [2016] SGHC 249, [2016] 2 Lloyd’s Rep 583.

[11] Enka Insaat ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38, [2020] 1 WLR 4117

[12] See McNeill M. S. & Juratowitch B., Agora: Thoughts on Fiona Trust: The Doctrine of Separability and Consent to Arbitrate, 3 Arbitration International 475 (2008).

[13] See Gary B. Born, International Commercial Arbitration (3rd edition), Kluwer Law International 2021, p. 428.

The convenors of the SLS Conflict of Laws section, Lauren Clayton-Helm and Bobby Lindsay, have been so kind as to share the following call for papers with us.

This is a call for papers and panels for the Conflict of Laws section of the 2023 Society of Legal Scholars’ Annual Conference to be held at Oxford Brookes, from 27th – 30th June.  The Conflict of Laws section will meet in the second half of the conference on 29–30 June and will have four sessions, each lasting 90 minutes.

The 2023 conference is in person with a virtual element. The virtual element to the conference will take place, for the Conflict of Laws section, on the 29th June 2023. Those who wish to present their papers virtually should select that option in Oxford Abstracts. Please note that speakers who select to present in person will be unable to revert to virtual delivery at a later date. We will be using Oxford Abstracts as the virtual platform this year. Those attending remotely on the 29th June will be able to participate in the sessions on those days, as well as having access to the plenary sessions.  There are significant costs involved in including a virtual element to the conference, and the numbers opting to attend virtually are quite low, but we are keen to ensure as many people have access to the conference as possible. On that basis, not only have we retained our two day virtual option, but we will also be providing remote access to all of the papers to delegates attending virtually, and where permission is granted by the presenters through Oxford abstracts.

In addition, the Society has set aside a fund of up to £10,000 as a hardship fund (https://sls.onlinesurveys.ac.uk/sls-hardship-fund-2023) to support attendance by those with special circumstances or in financial hardship warranting additional support. Priority for support will be given to applicants who have no other source of funding.

Doctoral students are very welcome and are encouraged to submit papers for consideration in the Subject Sections Programme. There will not be a separate doctoral stream at the 2023 conference.

If you are interested in delivering a paper or organising a panel, please submit your paper abstract or panel details by 11:59pm UK time on Friday 17 February 2023.  All abstracts and panel details must be submitted through the Oxford Abstracts conference system which can be accessed http://https://auth.oxfordabstracts.com/?redirect=/stages/4957/submitter– and following the instructions (select ‘Track’ for the relevant subject section). If you registered for Oxford Abstracts for last year’s conference, please ensure that you use the same e-mail address this year if that address remains current. For those whose papers are accepted, the original submission offers the facility to upload a full paper nearer the time. If you experience any issues in using Oxford Abstracts, please contact slsconference@mosaicevents.co.uk

This year we are trialling first blind peer review, with a subsequent non-blind review once initial decisions have been made to consider profile diversity before final decisions are made and communicated.

Decisions will be communicated by the 10th March.

We welcome proposals for papers and panels on any issue relating to Law and the Public Good. We welcome proposals representing a full range of intellectual perspectives and methodological approaches in the subject section, and from those at all stages of their careers.

Those wishing to present a paper should submit a title and abstract of around 300 words. Those wishing to propose a panel should submit a document outlining the theme and rationale for the panel and the names of the proposed speakers (who must have agreed to participate) and their abstracts.  Sessions are 90 minutes in length and so we recommend panels of three speakers, though the conference organisers reserve the right to add speakers to panels in the interests of balance and diversity.

As the SLS is keen to ensure that as many members with good quality papersas possible are able to present, speakers should not present twice at the conference at the expense of another credible paper.  With this in mind, when you submit an abstract via Oxford Abstracts you will be asked to note if you are also responding to calls for papers or panels from other sections.

Please also note that the SLS offers two prizes. First, The Best Paper Prize, which can be awarded to academics at any stage of their career and which is open to those presenting papers individually or within a panel.  The Prize carries a £300 monetary award and the winning paper will, subject to the usual process of review and publisher’s conditions, appear in Legal Studies.  To be eligible:

• speakers must be fully paid-up members of the SLS (Where a paper has more than one author, all authors eligible for membership of the Society under its rule 3 must be members. The decision as to eligibility of any co-authors will be taken by the Membership Secretary, whose decision will be final.)
• papers must not exceed 12,000 words including footnotes (as counted in Word; figures and tables are not included in the word count);
• papers must be uploaded to the paperbank by 11:59pm UK time on Friday 23 June 2023;
• papers must not have been published previously or have been accepted or be under consideration for publication; and
• papers must have been accepted by a convenor in a subject section and an oral version of the paper must be presented at the Annual Conference.

In 2020 the Society launched the Best Paper by a Doctoral Student Prize, which is open to currently registered doctoral students who are members of the Society. The Prize is £300. There is no link to publication in Legal Studies arising from this award, but any winner would be welcome to submit their paper for consideration by the Society’s journal. To be eligible:

• speakers must be fully paid-up members of the SLS who are Doctoral students. (Where a paper has more than one author, all authors eligible for membership of the Society under its rule 3 must be members and all authors must be Doctoral students, whatever their discipline). The decision as to eligibility of any co-authors will be taken by the Membership Secretary, whose decision will be final;
• papers must not exceed 12,000 words including footnotes (as counted in Word; figures and tables are not included in the word count);
• papers must be uploaded to the paperbank by 11:59pm UK time on Friday 23 June 2023;
• papers must not have been published previously or have been accepted or be under consideration for publication; and
• papers must have been accepted by a convenor in a subject section and an oral version of the paper must be presented at the Annual Conference.
• Where a paper eligible for this prize wins the Best Paper Prize, the judges may at their discretion award the prize for Best Paper by a Doctoral Student to a different nominated paper
• The judges may announce a shortlist at their discretion with the winner to be announced by the first week in August.

We have also been asked to remind you that all speakers will need to book and pay to attend the conference and that they will need to register for the conference by Friday 21 April 2023 to secure their place within the programme, though please do let us know if this deadline is likely to pose any problems for you. Booking information will be circulated in due course, and will open after the decisions on the response to the calls are made.

With best wishes,

Lauren and Bobby

As previously announced, the 4th German Conference for Young Scholars in Private International Law will take place on 23 and 24 February 2023 at Sigmund Freud University in Vienna.

The theme of the conference is

Deference to the foreign – empty phrase or guiding principle of private international law?

 

Although primarily held in German, a significant amount of presentations will be offered in English, including

“The metaphor of the ‘dismal swamp’: an ecosophical approach to the conflict of laws” by Prof. Horatia Muir Wat (Keynote lecture)

“Overriding Mandatory Rules and Choice of Law Rule in Procedure: Opposite Trends?” by Shahar Giller (presentation)

“Mind the Gap – Adaptation Mechanisms in the Cross-Border Enforcement of Judgments” by Tess Bens (presentation)

“Connecting Factors: Tools or Loopholes in Achieving Deference to the Foreign” by Stefano Dominelli and Michael Cremer (short presentation)

For further information and registration, please visit the event’s homepage – the organizers kindly ask to register by 17 February 2023.

Asif Efrat (Reichman University, Israel) authored a book titled Intolerant Justice – Conflict and Cooperation on Transnational Litigation, with Oxford University Press.

In a globalized world, national legal systems often face dilemmas of international cooperation: Should our citizens stand trial in foreign courts that do not meet our standards? Should we extradite offenders to countries with a poor human rights record? Should we enforce rulings issued by foreign judges whose values are different from our own? Intolerant Justice argues that ethnocentrism—the human tendency to divide the world into superior in-groups and inferior out-groups—fuels fear and mistrust of foreign justice and sparks domestic political controversies. Skeptics portray foreign legal systems as a danger and a threat to local values and interests. Others, however, seek to dispel these concerns, arguing that legal differences among countries should be respected. Such disagreements often make it harder to establish cooperation on litigation.

The book traces this dynamic in a range of fascinating cases, including the American hesitation to allow criminal trials of troops in the courts of NATO countries; the dilemma of extradition to China; the European wariness toward U.S. civil judgments; and the controversy over the prosecution of foreign terrorist fighters for ISIS. Despite the growing role of law and courts in international politics, Intolerant Justice suggests that cooperation among legal systems often meets resistance, but it also shows how this resistance can be overcome. These insights will speak to anyone who seeks to strengthen the rule of law and international collaboration in an era of increasing nationalism. 

The table of contents can be accessed here.

In Zenith Energy Amsterdam B.V. and Exolum Amsterdam BV v The Netherlands a Dutch judge last week rejected the challenge by fuel traders of the Dutch ban on export of fuels to non-EU (particularly Ecowas) countries of fuels falling short of the EU requirements under Directive 98/70. The Dutch Statute is the culmination of established Dutch studies of the sector (The Netherlands being a prime tank storage country) and of repeated EOWAS calls that the export causes issues on their territories.

A first test is the duty of care under the Dutch environmental laws, which in summary obliges industry et al to prevent and /or limit the environmental and public health impacts of their production. The judge [4.10] refers to the travaux and recitals of the Act which contains the duty of care, as having recognised the global, one might say ‘extraterritorial’  impact of Dutch and European industrial activities, and emphasises that the duty of care requires a dynamic interpretation in line with societal and technical developments.

In 4.13 the judge emphasises that Directive 98/70 does not harmonise export outside of the EU and that the Directive therefore does not impede national rules on export and in 4.14 the rule is said not to force duties upon third States who themselves have signalled the difficulties. The judge also explicitly refers to Urgenda and UNEP to emphasise that looking after the environment and public health elsewhere, is an expression of the State’s own duty of care. 4.16 ‘fuel leakage’ (the drug dealer defence: trade will just move elsewhere, Antwerp in particular) has not been made out on the facts, quite the opposite, the State can show that the majority of traders already export cleaner fuel from Dutch ports.

Of note is also that the judge, Vetter J, in commendable Dutch style, does not exhaust himself in the arguments, rather cutting straight to the chase.

A judgment of note. Geert.

Judge OKs Dutch fuel export ban, prohibiting export of fuel already banned in EU, in particular to ECOWAS countries
Extends corporations' duty of care to health, environment abroad; rejects Qs of extraterritoriality and 'drug dealer defence'

Judgment (NL) https://t.co/qd08kZbYYc https://t.co/ya28uy9CxB

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

Note on Dolenc v. Slovenia (ECtHR no. 20256/20, 20 October 2022)

by Denise Wiedemann, Hamburg

1.      Facts and Holding

On 20 October 2022, the ECtHR issued a decision that provides guidance regarding the human rights review of recognition and enforcement decisions. The decision concerns the recognition of Israeli civil judgments by Slovenian courts. The Israeli judgments obliged Vincenc Vinko Dolenc, an internationally renowned neurosurgeon, to compensate a former patient for pecuniary and non-pecuniary damage in an amount equivalent to approximately 2.3 million euros (para. 22). Dolenc had performed surgery on the claimant, who was left severely disabled. After Slovenian courts recognized the Israeli judgments, Dolenc applied to the ECtHR. He contended that Slovenia had violated Art. 6(1) ECHR because it had recognized Israeli judgments that resulted from an unfair proceeding. Specifically, he argued that he had been unable to participate effectively in the trial in Israel because the Israeli court had refused to examine him and his witnesses by way of the procedure provided under the Hague Evidence Convention (para. 61).

The ECtHR found that the Slovenian courts had not examined the Israeli proceedings duly and had not given enough weight to the consequences that the non-examination of the witnesses had for the applicant’s right to a fair trial (para. 75). Therefore, the ECtHR unanimously held that Slovenia had violated Art. 6(1) ECHR.

2.      Standard of Review

In its reasoning, the Court confirmed the standard of review that it had laid down in Pellegrini v. Italy (no. 30882/96, ECtHR 20 July 2001). In Pellegrini, the ECtHR found that Contracting States to the ECHR have an obligation to refuse recognition or enforcement of a foreign judgment if the defendant’s rights were violated during the adjudication of the dispute in the state of the judgment’s origin (para. 40). As in Dolenc v. Slovenia, the ECtHR in Pellegrini did not examine whether the proceedings before the court of origin complied with Art. 6(1) of the Convention. Instead, the Court scrutinized whether the Italian courts, i.e. courts in the state of enforcement, applied a standard of review in reviewing the foreign judgment which was in conformity with Art. 6(1) ECHR. As regards the standard of review, the ECtHR required the Italian courts to ‘duly satisfy’ themselves that the proceedings in the state of the judgment’s origin fulfilled the guarantees of Art. 6(1) ECHR (para. 40). Thus, when recognizing or enforcing a civil judgment from a non-Contracting State, Contracting States have to verify that the foreign proceedings complied with Art. 6(1) ECHR.

Yet, in respect of other issues, the ECtHR has limited the standard of review from due satisfaction to that of a ‘flagrant denial of justice’. In the criminal law context, the ECtHR held in Drozd and Janousek v. France and Spain that Contracting States are obliged to refuse the enforcement of a foreign sentence only if ‘it emerges that the conviction is the result of flagrant denial of justice’ (para. 110). The same limited review has been applied to extradition cases (Othman (Abu Qatada) v. the United Kingdom) and to child return cases (Eskinazi and Chelouche v. Turkey). A flagrant denial of justice is a breach that ‘goes beyond mere irregularities or lack of safeguards in the trial procedures such as might result in a breach of Article 6 if occurring within the Contracting State itself. What is required is a breach of the principles of fair trial guaranteed by Article 6 which is so fundamental as to amount to a nullification, or destruction of the very essence, of the right guaranteed by that Article.’ (Othman, para. 260).

It has been argued that in cases regarding the recognition or enforcement of a foreign civil judgement, the review should likewise be limited because the fundamental rights violation in the state of recognition or enforcement would be only of an indirect nature (e.g. Matscher, ‘Der Begriff des fairen Verfahrens nach Art. 6 EMRK’ in Nakamura et al. (eds), Festschrift Beys, Sakkoulas, Athens 2003, pp. 989–1007, 1005). Contrary to this view, the ECtHR confirmed in Dolenc v. Slovenia the requirement of an unlimited review of the proceeding in the state of origin; the Court saw ‘no reason to depart from the approach set out in Pellegrini’ (§ 60).

The approach taken in Pellegrini and Dolenc is convincing with regard to Art. 1 ECHR, which obliges the Contracting States to fully secure all individuals’ rights and freedoms. A deviation from the requirement set out in Art. 1 ECHR is not justified by the fact that recognition or enforcement of a decision issued in violation of Art. 6(1) ECHR would only be of an indirect nature; rather, such a recognition or enforcement would exacerbate the violation and would, therefore, be in direct breach of the Convention. The ECtHR explained the restricted level of review in extradition and child return cases with the fact that, unlike in a recognition or enforcement situation, ‘no proceedings concerning the applicants’ interests [had] yet been disposed of’ (see  Eskinazi and Chelouche v. Turkey).

 However, it is not obvious why the ECtHR applies different standards for the enforcement of foreign criminal judgments (‘flagrant denial of justice’) and the recognition or enforcement of foreign civil judgment (‘due satisfaction’). Whereas Contracting States are not required to verify whether a foreign criminal proceeding was compatible with all the requirements of Art. 6(1) ECHR, they are obliged to do so when a foreign civil proceeding is at issue. In justifying the reduced effect of Art. 6(1) ECHR in criminal cases, the Court explained that a review of all the requirements of Art. 6(1) ECHR would ‘thwart the current trend towards strengthening international cooperation in the administration of justice, a trend which is in principle in the interests of the persons concerned.‘ (Drozd and Janousek v. France and Spain, para. 110). Thus, the ECtHR seems to place greater importance on cooperation in criminal matters than on cooperation in civil matters. A reason is not apparent.

3.      Situations Allowing for a More Limited Review

Despite the confirmation of Pellegrini v. Italy in Dolenc v. Slovenia, the ECtHR left open the possibility of a more limited review in certain civil recognition and enforcement cases. First, the Pellegrini case and the Dolenc case concerned judgments emanating from non-Contracting States. If, in contrast, the recognition or enforcement of a judgment from a Contracting State was at issue, debtors would be obliged to challenge violations of Article 6(1) ECHR in the state of the judgment’s origin. If debtors fail to do so – e.g. if they miss the time limit for lodging a complaint at the ECtHR (Art. 35(1) ECHR) –, a further review in the state of enforcement would not be successful. Otherwise, procedural limits for human rights challenges would lose their preclusive effect.

Second, the ECtHR qualified Pellegrini as a case having ‘capital importance’ (para. 40) and Dolenc as a case of ‘paramount importance to the defendant’ (para. 60). While Pellegrini concerned a decision annulling a marriage, i.e. determining personal status, the foreign judgment in Dolenc caused serious financial and reputational damage to the applicant. However, it is questionable why a judgment for payment of a small amount of money should allow for a more limited review as Art. 1 ECHR does not differentiate between important and less important matters.

Finally, different standards would in any event apply to recognition and enforcement within the EU: In the case of recognition and enforcement under strict EU procedures (without the possibility of refusal), Member States benefit from the ‘presumption of compliance’ (Sofia Povse and Doris Povse v. Austria;  Avoti?š v. Latvia). With this presumption, the ECtHR seeks to establish a balance between its own review powers vis-à-vis states and its respect for the activities of the EU. In cases with a margin of manoeuvre, in particular through the public policy clause, the ECtHR will not require the Member State of recognition or enforcement to ‘duly satisfy’ itself that the adjudication proceeding in the Member State of origin complied with Art. 6(1) ECHR. Rather, the ECtHR will assess only whether the application of the public policy clause has been ‘clearly arbitrary’ (Royer v. Hungary, para. 60).

In Public Institution for Social Security v Ruimy & Anor [2023] EWHC 177 (Comm) Jacobs J rejected both a forum non conveniens argument and an (acquired Brussels Ia) Article 34 Brussels Ia argument (raised by a Luxemburg-based defendant).

My paper on the Article 34 genesis and case-law hitherto is here.

Current claims are related to earlier jurisdictional challenges, culminating in The Public Institution for Social Security v Banque Pictet & Cie SA & Ors [2022] EWCA Civ 29 which I discuss here.

PIFSS is a Kuwaiti public institution responsible for Kuwait’s social security system and pension scheme. The claims involve alleged corruption of PIFSS. Director General by international financial institutions and intermediaries in return for causing or influencing PIFSS to invest substantial funds with or through those institutions and intermediaries (or related entities).

Following the Court of Appeal’s decision in January 2022 to uphold the successful jurisdictional challenge by some of the parties (‘the Mirabaud parties’), PIFSS have commenced proceedings against three of the Mirabaud parties (Banque Mirabaud, Mr Pierre Mirabaud and Mr Fauchier-Magnan) in Switzerland. These Swiss proceedings no longer, include a claim in respect of one of the schemes, the ‘Aerium’ scheme. Instead, the claim in those proceedings concerns a large number of other schemes in which the Mirabaud parties are alleged to have participated or assisted.

The forum non arguments are discussed [43] ff and are of course only possible because the United Kingdom are no longer party to the Lugano Convention (and the Swiss proceedings initiated post Brexit). At the heart of the forum non conveniens argument of some of the defendants in current claim, incl. Ruimy, is the proposition that the Aerium Scheme claims should be heard in Switzerland alongside the other claims advanced against the Mirabaud parties. [65] ff Jacobs J holds that defendants have not shown that Switzerland was clearly or distinctly more appropriate than the English forum.

I do not discuss forum non in detail for the interest of the post lies more with the Article 34 analysis.

This is discussed briefly [118] ff with the judge unfortunately albeit obiter following defendants’ concession that failure of the forum non argument would also sink Article 34. The reasoning seems to be that Article 34’s “necessary for the proper administration of justice” test fails if the third State at issue is not shown to be  the clearly or distinctly more appropriate than the English forum. As I discuss in my paper, this is wrong, and it falls into the same trap as the first instance judge in Municipio. While considerations relevant to the forum non test may play a role in Article 34, it is wrong to conflate the two tests.

As noted this view is made obiter only for the formal reason for the judge to reject the Article 34 defence is his decision that Article 34(1)’s condition  that an action be ‘pending before a court of a third State at the time when a court in a Member State is seised of an action which is related to the action in the court of the third State’, has not been met. Per the Court of Appeal in Municipio, “The action in the third state must be pending before the third state court when the member state court becomes seised of the action” (see also Henshaw J in Viegas v Cutrale[149]).

[122] Swiss proceedings which might potentially be considered to be relating to the English proceedings came too late, they were most definitely not pending at the time of the current English claims.

The only potentially relevant “proceedings”, in the context of Article 34, are the proceedings commenced by the service of the commandements de payer, however, they are held not to qualify: [129]

I agree with PIFSS that the request and issue of the commandements de payer did not mean that proceedings were “pending before a court” of Switzerland. In short, this is because there was no document lodged with any court. Commandments de payer are issued by administrative authorities, not a court. …a commandement de payer is at most a precursor to an action in court. In the present case, there was an objection by the recipient, with the result that court proceedings were then necessary if the requesting party wanted to take matters forward. This is what happened in the present case, when PIFSS did issue civil proceedings against the Mirabaud parties in 2022. But there were no relevant court proceedings issued by PIFSS in Switzerland prior to that time.

A judgment of note.

Geert.

A short note to refer to this post on the Wave News which focuses on third party litigation funding and how it might be used in climate change litigation, with input by Yours Truly. A good introductory summary of the opportunities and points of attention of third party funding generally, too.

Geert.

Of #climatelitigation note and happy to have contributed. https://t.co/tOYu0Lqr9N

— Geert Van Calster (@GAVClaw) February 1, 2023

 

In a judgment of 11 January 2023, the French supreme court for private and criminal matters (Cour de cassation) ruled that the exclusive jurisdiction of the courts of the place where a public registry is held under Article 24(3) of the Brussels I bis Regulation only covers actions concerned with the formal validity of an entry in such a registry.

Background

The case was concerned with the enforcement of an English judgment over the shares of a French company owned by the judgment debtor.

The creditor, English corporation Barclay Pharmaceuticals, had obtained a judgment in 2012 from the English High Court ordering its debtor, a French individual, to pay over £ 12 million. The judgment was declared enforceable in France under the Brussels I Regulation.

It seems that it was not  easy to find assets belonging to the debtor and the creditor sought and obtained from the English high court an order in 2018 declaring that the shares owned by the wife of the debtor in a French company were only held fictitiously by the wife, and that they should be considered as actually owned by the debtor, her husband.

On the basis of the English 2012 judgment and 2018 order, the creditor had a French enforcement authority carry out an enforcement measure over the shares.

Judgment

The debtor challenged the validity of the enforcement measure in French courts on a number of grounds.

Nouveau Tribunal de Commerce et Conseil de Prud’hommes de Bobigny (93)

One of them was that the 2018 English order could not be enforced in France, because the proceedings fell within the exclusive jurisdiction of French courts. The debtor argued that the proceedings had “as their object the validity of an entry in a public register” in the meaning of Article 24(3) of the Brussels I bis Regulation. As a result, the English High Court lacked jurisdiction, and its order could not produce effect in France.

The particular company was a Société Civile Immobilière (SCI). The shareholders of French SCIs appear in the French register for companies (Registre du commerce et des sociétés). The name of the wife presumably appeared in the register. A logical (but, importantly, not necessary, see below) consequence of the English order was that the entry into the registry would become inaccurate. There was, therefore, some potential influence of the English order over an entry into a French registry.

The issue before the Cour de cassation was thus to define the scope of the exclusive jurisdiction under Art. 24(3). The Court defines it as limited to proceedings concerned with the “formal validity” of entries into the registry.

In this case, the English court had ruled on the accuracy of an entry. This was an issue of substance, not form. Nobody was suggesting, and certainly not the English court, that the requirement for registering those shares had not been complied with. The English order had only ruled that the owner of the shares was different from that appearing in the register.

The appeal was thus dismissed, and the enforceability of the 2018 English order confirmed, since the English court had not violated the exclusive jurisdiction of French courts.

Assessment

The rationale for the exclusive jurisdiction over public registries seems to be that such registries are public authorities, and that foreign states cannot interfere with the operation of a public authority. This certainly explain why the procedure for registering a company in a public registry is necessarily governed by the law of the local state, and that only local courts could assess whether it was complied with. That is likely the idea behind the concept of “formal validity”.

Yet, whether formal validity can always be distinguished from  substantive validity is not obvious. This might well depend on the effect of the registration. If, under the applicable law, the registration determines the existence of the right (e.g. the ownership of the shares), then it is not easy to distinguish between formal and substantive validity.

But the law was simpler in this case. Under French law, the ownership of shares in SCIs is not determined by the registration. The effect of the registration is merely to extend the effects of the right to certain third parties. But registration is not mandatory. A transfer of ownership of shares would be valid as between the parties and third parties knowing about it without registration.

In this context, the distinction of the Cour de cassation makes sense. If the parties could transfer shares without registration, an English court could equally rule on the ownership of shares without interfering with the French registry.

Conclusion: it is unclear whether the concept of validity of an entry in a public registry under article 24(3) can be defined without reference to national law and the effect of registration in the relevant Member State.

Professor HE Qisheng  has published the annual report, Chronology of Practice: Chinese Practice in Private International Law in 2021, now in its 9th year. The article has been published by the Chinese Journal of International Law, a journal published by Oxford University Press..

This survey contains materials reflecting the Chinese practice of Chinese private international law in 2021. Firstly, regarding changes in the statutory framework of private international law in China, six legislative acts, one administrative regulation on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and Other Measures, and six judicial interpretations of the Supreme People’s Court (“SPC”) were adopted or amended in 2021, covering a wide range of matters, including punitive damages, online litigation, online mediation, and international civil procedure. Secondly, five typical cases on Chinese courts’ jurisdiction are selected to highlight the development of Chinese judicial practice in respect of consumer contracts, abuse of dominant market position, repeated actions and other matters. Thirdly, this survey considers 18 cases on choice-of-law issues relating, in particular, to capacities of legal persons, proprietary rights, employee contracts, mandatory rules, gambling and public policy. Fourthly, two significant decisions on punitive damages of intellectual property are reported. Fifthly, several key decisions in the recognition and enforcement of foreign judgments, international arbitration agreements and foreign settlement agreements, are reproduced. Lastly, this survey also covers the Summaries of the National Symposium on Foreign-related Commercial and Maritime Trials of Courts published by the SPC, an official document which represents the current judicial practices in the Chinese courts, and which is expected to provide guidance in the adjudication of foreign-related matters in the future.

Table of Contents

1. Introduction
2. Overview

II.A. Report on the Work of the SPC in 2021

II.B. Laws and the SPC’s interpretations

III. Jurisdiction

III.A. Rules in the SPC Summaries on Foreign-related Trials

III.B. Consumer contract

III.C. Different courts agreed upon in the principal and accessory contract

III.D. Jurisdiction over abuse of dominant market position

III.E. Repeated actions

1. Choice of law

IV.A. Rules in the SPC Summaries on Foreign-related Trials

IV.B. Capacity of legal person

IV.C. Rights in rem

IV.D. Obligations

IV.E. Mandatory rules

IV.E.i. Foreign exchange guarantee

IV.E.ii. Share transfer

IV.F. Gambling and public order

1. Intellectual property

V.A. New rules on punitive damages

V.B. Selected cases on punitive damages in Chinese courts

1. Foreign judgments

VI.A. Rules in the SPC Summaries on Foreign-related Trials

VI.B. Cases about recognition and enforcement of foreign judgments

VII. International arbitration and foreign awards

VII.A. Rules in the SPC Summaries on Foreign-related Trials

VII.B. Arbitration clause and a lien dispute over the subject matter

VIII. Confirmation of the validity of foreign settlement agreement

Here are the links to the article:

• Standard link:
  https://academic.oup.com/chinesejil/advance-article-abstract/doi/10.1093/chinesejil/jmac041/6988730?utm_source=advanceaccess&utm_campaign=chinesejil&utm_medium=email
• Free-access link:
  https://academic.oup.com/chinesejil/advance-article/doi/10.1093/chinesejil/jmac041/6988730?utm_source=authortollfreelink&utm_campaign=chinesejil&utm_medium=email&guestAccessKey=01d9c811-e555-4366-8b93-3259516005d8

Registration now open

 

Dates:                   

Friday and Saturday, 9 and 10 June 2023

Venue:                  

Universitätsclub Bonn, Konviktstraße 9, D – 53113 Bonn

Registration:     

sekretariat.weller@jura.uni-bonn.de

 

Registration Fee: € 220.- Young Scholars Rate (limited capacity): € 110.- Dinner (optional):                      € 60.-

Registration: Please register with sekretariat.weller@jura.uni-bonn.de. Clearly indicate whether you want to benefit from the young scholars’ reduction of the conference fees and whether you want to participate in the conference dinner. You will receive an invoice for the respective conference fee and, if applicable, for the conference dinner. Please make sure that we receive your payment at least two weeks in advance. After receiving your payment we will send out a confirmation of your registration. This confirmation will allow you to access the conference hall and the conference dinner.

Please note: Access will only be granted if you are fully vaccinated against Covid-19. Please confirm in your registration that you are, and attach an e-copy of your vaccination document. Please follow further instructions on site. Thank you for your cooperation.

 

Programme

Friday, 9 June 2023

 

8.30 a.m.      Registration

9.00 a.m.      Welcome notes

Prof Dr Matthias Weller, Director of the Institute for German and International Civil Procedural Law, Rheinische Friedrich-Wilhelms-Universität Bonn;
Dr Christophe Bernasconi, Secretary General, HCCH

Moderators: Prof Dr Moritz Brinkmann, Prof Dr Nina Dethloff, Prof Dr Matthias Weller, University of Bonn; Prof Dr Matthias Lehmann, University of Vienna; Dr João Ribeiro-Bidaoui, Former First Secretary, HCCH

 

Part I: Cornerstones

1. Scope of application
   Prof Dr Xandra Kramer, Erasmus University Rotterdam, Utrecht University, The Netherlands

2. Judgments, Recognition, Enforcement
   Prof Dr Wolfgang Hau, Ludwig-Maximilians-Universität Munich, Germany

3. The jurisdictional filters
   Prof Dr Pietro Franzina, Catholic University of Milan, Italy

4. Grounds for refusal
   Adj Prof Dr Marcos Dotta Salgueiro, University of the Republic, Montevideo; Director of International Law Affairs, Ministry of Foreign Affairs, Uruguay

5. Article 29: From a Mechanism on Treaty Relations to a Catalyst of a Global Judicial Union
   Dr João Ribeiro-Bidaoui, Former First Secretary, HCCH
   Dr Cristina Mariottini, Senior Research Fellow at the Max Planck Institute for International, European and Regulatory Law, Luxembourg

 

1.00 p.m.     Lunch Break

6. The HCCH System for choice of court agreements: Relationship of the HCCH Judgments Convention 2019 to the HCCH 2005 Convention on Choice of Court Agreements
   Prof Dr Paul Beaumont, University of Stirling, United Kingdom
   

Part II: Prospects for the World 

1. European Union
   Dr Andreas Stein, Head of Unit, DG JUST – A1 “Civil Justice”, European Commission

2. Perspectives from the US and Canada
   Professor Linda J. Silberman, Clarence D. Ashley Professor of Law, Co-Director, Center for Transnational Litigation, Arbitration, and Commercial Law, New York University School of Law, USA
   Professor Geneviève Saumier, Peter M. Laing Q.C. Professor of Law, McGill Faculty of Law, Canada

3. Southeast European Neighbouring and EU Candidate Countries
   Prof Dr Ilija Rumenov, Associate Professor at Ss. Cyril and Methodius University, Skopje, North Macedonia

 

8.00 p.m.     Conference Dinner (€ 60.-)

Dinner Speech
Prof Dr Burkhard Hess, Director of the Max Planck Institute for International, European and Regulatory Law, Luxembourg

 

Saturday, 10 June 2023

 

9.00 a.m.      Part II continued: Prospects for the World

4. Perspectives from the Arab World
   Prof Dr Béligh Elbalti, Associate Professor at the Graduate School of Law and Politics at Osaka University, Japan

5. Prospects for Africa
   Prof Dr Abubakri Yekini, University of Manchester, United Kingdom
   Prof Dr Chukwuma Okoli, Postdoctoral Researcher in Private International Law, T.M.C. Asser Institute, The Netherlands

6. Gains and Opportunities for the MERCOSUR Region
   Prof Dr Verónica Ruiz Abou-Nigm, Director of External Relations, Professor of Private International Law, University of Edinburgh, United Kingdom

7. Perspectives for ASEAN
   Prof Dr Adeline Chong, Associate Professor of Law, Yong Pung How School of Law, Singapore Management University, Singapore

8. China
   Prof Dr Zheng (Sophia) Tang, University of Newcastle, United Kingdom

 

1.00 p.m.     Lunch Break

 

Part III: Outlook

1. Lessons Learned from the Genesis of the HCCH 2019 Judgments Convention
   Dr Ning Zhao, Principal Legal Officer, HCCH

2. International Commercial Arbitration and Judicial Cooperation in civil matters: Towards an Integrated Approach
   José Angelo Estrella-Faria, Principal Legal Officer and Head, Legislative Branch, International Trade Law Division, Office of Legal Affairs, United Nations; Former Secretary General, UNIDROIT

3. General Synthesis and Future Perspectives
   Hans van Loon, Former Secretary General, HCCH

 

Poster Bonn HCCH Conference-30-01-23

 

 

 

 

Conventions & Instruments

On 1 December 2022, the 2007 Maintenance Obligations Protocol entered into force for Ukraine. At present, 31 States and the European Union are bound by the Protocol. More information is available here.

On 7 December 2022, the 1961 Apostille Convention entered into force for Saudi Arabia. The Convention currently has 124 Contracting Parties. More information is available here.

On 1 January 2023, the 1980 Child Abduction Convention entered into force for Cabo Verde. The Convention currently has 103 Contracting Parties. More information is available here.

On 19 January 2023, El Salvador deposited its instrument of accession to the 1970 Evidence Convention. The Convention, which currently has 65 Contracting Parties, will enter into force for El Salvador on 20 March 2023. More information is available here.

 

Publications & Documentation

On 20 December 2022, the Permanent Bureau published the Practitioners’ Tool: Cross-Border Recognition and Enforcement of Agreements Reached in the Course of Family Matters Involving Children. More information is available here.

On 18 January 2023, the Permanent Bureau published the second edition of the Practical Handbook on the Operation of the Apostille Convention. More information is available here.

 

Other

On 13 December 2022, the Permanent Bureau celebrated the 10th anniversary of the establishment of the HCCH Regional Office for Asia and the Pacific. More information is available here.

 

These monthly updates are published by the Permanent Bureau of the Hague Conference on Private International Law (HCCH), providing an overview of the latest developments. More information and materials are available on the HCCH website.