Flux européens

Thank you Stefanie Roosen for flagging the issue in what after a bit of searching I take it to be Delta Lloyd v Witsen. At issue is not immediately a conflict of laws concern however the case does highlight a discussion often occurring with respect to choice of court and choice of law: when do mere references to general terms and conditions (GTCS) become binding upon parties, all the more so when these refer to industry standards. Here: HISWA standards, the ‘Nederlandsche Vereeniging voor Handel en Industrie op het Gebied van Scheepsbouw en Watersport’ est.1932.  The Netherlands are a seafaring nation: HISWA is big.

During repairs to the yacht Kontiki, the rear cable of the shipyard’s portal crane broke, the Kontiki fell and she suffered severe damage. The shipyard had in the course of negotiation, agreement and confirmation referred to no less than three different HISWA sets. The Rechtbank Noord-Holland held that as a result, none was validly incorporated into the contract (neither incidentally was a mere sign quayside, limiting liability).

As I have reported on this blog before (e.g. here), there is no magic wand when it comes to GTCS: all that is required is due diligence. Neat filing and dito reference. Electronically or otherwise: it is elementary for all things legal.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.3.1.

Worldwide freezing injunctions are one of the civil procedure reasons for forum shopping to the English courts. [2017] EWHC 2747 (Ch) Campbell v Campbell is an excellent illustration  of the current state of the law, with Sarah Worthington QC expertly summarising and applying precedent. The application is for a freezing injunction over assets located outside England and Wales, partly in aid of domestic proceedings (partnership dissolution proceedings) and partly in aid of foreign proceedings (proceedings in Jersey re claims for 50% interest in shareholdings).

One for the comparative binder.

Geert.

The Court held some weeks ago in C-194/16 Bolagsupplysningen OÜ on the application of the Shevill rule, as supplemented by e-Date advertising, to infringements of a company’s personality rights over the internet. I held back reporting on the case for exam reasons – yep, some of the places I teach at already have exams.

Judgment was issued in Grand Chamber. There can be no clearer indication of the relevance the Court attaches to the question. The CJEU introduces in my view further complication in the Article 7(2) rule (jurisdiction for torts) by requiring the court seized carry out analysis of ‘main economic activity’ with those same courts being told not to get carried away however in that analysis. The judgment does not I believe offer a solid conclusion for the issues of removal and rectification.

An Estonian company operating in Sweden was blacklisted for its allegedly questionable business practices on the website of a Swedish employers’ federation. The website attracted a number of hostile comments from its readers. The Estonian company brought an action before the Estonian courts against the Swedish federation. It complained that the published information has negatively affected its honour, reputation and good name. It asked the Estonian courts to order that the Swedish federation rectify the information and remove the comments from its website. It also requested damages for harm allegedly suffered as a result of the information and comments having been published online.

Can the Estonian courts assert jurisdiction to hear this action on the basis of the claimant’s ‘centre of interests’, a special ground of jurisdiction that the Court previously applied to natural persons, but so far not legal persons? If they can, then second, how should the centre of interests of a legal person be determined? Third, if the jurisdiction of the Estonian courts were to be limited to situations in which the damage occurred in Estonia, the referring court wonders whether it can order the Swedish federation to rectify and remove the information at issue.

I reviewed Bobek AG’s Opinion here – let me recap core issues: Bobek AG suggested there are two novelties in the questions referred: a legal person (not a natural one) is primarily asking for rectification and removal of information made accessible on the internet (and only secondarily for damages for the alleged harm to its reputation). This factual setting, the AG suggests, leads to the question of how far the seemingly quite generous rules on international jurisdiction previously established in Shevill with regard to libel by printed media, and then further extended in eDate to the harm caused to the reputation of a natural person by information published on the internet, may be in need of an update.

At the real root of course of the generous rules on jurisdiction for tort, lies the Court’s judgment in Bier. Bobek AG joined Szpunar AG in severely questioning the wisdom of the Bier rule (both locus delicti commissi and locus damni lead to jurisdiction) in the age of internet publications. Not unexpectedly, the Court of Justice further refined Bier, but did not overrule it.

It held first of all that legal persons like natural persons can claim for damages in their centre of interests (at 38): the split in Bier was introduced for reasons of judicial suitability (‘sound administration of justice’), not personal interest of the plaintiff hence the qualification of that plaintiff has no bearing on the rule.

Following e-Date, the national court therefore needs to determine a centre of interests for a legal person just as it would for a natural person. At 41: for legal persons, this centre of interests ‘must reflect the place where its commercial reputation is most firmly established and must, therefore, be determined by reference to the place where it carries out the main part of its economic activities. While the centre of interests of a legal person may coincide with the place of its registered office when it carries out all or the main part of its activities in the Member State in which that office is situated and the reputation that it enjoys there is consequently greater than in any other Member State, the location of that office is, not, however, in itself, a conclusive criterion for the purposes of such an analysis.’ As one knows from the definition of ‘domicile’ under the Brussels I Regulation, leading to positive jurisdictional conflicts (it is perfectly possible for more than one Member State considering itself the domicile of a corporation), it is far from self-evident to determine where a company’s ‘main’ economic activities are located.

At 43 the Grand Chamber reminds the national courts that their role in the application of the Brussels I Recast is limited to the jurisdictional stage: they must not go into the merits (yet), hence if it is ‘not clear from the evidence that the court must consider at the stage when it assesses whether it has jurisdiction that the economic activity of the relevant legal person is carried out mainly in a certain Member State’, the Court must conclude that the Article 7(2) locus damni for the full damage is not available to that claimant.

 

The Court then distinguishes actions for rectification of false information and removal of comments: there is no jurisdiction before the courts of each Member State in which the information published on the internet is or was accessible. The Court follows Bobek AG’s Opinion on this point (although the AG also employed it to support his view on withdrawal of Bier altogether) at 48: ‘in the light of the ubiquitous nature of the information and content placed online on a website and the fact that the scope of their distribution is, in principle, universal …an application for the rectification of the former and the removal of the latter is a single and indivisible application and can, consequently, only be made before a court with jurisdiction to rule on the entirety of an application for compensation for damage [the Court refers to Shevill and e-Date] and not before a court that does not have jurisdiction to do so.’

On this latter point, the judgment is bound to create a need for further clarification: Shevill and e-Date confirm full jurisdiction for the courts of the domicile of the defendant and of the locus delicti commissi. These do not necessarily coincide but do raise the same difficulty of claims for rectification and removal by nature being single and indivisible. With more than one court having such full jurisdiction I do not see a solution in the Court’s approach.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.

 

Lounes
Citoyenneté européenne
Un ressortissant d’un État non UE, membre de la famille d’un citoyen de l’Union, peut bénéficier d’un droit de séjour dans l’État membre dans lequel ce citoyen a séjourné avant d’en acquérir la nationalité en sus de sa nationalité d’origine

APVE e.a.
Concurrence
Une concertation sur les prix et les quantités entre plusieurs organisations de producteurs agricoles et associations de telles organisations peut constituer une entente au sens du droit de la concurrence

Schrems
Espace de liberté, sécurité et justice
Selon l’avocat général Bobek, M. Maximilian Schrems peut invoquer sa qualité de consommateur pour poursuivre Facebook devant des juridictions autrichiennes en ce qui concerne l’usage privé de son propre compte Facebook

Granted, Arie van Hoe’s brief review of the issues in C-641/16 Tünkers France has the more resonant title for those truly in the know: vis attractiva concursus is a principle which makes sense from a judicial economy point of view but which is likely to gazump parties’ choice of court, as well as ordinary jurisdictional rules. Briefly explained: when a company is insolvent (or under restructuring), prima facie it makes sense to gather as many lawsuits as possible against it, in one court: that of the Member State of COMI. Vis attractiva (the pulling force) concursus then (as defined by Arie) is the principle that ancillary proceedings may be attracted to, and brought before, the forum concursus. The Court of Justice supports an interpretation in that direction of the Brussels I Regulation in conjunction with the insolvency Regulation, most recently in case like Nortel (see my posting for references to earlier case-law), and now included in some form in the Insolvency Regulation. Its development by the CJEU however was not straightforward, as is explained by Laura Carballo Piñeiro; neither is the jury on it entirely settled as excellently reviewed by Zoltan Fabok. More importantly, vis attractiva concursus tends to upset choice of court validly made by creditors of the insolvent company (unlike the Brussels I Regulation, the Insolvency Regulaiton does not accommodate choice of court; indeed it actively discourages forum shopping). The principle therefore must not be interpreted in a way which upsets standard choice of court to a disturbing degree.

Tünkers France involves a case for unfair competition brought by the insolvency practitioners of a German company. Part of the business was sold to a company in France who subsequenly started soliciting clients from the insolvent company, misrepresenting itself as the exclusive distributor in France of the goods manufactured by the debtor. The French subsidiary of the insolvent company brings an action for damages for unfair competition.

The CJEU (in passing nota bene emphasising the need for a harmonious application of the Insolvency and Brussels I Regulation) held that such action is a separate action and it is not based in the rules specific to insolvency proceedings. The French subsidiary acted exclusively with a view to protecting its own interests and not to protect those of the creditors in the insolvency proceedings. The conduct of the tortfeasors is moreover subject to other rules than those applicable in the contest of insolvency proceedings.

Vis attractiva concursus therefore does not have superhero status: the forum concursus cannot attract cases that are too far removed from the insolvency.

Geert.

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

 

Thank you Angharad Parry for flagging  [2017] EWCA Civ 1609 Koza v Akcil – Angharad has excellent factual background. The case concerns the application of Article 24(2) of the Brussels I Recast Regulation, which assigns exclusive jurisdiction to the Courts of the Member State of the seat in matters relating to the life and death of companies and of the validity of decisions made by their organs:

in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or of the validity of the decisions of their organs, the courts of the Member State in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law;

Referring particularly to C-144/10 BVG and to C-372/07 Hassett, the Court of Appeal at 28 correctly suggests Article 24’s exclusive jurisdictional rules need to be interpreted with their limited purpose in mind: ‘when article 24(2) speaks of proceedings having an “object” it is not referring to the purpose of the proceedings. Rather that phrase is to be interpreted as “proceedings which are principally concerned with” one of the types of subject matter within the article.’ At 37: ‘The task for the court in each case is therefore to determine whether the proceedings relate principally to the validity of the decisions of an organ of the company. A mere link to a decision of the company, or an issue raised which is ancillary to the heart of a contractual or some other dispute, is insufficient to bring the proceedings within the exclusive jurisdiction.’

Floyd LJ at 46 summarises the direction for courts: ‘I do not take from the English or European authorities which were cited to us any suggestion that one is required in all cases to disentangle issues which are interlinked in this way and apply Article 24(2) to each issue separately. On the contrary, faced with such proceedings, the court is required to form an overall evaluative judgment as to what the proceedings are principally concerned with. The position is obviously different from a case where two quite independent claims are made in the same proceedings. Exclusive jurisdiction in relation to each claim would, in those circumstances, have to be determined separately.’ In the case at hand the case was found overall and fundamentally to concern one and the same issue of the validity of decisions of the organs of the company

Consequently the issue is one of looking beyond the particulars of form and into the true nature of the proceedings. Not a decision always made with ease.

Geert.

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

 

Saugmandsgaard ØE’s would seem fast to become the CJEU’s Advocate General of choice in matters of social dumping – witness the recent Ryanair litigation. In C-359/16 Altun, at issue is the binding nature of the E101 certificate. This certifies that a worker moving within the EU is covered by the social security scheme of the Member State (‘MS’) to which the issuing institution belongs. Standing case-law is that the host MS is not entitled to scrutinise the validity of an E101 certificate in the light of the background against which it was issued: this is the result of the mutual trust built into the relevant secondary law.

In current case the Belgian Supreme Court queries whether that case-law applies where a court of the host MS finds that an E101 certificate was obtained or invoked fraudulently.

The AG summarises the relevant investigation at 10: ‘The Sociale Inspectie (Social Inspectorate, Belgium) conducted an investigation into the employment of the staff at Absa NV, an undertaking governed by Belgian law active in the construction sector in Belgium. That investigation established that from 2008 Absa had practically no staff in its employ and outsourced all manual labour to Bulgarian undertakings under subcontracting agreements. Those Bulgarian undertakings had no activities to speak of in Bulgaria and posted workers to work under subcontracting agreements in Belgium for Absa, partly with the involvement and cooperation of other Belgian companies. The employment of the workers concerned was not notified to the Belgian institution responsible for the collection of social security contributions, as they held E 101 certificates issued by the competent Bulgarian authority, certifying that they were covered by the Bulgarian social security system.’

What follows is essentially the Belgian authorities alleging that their Bulgarian counterparts, having been asked to withdraw the certificates, only answered halfheartedly if at all. The Court of Appeal found that the certificates had been obtained by fraud.

Saugmandsgaard ØE emphasises that the EU social security rules at issue effectively establish a private international law system for social security. They assign authorities competent to issue certificates; they designate the social security law applicable. The principle of mutual trust /sincere co-operation, laid down in Article 4(3) TEU, ensures that authorities in the host MS respect the certificates issued in the home MS. However, the AG then effectively flips the coin: sincere co-operation requires sincerity on both sides (my words, not the AG’s).

The AG recalls the Halifax case-law of the CJEU: EU law cannot be relied on for abusive or fraudulent ends and that national courts may, case by case, take account — on the basis of objective evidence — of abuse or fraudulent conduct on the part of the persons concerned in order, where appropriate, to deny them the benefit of the provisions of EU law, in the light of the objectives pursued by the provisions of EU law concerned.

The AG does not just refer to case-law on the very secondary law at issue. He opens up the debate to the wider implications of social dumping and regulatory competition:

At 46: ‘socio-economic considerations likewise support priority being given to the combating of fraud in such a situation. In the context of the system of conflict of laws established by … Regulation No 1408/71, fraud linked to the issue of E 101 certificates represents a threat to the coherence of the Member States’ social security schemes. In that regard, I consider that Member States have a legitimate interest in taking appropriate steps to protect their financial interests and to ensure the financial balance of their social security systems. In addition, the use of E 101 certificates obtained or invoked fraudulently is, in my view, a form of unfair competition and calls into question the equality of working conditions on national labour markets.‘ (footnotes omitted)

At 49, the AG suggest a finding of fraud requires the satisfaction of an objective criterion and of a subjective criterion. The objective criterion consists in the fact that the conditions for obtaining the advantage sought are not in fact satisfied. At 51, the subjective factor:  it is to be established that the persons concerned had the intention of concealing the fact that the conditions for the issue of the E 101 certificate were not in fact met, in order to obtain the advantage stemming from that certificate. Proof of the existence of such fraudulent intent may consist in an intentional act, in particular an inaccurate presentation of the true situation of the posted worker or of the undertaking posting that worker, or in an intentional omission, such as the non-disclosure of relevant information.

(In the case at issue, the facts point to non-fulfillment of one of the substantive criteria for the E101 to be issued, namely that only an undertaking which habitually carries on significant activities in the Member State in which it is established may be issued an E101 of that State).

The fraud must be established in the context of adversarial proceedings with legal guarantees for the persons concerned and in compliance with their fundamental rights, in particular the right to an effective remedy enshrined (at 52).

If the AG’s Opinion is followed, and taking into account Commissioner Thyssen’s recent progress on the reform of the relevant laws, the social dumping window is closing yet a bit more.

Geert.

 

 

Icap e.a. / Commission
Concurrence
Le Tribunal de l’Union européenne annule partiellement la décision prise par la Commission contre le groupe Icap dans les ententes relatives aux produits dérivés de taux d’intérêt libellés en yens

Egenberger
Principes du droit communautaire
L’avocat général Tanchev estime que les exigences professionnelles fixées par des organisations religieuses sont soumises à un contrôle juridictionnel à l’égard d’allégations de discrimination illicite en raison des convictions

Altun e.a.
Sécurité sociale des travailleurs migrants
Selon l’avocat général Saugmandsgaard Øe, une juridiction nationale peut, en cas de fraude, laisser inappliqué le certificat de sécurité sociale des travailleurs détachés dans l’Union européenne

Espadas Recio
SOPO
Le système utilisé en Espagne pour déterminer la base de calcul de la durée de la prestation de chômage des travailleurs à temps partiel vertical est contraire au droit de l’Union

Maio Marques da Rosa
SOPO
Le repos hebdomadaire des travailleurs ne doit pas nécessairement être accordé le jour suivant six jours de travail consécutifs

I was asked yesterday (interview in Dutch) for my thoughts on the Belgian Government’s plans for a Brussels International Business Court. Here goes, in bullet-points format, a slightly extended and more technical version of those preliminary thoughts:

• Three and more’s a crowd. The Belgian move of course is not the first and neither will it be the last. Even pre-Brexit, Member States (and even individual cities within Member States; see Michiel Poesen recently on Frankfort) were vying for the title of preferred place for litigation.
• Brexit evidently may be a game-changer. I have flagged repeatedly that post-Brexit and assuming there will be no deal which would roll-over the UK’s engagement with EU civil procedure law, UK courts will become a lot less attractive. This is due to the more cumbersome recognition and enforcement regime that will be the result of decoupling from Brussels I. The same incidentally does not apply to arbitration. Pre and post Brexit, deal or not, free movement of arbitral awards is subject to the New York Convention.
• Attractiveness as a centre of litigation and legal services is part of regulatory competition. Being known as a place of legal know-how and expedited litigation brings prestige as well as attractive billable hours to the law firms of one’s country.
• Crucially, in an attempt to prise litigation away from London in particular, the use of English in proceedings is always the eye-catcher for the media. However in reality the language of proceedings is to my experience not the defining issue in client’s forum shopping strategies. Know-how of the bench; speed of proceedings; transparency of case-law; and of course ease of recognition and enforcement, are much more so. The Belgian proposal acknowledges as much by touting in particular the ‘collegiality’ and ‘expertise’ of the pool of (domestic and foreign) commercial law experts that will populate the court.
• Unwittingly perhaps but without a doubt, the proposal in flagging the benefits of the BIBC, also highlights the well-known disadvantages of the Belgian courts in ordinary: tardiness of proceedings (the ‘Belgian’ torpedo) in particular. However also very much so, intransparency (as I have repeatedly signalled: access to Belgian case law continues to be highly problematic) and lack of collegiality among the bench: being a judge is a lonely professional existence in Belgium. Professional secrecy rules, practicalities (lack of proper office space), and the aforementioned reporting issues work against Belgian jurisprudence presenting itself as coherent.
• At a technical level, the proposal emphasises repeatedly that the BIBC will be a court. Not an arbitral tribunal. The difference lies particularly in the easy or enforcement. The draft Bill loudly talks the talk in this respect. But does it walk the walk? What a ‘court’ means within the context of EU civil procedure law is of course the prerogative of that EU law: not of the Member States. (I refer to recent blog posts on same). Extensive reference to UNCITRAL’s Model Law on international commercial arbitration is a strange prop to use in the draft, if the idea is to take one’s attention away from arbitration. The BIBC will only take cases in the event of prorogation (choice of court or submission). The pool of judges will mostly be taken from part-timers, not benchers. Most importantly, in my mind: Article 43 of the draft instructs the BIBC, with respect to choice of law, to respect parties’ choice of governing law, and, in the absence of such law, ‘to apply the law determined by the conflict of laws rules which it considers applicable’. This is a copy /paste from Article 28(2) of the Model Law. In footnote the Act suggests that by omitting the third para of said Law (‘The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so’), the Bill emphasises the nature of the BIBC as court. It does not. Courts are simply subject to Rome I and II when it comes to applicable law. They do not just ‘consider a law applicable’.

Much to chew on. My analysis is based on a draft Bill which a little bird sent me. This is probably not the final say on the BIBC. (On an aside: @BIBC is already taken. I can think of one or two Twitter Handles which the BE government may want to snap up before someone else does).

Geert.

 

Readers may have noticed a surge in blog posts during the month of October. Indeed when I scheduled last night’s release I noticed I had effectively posted every working day (and some week-end days, too) in the past month. This is testimony to an exciting amount of developments in the areas on which I report, particularly in conflict of laws.

I cannot promise you’ll be treated to a post every day for November, too. Neither however will I trick you into having to wait too long for reporting on the many interesting cases I have in the queue.

Happy Halloween.

Geert.

In [2017] NIQB 81 Townsend v Google Inc. & Anor the Northern Ireland High Court refused service our of jurisdiction in relation to a request for Google (UK and Inc.) to de-list a number of urls relating to reports on sexual and other criminal offences committed by plaintiff.

Plaintiff seeks an injunction inter alia requiring the defendants and each of them to withdraw and remove personal data relating to the plaintiff, making reference to or tending to reveal sexual offences committed by the plaintiff while a child, from their data processing and indexing systems and to prevent access to such personal data in the future. The Court references ia Vidal-Hall and Google Spain. I will leave readers to digest the ruling largely for themselves for there is a lot in there: consideration of Article 8 ECHR; Directive 95/46; aforementioned precedent; tort law etc.

Of particular note is Stephens J’s finding at 61 that ‘(t)here is a clear public interest in open justice. There is a clear right to freedom of expression. In such circumstances the processing was not unwarranted and that there is no triable issue in relation to any allegation that Google Inc. has not satisfied this condition.’

A judgment to add to the growing pile of internet, jurisdiction and balancing of interests in privacy considerations.

Geert.

 

 

In Fernandes v. Wal-Mart Canada  2017 MBCA 96 the Court of Appeal of Manitoba offers great material for comparative conflict of laws. I will leave the Canadian analysis to the experts, in particular Chloe Snider who alerted me to the case. Suffice to say here that the gist of the ruling is that where a corporation carries on business in the territory (here: Wal MArt operating stores), this suffices to establish jurisdiction (here: re an employment issue): no ‘real and substantive connection’ test needs to be separately established. (Cue comparative litigation: compare with ‘domicile’ and extended notions of domicile in EU conflicts law).

The action was eventually still stayed on forum non conveniens grounds in favour of Ontario (extra cue for comparative review here: for this was so held despite the fact that the Ontario limitation period had probably expired).

Geert.

 

Aspen Underwriting v Kairos Shipping et al [2017] EWHC 1904 illustrates the splintering of claims which may well occur when plaintiff chooses to ignore Brussels I’s core jurisdictional rule of domicile of the defendant. Evidently such splintering often is the strategic intention of a plaintiff and even if it does inconvenience them, having part of the claims settled by one court rather than another may still be its overall preference. The case however also highlights important crossed wires between the common law and EU law on the qualification of ‘tort’, and the relation between Rome II and Brussels I (Recast).

The vessel ATLANTIK CONFIDENCE  sank in the Gulf of Aden in 2013. It had earlier been held in a limitation Action commenced by her Owners, the First Defendant, that the Vessel was deliberately sunk by the master and chief engineer at the request of Mr. Agaoglu, the alter ego of the Owners. In the current action the Hull Underwriters of the Vessel, who paid out on the hull and machinery policy (“the Policy”) in August 2013 but who now consider, on further investigation, that the Vessel was deliberately cast away by her Owners, claim recovery of the insurance proceeds which were paid to Owners and the Vessel’s mortgagees, Credit Europe Bank NV, the Third Defendant (“the Bank”).

The Bank is domiciled in the Netherlands. and maintains that under the Brussels Regulation this court has no jurisdiction to hear and determine the claim against the Bank. It must be sued in the courts of the Netherlands where it is domiciled. The Hull Underwriters maintain that this court has such jurisdiction for three reasons. First, it is said that Bank is bound by a Settlement Agreement which confers exclusive jurisdiction on this court. Second, it is said that the Bank is bound by the exclusive jurisdiction clause in the Policy. Third, it is said that the claims brought against the Bank are matters which relate to tort, delict or quasi-delict and the harmful event occurred in England. This is the judgment of the court upon the Bank’s challenge to the jurisdiction.

Teare J rejected the first and second argument on the basis of analysis of the settlement. He then looks into Article 7(2) Brussels I Recast. The insurance heading of the Regulation does not apply as the relations concern those between two professional parties (at 72 the High Court refers to C-347/08 Voralberger; the CJEU confirmed later in C-521/14 Sovag).

Whether the claim of misrepresentation leading to the settlement, is one in tort or one in contract depends on how closely one finds it to be connected to the contract at issue (the Settlement). Plaintiff suggests that where such misrepresentations induce a contract, in this case the Settlement Agreement, the resulting claims are not matters relating to tort within the autonomous meaning of Article 7(2) but are matters relating to a contract within Article 7(1).

Teare J settles on the basis of the following convincing argument, at 76: ‘The court is concerned with a claim between the Hull Underwriters and the Bank. The Hull Underwriters allege that misrepresentations made by the Bank induced the Hull Underwriters to enter into the Settlement Agreement with the Owners. They seek to recover damages suffered by the Hull Underwriters as a result of the Bank’s misrepresentations. Whilst there is a factual connection between the claim and the Settlement Agreement I do not consider that that is enough to make the claim a matter relating to a contract and so within Article 7(1). Where there is a claim against the contracting party and it is alleged that the contract should be rescinded on the grounds of misrepresentations made by that party because such misrepresentations induced the contract it can sensibly be said that the subject-matter of the claim is the contract. But in the case of the claim against the Bank I do not consider that it can be fairly said that the subject-matter of the claim is the Settlement Agreement.‘

Oddly no reference here is made to relevant CJEU precedent including recently Granarolo and Kareda.

Now, the claim for damages based upon misrepresentation can be brought in England so long as the “harmful event” occurred in England (at 79; with reference to Bier /Mines de Potasse split into locus delicti commissi and locus damni). Jurisdiction for the claim based on misrepresentation can be brought fully in England because (at 79) ‘either the damage occurred in England (where Norton Rose Fulbright signed the Settlement Agreement and/or where the $22m. was paid to Willis’ bank account in London) or the event giving rise to the damage occurred in London (being the place where the misrepresentations were made and/or the place where the Hull Underwriters were induced).’

At 78 the High Court highlights the difficulty of the qualification viz conflict of laws of restitution based on unjust enrichment. The common law has the precedent of the House of Lords in Kleinwort Benson v Glasgow [1999] 1 AC 153.  Teare J summarises ‘In that case Lord Goff, with whom the other members of the court agreed on this point, said that a claim in restitution based upon unjust enrichment does not, save in exceptional circumstance, presuppose a harmful event and so is impossible to reconcile with the words of Article 7(2). He was not deterred from reaching this conclusion by the decision in Kalfelis. The claim for restitution in this case is based upon a mistake; it does not require a harmful event, though there might in fact be one as suggested by [plaintiff]. I consider that I am bound to follow the decision of the House of Lords and to hold that the claim in restitution based upon mistake is not within Article 7(2). It must follow that this court has no jurisdiction over that claim and that if it is to be pursued it must be pursued in the Netherlands where the Bank is domiciled.‘

The claim for unjust enrichment cannot be brought in England. Teare J observes the consequence of the Brussels I Regulation (at 80): ‘On case management grounds it is unsatisfactory to reach the conclusion that the tort claim may be brought in England but that the restitution claim may not be brought in England. However, this is the consequence of the Brussels Regulation as was accepted in Kalfelis. Of course, the entirety of the Hull Underwriters’ case against the Bank could be brought in the Netherlands but in circumstances where the Hull Underwriters’ case against the Owners and Managers is being brought in England that also is not satisfactory. The court cannot however base its jurisdictional decisions when applying the Brussels Regulation on considerations of forum conveniens.’

Of note finally is that Kleinwort Benson was issued post Kalfelis but prior to Rome II, which contains a specific heading on unjust enrichment. Notwithstanding its clear non-contractual nature (‘non-contractual’ being the generic title of Rome II which therefore encompasses more than just torts), it is not generally considered a tort: this continues to create issues in the application of Rome II.

A good case to illustrate the lasting challenges in distinguishing contracts from torts.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2.

Thank you Ben Zielinski for flagging Bank Leumi (UK) Plc v Screw Conveyor Ltd [2017] CSOH 129. I believe Ben is right in writing that this is the first formal acknowledgement that Scottish judicial authorities have no insolvency business in respect of an English registered company, and the same applies to English courts and Scottish companies,  in spite of the EU’s Insolvency Regulation.

Even if a company carries out its main activities in Scotland, internal UK jurisdictional rules will assign insolvency jurisdiction to the English judicial authorities. That is a result of, as Lord Doherty writes, the Insolvency Regulations designating the ‘Member State the courts of which may open insolvency proceedings’ however ‘territorial jurisdiction within that Member State is established by the Member State’s national law’ (at 9).

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.