Flux européens

Commission / Pologne
Selon l’avocate générale Kokott, l’impôt polonais dans le secteur de la vente au détail et la taxe hongroise sur la publicité ne violent pas le droit de l’Union en matière d’aides d’État

In Selecta Finance UK Ltd, Re [2020] EWHC 2689 (Ch) Johnson J considered the jurisdictional issues for schemes of arrangement in a touch more detail than recently has been the regular method in both convening and sanctioning hearings.

Selecta Finance UK Limited is a most recent addition to the ‘Selecta’ group , having been established only on 13 August 2020. (Selecta is said to be the leading provider of unattended self-service coffee and convenience food in Europe).  The Scheme concerns three series of senior secured Notes (“the Existing SSNs“), which have an aggregate principal amount of €1.24 billion plus CHF 250 million. The Existing SSNs were issued originally not by the Company but by Selecta Group BV, its parent company incorporated in the Netherlands. They were issued pursuant to a Trust Deed dated 2 February 2018 , and were originally governed by New York law and subject to a provision for the New York Courts to have exclusive jurisdiction.

With reference to authority, Johnson J accepts that the relevant parties in interest who qualify as the Scheme Creditors are the ultimate beneficial owners of the Existing SSNs. By 14 September 2020, the Existing SSN Holders holding a majority by value of the Existing SSNs had provided their consent to (among others) the following key changes to the terms of the SSNs:  i) Amendment of the governing law provisions of the Trust Deed so that the Existing SSNs are governed by English rather than New York law. ii) Amendment of the jurisdiction provisions of the Trust Deed so that the Existing SSNs are subject to the exclusive jurisdiction of the English Court in relation to any proceedings commenced by an obligor of the Existing SSNs, and the non-exclusive jurisdiction of the English Court in relation to other proceedings; iii) Accession of the Company to the Trust Deed as a co-issuer of the Existing SSNs.

At 18 it is said that an expert report on US and New York law confirms that the amendments to the governing law and jurisdiction clauses of the Trust Deed are valid under New York law and would be regarded as effective in any United States court applying that law.

The relevance of that finding for unwilling SSNs beneficiaries, I would argue, is not undisputedly established under Article 10 and Article 3(2) Rome I.

 

The Company then entered into a Supplemental Trust Deed on 14 September 2020 and thereby became a co-issuer of the Existing SSNs under the Trust Deed. As Johnson J notes at 44: it is only by means of the Supplemental Trust Deed that the Company became co-issuer of the Existing SSNs, and that the governing law and jurisdiction provisions were changed so as to refer to English law and jurisdiction.

It is clear that a jurisdictional link with England & Wales has been established specifically for the purpose of a company taking advantage of the scheme provisions in English law. With reference to Newey J in Re Codere Finance (UK) Ltd [2015] EWHC 3778 (Ch) which I reviewed here, this is held to be ‘good forum shopping’.

Article 25 Brussels Ia jurisdiction is only possible by means of the amendments to the Trust Deed effected via the Supplemental Trust Deed, as I also noted above. As I suggest there, had there been recalcitrant minority Note holders objecting to the change in court and law clause, I think the Scheme would not have been jurisdictionally home and dry on A25 choice of court grounds.

The next classic consideration is under Article 8(1)’s anchor defendant mechanism seeing as jurisdiction against the company is established per Article 4.

At 53 reference is made to Snowden J. who in Van Gansewinkel has suggested that in determining whether A8(1) applies, the Court is required to consider whether the “numbers and size of the scheme creditors domiciled in [the UK]” are “sufficiently large“: the result of that instruction is that applicants tend to point out the (debt) size of the creditors so domiciled, even if in DTEK Newey J held that size and number are irrelevant, ditto in Lecta Paper and Swissport Fuelling.

At 54 comes Johnson J’s obiter, useful finding:

Speaking for myself, I incline to the view that the presence of a single creditor is a necessary, but not of itself a sufficient, condition to the operation of Art. 8. I say that because in terms the power conferred by Art. 8 is engaged where “any one of” a number of defendants is domiciled in England & Wales, but even then the power is to be exercised only in cases where the language of the proviso in Art. 8 is satisfied – i.e., where the claims against the various defendants are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. I did not hear detailed argument on the meaning of this language, and in any event the application before me was uncontested, and so I express my view on it somewhat tentatively; but tentatively it seems to me that the question of expediency posed by the proviso is rather less about the geographical distribution in terms of number and size of the prospective defendants, and is rather more about the expediency in case management terms of connected claims being resolved in one place, even if only one anchor defendant is domiciled there. The argument in this case is that it is expedient for the claims against all EU domiciled Scheme Creditors to be resolved in one place, i.e. in England & Wales, because such claims all relate to the reorganisation of their indebtedness vis-à-vis the Company, and these Courts are best placed to resolve such questions given the separate jurisdiction they exercise over the Company under CA Part 26. Indeed, they may be uniquely placed to do so.

Opposition to the Scheme’s jurisdiction tends to evaporate once it gets to the convening and hearing stage. This is typically because the opposing creditors tend to by that stage be converted to the necessity of restructuring and the unattractiveness of having to pursue debt collection against a corporation in serious financial difficulty. As a result nearly all precedent is first instance only.

Geert.

(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 2, Chapter 5. Third edition forthcoming February 2021.

Scheme of arrangement. Rare more detailed consideration of A8(1) BIA jurisdiction (upheld) by Johnson J.
Conclusions on A25 'good forum shopping' remain shaky in my view given change of choice of court and law provisions from New York to English law and court. https://t.co/yL2edW1tMc

— Geert Van Calster (@GAVClaw) October 14, 2020

As I seem to be in a comparative mood today, thank you Jan Jakob Bornheim for flagging [2020] NZHC 2560 Lange v Lange. The case is further discussed by Jack Wass here – at the time of writing I only have Jack’s review to go on for the actual decision appears to be as yet unpublished.

TTPA 2010 follows the model of the more recent Hague Judgments Convention: recognition and enforcement of a judgment may be refused if it infringes jurisdictional rules detailed in the Act. For the case at issue, s 61(2)(c) of the TTPA is engaged. It requires the court to set aside registration of a judgment if it was “given in a proceeding the subject matter of which was immovable property” located outside Australia.

The determining concern is whether the New Zealand property was “in issue” (the words which Jack uses and which presumably Gault J employed; the Act itself uses ‘proceeding subject matter of which is’; compare with Brussels Ia’s ‘proceedings which have as their object’) in the proceedings. Gault J, citing authority, finds that a judgment setting aside a fraudulent disposition is not rendered unenforceable simply because the debt concerned the sale of New Zealand land. (A further appeal to ordre public was refused; for that to be successful, the result of recognition must, Jack notes, “shock the conscience” of the ordinary New Zealander” (Reeves v OneWorld Challenge LLC [2006] 2 NZLR 184 (CA) at [67].

Obvious comparative pointers with EU conflicts law are Webb v Webb, Weber v Weber, Schmidt v Schmidt, Komu v Komu etc.: readers will know that Article 24(1) Brussels Ia typically involves feuding family members.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6 . Third edition forthcoming February 2021.

A short note for the benefit of comparative contract lawyers who may find some interesting material when looking into the failed LVMH /Tiffany acquisition. That acquisition agreement (see SEC filing here)  is subject to the laws of Delaware other than claims against the financiers which are subject to the laws of New York (s.10.5). As readers might be aware, LVMH would seem to argue not that the Pandemic is a Material Adverse Effect which invalidates the merger. Rather, that Tiffany’s handling of its business in the pandemic is a MAE.

Of interesting comparative note therefore is Travelport Ltd & Ors v WEX Inc [2020] EWHC 2670 (Comm) where Cockerill J preliminarily discusses  the proper construction of, and burden of proof in relation to, the MAE definition contained in a Share Purchase Agreement (SPA) dated 24 January 2020. The substantive issues will be dealt with before her at a later stage.

Geert.

(Preliminary) findings of comparative relevance to #LVMH #Tiffany merger (which is subject to the laws of Delaware: see https://t.co/uxmBf2XeSY)
Proper construction of, and burden of proof re definition of Material Adverse Effect contained viz #Covid19 in SPA under English law. https://t.co/8l6N42YyTZ

— Geert Van Calster (@GAVClaw) October 12, 2020

The Council has made available today its 8 October 2020 Conclusions “Access to Justice – Seizing the Opportunities of Digitalisation”. There are attached to this post.

council-conclusions-access-to-justice-e28093-digitalisationDownload

In Case C‑471/18 P in which Tanchev AG Opined last month, Germany is asking the CJEU to set aside judgment in  T‑283/15 Esso Raffinage v ECHA by which the General Court annulled entitled a European Chemical Agency (‘ECHA’)  letter entitled ‘Statement of Non-Compliance following a Dossier Evaluation Decision under  [REACH]’. The letter concerned the outcome of ECHA’s compliance check of Esso Raffinage’s registration dossier for a particular chemical substance. The main thrust of its appeal is that the REACH Regulation does not provide for further examination by ECHA of the conformity of the information submitted with the first compliance check decision, and that this matter falls within the competences of the Member States pursuant to the REACH enforcement provisions. In support of its position, it argues that a registrant must conduct animal testing specified in the Evaluation Decision, and cannot submit adaptations at that stage.

Esso and ECHA find themselves in an unusual alliance with animal rights activists who argue that a registrant must be able to submit adaptations in lieu of performing animal testing specified in a first compliance check decision.

The case mostly concerns the respective competences of Member States and ECHA under Reach, I highlight it here for the AG’s emphasis on the relevance of animal welfare in the Regulation: consideration of animal welfare through the reduction of animal testing is one of the objectives pursued by the REACH Regulation. At 158: ‘Viewed more broadly, as indicated by Esso Raffinage and [NGO], the promotion of animal welfare and alternative methods to animal testing in the REACH Regulation reflects Article 13 TFEU, pursuant to which, in formulating and implementing the European Union’s policies, the European Union and the Member States are to pay full regard to the welfare requirements of animals.’

Animal welfare has come a long way since Michael Rose and I submitted it in CJEU C-1/96 Compassion in World Farming.

Geert.

 

For those interested in #AnimalWelfare & #REACH
Tanchev AG Opinion yday re allocation of competences between #ECHA and MS in assessing conformity of registration dossiers with #REACH.
Broader implications for the promotion of animal welfare under EU lawhttps://t.co/wxaJIxOfV1

— Geert Van Calster (@GAVClaw) September 25, 2020

The ‘transparency’ or ‘notification’ Directive 2015/1535 (the successor to Directive 98/34) featured twice at the CJEU yesterday. In Case C‑711/19 Admiral Sportwetten, the Court held that a national tax rule that provides for taxation of the operation of betting terminals does not constitute a ‘technical regulation’ that needs to be notified under the Directive. In Case C-514/19 Union des industries de la protection des plantes it held more directly than Kokott AG had opined, that France had validly informed the Commission of the need to take measures intended, in particular, to protect bees by banning the use of 3 active substances of the neonicotinoid family which had been authorised for use under the relevant EU procedure. That procedure is regulated by Directive 1107/2009 on plant protection products.

The complication in the case in essence is a result of the dual procedure for national safeguard measures as a result of the existence of both the PPP and the notification Directive. May a communication of a Member State under the Notification Directive, double as notification of emergency measures under the PPP Directive? The CJEU held it can, provided the notification contains a clear presentation of the evidence showing, first, that those active substances are likely to constitute a serious risk to human or animal health or to the environment and, second, that that risk cannot be controlled without the adoption, as a matter of urgency, of the measures taken by the Member State concerned, and where the Commission failed to ask that Member State whether that communication must be treated as the official provision of information under the regulation.

The Court referred to its findings in C-116/16 Fidenato, that a Member State’s power, provided by an EU act, to adopt emergency measures requires compliance with both the substantive conditions and procedural conditions laid down by that act (a requirement, I would add, which conversely also applies to the European Commission), but adds that a notification to the Commission under Article 71(1) of Regulation 1107/2009 requires only that the Member State concerned ‘officially informs’ that institution, without having to do so in a particular manner.

More generally, the Court emphasises the principle of sound administration imposed upon the EC, which explains its insistence on the EC having proactively to ensure the Member State concerned be aware of its obligations under the EU law concerned or indeed adjacent law. A certain parallel here may be made with the rules of civil procedure which require from those soliciting the courts that they approach the court with clean hands.

The Court in essence, I submit, finds that, the consequences for the Member State concerned in failing to meet the requirements for it to be able to make use of a safeguard provision in secondary law being so great, the conditions imposed on them must be met by a strict due diligence on behalf of the European Commission.

Of note is that the judgment does not entail any finding on the substantive legality of the French ban.

Geert.

 

 

Junqueras i Vies / Parlement
Droit institutionnel
Le pourvoi contre l’ordonnance du vice-président du Tribunal rejetant la demande de référé de M. Junqueras i Vies est aussi rejeté

Crown Van Gelder
Liberté d'établissement
Un client peut introduire un recours contre le gestionnaire du réseau national à la suite d’une panne d’électricité

Union des industries de la protection des plantes
Rapprochement des législations
La France a valablement informé la Commission de la nécessité d’adopter des mesures visant notamment à protéger les abeilles

Entrée en fonctions des nouveaux membres à la Cour de justice de l’Union européenne
Entrée en fonctions des nouveaux membres à la Cour de justice de l’Union européenne

PJSC Tatneft v Bogolyubov & Ors [2020] EWHC 2437 (Comm) is another example of a case where privilege is firmly considered to be subject to lex fori, like in the New York courts but unlike the approach of the Dutch courts. Moulder J did discuss the extent to which the rule applies to foreign unregistered, in-house lawyers. However she does this purely from the English point of view and without any consideration of either Rome I or Rome II. That is not very satisfactory in my view. As I have signalled before, one can discuss whether privilege is covered by the evidence and procedure exception in the Rome Regulations, however it must be discussed and cannot be just brushed under the carpet.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Chapter 4.

(3rd ed forthcoming February 2021).

 

État luxembourgeois (Droit de recours contre une demande d’information en matière fiscale)
DFON
Le droit à un recours effectif garanti par la charte des droits fondamentaux de l’Union européenne impose de permettre aux personnes qui sont détentrices d’informations dont l’administration nationale demande la communication, dans le cadre d’une procédure de coopération entre États membres, de former un recours direct contre cette demande. En revanche, les États membres peuvent priver d’une telle voie de recours direct le contribuable visé par l’enquête fiscale et les tiers concernés par les informations en cause, dès lors qu’il existe d’autres voies de recours permettant à ces derniers d’obtenir un contrôle incident de ladite demande

Jobcenter Krefeld
Libre circulation des personnes
Un ancien travailleur migrant et ses enfants bénéficiant d’un droit de séjour au titre de la scolarisation des enfants ne peuvent pas être automatiquement exclus de prestations sociales de base prévues par le droit national au motif que ce travailleur est tombé au chômage

Commission / Hongrie (Enseignement supérieur)
Liberté d'établissement
Les conditions introduites par la Hongrie pour permettre aux établissements d’enseignement supérieur étrangers d’exercer leurs activités sur son territoire sont incompatibles avec le droit de l’Union

Bank Refah Kargaran / Conseil
Droit institutionnel
La Cour confirme l’arrêt du Tribunal ayant rejeté la demande de Bank Refah Kargaran d’indemnisation pour les préjudices subis du fait des mesures restrictives adoptées à son égard

La Quadrature du Net e.a.
Rapprochement des législations
La Cour de justice confirme que le droit de l’Union s’oppose à une réglementation nationale imposant à un fournisseur de services de communications électroniques, à des fins de lutte contre les infractions en général ou de sauvegarde de la sécurité nationale, la transmission ou la conservation généralisée et indifférenciée de données relatives au trafic et à la localisation

Casino, Guichard-Perrachon et AMC / Commission
Concurrence
Le Tribunal annule partiellement des décisions d’inspection de la Commission faisant suite à des soupçons de pratiques anticoncurrentielles par plusieurs entreprises françaises du secteur de la distribution

Thank you Irene Pietropaoli for alerting me to the European Parliament’s draft proposal for a mandatory human rights due diligence Directive. The official title proposed is a Directive on Corporate Due Diligence and Corporate  Accountability). Parliament also proposes insertions in both Brussels Ia and Rome II. For the related issues see a study I co-authored on the Belgian context, with links to developments in many jurisdictions.

I do not in this post go into all issues and challenges relating to such legislation, focusing instead on a first, preliminary analysis of the conflicts elements of the proposal.

A first issue of note in the newly proposed Directive is the definitional one.  The proposal’s full title as noted uses ‘corporate due diligence and corporate accountability’. However in its substantive provisions it uses ‘duty to respect human rights, the environment and good governance’ and it defines each (but then with the denoter ‘risk’) in Article 3. For human rights risks and for governance risks these definitions link to a non-exhaustive list of international instruments while for the environment no such list is provided.

The proposed Directive points out the existence of sectoral EU due diligence legislation e.g. re timber products and precious metals, and suggests ‘(i)n case of insurmountable incompatibility, the sector-specific legislation shall apply.’ This is an odd way to formulate lex specialis, if alone for the use of the qualifier ‘insurmountable’. One assumes the judge seized will eventually be the arbitrator of insurmountability however from a compliance point of view this is far from ideal.

As for the proposed amendment to Brussels Ia, this would take the form of a forum necessitatis as follows:

Article 26a
Regarding business-related civil claims on human rights violations within the value chain of a company domiciled in the Union or operating in the Union within the scope of Directive xxx/xxxx on Corporate Due Diligence and Corporate Accountability, where no court of a Member State has jurisdiction under this Regulation, the  courts of a Member State may, on an exceptional basis, hear the case if the right to a fair trial or the right to access to justice so requires, in particular: (a) if proceedings cannot reasonably be brought or conducted or would be impossible in a third State with which the dispute is closely related; or (b) if a judgment given on the claim in a third State would not be entitled to recognition and enforcement in the Member State of the court seised under the law of that State and such recognition and enforcement is necessary to ensure that the rights of the claimant are satisfied; and the dispute has a sufficient connection with the Member State of the court seised.

This proposal is a direct copy paste (with only the reference to the newly proposed Directive added) of the European Commission’s proposed forum necessitatis rule (proposed Article 26) at the time Brussels I was amended to Brussels Ia (COM (2010) 748). I discussed the difficulty of such a forum provision eg here (for other related posts use the search string ‘necessitatis’). The application of such a rule also provokes the kinds of difficulty one sees with A33-34 BIa (including the implications of an Anerkennungsprognose).

Coming to the proposed insertion into Rome II, this text reads

Article 6a
Business-related human rights claims
In the context of business-related civil claims for human rights violations within the value chain of an undertaking domiciled in a Member State of the Union or operating in the Union within the scope of Directive xxx/xxxx on Corporate Due Diligence and Corporate Accountability, the law applicable to a non-contractual obligation arising out of the damage sustained shall be the law determined pursuant to Article 4(1), unless the person seeking  compensation for damage chooses to base his or her claim on the law of the country in which the event giving rise to the  damage occurred or on the law of the country in which the parent company has its domicile or, where it does not have a domicile in a Member State, the law of the country where it operates.

I called this a choice between lex locus damni; locus delicti commissi; locus incorporationis; locus activitatis. Many of the associated points of enquiry of such a proposal are currently discussed in Begum v Maran (I should add I have been instructed in that case).

A first obvious issue is that the proposed Article 6a only applies to the human rights violations covered by the newly envisaged Directive. It does not cover the environmental rights. These presumably will continue to be covered by Rome II’s Article 7 for  environmental damage. This will require a delineation between environmental damage that is not also a human rights issue, and those that are both. Neither does the proposed rule apply to the ‘good governance’ elements of the Directive. These presumably will continue to be covered by the general rule of A4 Rome II, with scope for exception per A4(3).

My earlier description of the choice as including ‘locus incorporationis’ is not entirely correct, at least not if the ‘domicile’ criterion is the one of Brussels Ia. A corporation’s domicile is not necessarily that of its state of incorporation and indeed Brussels Ia’s definition of corporate domicile may lead to more than one such domicile. Does the intended rule imply claimant can chose among any of those potential domiciles?

Locus delicti commissi in cases of corporate due diligence (with the alleged impact having taken place abroad) in my view rarely is the same as locus damni, instead referring here to the place where the proper diligence ought to have taken place, such as at the jurisdictional level in CJEU C-147/12 OFAB, and for Rome II Arica Victims. This therefore will often co-incide with the locus incorporationis.

Adding ‘locus activitis’ as I called it or as the proposal does, the law of the country where the parent company operates, clearly will need refining. One presumes the intention is for that law to be one of the Member States (much like the proposed Directive includes in its scope ‘limited liability undertakings governed by the law of a non-Member State and not established in the territory of the Union when they operate in the internal market selling goods or providing services’). Therefore it would be be best to replace ‘country where it operates’ with ‘Member State’ where it operates. However clearly a non-EU domiciled corporation may operate in many Member States, thereby presumably again expanding the list of potential leges causae to pick from. Moreover, the very concept of ‘parent’ company is not defined in the proposal.

In short, the European Parliament with this initiative clearly hopes to gain ground quickly on the debate. As is often the case in such instances, the tent pegs have not yet been quite properly staked.

Geert.

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

(3rd ed forthcoming February 2020).

 

 

 

Yesterday (30 September 2020), Belgium ratified the Hague Convention of 13 January 2000 on the International Protection of Adults, which will enter into force for Belgium on 1 January 2021.

Source:

here