This is possibly the longest title of any of my posts and rightly so for the issues in current judment are extensive. Bourlakova & Ors v Bourlakov & Ors (Rev1) [2023] EWHC 2233 (Ch) is a follow-up to Bourlakova v Bourlakov [2022] EWHC 1269 (Ch) which I discuss here; in the meantime Mr Bourlakov has passed away, leaving the other defendants.
Claimants ask for permission to amend their PoC (Particulars of Claim) including the proposed joinder of an additional claimant. Some of the Defendants have themselves made three related applications, namely (a) to adjourn the hearing of the Claimants’ amendment applications (b) for permission to rely on further evidence and (c) for a stay under A33 or 34 Brussels Ia of such amended claims for which the Claimants may be given permission.
The case first of all raises an interesting discussion on applicable limitation periods (attached to Panama law as the lex causae under Rome II) as compared to carved-out procedural issues under Rome II (and English residual conflicts law), subject to English law as lex fori. It then discusses a number of jurisdictional issues.
First, on the limitation periods, discussed by Smith J [56] ff against the background of the Panamian Penal Code (‘PC’). Of note is that defendants only have to raise a reasonably arguable limitation defence in relation to these new damages claims (hence the discussion need not contain the Alfa and Omega of the issues) and it is worthwhile to see the competing arguments in full [64] ff (footnotes omitted):
Panamanian law admits of a civil claim in damages for those guilty of a criminal offence. The specific offences relied upon by the Claimants are those identified in Articles 220, 243 and/ or 253 PC. Although the route by which this is achieved is contentious, it is common ground that Panamanian law governs the question of any available limitation defence to claims brought under these articles. It is also common ground that the damages claims could be brought in Panama in different ways, namely
(i) within criminal proceedings;
(ii) before the civil courts without awaiting the outcome of any criminal trial; or
(iii) before the civil courts after the criminal court has issued its final liability ruling.
[Defendants] say that if, as here, a claim for civil damages arising from alleged criminal acts under Articles 128 and 129 PC is filed without a criminal conviction having first been obtained or in the absence of criminal proceedings, this would have to be submitted as an extra-contractual or tortious claim under Article 1644 of the Civil Code (CC) which provides that:-
“Whoever by act or omission causes damage to another, through fault or negligence, is bound to repair the damage caused. If the act or omission is attributable to two or more persons, each of them shall be jointly and severally liable for the damage caused.“
[Defendants] also say that the relevant limitation period for such a claim is one year by operation of Article 1706 CC which provides:-
“The civil action to claim indemnification for slander or insult or to demand civil responsibility for the obligations resulting from guilt or negligence to which Article 1644 refers, shall prescribe in the term of one (1) year, counted from the moment in which the victim knew.
If criminal or administrative action is timely initiated for the facts foreseen in the previous paragraph, the prescription of the civil action shall be counted from the moment when the criminal judgment or the administrative resolution became firm, as the case may be.
For the recognition of the civil claim, in no case is the intervention of the criminal jurisdiction essential.”
The Claimants disagree with this analysis. They say that a claim for civil damages for an alleged criminal act may be brought directly under Articles 128 and 129 PC (without regard to Article 1644 CC) by operation of Article 977 CC which provides that :-
“Civil obligations arising from crimes or offences shall be governed by the provisions of the Penal Code.”
The Claimants say that the applicable limitation period for a claim under Articles 128 and 129 PC is seven years by operation of Article 1701 CC which provides that:-
“Actions in personam for which there is no special limitation period shall prescribe in seven years.”
This is where the Rome II procedural carve-out becomes relevant, and I will limit the discussion here to the Rome element: [71]
Before which court in Panama any claim could be asserted is a matter of procedure (whether considered under Rome II or the common law). According to Dicey, Morris & Collins on the Conflict of Laws (16th ed., at [4-074]), this includes the question whether a civil action can be brought in respect of alleged criminal acts before criminal proceedings have been taken. Since the English court is only concerned with the relevant foreign law as it applies to matters of substance, the Claimants are entitled to rely on the limitation period which remains available under Article 116 PC even if criminal proceedings have not begun and may not yet eventuate.
[72 [Defendants] say that there is a world of difference between the English court ignoring as a bar to recovery a procedural requirement for criminal proceedings prior to the commencement of a civil action (a proposition from which they do not demur) and the broader proposition (from which they do) that, where multiple potential routes for bringing civil damages claims are available locally, it matters not which particular procedural route the claimant has, in fact, adopted. The Claimants have brought a claim where there has been no criminal conviction as they were entitled to do so under Panamanian law. Having done so, the limitation period is one year. No question of having or failing to comply with local procedural requirements arises.
[73]
I understand the logic of the Claimants’ position that, being a matter of procedure, it is irrelevant which particular course the Claimants may, in fact, have pursued in this case. However, it seems to me that the distinction between the position indicated in Dicey, where the need for a criminal conviction is a bar to the commencement of a civil action, and the position here, where multiple routes are potentially available, may, in fact, be more meaningful than the Claimants suggest. I am therefore unable to say, without more direct authority on the point at least, that the [defendants’] limitation defence falls short of the reasonably arguable threshold on this account.
yet on the point of the actual damages sought, and other elements of the claim, the defence does fall short and the eventual conclusion is that the limitation defence fails. The judgment is a bit dense to read on the factual elements of the various claims however its overall emphasis on procedure v lex causae is really quite relevant.
The judgement subsequently discusses the jurisdictional issues with given the amendment of the claims, a shift from the alternative Monegask forum before Trower J, to [107]Panama or Florida now the suggested alternative fora to England.
[108] The jurisdictional issues arising on these amendment applications are whether:-
(i) despite the UK’s withdrawal from the EU, the Brussels Recast (including Article 8(1)) applies to the proposed new claims against the Kazakovs and Mr Anufriev;
(ii) in relation to the Claimants’ proposed new claims subject to the common law regime, England, Panama or Florida is clearly and distinctly the appropriate forum;
(iii) the Claimants’ proposed new claims against the ‘anchor defendant’, Leo Holding, are artificial and abusive such that the amendment applications fail for lack of jurisdiction, whether through their inability to invoke Article 8(1) of the Brussels Recast or the relevant jurisdictional gateway at common law;
(iv) Gatiabe is a ‘necessary or proper’ party with respect to the proposed new claims concerning the ownership of that company; and
(v) if the EU jurisdictional regime does apply to the Kazakovs, whether a stay should be granted under Articles 33 and 34 of the Brussels Recast of any new claims the Claimants might be permitted to advance.
(i) Application of Brussels Ia at all following the UK-EU Withdrawal Agreement: “legal proceedings instituted before the end of the transition period”
Article 67.1(a) WA provides that “in respect of legal proceedings instituted before the end of the transition period and in respect of proceedings or actions related to such legal proceedings pursuant to Articles 29, 30 and 31 of [the Brussels Recast]”, the provisions of the Brussels Recast shall continue to apply. Are permitted amendments caught by ‘proceedings instituted’? [116-117] the judge, referring to Simon v Taché, that Article 67 WA preserves the applicability of Brussels Recast to “proceedings” and not to particular claims or, here, unamended claims in proceedings.
(ii) and (iii) Abuse of the anchor defendant mechanism
The judge [128] sees no reason under BIa to conclude that claimants’ claims against Leo Holding are artificial, abusive or do not reflect a genuine intention to sue the ‘anchor defendant’, and repeats that [134] conclusion under the obiter English gateway.
(iv) a lengthy and largely obiter forum non conveniens discussion ends [212] with both Florida and Panama being rejected as a more appropriate forum, and (v) [213] the A33-34 stay was not discussed at hearing but, it seems, may be revived at a later stage (which would be highly relevant) and therefore [223] has been deferred.
Quite the judgment.
Geert.
Various EU law jurisdictional issues
Incl application of Brussels A ratione temporis given WA; abuse of anchor defendant mechanism; application of A33-34 'forum non light'
More on the blog soon
Bourlakova & Ors v Bourlakov & Ors [2023] EWHC 2233 (Ch)https://t.co/ixIzSCt20c
— Geert Van Calster (@GAVClaw) September 11, 2023
Vegesentials Ltd & Anor v Shanghai Commercial & Savings Bank Ltd [2024] EWHC 7 (Ch) is a judgment, as Matthew Hoyle also notes, without reference to authority, and it surprisingly succinctly deals with the applicable law issue for misrepresentation under the Rome II Regulation (readers will be aware that Rome II is what used to be called retained EU law and is now ‘assimilated’ law).
Claimants seek damages from the defendant bank for fraudulent misrepresentations set out in a letter signed and stamped by the bank’s former corporate banking relationship manager of the Chung-Li Branch in Taiwan, to the effect that potential investors had free funds to invest £20 million in a new product, ‘FibreWater’ (chicory inulin, with testified health effects; FibreWater does not need to be chilled, and has a longer shelf life, and higher margins, than fruit and vegetable drinks) which the first claimant was developing. The second claimant was incorporated for the purpose of this claim, and was assigned the first claimant’s rights in the product. Claimant also entered into a sponsorship agreement with the tennis player Sir Andy Murray for him to sponsor FibreWater.
It is now conceded by the defendants that those investors, companies incorporated in Hong Kong and Anguilla respectively, had no such funds and that the manager made the fraudulent misrepresentations knowing them to be false and intending that it should be relied upon by the claimant. No funds were forthcoming, and FibreWater did not proceed. The claimant says that had the misrepresentations not been made, it would have continued to engage with alternative investors, and there was a real chance that investment would have been secured so as to allow the product to be successfully produced, marketed and sold and to become profit making.
Fraudulent misrepresentations are conceded, liability is not. The bank raises issues as to the applicable law, whether the claimant in fact relied on the misrepresentation, whether the bank is vicariously liable, as to causation and as to quantum.
Article 4 Rome II reads
“1. Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.
2. However, where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.
3. Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.”
Claimant submits that the damage it claims to have suffered occurred in E&W because the share purchase agreement was governed by the law of England and Wales and provided for the payment of monies into the claimant’s bank account with Barclays in E&W. Any monies paid by the investors would also have been paid into that account. The claimant is incorporated in E&W and conducted most of its business there. Most of the lost profits claimed arise from the supply to UK retailers. Finally the sponsorship agreement with Sir Andy Murray is governed by English law.
Claimant also submits that the default rule is not displaced by A4(3), because the fraud relied on is not “manifestly more closely connected” with Taiwan. The claimant had no pre-existing relationship with the bank.
The bank submits that the fraud was part of a larger scheme and was planned, orchestrated, and implemented in Taiwan, and there are indications of such a larger scheme in the subsequent criminal proceedings against the manager. Jarman J [32] dismisses the relevance of this, pointing out that “it is not clear precisely who was involved in planning the scheme or where they were located at the time. All that is clear is that [the manager’s] involvement was at a time when he was based in Taiwan.” The bank further submits that the core misrepresentative Letter was concerned with a bank account in Taiwan. The judge again dismisses this, saying [32] “However, the ultimate purpose of [the letter] was to confirm the ability of the investors, incorporated elsewhere, to transfer monies in Pounds and Euros for a shareholding in a company incorporated here to develop business in the UK and Europe.”
[33] the conclusion on applicable law is
In my judgment, the claimant’s submissions on this point are to be preferred. Under Article 4(1) the damage relied upon occurred in this jurisdiction. Although some of the facts relied upon arose in Taiwan, as indicated above, it is not the case that the fraud was manifestly more closely connected with Taiwan within the meaning of Article 4(3). Accordingly the applicable law is that of England and Wales.
Most cases concerning fraudulent misrepresentation concern subsequent acting upon the fraud: see eg Abu Dhabi Commercial Bank Pjsc v Shetty & Ors: In the case of a misrepresentation or fraud, the locus damni is held to be the place where that misrepresentation is acted upon; or Avonwick Holdings: not so much for the (poor) A4(1) analysis in that judgment but rather the A4(3) displacement, and to some degree the potential for the lex contractus (of the contract said to have been missed) to play a role.
I feel there is more to be said about both the A4(1) and 4(3) application than succinctly touched upon in the judgment, in cases where the misrepresentation leads to missed opportunities, rather than to regretted action.
Geert.
EU Private International Law, 4th ed, 2024, 2.443.
Ia applicable law in a claim of fraudulent misrepresentation
Article 4 Rome II
Vegesentials Ltd & Anor v Shanghai Commercial & Savings Bank Ltd [2024] EWHC 7 (Ch)https://t.co/VNEe3qGd95
— Geert Van Calster (@GAVClaw) January 8, 2024
On 14 December 2023, AG Emiliou delivered his opinion in case C‑90/22 (‘Gjensidige’ ADB), which is about Brussels I bis, more precisely Articles 71 and 45, and the Convention on the Contract for the International Carriage of Goods by Road (CMR).
The context: A “dispute arose following a theft of cargo during its transportation from the Netherlands to Lithuania. The insurer concerned claimed compensation from the carrier and it did so in Lithuania, relying on a choice-of-court agreement contained in the contract of carriage.
5. However, at that point in time, the carrier had already initiated judicial proceedings in the Netherlands, with the aim of establishing that its liability in this particular context was limited. Before granting that claim, the Netherlands court affirmed its jurisdiction by applying one of the jurisdictional rules contained in the Convention on the Contract for the International Carriage of Goods by Road (‘the CMR’), despite the choice-of-court agreement referred to above, which, from the point of view of that court, could not exclude the other (alternative) grounds of jurisdiction set out in the CMR.
6. Following recognition by the Lithuanian courts of that judgment, [Gjensidige, an insurance company that had insured the consignment and made an insurance payment] filed an appeal in cassation before the Lietuvos Aukščiausiasis Teismas (Supreme Court of Lithuania, Lithuania), the referring court. It argues that recognition of the judgment of the Netherlands court is at odds with Regulation No 1215/2012, as that regulation establishes, in principle, the exclusivity of the jurisdiction resulting from a choice-of-court agreement.
7. In those circumstances, the referring court wonders, first, which rules of jurisdiction apply. It notes that Regulation No 1215/2012 confers primacy of application to rules laid down in a specialised international convention, such as the CMR. Nevertheless, it doubts whether such precedence may permit a choice-of-court agreement to be disregarded, in view of the enhanced protection accorded to those agreements by Regulation No 1215/2012. Second, it seeks clarification on whether this increased protection must result in the recognition of the judgment of the Netherlands court being refused. Although Regulation No 1215/2012 does not expressly allow for such an approach, the referring court enquires whether broader interpretation thereof is called for so as to safeguard, in essence, the intentions of the parties, as documented in the choice-of-court agreement at issue”.
The opinion: “Article 45(1)(a) and (e)(ii) of Regulation (EU) No 1215/2012 […] must be interpreted as meaning that the grounds for the refusal of recognition set out therein do not apply to a situation in which the court of origin established its jurisdiction on the basis of one of several rules contained in a specialised convention, within the meaning of Article 71 of Regulation No 1215/2012, which include – but do not classify as exclusive – a choice-of-court agreement, and when the court of origin was not the court designated by the choice-of-court agreement concluded by the parties concerned.
Moreover, Article 45(1)(a) of Regulation No 1215/2012 must be interpreted as meaning that an error, when established, as to the determination of the applicable law cannot, per se, lead to the recognition of a judgment being refused on the ground that it is contrary to the public policy of the State addressed”.
The Court of Justice delivered on 23 November 2023 its judgment in case C‑321/22 (ZL, KU, KM v Provident Polska S.A.), which is about Article 7 Directive 93/13 (notably):
“Article 7(1) of Directive 93/13, read in the light of the principle of effectiveness, must be interpreted as precluding a national law which, as interpreted in the case-law, requires, in order for a consumer’s action for a declaration that an unfair term in a contract concluded with a seller or supplier is unenforceable to be upheld, proof of an interest in bringing proceedings, where that interest is regarded as being absent where the consumer may bring an action for the recovery of sums unduly paid, or where the consumer may raise that unenforceability as part of his or her defence to a counter-claim brought against him or her by that seller or supplier on the basis of that term.
AG Campos Sánchez-Bordona delivered on 23 November 2023 his opinion in case C‑634/22, which is about Article 19 TEU and the abolition of a specialised Court (in that case a criminal one but the opinion seems equally applicable to a civil and commercial Court, hence its inclusion on this blog).
The opinion: “The second subparagraph of Article 19(1) TEU must be interpreted as meaning that it does not preclude a reform of the judicial system of a Member State according to which a specialised criminal court is abolished and its jurisdiction transferred to a different, ordinary, court, and which provides at the same time that the criminal cases being dealt with in the abolished court and in which a hearing has been held will continue to be heard by the formation that had jurisdiction until that time.
Nor does it preclude, in the context of that reform of the judicial system, the reassignment of the judges of the abolished court to other courts with the same rank, on the basis of objective criteria free of any suspicion of arbitrariness”.
The Court of Justice delivered on 16 November 2023 its judgment in case C‑497/22 (EM v Roompot Service BV), which is about Article 24 Brussels I bis.
The context: “On 23 June 2020, EM, made a booking, via the internet on the website of Roompot Service, for a bungalow at the Waterpark Zwartkruis holiday park, situated at Noardburgum (Netherlands), for the period from 31 December 2020 to 4 January 2021 for a group of nine people who were members of more than two different households.
7 The booking was for a total rental price of EUR 1 902.80, which EM paid in full, and included the provision of bed linen and cleaning at the end of the stay
8 The water park has bungalows located directly on a lake, each with a separate jetty. Boats and canoes can be hired for an additional charge.
9 Roompot Service informed EM by email, prior to arrival and at her request, that the waterpark was open during the period of her booking despite the COVID-19 pandemic, but that, due to the rules in force in the Netherlands, it was only possible for her to stay in the accommodation with her family and a maximum of two people from another household in one bungalow. Roompot Service also offered EM the opportunity to rebook her stay for a later date.
10 Since EM did not stay at the accommodation and did not rebook her stay, she was repaid the amount of EUR 300 by Roompot Service.
11 EM brought an action against Roompot Service before the Amtsgericht Neuss (Local Court, Neuss, Germany) seeking repayment of the remainder of the rental price, in the amount of EUR 1 602.80, plus interest and costs. Roompot Service contested the international jurisdiction of the German courts to hear such an action.
12 By judgment of 1 October 2021, the Amtsgericht Neuss (Local Court, Neuss) dismissed the action as unfounded.
13 EM lodged an appeal before the Landgericht Düsseldorf (Regional Court, Düsseldorf, Germany), the referring court.
14 That court is uncertain whether Netherlands courts have exclusive international jurisdiction to hear the case in the main proceedings on the basis of the first subparagraph of Article 24(1) of Regulation No 1215/2012”.
The decision: “The first subparagraph of Article 24(1) of Regulation (EU) No 1215/2012 […] must be interpreted as meaning that a contract concluded between an individual and a tourism professional by which the latter lets for short-term personal use holiday accommodation situated in a holiday park operated by that professional and including, in addition to the letting of that accommodation, the performance of a range of services in return for a lump sum, does not come within the concept of ‘tenancies of immovable property’ within the meaning of that provision”.
AG Collins delivered on 16 November 2023 his opinion in joined cases C‑345/22 to C‑347/22 (Maersk A/S), which are about Article 25 Brussels I bis.
The context: “Each of these actions is a claim for damages on foot of the partial loss of goods transported by sea. They raise the issue as to the conditions under which a jurisdiction clause in a contract for the carriage of goods by sea evidenced by a bill of lading may be enforced against a third party that subsequently acquired those goods, thereby becoming a third-party holder of that bill of lading”.
The opinion: “(1) Article 25(1) of Regulation (EU) No 1215/2012 […] must be interpreted as meaning that a jurisdiction clause agreed between a carrier and a shipper which is incorporated in a bill of lading is enforceable against a third-party holder of the bill of lading if, on acquiring that bill, it succeeded to the shipper’s rights and obligations. It is for the court seised of the matter to answer that question in accordance with national substantive law as established by applying its rules of private international law. The rule in that provision that the substantive validity of a jurisdiction clause is to be assessed in accordance with the law of the Member State of the court or courts designated in that clause does not govern the enforceability of a jurisdiction clause incorporated in a bill of lading against a third-party holder of that bill.
(2) Article 25(1) of Regulation No 1215/2012 must be interpreted as precluding national legislation under which a third party to a contract for the carriage of goods by sea concluded between a carrier and a shipper that acquires the bill of lading evidencing that contract is subrogated to all the shipper’s rights and obligations, with the exception of the jurisdiction clause incorporated therein, which is enforceable against it only where it negotiated that clause individually and separately”.
The Court of Justice delivered on 9 November 2023 its judgment in case C‑598/21 (SP, CI v Všeobecná úverová banka a.s.), which is about Article 7 Directive 93/13 (notably):
“Article 3(1), Article 4(1), Article 6(1) and Article 7(1) of Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, read in the light of Articles 7 and 38 of the Charter of Fundamental Rights of the European Union, must be interpreted as precluding national legislation under which the judicial review of the unfairness of an acceleration clause contained in a consumer credit agreement does not take account of the proportionality of the option given to the seller or supplier to exercise his or her right under that clause, in the light of criteria relating, in particular, to the extent of the consumer’s failure to fulfil his contractual obligations, such as the amount of the instalments which have not been paid in relation to the total amount of the credit and the duration of the contract, and to the possibility that the implementation of that clause may result in the seller or supplier being able to recover the sums due under that clause by selling, without any legal process, the consumer’s family home”.
AG Pikamäe delivered on 26 October 2023 his opinion in joined cases C‑554/21, C‑622/21 and C‑727/21 (Hann-Invest), which are about Article 19 TEU:
“The second subparagraph of Article 19(1) of the Treaty on European Union must be interpreted as not precluding national rules and practices which, at the deliberation stage of court proceedings at second instance concerning a dispute that has been the subject of a decision by the judicial panel seised, provide for:
– the referral to an enlarged formation by the president of the court or the president of a specialised section, in the light of that decision and where the consistency of the court’s case-law may be or is being undermined, for the purpose of the adoption, by majority vote, of a common position as to the general and abstract interpretation of the applicable legal rule, previously a matter of debate between the parties, which the formation initially seised must take into account for the purpose of resolving the dispute as to the substance;
– the informing of the president of the court or the president of a specialised division, by a judge responsible for monitoring the case-law of the court, in a situation where the consistency of that case-law may be or is being undermined because the formation seised has maintained its original decision and, pending the adoption of the abovementioned legal position, the suspension of that formation’s decision ruling on the dispute and its notification to the parties”.
Theme by Danetsoft and Danang Probo Sayekti inspired by Maksimer