A note on RM RENT A CAR v KFZ BRÜNING ECLI:NL:RBNHO:2023:7489 in which the Noord-Holland court of first instance much more readily accepts the escalation of a purely domestic (German) contract to the ‘international’ plain. Clearly in contrast with de la Tour AG in Inkreal.
RM Rent A car argues that the close links it has with The Netherlands, as a result of a number of its directors are domiciled in The Netherlands, as is its mother holding Network4Cars Trading B.V., explain Dutch choice of court and the Dutch governing law clause. It also refers to the Report Jenard, a contrario I assume (for that detail is not given) p.37 in fine (where the report argues that (now) A25 does not apply between to parties domiciled in the same State and designating a court of that State).
KFZ Brüning by contrast argue that the sale between two German corporations, of German registered vehicles, with delivery in Germany, lacks the international element required to trigger Brussels Ia.
The Court goes about the issue in a roundabout way. It says nothing about the ‘international character’ (arguably implicitly acknowledging it), instead merely finding 2.8 that there is no proof that in signing the purchase order, Brüning also consented to the GTCS.
As noted, an interesting judgment in light of the AG’s Opinion in Inkreal.
Geert. EU Private International Law. 4th ed. 2024, para 2.22 ff.First instance Noord-Holland, A25 Brussels Ia choice of court
Lack of reference to general terms & conditions in Purchase Order = ineffectiveness of choice of court in those GTCs
Implicitly acknowledges 'international' element of prima facie German casehttps://t.co/v8TE2B9SpY
— Geert Van Calster (@GAVClaw) August 29, 2023
Still mopping up that blog queue….In Case C-393/22 EXTÉRIA s.r.o. v Spravime, s.r.o. the CJEU has held that a contract to enter into a future services contract is not itself a services contract within the meaning of Article 7(1) Brussels Ia., rather, a contract whose forum contractus needs to be determined using CJEU 12/76 Tessili v Dunlop‘s ‘looking over the fence’ method.
The applicant in the main proceedings, which provides consultancy services in the field of occupational safety and health, and the defendant in the main proceedings concluded, on 28 June 2018, a contract to enter into a future contract relating to the future conclusion of a franchise agreement. The contract contained, in addition to the obligation to conclude that contract in the future, certain contractual terms and conditions and an undertaking on the part of the defendant in the main proceedings to pay an advance of EUR 20 400, exclusive of value added tax, and, in the event of failure to comply with that obligation, a contractual penalty equal to the amount of that advance.
The contract to enter into a future contract provided for the application of Czech law, without any agreement on jurisdiction having been concluded.
Alleging that the defendant in the main proceedings had failed to fulfil its obligation to pay the advance in question, the applicant in the main proceedings withdrew from the contract to enter into a future contract and claimed payment of the contractual penalty.
(34) The concept of ‘services’, within the meaning of the second indent of Article 7(1)(b), implies, at the very least, that the party providing them 1. carries out a specific activity 2. in return for remuneration (see ia CJEU Kareda).
Re 1, (35) the existence of an activity requires the performance of positive acts, to the exclusion of mere abstentions (see ia CJEU Corman-Collins and Granarolo). re 2, remuneration granted in return for an activity, (36) this cannot be understood in the strict sense of the payment of a sum of money, since the receipt of a package of benefits representing an economic value may be regarded as constituting remuneration (same case-law).
(37) a contract to enter into a future contract, the objective of which was to conclude a future franchise agreement and preserve the confidentiality of the information contained in that contract to enter into a future contract, is not an ‘activity’. Moreover, in the absence of any actual activity carried out by the co-contractor, the payment of the contractual penalty cannot be characterised as remuneration.
(39) that the obligation to pay the contractual penalty is closely linked to the franchise agreement which was to be concluded and under which it would be possible to determine the place where the services concerned should have been provided, does not rescue the issue. This is said (40) to follow from the need to interpret exceptions to A4 restrictively, and from the requirements of predictability.
A useful judgment.
Geert.
EU private international law, 3rd ed. 2021, para 2.412. 4th ed forthcoming January 2024.
New #CJEU judgment Jurisdiction Regulation Brussels Ia
Contract to enter into a future services contract is not itself a services contract; jurisdiction to be determined following 'looking over the fence' method, A7(1)(a)
C-393/22 Exteria https://t.co/yZNRz0f9ap
— Geert Van Calster (@GAVClaw) September 14, 2023
Butcher J as I noted in my Tweet on the judgment at the time, has largely granted immediate leave to appeal his ruling in London Steam-Ship Owners’ MIA v [Spain] (Re Prestige) [2023] EWHC 2473 (Comm), in which he entertains yet further litigation forming part of the protracted procedures arising from the sinking of the M/T Prestige in 2002. [Of note is that he did not allow appeal on the issue of the effect of the CJEU Judgment in Prestige, on the jurisdiction of Sir Peter Gross as arbitrator in a second set of arbitration proceedings; I imagine permission to appeal that point has been sought separately with the Court of Appeal itself).
I have reported repeatedly on the issues and the trigger for most of the discussions in the judgment is the CJEU Grand Chamber Judgment which I called a parallel universe here. I stand by my criticism in that post, not because I suggest the CJEU is some lawless band of brigands upending the rule of law. Clearly it is not. Rather, I find the CJEU’s lack of consistent treatment of arbitration whether commercial or investment, troubling. I also fail to understand its backdoor disciplining of arbitration procedures (via the res judicata and privity issues which I discuss in my previous posts) if these procedures are principally excluded from the scope of Brussels Ia.
The Prestige saga is an indictment first of all of the failure of environmental law (one of my other academic and practice hats) properly to address one of the most outrageous outcomes of the fossiel fuel area, which is to pollute twice over nature and human health alike in causing environmental catastrophe by spilling crude oil. As for international litigation, it is an indictment of the failure of international and European law alike to develop a systematic approach to the outcomes of litigation in ordinary, and arbitration.
Now to the case at hand. My discussion of same is greatly helped by professor Giles Cuniberti’s post over at EAPIL, and the comments on same, and I would suggest readers refer to Giles’ summary of the case and the issues.
Core to the appeal will be to what degree the English courts (pro memoria: the proceedings are subject to Brussels Ia and were introduced pre Brexit) are bound by all of the findings in the CJEU judgment, particularly those with an impact on what the arbitrator should have checked (the CJEU ordinarily practices judicial economy; in the case at hand some argue it answered questions that were not put to it). This provoked an interesting debate on the extent of the authority of those parts of the CJEU judgment which in a precedent system would likely be called obiter. The preliminary reference procedure however is not like a common law precedent or authority regime. What exactly it is will undoubtedly be discussed upon appeal and as professor Dickinson replies in comment to Giles’ post, there may be a way for the European Commission to use the Withdrawal Agreement’s dispute settlement provisions to clarify how CJEU authority is supposed to work.
Geert.
Unsuccessful appeal of #arbitration award following (and mostly ignoring) #CJEU Prestige judgment (see https://t.co/2ysTMGyzwT)
Permission to appeal largely granted instantly
London Steam-Ship Owners' MIA v [Spain] (Re Prestige) [2023] EWHC 2473 (Comm)https://t.co/VSBL2uQ9ip
— Geert Van Calster (@GAVClaw) October 6, 2023
X v Y (yep, annoying and entirely without reason, an anonymous judgment) ECLI:NL:RBLIM:2023:4342 is an interesting illustration of Brussels Ia’s Article 7(1)(a’)s ‘looking over the fence’ aka the conflicts method for determining forum contractus.
The method implies that beyond the standard contractual categories for which Article 7(1)(b) locks in forum contractus as a European ius commune, the ‘place of performance of the obligation in question’ needs to be determined by provisionally identifying the lex contractus and then using that lex contractus to determine place of performance, leading to a conclusion whether the judge seized has jurisdiction or not. See CJEU 12/76 Tessili v Dunlop.
In the case at issue, the contract is a loan and the applicable law is determined with reference to CJEU Kareda. This is where the court veers off course (my first categorisation by Tweet of the judgment being an excellent example therefore needs to be corrected): In Kareda the CJEU held that the credit agreement at issue was to be considered an ‘agreement for the provision of services’ per A7(1)(b), locking in forum contractus “in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided”. In such case, no more looking over the fence is required, let alone consideration of Article 4(3) Rome I etc.
Geert.
Students claxon
First instance Limburg, excellent example of 'looking over the fence' aka the conflicts method per CJEU Tessili v Dunlop to determine forum contractus per A7(1)a BIa, A4(2) Rome I (no A4(3) manifest closer connection
ECLI:NL:RBLIM:2023:4342https://t.co/g6EdSsEs2c
— Geert Van Calster (@GAVClaw) October 20, 2023
The UK Supreme Court has dismissed the appeal in Skatteforvaltningen (the Danish Customs and Tax Administration) v Solo Capital Partners LLP & Ors [2023] UKSC 40, confirming the Court of Appeal’s finding that the claim against the majority of the defendants may go ahead.
I reviewed the first instance judgment here and the Court of Appeal’s here and I shall not repeat all the issues. Readers should note that the issues discussed are of wider relevance to current developments in both public and private international law (business and human rights litigation, climate change litigation etc.).
[21] Lord Lloyd-Jones summarises the Dicey rules at play (and also notes the editors of the 16th d and those before them pointing out the inroads that in recent years have been made into the principle) and [22] he makes a delightfully concise reference to somewhat different US views on the rationale for the issue.
[39] after reviewing the authorities, it is held that
The Danish tax system undoubtedly provided the context and the opportunity for the alleged fraud and the operation of the fraud can be understood only by an examination of that system. It may well be that at the trial of this action it will be necessary to address that in detail. However, as we have seen [that’s a reference to Dicey as summarised above, GAVC], there is no objection to the recognition of foreign tax laws in that way. Because the present proceedings do not involve an unsatisfied claim to pay taxes due in Denmark, they fall outside the scope of the revenue rule.
[41] applies fraus and nemo auditur in dismissing appellants’ attempt to present themselves as taxpayers
The appellants seek to circumvent this difficulty by nevertheless portraying the refund applicants as taxpayers. It is said that by making applications for withholding tax refund applications the applicants brought themselves within the Danish tax system and became Danish taxpayers. It is also said that the respondent by paying “refunds” accepted them into the Danish tax system. It is further said that in rescinding the “refunds” the respondent was acting in the capacity of a taxing authority. The appellants therefore maintain that, in all the circumstances, the recipients of “refunds” and the respondent were in the relationship of taxpayer and taxing authority. As the Court of Appeal pointed out (at para 136) this submission is misconceived. The applications for “refunds” were all based on the lie that the applicants had paid tax in the first place which, on the respondent’s pleaded case, they had not. This attempt to portray the applicants as taxpayers cannot bind the respondent as the victim of their fraud and the applicants cannot take advantage of their own wrongdoing in order to bring themselves within the revenue rule.
[44] ff discusses the impact of (commentary on) CJEU C-49/12 Sunico, which was also discussed by the first instance judge in current case and by Szpunar AG and the CJEU in Movic.
[53] ff then discusses the sovereign authority rule, essentially considering whether the claim is a simple money claim like thirteen to the dozen, and with reference (via Dr Mann) to Grotius’ ‘actus qui a rege sed ut a quovis alio fiant’.
[58] again substance is distinguished from context
appellants are undoubtedly able to point to prior exercises of sovereign power by Denmark in creating its laws relating to the taxation of dividends and in operating the tax system. This, however, merely provides the context for the present claims. The substance of the claims, as we have seen, does not involve any act of a sovereign character, any exercise or enforcement of a sovereign right, or any vindication of sovereign power. On the contrary, the respondent is simply bringing restitutionary claims to recover monies of which it has been defrauded, a course open to any private citizen who had been similarly defrauded.
Unlike in first instance, neither Lugano nor Brussels Ia feature substantially at the Court of Appeal or Supreme Court. That is a pity for how the Dicey rules and similar ones in the current EU Member States relate to Lugano and Brussels, is not clear-cut.
Geert.
EU Private International Law, 3rd ed. 2021, para 2.28 ff. (4th edition forthcoming January 2024).
For background see https://t.co/B5DeTbT5g4
More on the blog soon.
via @bwmlindsay https://t.co/3tVcUeFyL7
— Geert Van Calster (@GAVClaw) November 8, 2023
In Limbu & Ors v Dyson Technology Ltd & Ors [2023] EWHC 2592 (KB) a jurisdictional challenge on forum non conveniens grounds in allegations of forced labour at Dyson’s Malaysian Supplier, was successful. The judgment shows the impact of neither Brussels Ia (with a forum non conveniens ultra light regime) or the Lugano Convention (no forum non conveniens at all) applying.
The case is said [18] to raise a number of novel questions: whether the unjust benefit in a claim for unjust enrichment has to flow directly from the claimant to the defendant; and whether a party can be liable in negligence for the treatment by a third party — a supplier — of that third party’s employees. I do not think nota bene that the latter is correct: IMHO undoubtedly it can (for similarish considerations, albeit at strike-out level, see the Court of Appeal in Begum v Maran). The question is under what conditions.
[16] the judgment lists the concessions made by the defendants:
(i) D1 and D2 will submit to the jurisdiction of the Malaysian courts if they are sued there;
(ii) The Dyson Defendants will not seek security for costs or an adverse costs order against the Claimants if and to the extent such costs would not be recoverable under the Qualified One Way Cost Shifting regime in England;
(iii) The Dyson Defendants will pay the reasonable costs necessary to enable the Claimants to give evidence in Malaysian proceedings including (if necessary) affidavit affirmation fees and other costs necessary for the Claimants to give remote evidence including travel and accommodation costs, costs associated with the provision/set-up of suitable videoconferencing technology and other costs associated with the logistics of giving evidence remotely;
(iv) The Dyson Defendants will not oppose an application by the Claimants for remote attendance at a hearing/the trial in Malaysian proceedings;
(v) The Dyson Defendants will pay for the Claimants’ share of the following disbursements to the extent reasonably incurred and necessary: (a) Court interpretation fees, (b) Transcription fees, and (c) Joint expert evidence; and
(vi) The Dyson Defendants will not seek to challenge the lawfulness of any success fee arrangement entered into between the Claimants and their Malaysian lawyers.
A further undertaking was given in the course of the hearing before me: that the Dyson Defendants would not oppose an application for a split trial.
Sheldon DJ, with reference to Spiliada, sets out the jurisdictional test as follows [28-29]
With respect to “service in” cases [defendants domiciled in England, served there ‘of right’, GAVC], the burden of proof rests on the defendant to show that England is not the natural or appropriate forum and that there is another available forum which is clearly and distinctly more appropriate: Stage 1. If so, then the burden shifts to the claimant to show that there are special circumstances such that justice requires the trial to take place in England: Stage 2.
With respect to “service out” cases [defendant in respect of whom permission to serve abroad has been obtained, GAVC], the burden of proof is on the claimant at Stage 1 to show that England is the appropriate forum for the trial of the action, and that it is “the proper place in which to bring the claim” (CPR rule 6.37(3)). According to Lord Goff in Spiliada … the claimant must show that this is “clearly so”. If the claimant fails to establish that England is the proper forum, then Stage 2 will apply.
[30] the judge refers to Briggs J in Vedanta emphasising a preference for a single forum, so as not to run the risk of irreconcilable judgments, should there be bifurcation. [37] He refers to Lord Briggs’ reference [87] in Vedanta that when the E&W-domiciled anchor defendant)s) have agreed to submit to a foreign jurisdiction, but the claimant has made a deliberate choice to sue in this forum and has thereby engendered the risk of irreconcilable judgments, it “would offend the common sense of all reasonable observers to think that the proper place for this litigation to be conducted was England”.
That element of Lord Briggs’ speech was subject to a requirement that substantial justice can be obtained abroad, and I pointed out here that I found that a massive get out off jail free card.
The judge in current case [43ff] emphasises the caution that should be applied when considering whether “substantial justice” can be obtained in the foreign jurisdiction.
First, it has been observed that there have been “judicial warnings of undoubted authority that the English court should not in this context conclude, other than in exceptional cases, that the absence of a means of funding litigation in the foreign jurisdiction, where such means are available in England, will lead to a real risk of the non-availability of substantial justice”: see Lord Briggs JSC in Vedanta at §93 referring to Connelly v RTZ Corpn plc (No 2) [1998] AC 854 (“Connelly“), 873 per Lord Goff, and Lubbe and Others v Cape Plc [2000] 1 WLR 1545 (“Lubbe“), 1555 per Lord Bingham.
Second, as Lord Goff noted in Connelly at p874D, “seeking to take advantage of financial assistance available here to obtain a Rolls Royce presentation of his case, as opposed to a more rudimentary presentation in the appropriate forum” would not be sufficient to justify such a refusal.
Third, and more generally, Lord Briggs warned in Vedanta at §11 that the “conclusion that a foreign jurisdiction would not provide substantial justice risks offending international comity. Such a finding requires cogent evidence, which may properly be subjected to anxious scrutiny”.
Authorities discussed were then Connelly, Lubbe, Pike, Unilever, and of course Vedanta. [52] Claimants argue that from an access to justice perspective, where the English Court was seized of jurisdiction, and knows that a fair trial is possible here, it should not lightly relinquish that jurisdiction – I think they are right. Parties’ respective arguments are summarised [54] ff and the judge held as follows [83] ff.
On “Spiliada Stage 1. The key factors are said to be
(i) Neither England nor Malaysia are practically convenient for all of the parties and witnesses. This factor in essence is said to be neutral.
(ii) There is no completely common language for each of the witnesses, and so this factor is neutral.
(iii) Lex causae will be Malaysian, and this it is [97] said “is a factor which clearly favours hearing the case in Malaysia.” This section I find does not properly represent the way in which English courts can and do apply foreign law even when that law may not be clear to the foreign country itself. (And by the way was it common ground that the unjust enrichment claim would be subject to Malaysian law?)
(iv) The issues in this case took place in both England and Malaysia, [102] “however, the place where the harm occurred was in Malaysia (even if there are ongoing injuries for the Claimants who live outside of Malaysia), and the underlying alleged mistreatment took place in Malaysia. In my judgment, the centre of gravity of this case is plainly Malaysia, and this is a strong factor pointing towards Malaysia as being the proper forum.”
I disagree. As the judge said himself, this claim raises new issues on unjust enrichment in the supply chain and the English outsourcing corporation’s liability for mistreatment in the supply chain. The main focus of the trial will in reality be concerned with the E&W defendants and the Dyson Defendants’ policies, activities and arguments about their liability, as claimant’s counsel argues [104].
(v) The documents relevant to the case are held in both England and Malaysia. Wherever a trial is held, it seems most likely that the relevant documents will be obtainable. This factor is said slightly to favour Malaysia.
(vi) There is a real risk of a multiplicity of proceedings, and of irreconcilable judgments, wherever this claim is heard. However [121] particularly in light of related defamation proceedings, this element is said to favour E&W.
In conclusion on Spiliada Stage 1, [122]:
England is not the natural or appropriate forum and that Malaysia is another available forum which is clearly and distinctly more appropriate. The centre of gravity in this case is Malaysia: that is where the primary underlying treatment about which the Claimants complain took place, and is therefore the forum with “the most real and substantial connection” per Lord Goff in Spiliada at 478A. Malaysian law is also the governing law, and there are good policy reasons for letting Malaysian judges consider the novel points of law that are being raised in this claim within the context of their jurisprudence, rather than letting an English Court second guess what they might decide. In my judgment, these factors are not “dwarfed” by countervailing factors (per Lord Mance in VTB). The risk of irreconcilable judgments resulting from the defamation proceedings is an important factor, but it does not tilt the balance in favour of the English Court being the proper forum to determine the Claimants’ claim.
On to Stage 2: are there special circumstances such that justice requires the trial to take place in England? Neither the
difficulties in obtaining justice for migrant workers,
that the claims were complicated and needed suitably qualified advocates, the lawyers who argued labour and migrant cases did not have the expertise necessary to deal with this kind of case, and teaming up was unlikely
that it was not possible to case manage out complexity, and although personal injury cases could easily be divided into liability and quantum this was not possible for a claim of unjust enrichment, where establishing the extent of enrichment was part of the question of liability. A very substantial part of the case would involve unjust enrichment, and an estimate of 6 months for the trial had been given
that there would be very significant disbursements, not least on expert fees; and there would be a need for forensic accounting for the unjust enrichment claim;
that the claims would involve considerable financial risk for the Claimants’ legal representatives. They would have to commit thousands of hours of work, and be at risk that they would not recover them. Among other things, there would also be translation costs, hundreds of hours for reviewing documents, setting up hearings in Bangladesh. The fact that there was one witness who had said he would do the case was not sufficient.
that the prospect of a small band of practitioners being willing to take the risk was reduced when considering that they would be opposed by Defendants without any effective limitation on resources, represented by one of the largest law firms in the world, and where aggressive and heavy-handed approach is likely to be taken in the defence of the proceedings
that it was inappropriate to rely on the undertakings given by the Dyson Defendants. Paying for the disbursements does not touch the size of the financial risk. There was also a conflict of interest here, as the Claimants’ legal representatives would be negotiating with the Defendants’ legal representatives over the reasonableness of the costs incurred;
that there was no cogent evidence that the gaps could be filled by NGOs; and
that the Claimants contended that partial CFAs were unlawful; and even if they were lawful, the basic fee to be paid cannot be nominal, and the fee that would have to be paid by the Claimants would be set at a level which was unrealistic.
was held [171] to be one of the “exceptional cases” in which “the absence of a means of funding litigation in the foreign jurisdiction, where such means are available in England, will lead to a real risk of the non-availability of substantial justice”, per Lord Briggs JSC in Vedanta at §93.
I do find the evident reliance in many of these factors, on defendants’ commitments troubling, including from an Article 6 ECHR point of view; I do not think the judge is right on the applicable law being Malaysian law issue- and that element was really the only one favouring Malaysia; and the main focus of the trial on the claim argued will in reality be concerned with the E&W defendants and the Dyson Defendants’ policies, activities and arguments about their liability.
Geert.
EU private international law, 4th ed. 2024, Chapter 7.
A case which unfortunately illustrates the impact of Brexit on #bizhumanrights claims
Successful jurisdictional challenge on forum non conveniens grounds in allegations of forced labour at @Dyson Malaysian Supplier
Limbu ea v [Dyson] [2023] EWHC 2592 (KB)https://t.co/JWVryJDEzc pic.twitter.com/a3nYD478nw
— Geert Van Calster (@GAVClaw) October 20, 2023
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