First Advocate-General Szpunar opined in C-265/21 AB, AB-CD v Z EF a few weeks back. The case-name is a victim of the anonymisation rules and I propose we name it ‘the São Paulo Panels’, this being its ultimate subject: 20 panels exhibited at the 1977 São Paulo Art Biennial (this much information one can read in the publicly available referral decision and the AG Opinion). Tobias Lutzi has summary of the most relevant sections in the Opinion here and in the interest of disclosure I should add I am instructed for Belgium in the case.
Early in the 1980s the original German artists handed over the panels to an art gallery in Belgium. The nature of the deposit (sale or deposit) is contested. The owner of the art gallery later sold the panels to her daughter and son-in-law, who requested Christie’s of London to sell the panels. That sale has been suspended since 2013 (hence the case is subject to Brussels I, not Brussels Ia however there is no material difference) in light of one of the original artists, the wife (her husband had passed away) claiming ownership; the wife in the meantime has passed away, too, and the proceedings are continued by their son. (The CJEU may find this of note, seeing as the original proceedings at the outset involved at least one of the original contracting parties).
Current proceedings result from the Belgian-domiciled claimants having requested the Belgian courts to confirm their ownership of the objects. The Belgian courts are asking the CJEU whether the case involves A7(1) special jurisdiction for contract and if so, where the forum contractus lies. Claimants argue the claim engages A7(1) on the basis of the original contract which they argue is one in sale, with performance in Belgium. The defendant argues the original contract was one of deposit, and that a declaratory claim such as the one at issue, with the parties to the proceedings not being parties to the original contract, does not engage A7(1) at all, instead only being subject to Article 4, domicile of the defendant.
Clearly the questions will enable the Court to clarify whether its Feniks, Flight Right etc case-law, with their extended notion of ‘contract’, applies across the board, without much need to take the specific context of those cases into account; or whether there ought to be some restraint on the reach of the forum contractus. One assumes it may seek some inspiration in its approach to distinguishing contracts and torts, eg in Wikingerhof (or Sharpston AG’s earlier ‘ancestry’ test for the Rome I and II distinction in Ergo). Without restraint, CJEU De Bloos’ great window of opportunity for claim formulation hence forum shopping is likely to be reinvigorated.
The AG (44) ff explains the initial restrictive approach to forum contractus per CJEU Handte, and (53) confesses not to be a fan of a restrictive interpretation of A7, arguing such interpretation would undermine the Regulation’s intention, in formulating the special jurisdictional rules, of ensuring that courts with a particular suitability to hear the case will have jurisdiction to do so. The alternative view is that too wide an interpretation undermines the Regulation’s DNA of predictability and the statutorily expressed view that A4 forum rei is the core principle of the Regulation, and the established case-law in support of this principle that exceptions to it need to be restrictively interpreted. The AG refers more than once in his Opinion to scholarship of one of my Doktorkinder, Dr Michiel Poesen, to substantiate the scholarly debate.
He subsequently discusses the later wider CJEU wider approach, starting with Engler and culminating in flight right, concludes that the current claim falls within that wider framework but does emphasise that the contract must lie at the foundation of the claim: ‘et sur laquelle se fonde l’action du demandeur’ (75).
(76) ff discusses the important question how far the judge, faced with opposition to her /his jurisdiction, must go in the consultation or interpretation of the contract, to establish whether or not the claim finds its foundation in contract. Per Kolassa and Universal Music, both the claimant’s and the defendant’s arguments to that effect are said by the AG to be of relevance. (83) Seeing as both parties argue their position with reference to a contract, the AG advises that on the facts of the case, the contractual foundation is clear; (84) that the contract which is the initial source of the rights and obligations (“la source originale des droits et obligations litigieux”) is the anchor point for the forum contractus, i.e. the disputed 1980s contract and not the later contract of sale; and (86) ff, that the judge will have to apply the classic A7(1) cascade: if the initial contract cannot be qualified as one for the sale of movable goods or a service, the CJEU Tessili Dunlop method of looking over the fence will have to be applied. (The referral decision is short on factual elements to help the AG opine on this point).
Fun with contracts…..
Geert.
EU Private International Law, 3rd ed. 2021, 2.419 ff.
Opinion @maciejszpunar AG last week in C-265/21: yet more on 'contract' for jurisdictional purposes, A7(1) Brussels Ia. More later this week – I am a bit swamped.https://t.co/CPoq3x1PLS
— Geert Van Calster (@GAVClaw) June 20, 2022
In Case C-652/20 HW, ZF, MZ v Allianz Elementar Versicherungs AG, the CJEU held (no English version of the judgment is as yet available) end of June that A11(1)(b) Brussels Ia, determines jurisdiction not just of ‘the’ courts in a Member State (leaving territorial jurisdiction to be determined by national civil procedure rules) but rather of a specific court within that Member State. The judgment is a bit longer than might have been expected: that is because the referring judge did not qualify one or two elements which, particularly in an insurance context, can be quite convoluted. (Such as the nature and deliniation of ‘beneficiaries’, ‘insureds’, ‘victims’).
In accordance with the Article, ‘An insurer domiciled in a Member State may be sued: …(b) in another Member State, in the case of actions brought by the policyholder, the insured or a beneficiary, in the courts for the place where the claimant is domiciled’.
[35] The Court observes that in the Romanian (the language of the case) as well as the English and Finnish version of Brussels Ia use the plural ‘courts’ while in the other language versions, the singular is used. (Regular readers of the blog may be familiar with my earlier work on languages and interpretation). Coupled with the indications of territorial jurisdiction in the relevant section of the Report Jenard, and with the similar language in A7(1) and (2) and relevant case-law there (ex multi: Kareda, Volvo), the CJEU concludes that where A11(1)(b) and all its conditions apply, the Article identifies both national and territorial jurisdiction indeed.
Geert.
CJEU today in Allianz today. Brussels Ia insurance title determines national as well as territorial jurisdiction https://t.co/tnv51a8qWx
— Geert Van Calster (@GAVClaw) June 30, 2022
On 8 July 2022, Pakistan acceded to the Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents, which will enter into force for Pakistan on 9 March 2023.
Source: https://www.hcch.net/en/news-archive/details/?varevent=865
Municipio De Mariana & Ors v BHP Group (UK) Ltd & Anor [2022] EWCA Civ 951 (background to the case here) is the appeal against the stay (and partial strike-out), on forum non conveniens, A33-34 Brussels Ia and case-management grounds ordered by Justice Turner. The Court of Appeal has overturned all three reasons for a stay. Bar appeal with the Supreme Court (which the defendants are likely to seek) the claimants may now bring their claim in the courts of England and Wales.
For the benefit of full disclosure I should add I am instructed for claimants in the case; this post however does not speak for claimants or co-counsel in the case and is merely my academic view on the judgment.
The judgment runs to 107 pages (not excessive given the issues and facts covered). There is little point in me rehashing it all (again, reference to my previous post may be useful). 40 pages are spent describing the applicable law in Brasil and the various proceedings underway there. This is of particular importance seeing as the crux of all three defences advanced is that the proceedings are already underway in Brasil and should not be duplicated by an English procedure.
In the main:
Abuse is dealt with [170] ff, with the key points for reversal listed [179] and the CA’s own analysis detailed thereafter, summarising in [234] ff.
Of particular note here is the rebuke of Justice Turner’s finding of ‘unmanageability’ of proceedings (which the CA as such does not believe will be the case) having dominated his subsequent findings on other elements of abuse, and the use of forum non conveniens criteria for the assessment of abuse.
[182] Consideration should have been made of the question of the availability of full redress in Brazil. To those following business and human rights litigation, this will be a welcome finding. [186] Support for manageability of proceedings not having a place in the abuse assessment (other than [187] if the claimant were to have vexatiously made the proceedings unmanageable himself), was found in Mastercard v Merricks [2020] UKSC 5.
[190] discussion of what Turner J at the abuse level, saw as complications arising out of the existence of parallel proceedings in Brazil, already indicate the direction the Court took on the forum non and A34 issue: the many differences between the English and the Brazilian proceedings.
The Article 34 Brussels Ia application is discussed [237] ff and is of particular relevance to readers of the blog.
Firstly [256] the Court of Appeal settles for now the Privatbank /Euroeco discussion on ‘expediency’ (see also ia SCOR v Barclays) in favour of the former: What is required to fulfil A34(1)(a)’s condition is that it must be desirable for the two actions to be heard and determined together in order to avoid the risk of irreconcilable judgments, irrespective of whether that is a practical possibility. (Claimants have reserved the right to contest this should the matter go before the Supreme Court).
Further [257] the test of relatedness for the purposes of A34 is held by the CA to be a broad test: [243] per Tesauro AG in C-406/92 The Tatry, whenever the judge seized of the stay request considers that the reasoning adopted by the court hearing the earlier proceedings may concern issues likely to be relevant to its own decision, the cases can be said to be related. This is opposed to the narrow approach in the House of Lords Sarrio SA v Kuwait Investment Office [1991] AC 32: there the HoL held that for there to be a risk of irreconcilable judgments the inquiry is limited to “primary” issues which are those necessary to establish the cause of action, and does not include issues which the court might or might not decide and which would not be essential to its conclusion.
On the condition ‘that the court of the third State will give a judgment capable of recognition‘, at the hearing the question was asked whether a twofold condition exists, namely (i) that a judgment was expected as a matter of fact and (ii) that the expected judgment was one which was capable of recognition and, where applicable, enforcement. The Court [260] supports the view that only the second (ii) condition applies. I do not think that is correct and I am not convinced by the Court’s travaux analysis on this point [266] – I detail this in my forthcoming paper in the JPIL. As for that second condition, the CA holds [269] that ‘the exercise at this stage is a conceptual one, looking at the type of judgment to which the third state pending action may give rise, and evaluating whether it attracts recognition, or where applicable enforceability.’
‘Necessity for the proper administration of justice’ is dealt with [273] ff (although it confusingly includes discussion of more than just this ultimate A33-34 condition), starting with the discussion whether a stay was available or could be justified on a “consolidation” basis (effectively, an allocation of jurisdiction [275], or on a “wait and see” basis [temporary case-management: wait and see whether and to what extent the outcome of the case ex-EU affects the action in the member state]. [277] Underhill LJ takes a holistic approach: Does waiting for the outcome [of the Brazilian proceedings held to be related] give rise to advantages which sufficiently outweigh any disadvantages such that a stay is necessary? [279] The CA takes a broad approach to the issues that might be considered, including issues classic to a forum non conveniens analysis. I believe that is right, with the important caveat that A34 must not effectively be conflated with forum non (which is what the first instance judge had effectively done) (compare Ness).
[282] the Court takes a formalistic (and correct) view on the ‘related proceedings’ and their being ‘pending’:
for the purposes of the article 34 application, the nature and extent of overlap which falls to be considered when addressing whether and to what extent there is a risk of irreconcilable judgments, and in considering whether that risk weighs in favour of a stay being necessary for the proper administration of justice, is limited by reference to that which might be decided in the [pending Brazilian proceedings].
In particular, an advantage eg in winding-up proceedings viz the defendants or related undertakings, which could be obtained down the line from the outcome of the related proceedings, would not be caught by the comparative overlap and the likelihood of relatedness therefore is seriously reduced ([283] contrary to Turner J’s finding that that the list of areas in which potentially
irreconcilable judgments are liable to arise was “almost endless”).
[291] ff the CA makes its own assessment of the ‘proper administration of justice’ requirement given the judge’s core mistakes (particularly, his abuse conflation and the consideration given to future proceedings which are not pending).
[298] The CA holds that the continuation of the claim against BHP Australia (for which later in the judgment it finds that this is not barred on forum non grounds) in and of itself argues against an A34 stay (and that relevant parts of Lord Briggs’ speech in Vedanta do not change that).
Obiter [300] ff it lists other factors against a stay: [302] there is a real possibility that final resolution of the related BRA proceedings, if they resume at all, is well over a decade away; [303] ‘For there to be a further delay of years, and quite possibly over a decade, before [E&W proceedings] could resume would cause very substantial prejudice to the claimants in obtaining relief, and would be inimical to the efficient administration of justice as a result of all the well-known problems which delay brings to the process’; [304] ff there are many disadvantages to the BRA proceedings including that these will not address the liability of the defendants in the E&W proceedings; [308] the degree of overlap between the proceedings is limited.
The forum non application is highly relevant given the English courts’ preponderant reliance on it, outside the BIa context, following UKSC Brownlie. Of note here is ia [345] the unrealistic prospect of the alternatives being suggested – I will leave the further forum non analysis to blogs less focused on European conflict of laws.
Rejection of a case-management stay is done succinctly, with Underhill LJ noting ia [374] that such stay would be incompatible with A34 and A4 BIa.
All in all I do not agree with each of the Court’s findings on tenets of A34, however in general the Court’s application reflects the correct approach to the Article, which very much makes a stay the exception.
Geert.
See also ‘Dude, where’s my EU court? On the application of Articles 33-34 Brussels Ia’s forum non conveniens- light rules’, Journal of Private International Law, forthcoming 2022.
Delighted to report we have won jurisdiction appeal in Mariana (background https://t.co/SiYFGAJEEM
Court of Appeal finds unanimously that forum non conveniens, A34 Brussels Ia and case-management stay applications all fail
Holds victims of 2015 Fundão Dam disaster may sue in E&W pic.twitter.com/qwZQZk7gwe
— Geert Van Calster (@GAVClaw) July 8, 2022
The Court of Justice delivered yesterday (7 July 2022) its judgment in case C‑7/21 (LKW WALTER Internationale Transportorganisation AG), which is about the rights of the defence in the Service bis Regulation:
« Article 8(1) of Regulation (EC) No 1393/2007 […], read in conjunction with Article 47 of the Charter of Fundamental Rights of the European Union, must be interpreted as precluding legislation of the Member State of the authority which issued a document to be served, pursuant to which the starting point of the one-week period referred to in Article 8(1) of that regulation, within which the addressee of such a document may refuse to accept it on one of the grounds set out in that provision, is the same as the starting point for the period within which a remedy is to be sought against that document in that Member State”.
I discuss the background to Barings (UK) Ltd & Ors v Galapagos SA [2022] EWHC 1633 (Ch) here. At the end of August 2019 an opening of insolvency proceedings was requested by various Barings companies and Goldman Sachs, in respect of the Respondent, Galapagos S.A. – GSA.
While this request was pending before the English courts, a group of high yield noteholders (including Signal, the main opponent in the English proceedings) procured the replacement of GSA’s English directors with a German director, and the new German director and two creditors brought separate ex parte applications before the Düsseldorf Amtsgericht (District Court) for the opening of insolvency proceedings there. Following the opening of insolvency proceedings by the Düsseldorf court, the English proceedings were stayed. The German proceedings then led to a preliminary reference to the CJEU which resulted in a judgment on 24 March 2022, the judgment I discuss in my previous post.
[12] ff Bacon J summarises the procedural tussle (including the, I believe unreported August 2019 Norris J stay: [2019] EWHC 2355 (Ch)). Justice Norris had stayed the English proceedings believing inter alia that the German courts might dismiss the German proceedings once they had been properly told of the English action.
The dictum in C-723/20 was
Article 3(1) of Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings must be interpreted as meaning that the court of a Member State with which a request to open main insolvency proceedings has been lodged retains exclusive jurisdiction to open such proceedings where the centre of the debtor’s main interests is moved to another Member State after that request has been lodged, but before that court has delivered a decision on it. Consequently, in so far as that regulation is still applicable to that request, the court of another Member State with which another request is lodged subsequently for the same purpose cannot, in principle, declare that it has jurisdiction to open main insolvency proceedings until the first court has delivered its decision and declined jurisdiction.
The reference to ‘in so far as that regulation is still applicable’ refers to the Brexit element to the case which surprisingly perhaps was not included in the dictum: COMI presumptions ordinarily serve to protect the first court seized’ privilege to find, or reject, COMI in its jurisdiction however that privilege no longer applies vis-a-vis UK courts post Brexit.
As I note in my earlier review, the CJEU wrongly decided not to answer the German court’s question
Is Article 3(1) of [Regulation 2015/848] to be interpreted as meaning that:
(a) the courts of the Member State within the territory of which the centre of the debtor’s main interests is situated at the time when the debtor lodges the request to have insolvency proceedings opened retain international jurisdiction to open those proceedings if the debtor moves the centre of its main interests to the territory of another Member State after lodging the request but before the decision opening insolvency proceedings is delivered, and
(b) such continuing international jurisdiction of the courts of one Member State excludes the jurisdiction of the courts of another Member State in respect of further requests to have the main insolvency proceedings opened received by a court of that other Member State after the debtor has moved its centre of main interests to that other Member State?’
Neither, possibly because the question was not so asked by the referring court, does it entertain the issue of ‘permanency’ required to move COMI to another state (see my previous post for detail).
Applicants in the current case and Bidco say that the effect of the GalapagosCJEU judgment is that GSA’s winding up can and should now proceed in E&W. Signal, however, contends that the English insolvency proceedings should remain stayed or should be dismissed.
Of relevance in that assessment is Article 67(3) (c) withdrawal agreement, which reads
In the United Kingdom, as well as in the Member States in situations involving the United Kingdom, the following provisions shall apply as follows:…
Regulation (EU) 2015/848 of the European Parliament and of the Council shall apply to insolvency proceedings, and actions referred to in Article 6(1) of that Regulation, provided that the main proceedings were opened before the end of the transition period;
The question in my view is not ‘are the German insolvency proceedings to be regarded as the “main proceedings” within the meaning of Article 3 of the Recast EIR?’ which is the course which the judge seems to follow. Rather, whether either the German or the English insolvency proceedings were to be regarded as main proceedings.
In either case, in my view, main proceedings have been opened and the EU EIR continues to apply as acquired EU law.
[21] Signal’s position is that unless and until the German courts have given effect to CJEU Galapagos by setting aside or otherwise the Düsseldorf insolvency proceedings, the German insolvency proceedings remain the “main proceedings” for the purposes of the Recast EIR. Accordingly, under A67(3) WA the Recast EIR remains applicable and the German proceedings have to be recognised by the English court, precluding the making of a winding up order. If that is wrong, and the Recast EIR does not apply, Signal argue that GSA’s COMI is not in England, such that the UK IR (the retained Insolvency Regulation) does not apply, leaving s. 221 of the relevant UK law as the only jurisdictional basis for a winding up order. In addition, whether under the UK IR or s. 221, Signal contends that the circumstances are such that the court should not exercise its discretion to make the order.
The rather important questions are therefore summarised by Bacon J [23] as
i) The first issue is whether the Recast EIR remains applicable to these proceedings, as Signal contends. That in turn depends on whether the German proceedings are to be characterised as “main proceedings” for the purposes of Article 67(3)(c) of the Withdrawal Agreement. – as I note above, that issue is wrongly formulated.
ii) If the German proceedings are not “main proceedings”, such that the Recast EIR no longer governs the question of jurisdiction of the UK courts in the present case, the next question is whether there is jurisdiction to make a winding up order under the UK IR on the basis that GSA’s COMI is in England. – again see my own caveat above.
iii) The final issue is whether the court should exercise its discretion to make a winding up order under either the UK IR if that is applicable, or alternatively under s. 221 of the Insolvency Act 1986.
[48] the judge has the interim conclusion that up to and until 31 December 2020, the combined effect of the pending application before the High Court and the Recast EIR was to prohibit the German courts from declaring jurisdiction to open main insolvency proceedings. After that date, however, they could quite validly do so, if GSA’s COMI was by then situated in German territory.
I am not convinced that a mere request for opening of proceedings equates opening of these proceedings, and I am not convinced that the fall-back finding of COMI in England [83] ff, applying the Swissport ([2020] EWHC 3556 (Ch), unreported) summary of criteria, is solid: it is exactly on this point that the CJEU’s silence on the issue of ‘permanency’ is frustrating.
The judge concludes that a winding up order in respect of GSA be made however I think her analysis is incorrect and I assume permission to appeal must have been sought.
Geert.
English court concludes, not uncontroversially, that it has jurisdiction to wind-up following unclear CJEU Galapagos, discussed here https://t.co/uCmHjGT0tb
Barings (UK) Ltd & Ors v Galapagos SA [2022] EWHC 1633 (Ch)https://t.co/DMIbLfgxMH
— Geert Van Calster (@GAVClaw) June 30, 2022
The Singapore-based Asian Business Law Institute (ABLI) is organising a second joint webinar with the Permanent Bureau of the Hague Conference on Private International Law (HCCH) on 27 July.
Titled Cross-border Commercial Dispute Resolution – HCCH 2005 Choice of Court and 2019 Judgments Conventions, the webinar will take place on Wednesday 27 July between 3 to 6pm (Singapore time), and will comprise two sessions to take a holistic look at the Choice of Court and Judgments Conventions. Attendees have the option of attending one or both sessions.
Invited speakers include Sara Chisholm-Batten (Partner, Michelmores LLP), the Honourable Justice David Goddard (Court of Appeal of New Zealand), Justice Anselmo Reyes (International Judge, Singapore International Commercial Court), Nish Shetty (Partner, Clifford Chance LLP) and Dr Ning Zhao (Senior Legal Officer, HCCH).
For more information or to register, see here. Queries about the webinar can be directed to Catherine of ABLI at info@abli.asia.
The region is a hotbed for international commercial litigation, as readers of the blog will know, and the event is very timely.
Geert.
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