Flux Belges et Lux

Advocate General Szpunar opined end of March in C‑172/18 AMS Neve. The case concerns in essence, in the AG’s words, whether and, if so, under what circumstances, pursuant to Article 97(5) of Regulation 207/2009 on a Community Trade Mark, the person responsible for an alleged infringement, consisting in the advertising and offer for sale of goods bearing a sign which is identical to an EU trade mark on a website, may be sued in the courts of the Member State on whose territory the traders and consumers targeted by that website are situated.

It is clear from the rules on jurisdiction in Regulation 207/2009 on Community trade marks that the EU legislature decided to derogate in part from the rules on jurisdiction in Brussels Ia (these are fully applicable in the case of actions relating to national trade marks).

CJEU authority is varied (Case C-324/09, L’Oréal, which concerns the territorial scope of the EU’s trademark laws and revolves around websites ‘targeting’ consumers as opposed to merely being accessible to them, is a clear precedent; as is Wintersteiger; Hejduk; Pinckney; Football Dataco) but difficult to apply for all of them are so easily distinguishable: various intellectual property rights are at issue; some of them EU-wide granted, others only local; precedent on online activity generally such as Pammer /Alpenhof, ‘G’ etc. do not have the IPR context,….

The Advocate General does a highly commendable job (in my classes I tend to make things easy for myself on this section by mumbling something like ‘it’s complicated’; ‘you need to know your intellectual property rights’; and ‘there are so many rules in the secondary law on IPR’) in distinguishing and untangling authority, and he focuses his analysis on the issue of ‘targeting’. Those with an interest in IPR litigation had best read the Opinion in full.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Heading 2.2.8.2.5; Heading 2.2.11.2.4 (quoted by the AG in current Opinion).

In C-464/18 ZX v Ryanair, the CJEU last week succinctly held on branch jurisdiction (Article 7(5)) and on voluntary appearance under Article 26.

The Court first reminds readers of the exclusion of simple contracts of transport (as opposed to combined tickets /package travel) from the consumer title of the Regulation: aee Article 17(3): the consumer title ‘shall not apply to a contract of transport other than a contract which, for an inclusive price, provides for a combination of travel and accommodation’.

Surprisingly perhaps (and /or due to lobbying), this did not come up for amendment in the recent Recast, despite the massive increase on travel tickets bought online in particular since transport was first carved out from the consumer title in the Brussels Convention. At 160 the Jenard Report explains the carve-out by reference to international agreements – yet these too could probably do with a refit – but I am straying.

The Court also reminds us that the flight compensation Regulation 261/2004 does not contain conflict of laws rules – these remain subject to the general instruments.

To the case at hand then: ZX purchased a ticket online for a flight operated by Ryanair between Porto (Portugal) and Barcelona (Spain). Applicant  is neither domiciled nor resident in Spain, defendant has its registered office in Ireland, and has a branch in Girona (Spain). ZX, the passenger, did not justify jurisdiction pro Girona on the basis of forum contractus. Per C‑204/08 Rehder, this would have been place of arrival or departure.

Branch jurisdiction per Article 7(5) featured most recently in C-27/17 flyLAL, and is quite clearly not engaged here: the ticket was purchased online. There is no element in the order for reference indicating that the transport contract was concluded through that branch. Furthermore, the services provided by the branch of Ryanair in Girona appear to be related to tax matters.

That leaves Article 26: how and when may it justify the international jurisdiction of the court seised by virtue of a tacit acceptance of jurisdiction, on the ground that the defendant in the main proceedings does not oppose that court having jurisdiction? The case-file reveals that following the invitation from the registry of that court to submit observations on the possible international jurisdiction of that court, Ryanair failed to submit written observations. The Court finds this does not amount to tacit acceptance.

Article 26 requires that the defendant enter an appearance. However what exactly this requires hitherto I believe to quite a degree has been subject to lex fori – particularly the local procedural law. One might have expected a more extensive CJEU consideration e.g. revisiting 119/84 Capelloni v Pelkmans.

A missed opportunity.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.7.

Chapter 15 is the typical entry gate for a foreign insolvency practitioner to engage in US bankruptcy proceedings – it is also the general jurisdictional gateway for US courts viz international insolvencies, COMI and insolvency tourism discussions etc. By way of example see Norton Rose’s 2017 overview here.

In Ema Garp Fund v. Banro Corp., Case No. 18-01986 Law360 summarise the outcome as it stands (I understands motion to appeal has been filed) as follows: ‘Canada’s Banro Corp. won’t face a suit in New York federal court alleging the mining company lied to investors about its operations in the Democratic Republic of Congo after a judge ruled (..) that those claims were resolved last year in bankruptcy proceedings in Canada.’

Kelly Porcelli excellently reviews the issues here, with justified emphasis on comity considerations – I am happy to refer.

One for the comparative litigation ledger.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.5, Heading 5.6.

An interesting comparison may be made between [2019] SGHC 53 Re Zetta Jet Pte Ltd and [2018] EWHC 2186 (Ch) Videology on which I reported here. Both concern recognition of foreign main (or not) proceeding under of the UNCITRAL Model Law on Cross-Border Insolvency (“the Model Law”). Zetta Jet came to me courtesy of my former student Filbert Lam, and has now also been analysed to great effect by Tan Meiyen and colleagues here.

The judgment is a master class on COMI determination, but also on comparative legal analysis re time of filing etc.: best read judgment and Tan’s note for oneself. Of particular note are

• the expression of sympathy by Aedit Abdullah J for forum shopping in insolvency law; compare also with Ocean Rig, and Kekhman; here this took the particular form of following the US approach to selecting the date on which the application for recognition is filed, as relevant to COMI determination (friendlier to forum shopping than te EU’s and England’s date of commencement of the foreign insolvency proceedings);
• the emphasis on the basket of criteria required to identify COMI;
• the narrow approach to ordre public despite Singaporean court order having been defied; yet also the relevance of the fact that these orders post defiance had been varied.

Geert.

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

The SC this morning held in [2019] UKSC 20 Vedanta and Konkola v Lungowe, confirming jurisdiction in England for a human rights /environmental claim against a Zambia-based defendant, Konkola Copper Mines or ‘KCM’, anchored unto an EU-based defendant, Vedanta resources, the ultimate parent company of KCM. Both High Court and Court of Appeal had upheld such jurisdiction (the links lead to my blog post on both).

Of note are (excuse the small font, there is a lot to report here; I am generally hoping to find some time at some point to convert the blog to a more modern setting. Simply increase font size with your keyboard shortcuts should you find the below difficult to read)

• First of all Lord Briggs’ emphatic rebuke of parties (and courts, one assumes) having disproportionately engaged with the issue of jurisdiction. With reference to ia VTB Capital he underlines that jurisdictional dispute should be settled in summary judgment alone, and should not lead to a mini trial. Reference is made to the size of the bundles etc. A bit of an unfair comment perhaps given that clearly there was a need for SC intervention. At any rate, one imagines that current judgment settles a number of issues and that in future litigation therefore these at least will have to be met with less arguments; lest, as his lordship notes at 14, the Supreme Court’ will find itself in the unenviable position of beating its head against a brick wall.’
• As noted by Coulson J at 57 in the High Court judgment, neither Vedanta nor KCM pursue an Article 34 Brussels Ia argument of lis alibi pendens with proceedings in Zambia. As I signalled in my succinct review of recent study for the EP yesterday, the A34 defence is likely to be important in future litigation.
• Applicants’ arguments that pursuing the case against them is an abuse of EU law, were advanced and equally rejected at both the High Court and the Court of Appeal stage. They are pursued again with the SC (at the latter’s express instruction).
  • At 29 Lord Briggs agrees with the HC and the CA and decides that the point that there has been no such abuse of EU law, is acte clair – no reference to the CJEU therefore.
  • At 31 ff he discusses the limited authority (all of it discussed at the HC and the CA) on abuse of Brussels I (a), particularly abuse of the anchor defendant mechanism of (now) Article 8(1), including of course CDC and at 37 raises the interesting issue of remedy: if abuse is found, is it to be disciplined under a European remedy or rather using the common law instrument of forum non conveniens?
  • And at 39: appellants argue that in CSR cases like these, Owusu has the almost inevitable effect that, providing a minimum level of triable issue can be identified against an English incorporated parent, then litigation about environmental harm all around the world can be carried on in England, wherever the immediate cause of the damage arises from the operations of one of that group’s overseas subsidiaries. With the case against the England-based defendant going ahead at any rate, per Owusu, the risk or irreconcilable judgments should jurisdiction against the subsidiaries be vacated, simply becomes to great. Not so hands tied behind the back, appellants argue, but forum non paralysis.
  • At 40 Lord Briggs suggests an adjustment of the English forum non conveniens doctrine for cases like these: namely to instruct claimants of the need to avoid irreconcilable judgments, where the anchor defendant is prepared to submit to the jurisdiction of the domicile of the foreign defendant in a case where, as here, the foreign jurisdiction would plainly be the proper place, leaving aside the risk of irreconcilable judgments.
• Despite Owusu, the English courts are still within their rights to reject the case in summary judgment if there is no ‘real issue’ to be tried against the anchor defendant. Here, discussion turned at 42 ff as to whether one should merely apply Chandler v Cape [2012] EWCA Civ 525, or whether this case involves the assertion of a new category of common law negligence liability.
  • This was rejected, like it was by Sales LJ in AAA v Unilever plc [2018] EWCA Civ 1532, which I review here.
  • Lord Briggs 54 concludes that viz the common law of liability there is neither anything special nor conclusive about the parent /subsidiary relationship, and
  • at 53 flags what instantly has become a favourite among commentators on the case: ‘Even where group-wide policies do not of themselves give rise to such a duty of care to third parties, they may do so if the parent does not merely proclaim them, but takes active steps, by training, supervision and enforcement, to see that they are implemented by relevant subsidiaries. Similarly, it seems to me that the parent may incur the relevant responsibility to third parties if, in published materials, it holds itself out as exercising that degree of supervision and control of its subsidiaries, even if it does not in fact do so. In such circumstances its very omission may constitute the abdication of a responsibility which it has publicly undertaken.’
  • This part of course inevitably may give parent companies a means to prevent such liability (do not proclaim group-wide policies, let alone train or enforce them – as Gabrielle Holly also immediately noted here). However a variety of mechanisms may prevent this becoming a cheap trick to avoid liability: such compliance programs are often required under competition law, financial law etc., too; are relevant for directors’ liability; and of course may already (such as in the French devoir de vigilance) or in future (as mooted ia by the EC and the EP) be statutorily prescribed.
  • At 60: in the case at issue, the SC finds that the High Court with sufficient care examined and upheld the essence of the claimants’ case against Vedanta, that it exercised a sufficiently high level of supervision and control of the activities at the Mine, with sufficient knowledge of the propensity of those activities to cause toxic escapes into surrounding watercourses, as to incur a duty of care to the claimants. At 61 Lord Briggs adds obiter that not all the material (particularly services agreements) would have persuaded him as much as they did the HC or the CA, however at 62 he emphasis again that the HC and CA’s judgment on same was not vitiated by any error of law.
• At 66 ff then follows the final issue to be determined: forum non conveniens and the further advancement of the issue already signalled above: it troubles Lord Briggs at 75 that the trial judges did not focus upon the fact that, in this case, the anchor defendant, Vedanta, had by the time of the hearing offered to submit to the jurisdiction of the Zambian courts, so that the whole case could be tried there. (An argument which was considered by Leggatt J in VTB).
  • Evidently the A4 BruIa case would have had to continue per Owusu, yet the reason why the parallel pursuit of a claim in England against Vedanta and in Zambia against KCM would give rise to a risk of irreconcilable judgments is because the claimants have chosen to exercise that right to continue against Vedanta in England, rather than because Zambia is not an available forum for the pursuit of the claim against both defendants: claimant-inflicted forum non.
  • Why, at 75 in fine, (it may be asked) should the risk of irreconcilable judgments be a decisive factor in the identification of the proper place, when it is a factor which the claimants, having a choice, have brought upon themselves?
  • Lord Briggs’ argument here is complex and I need to cross-refer more to the various authorities cited however the conclusion seems to be that Lord Briggs rejects the argument of Leggatt J in VTB and he finds that ! provided the ex-EU forum is a suitable forum, under English private international law claimants do have to make a choice: either only sue the A4 defendant in the EU but not the ex-EU subsidiaries; or sue all in the forum where they may all be sued (if there is such a forum), here by virtue of submission to the non-EU forum. The alternative would allow claimant to profit from self-inflicted risks of irreconcilable judgments.
  • In the end the rule is of no impact in the case for Zambia was found not to be an appropriate forum, for reasons of ‘substantial justice’: among others because of the absence of Conditional Fee Agreements, and given the unavoidable scale and complexity of this case (wherever litigated), the trial judge was right that it could not be undertaken at all with the limited funding and legal resources which the evidence led him to conclude were available within Zambia.

By way of my conclusion so far: the group policy direction, enforcement, compliance and communication of same -issue is an important take away from this case. Particularly as it may be expected that holding companies will not find it that straightforward simply to do away with such policies. Of great impact too will be the choice now put upon claimants in the forum non conveniens issue: suing nondom companies by virtue of anchoring unto the A4 mother company in England at least will be less straightforward (many usual suspects among the competing jurisdictions do have CFAs, allow for third party funding  etc.). Yet the two in my view dovetail: the reason for bringing in the ex-EU subsidiaries often is because the substantial case against them tends to serve the case against the mother. With a tighter common law neglicence liability the need to serve the daughter may be less urgent.

Geert.

European private international law, second ed. 2016, Chapter 8, Headings 8.3.1.1., 8.3.2

A little bit of factual background (and imagination; I shall let readers’ imagination run their course) is needed to appreciate Tanchev AG’s Opinion last week in C‑722/17 Reitbauer, which engages Articles 24(1) and (5), and Article 7(1).

It is alleged in the ‘opposition proceedings’ at issue that the claim of creditor A (the defendant in the CJEU proceeding, Mr Casamassima), which arises from a loan agreement secured by a pledge, and which competes with a counterclaim of creditors B (the applicants at the CJEU: Reitbauer and Others) is invalid due to the (wrongful) preferential treatment of creditor A. This objection is similar to what is known under Austrian law as an action for avoidance (Anfechtungsklage).

The defendant, Mr Casamassima and Isabel C. (‘the debtor’) are resident in Rome and lived together, at least until the spring of 2014. In 2010, they purchased a house in Villach, Austria; and the debtor, Isabel C, was registered in the land register as being the sole owner.

Contracts for extensive renovation work of the house were entered into between Isabel and the CJEU applicants, contracts which were entered into with the ‘participation’ of Mr Casamassima.  Because the costs of the renovation work far exceeded the original budget, payments to Reitbauer et al were suspended. From 2013 onwards, Reitbauer et al were therefore involved in judicial proceedings in Austria against Isabel. Early 2014, the first judgment was handed down in favour of the applicants, and others followed. Isabel appealed against those judgments.

On 7 May 2014 before a court in Rome, the Isabel acknowledged Mr Casamassima’s claim against her with respect to a loan agreement, amounting to EUR 349 772.95. She undertook to pay this amount to the latter within five years under a court settlement. In addition, Isabel undertook to have a mortgage registered on the house in Villach (Austria) in order to secure Mr Casamassima’s claim [the amount of the claim is the result of compensation between the original claim and a counterclaim. Isabel requested Mr C to pay her for overtime work. Mr C requested approximately EUR 380 000 for the purchase of the house and the works. According to him the house belonged formally only to the debtor, who was registered as the sole owner, but the funds were provided by the defendant. Finally, the two parties reached an agreement, leading to the sum at issue].

Now we come to the issues sub judice: at 17 ff (footnotes omitted):

On 13 June 2014 a (further) certificate of indebtedness and pledge certificate was drawn up under Austrian law in Vienna by an Austrian notary to guarantee the above arrangement (pledge 1). With this certificate, the pledge on the house in Villach was created on 18 June 2014.

The judgments in favour of the applicants did not become enforceable until after this date. The pledges on the house of the debtor held by the applicants, obtained by way of legal enforcement proceedings (pledge 2), therefore rank behind the contractual pledge 1 in favour of the defendant.

On 3 September 2015, the court in Rome confirmed that the court settlement of 7 May 2014 constituted a European Enforcement Order.

In order to realise the pledge, the defendant applied in February 2016 to the referring court (Bezirksgericht Villach (District Court, Villach, Austria)) for an order against the debtor, requiring a compulsory auction of the house in Villach. The house was auctioned off in the autumn of 2016 for EUR 280 000. The order of entries in the land register shows that the proceeds would go more or less entirely to the defendant because of pledge 1 (registered under Austrian law in June 2014).

With a view to preventing this, the applicants brought an action for avoidance (Anfechtungsklage) in June 2016 before the Landesgericht Klagenfurt (Regional Court, Klagenfurt, Austria) against the defendant and the debtor. The action was dismissed by that court ‘due to a lack of international jurisdiction in view of the [debtor’s and the defendant’s] domicile’ outside of Austria. In July 2017, that decision became final.

At the same time the applicants filed an opposition before the referring court (Bezirksgericht Villach (District Court, Villach)) at the hearing of 10 May 2017 regarding the distribution of the proceeds from the compulsory auction, and subsequently brought opposition proceedings, as provided for in the EO, against the defendant.

In these opposition proceedings, the applicants seek a declaration that the decision regarding the distribution to the defendant of EUR 279 980.43 was not legally valid in so far as: (i) the debtor had damages claims against the defendant of at least the same amount as the claim arising from the loan agreement, with the result that a claim no longer existed (they claim that the debtor confirmed that the defendant had placed orders with the applicants without her knowledge and consent); and (ii) the certificate of indebtedness and pledge certificate of June 2014 were drawn up merely as a formality and for the purpose of pre-empting and preventing the applicants from bringing any enforcement proceedings in relation to the house.

There we are. In essence applicants are attempting to anchor their pauliana unto A24(5)’s enforcement jurisdiction, in which case Mr C’s enforcement action has acted as a Trojan horse. (Note a similar potential in Kerr v Postnov(a)). Failing that, the anchor might be A24(1)’s locus rei sitae exclusive jurisdictional rule.

Mr C contends in substance that A24(5) B1a does not apply. He argues that the action lacks a direct connection to official enforcement measures: what is being sought is a substantive examination of the pledge entered into in his favour. By its nature, the action lodged is equivalent to an action for avoidance; and in Reichert the CJEU has already ruled that this jurisdiction is not applicable to actions for avoidance. This must therefore also apply if the action for avoidance is exercised by way of an opposition against the distribution and ensuing opposition proceedings. Moreover, he argues A24(1) B1a is not applicable, as in the opposition proceedings the connection with the location of the house at issue is lacking (the opposition proceedings took place only after the immovable property had been auctioned off by the court).

The AG first of all at 39 ff rejects jurisdiction on the basis of Article 24(5). I believe he is right: see my Trojan horse suggestion above. A25(5) must not resurrect merits claims on much wider issues (claim for compensation of applicants’ debt, objections concerning the non-existence of a claim underlying a judicially ordered auction, and concerning the invalidity of the creation of the pledge for that claim under a loan agreement ) for which the enforcement court does not have original jurisdiction. Neither does A24(1) ground jurisdiction: parallel with Reichert is obvious.

Then however the AG, sensing perhaps the suggestions of fraudulent construction, suggests Article 7(1)’s’ forum contractus as a way out – not something which the referring court had enquired about hence quite possible the CJEU might not entertain it. Clearly per Handte there is a contract between applicants and Isabel. However is Mr C involved, too?: the AG draws on Feniks: at 72 ff: in Feniks the CJEU does not require knowledge by the defendant of the first contract, nor does it require an intention to defraud. However in casu it looks like there might be both (subject to factual review by the referring court). At 84: ‘Given the fact that in the judgment in Feniks the jurisdiction in contractual matters in disputes brought against a third party was extended to an actio pauliana even though there was no contractual relationship between the applicant and the defendant, knowledge of a third party should act as a limiting factor: as in the present case, the third party needs to know that the legal act binds the defendant to the debtor and that that causes harm to the contractual rights of another creditor of the debtor (the applicants).’

And at 92: ‘the defendant’s knowledge of the existence of the contract(s) at issue is important.’

The AG is essentially suggesting a limitation of Feniks to cases of fraus – it is unlikely that the CJEU will follow (and vary Feniks so soon). However it is clear that knowledge of the contract between the other parties, particularly where supported by elements of fraus, will increase the potential for application of the (in my view problematic) Feniks route. Note the AG does not discuss the place of performance of the contract (between Reitbauer et al and Mr C – this was exactly one of the sticky points signalled by Bobek AG in Feniks).

Geert.

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

As I seem to be in a mopping-up mode this morning, I might as well sneak in late review of Secure Capital SA v Credit Suisse AG, [2015] EWHC 388 (Comm) and at the Court of Appeal [2017] EWCA Civ 1486. Draft post of the latter has been in my ledger since 2017…

The cases essentially are concerned with characterisation; privity of contract, choice of law and dépeçage (bifurcation or severance).

My father-in-law OBE wonderfully sums up the world of international finance as fairy money. Harry (aka Tim Nice But Balding) & Paul express a similar feeling here. I can’t help but think of both when re-reading judgments in both cases.

Allen & Overy have most useful overview here, and RPC add useful analysis here. Claim related to eight longevity notes issued by Credit Suisse in 2008. The Notes were linked to life insurance policies, which meant that the prospect of the holder receiving payments for the Notes depended on mortality rates among a set of “reference lives”.  Secure Capital contended that Credit Suisse failed to disclose that the mortality tables used to generate the estimated life expectancies were shortly to be updated in a way that would significantly increase life expectancies, rendering the Notes effectively worthless. Secure Capital relied on a term in the issuance documentation that stated that Credit Suisse had taken all reasonable care to ensure that information provided in such documentation was accurate and that there were no material facts the omission of which would make any statements contained in those documents misleading.

The Notes were issued by Credit Suisse’s Nassau branch. Under the terms of the transaction documents, the Notes were deposited with the common depositary, Bank of New York Mellon, which held the securities on behalf of the clearing system, in this case Clearstream: which is Luxembourg-based.  The Notes were governed by English law and issued in bearer form.

Secure Capital essentially employ an attractive proposition in Luxembourg law reverse-engineering it either as the proper law of the contract in spite of prima facie clear choice of law, or alternatively as dépeçage: it argues that the provisions of a 2001 Luxembourg law on the Circulation of Securities, being the law that governed the operation of Clearstream through which the Notes were held, gave it an entitlement “to exercise the right of the bearer to bring an action for breach of a term of the…Notes“. In order to succeed, Secure Capital would have to circumvent the English law on privity of contract in respect of a transaction governed by English law.

Allen & Overy’s and RPC’s analysis is most useful for the unsuspected bystander like myself (thankfully I have a researcher, Kim Swerts, starting soon on a PhD in the area of conflict of laws and financial law).

In the High Court Hamblen J at 35 ff discusses the alternative arguments, wich would displace the suggestion that Secura Capital’s claim is a contractual claim. (Tort, as Betson LJ at the appeal stage notes at 24, was not advanced). This included a suggested property right (with discussion on the issue of the lex causae, whether e.g. this might be the lex situs), or, more forcefully, a right sui generis. None of these was upheld. Discussion on relevance of Rome I and /or the Rome Convention took place very succinctly at 53-54 – a touch too succinctly for Hamblen J’s swift reflection is that under both Rome and English conflicts rules, there was no suggestion of displacing the lex contractus. Depending on what counsel discussed, one would have expected some discussion of mandatory law perhaps, or indeed dépeçage – the latter was discussed summarily by Beatson LJ at the Court of Appeal under 54-55.

Geert.

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

A former dean of ours reportedly once suggested that the last thing one should do with something urgent, is tackle it immediately. I have had a draft post on the EC’s assignment proposals in my ledger since 20 March 2018. Colleagues in private law (prof Matthias Storme, too) had already flagged the issues with the applicable law proposal COM(2018) 96 in particular. Now the need for a separate post has been overtaken by Alexander Hewitt’s excellent overview here, following EP first reading.

No more needs to be said.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 3.

As I turn to preparations for a talk on CSR litigation and conflict of laws, Thursday next (11 April) in Cork, (which incidentally will be a day after the UKSC will deliver its verdict in Vedanta), I was consulting the report made for the European Parliament on the issue of access to legal remedies for the victims of corporate human rights abuses.

A few supplementary thoughts, fed also by an upcoming chapter of mine in an edited volume for OUP.

The report does an excellent job at collating much of the relevant case-law in a variety of countries: there is no better way to appreciate the difficulties than to consider the law in action. Despite the efforts of the team, particularly for the UK a few important cases were not included: Bento Rodriguez, Gemfield, Kalma, Garcia v Total.

The report flags the absence of forum non conveniens in Brussels I but omits the important forum non-type mechanism of Brussels Ia: Articles 33-34. This is likely to be important for the future application of CSR cases in the EU.

Analysis of KIK could have focused on the problematic qualification of statutes of limitation under Rome II. (Particularly as the report seeks to make recommendations to the EP and the EU Institutions as a whole).

The often missed elephant in the conflicts room of lex causae for veil-piercing and /or allocating duty of care. Lex fori? Lex causea? Lex societatis (e.g. for the Shell cases in the UK).

The suggestions under 6.2.2 for a forum necessitatis were in fact discussed in the review of Brussels I and it was Parliament at the time which (not unjustifiably) rejected it.

Ordre public considerations would be served well by final completion and release by the EC of its report on the use of ordre public in the EU: the report would have been a good reminder.

Finally in discussing access to justice issues no mention is made of the role of third party financing: this essentially enables much of this type of litigation yet is often seen by many in the CSR community as suspicious.

All in all the conflicts-related recommendations of the report ought to have been fine-tuned: I hope the above is of some service.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 8.

I fear I do not have the time or opportunity for the moment fully to analyse Saugmandsgaard ØE’s Opinion at the end of January in C-689/17 MSC Flaminia (no EN version available) – hence this post is a flag more than a review. The second Opinion of the AG in the same month (see C-634/16 ReFood) on the waste shipments Regulation.

Readers beware: there are two distinct exemptions for ships-related waste in the waste shipments Regulation: are exempt:

the offloading to shore of waste, including waste water and residues, generated by the normal operation of ships and offshore platforms, provided that such waste is subject to the requirements of the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto (Marpol 73/78), or other binding international instruments; and

waste generated on board vehicles, trains, aeroplanes and ships, until such waste is offloaded in order to be recovered or disposed of.

In the case at issue: does the latter cover residues from damage to a ship at sea in the form of scrap metal and fire extinguishing water mixed with sludge and cargo residues on board the ship?

Geert.

Handbook of EU Waste Law, 2nd ed. 2015, Oxford, OUP, Chapter 3, 3.27 ff.

Case C-195/18 B.S. v Prokatura et al held mid-March, is great for the week-end. Serious stuff (excise duties and customs classification), but with a fun twist: does beer under excuse duties and customs regulation require the beverage to be made with malt as an ingredient, or does it also include mixtures of beer with non-alcoholic beverages, as long as it has fermented?  Put differently, may an alcoholic product obtained by fermentation of a wort produced from, inter alia, glucose syrup (yikes! yikes! and yikes again) and a small proportion of malt may be classified as ‘beer made from malt’?

The CJEU touches upon important issues: linguistic interpretation, WCO rules, etc. and finally decides that such a product can come under the ‘beer’ heading only on condition that its objective characteristics and properties correspond to those of beer (adding glucose syrup is not prohibited, other than of course under the only proper standard in this regard which is of course the Rheinheitsgebot (as amended)). In this regard, the court holds, account must be taken more particularly of the organoleptic (meaning ‘involving the use of the sense organs’) characteristics of the product in question, which is an exercise the referring court must undertake. No tasting sessions at Kirchberg therefore.

Have a good week-end.

Geert.

I have of course posted regularly on the issues of unstunned slaughter, freedom of religious expression and animal welfare (search tag ‘shechita’ should pull out the relevant postings). The Belgian Constitutional court, to the expectations I assume of counsel in the case, yesterday referred to the CJEU for preliminary reference (cases 52 and 53/2019).

The subject of the litigation is the Flemish decree banning unstunned slaughter outright (for standing reasons the similar Walloon regime is no longer sub judice). The Belgian court requests the CJEU to clarify its judgment in C-426/16, on which I reported here,

Q1: does Regulation 1099/2009 allow Member States to introduce an outright ban; Q2 in the affirmative, is that compatible with the Charter’s right to religious expression; Q3 in the event of an affirmative answer to Q1: the elephant in the Regulation’s room which I flagged years back: is it not discriminatory to allow Member States to restrict religious slaughter, while simply exempting hunting, fishing and ‘sporting and cultural events’ from the Regulation altogether.

Readers will know my answer to these questions.

Geert.

Absolutely brilliant analysis of the Brexit shambles by KJ Garnett over on EU Perspectives. A poor, poor game of contract bridge.

EU Perspectives

Putin, the old cliché goes, views the international world order as a game of chess where pawns, knights, bishops and queens are played off one against the other until there is only one outright winner: Russia. Putin’s strategy is to align both his and his opponent’s pawns (the mob) with the bishops and knights (the snob) to weaken and topple his rival. His tactic has been to whip his adversary’s pawns into a state of fury through the spread of misinformation, defamation and slander thereby undermining his adversary’s legitimacy and authority. On the face of it both his strategy and his tactic appear to be working. Across the European Union we see the rise of extremism, the victory of populists in democratic elections and the phenomenal rise of an out-raged right-wing media slamming the European project as a wicked “cabal of high-priests”.

Putin has every right to feel smug. He…

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The title of this piece is optimistic. Broadly defined many of the conflicts issues I address touch upon civil procedure of course. Yet I rarely address civil procedure pur sang (see here for an example). C-637/17 Cogeco was held by the European Court of Justice yesterday.

The Court held that the EU (competition law) damages Directive 2014/104 does not apply ratione temporis to the facts at issue.

The Directive includes two recitals on limitation periods:

Recital 36 argues

‘National rules on the beginning, duration, suspension or interruption of limitation periods should not unduly hamper the bringing of actions for damages. This is particularly important in respect of actions that build upon a finding by a competition authority or a review court of an infringement. To that end, it should be possible to bring an action for damages after proceedings by a competition authority, with a view to enforcing national and Union competition law. The limitation period should not begin to run before the infringement ceases and before a claimant knows, or can reasonably be expected to know, the behaviour constituting the infringement, the fact that the infringement caused the claimant harm and the identity of the infringer. Member States should be able to maintain or introduce absolute limitation periods that are of general application, provided that the duration of such absolute limitation periods does not render practically impossible or excessively difficult the exercise of the right to full compensation.’

Recital 49 adds

‘Limitation periods for bringing an action for damages could be such that they prevent injured parties and infringers from having sufficient time to come to an agreement on the compensation to be paid. In order to provide both sides with a genuine opportunity to engage in consensual dispute resolution before bringing proceedings before national courts, limitation periods need to be suspended for the duration of the consensual dispute resolution process.’

Article 10 then foresees expressis verbis

1.   Member States shall, in accordance with this Article, lay down rules applicable to limitation periods for bringing actions for damages. Those rules shall determine when the limitation period begins to run, the duration thereof and the circumstances under which it is interrupted or suspended.

2.   Limitation periods shall not begin to run before the infringement of competition law has ceased and the claimant knows, or can reasonably be expected to know:

(a) of the behaviour and the fact that it constitutes an infringement of competition law;

(b) of the fact that the infringement of competition law caused harm to it; and

(c) the identity of the infringer.

3.   Member States shall ensure that the limitation periods for bringing actions for damages are at least five years.

4.   Member States shall ensure that a limitation period is suspended or, depending on national law, interrupted, if a competition authority takes action for the purpose of the investigation or its proceedings in respect of an infringement of competition law to which the action for damages relates. The suspension shall end at the earliest one year after the infringement decision has become final or after the proceedings are otherwise terminated

Article 11 adds for joint and several liability

‘Member States shall ensure that any limitation period applicable to cases under this paragraph is reasonable and sufficient to allow injured parties to bring such actions.’

and finally Article 18(1) reads

‘Member States shall ensure that the limitation period for bringing an action for damages is suspended for the duration of any consensual dispute resolution process. The suspension of the limitation period shall apply only with regard to those parties that are or that were involved or represented in the consensual dispute resolution.’

Of note in my view is first of all the unavailing nature of much of the recitals quoted above. As the overview shows, the recitals are more or less verbatim repeated in the actual rules; or the other way around: the Articles’ provisions are copy /pasted into the recitals. To that there is not much point.

Further, the minimum period imposed by the Directive (not applicable, as noted, ratione temporis) is five years. (Compare in the mooted amendment of the motor insurance Directive  2009/103: minimum 4 years is being suggested – subject to gold plating). The Court could not evidently read that minimum period as being ius commune. However it did read much of the qualitative requirements of recitals and articles effectively as ius commune using the effective enforcement of EU competition law as an anchor. It held that the Portuguese limitation period of three years, which, first, starts to run from the date on which the injured party was aware of its right to compensation, even if the infringer is not known and, secondly, may not be suspended or interrupted in the course of proceedings before the national competition authority, renders the exercise of the right to full compensation practically impossible or excessively difficult.

I realise it is a bit of a stretch to see this as a move towards a European Ius Commune on limitation periods. Yet it might be a first cautious step.

Geert.

The Court held today in C-60/18 AS Tallinna Vesi and agrees with its AG re the possibility of national criteria, yet unlike Ms Kokott does not see an obligation in the WFD for the Member States to have a proactive vetting and decision procedure. It does not give much specification to its reasoning, other than a reference to the ‘circumstances of the case’. This may refer, but I am speculating, to applicant wanting the authorities generally to sign off on its production method, rather than requesting an opinion on an individual stream.

If my interpretation is right it underscores what I have remarked elsewhere on the regulatory process, for instance in the case of circular economy: in a grey regulatory zone, we need to think of mechanisms to assist industry in embracing environmentally proactive solutions, rather than driving them into incumbent technologies or worse, illegality.

Geert.

Handbook of EU Waste law, 2nd ed. 2015, OUP, 1.166 ff and 1.189 ff.

Case C-129/18 SM v Entry Clearance Officer, UK Visa Section was held last Tuesday in Grand Chamber. It concerns the application of the EU’s main migration Directive, 2004/38 and essentially addresses the fear of the Member States (many of whom appeared before the court, all arguing a rather restrictive interpretation) that the islamic system of Kafala or Kefala hands human traffickers a means to support their trade.

As I flagged in an earlier post, in which I also referred to the case involving SM, kafala is clearly not equivalent to adoption. It is more akin to guardianship or custody in advance of adoption, or in the case of the Middle East, is even used as a form of visa et al sponsorship for migrant workers (hence leading to issues of slavery and the like).

In SM’s case, Mr and Ms M are two French nationals who married in the UK in 2001. They travelled to Algeria in 2009 to be assessed as to their suitability to become guardians of a child under Algerian kafala and were deemed ‘suitable’. SM, who was born in Algeria in June 2010, was abandoned by her biological parents at birth. In October 2011, Mr M returned to the UK where he has a permanent right of residence, for professional reasons. For her part, Ms M remained in Algeria with SM. In May 2012, SM applied for entry clearance for the UK as the adopted child of an EEA national. Her application was refused by the Entry Clearance Officer on the ground that guardianship under Algerian kafala was not recognised as an adoption under UK law and that no application had been made for intercountry adoption.

The Court essentially agrees with the Member States that the case does not fall under directive 2004/38’s heading on ‘direct descendants’ (‘blood’ relatives in e.g. the Dutch version) which the Court interprets (as do the Member States) as both biological and adopted direct descendants. This is a consequence of the qualification by the lex fori itself: unlike adoption, which is prohibited by Algerian law, the placing of a child under kafala does not mean that the child becomes the guardian’s heir. In addition, kafala comes to an end when the child attains the age of majority and may be revoked at the request of the biological parents or the guardian.

Yet the Court also finds that the Member States’ concerns over human trafficking are properly addressed by the Directive’s provisions for ‘other family Members’. Unlike the right to entry for direct descendants, other family members’ visa applications must be processed taking into account an extensive examination of their personal circumstances. At 69: in the case of minors, that assessment must take into consideration, inter alia, the age at which the child was placed under Algerian kafala system, whether the child has lived with its guardians since its placement under that system, the closeness of the personal relationship which has developed between the child and its guardians and the extent to which the child is dependent on its guardians, inasmuch as they assume parental responsibility and legal and financial responsibility for the child.

That the Algerian system of kafala guardian’s assessment clearly does not meet with the 1996 Hague Convention requirements for assessment of prospective adoptive parents and the interests of the child (to which Algeria is not a party but the Member States are) is not material: such assessment must be weighed against the factual elements identified by the Court at 69, see above.

Hague and Kafala at Kirchberg. Not an everyday occurrence.

Geert.

Thank you Thomas Kendra and Thibaud Roujou de Boubée for signalling 16/25484 Cameroon v Projet Pilote Garoubé at the Paris Court of Appeal end of December 2018. The essence of the case is the Court confirming an arbitral award applying OHADA law. OHADA stands for ‘Organisation pour l’harmonisation en Afrique du droit des affaires’ – ie the Organisation for the Harmonization of Corporate Law in Africa.

Thomas and Thibaud analyse excellently – of note for this blog are the issue of non-State law as lex contractus (compare with Rome I), the recognition of same as trumping Cameronese law essentially as overriding mandatory law, and the rejection of the Cameronese argument that its wildlife laws qualify themselves as lois de police /overriding mandatory law and that the lack of recognition of same violates ordre public.

Interesting arbitration /conflicts material.

Geert.

Kokott AG Opined in C-624/17 OM v Tronex end of February (I had flagged the case summarily earlier): whether consumer returns of electrical appliances some of which are no longer usable because defective, and residual stock are to be regarded as waste that may be exported only in accordance with the Waste Shipment Regulation. – Reminiscent of the issues in Shell: in that case in a B2B context.

Tronex’ export consignment that was stopped, consisted of appliances which had been returned by consumers under a product guarantee, on the one hand, and goods which, because of a change to the product range, for example, were or could no longer be sold (normally), on the other. A number of the boxes in which the appliances were packaged carried a notice stating their defects. The glass in some of the glass kettles was damaged. The shipment was to take place without notification or consent in accordance with the Waste Shipment Regulation.

The AG takes a sensible approach which distinguishes between consumer and collector. At 31 ff: The mere fact that objects have been collected for the purpose of reuse does not in itself necessarily support the assumption that they have been discarded. Indeed, it seems sensible, both economically and from the point of view of the efficient use of resources, to make appliances which can no longer be sold on the market for which they were originally intended available on other markets where they may still sell. Particularly in the case of residual stock which is still in its unopened original packaging, therefore, the request for a preliminary reference contains insufficient evidence to support the conclusion that there has been any discarding.

Returned appliances which, on account of serious defects, are no longer usable and can no longer be repaired at reasonable cost, on the other hand, must unquestionably be regarded as waste. Kokott AG suggests waste classification as the default position. At 39: in so far as there are doubts as to the reuse of the goods or substance in question being not a mere possibility but a certainty, without the necessity of using any of the waste recovery processes referred to in the Waste Directive prior to reuse, only the possibility of ‘prompt’ dispelling of the doubt by an inspection of the appliances, can shift the presumption of it being waste.

‘Repair’ is what the AG proposes as the distinctive criterion: at 40: if the inspection shows that the item is still capable of functional use, its status as waste is precluded. The same is true of goods with minor defects which limit functionality only negligibly, meaning that these goods can still be sold without repair, in some cases at a reduced price. At 41: ‘In so far as the inspection identifies defects which need to be repaired before the product is capable of functional use, however, that product constitutes waste, since there is no certainty that the retailer will actually carry out the repair. Whether the repair is less or more expensive cannot be decisive in this regard, since a product that does not work constitutes a burden and its intended use is in doubt.’ The same goes for goods (other than those in the original packaging, per above) which have not been inspected at all.

At 45 ff the AG supports this conclusion with reference to instruction in Annexes to the WEEE Directive. She also suggests that her interpretation, given the criminal law implications, be limited to those instances occurring after the eventual CJEU judgment.

Geert.

(Handbook of) EU Waste law, 2nd ed. 2015, Oxford, OUP, Chapter 1, 1.149 ff.

In [2019] EWHC 466 (Fam) V v M, Williams J refused both an application for a stay on the basis of forum non conveniens of English proceedings in favour of proceedings in India, and an anti-suit injunction. Applicant mother is V and the respondent is the father M. They are engaged in litigation in England and in India in respect of their son. The English limb of the proceedings is the mother’s application for wardship which was issued on or about the 16 October 2018, and which includes within it application for the summary return of the child from India to England.

India is (obviously) neither a Brussels IIa party nor the 1996 Hague child Protection Convention. Brussels IIa contains a forum non-light regime (as Brussels Ia now does, too): see e.g. Child and Family Agency v J.D. Whether more general forum non is excluded following Owusu v Jackson per analogiam, has not reached the CJEU however as Williams J notes at 22 ‘the trend of authority in relation to the ‘Owusu-v-Jackson’ points towards the conclusion that the power to stay proceedings on forum non-conveniens grounds continues to exist in respect of countries which fall outside the scheme of BIIa or the 1996 Hague Child Protection Convention.’

Given that eventually he upholds jurisdiction of the English courts, the point is moot however may be at issue in further cases.

At 48 ff the various criteria for forum non were considered:

i) The burden is upon the applicant to establish that a stay of the English proceedings is appropriate.

ii) The applicant must show not only that England is not the natural or appropriate forum but also that the other country is clearly the more appropriate forum.

iii) In assessing the appropriateness of each forum, the court must discern the forum with which the case has the more real and substantial connection in terms of convenience, expense and availability of witnesses. In evaluating this limb the following will be relevant;

a) The desirability of deciding questions as to a child’s future upbringing in the state of his habitual residence and the child’s and parties’ connections with the competing forums in particular the jurisdictional foundation

b) The relative ability of each forum to determine the issues including the availability of investigating and reporting systems. In practice, judges will be reluctant to assume that facilities for a fair trial are not available in the court of another jurisdiction but this may have to give way to the evidence in any particular case.

c) The convenience and expense to the parties of attending and participating in the hearing and availability of witnesses.

d) The availability of legal representation.

e) Any earlier agreement as to where disputes should be litigated.

f) The stage any proceedings have reached in either jurisdiction and the likely date of the substantive hearing.

g) Principles of international comity, insofar as they are relevant to the particular situation in the case in question. However public interest or public policy considerations not related to the private interests of the parties and the ends of justice in the particular case have no bearing on the decision which the court has to make.

h) The prospects of success of the applications.

iv) If the court were to conclude that the other forum was clearly more appropriate, it should grant a stay unless other more potent factors were to drive the opposite result; and

v) In the exercise to be conducted above the welfare of the child is an important (possibly primary), but not a paramount, consideration.

Conclusion is that on clear balance England is the natural and appropriate forum and India is not clearly the more appropriate forum.

At 50, the anti-suit injunction was considered premature (Williams J suggests that had it been a commercial matter, it may not have been): ‘Assuming that a stay application can be made and that some form of judicial liaison can be commenced to enable this court and the Indian court to work cooperatively to solve the riddle of competing applications in our respective courts, it is in my view wholly premature to grant such an injunction. That situation might fall to be reconsidered if no progress can be made and in particular if the father embarked upon a rear-guard action to play the Indian courts to delay the resolution of matters. However we are far from that position as yet.’

Note the comity considerations here, reflecting on the potential judicial co-operation between India and England, advanced here given the interest of the child (less likely for purely commercial cases, one assumes).

Geert.

Many thanks to Donna Williams for reporting and commenting on 1:18-cv-10798 Snöfrost AB v. Håkansson in the District Court of Massachusetts. Not all my blog posts relate to maverick cases, especially at the week-end perhaps. This one is a standard application of forum non conveniens in the US and a useful reminder of the application of the principle by US courts.

Snöfrost, a Swedish company, filed in the U.S. District Court for the District of Massachusetts against Susanne Håkansson, a Massachusetts resident, seeking to enforce an alleged share purchase agreement (“SPA”). The SPA required Håkansson to purchase shares in a Swedish company (Farstorps Gård AB) for 330 million Swedish Krona. Snöfrost alleged that Håkansson reneged on the deal “at the eleventh hour” by raising regulatory issues as an excuse.

Håkansson’s residence in the jurisdiction would have meant immediate dismissal of FNC under the Owusu rule, had this been a case before a court in the EU.

Jurisdiction dismissed: centre of gravity of the case is Sweden – Donna explains the relevant factors in her post.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.2.1.