Flux européens

I had earlier reviewed Bot AG’s Opinion in C-308/17 Leo Kuhn, in which the Court held on Thursday. The case concerns the retrofit introduction of CACs – Collective Action Clauses, in Greek bonds, allowing the amendment to the initial borrowing terms by decisions adopted by a qualified majority, of the remaining capital owed and applying also to the minority.

Along the lines suggested by the AG, the Court finds the litigation not to relate to civil and commercial matters (likely also leading to a finding on the basis of national law, of sovereign immunity).

Extensive reference is made of course to Fahnenbrock , among others. Yet the Court pays lip service only to Fahnenbrock: in that judgment, it launched the ‘direct and immediate’ formula: in that case it found it was the bondholders’ vote, which led directly and immediately to changes to the financial conditions of the securities in question, not the public authorities’ actions essentially dictating it: therefore that litigation was held not to be actum iure imperii, and it was found to be subject to the service of documents Regulation.

In Kuhn, Brussels I Recast is engaged and here the Court would seem to be inclined to follow (also) Bot AG’s Opinion in Fahenbrock (where he was not so followed): there, Bot AG had opined that the Greek State’s intervention in the contracts was direct and not at a distance from the contract. His focus was more on the circumstances of the case than on the legal nitty-gritty. There are certainly many similarities between Fahnenbrock and Kuhn: in the latter, the crammed-down haircut was formally the result of a majority decision of bondholders to accept the restructuring offer made by the Greek State. Not unlike Fahnenbrock were as noted it was also a bondholders’ vote which was the formal trigger.

In Kuhn, the Court emphasises the context, like Bot to no avail had done in Fahnenbrock: after a succinct tour d’horizon of the debt crisis leading to the CACs, the Court concludes ‘It follows that, having regard to the exceptional character of the conditions and the circumstances surrounding the adoption of Law 4050/2012, according to which the initial borrowing terms of the sovereign bonds at issue in the main proceedings were unilaterally and retroactively amended by the introduction of a CAC, and to the public interest objective that it pursues, the origin of the dispute in the main proceeding stems from the manifestation of public authority and results from the acts of the Greek State in the exercise of that public authority, in such a way that that dispute does not fall within ‘civil and commercial matters’ within the meaning of Article 1(1) of Regulation No 1215/2012.’

I suggested at the time that ‘direct and immediate effect’ is not a criterion which is easy to handle. Yet in solely emphasising context, the Court now casts the net too wide in my view, and at the very least leads to more speculation (pun intended) in the litigation context of sovereign debt.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Heading 2, Heading 2.2, Heading 2.2.9.

 

The pauliana rings extensively at Kirchberg these days and months.

Two days ago the Court held in C‑296/17 Wiemer & Trachte. Following Wahl AG’s Opinion (which is not available in English), the Court has confirmed exclusive jurisdiction for set aside (pauliana) actions, of the courts of the Member State within the territory of which insolvency proceedings have been opened (COMI or secondary proceedings). Not therefore jurisdiction under the Brussels I Recast for the State of domicile of the defendant.

The need to avoid forum shopping (a strong leading principle in the insolvency Regulation) in particular, led Wahl AG and now the Court to insist on exclusive jurisdiction. The alternative reading (defended, I understand, inter alia by the Commission) relied on the altogether limiting wording of the relevant articles in the Regulation (both the previous and current versions), and also on an efficiency argument: particularly the insolvency practitioner ought to be able to forum shop so as to ensure the best outcome for the collective creditors (particularly by pursuing parties who have benefitted from avoidance actions, in their domicile). Wahl AG confessed sympathy for that practical reason (not unlike some of the arguments in the common law against say Owusu or West Tankers), yet emphasised the CJEU’s direction on vis attractiva concursus: rather a magnetic direction.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5 Heading 5.4.1. Chapter 2 Heading 2.2.2.10.1

 

I earlier posted a guest blog on the qualification of the Dutch Peeters /Gatzen suit, a damages claim based on tort, brought by a liquidator against a third party having acted wrongfully towards the creditors. Bobek AG opined two weeks back in C-535/17 NK (insolvency practitioner for a baillif practice) v BNP Paribas Fortis.

His Opinion is of relevance not just for the consideration of jurisdiction, but perhaps even more so (for less litigated so far) for the analysis of applicable law.

Roel Verheyden has commented on the Opinion in Dutch here, and Sandrine Piet had earlier contextualised the issues (also in Dutch) here. She clarifies that the suit was introduced by the Dutch Supreme Court in 1983, allowing the insolvency practitioner (as EU insolvency law now calls them) to claim in tort against third parties whose actions have diminished the collective rights of the creditors, even if the insolvency person or company at issue was not entitled to such suit. The Advocate General himself, in his trademark lucid style, summarises the suit excellently.

Importantly, the Peeters /Gatzen is not a classic pauliana (avoidance) suit: Bobek AG at 16: ‘The power of the liquidator to bring a Peeters-Gatzen action is not limited to cases where the third party belongs to the circle of persons who, based on a Paulian (bankruptcy) claim .. would be liable for involvement in allegedly detrimental acts. The liquidator’s competence relates more generally to the damage caused to the general body of creditors by the wrongful act of a third party involved in causing that damage. The third party need not have caused the damage or have profited from it: it is sufficient that that third party could have prevented the damage but cooperated instead.’

In the case at issue, the third party is BNP Paribas Fortis, who had allowed the sole director of the company to withdraw large amounts of cash from the company’s account.

Firstly, on the jurisdictional issue, Nickel /Goeldner and Nortel had intervened after the interim judgments of the Dutch courts, creating doubt in their minds as to the correct delineation between the Insolvency and Brussels I Recast Regulation. The Advocate-General’s approach in my view is the correct one, and I refer to his Opinion for the solid arguments he deploys. In essence, the DNA of the suit are the ordinary rules of civil law (re: tort). That it be introduced by the insolvency practitioner (here, the liquidator) and that it is the case-law on liquidation proceedings which has granted that right to the liquidator, is not materially relevant. Note that the AG correctly adds in footnote 40 that even if the suit is not subject to the Insolvency Regulation, that Regulation does not disappear from the litigation. In particular, given that liquidation proceedings are underway, the lex concursus determines the ius agendi of the liquidator to bring the suit in tort, in another Member State (Belgium, on the basis of Article 7(2) or 4 Brussels I Recast).

Now, for applicable law, the AG first of all completes the analysis on the basis of the Insolvency Regulation, in the unlikely event the CJEU were not to follow him on the jurisdictional issue. Here (para 85 ff) the referring court wishes to know whether, if the Peeters-Gatzen action is covered by the Insolvency Regulation, such a claim would be governed, pursuant to Article 4(1) of that Regulation, by the law of the Member State where the insolvency proceedings were opened as regards both the power of the liquidator to bring that claim and the substantive law applicable to that claim. This question seeks to determine whether it is possible to follow the approach of the second-instance court in the main proceedings, and separate the law governing the powers of the liquidator (ius agendi) from the law applicable to the merits of the claim. The powers of the liquidator would then be governed by the lex fori concursus (Dutch law, per Article 4(2)(c) Insolvency Regulation). That article states that ‘the law of the State of the opening of proceedings … shall determine in particular … the respective powers of the debtor and the liquidator’. However, the merits of the claim would then be governed by the law applicable by virtue of the general (non-insolvency) conflict of law rules. In the present case that would lead to application of residual Dutch conflict of law rules, because the Rome II Regulation does not apply ratione temporis as the AG further explains. These rules lead to Belgian law being the lex causae.

Within the assumption of the Insolvency Regulation determining jurisdiction (for see footnote 40 as reported above, re ius agendi) the AG emphasises the Regulation’s goal of Gleichlauf: at 89: If the Peeters-Gatzen action were covered by the Insolvency Regulation, all its elements would be governed exclusively by the conflict of law rules of that regulation.

(Current) Article 16’s exception such as in Nike and Lutz does not come into play for as Bobek AG notes at 94, ‘It is difficult to see how the Peeters-Gatzen action at issue in the main proceedings could be qualified as a rule ‘relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors’, in the sense of Article 4(2)(m) [old, GAVC] of the Insolvency Regulation. The purpose of such an action is not a declaration of the voidness, voidability or unenforceability of an act of the third party, but the recovery of damages based on the wrongful behaviour of that third party towards the creditors. Therefore, as Article 4(2)(m) [old, GAVC] of the regulation would not apply in the main proceedings, the exception in Article 13 [old, GAVC] could not apply either.’

The AG finally discusses the referring court’s question whether if the Peeters-Gatzen action is exclusively subject to the lex fori concursus, it would be possible to take into account, whether directly or at least by analogy, and on the basis of Article 17 Rome II read in conjunction with Article 13 (now 16) of the Insolvency Regulation, the security regulations and codes of conduct applicable at the place of the alleged wrongful act (that is to say, in Belgium), such as financial rules of conduct for banks. Article 17 Rome II reads ‘In assessing the conduct of the person claimed to be liable, account shall be taken, as a matter of fact and in so far as is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability.‘

I have argued before that Article 17 Rome II does not have the rather extensive impact which some attribute to it. The AG, after signalling that the Article is yet to be applied by the CJEU, notes that Rome II does not apply here ratione temporis. He then concludes with an aside (it is not articulated as a proper argument – which is just as well for it is circular I suppose): at 104: ‘the more pertinent question is… whether it is really necessary to have recourse to a cumbersome legal construction, in this case the application of rules by analogy, outside of their material and temporal scope, in order to reach a solution (the application of Belgian law) which solves a problem (the applicability of Netherlands law by virtue of the Insolvency Regulation) that should not have been created in the first place (since the Peeters-Gatzen claim at hand should fall within the scope of the Brussels I Regulation). In any event, I am of the view, also in this regard, that these questions by the referring court rather confirm that there is no close connection between that action and the insolvency proceedings.’

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.4.1, Heading 5.7.

 

 

Tempus Energy et Tempus Energy Technology / Commission
Aide d'État
Le Tribunal annule la décision de la Commission de ne pas s’opposer au régime d’aides instaurant un marché de capacité au Royaume-Uni

Kuhn
Espace de liberté, sécurité et justice
Le règlement « Bruxelles I bis » n’est pas applicable pour déterminer quelle juridiction d’un État membre est compétente pour statuer sur les demandes formées contre l’État grec par un particulier détenteur d’obligations souveraines grecques suite à leur échange forcé en 2012

Verbraucherzentrale Baden-Württemberg
Transport
Les transporteurs aériens qui n’expriment pas les tarifs des passagers pour les vols intracommunautaires en euros sont tenus d’indiquer ces tarifs dans une monnaie nationale objectivement liée au service proposé

Deutsche Telekom / Commission
Aide d'État
Le Tribunal confirme les décisions de la Commission européenne qualifiant le régime fiscal espagnol d’amortissement de la survaleur « financière » d’aide d’État incompatible avec le marché intérieur

Memoria et Dall'Antonia
Liberté d'établissement
La réglementation italienne interdisant aux entreprises privées d’exercer une activité de garde d’urnes funéraires est contraire au droit de l’Union

Milivojević
Espace de liberté, sécurité et justice
L’avocat général Tanchev propose à la Cour de juger qu’une loi nationale qui permet d’annuler rétroactivement des contrats de crédit conclus avec des prêteurs étrangers qui n’étaient pas autorisés à fournir des services de crédit dans ce pays est contraire au droit de l’Union lorsque la même loi ne s’applique pas aux prêteurs croates

Commission / Grèce
Aide d'État
Pour ne pas avoir récupéré les aides d’État octroyées à Ellinika Nafpigeia, la Grèce est condamnée à payer une somme forfaitaire de 10 millions d’euros et une astreinte de plus de 7 millions d’euros par semestre de retard

I have reported twice before on the BIBC – once viz the initial version and a second time with my short report for the Parliamentary Hearing. I have now had a minute to review the Council of State’s comments on the amended version – among others with a view to preparing for next week’s conference on hybrid courts in Doha. Note that the Council of State here acts in its advisory function: essentially its opinions aim to improve draft statute so as to avoid future litigation.

What is clear from these recent comments is that the Council does not at all embrace the regulatory competition incentives which lie at the heart of the proposal, in particular in its view on how a matter may be made ‘international’ so as to justify engagement of the BIBC. Its view (let alone the Justice Council’s fear for forum shopping?!: encouraging such shopping being the very raison d’etre of the Act) contradicts the CJEU’s flexible stance on the issue as apparent eg in Vinyls Italia. As I noted in my comments before the Committee, it is a rather odd indeed parochial requirement to insist on parties having used English in their correspondence, before they can validly engage the BIBC. Even the suggested amendment that the use of languages other than Belgium’s three official ones (French, Dutch, German) should suffice, is not convincing to the Council. One hopes the drafters will ignore the Council’s hesitation at this point.

The Council does not of course engage in the political discussions surrounding the proposal: in particular, whether in a country in which the court system arguably does not operate to satisfaction, the creation of an international commercial court may compound, rather than remedy issues.

Geert.

 

Thank you Nicolas Contis and Leonardo Pinto for reporting  judgments by the French Supreme Court (Cour de Cassation) 16-19-731 Ergo Versicherung v Volker and 16-27.913, Haras des Coudrettes v X, both held on 14 March 2018.

The judgments concern the interpretation of Article 35 Brussels I Recast c.q. Article 31 of the Lugano Convention (the second case concerned a defendant domiciled in Switzerland) on provisional measures.

Please refer to Nicolas and Leonardo for a summary of the facts the judicial proceedings in the case. In neither cases do the French courts have subject-matter jurisdiction: in Ergo, the German courts do by virtue of choice of court; in Haras des Coudrettes, the Swiss courts do by virtue of Article 5(3) Lugano (locus delicti commissi being there; and direct damage also having occurred there hence leaving only indirect, financial damage with the French owner of the horse at issue, even if the exact nature and size of those direct injuries could only be later established in France).

In Ergo, the Supreme Court held that ‘la juridiction française (est) compétente pour ordonner, avant tout procès, une mesure d’expertise devant être exécutée en France et destinée à conserver ou établir la preuve de faits dont pourrait dépendre la solution du litige. Appointing an expert to assess any damages caused to a solar plant, and to explore liabilities for such damage, falls within Article 35 Brussels I Recast. I would agree with such a wide reading as I have discussed before in my review of the Belo Horizonte case. The Supreme Court does not consider relevant to the outcome claimants’ argument, that under Article 2 Brussels I Recast, provisional measures only enjoy free movement under the Regulation when ordered by a court with subject-matter jurisdiction. Indeed in view of the Supreme Court the Court of Appeal need not even consider whether it has such jurisdiction. Given that the form Annexed to the Regulation includes a box requiring exactly that, this may seem odd. One assumes the Court held so given that the forensic measures ordered, can be rolled out entirely in France: no need for any travel at all.

In Haras des Coudrettes, the Supreme Court annulled because the Court of Appeal had established subject-matter jurisdiction for the Swiss courts, and had subsequently not entertained the possibility of provisional measures, even though the object at issue (the mare: ‘la jument’) is in France: ‘Qu’en statuant ainsi, alors qu’elle relevait que la mesure sollicitée avait pour objet notamment d’examiner la jument située en France, la cour d’appel, qui n’a pas tiré les conséquences légales de ses propres constatations, a violé les textes susvisés.‘

and  ‘une mesure d’expertise destinée à conserver ou établir la preuve de faits dont pourrait dépendre la solution du litige, ordonnée en référé avant tout procès sur le fondement du second de ces textes, constitue une mesure provisoire au sens du premier, qui peut être demandée même si, en vertu de cette Convention, une juridiction d’un autre Etat lié par celle-ci est compétente pour connaître du fond’:

expert findings which aim at maintaining or establishing facts upon which the eventual solution of the litigation may depend, fall within the scope of provisional measures and may be ordered even before any entertainment of subject-matter jurisdiction. Again, the fact that for the effective roll-out of the provisional measures no other State need be engaged, must have relevance in this assessment.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.15.

 

 

 

Levola Hengelo
Liberté d'établissement
La saveur d’un produit alimentaire ne peut pas bénéficier d’une protection par le droit d’auteur

Čepelnik
Liberté d'établissement
Une réglementation d’un État membre permettant d’imposer, au destinataire d’un service, de suspendre les paiements et de constituer une caution afin de garantir une éventuelle amende qui pourrait être infligée au prestataire du service, établi dans un autre État membre, pour violation du droit du travail du premier État membre, est contraire au droit de l’Union

When is a court ‘seized’ under EU civil procedure /private international law? The question is highly relevant in light of the application of the lis alibi pendens principle: the court seized second in principle has to cede to the court seized first. Williams J in [2018] EWHC 2035 (Fam) MB v TB notes the limited attempt at harmonisation under EU law and hence the need for the lex fori to complete the procedural jigsaw.

On 8 July 2016 MB (the wife) issued a divorce petition seeking a divorce from TB (the husband). On 16 August 2016 the husband issued a divorce petition against the wife out of the Munich Family Court. On the 22 August 2016 the husband filed an acknowledgement of service to the wife’s petition asserting that the German court was first seized because it was ‘not accepted England is first seized, owing to failures to comply with art. 16 and 19 of Council Regulation (EC 2201/2003) and relevant articles of the EC Service Regulation (EC 1393/2007).

At issue were two considerations: whether seizure of the English courts had been effected; and whether the wife’s issuing of the petition on 8 July 2016 is an abuse of process on the basis that the wife did not at that time consider the marriage to have irretrievably broken down but was issuing a petition simply to secure the English jurisdiction in the event that a divorce was needed? This latter element amounts to disciplining a form of fraus, on which I have reported before – eg here that there is very little EU law.

In Regulation ‘Brussels IIa’ (2201/2003) – concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, as in the other Regulations, ‘seising of a Court’ is defined as:

1. A court shall be deemed to be seised: 

(a) at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the applicant has not subsequently failed to take the steps he was required to take to have service effected on the respondent;

or

(b) if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the applicant has not subsequently failed to take the steps he was required to take to have the document lodged with the court.

These ‘steps required’ are not further defined under EU law and hence rest with national law. Under relevant English law, Williams J held that the husband was aware of the wife’s petition before it was validly served on him, and that this was enough for the English courts to have been validly seized.

Geert.

Thank you 20 Essex Street for flagging (and analysing)  [2018] EWHC 3009 (Comm) Qingdao Huiquan, granting anti-suit against a foreign litigant who is not a party to an exclusive choice of forum agreement (in particular: arbitration agreed in a settlement agreement). The third party, SDHX, is engaging in proceedings in China, and is related to one of the parties to the settlement agreement.

SDHX appeal to privity of contract is tainted by its invoking elements of the settlement agreement in the Chinese proceedings. Under relevant authority, this was ground for Bryan J to issue aint-suit against it.

A classic cake and eating it scenario, one could say: at 36: ‘I have had particular regard to the fact that it is clear from the Settlement Agreement that SDHX is indeed seeking to rely upon the terms of the Settlement Agreement in advancing its claims in the Chinese proceedings and that, in doing so, therefore, it has to take the burden of the arbitration clause, if an arbitration clause be a burden,..as well as the benefits that it seeks to derive from that agreement.’

Evidently Brussels I Recast is not engaged.

Geert.

European private international law, second ed. 2016, Chapter 2, Heading 2.2.2.10.

The media have been reporting on a considerable class action lawsuit, underway in the English courts, in the Corporate Social Responsibility /mass torts category.

The class action case was filed against Anglo-Australian company BHP Billiton on behalf of 240,000 individuals, 24 municipal governments, 11,000 businesses, a Catholic archdiocese and about 200 members of the Krenak indigenous community. It concerns victims of the Samarco dam collapse in Mariana three years ago.

I am reporting the case simply to ensure complete overview of the CSR /jurisdiction /applicable law issues reported on the blog. For as I am co-counsel acting for the applicants, I am not in a position to comment on the case until and if legal analysis will be in the public domain.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.

Mad Dogg Athletics / EUIPO - Aerospinning Master Franchising (SPINNING)
Propriété intellectuelle et industrielle
Le Tribunal annule la décision de l’EUIPO constatant la déchéance des droits du titulaire de la marque de l’Union SPINNING

Dyson / Commission
Énergie
Le Tribunal annule le règlement sur l’étiquetage énergétique des aspirateurs

Another case in my backlog for some time, and thank you Sarah McKibbing for flagging, some time back, [2017] VSC 810 Liu v Ma,

A recent VSC decision, Liu v Ma, held that nationality is sufficient to found international jurisdiction for the recognition of a Chinese judgment at common law. A highly doubtful conclusion… See Liu v Ma here: https://t.co/7cMMtjnYQY #conflictoflaws #privateinternationallaw

— Sarah McKibbin (@SarahMcKib) August 17, 2018

 

At 6 Mukhtar AJS notes ‘There is sufficient authority for the view that Australian Courts will enforce a foreign judgment where the defendant is a subject of the foreign country in which the judgment was obtained.  That view has its critics (footnote omitted, GAVC) and it may have its difficulties especially if the citizenship is inactive.  Nevertheless, it is founded on a line of English authority exemplified by the statement of Buckley LJ in Emanuel v Symon‘.

Many would argue that at the very jurisdictional level nationality as a ground is parochial /exorbitant. At the same time that at the level of recognition, one should show restraint in refusing to recognise judgments based on such flimsy jurisdictional grounds.

For those wanting to dig deeper, prof Andrew Dickinson has critical review of the relevant case-law in (2018) 134(July) LQR 426-449 (‘Schibsby v Westenholz and the recognition and enforcement of judgments in England’).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.4. for a discussion of ‘parochial’ jurisdiction in the EU context).