Flux des sites DIP

UNIDROIT has started an online consultation on its Draft Principles and Commentary on Digital Assets and Private Law, which Marco Pasqua has thankfully posted on this blog.

Principle 5 titled “Conflict of laws” will be of special interest for our readers, yet even experts of the field may have trouble understanding this somewhat complex provision. As an observer in the Working Group, I would like to give some background.

The subject of Principle 5 is the law applicable to proprietary issues in digital assets. A digital asset is defined in a broad way as an “electronic record which is capable of being subject to control” (Principle 2(2)). This covers all cryptocurrencies and tokens. The term “proprietary issues” is not defined but can be understood as encompassing the existence and transfer of ownership as well as other rights in rem.

The law governing proprietary issues in digital assets is defined by a waterfall.

The first two levels are dominated by party autonomy. Principle 5(1)(a) refers to the law expressly specified in the digital asset itself, whereas Principle 5(1)(b) points to the law chosen for the system or platform on which the asset is recorded.

Free choice of law may be seen as a heresy in property law. Yet it must be borne in mind that the blockchain environment is relatively self-contained. A restricted choice of the applicable property law has already been accepted in the Hague Intermediated Securities Convention. This was a door-opener, even though the EU did not sign up.

The problem lies elsewhere. Virtually none of the existing digital assets or systems contains a choice of law. This is by no means a coincidence, but the result of the anti-etatist beliefs of the social circles in which the technology was conceived. Since these beliefs are unlikely to change any time soon (if ever), choice of law for a blockchain will remain as rare as hen’s teeth.

If the governing law is not chosen (i.e. virtually always), the draft provides two options (Principle 5(1)(c)). Under Option A, a state can specify the relevant rules of its forum law which should govern, and to the extent these are insufficient, refer to the UNIDROIT Principles as a kind of gap-filler. Under Option B, it can declare the UNIDROIT Principles to apply directly, without specifying any part of its domestic law.

What is striking is that the conflict-of-laws method is completely ignored here. The law of the forum or the UNIDROIT Principles govern, regardless of the connections of the case.

This may be justified insofar as substantive law harmonisation on the international level is achieved, i.e. in case of Option B. But where a state follows Option A by specifying certain rules of the forum as applicable, these rules would in fact govern all situations world-wide before its courts. Other states following Option A would also specify their own national rules. Divergences between these rules will not only be cast in stone, but exacerbated by substantive rules of PIL (règles matérielles de droit international privé). The result will be a global jumble, leading to the opportunities of forum shopping which PIL experts know so well. 

If the governing law is not chosen, nor the substantive rules or the UNIDROIT Principles on Digital Assets apply, then the law applicable by virtue of the PIL rules of the forum governs (Principle 5(1)(c)). The PIL rules are thus relegated to the last level. What is more, no harmony is achieved, as not a single indication is given on how the states should fashion their PIL. Anything goes – hardly a recipe for global harmonisation.

The Hague Conference on PIL has just published a joint proposal with UNIDROIT for a “Project on Law Applicable to Cross-Border Holdings and Transfers of Digital Assets and Tokens”. It shall deal specifically with Principle 5 of the UNIDROIT Draft. This is the first joint project between the two institutions. One may nurture the hope that it will result in more precise and elaborate connecting factors. Until then, the need for clearer conflicts rules may be highlighted in the UNIDROIT online consultation, which is open until 20 February 2023.

The rules on negotorium gestio in Article 11 Rome II Regulation have received little attention so far and are rarely well understood. Jonas Fritsch has written a PhD thesis on them, in which he compares the different legal systems of the Member States and examines in detail the connecting factors of Article 11 Rome II. He has kindly provided the following summary:

“Negotiorum gestio is a concept that can be described as multifaceted. Whilst in Germany it is subject to many controversial discussions in academia, other Member States of the EU barely know it. In any case, its scope is vague. This is why the EU’s ambition to create a uniform conflict of laws rule was described by the Hamburg Group for Private International Law as “a bold attempt”. The presented thesis sheds light on the end product of EU’s work by analyzing in particular Article 11 of EU’s Rome II Regulation. This provision is interpreted in detail and considered in the context of the other provisions of EU’s regulatory framework.

The analysis is preceded by a section deemed to create a methodological foundation for the later work. Here, for example, the question is addressed as to whether in European law a distinction must be made between “mere” interpretation and further development of the law (so-called “Rechtsfortbildung”). Whilst the CJEU does not differentiate between both concepts of methodology, it is shown that they differ considerably. For this reason, the author opts for identifying a legal finding that goes beyond mere interpretation and applying the appropriate methods to this. By referencing the discussion in German academia, it is shown that it is no longer a matter of “mere” interpretation when the law’s wording is exceeded.

On this basis, Article 11 Rome II is examined. Here, selected legal systems (in particular Germany, Austria, France, Spain and Italy) are studied with regard to their view on negotiorum gestio. From this, conclusions are drawn on the scope of application of Article 11 Rome II. At the end it becomes clear that the provision’s scope includes all claims that arise when a person (the intervenor) intervenes in the affairs of a third party (the principal), does not (exclusively) act in his or her own interest and is not obliged to do so.

Subsequently, the connecting factors provided for in Article 11 Rome II are analyzed. Particularly neuralgic is Article 11(3) Rome II. The “country in which the act was performed” is difficult to identify in some cases as there is uncertainty about the meaning of the term “act”. This causes problems, for example, when the actions of the intervenor are locally distinct from their effects – additional examples are presented in the book. It is demonstrated that Article 11(3) Rome II can be directly applied only if the intervenor’s actions immediately coincide with an interference with absolutely protected rights (such as body integrity or property) or the principal’s unpaid obligations (i. e. payment of the principal’s debts). In all other cases, the purpose (or “telos”) underlying Article 11(3) Rome II is missed. This is why the author states that Rome II contains an unconscious lacuna in this regard: It can be assumed that the European legislator intended to regulate all cases of negotiorum gestio; however, it has not been able to consider all possible constellations. This lacuna needs to be filled and this should be done by applying the law of the place where the specific interest of the principal is located; this constitutes a neutral connecting factor and is thus in line with the telos of Article 11(3) Rome II. Stating this, the author also mentions that other scholars might disagree with the presented way of solution and rather refer to the escape clause contained in Article 11(4) Rome II to handle those cases. However, he points to the uncertainties regarding the proper application of the escape clause and that it does not apply here on the basis of the proper understanding.

Finally, the European civil procedural law and the qualification of claims arising out of negotiorum gestio are discussed. The thesis reveals that such claims are subject to the jurisdiction according to Article 7 No. 2 Brussels Ibis and cannot be qualified contractually”.

Contact the author: jonas.fritsch@staff.uni-marburg.de

On 3 March 2023, the Catholic University of the Sacred Heart will host a conference titled The European Account Preservation Order – Six Years On. The aim is to discuss the operation of Regulation (EU) 655/2014 in light of practice and case law, six years after its provisions became applicable, in January 2017.

Presentations will be given in English and Italian, with simultaneous interpretation.

The speakers include Fernando Gascón Inchausti (Complutense University of Madrid), María Luisa Villamarín López (Complutense University of Madrid), Katharina Lugani (Heinrich Heine University, Düsseldorf), Antonio Leandro (University of Bari), Carlos Santalò Goris (Max Planck Institute, Luxembourg), Caterina Benini (Catholic University of the Sacred Heart), Elena Alina Ontanu (Tilburg University), Raffaella Muroni (Catholic University of the Sacred Heart), Elena D’Alessandro (University of Torino), and Gilles Cuniberti (University of Luxembourg).

The event will also serve as a launch event for an article-by-article commentary on the EAPO Regulation, edited by Elena D’Alessandro and Fernando Gascón Inchausti, and recently published by Edward Elgar Publishing in its Commentaries in Private International Law series. Augusto Chizzini (Catholic University of the Sacred Heart) and Luca Radicati di Brozolo (formerly of the same University, now partner at ArbLit) will discuss the commentary with the editors and the audience.

Attendance is free, but prior registration is required.

See the registration form and the full programme. For further information: pietro.franzina@unicatt.it

A conference on The Law of Treaties as Applied to Private International Law is scheduled to take place in Milan on 5 and 6 May 2023, under the auspices of the Italian Society of International Law and EU Law (SIDI) and the European Association of Private International Law (EAPIL).

The conference will be opened by two general presentations. Catherine Brölmann (University of Amsterdam) will present the rules of public international law relating to treaties and discuss the manner in which, and the extent to which, they can reflect the specificities of the subject-matter of the treaty concerned. Patrick Kinsch (University of Luxembourg) will outline the relevance of the law of treaties to the development and implementation of international conventions in the field of private international law.

Five thematic panels will follow, each featuring a discussion between experts in the law of treaties and speakers familiar with the practice relating to private international law treaties, respectively.

The first panel, on The conclusion and entry into force of private international law treaties, will be chaired by Hans Van Loon (former Secretary-General of the Hague Conference on Private International Law). The discussion will involve Jean-Marc Thouvenin (University of Paris Nanterre; Secretary-General of The Hague Academy of International Law) and Antonio Leandro (University of Bari).

The second panel, chaired by Sergio Carbone (University of Genova, Emeritus), will be devoted to The observance, application and interpretation of private international law treaties. Luigi Crema (University of Milan), Pedro De Miguel Asensio (Complutense University of Madrid) and Paul Beaumont (University of Stirling) will speak on the topic.

The third panel will be about The amendment and succession of private international law treaties: Catherine Kessedjian (University Paris II Panthéon-Assas, Emerita) will moderate a discussion between Jan Wouters (KU Leuven) and Andrea Schulz (German Federal Ministry of Justice).

Burkhard Hess (Director of the Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law) will chair the fourth panel, on The management of conflicts between private international law treaties, with Jan Klabbers (University of Helsinki, TBC) and Alex Mills (University College London) as speakers.

Finally, with Etienne Pataut (University Paris I – Panthéon-Sorbonne) chairing, Malgosia Fitzmaurice (Queen Mary University of London), Chiara Tuo (University of Genova) and Zeno Crespi Reghizzi (University of Milan) will discuss issues in connection with Avoiding, exiting and litigating commitments arising from private international law treaties.

A roundtable on The role of IGOs in the elaboration, implementation and coordination of private international law treaties, chaired by Fausto Pocar (University of Milan, Emeritus), will follow. Participants will include: Nicolas Nord (Secretary-General of the International Commission on Civil Status), Andreas Stein (Head of Unit (Civil Justice) at the European Commission Directorate-General for Justice and Consumers – Civil and commercial justice), Ignacio Tirado (Secretary-General of the International Institute for the Unification of Private Law (Unidroit), and Luca Castellani (Secretary of Working Group IV (Electronic Commerce) – Uncitral).

The conference, which will also feature a key-note speech by Maciej Szpunar (Judge at the Court of Justice of the European Union, TBC), will be closed by remarks by Stefania Bariatti (University of Milan).

The conference is organised by a scientific committee consisting of Stefania Bariatti, Giacomo Biagioni, Pietro Franzina and Lorenzo Schiano di Pepe, and will take place at the Catholic University of the Sacred Heart.

The full programme can be found here, together with additional practical information. Those wishing to attend must fill in the registration form available here. Early bird rates are offered to those registering before 6 March 2023.

For further information, please write an e-mail to: pietro.franzina@unicatt.it.

The Centre for Private International Law of the University of Aberdeen is organising a webinar/book launch for Csongor István Nagy (ed.), Cross-Border Litigation in Central Europe (Kluwer Law International, 2022) on 23 February 2023, 13:00 – 15:00 UK time.

Speakers: 

Prof Carmen Otero García-Castrillón, Complutense UniversityComplutense University, Madrid (Spain)

Dr Mihail Danov, University of Exeter (UK)

Prof Csongor István Nagy, University of Szeged (Hungary)

Moderator: 

Dr Michiel Poesen, University of Aberdeen (UK)

Please register and find more information here.

In Bravo & Ors v Amerisur Resources Ltd (Re The Amerisur plc Putumayo Group Litigation) [2023] EWHC 122 (KB) claimants, who live in remote rural communities in the Putumayo region of Colombia, seek damages from the defendant pursuant to the Colombian Civil Code, and in reliance on Colombia Decree 321/1999, in respect of environmental pollution caused by a spill (or spills) of crude oil on 11 June 2015. The claimants’ two causes of action are pleaded under the headings (i) guardianship of a dangerous activity and (ii) negligence. It is common ground between the parties that the oil spillage was the result of deliberate acts by terrorist organisation, FARC.

Steyn J yesterday held on preliminary issues, including statute of limitation. Defendant contends that the two year limitation period provided by relevant Colombian law re Colombian group actions (‘Law 472’), applies to the claim. Parties agree that in substance, Colombian law is lex causae per A4 and A7 Rome II.

Claimants rely on two points of English law and one of Colombian law. First, they contend that the relevant Article of Law 472 is a procedural provision within the meaning of A1(3) Rome II, and therefore it falls outside the scope of Rome II. I believe they are right but the judge did not. Secondly, they refute the defendant’s contention that this action should be treated as a group action under Law 472. Thirdly, even if they are wrong on both those points, they submit that application of the time limit of Law 472 would be inconsistent with English public policy, and so the court should refuse to apply it pursuant to A26 Rome II.

All but one links to case-law in this post refer to my discussion of same on the blog, with pieces of course further linking to the judgment. Apologies for the pat on my own back but it is nice to see that all but one (Vilca, where parties essentially agreed on the Rome II issue) of the cases referred to in the judgment all feature on the blog.

For claimants, Alexander Layton KC referred to Wall v Mutuelle de Poitiers Assurances and Actavis UK Ltd & ors v Eli Lilly and Co (where the issues were discussed obiter). Defendants rely on Vilca v Xstrata Ltd [2018] EWHC 27 (QB), KMG International NV v Chen [2019] EWHC 2389 (Comm), Pandya v Intersalonika General Insurance Co SA [2020] EWHC 273 (QB), [2020] ILPr 44 and Johnson v Berentzen [2021] EWHC 1042 (QB).

My reception of the High Court’s conclusions in KMG, Pandya, and Johnson was not enthusiastic, and in my review of Pandya in particular I also suggest that the same scholarship relied on in this case, did not actually lend support to the  defendant’s arguments, and I stand by that, too.

Hence Steyn J’s conclusion [102] that Article 15 Rome II

contains a list of matters which are ‘in particular’ to fall under the designated law, irrespective of whether they would be classified as matters of substance or procedure

and [106]

that the provisions of article 15 of Rome II should be construed widely

in my view is wrong. (Note the linguistic analysis in [110] will be of interest to readers interested in authentic interpretation of multi-lingual statutes).

[109] The key question then is which Colombian limitation period applies to these English proceedings, which brings the judge to discuss [115] ff ia Iraqi Civilians v Ministry of Defence (No.2). Here the judge, after discussing Colombian law evidence, holds [137]

that this action has not been brought under Law 472, and it does not fall to be treated as if it had been brought as a Colombian group action. Therefore, this action is not time-barred pursuant to article 47 of Law 472.

Hence claimants lost the argument on Rome II’s procedural exception but won the argument on application of Colombian law.

[139] ff whether the limitation rule should be disapplied pursuant to A26 Rome II is discussed obiter and summarily, with reference of course to Begum v Maran which I discuss here. The judge holds A26’s high threshold would not be met.

Both parties have reason to appeal, and one wonders on which parts of Rome II, permission to appeal will be sought.

Geert.

EU Private International Law, 3rd ed. 2021, ia para 4.80.

Successful claimants (represented ia by @alexwlayton instructed by @leighdayintl) in Amerisur Putumayo Group Litigation -Colombia crude oil spill
Preliminary Rome II issues include qualification of issues as procedural, public policy

[2023] EWHC 122 (KB)https://t.co/X139KicNzR

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

The International Institute for the Unification of Private Law (UNIDROIT) is presently conducting a public consultation regarding a set of Draft Principles and Commentary on Digital Assets and Private Law.

These Principles have been prepared by the Working Group on Digital Assets and Private Law over the course of 7 sessions between 2020-2022. Additional information about the Working Group and its meetings can be found here.

Comments should be provided in English, using this online form. The form is divided into seven sections consistent with the text of the Principles; section II is about private international law.

The deadline to submit comments is 20 February 2023. The Working Group will consider the comments received at its next session (8-10 March 2023).

For further information, please contact Hamza Hameed at h.hameed@unidroit.org.

The European Commission has announced earlier today that it has sent a letter of formal notice to Poland (INFR(2021)2001) for failure to fulfil its obligations under the Brussels IIa Regulation.

The infringement case concerns the non-conformity of the Polish law with the Brussels IIa Regulation, specifically the provisions relating to the enforcement of judgments or orders that require the return of abducted children to their place of habitual residence. The Commission considers that there is a systematic and persistent failure of Polish authorities to speedily and effectively enforce judgments ordering the return of abducted children to other EU Member States.

Poland now has two months to reply to the Commission’s letters of formal notice and take the necessary measures to remedy the breach of EU law identified by the Commission. Failing this, the Commission may decide to issue a reasoned opinion.

The editors of the blog welcome additional information on the background of this infringement action.

As announced on this blog, the Catholic University of the Sacred Heart, in Milan, will host, on 3 March 2023, a conference on the operation of Regulation (EU) No 655/2014 establishing a European Account Preservation Order (EAPO) procedure, in light of practice and case law.

The working languages of the conference will be English and Italian, with simultaneous interpretation.

Attendance is free, but prior registration is required. The registration form can be found here.

Speakers include Gilles Cuniberti (University of Luxembourg), Elena D’Alessandro (University of Torino), Fernando Gascón Inchausti (Complutense University, Madrid), Katharina Lugani (Heinrich Heine University, Düsseldorf), Antonio Leandro (University of Bari), Raffaella Muroni (Catholic University of the Sacred Heart), Elena Alina Ontanu (Tilburg University), Carlos Santalò Goris (Max Planck Institute, Luxembourg), María Luisa Villamarín López (Complutense University, Madrid), and Caterina Benini (Catholic University of the Sacred Heart).

The conference will also offer an opportunity to present an article-by-article commentary of the EAPO Regulation, edited by Elena D’Alessandro and Fernando Gascón Inchausti, recently published by Edward Elgar in its Commentaries in Private International Law series. Augusto Chizzini (Catholic University of the Sacred Heart) and Luca Radicati di Brozolo (formerly professor at the Catholic University of the Sacred Heart, now partner at ArbLit, Milan) will exchange views on this work.

The full programme of the conference is available, with additional details, on the event’s dedicated website.

… they sometimes forget to buy the compulsory toll ticket (“e-vignette”) in advance or make mistakes when filling out the online form. The company collecting the Hungarian toll – which is incorporated as a plc under Hungarian law – proved to be unforgiving and regularly sues the owners of the cars in German courts.

Twice was the German Federal Court called upon to decide on such actions in a relatively short timespan (judgments of 28 September 2022 – press release discussed by Matthias Weller here – and of 7 December 2022). Both rulings are of particular interest for our blog because the Court applied the Rome I Regulation.

The first issue the Federal Court had to decide was whether the actions were “civil and commercial matters” in the sense of Art 1(1) Rome I. This question had already been answered in the affirmative by the CJEU in another case (C-31/21, Nemzeti Útdíjfizetési Szolgáltató Zrt. v NW), testifying to the serious troubles Germans are in when not driving on their Autobahn.

The second issue was trickier: Was there a contractual obligation?

The Federal Court argues that contractual obligations can arise from the simple act of driving over the highway, which can be constructed as the acceptance of an offer made by the toll service company to enter into a contract. The CJEU had decided as much for the use of a railway (C-349/18 to C-351/18, Nationale Maatschappij der Belgische Spoorwegen (NMBS) v Mbutuku Kanyeba and Others, para 37). It is hard to see why it should be different for highway usage.

One may wonder which of the categories listed in Art 4(1) Rome I fits the contract over the usage of a highway: Is it a service contract, a tenancy, or another one?

The Federal Court cuts short this debate by underlining that both Art 4(1)(b) and Art 4(2) Rome I will lead to the application of Hungarian law. Undoubtedly, the characteristic performance is provided here by the toll payment company, not by the user. That the contract involves the tenancy of immovable property seems far-fetched, but even so, Art 4(1)(c) Rome I would have yielded the same result.

The Hungarian toll payment service company had not sued the driver, but the person on whose name the car was registered. The question thus arose whether the alleged liability was based on “obligations freely assumed by the defendant towards the claimant”, as required for a contractual obligation (see CJEU, C-334/00, Tacconi).

The Federal Court overcomes this obstacle by leaving it to the law applicable to the contract to decide who is debtor and creditor. It bases this view on Art 12(1)(b) Rome I, according to which the “performance” falls into the scope of this law. According to the Federal Court, this also encompasses the definition of the persons bound by the contract.

While this may be true, it would go too far to allow the law governing the contract to draw any person into its scope. This would be fundamentally incompatible with the requirement of a freely assumed obligation.

In the end, one cannot ignore the practical need to be able to sue the person in whose name the car is registered, as the driver will mostly be unknown. But perhaps this need could as well have been filled by non-contractual liability, which would have resulted in the applicability of the Rome II Regulation.

The most disputed point of both cases concerned the amount that was claimed. Since the defendants had not acquired a proper ticket in advance, they were charged a price that was three times higher than the normal toll. Since in addition they let pass a deadline of 60 days after the first payment reminder, they also had to pay another fee, ratcheting up the bill to 20 times (!) of the normal ticket price.

The defendants claimed that these rules of Hungarian law would violate German public policy. Yet, the Federal Court sees this differently. First, it underlines that German public policy must be applied “in a restrictive manner” in relation to the law of another EU Member State. Second, the Federal Court points out that the relativity of public policy mandates restraint when invoking it, as the case bears only tenuous relations with Germany and all of the facts happened in Hungary.

Most importantly, the Federal Court rejects the defendants’ claim that the additional fees would amount to “punitive damages”, which are incompatible with German public policy. It characterises the increased price not as a penalty, but instead sees the original ticket price as a discount for early payment. Furthermore, it takes the view that the increase of the ticket price in case of later payment is justified by the additional administrative burdens and risks of the toll collection company in enforcing the claim against the user. Most interestingly, the Court also explicitly acknowledges that it is in the legitimate interest of the toll collection company to incentivise voluntary prepayment.

Finally, the Court does not take issue with the second fee, even though it was 20 times higher than the original ticket price. The Court characterises this fee as a (first) contractual penalty. It recalls that such fees are not unusual in German public transport, and thus can hardly be seen as incompatible with German public policy.

Although it confirmed the lower courts’ judgments on all other points, the Federal Court nevertheless vacated them because they had awarded payment in euros to the claimants. The Federal Court highlights that the Hungarian toll laws only provide for claims in Hungarian forint, not in euros. It sent back both rulings to the lower courts to enquire whether there are any additional rules of Hungarian law that allow conversion of the debt into a foreign currency.

Besides shedding light on a number of aspects of the Rome I Regulation, both cases are also illustrative of a wider point. The German courts have lent a helping hand to the Hungarian toll payment services company in collecting unpaid fees. They have withstood the German residents’ anger over seemingly outrageous Hungarian fees by pointing out that such fees are not incompatible with the German legal system. Even though it is bad news for car drivers, it proves that judicial cooperation in the EU is working.

— Thanks to Paul Eichmüller and Verena Wodniansky-Wildenfeld for reading and commenting a draft of this post.

The American Society of International Law (ASIL) Private International Law Interest Group (PILIG) has just published its most recent Newsletter and Commentaries on Private International Law (Vol. 5, Issue 2). The primary purpose of the newsletter is to communicate global news on PIL. Accordingly, the newsletter attempts to transmit information on new developments on PIL rather than provide substantive analysis, in a non-exclusive manner, to provide specific and concise information that our readers can use in their daily work. These updates on developments on PIL may include information on new laws, rules and regulations; new judicial and arbitral decisions; new treaties and conventions; new scholarly work; new conferences; proposed new pieces of legislation; and the like.

Please see find the Newsletter and Commentaries in the attachment seen above.

The Dutch first instance judgment in Groningen  earlier this month, in X v PayPal (Europe) S.a.r.l. & Cie S.C.A., sees claimant debtor essentially seeking a compulsory settlement – CS. PayPal (established in Luxembourg) is the only debtor refusing the settlement proposed by claimant’s bank.

The CS is not listed in Annex I to the Insolvency Regulation 2015/848 (always check for the consolidated version, for the Annex is frequently updated by the Member States’ communication of proceedings to be included). This is where the discussion of scope of application could and should end.

Instead, the judge tests the CS against A1(1)’s abstract criteria. She decides there is neither divestment of assets, nor a temporary stay of individual enforcement proceedings.

This then raises the applicability of Brussels Ia. Seeing as the judge finds the action does not meet with the CJEU F-Tex criteria (Brussels Ia’s insolvency exception only applies to actions which derive directly from insolvency proceedings and are closely connected with them), she holds that Brussels Ia’s ‘insolvency’ exception is not triggered and that BIa applies.

The judge then cuts the corner which English courts in schemes of arrangement have often cut, namely to consider the willing debtors, domiciled in The Netherlands, as ‘defendants’ per Brussels Ia, hereby triggering Article 8(1) BIa’s anchor defendant mechanism. The judge justifies this by stating that the other creditors are interested parties and that it is in the interest of the sound administration of justice that the CS be discussed viz the interested parties as a whole. That may well be so, however in my view that is insufficient reason for A8(1) to be triggered. A8(1) requires ‘defendants’ in the forum state, not just ‘interested parties’. The suggestion that a co-ordinated approach with an eye for all interested parties, justifies jurisdiction, puts A8(1)‘s expediency cart before the A4 ‘defendant’-horse.

The judge then also cuts corners (at least in her stated reasons) on the applicable law issue, cataloguing this firmly in Rome I. She argues that even if the CS is a forced arrangement, replacing a proposed contract which party refused to enter into, it is still a contractual arrangement. That is far from convincing.

Equally not obvious is as the judge holds, that  per A4(2) Rome I, the party required to effect the ‘characteristic performance’ of a compulsory settlement, is the claimant-debtor of the underlying debt, leading to Dutch law being the lex causae.

The judgment at the very least highlights the continuing elephant in the restructuring tourism room, namely the exact nature of these proceedings under Brussels Ia, EIR and Rome I.

Geert.

1st instance Noord Holland
WSNP Dwangakkoord wrongly held to be outside EU #Insolvency Regulation not by resorting to Annex but by applying abstract definition
Jurisdiction established under A8 BIa anchor defendant
Shaky finding of applicable law A4 Rome Ihttps://t.co/G63d0GO71S

— Geert Van Calster (@GAVClaw) January 2, 2023

It is my pleasure to recommend to the global CoL community a real treat: Talia Einhorn’s “Private International Law in Israel”, an analysis of the country’s private international law of no less than almost 900 pages, now in its third edition. This monograph forms part of and is a reprint from the International Encyclopedia of Laws/Private International Law amongst a large series of country reports on which the “General Section” by Bea Verschraegen, the editor of the entire series, builds.

According to the Encyclopedia’s structure for country reports, the text covers all conceivable aspects of a national private international law, from “General Principles (Choice of Law Techniques)” in Part I, including the sources of PIL, the technical and conceptual elements of choice of law rules (“determination of the applicable law”) as well as “basic terms”. Part II unfolds a fascinating tour d’horizon through the “Rules of Choice of Law” on persons, obligations, property law, intangible property rights, company law, corporate insolvency and personal bankruptcy, family law and succession law. Part III covers all matters of international civil procedure, including jurisdictional immunities, international jurisdiction, procedure in international litigation, recognition and enforcement and finally international arbitration.

The analyses offered seem to be extremely thorough and precise, including in-depth evaluations of key judgments, which enables readers to grasp quickly core concepts and issues beyond basic information and the mere black letter of the rules. For example, Chapter 4 of Part III on the recognition and enforcement of foreign judgments explains that Israel is a State Party to only one rather specific convention, the UN Convention on the Recovery Abroad of Maintenance 1956 (apparently operated without any implementing legislation, see para. 2434). Further, Israel entertains four bilateral treaties (with Austria, Germany, Spain and the UK) that provide generally for recognition and enforcement of judgments in civil and commercial matters. These four treaties, however, seem to differ substantially from each other and from the domestic statutory regime under the Israeli Foreign Judgments Enforcement Law (“FJEL”), see para. 2436. These differences are spelled out down to the level of decisions of first instance courts of the respective foreign State Party, see e.g. footnote 1927 with reference to recent jurisprudence (of the German Federal Court of Justice and) of the local court of Wiesbaden on Article 8(2) of the bilateral treaty with Germany stipulating, according to these courts’ interpretation, a far-reaching binding effect to the findings of the first court. This is contrasted with case law of the Israeli Supreme Court rejecting recognition and enforcement of a German judgment, due to the lack of a proper implementation of the Treaty in Israeli domestic law, see paras. 2437 et seq. – a state of things criticized by the author who also offers an alternative interpretation of the legal constellation that would have well allowed recognition and enforcement under the Treaty, see para. 2440. Additionally, interpretation of the domestic statutory regime in light of treaty obligations of the State of Israel, irrespective of a necessity of any specific implementation measures, is suggested, para. 2447. On the level of the domestic regime, the FJEL, in § 3 (1), prescribes as one out of a number of cumulative conditions for enforcement that “the judgment was given in a state, the courts of which were, according to its laws, competent to give it”, see para. 2520. Indeed, “the first condition is puzzling”, para. 2526, but by no means unique and does even appear in at least one international convention (see e.g. Matthias Weller, RdC 423 [2022], at para. 251, on Art. 14(1) of the CEMAC 2004 Agreement and on comparable national rules). At the same time, and indeed, controlling the jurisdiction of the first court according to its own law appears hardly justifiable, all the more, as there is no control under § 3 FJEL of the international jurisdiction according to the law of the requested court / State, except perhaps in extreme cases under the general public policy control in § 3 (3) FJEL. Additionally, on the level of domestic law, English common law seems to play a role, see paras. 2603, but the relation to the statutory regime seems to pose a question of normative hierarchy, see para. 2513, where Einhorn proposes that the avenue via common law should only be available as a residual means. In light of this admirably clear and precise assessment, one might wonder whether Israel should considering participating in the HCCH 2019 Judgments Convention and the reader would certainly be interested in hearing the author’s learned view on this. The instrument is not listed in the table of international treaties dealt with in the text, see pp. 821 et seq., nor is the HCCH 2005 Choice of Court Agreements Convention. Of course, these instruments do not (yet?) form part of the Israeli legal system, but again, the author’s position whether they should would be of interest.

As this very brief look into one small bit of Einhorn’s monograph shows, this is the very best you can expect from the outsider’s and a PIL comparative perspective, probably as well from the insider’s perspective if there is an interest in connecting the own with the other. Admirable!

Mathilde Codazzi, who is a master student at the University Paris II Panthéon-Assas, contributed to this post.

In a judgment of 8 November 2022, the international commercial chamber at the Paris Court of Appeal (ICCP-CA) addressed the issue of the applicable law to a claim for loss due to fraudulent misappropriation of funds transferred on a bank account.

The plaintiff, a French farmer, invested over € 200,000 between 2013 and 2014 with an online trading platform on Forex. For that purpose, he transferred the monies on an account owned by the first defendant, an English company (Worldpay AP Ltd) and registered at the French subsidiary (or possibly branch, the judgment is not quite clear on this point) of the second defendant, a Scottish bank (Natwest Markets Plc, formerly Royal Bank of Scotland).

The plaintiff eventually brought proceedings before a Parisian court (tribunal judiciaire) in July 2020 against these two companies and the platform’s operator, a Dutch company. The judgment is not very detailed on his claims, but it seems that the plaintiff alleged that he had made gains that he could not eventually receive. It seems, therefore, that the claim is that his investment and gains were misappropriated fraudulently.

On 3 December 2021, the pre-trial judge (juge de la mise en état) declared the claim inadmissible on the ground that it was time-barred. It does not seem that the issue of the applicable law was raised at this stage.

The plaintiff appealed on the ground that he disputed the starting point of the the five-year prescription period (Article 2224 of the French civil code). His lawyer had sent to the defendants a letter of formal notice dating from March 2015. The issue was whether the starting point was that letter, or whether it had not started to run when the letter of formal notice was sent because the plaintiff was not aware that he was a victim of the fraudulent scheme.

For a reason which is not detailed in the judgement, the judge only held that the claim against the two financial institutions (Natwest and Worldplay) was time barred. The plaintiff only appealed against them. It is unclear why, but it might be that, because the issue was one of misappropriation, the claim against the platform was always quite weak, and thus was not pursued.

In a judgment of 8 November 2022, the ICCP-CA upheld the decision of the pre-trial judge.

The Court of Appeal raised the issue of the applicable law ex officio and invited the parties to comment on it. It eventually confirmed that French law applied, however.

The ICCP-CA characterized the issue as tortious (quasi-delictual). It thus ruled that the Rome II Regulation applied, and the law governing the tort also governed  the prescription issue.

It applied Article 4.1 of the Rome II Regulation and relied on the case-law of the CJEU concerning financial damage under the Brussels I Regulation, after insisting on the consistency principle mentioned in Recital 7 of the Rome II Regulation.

The court thus ruled that the applicable law should be the law of the country where the victim is domiciled when the alleged financial damage materializes directly on the plaintiff’s bank account held with a bank established in this country and that, subsidiarily, the same law is applicable when the harmful even is manifestly more closely connected to this law (Kronhofer, C-168-02, Kolassa, C-375/13 and Löber, C-304/17).

The court found that the evidence provided by the plaintiff proved the transfer of funds from his bank account held with a French bank to the Worldpay’s account, held by Natwest’s French subsidiary (or branch). It further found that the monies had been made available to the online platform from that last bank account. It then concluded that the monies had “disappeared” after being transferred on this Natwest’s French bank account, and that this set the place of the damage suffered by the investor. As a result, the court ruled that the damage occurred in France and that French law was therefore applicable to the claim.

On the merits, the ICCP-CA confirmed that the claim was time barred.

An interesting question is whether the outcome would have been the same depending on whether the claim was one of misappropriation of funds or negligence of the platform. In particular, would the loss have been suffered in both cases “directly” on the bank account where the monies had initially been transferred by the investor?

It is also interesting to note that the court relied on the consistency principle between Rome II and Brussels Ibis in a case where the provisions are quite different, in particular in that Article 4 of the Rome II Regulation is more complex than Article 7(2) of the Brussels I bis Regulation. But a reasonable argument could be that the case law of the CJEU on Article 7(2) in the field of financial loss has made the two rules very similar.

The University of Milan, on behalf of the DIGinLaw consortium (consisting of partners: the Josip Juraj Strossmayer University of Osijek, the University of Aberdeen, and the University of Zagreb – University Computing Centre (SRCE)), is organising an international conference on Law in the Age of Modern Technologies, taking place in Milan on 10 February 2023.

Digitalization strongly affects society, science, and the transfer of knowledge. While taking advantage of modern technologies, the DIGinLaw Project aims to raise awareness of digital demands in higher education and research in law and fosters the creation of digital literacy and digital competence that is needed in the law labour market. The Project aims to create an open and inclusive society of legal knowledge and to open access to the scientific areas dealing with the effects of digitalization on law and legal education.

The Conference is the culmination of scientific research on the digitalization of legal education and the digitalization of law. It provides a venue for the presentation and discussion of scientific research focusing on such and related themes. The full program of the event is available here.

The conference will be held in a hybrid format. Participation is free of charge, but registration is required.

Written by Kiara van Hout. Kiara graduated from the Law Tripos at the University of Cambridge in 2021 (St John’s College). She is currently an Associate to a Judge at the Supreme Court of Victoria.

In two recent English cases, the High Court has granted injunctive relief to restrain European proceedings in breach of English forum selection clauses. This article compares the position on anti-suit injunctive relief under the Brussels I Regulation Recast and the English common law rules, and the operation of the latter in a post-Brexit landscape. It considers whether anti-suit injunctions to protect forum selection clauses will become the new norm, and suggests that there is Supreme Court authority militating against the grant of such injunctive relief as a matter of course. Finally, it speculates as to the European response to this new English practice. In particular, it questions whether the nascent European caselaw on anti anti-suit injunctions foreshadows novel forms of order designed to protect European proceedings.

Anti-suit injunctions under the Brussels I Regulation Recast

In proceedings commenced in the English courts before 1 January 2021, it is not possible to obtain an anti-suit injunction to restrain proceedings in other EU Member States.

In Case 159/02 Turner v Grovit [2004] ECR I-3565, the Full Court of the European Court of Justice found that it was inconsistent with the Brussels I Regulation to issue an anti-suit injunction to restrain proceedings in another Convention country. That is so even where that party is acting in bad faith in order to frustrate existing proceedings. The Court stated that the Brussels I Regulation enacted a compulsory system of jurisdiction based on mutual trust of Contracting States in one another’s legal systems and judicial institutions:

It is inherent in that principle of mutual trust that, within the scope of the Convention, the rules on jurisdiction that it lays down, which are common to all the courts of the Contracting States, may be interpreted and applied with the same authority by each of them… Any injunction prohibiting a claimant from bringing such an action must be seen as constituting interference with the jurisdiction of the foreign court which, as such, is incompatible with the system of the Convention.

In the subsequent Case 185/07 Allianz v West Tankers [2009] ECR I-00663, the question arose as to whether it was inconsistent with the Brussels I Regulation to issue an anti-suit injunction to restrain proceedings in another Convention country on the basis that such proceedings would be contrary to an English arbitration agreement. In its decision, the Grand Chamber of the European Court of Justice found that notwithstanding that Article 1(2)(d) excludes arbitration from the scope of the Brussels I Regulation, an anti-suit injunction may have consequences which undermine the effectiveness of that regime. An anti-suit injunction operates to prevent the court of another Contracting State from exercising the jurisdiction conferred on it by the Brussels I Regulation, including its exclusive jurisdiction to determine the very applicability of that regime to the dispute. The decision in Allianz v West Tankers represents an extension of Turner v Grovit insofar as it prohibits the issue of anti-suit injunctions in support of English arbitration as well as jurisdiction agreements.

Anti-suit injunctions under the common law rules

The Brussels I Regulation Recast rules govern proceedings commenced in the English courts before 1 January 2021. The regime governing jurisdiction in proceedings commenced after 1 January 2021 comprises the Hague Choice of Court Convention and, more pertinently for present purposes, the common law rules.

At common law, a more flexible approach to parallel proceedings is taken. Anti-suit injunctions may be deployed to ensure the dispute is heard in only one venue. Section 37 of the Senior Courts Act 1981 empowers courts to grant an anti-suit injunction where it appears just and convenient to do so. The ordinary justification for injunctive relief is protection of the private rights of the applicant by preventing a breach of contract. Where parties have agreed to a forum selection clause, either in the form of a jurisdiction or arbitration agreement, anti-suit injunctions may be available to prevent a breach of contract.

In two recent cases, the English courts have granted injunctive relief to restrain European proceedings in breach of English forum selection clauses. These cases demonstrate clearly the change of position as compared with Allianz v West Tankers and Turner v Grovit, respectively.

Proceedings in violation of English arbitration agreement

In QBE Europe SA/NV v Generali España de Seguros Y Reaseguros [2022] EWHC 2062 (Comm), a yacht allegedly caused damage to an underwater power cable which resulted in hydrocarbon pollution. The claimant had issued a liability insurance policy to the owners in respect of the yacht. That policy contained a multi-faceted dispute resolution and choice of law clause, which provided inter alia that any dispute arising between the insurer and the assured was to be referred to arbitration in London.

The defendant had issued a property damage and civil liability insurance policy with the owners of the underwater power cable. The defendant brought a direct claim against the claimant in the Spanish courts under a Spanish statute. The claimant responded by issuing proceedings in England, and applied for an anti-suit injunction in respect of the Spanish proceedings brought by the defendant.

The court found that the claims advanced by the defendant in the Spanish proceedings were contractual in nature, as the Spanish statute provided the defendant with a right to directly enforce the contractual promise of indemnity created by the insurance contract. The matter therefore concerned a so-called ‘quasi-contractual’ anti-suit injunction application, as the defendant was not a party to the contractual choice of jurisdiction in issue. Nevertheless, the right which the defendant purported to assert before the Spanish court arose from an obligation under a contract (the claimant’s liability insurance policy) to which the arbitration agreement is ancillary, such that the obligation sued upon is said to be ‘conditioned’ by the arbitration agreement.

That the defendant was seeking to advance contractual claims without respecting the arbitration agreement ancillary to that contract provided grounds for granting an anti-suit injunction. As such, the position under English conflict of laws rules is that the court will ordinarily exercise its discretion to restrain proceedings brought in breach of an arbitration agreement unless the defendant can show strong reasons to refuse the relief (see Donohue v Armco Inc [2001] UKHL 64). The defendant advanced several arguments, which were dismissed as failing to amount to strong reasons against the grant of relief. Therefore, the court found that it was appropriate to grant the claimant an anti-suit injunction restraining Spanish proceedings brought by the defendants.

Proceedings in violation of exclusive English jurisdiction agreement

In Ebury Partners Belgium SA/NV v Technical Touch BV [2022] EWHC 2927 (Comm), the defendants were interested in receiving foreign exchange currency services from the claimant company. The claimant submitted that the parties had entered into two agreements in early 2021.

The first agreement was a relationship agreement entered into by the second defendant Mr Berthels as director of the first defendant Technical Touch BV. Mr Berthels completed an online application form for currency services, agreeing to the claimant’s terms and conditions. These terms and conditions were available for download and accessible via hyperlink to a PDF document, though in the event Mr Berthels did not access the terms and conditions by either method. The terms and conditions included an exclusive jurisdiction agreement in favour of the English courts.

The second agreement was a personal guarantee and indemnity given by Mr Berthels in respect of the defendant company’s obligations to the claimant. This guarantee also included an exclusive English jurisdiction agreement.

When a dispute arose in April 2021 as to the first defendant’s failure to pay a margin call made by the claimant under the terms of the relationship agreement, the defendants initiated proceedings in Belgium seeking negative declaratory relief and challenging the validity of the two agreements under Belgian law. The claimant responded by issuing proceedings in England, and applied for an interim anti-suit injunction in respect of Belgian proceedings brought by the defendants. The claimant submitted that the Belgian proceedings were in breach of exclusive jurisdiction agreements in favour of the English court.

An issue arose as to whether there was a high degree of probability that the English jurisdiction agreement was incorporated into the relationship agreement, and which law governed the issue of incorporation. It is not within the scope of this article to consider this choice of law issue in depth. For present purposes, it is sufficient to note that the court decided that it was not unreasonable to apply English law to the issue of incorporation, and that on this basis, there was a high degree of probability that the clause was incorporated into the relationship agreement.

As in QBE Europe, the court approached the discretion to award injunctive relief on the basis that the court will ordinarily restrain proceedings brought in breach of a jurisdiction agreement unless the defendant can show strong reasons to refuse the relief. No sufficiently strong reasons were shown. Therefore, the court found that it was appropriate to grant the claimant an anti-suit injunction restraining the Belgian proceedings.

Anti-suit injunctions to protect forum selection clauses: the new norm?

It is plainly important to the status of London as a litigation hub in Europe that English forum selection clauses maintain their security and enforceability. The Brussels I Regulation Recast provided one means of managing parallel proceedings contrived to circumvent such clauses. Absent the framework provided by the Brussels I Regulation Recast; the English courts appear to be employing anti-suit injunctions as an alternative means of protecting English forum selection clauses. This ensures that litigants are still equipped to resist parallel proceedings brought to ‘torpedo’ English proceedings.

Proceedings in which there is an exclusive English forum selection clause represent among the most compelling circumstances in which the court might grant an anti-suit injunction. In those circumstances, the court is likely to grant injunctive relief to protect the substantive contractual rights of the applicant. The presence of an exclusive forum selection clause is a powerful ground for relief which tends to overcome arguments as to comity and respect for foreign courts. As noted in the joint judgment of Lord Hamblen and Lord Leggatt (with whom Lord Kerr agreed) in Enka Insaat Ve Sanayi A.S. v OOO Insurance Company Chubb [2020] UKSC 38, citing Millett LJ in Aggeliki Charis Cia Maritima SA v Pagnan SpA (The Angelic Grace) [1995] 1 Lloyd’s Rep 87, a foreign court is unlikely to be offended by the grant of an injunction to restrain a party from invoking a jurisdiction which he had promised not to invoke and which it was its own duty to decline.

Nevertheless, it is not to be assumed that injunctive relief will always be granted to enforce English forum selection clauses. As Lord Mance (with whom Lord Neuberger, Lord Clarke, Lord Sumption and Lord Toulson agreed) stated in Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35, at paragraph [61]:

In some cases where foreign proceedings are brought in breach of an arbitration clause or exclusive choice of court agreement, the appropriate course will be to leave it to the foreign court to recognise and enforce the parties’ agreement on forum. But in the present case the foreign court has refused to do so, and done this on a basis which the English courts are not bound to recognise and on grounds which are unsustainable under English law which is accepted to govern the arbitration agreement. In these circumstances, there was every reason for the English courts to intervene to protect the prima facie right of AESUK to enforce the negative aspect of its arbitration agreement with JSC.

It is too early to say whether anti-suit injunctions will be granted as a matter of course in circumstances such as those in QBE Europe and Ebury Partners. The judgment of Lord Mance indicates that there is a residual role for comity and respect for foreign courts even in cases of breach of a forum selection clause. The English court should not necessarily assume that its own view as to the validity, scope and interpretation of a forum selection clause is the only one. In some instances, it will be appropriate to allow a foreign court to come to its own conclusion, and consequently to refuse injunctive relief. It is clear, at least, that anti-suit injunctions have returned to the toolbox.

The European response: anti anti-suit injunctions?

It seems likely that English anti-suit injunctions will be met with resistance by European courts who find their proceedings obstructed by such orders. As a matter of theory, it is now possible for European courts to issue anti-suit injunctions to restrain English proceedings: the inapplicability of Allianz v West Tankers and Turner v Grovit vis-à-vis England cuts both ways. However continental European legal systems have traditionally regarded anti-suit injunctions as being contrary to international law on the basis that they operate extraterritorially and impinge on the sovereignty of the State whose legal proceedings are restrained.

It is more plausible that European courts would deploy anti anti-suit injunctions to unwind offending English orders. Assuming that the grant of anti-suit injunctions becomes a regular practice of the English courts in these circumstances, this could provide the impetus for legal developments in this direction across the Channel. In recent years both French and German courts have issued orders of this kind in the context of patent violation. In a December 2019 judgment, the Higher Regional Court of Munich issued an anti anti-suit injunction to prevent a German company from making an application in US proceedings for an anti-suit injunction (see Continental v Nokia, No. 6 U 5042/19). In a March 2020 judgment, the Court of Appeal of Paris issued an anti anti-suit injunction ordering various companies of the Lenovo and Motorola groups to withdraw an application for an anti-suit injunction in US proceedings (see IPCom v Lenovo, No. RG 19/21426).

However, neither decision endorses the general availability of anti anti-suit injunctions outside of the specific circumstances in which relief was sought in those cases. It remains to be seen whether European courts will be willing to utilise anti anti-suit injunctions in circumstances wherein parties have agreed to English forum selection clauses. At this stage, it can only be said that there is a possibility of an undesirable tussle of anti-suit injunctions and anti anti-suit injunctions. This would expose litigants to increased litigation costs, wasted time and trouble, uncertainty as to which court will ultimately hear their case, and the spectre of coercive consequences in the event of non-compliance. Furthermore, a move towards relief of this kind would have a profound impact on the security of English jurisdiction and arbitration agreements. Developments in this area should be watched with interest.

The latest issue of the IPRax (Praxis des Internationalen Privat- und Verfahrensrechts) has been published. The table of contents is available here. The following abstracts have been kindly provided to us by the editor of the journal.

R. Wagner, European account preservation orders and titles from provisional measures with subsequent account attachments

The enforcement of a claim, even in cross-border situations, must not be jeopardised by the debtor transferring or debiting funds from his account. A creditor domiciled in State A has various options for having bank accounts of his debtor in State B seized. Thus, he can apply for an interim measure in State A according to national law and may have this measure enforced under the Brussels Ibis Regulation in State B by way of attachment of accounts. Alternatively, he may proceed in accordance with the European Account Preservation Order Regulation (hereinafter: EAPOR). This means that he must obtain a European account preservation order in State A which must be enforced in State B. By comparing these two options the author deals with the legal nature of the European account preservation order and with the subtleties of enforcement under the EAPOR.

H. Roth, The “relevance (to the initial legal dispute)” of the reference for a preliminary ruling pursuant to Article 267 TFEU

The preliminary ruling procedure under Article 267 of the Treaty on the Functioning of the European Union (TFEU) exists to ensure the uniform interpretation and application of EU law. The conditions under which national courts may seek a preliminary ruling are based on the established jurisdiction of the European Court of Justice (CJEU) and are summarised in Article 94 of the Rules of Procedure of the CJEU. One such condition is that the question referred to the court must be applicable to the decision in the initial legal dispute. Any future judgement by the referring court must thereafter be dependant on the interpretation of Union law. When cases are obviously not applicable, the European Court dismisses the reference for a preliminary ruling as inadmissible. The judgement of the CJEU at hand concerns one of these rare cases in the decision-making process. The sought-after interpretation of Union law was not materially related to the matter of the initial legal dispute being overseen by the referring Bulgarian court.

S. Mock and C. Illetschko, The General International Jurisdiction for Legal Actions against Board Members of International Corporations – Comment on OLG Innsbruck, 14 October 2021 – 2 R 113/21s, IPRax (in this issue)

In the present decision, the Higher Regional Court of Innsbruck (Austria) held that (also) Austrian courts have jurisdiction for investors lawsuits against the former CEO of the German Wirecard AG, Markus Braun. The decision illustrates that the relevance of the domicile of natural persons for the jurisdiction in direct actions for damages against board members (Art 4, 62 Brussels Ia Regulation) can lead to the fact that courts of different member states have to decide on crucial aspects of complex investor litigation at the same time. This article examines the decision, focusing on the challenges resulting from multiple residences of natural persons under the Brussels Ia Regulation.

C. Kohler, Lost in error: The ECJ insists on the “mosaic solution” in determining jurisdiction in the case of dissemination of infringing content on the internet

In case C-251/20, Gtflix Tv, the ECJ ruled that, according to Article 7(2) of Regulation No 1215/2012, a person, considering that his or her rights have been infringed by the dissemination of disparaging comments on the internet, may claim, before the courts of each Member State in which those comments are or were accessible, compensation for the damage suffered in the Member State of the court seized, even though those courts do not have jurisdiction to rule on an application for rectification and removal of the content placed online. The ECJ thus confirms the “mosaic solution” developed in case C-509/09 and C-161/10, eDate Advertising, and continued in case C-194/16, Bolagsupplysningen, for actions for damages for the dissemination of infringing contents on the internet. The author criticises this solution because it overrides the interests of the sound administration of justice by favouring multiple jurisdictions for the same event and making it difficult for the defendant reasonably to foresee before which court he may be sued. Since a change in this internationally isolated case law is unlikely, a correction can only be expected from the Union legislator.

T. Lutzi, Art 7 No 2 Brussels Ia as a Rule on International and Local Jurisdiction for Cartel Damage Claims

Once again, the so-called “trucks cartel” has provided the CJEU with an opportunity to clarify the interpretation of Art. 7 No. 2 Brussels Ia in cases of cartel damage claims. The Court confirmed its previous case law, according to which the place of damage is to be located at the place where the distortion of competition has affected the market and where the injured party has at the same time been individually affected. In the case of goods purchased at a price inflated by the cartel agreement, this is the place of purchase, provided that all goods have been purchased there; otherwise it is the place where the injured party has its seat. In the present case, both places were in Spain; thus, a decision between them was only necessary to answer the question of local jurisdiction, which is also governed by Art. 7 No. 2 Brussels Ia. Against this background, the Court also made a number of helpful observations regarding the relationship between national and European rules on local jurisdiction.

C. Danda, The concept of the weaker party in direct actions against the insurer

In its decision T.B. and D. sp. z. o. o. ./. G.I. A/S the CJEU iterates on the principle expressed in Recital 18 Brussels I bis Regulation that in cross-border insurance contracts only the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules. In the original proceedings – a joint case – the professional claimants had acquired insurance claims from individuals initially injured in car accidents in Poland. The referring court asked the CJEU (1) if such entities could be granted the forum actoris jurisdiction under Chapter II section 3 on insurance litigation against the insurer of the damaging party and (2) if the forum loci delicti jurisdiction under Art. 7(2) or 12 Brussels I bis Regulation applies under these conditions. Considering previous decisions, the CJEU clarified that professional claimants who regularly receive payment for their services in form of claim assignment cannot be considered the weaker party in the sense of the insurance section and therefore cannot rely on its beneficial jurisdictions. Moreover, the court upheld that such claimants may still rely on the special jurisdiction under Art. 7(2) Brussels I bis Regulation.

C. Reibetanz, Procedural Consumer Protection under Brussels Ibis Regulation and Determination of Jurisdiction under German Procedural Law (Sec. 36 (1) No. 3 ZPO)

German procedural law does not provide for a place of jurisdiction comparable to Article 8 (1) Brussels Ibis Regulation, the European jurisdiction for joinder of parties. However, according to Sec. 36 ZPO, German courts can determine a court that is jointly competent for claims against two or more parties. In contrast to Art. 8 (1) Brussels Ibis Regulation, under which the plaintiff has to choose between the courts that are competent, the determination of a common place of jurisdiction for joint procedure under German law is under the discretion of the courts. Since EU law takes precedence in its application over contrary national law, German courts must be very vigilant before determining a court at their discretion. The case is further complicated by the fact that the prospective plaintiff can be characterised as a consumer under Art. 17 et seq. Brussels Ibis Regulation. The article critically discusses the decision of the BayObLG and points out how German judges should approach cross-border cases before applying Sec. 36 ZPO.

M.F. Müller, Requirements as to the „document which instituted the proceedings“ within the ground for refusal of recognition according to Art 34 (2) Brussels I Regulation

The German Federal Court of Justice dealt with the question which requirements a document has to comply with to qualify as the “document which instituted the proceedings” within the ground for refusal of recognition provided for in Art 34 (2) Brussels I Regulation regarding a judgment passed in an adhesion procedure. Such requirements concern the subject-matter of the claim and the cause of action as well as the status quo of the procedure. The respective information must be sufficient to guarantee the defendant’s right to a fair hearing. According to the Court, both a certain notification by a preliminary judge and another notification by the public prosecutor were not sufficiently specific as to the cause of action and the status quo of the procedure. Thus, concerning the subject matter of the claim, the question whether the “document which instituted the proceedings” in an adhesion procedure must include information about asserting civil claims remained unanswered. While the author approves of the outcome of the case, he argues that the Court would have had the chance to follow a line of reasoning that would have enabled the Court to submit the respective question to the ECJ. The author suggests that the document which institutes the proceedings should contain a motion, not necessarily quantified, concerning the civil claim.

B. Steinbrück and J.F. Krahé, Section 1032 (2) German Civil Procedural Code, the ICSID Convention and Achmea – one collision or two collisions of legal regimes?

While the ECJ in Achmea and Komstroy took a firm stance against investor-State arbitration clauses within the European Union, the question of whether this will also apply to arbitration under the ICSID Convention, which is often framed as a “self-contained” system, remains as yet formally undecided. On an application by the Federal Republic of Germany, the Berlin Higher Regional Court has now ruled that § 1032 (2) Civil Procedural Code, under which a request may be filed with the court to have it determine the admissibility or inadmissibility of arbitral proceedings, cannot be applied to proceedings under the ICSID Convention. The article discusses this judgment, highlighting in particular that the Higher Regional Court chooses an interpretation of the ICSID Convention which creates a (presumed) conflict between the ICSID Convention and German law, all the while ignoring the already existing conflict between the ICSID Convention and EU law.

L. Kuschel, Copyright Law on the High Seas

The high seas, outer space, the deep seabed, and the Antarctic are extraterritorial – no state may claim sovereignty or jurisdiction. Intellectual property rights, on the other side, are traditionally territorial in nature – they exist and can be protected only within the boundaries of a regulating state. How, then, can copyright be violated aboard a cruise ship on the high seas and which law, if any, ought to be applied? In a recent decision, the LG Hamburg was confronted with this quandary in a dispute between a cruise line and the holder of broadcasting rights to the Football World Cup 2018 and 2019. Unconvincingly, the court decided to circumnavigate the fundamental questions at hand and instead followed the choice of law agreement between the parties, in spite of Art. 8(3) Rome II Regulation and opting against the application of the flag state’s copyright law.

T. Helms, Validity of Marriage as Preliminary Question for the Filiation and the Name of a Child born to Greek Nationals in Germany in 1966

The Higher Regional Court of Nuremberg has ruled on the effects of a marriage on the filiation and the name of a child born to two Greek nationals whose marriage before a Greek-orthodox priest in Germany was invalid from the German point of view but legally binding from the point of view of Greek law. The court is of the opinion that – in principle – the question of whether a child’s parents are married has to be decided independently applies the law which is applicable to the main question, according to the conflict of law rules applicable in the forum. But under the circumstances of the case at hand, this would lead to a result which would be contrary to the jurisprudence of the Court of Justice on names lawfully acquired in one Member State. Therefore – as an exception – the preliminary question in the context of the law of names has to be solved according to the same law which is applicable to the main question (i.e. Greek law).

K. Duden, PIL in Uncertainty – failure to determine a foreign law, application of a substitute law and leaving the applicable law open

A fundamental concern of private international law is to apply the law most closely connected to a case at hand – regardless of whether this is one’s own or a foreign law. The present decision of the Hanseatic Higher Regional Court as well as the proceedings of the lower court show how difficult the implementation of this objective can become when the content of the applicable law is difficult to ascertain. The case note therefore first addresses the question of when a court should assume that the content of the applicable law cannot be determined. It examines how far the court’s duty to investigate the applicable law extends and argues that this duty does not seem to be limited by disproportionate costs of the investigative measures. However, the disproportionate duration of such measures should limit the duty to investigate. The comment then discusses which law should be applied as a substitute for a law whose content cannot be ascertained. Here the present decision and the proceedings in the lower court highlight the advantages of applying the lex fori as a substitute – not as an ideal solution, but as the most convincing amongst a variety of less-than-ideal solutions. Finally, the note discusses why it is permissible as a matter of exception for the decision to leave open whether German or foreign law is applicable.

M. Weller, Kollisionsrecht und NS-Raubkunst: U.S. Supreme Court, Entscheidung vom 21. April 2022, 596 U.S. ____ (2022) – Cassirer et al. ./. Thyssen-Bornemisza Collection Foundation

In proceedings on Nazi-looted art the claimed objects typically find themselves at the end of a long chain of transfers with a number of foreign elements. Litigations in state courts for recovery thus regularly challenge the applicable rules and doctrines on choice of law – as it was the case in the latest decision of the U.S. Supreme Court in Cassirer. In this decision, a very technical point was submitted to the Court for review: which choice-of-law rules are applicable to the claim in proceedings against foreign states if U.S. courts ground their jurisdiction on the expropriation exception in § 1605(3)(a) Federal Sovereign Immunities Act (FSIA). The lower court had opted for a choice-of -aw rule under federal common law, the U.S. Supreme Court, however, decided that, in light of Erie and Klaxon, the choice-of-law rules of the state where the lower federal courts are sitting in diversity should apply.

Uglješa Grušić has published on SSRN a policy brief titled Remote working and European private international law.

The brief was prepared for the European Trade Union Institute (ETUI) an independent research and training centre of the European Trade Union Confederation (ETUC) which itself affiliates European trade unions into a single European umbrella organisation.

Policy implications listed in the brief are as follows:

• The risk created by expanding the labour pool to workers based in other countries can, if necessary, be dealt with by EU legislative action, for example, through substantive EU employment law. Furthermore, the risk created by expanding the labour pool to workers based in non-EU countries can be dealt with by the overriding application of EU employment standards to situations sufficiently closely connected with the EU. Empirical data is needed to assess the policy implications of the risk created by the expansion of the labour pool to workers based in other countries. This risk should therefore be monitored in the years ahead.
• The Brussels I Regulation, the Lugano Convention and the Rome I Regulation give domestic courts an adequate tool to deal with the potential of remote working to put additional pressure on the employee/self-employed worker dichotomy. Nevertheless, application of the concept of ‘individual employment contract’ to remote working should be monitored in the years ahead.
• Employers might be able to use arbitration agreements to effectively escape the jurisdiction of domestic courts and employment laws. This issue requires further research.

This post was contributed by Catherine Kessedjian, Professor Emerita of the University Paris Panthéon-Assas and Chair of the ADI/ILA 2023 Organising Committee.

In a judgment of 16 November 2022 (pourvoi n° 21-17.338), the French Supreme Court for private and criminal matters (Cour de cassation) addressed, among many other issues, the application of anational norms such as the Unidroit Principles on International Commercial Contracts.

This post will only focus on this issue.

Conforama, a French Company, was contractually linked to Mab Ltd, a US company until the latter became bankrupt. Two creditors of Mab Ltd made a “saisie conservatoire” in Conforama’s hands of a certain sum that it owed to Mab Ltd. However, Conforama declared that Mab Ltd did owe it another sum of money (via several invoices issued by Conforama) and intended to apply “compensation” (set-off of debts) between the two sums in order to reduce the amount that it would have to pay to the creditors.

The Paris Commercial Court (First Instance) (Tribunal de commerce de Paris, 19 June 2019, n°2008006861) decided that Conforama’s invoices were issued without cause. Consequently, it ordered Conforama to pay the entire sum due to Mab Ltd.

Conforama appealed to the Paris Court of Appeal.

At the centre of the controversy are several contracts between Conforama and Mab Ltd, from 2004 onward, titled “Commercial Cooperation” according to which Conforama issued the contested invoices. Article 4.2 of these contracts provided for set-off. French law is very strict when it comes to these types of contracts because they have led to abuses in the past. Particularly, former Article L.442-6 of the commercial Code provided that, in absence of proven counterpart, these contracts were to be declared null and void. The provisions on restrictive practices are now codified in Articles L. 442-1 to L. 442-4 of the Commercial Code (see in particular Article L 442-1 I 1°).

In this context, in order to avoid the application of French Law, Conforama argued that its cooperation contracts with Mabs were regulated by “general principles of law as applied to international commercial relations together with usages of international commerce” (translation of a quote made by the Court of Appeal out of Conforama’s brief). In addition, Conforama pointed out to Article 17 of the supplier contract of 15 July 2004 and Article 11 of its general terms and conditions of purchase of 14 October 2004 and also to the Unidroit Principles (Disclaimer: we did not have access to the exact wording of these contractual documents).

However, according to Conforama’s opponents, the cooperation agreement of 10 January 2006 referred to (former) Article 1289 of the French civil code on set-off of debts (cf. current Article 1347 of the French civil code).

The question of the applicable law to a “commercial cooperation” contract, was at the centre of the dispute with the following sub-questions: (a) what method should apply to define the applicable law when the contract is silent? (b) is the theory of “goup of contacts” helpful for applicable law purposes? (c) what role can play anational rules of law?

From this complicated contractual picture, the Court of Appeal rendered a very well-motivated decision centred on the mandatory character of French Law on the type of services Conforama pretended to invoice Mab Ltd (Paris, 30 March 2021, 19/15655). Wisely, the Court did not enter into the discussion on the matter of the ‘group of contracts’ theory or on the matter of the applicability of anational law. It simply said that the cooperation agreement did not include an applicable law provision and that the Rome Convention of 1980 (applicable ratione temporis) led the court to apply French law. Since the provisions of French law are mandatory, there was no need to go further into the arguments presented by Conforama.

At the level of the Court of cassation, Conforama altered slightly its story. Its argument can be summarised as follows. First, it argued that Unidroit Principles might be applied even though they are not mentioned expressly in a contract. Second, it insisted on the ‘group of contracts’ theory and argued that applicable law clauses contained in some other contracts did apply to all contracts that are related, including the “cooperation agreement”. Third, even if the court did decide that the contract did not include a proper choice of law clause, the cooperation contract is closely related to the distribution agreement and must be regulated by the same law.

In an unusual move for a decision that confirms the appellate decision, the Court starts with a broad pronouncement (§14 of the decision) and decides that (a) general principles applicable to international contracts, such as the Unidroit principles, may not be considered as “law” and (b) that they may not be chosen by the parties to regulate their contract according to article 3.1 of the Rome Convention of 1980.

First, this pronouncement was not necessary to the decision of the Court. It is an obiter dictum. The Court could have, as did the Paris Court of Appeal, decided that the Unidroit Principles did not apply in the case at hand (and limited its pronouncement to that) because they were simply not referenced in the contract that, apparently (although this is only implied in the discussion of the facts by the Court of Appeal) was silent on the applicable law. The Court could also reach the same decision on the basis of the mandatory nature of the applicable French provisions. Therefore, it had two avenues to confirm the Court of appeal decision without making a strong, bold, broad and overarching declaration.

Instead, for an unknown reason or out of sheer conservatism and strict positive law conception, the Court reverses years of understanding under French law (see already in that sense, Cour de cassation, 13 January 2021, 19-17.157), or at least in French doctrine, that under French law, general principles such as the Unidroit Principles could indeed have some application.

In addition, and more importantly, it was always understood that freedom of contract allowed parties to reference such non-state rules of law. This is reflected in Recital 13 of the preamble to the Rome I Regulation that reads as follows:

This Regulation does not preclude parties from incorporating by reference into their contract a non-State body of law or an international convention.

It is true that such a reference is not very common in practice. Indeed, parties may run a risk by limiting their choice of law to a non-State body of law either because that document is incomplete or would not cover the very question underlying the dispute, or because of the lack of case law to ascertain proper interpretation of these rules.

A final remark as to the effect of that part of the decision by the Court of cassation: it is rendered under the 1980 Rome Convention and not the Rome I Regulation. Strictly speaking, the Court will have to change its decision the next time it will be confronted with a similar provision in a contract regulated by Rome I. Indeed, under the Regulation, it is clear that the Court would not be able to say that parties are not allowed to choose non-State body of law as the applicable law to their contract.

Thanks to Alberto Pomari, JD Candidate at the University of Pittsburgh School of Law, for his assistance with this post.

Two cases slated for Supreme Court’s 2024 term could boost the enforcement of foreign arbitral awards in the United States. On Friday January 13, 2023, the U.S. Supreme Court granted certiorari and consolidated the cases of Yegiazaryan v. Smagin and CMB Monaco v. Smagin. Both present the question of when an injury is foreign or domestic for purposes of RICO civil applicability. Beyond this statutory issue, however, the Supreme Court’s decision will have consequences for the enforcement of foreign arbitral awards too.

The Racketeer Influenced and Corrupt Organizations Act (“RICO”) enables private individuals injured by a racketeering violation to bring a civil suit and recover treble damages if he was “injured in his business or property.” In RJR Nabisco, Inc. v. European Cmty., the U.S. Supreme Court upheld the federal presumption against extraterritoriality to limit RICO’s private right of action to only those injuries that are “domestic” in their nature. However, no definition or test was provided to draw a bright line between domestic and foreign injuries.

In Yegiazaryan v. Smagin, the defendant (Yegiazaryan) is a Russian businessman living in California. The plaintiff (Smagin) commenced arbitration proceedings against him in London and was awarded $84 million. In 2014, Smagin successfully filed to recognize and enforce the award against Yegiazaryan in the U.S. district court where Yegiazaryan now resides. In 2020, Smagin filed a RICO action against Yegiazaryan alleging that he and various associates attempted to conceal $198 million from Smagin, which inevitably “injured in his business or property.” Specifically, Smagin alleged that his U.S. judgment confirming this prior foreign arbitral award against Yegiazaryan is intangible property located in the United States, thus making any injury thereto eligible for a RICO civil claim even though he lives abroad.

As to the location of intangible property for purposes of RICO injuries, circuits have split. The Seventh Circuit adopted the residency test, according to which an injury to intangible property must occur in the place where the plaintiff has its residence. Accordingly, a foreign-resident plaintiff like Smagin always suffers foreign injuries to intangible property and cannot recover under RICO. The Third Circuit rejected the residency test in favor of a holistic, six-factor test, with particular emphasis on where the plaintiff suffers the effect of the injurious activity. The Ninth Circuit in the Smagin cases adopted a totality-of-the-circumstances test similar to the Third Circuit’s one, yet with a particular emphasis on the defendant’s conduct. Indeed, the court concluded that Smagin had pleaded a domestic injury because much of the defendant’s alleged misconduct took place in California and the U.S. judgment confirming the foreign award could be executed against the defendant only in California.

The case also has implications for the enforcement of foreign judgments and arbitral awards in the United States. If a U.S. judgment recognizing a foreign judgment or confirming a foreign arbitral award are considered property in the United States, then RICO violations committed in the process of trying to avoid enforcement of the U.S. judgment may give rise to civil liability.