GAVC

This guest post was authored by Dr Mukarrum Ahmed, Barrister (Lincoln’s Inn), and Lecturer in Business Law & Director of PG Admissions at Lancaster University Law School. I am most grateful to Dr Ahmed for complementing my earlier post on the CJEU case discussed, Joined Cases C‑345/22 and C‑347/22 Maersk.

 

According to the doctrine of privity of contract, only parties to a choice of court agreement are subject to the rights and obligations arising from it. However, there are exceptions to the privity doctrine where a third party may be bound by or derive benefit from a choice of court agreement, even if it did not expressly agree to the clause. A choice of court agreement in a bill of lading which is agreed by the carrier and shipper and transferred to a consignee, or third-party holder is a ubiquitous example.

Article 25 of the Brussels Ia Regulation does not expressly address the effect of choice of court agreements on third parties. However, CJEU jurisprudence has laid down that the choice of court agreement may bind a third party in some contexts even in the absence of the formal validity requirements. Effectively, this is a context specific harmonised approach to developing substantive contract law rules to regulate the effectiveness of choice of court agreements.

Article 25 of the Brussels Ia Regulation prescribes formal requirements that must be satisfied if the choice of court agreement is to be considered valid. Consent is also a necessary requirement for the validity of a choice of court agreement. (Case C-322/14 Jaouad El Majdoub v CarsOnTheWeb.Deutschland GmbH EU:C:2015:334, [26]; Case C‐543/10 Refcomp EU:C:2013:62, [26]).

Although formal validity and consent are independent concepts, the two requirements are connected because the purpose of the formal requirements is to ensure the existence of consent (Jaouad El Majdoub, [30]; Refcomp, [28]). The CJEU has referred to the close relationship between formal validity and consent in several decisions. The court has made the validity of a choice of court agreement subject to an ‘agreement’ between the parties (Case C-387/98 Coreck EU:C:2000:606, [13]; Case C-24/76 Estasis Salotti di Colzani Aimo e Gianmario Colzani s.n.c. v Rüwa Polstereimaschinen GmbH EU:C:1976:177, [7]; Case C-25/76 Galeries Segoura SPRL v Société Rahim Bonakdarian EU:C:1976:178, [6]; Case C-106/95 Mainschiffahrts-Genossenschaft eG (MSG) v Les Gravières Rhénanes SARL EU:C:1997:70, [15]). The Brussels Ia Regulation imposes upon the Member State court the duty of examining whether the clause conferring jurisdiction was in fact the subject of consensus between the parties, which must be clearly and precisely demonstrated (ibid). The court has also stated that the very purpose of the formal requirements imposed by Article 17 (now Article 25 of Brussels Ia) is to ensure that consensus between the parties is in fact established (Case 313/85 Iveco Fiat v Van Hool EU:C:1986:423, [5]).

In similar vein, the CJEU has developed its case law as to when a third party may be deemed to be bound by or derive benefit from a choice of court agreement. In the context of bills of lading, the CJEU has decided that if, under the national law of the forum seised and its private international law rules, the third-party holder of the bill acquired the shipper’s rights and obligations, the choice of court agreement will also be enforceable between the third party and the carrier (C 71/83 Tilly Russ EU:C:1984:217, [25]; C-159/97 Castelletti EU:C:1999:142, [41]; C‑387/98 Coreck EU:C:2000:606, [24], [25] and [30], C‑352/13 CDC Hydrogen Peroxide EU:C:2015:335, [65]; Cf. Article 67(2) of the Rotterdam Rules 2009). There is no separate requirement that the third party must consent in writing to the choice of court agreement. On the other hand, if the third party has not succeeded to any of the rights and obligations of the original contracting parties, the enforceability of the choice of court agreement against it is predicated on actual consent (C‑387/98 Coreck EU:C:2000:606, [26]; C‑543/10 Refcomp EU:C:2013:62, [36]). A new choice of court agreement will need to be concluded between the holder and the carrier as the presentation of the bill of lading would not per se give rise to such an agreement (AG Slynn in Tilly Russ).

Article 17 of the Brussels Convention and Article 23 of the Brussels I Regulation did not contain an express provision on the substantive validity of a choice of court agreement. The law of some Member States referred substantive validity of a choice of court agreement to the law of the forum whereas other Member States referred it to the applicable law of the substantive contract (Heidelberg Report [326], 92). However, Article 25(1) of the Brussels Ia Regulation applies the law of the chosen forum (lex fori prorogatum) including its choice of law rules to the issue of the substantive validity of a choice of court agreement (‘unless the agreement is null and void as to its substantive validity under the law of that Member State’).

The CJEU recently adjudicated on whether the enforceability of English choice of court agreements in bills of lading against third party holders was governed by the choice of law rule on ‘substantive validity’ in Article 25(1) of the Brussels Ia Regulation. (Joined Cases C‑345/22 and C‑347/22 Maersk A/S v Allianz Seguros y Reaseguros SA and Case C‑346/22 Mapfre España Compañía de Seguros y Reaseguros SA v MACS Maritime Carrier Shipping GmbH & Co.) The CJEU held that the new provision in Article 25(1) referring to the law of the Member State chosen in the choice of court agreement including its private international law rules is not applicable. A third-party holder of a bill of lading remains bound by a choice of court agreement, if the law of the forum seised and its private international law rules make provision for this. Notwithstanding, the principle of primacy of EU law precludes Spanish special provisions for the subrogation of a choice of court agreement that undermine Article 25 as interpreted by CJEU case law.

In the three preliminary references under Article 267 TFEU, the enforceability of English choice of court agreements between Spanish insurance companies and maritime transport companies was at issue. The insurance companies exercised the right of subrogation to step into the shoes of the consignees and sued the maritime transport companies for damaged goods. The central issue in the proceedings was whether the choice of court agreements concluded in the original contracts of carriage evidenced by the bills of lading between the carrier and the shipper also bound the insurance companies. The transport companies objected to Spanish jurisdiction based on the English choice of court agreements. The Spanish courts referred questions to the CJEU on the interpretation of choice of court agreements under the Brussels Ia Regulation.

At the outset, the CJEU observed that the Brussels Ia Regulation is applicable to the disputes in the main proceedings as the proceedings were commenced by the insurance companies before 31 December 2020. (Article 67(1)(a), Article 127(1) and (3) of the EU Withdrawal Agreement)

The CJEU proceeded to consider whether Article 25(1) of the Brussels Ia Regulation must be interpreted as meaning that the enforceability of a choice of court clause against the third-party holder of the bill of lading containing that clause is governed by the law of the Member State of the court or courts designated by that clause. The CJEU characterised the subrogation of a choice of court agreement to a third party as not being subject to the choice of law rule governing substantive validity in Article 25(1) of the Brussels Ia Regulation. (C‑519/19 DelayFix EU:C:2020:933, [40]; C‑543/10 Refcomp EU:C:2013:62, [25]; C‑366/13 Profit Investment SIM EU:C:2016:282, [23])

The CJEU relied on a distinction between the substantive validity and effects of choice of court agreements (Maersk, [48]; AG Collins in Maersk, [54]-[56]). The latter logically proceeds from the former, but the procedural effects are governed by the autonomous concept of consent as applied to the enforceability of choice of court agreements against third parties developed by CJEU case law.

Although Article 25(1) of the Brussels Ia Regulation differs from Article 17 of the Brussels Convention and Article 23(1) of the Brussels I Regulation, the jurisprudence of the CJEU is capable of being applied to the current provision (Maersk, [52]; C‑358/21 Tilman, EU:C:2022:923, [34]; AG Collins in Maersk, [51]-[54]).

The CJEU concluded that where the third-party holder of the bill of lading has succeeded to the shipper’s rights and obligations in accordance with the national law of the court seised then a choice of court agreement that the third party has not expressly agreed upon can nevertheless be relied upon against it (C 71/83 Tilly Russ EU:C:1984:217, [25]; C-159/97 Castelletti EU:C:1999:142, [41]; C‑387/98 Coreck EU:C:2000:606, [24], [25] and [30], C‑352/13 CDC Hydrogen Peroxide EU:C:2015:335, [65]; Maersk, [51]; Cf. Article 67(2) of the Rotterdam Rules 2009).

In this case, there is no distinct requirement that the third party must consent in writing to the choice of court agreement. The third party cannot extricate itself from the mandatory jurisdiction as ‘acquisition of the bill of lading could not confer upon the third party more rights than those attaching to the shipper under it’ (C 71/83 Tilly Russ EU:C:1984:217, [25]; C-159/97 Castelletti EU:C:1999:142, [41]; C‑387/98 Coreck EU:C:2000:606, [25]; Maersk, [62]). Conversely, where the relevant national law does not provide for such a relationship of substitution, that court must ascertain whether that third party has expressly agreed to the choice of court clause (C‑387/98 Coreck EU:C:2000:606, [26]; C‑543/10 Refcomp EU:C:2013:62, [36]; Maersk, [51]).

According to Spanish law, a third-party to a bill of lading has vested in it all rights and obligations of the original contract of carriage but the choice of court agreement is only enforceable if it has been negotiated individually and separately with the third party. The CJEU held that such a provision would undermine Article 25 of the Brussels Ia Regulation as interpreted by the CJEU case law (Maersk, [60]; AG Collins in Maersk, [61]). As per the principle of primacy of EU law, the national court has been instructed to interpret Spanish law to the greatest extent possible, in conformity with the Brussels Ia Regulation (Maersk, [63]; C‑205/20 Bezirkshauptmannschaft Hartberg-Fürstenfeld (Direct effect) EU:C:2022:168) and if no such interpretation is possible, to disapply the national rule [65].

The choice of law rule in Article 25(1) is not an innovation without utility. A broad interpretation of the concept of substantive validity would encroach upon the autonomous concept of consent developed by CJEU case law yet it could avoid the need for a harmonised EU substantive contract law approach to the enforceability of choice of court agreements against third parties. The CJEU in its decision arrived at a solution that upheld the choice of court agreement by the predictable application of its established case law without disturbing the status quo. In practical terms, the application of the choice of law rule in Article 25(1) would have led to a similar outcome. However, the unnecessary displacement of the CJEU’s interpretative authorities on the matter would have increased litigation risk in multi-state transactions.

By distinguishing substantive validity from the effects of choice of court agreements, the CJEU does not extrapolate the choice of law rule on substantive validity to issues of contractual enforceability that are extrinsic to the consent or capacity of the original contracting parties. On balance, a departure from the legal certainty provided by the extant CJEU jurisprudence was not justified. It should be observed that post-Brexit, there has been a resurgence of English anti-suit injunctions in circumstances such as these where proceedings in breach of English dispute resolution agreements are commenced in EU Member State courts.

Mukarrum.

 

Three Opinions of Vlas AG at the Dutch Supreme Court dated 5 April 2024 but published today discuss issues of applicable law in competition follow-on cases. See also my earlier posts on Air Cargo and Palink. CJEU authority cited includes Concurrence, Nintendo, Tibor Trans, CDC, flyLAL.

ECLI:NL:PHR:2024:561 is the Palink case in the Truck Cartel: Uzdaroji Akcine Bendrove “Palink” et al v CNH Industrial NV et al

ECLI:NL:PHR:2024:370 concerns the Air Cargo cartel: KLM et al v Stichting Cartel Compensation – SCC; and

ECLI:NL:PHR:2024:369 is also an Air Cargo case, ‘Equilib’: KLM et al v Equilib Netherlands B.V.

In the Truck Cartel opinion which is a preliminary reference, the essence of the case is the impact of a single and continuous infringement on the application of A6 Rome II. A first issue is the date of application of Rome II: it applies (A31 juncto A32) to events giving rise to damage which occur (the events, NOT the damage) after 11 January 2009. The cartel at issue ran between 1997 and 2011. (4.6) the application of Dutch residual lex causae rules for the pre 2009 period and of the Rome II rules for the post 2009 period does not serve Rome II’s quest for predictability. The fissure between pre and post Rome II’s application ratione temporis in the case of a continuous tort is not solved by CJEU Homawoo as referenced ia in CJEU Nikiforidis. 

Vlas AG 4.8 cites Mankowski

The second remaining issue is whether the Rome II Regulation applies where a continuous tort was at stake, i.e. where a multiplicity of events giving rise to the damage have occurred, some before and some after 11 January 2009. There is a plethora of conceivable solutions: First, the last causal event matters. One would run into severe trouble in identifying which event is the last. Second, the first causal event matters. Third, the most relevant causal event matters. Fourth, all causal events are treated as equivalent, and it disqualifies for the purposes of applying the Rome II Regulation that one of them occurred before 11 January 2009. Fifth, all causal events are treated as equivalent, and it suffices for the application of the Rome II Regulation that one of them occurred on or after 11 January 2009.

If one is prepared to adopt as a general policy that the Rome II Regulation and its uniform rules should be applied to the widest possible extent, the fifth approach ought to be preferred.

and Fitchen (4.10)

(…) accordingly, for many years to come it may be that the applicable law in cross-border competition law claims brought after 11 January 2009 will still be wholly or partially governed by pre-Rome II methods of determining the applicable law. As such an outcome does not appear to accord with the general policy of increasing legal certainty in the context of cross-border claims, it is worth considering whether, in the circumstance that an infringement of competition law is alleged to be ongoing both before and after the temporal datum point of Rome II, it is wrong to split the ascertainment of the applicable law. Possibly the fact that the damage causing events of the competition law tort continue past the Rome II datum point should cause the alleged tort to be regarded as occurring continuously and to therefore legitimate the application of the Rome II Regulation to determine the applicable law for the entire claim? Though increasing legal certainty and simplifying the choice of law process for cross-border competition law claims, this suggestion has to contend with the principled objection that it would be an unfair departure from the general stance of Rome II of neutrality between claimant and defendant. This objection is possibly less convincing in the specific context of follow-on competition law claims as here the existence of an anti-competitive act is already established: in these cases such neutrality may be argued to perversely favour the wrongdoer. Considerations of principle aside, the most formidable obstacle to any suggestion that competition claims which straddle the temporal datum point should benefit from a single method of applicable law selection is Rome II itself: the text currently lacks any provision supporting retrospective temporal applicability whether immediate or deferred in time.

It is suggested that a case based upon increasing legal certainty can be made for a legislative amendment to address the problem of an absence of transitional provisions concerning the temporal applicability in Rome II for follow-on competition claims either by allowing a deferred form of retrospective temporal applicability after the effluxion of a certain period of time from 11 January 2009, or, by providing follow-on competition claims with a new specific regime which includes private international law measures more appropriate to this specific type of competition claim.

Vlas AG then himself opposes the fissure or ‘split’ (4.11), citing predictability and legal certainty. However unlike Mankowski he does not propose that author’s ‘5th solution’ per above, rather, (4.13) he suggests the residual rules should apply seeing as the continuous event started pre Rome II’s ratione temporis scope. This he argues will serve predictability and unity of lex causae, albeit he concedes that unity will be achieved at the national as opposed to the EU level. The general absence of retroactive effect of EU PRivIL rules is cited, justifiably IMO, in support. (4.14) he argues against referral to the CJEU, not because the issue is acte clair, rather because in his view under the Dutch residual rules, too, claimants may make choice of law for the lex fori, just as they can under A6(3) RII. In other words he does not think there is an interest in requesting the view from the CJEU. The AG then further discusses the exercise by claimants under A6(3) Rome II (and the residual Dutch rules), opining that it need not be the claimant whose interests have been affected in various countries, just as long as markets have been affected in various countries. He also sees no reason (and I agree; the AG uses ia linguistic comparison) that this should be any different where the claims have been acquired by litigation vehicles. In the air cargo cartel SCC and Equilib cases, which are an application for annulment, Rome II does not feature ratione temporis however in accordance with Dutch authority, A6 Rome II is used pro inspiratio. Here the determination of ‘markets affected’ is an issue. With reference to the travaux and a wide variety of scholarship, the AG suggests ‘the law of the state on whose market the victim was affected by the anti-competitive practice’ ought to be the lex causae, leading to Mozaik of course, with then the subsequent discussion of A6(3)b. In both cases, the AG proposes that the judgment appealed be annulled on the issue of validity of assignment.

Others no doubt will have more analysis. These are highly relevant opinions.

Geert.

EU Private International Law, 4th ed. 2024, 4.53 ff.

https://x.com/GAVClaw/status/1793671819590766990

 

 

A bit of a late reblog but for archival etc purposes see my post with Elijah Granet on ECtHR Executief van de Moslims van België v Belgium , re unstunned slaughter, freedom of religious expression and animal welfare over at the Oxford Human Rights Blog here in four languages.

The CJEU held succinctly yesterday and without AG Opinion in Case C-222/23 Toplofikatsia Sofi. The Bulgarian rule according to which all Bulgarian nationals have a permanent domicile in Bulgaria even if they move to a different Member State, undermines the effet utile of Brussels Ia despite that Regulation leaving the determination of domicile of natural persons to the Member States: [60]:

in so far as national legislation automatically links [the concept of domicile] to a permanent, mandatory and sometimes fictitious address registered for any national of the Member State concerned, such legislation undermines the effectiveness of Regulation No 1215/2012, since it amounts to replacing the domicile criterion, on which the rules of jurisdiction laid down by that regulation are based, with the criterion of nationality.

Article 21 TFEU (non-discrimination and citisenship) need not be separately addressed in light of the BIa finding.

Orders for payment against a debtor suspected of being domiciled elsewhere in EU yet also domiciled in Bulgaria according to the formal presumption, may of course (and only) be issued by a Bulgarian court on the basis of A7(1) or indeed any other jurisdictional gateway other than A4,  5 and 6 BIa.

Geert.

 

A quick flag of the letter before action in Ali Hussein Julood v BP, a claim relating to gas flaring in Iraqi oil fields. BP is likely to contest jurisdiction under forum non conveniens (a reminder that such defence would be impossible under Lugano and very narrow under Brussels Ia). Information to date is vague however one imagines applicable law may be argued under Article 7 Rome II (and contested by BP as Maran did in Begum v Maran), giving claimants the choice between lex loci delicti commissi or lex locus damni, with for the former the discussion whether it is BP’s company policy with respect to flaring etc that is the real locus delicti.

Geert.

EU Private International Law, 4th ed. 2023, 4.56 ff.

A7 Rome II applicable law (and likely jurisdictional challenge) claxon
LBA Letter before action issued, flaring overseas https://t.co/SZzdbwHgte

— Geert Van Calster (@GAVClaw) April 23, 2024

I have a great interest in claim formulation as a means to forum shop as both my clients and my students know. Despite the post being way behind my signalling of the case on Twitter /X, I do want briefly to flag X v Horsedeals BV et al ECLI:NL:RBOVE:2023:3987 for it shows the limits to what one can do with creative claim formulation. Claimant claims to be the owner of various shipments of stud sperm and aims to obtain various injunctions for (re)sale etc of the shipments, as well as a block on the enforcement of a French judgment in which it was ordered to provide relevant information. All of this is related to allegations of fraud in the horse market. The judge holds that the claim for negative declaration in tort against a France-domiciled defendant is in reality a claim for ownership of the sperm at issue for which there is no A7(2) gateway in The Netherlands. Similarly the court holds that alleged future damage following the enforcement of a French judgment cannot ground an A7(2) claim to halt that enforcement in light of Title III Brussels Ia.

Geert.

Claim formulation: limits to engineering
Interesting first instance judgment rejecting jurisdiction, holding claim for negative declaration in tort in reality is claim for ownership
No A7(2) BIa gateway

X v Horsedeals BV et al (re https://t.co/RBvfubQLO8)https://t.co/U6nMW5egVs

— Geert Van Calster (@GAVClaw) October 12, 2023

The CJEU held last week in Joined Cases C‑345/22 and C‑347/22 Maersk A/S v Allianz Seguros y Reaseguros SA and Case C‑346/22 Mapfre España Compañía de Seguros y Reaseguros SA v MACS Maritime Carrier Shipping GmbH & Co.

The case concerns enforceability of choice of court (in the cases at issue: pro a court in England) included in bills of lading against third party holders of the bills. Each case was brought prior to Brexit Implementation day and as a result of the UK-EU Withdrawal Agreement (A127(3)) fully subject to Brussels Ia. Mukkarum Ahmed had earlier signalled Collins AG’s Opinion in which his scholarship was justifiably cited.

Relevant Spanish law is not amongst those national laws which accept with relative ease that choice of court and law has binding effect on third party acquirers of the bill, seeing as it provides:

In Section XI( of the preamble to Ley 14/2014 de Navegación Marítima (Shipping Law 14/2014) of 24 July 2014 (BOE No 180 of 25 July 2014, p. 59193; ‘the LNM’) it states:

‘… [Chapter I of Title IX] contains the special rules of jurisdiction and competence and, proceeding on the basis of the preferential application in this matter of the rules in international agreements and the law of the European Union, seeks to prevent the abuses identified, by declaring void clauses which provide for submission to a foreign jurisdiction or to arbitration abroad, contained in contracts for the use of a ship or in ancillary shipping contracts, if those clauses have not been individually and separately negotiated. …’

 Under Article 251 of the LNM, headed ‘Effectiveness of transfer’:

‘Delivery of a bill of lading shall have the same effects as delivery of the goods represented by the bill, without prejudice to the criminal and civil actions open to a person who has been unlawfully dispossessed of those goods. The acquirer of the bill of lading shall acquire all the transferor’s rights and actions over the goods, with the exception of agreements on jurisdiction and arbitration, which shall require the consent of the acquirer in accordance with Chapter I of Title IX.’

The first paragraph of Article 468 of the LNM, entitled ‘Clauses on jurisdiction and arbitration’, which appears in Chapter I of Title IX of that law, provides:

‘Without prejudice to the provisions of the international agreements applicable in Spain and to the rules of EU law, clauses which provide for submission to a foreign jurisdiction or to arbitration abroad, contained in contracts for the use of a ship or in ancillary shipping contracts, shall be void and deemed not to exist if those clauses have not been individually and separately negotiated.

Relevant authority is of course CJEU C‑387/98 Coreck Maritime) where the Court held that a jurisdiction clause incorporated in a bill of lading may be relied on against a third party to that contract if that clause has been adjudged valid between the carrier and the shipper and provided that, by virtue of the relevant national law, the third party, on acquiring the bill of lading, succeeded to the shipper’s rights and obligations.

CJEU DelayFix as Collins AG put it (45) “appears to adopt the same approach when, citing paragraph 65 of the judgment in CDC Hydrogen Peroxide, which in turn refers to paragraph 30 of the judgment in Coreck, it refers to ‘national substantive law’”.

The CJEU in the cases at issue firstly [48] holds

.. although it is clear from [A25(1) BIa] that the substantive validity of a jurisdiction clause is to be assessed in the light of the law of the Member State of the court or courts designated by that clause, the fact remains that the enforceability of such a clause against a third party to the contract, such as a third-party holder of the bill of lading, is concerned not with the substantive validity of that clause, as the Advocate General observed in points 54 to 56 of his Opinion, but with its effects, the assessment of which necessarily comes after the assessment of its substantive validity, that latter assessment having to be carried out by reference to the relationship between the original parties to the contract.

[50] with reference to Case 71/83 Tilly Russ and C‑543/10 Refcomp (itself borrowing from Correck Maritime, see above), the Court also reminds us

a jurisdiction clause incorporated in a bill of lading may be relied on against a third party to the contract if that clause has been adjudged valid between the shipper and the carrier and provided that, by virtue of the relevant national law, the third party, on acquiring the bill of lading, succeeded to the shipper’s rights and obligations. In such a case, there is no need for the court seised of the matter to ascertain whether that third party agreed to that clause [emphasis added]

In other words in such case the important step of establishing factual consent, ordinarily always required for choice of court under A25, is no longer needed.

Further, [56], does A25 BIa preclude the Spanish legislation at issue “under which a third party to a contract for the carriage of goods concluded between a carrier and a shipper, who acquires the bill of lading evidencing that contract and thereby becomes a third-party holder of that bill of lading, is subrogated to all of the shipper’s rights and obligations, with the exception of those arising under a jurisdiction clause incorporated in the bill of lading, where that clause is enforceable against that third party only if the third party has negotiated it individually and separately”?

Here, the CJEU [58] repeats that if “third-party holders of bills of lading  [are]…subrogated [under the relevant applicable law] to all of the rights and obligations of the shippers concerned…there is no need to ascertain whether each of those third parties actually accepted those clauses.”

[59] The relevant Spanish law in essence has the effect that the acquirer of the bill of lading acquires all of the transferor’s rights and actions over the goods, with the exception of jurisdiction clauses, which under that Spanish law require the actual consent of the acquirer. The result of the Spanish law is that those clauses are to be void and deemed not to exist if they have not been individually and separately negotiated. This, the CJEU holds [60] circumvents A25 as interpreted in Coreck Maritime, Tilly Russ, Refcomp etc. and cannot be so allowed. The national court is instructed as a result of the primacy of EU law to interpret the Spanish law as much as possible in line with the Regulation (reference [63] ex multi to CJEU Bezirkshauptmannschaft Hartberg-Fürstenfeld) and if no such interpretation other than one contra legem is possible, [65] to disapply the national rule seeing as A25 BIa as a provision in a Regulation (cf. a Directive) is directly applicable.

In conclusion:

1.      Article 25(1) [BIa]

must be interpreted as meaning that the enforceability of a jurisdiction clause against the third-party holder of the bill of lading containing that clause is not governed by the law of the Member State of the court or courts designated by that clause. That clause is enforceable against that third party if, on acquiring that bill of lading, it is subrogated to all of the rights and obligations of one of the original parties to the contract, which must be assessed in accordance with national substantive law as established by applying the rules of private international law of the Member State of the court seised of the dispute.

2.      Article 25(1) [BIa]

must be interpreted as precluding national legislation under which a third party to a contract for the carriage of goods concluded between a carrier and a shipper, who acquires the bill of lading evidencing that contract and thereby becomes a third-party holder of that bill of lading, is subrogated to all of the shipper’s rights and obligations, with the exception of those arising under a jurisdiction clause incorporated in the bill of lading, where that clause is enforceable against that third party only if the third party has negotiated it individually and separately.

An important judgment for the transport sector specifically and for the meaning of ‘substantive validity’ in A25 BIa.

Geert.

EU private international law, 4th ed. 2024, 2.373 ff.

CJEU Maersk

‘substantive validity’ in A25(1) BI encompasses defect in consent in choice of court btw the original contracting parties but not its applicability or enforceability against third partieshttps://t.co/o1K6dPDF1z

for context @mukarrumahmed https://t.co/rlD4bOlUVk

— Geert Van Calster (@GAVClaw) April 25, 2024

A further effort in tackling the blog queue. Those with an interest in the application of Rome II to purely economic damage will be interested in Uzdaroji Akcine Bendrove “Palink” et al v CNH Industrial NV et al ECLI:NL:RBAMS:2023:7093 and most probably will have seen my Tweet on the case at the time (January 2024).

The Dutch Supreme Court (the referring court oddly calling claimants “claimanten” in Dutch; my Dutch colleagues will correct me however surely this is a novel Anglicism and one which must be firmly stopped and pronto; what’s wrong with *eisers*?) has been seized with a preliminary reference on the application of Article 6 Rome II.

That Article identifies the applicable law for infringement of competition law and acts restricting free competition and it is a calamitous statutory provision.

Article 6. Unfair competition and acts restricting free competition

1.   The law applicable to a non-contractual obligation arising out of an act of unfair competition shall be the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected

2.   Where an act of unfair competition affects exclusively the interests of a specific competitor, Article 4 shall apply

3. | (a) | The law applicable to a non-contractual obligation arising out of a restriction of competition shall be the law of the country where the market is, or is likely to be, affected. | (b) | When the market is, or is likely to be, affected in more than one country, the person seeking compensation for damage who sues in the court of the domicile of the defendant, may instead choose to base his or her claim on the law of the court seised, provided that the market in that Member State is amongst those directly and substantially affected by the restriction of competition out of which the non-contractual obligation on which the claim is based arises; where the claimant sues, in accordance with the applicable rules on jurisdiction, more than one defendant in that court, he or she can only choose to base his or her claim on the law of that court if the restriction of competition on which the claim against each of these defendants relies directly and substantially affects also the market in the Member State of that court.

4.   The law applicable under this Article may not be derogated from by an agreement pursuant to Article 14.

A first question referred relates to the qualification of infringement of competition law, Article 101 TFEU (prohibition of cartels) in particular  as a singular, continuous event or rather a chain of new events: if it is a simple and continuous unlawful conduct it would lead to separate claims for damages at the time the damage is suffered; the alternative is that it results in a single claim for damages per victim, consisting of various damage items.

The conflicts relevance also kicks in ratione temporis viz the singular /continuous qualification: what is the decisive point in time for determining the applicable conflict rule?

Furthermore, the first instance court has referred on A6(3)(a) Rome II. Should the determination of the applicable law be based on the country where the first purchaser of the truck to which the claim relates is established (also in the case of transport services)? Or must this be connected to the place where the truck or transport service was purchased? Or does another criterion apply?

If it is held that competitive conditions have been affected at least throughout the internal market, how can A 6(3) b Rome II be applied (choice of law by claimant for the lex fori: “the person seeking compensation for damage who sues in the court of the domicile of the defendant, may instead choose to base his or her claim on the law of the court seised”)?

With regard to Article 6(3)(b) Rome II, the court asks the Supreme Court whether a choice of law for the lex fori can be made if the following requirements are met: that the market is or is likely to be affected in more than one country; that one of the defendants be brought before the court of his place of residence; that the market in the Member State of that court is directly and significantly affected by the restriction of competition.

Or does the (additional) requirement that the consequences for the victim must have occurred in different countries, including (in this case) the Netherlands, also apply to the application of Article 6(3)(b) of Rome II?

This will be an interesting SC judgment on one of the most dense Rome II Articles. Will the SC at its turn refer to the CJEU?

Geert.

EU Private International Law, 4th ed. 2024, 4.53 ff.

Truck cartel, applicable law
First instance Amsterdam refers to Dutch Supreme Court for clarification of A6 Rome II: applicable law for competition law infringement

UZDAROJI AKCINE BENDROVE "PALINK" et al v CNH INDUSTRIAL N.V., et al https://t.co/ezzYWT1SAC

— Geert Van Calster (@GAVClaw) January 17, 2024

A quick note on the first instance court in Amsterdam in B&C v Atlas Flexibles e.a. ECLI:NL:RBAMS:2023:4982. Relevant parties are bound by an SPA (share purchase agreement) with binding arbitration clause (pointing to Germany). B&C are pondering the viability of a pauliana (set-aside). To assist them with the viability decision they would like to depose a Netherlands-domiciled director of one of the corporations involved.

[4.3] the court holds that under the New York Convention (Article 2) the recognition of an arbitration agreement only extends to the subject-matter capable of settlement by arbitration. There is no indication that the arbitral panel could be asked to order deposition of a fact witness in The Netherlands hence it is held that the NY Convention is not engaged.

As for Brussels Ia, [4.4] the court holds that A35 is not engaged, either: fact witnesses depositions, it holds, are not a ‘provisional or protective measure’, merely a preparatory one with a view to pondering future litigation.

Geert.

EU Private International Law, 4th ed. 2024, 2.576 ff.

.

Court Amsterdam: A35 Brussels Ia does not apply to, and New York Convention does not restrict, witness questioning subject to Dutch CPR civil procedure rules, in claim which in substance will be dealt with in an #arbitration proceedinghttps://t.co/O78b77BIXi

— Geert Van Calster (@GAVClaw) August 29, 2023

I have been absolutely swamped in recent months and as a result, the blog has suffered. In coming up for some air, I decided to first tackle some of the oldest drafts in my blog queue. First up is CJEU C-832/21 Beverage City & Lifestyle GmbH et al v Advance Magazine Publishers Inc held let’s say a little while ago (September 2023; did I flag I have been busy?) which in essence clarifies CJEU Nintendo.

The EU Trademark Regulation 2017/1001 has lex specialis conflict of laws provisions viz Brussels Ia. However it does not specify an anchor mechanism and therefore [26] Article 8(1) Brussels Ia  applies in full.

I discussed Richard de la Tour AG’s Opinion here. As I summarised when I tweeted the judgment, the CJEU has essentially followed the AG’s suggestion of a flexible interpretation of the A8(1) conditions:

with respect to the the A8(1) (compare CJEU The Tatry) condition relating to the existence of the “same situation of law”, this [31] “appears to be satisfied” (final check is for the national court) where the claim concerns the protection of claimant’s exclusive right over EU trade marks, which is based on EU trademark law identical to all EU Member States. [29] Any difference in the legal bases under national law of claims relating to that protection is irrelevant to the assessment of the risk of conflicting decisions.

further, with respect to the condition of “same situation of fact”,  [37]

“the existence of a connection between the claims concerned relates primarily to the relationship between all the acts of infringement committed rather than to the organisational or capital connections between the companies concerned. Similarly, in order to establish the existence of the same situation of fact, particular attention should also be paid to the nature of the contractual relationship between the customer and the supplier.”

[38] Anchor defendant Beverage City & Lifestyle was connected to Beverage City Polska by an agreement for the exclusive distribution of the energy drink ‘Diamant Vogue’ in Germany.

“That exclusive contractual relationship between those two companies may make it more foreseeable that the acts of infringement of which they are accused may be regarded as concerning the same situation of fact, capable of resulting in a single court having jurisdiction to rule on the claims brought against all of the actors who committed those acts.”

The CJEU throughout the judgment emphasises the sound administration of justice objective supporting the joinder mechanism.

Geert.

EU Private International Law, 4th ed. 2023, 2.505 ff, 2.518.

#CJEU this morning in C‑832/21 Beverage City#Trademark infringement, 'anchor' jurisdiction, A8(1) BIa
Confirming the flexible approach advised by Richard de la Tour AG (discussed here https://t.co/ODrh3F4pKB)https://t.co/nOc8C25mF0 pic.twitter.com/2bndwSS95Z

— Geert Van Calster (@GAVClaw) September 7, 2023

First Advocate General Szpunar Opined last week in Case C-86/23 E.N.I., Y.K.I. v HUK-COBURG-Allgemeine Versicherung AG – let’s call that case HUK-Coburg. The case concerns the application of Article 16 Rome II’s lois de police aka lois d’application immédiate aka overriding mandatory provisions.

A claim is issued for compensation submitted by private individuals, who are Bulgarian nationals, in accordance with compulsory insurance against civil liability in respect of the use of motor vehicles, against an insurance company for non-material damage caused by the death of their daughter in a road traffic accident in Germany.

The core issue to determine by the CJEU is the concept of overriding mandatory provisions in Article 16 Rome II and in particular the determination of the criteria for classifying rules safeguarding individual rights and freedoms as ‘overriding mandatory provisions’. This echos the discussion in Unamar, where the Brussels Court of Appeal eventually held that the relevant Belgian provisions only serve the interests of private parties, not of the Belgian public legal order, hence there can be no question of application of the lois de police exception (current Opinion suggests ‘only’ as the key word in the Court of Appeal’s analysis). The current discussion by the AG also echoes the facts in Lazar.

Contrary to German law (28), Bulgarian law (lex fori) (29) provides that compensation for non-material damage is determined by the court giving judgment on the basis of fair criteria. That court points out that, under Bulgarian law, compensation is payable for all mental pain and suffering endured by parents on the death of their child as a result of an unlawfully and culpably caused road traffic accident. It is not necessary for the harm to have resulted indirectly in pathological damage to the health of the victim.

(32) The mere fact that, by applying the lex fori, there would be a different outcome with regard to the amount of compensation from that which would have been reached by applying the lex causae is not sufficient to conclude that the Bulgarian provision at issue may be classified as an ‘overriding mandatory provision’ within the meaning of Article 16 of the Rome II Regulation, provided, the AG adds,  that the application of the lex causae is compatible with considerations of justice.

(36) Over and above CJEU Unamar, the Court also in Da Silva Martins explored the concept and the criteria. (42) ff the AG recalls the general principles, and (56) he points to recital 32 Rome II’s reference to ‘‘considerations of public interest’. The AG is absolutely right in opining that safeguarding individual interest may absolutely contribute to the protection of public interest. His argument (60) is common sense and absolutely right:

A first argument is linked to the interplay of collective and individual interests. Thus, in the field of tort law, the rules that a Member State establishes in order to protect a category of persons who have sustained damage, by modifying, in particular, the burden of proof or by establishing a minimum threshold for compensation, could have the principal objective to restore the balance between the competing interests of private parties. Indirectly, they could therefore also contribute to safeguarding the social and economic order of the Member State by reducing the impact of accidents on public resources.

On the basis of CJEU authority as outlined, the AG concludes that the case at issue may absolutely lead to the court seised applying Bulgarian law however only if

it finds, on the basis of the existence of sufficiently close links with the country of the forum and a detailed analysis of the terms, general scheme, objective and context of the adoption of that directive, that it is of such importance in the national legal order that it justifies a departure from the applicable law designated pursuant to Article 4 [Rome II].

A good opinion which I hope will be followed by the Court.

Geert.

EU Private International Law, 4th ed. 2024, 4.87 ff.

First AG Szpunar this morning in C‑86/23 HUK-Coburg
Applicable law
Criteria for classifying rules safeguarding individual rights and freedoms as ‘overriding mandatory provisions’ viz A16 Rome II
citing ia @KrzysztofPacula, Bonomi, Wauthelet, Francqhttps://t.co/M0qXbb8aCu

— Geert Van Calster (@GAVClaw) March 21, 2024

In his Opinion in C-774/22 JX v FTI Touristik, Advocate General Emiliou in my opinion is spot on for both core elements of the case. A consumer domiciled in Germany issues a claim against a tour operator also established in Germany in relation to a contract for a package of travel services booked by that consumer for a trip abroad. Does Brussels Ia apply and does the consumer title of the Regulation assign territorial as well as national jurisdiction?

The trip is sold as a package holiday. That is relevant, for the consumer title does not apply to mere contracts of transport. The consumer in the case at issue suggests that the operator failed in its duties under the Package Travel Directive to inform ia re visa requirements and brings a case in his domicile, Nuremberg (as opposed to Munich, the defendant’s domicile).

The AG is absolutely right to spend a mere two paras on the territorial jurisdiction issue. The answer follows from the very wording of the consumer title. (18):

The referring court’s doubts concerning the function of the forum actoris rule for consumers call for a swift response. It stems from the very wording of Article 18(1) of the Brussels I bis Regulation. A comparison of the two provisions it contains is enlightening in that regard. The forum rei rule refers to the ‘courts of the Member State’ in which the professional is domiciled. By contrast, the forum actoris rule refers to the ‘courts for the place’ where the consumer is domiciled. That terminological difference is not trivial. It is designed precisely to indicate that, whereas the first rule merely confers international jurisdiction on the courts system of the designated State, taken as a whole, the second rule gives both international and territorial jurisdiction to the court for the locality of the consumer’s domicile, irrespective of the allocation of jurisdiction otherwise provided for by the rules of procedure of that State.

On the next issue, the international element, the AG refers to the discussion in German scholarship on ‘false internal cases’ (unechteInlandsfälle). Does the foreign destination of the trip give the contractual relationship an international character? (29) ff he finds support in the broad conception of the international element in BIa generally. Owusu of course, Lindner, ZN v Bulgarian Consulate, IRnova and most recently Inkreal are all relevant authority.

(33) The AG refers to some clear examples of what the majority view would call unechteInlandsfälle which without a doubt however are caught by Brussels Ia:

For instance, where a court of a Member State is called upon to determine a case which, on the one hand, involves two litigants domiciled in that State but, on the other, relates to a tort that took place abroad, or the tenancy of an immovable property located in another country, the Brussels I bis Regulation applies.

Emiliou AG is not a fan of ZN v Bulgarian Consulate not because it viewed the case as being international but rather because it relies too much on the definition of ‘international’ in the European Order for Payment Regulation 1896/2006 (respective domiciles of the parties and the seat of the court seised). (38-39)

On the one hand, Regulation No 1896/2006 was adopted to tackle the difficulties faced by creditors seeking to recover uncontested claims from debtors in other Member States. It is aimed at simplifying and speeding up the recovery of such claims, through the creation of a uniform procedure allowing a creditor to obtain, from a court of a Member State, a judicial decision on such a claim, which can easily be enforced in the Member State where the debtor’s assets are located, while guaranteeing a level playing field in terms of rights of defence throughout the European Union. The definition of ‘cross-border case’ given in that regulation – based on the respective domiciles of the parties and the seat of the court seised – has a certain logic in that context. Where the parties are domiciled in the same State, the remedies provided by the courts of that State, under its procedural law, are usually sufficient to ensure that the creditor swiftly recovers his or her claim. Therefore, the procedure laid down in that regulation is not necessary.

On the other hand, the Brussels I bis Regulation purports to unify the rules of conflicts of jurisdiction in civil and commercial matters. That definition is too narrow and, thus, ill-suited for that purpose. As explained in points 32 and 33 above, questions of international jurisdiction may arise even where the litigants are domiciled in the same Member State and the courts of that State are seised. Moreover, that instrument also contains rules on recognition and enforcement of judgments given by the courts of the Member States. To be fit for purpose, those rules must apply whenever the authorities of a Member State are required to recognise or enforce a decision delivered by a court of another Member State, even where it concerns an internal dispute between two persons domiciled in the latter State. That definition also does not accommodate that situation.

(41) the AG insists the CJEU no longer refer to the OFP Regulation in interpreting Brussels Ia:

I urge the Court to refrain, in the future, from referring to Regulation No 1896/2006 in that context. Should the Court wish to draw inspiration from, and to ensure consistency with, other instruments on that issue, [Rome I and Rome II] fit the bill better, as will be seen below.

(I have in the past voiced concern with too much BIa /RI and II parallel as has the CJEU itself in Kainz).

More in general though and away from purposive construction in light of other PIL instruments, the AG opines straightforwardly that the destination of the trip constitutes a relevant ‘international element’ for the purposes of BIa.

The place of destination of the trip is also the place where, under the package travel contract, (most of) the services were provided or should have been provided to the traveller (the flight would land nearby, the hotel be situated there, and so on). In other words, that contract was, or should have been, essentially performed there. In my view, where a court of a Member State is called upon to determine a dispute related to the performance of a contract, and the place of performance is in a foreign country, that factor is ‘such as to raise questions relating to the determination of the international jurisdiction of that court’. (Reference to Richard de la Tour AG in Inkreal).

CJEU Lindner at the jurisdictional level echoes in (45) in the AG’s reference to Rome I:

An analogy can also be made, in my view, with the Rome I Regulation and the relevant case-law of the Court. Similar to the Brussels I bis Regulation with respect to jurisdiction, that instrument determines the law applicable to a contract where the situation ‘involv[es] a conflict of laws’. In that regard, it stems from the case law of the Court that the rules of the Rome I Regulation are applicable to any contractual relationship with a ‘foreign element’. Indeed, it is only where such a contract has connections with a country (or countries) other than that of the court seised that that contract could potentially be governed by different, conflicting national laws, and that court may wonder which law to apply in order to resolve a dispute. Pursuant to the same case law, that concept of ‘foreign element’ is not limited to the respective domiciles of the contracting parties. The fact that the contract is to be performed in another country constitutes such an ‘element’.  A connection of that kind obviously ‘involv[es] a conflict of laws’. The court seised can contemplate the possibility that the law of the country of performance could apply instead of its own. [Much appreciated reference in footnote to the 2nd ed of the Handbook, 2016, GAVC]. Thus, the rules of that regulation are necessary to resolve that conflict.

The somewhat convoluted reasoning by which the CJEU came to international element in Maletic (where the Court could just as well simply had referred to the foreign destination of the trip) is explained by the AG (49) by the fact that the real difficulty in that case was on which party to anchor the forum solutionis analysis.

(56) In further support comes Article 18(1)s’ ‘regardless of the domicile of the other party’, clearly designed with third States parties in mind, is broad enough to capture  the situation where the supplier is domiciled in the same the Member State as the consumer.

Geert.

EU Private International Law, 4th ed 2024, 2.22 ff and 2.233 ff.

1/2 Emiliou AG Thurs in C‑774/22 JX v FTI Touristik
Both spot on imo:
consumer title Brussels Ia applies to contract btw consumer and tour operator domiciled in same MS but with trip abroad;
consumer title forum actoris determines national as well as territorial jurisdiction

— Geert Van Calster (@GAVClaw) March 9, 2024

In competition law there is a strong presumption of attributability of daughter’s action to the mother corporation as I discussed ia in my post on CJEU C-508/11 P ENI (references to further case-law there). In general in competition law there is a strong emphasis on the concept of an ‘economic unit’ which readly looks beyond the legal fiction of separate corporate personality.

In C‑425/22 MOL Magyar Olaj- és Gázipari Nyrt. v Mercedes-Benz Group AG (let’s shorten that to ‘MOL v Mercedez-Benz) Emiliou AG opined that for the purposes of Article 7(2) Brussels Ia jurisdiction a parent company cannot rely on the competition law concept of an economic unit in order to establish the jurisdiction of the courts where it has its registered seat to hear and determine its claim for damages for the harm suffered by its subsidiaries.

(14) Applicant is a company established in Hungary. It has a controlling interest in companies belonging to the MOL group. It is either the majority shareholder or holds another form of exclusive controlling power over a number of companies, such as MOLTRANS, established in Hungary; INA, established in Croatia; Panta and Nelsa, established in Italy; ROTH, established in Austria; and SLOVNAFT, established in Slovakia. During the infringement period identified by the relevant Commision Decision (the Trucks Cartel)

The AG of course refers to Bier, Dumez France (direct damage in one person rules out an extra A7(2) forum for the third party (mother corporation) victim of indirect damage), and other core cases on A7(2) which this blog frequently refers to and /or has discussed:

C‑352/13 CDC: A7(2) locus delicti commissi for cartels is the court of the place where the cartel was definitively formed, confirmed in flyLAL and criticised by me inter alia here;

C‑352/13 CDC (holding ia that A7(2) locus damni for infringement of cartel is the victim’s registered seat); that solution too as the AG notes (44) was met by criticism both by Bobek AG in his Opinion in flyLAL and by scholarship;

C-30/20 Volvo: more emphasis Emiliou AG suggests on the link between the market affected by the anticompetitive conduct and the place where the claimants allege to have suffered harm; in my post on the case I point out the CJEU’s fuzziness on the issue;

He also distinguishes CJEU Tibor Trans‘ distinct view on (in)direct damage as follows (36-37) – footnotes omitted:

36. It is true, as the applicant notes, that in the judgment in Tibor-Trans (which related to the same collusive behaviour as that established in the Commission Decision at issue in the present case), the Court distinguished that case from the scenario in Dumez. The particularity of the facts in Tibor-Trans was that the applicant in that case, an end user of the trucks, did not purchase any trucks from the defendant directly, but did so through a dealership. However, that did not prevent the Court from finding that the applicant’s claim in that case concerned direct damage, because that damage was found to be the immediate consequence of an infringement of Article 101 TFEU, given that the overcharge resulting from the collusive agreement was passed on to that applicant by the dealers.

37. Such passing-on may occur within a supply chain where the alleged victim acquires the goods (or services) which have been subject to a cartel. That, however, is not claimed to have occurred in the case in the main proceedings. Instead, the applicant appears to present the initial harm suffered by its subsidiaries as its own.

(52) The AG points out that the distinguishing feature here is that the applicant’s registered seat is situated outside the affected market. (57) Applicant seeks to extend the application of the registered seat connecting factor to establish jurisdiction in relation to its claim in which it seeks compensation for harm suffered solely by other members of its economic unit.

Emiliou AG does not believe the competition law concept can simply be extended for jurisdictional services, referring also to Szpunar AG’s Opinion in C‑632/22 (service of documents) on which see prof Matthias Weller here. For his extensive arguments based on A7(2)’s requirement of proximity, predictability of forum, Gleichlauf (less convincing imo), and that BIa’s jurisdictional rules guarantee efficient enforcement (particularly in A4 domicile jurisdiction), see the Opinion.

His final conclusion is that (98)

the term ‘the place where the harmful event occurred’, within the meaning of Article 7(2) of Regulation No 1215/2012, does not cover the registered office of the parent company that brings an action for damages for the harm caused solely to that parent company’s subsidiaries by the anticompetitive conduct of a third party, and where it is claimed that that parent company and those subsidiaries form part of the same economic unit.

As my colleague Joeri Vananroye summarises the Opinion:

“In corporate law terms: yes to outsider veil piercing, no to insider reverse veil piercing. Outsiders may disregard legal structure and go for economic reality; but not those who set up that structure. See also: rules on derivate damages.”

Blame Bier /Mines de Potasse d’Alsace for this complex set of rules and distinguishing.

Geert.

EU private international law, 4th ed. 2024, 2.438 ff.

 

Emiliou AG, A7(2) BIa
Parent company cannot rely on competition law concept of economic unit to establish jurisdiction where it has its registered seat, re claim for damages for the harm suffered by its subsidiaries.

MOl v Mercedes-Benz https://t.co/MC376UYiX0

— Geert Van Calster (@GAVClaw) February 14, 2024

Project Lietzenburger Strabe Holdco, Re [2024] EWHC 468 (Ch) would seem to heed my prediction when I reviewed AGPS BondCo (“Strategic Value Capital Solutions Master Fund LP & Ors v AGPS BondCo PLC (Re AGPS BondCo PLC) [2024] EWCA Civ 24) here: that the English jurisdictional basis for schemes of arrangement and restructuring plans for corporations without English anchor prior to the restructuring, is less certain than court practice suggested.

Prior to AGPS Bondco and as I report in many posts which readers can find using the ‘scheme of arrangement’, in the event of a non-E&W incorporated debtor whose debt was being restructured, the classic technique is to insert a newly incorporated English company as a substitute obligor or co-obligor of debt owed by a foreign company in order to engage the jurisdiction of the English court. That technique in itself has not changed, but the court’s fairly ready acceptance of jurisdiction arguendo is now coming under some pressure.

As I reported in the past, the arguendo technique’s smoot riding through the courts first if all was assisted by the general absence of challenge by creditors. Even those not entirely convinced of the economic soundness of the restructuring at issue would eventually give up opposition when push came to shove. Further, pre-Brexit the assumption that a scheme or a plan would be readily recognised across the EU as a ‘judgment’ under Brussels Ia, despite question marks over the soundness of that ia viz the definition of ‘judgment’ and the application of BIa’s ‘insolvency’ exception, similarly lubricated passage through the courts. Post Brexit and absent UK Lugano membership, things have not necessarily changed from the content point of view; however they have certainly changed from the perception point of view.

In the case at issue, Richards J refers to AGPS Bondco and discusses COMI shift of the Plan corporation at length [69] ff.

The plan company having its COMI in E&W is one of the jurisdictional routes available. The Insolvency (Amendment) (EU Exit) Regulations 2019 are the main port of call, and Re Swissport Holding International SARL [2020] EWHC 3556 (Ch) (unreported), which I flagged  in my discussion of Barings v Galapagos here is the lead judgment referred to on the principles of COMI. One of the issues in Barings is the question of ‘permanency’ of COMI move, an urgent issue in Barings but perhaps less immediately concerning in current case (the judge does briefly address it [85]).

The judge having decided that COMI was indeed located in E&W then [86] ff discussed whether this move of COMI might have been in breach of Luxembourg law. The structure of this analysis is not entirely clear. Whether COMI moved in breach of applicable lex societatis is not in itself I would suggest relevant to the COMI move itself and indeed this is not how the judge seems to approach it. One assumes his analysis on this point is part of his consideration of whether the courts at Luxembourg would recognise the Plan, alongside [103] ff where the potential of exclusive Luxembourg jurisdiction is considered. Consideration including by the experts is made of CJEU C-723/20 Galapagos BidCo Sarl, with the judge eventually by a slender margin deciding that the view is to be preferred that Lux courts would not consider themselves to have such jurisdiction.

On recognition proper (again I am not quite sure of the structure here). [112] ff consider the Re DTEK Energy BV test, with consideration in particular of the COMI move as fraude à la loi /fraus (additionally in the form of fraude au jugement) and on balance the judge holds that it is unlikely that the LUX courts would object on ordre public grounds (ia given EU law’s acceptance of COMI move for restructuring purposes.

The same ordre public test under German law with an important Brexit consequence [125]: “Both experts agree that an English judgment sanctioning the Plan would be recognised in Germany only if the Plan Company’s COMI is in England at the time of any order sanctioning the Plan. Without that, the German courts would not accept that the English courts have jurisdiction for the purposes of s343 of the InsO.” I am not an expert on German law but it seems prima facie implicit in that opinion that a Plan would have to be considered an insolvency and indeed [125] ff follows that discussion. Here the judgment takes an interesting turn with [130] the presence of cross-class cram-down in an English Plan leading to pro inspiratio an Annex A EU Insolvency Regulation notified German procedure, StaRUG, in implementation of EU Directive 2019/1023 on Preventive Restructurings (the “Restructuring Directive”), the Plan being considered one in insolvency.

Consider the competing reasons:

Professor Thole’s reasons for concluding that the Plan would be recognised and given effect to in Germany can be summarised as follows:

i) The Plan is similar in nature to a StaRUG. StaRUGs fall within the list of “insolvency proceedings” set out in Annex A.

ii) Proceedings set out in Annex A are “insolvency proceedings” for the purposes of the InsO. In official commentaries on German domestic legislation, the German legislature has stated that, in deciding whether non-EU proceedings constitute “insolvency proceedings”, it is helpful to consider their similarities with proceedings listed in Annex A.

iii) Since the Plan is similar to a StaRUG, which falls within Annex A, a German court would likely conclude that an order sanctioning the Plan would be an order in “insolvency proceedings” for the purposes of the InsO.

iv) That conclusion is not altered by the accepted fact that the Plan does not deal with all the Plan Company’s creditors (such as professional advisers). The requirement for “collective proceedings” is present by virtue of the fact that the Plan deals with the rights of the Plan Company’s financial creditors. That conclusion is supported by a comparison with StaRUGs which likewise do not need to deal with the claims of all creditors.

v) Accordingly, the Plan would be enforced and recognised under the terms of the InsO.

1. 1. 1. Professor Skauradszun’s reasons for reaching a contrary conclusion can be summarised as follows:

i) German legal literature categorises plans under Part 26A as “preventive restructuring frameworks” which are the province of the StaRUG Act rather than the InsO. Accordingly, a German court would consider that the question whether the Plan should be recognised and enforced in Germany should be answered by reference to the StaRUG Act, rather than by reference to the InsO.

ii) The StaRUG Act does not provide for preventive restructuring frameworks of a non-EU member state to be recognised or enforced in Germany. There is, therefore a “gap” in German domestic legislation which means that non-EU “preventive restructuring frameworks” are inherently incapable of being recognised in Germany. Since Germany has a civil law tradition, the courts would not seek to fill that gap by adopting a strained interpretation of the concept of “insolvency proceedings” so as to enable the Plan to be recognised under the InsO. Rather, a German court would look to the legislature to fill the gap if it saw fit.

iii) The Plan falls outside the definition of “insolvency proceedings” in the InsO applying orthodox principles of interpretation which are not affected by any wish to fill a perceived gap in the legislation. That is because the Plan lacks the requisite element of “collectivity” to satisfy the definition.

iv) The fact that the Plan is similar to procedures (such as a StaRUG) listed in Annex A is not relevant. While German legislation does indeed take into account similarities with EU insolvency proceedings, the InsO only requires a comparison to be made with proceedings listed in the EU Insolvency Regulation prior to it being recast in 2015. The German court would not apply an “always speaking” doctrine of statutory interpretation to “update” those references to include Annex A of the Insolvency Regulation Recast.

 These are interesting positions and in the end the judge sides by a very narrow margin with the former. 

Further consideration of the plan then lead to the judge suggesting a number of amendments but for the purposes of the blog, the findings on jurisdiction and recognition are as extensive as they are exciting.

Geert.

EU Private International Law, 4th ed. 2024, 5.35 ff.

More on the blog soon
Refusal to sanction Restructuring Plan
Extensive review of LUX, DE expert opinion on jurisdiction, COMI, fraude à la loi (held i/t end E&W courts do have jurisdiction)

Project Lietzenburger Strabe Holdco, Re [2024] EWHC 468 (Ch)https://t.co/y4Mv0uDEE2

— Geert Van Calster (@GAVClaw) March 4, 2024

In Granville Technology Group Ltd v Chunghwa Picture Tubes Ltd & Ors [2024] EWHC 13 (Comm) Pelling J deals with a follow-on damages claim in the context of the LCD cartel (an EC decision under Article 101 TFEU). In E&W these are characterised as tortious claims for breach of statutory duty, as they are in most EU jurisdictions, too.

The applicable law issues were dealt with under residual English law pre Rome II. The events with which this claim is concerned occurred before 11 January 2009, when Rome II came into effect. For the Brussels Ia and Rome II issues see my paper here. However the judge’s discussion of elements displacing the English law’s presumption of locus damni have important comparative context to EU law as I discuss below.

Claimants were English registered companies carrying on business in England and Wales in the manufacture and/or sale primarily of  desktop PCs sold with monitors and notebooks. They are now all in liquidation. The judge handily recalls the principles [18]] for those not familiar with follow-on actions

A claimant alleging a competition law infringement can bring a claim before the English courts either as a ‘standalone’ claim (in which case it must establish both the breach of competition law alleged and the loss which it alleges was caused thereby); or (as in this case) as a ‘follow-on’ claim, where the claimants rely on the findings of the relevant competition authority (in this case the Commission) to establish breach. The “follow on” option is available because  in law the High Court is bound by infringement decisions of the Commission, such as the Decision. However the claimant in a follow on claim must prove the loss it alleges it has been caused by the infringement relied on…

Damage of course is an issue and [27] in this case as in many similar ones, “complex economic evidence involving statistical modelling at various levels of complexity and sophistication was deployed by both parties but in particular by the defendant in an attempt to identify what part of the price increases in LCD panels over the Relevant Period was attributable to the cartel’s infringing activity.”

[34] Applicable issues of law that arise against some of the defendants, are:

i) Whether any losses that arise out of purchases by the claimants of LCD panels or LCD Products containing LCD panels which were first put onto the market outside the EEA fall outside the territorial scope of EU law and are therefore unrecoverable;

ii) whether the Claim in so far as it arises out of purchases by the claimants of LCD panels or LCD Products containing LCD panels which were first put onto the market in South Korea, Taiwan, China and Japan is governed by the laws of these countries; and if so whether the claims by the claimant to recover damages for breach of TFEU, Article 101 and/or AEEA, Article 53 is a cause of action within the laws of those states. The claimants have not attempted to prove the relevant laws of any of those states and rely on the presumption (“Presumption of Similarity”) that those laws are materially the same as English law unless the contrary is pleaded and proved. The defendants case is that the Presumption of Similarity is of no application applying the decision of the Supreme Court in Brownlie v FS Cairo (Nile Plaza) LLC [2021] UKSC 45 per Lord Leggatt at [119] – [124]. If the defendants are correct on this issue, they maintain the claim fails to the extent that it is based on purchases by the claimants of LCD panels or LCD Products containing LCD panels which were first put onto the market in South Korea, Taiwan and China and Japan. The defendants estimate this at about 78% of the whole. There is a dispute as to the correct percentage in the event the defendants succeeds on the principle  In any event, the claimants submit that if I agree with the defendants on the issue of principle I should adjourn determination of the issue and give the claimants the opportunity to plead and prove the relevant foreign law. I return to that issue below; and

iii) Whether the claims against the third and fourth defendants are statute barred under the Limitation Act 1980 (“LA”). The claimants rely on LA, s.32 and maintain that they could not have with reasonable diligence discovered the relevant facts before publication of the Decision, particularly given that all the claimants are in liquidation and have acted at all material times by their liquidators and their support staff.

The foreign law issue is dealt with [292] ff. The relevant agreements, decisions  and concerted practices all occurred outside the EU in Taiwan, Japan and South Korea, as did the overcharge for the LCD panels incorporated into the goods which the claimants ultimately bought: this occurred when the LCD panels were first sold by the cartelists including the defendants to the manufacturers of screens that were then incorporated into monitors and notebooks. Loss to the claimants loss (subject to downstream pass on) happened in E&W, when they purchased monitors or notebooks with LCD screens incorporated into them or the parts necessary to enable them to assemble notebooks. Their losses on reduced sales were also suffered in E&W.

This is where PILA s11 and 12 come in: for their content and implications see my post on UKSC Zubaydah. This is where interesting comparative elements emerge with EU law.

[297]

Once the different elements of the events and the country in which they occurred have been identified, the court then has to make a ‘value judgment’ regarding the ‘significance’ of each of those ‘elements’ in relation to the tort in question – see Iiyama (UK) Ltd v Samsung Electronics Co Limited (ibid.) at [48]. In that case, it was conceded that “…in the modern world the place where a cartel agreement happens to be made is of little significance…” Neither party in this case suggests, and in particular the defendants do not suggest, otherwise. I agree. That being so, the primary considerations that remain by a process of elimination are (a) the place or places where the cartel was intended to be implemented; and (b) the place or places  where the damage resulting from the infringing activity was suffered.

In my aforementioned paper p.150 I criticise the CJEU’s approach for jurisdictional purposes) in C-352/13 CDC which it repeated in C-27/17 flyLAL. For locus delicti commissi, under Article 101 TFEU (cartels), with reference to CDC, the CJEU opted for courts for the place in which the agreement was definitively concluded: this truly is extraordinary for it allows for forum shopping by the cartel participants, and it is a far cry form the sentiment expressed in current judgment (for applicable law) that the place where a cartel agreement happens to be made is of little significance…. For Article 102 TFEU (abuse of dominant position) the picture is more fuzzy at the CJEU as I discuss in my post on flyLAL. I realise the analysis in current judgment is for applicable law, not jurisdiction and I also realise that on applicable law Rome II’s Article 6 is closer to a forum damni analysis (as befits the general DNA of Rome II) than the CJEU’s locus delicti commissi analysis for jurisdiction in CDC and flyLAL.

Parties still disagree however on where that place is where the cartel was first implemented. Defendants say this was at the time prices first incorporated the Overcharge, which was when LCD panels were sold to original equipment manufacturers in Taiwan, Japan, China  and South Korea.

The judge in this context discusses the territorial scope of EU competition law [299] ff:

….if and to the extent that the focus in relation to applicable law should be on the restriction on competition within the internal market, then concluding that EU competition law should not apply to infringing activity that has effect within the EU because the cartelists are based, or conspired, or first gave effect to their conspiracy outside the EU would have a chilling effect on the efficacy of EU competition law as an effective mechanism for protecting and enhancing fair competition for the benefit ultimately of all consumers within the EU.

Enter CJEU Woodpulp, Gencor and Intel. [308] “in my judgment the evidence available establishes that the cartel in issue in these proceedings was a worldwide cartel which was intended to produce and in fact produced substantial indirect effects on the EU internal market.”

[313]

I conclude that the claim is one that comes within the territorial scope of EU competition law Returning to the applicable law issue, these conclusions lead me to the further conclusion that applying PILA, s.11(2)(c),  the applicable law is that of England and Wales including the law of the EU that applied at the time of the events giving rise to this claim.  I reach that conclusion because the most significant elements of those events were (a) the place or places where the cartel was intended to be implemented, which for the reasons I have identified was materially the territory of the EU including the UK and, therefore, England and Wales ; and / or (b) the place or places where the damage resulting from the infringing activity was suffered which again materially was England and Wales. As the Commission makes clear in Article 331 of the Decision, while the effects of the cartel were experienced elsewhere as well that is entirely immaterial for present purposes, as is the fact that a number of sales were first put on the market outside the EU. That is so because the Commission has decided and the Decision establishes that the indirect sales of panels were targeted at the EU (including England and Wales) and were intended to and in the event had substantial effects on competition in the EU (including England and Wales).

Reference here is also made to Deutsche Bahn Ag & Ors v Mastercard Incorporated & Ors [2018] EWHC 412 (Ch) in which both a pre and a post Rome II scenario was at issue.

Obiter, [314]

…had I concluded that the general rule was that the applicable law in relation to sales that were first put on the market outside the EU was the law of the state where that had occurred, I would nonetheless have concluded that the significance of the factors referred to above which connect the tort to the EU and, therefore, England and Wales, so outweighed the factors connecting the tort to the states where LCD screens were first put on the market outside the EU during the Relevant Period so as to make it substantially more appropriate for the applicable law to be the law of England and Wales incorporating that of the EU as relevant. EU competition law is the most appropriate law to apply to a tort concerned with a breach of TFEU, Article 101 to the extent that it has effect within the EU because it comes within the territorial scope of EU competition law and English law is the most appropriate intra EU system of law to apply by reason of the effect on the market so far as the claimants are concerned being in England and Wales, the claimed losses having been suffered in England and Wales and the claimants having carried on business in England and Wales during the whole of the relevant period until they were each placed in administration. The geographical place of incorporation of each claimant is a minor consideration although the first and second claimants were registered in England and Wales and although OTC was registered in Jersey, it nonetheless carried on business in England and Wales and claims in respect of losses suffered there. To my mind it is also at least realistically arguable, given the cost and inconvenience of having to prove separately the competition law of each state where LCD screens were first put on the market outside the EU during the Relevant Period, that to decide otherwise would undermine the direct effect and/or the effectiveness principles.

Of note. Geert.

EU private international law, 4th ed. 2024, [2.447] ff, 4.53 ff.

CJEU Woodpulp claxon
Follow-on damages claim, LCD panels cartel
Applicable law under residual E&W law
Determination of locus delicti commissi, territorial reach of EU competition law

Granville Technology v Chunghwa Picture Tubes ea [2024] EWHC 13 (Comm)https://t.co/ymihdaLesC

— Geert Van Calster (@GAVClaw) February 9, 2024

I am mopping up the blog queue so forgive me for posting late on Deutsche Bank v RusChemAlliance [2023] EWCA Civ 1144, a successful appeal of SQD v QYP (Rev1) [2023] EWHC 2145 (Comm). (Regular readers of the blog know that I do tend to Tweet these cases with some direction of the blogpost’s direction of travel).

Nugee LJ [1]

A guarantee issued by a German bank in favour of a Russian company is governed by English law and provides for arbitration in Paris. When a dispute arises, the Russian company issues proceedings in Russia in apparent breach of the arbitration agreement. Should the English court grant an anti-suit injunction (“ASI”) to restrain those proceedings in circumstances where no such injunction could be obtained in France? That is the question raised by this appeal.

In short, the anti-suit injunction was now granted.

Bright J on the basis of the expert’s evidence, had considered at first instance [82]

My understanding from the evidence is that this is not because the grant of ASIs is an emerging doctrine under French law (cf. the incremental acceptance of freezing injunctions: English law was a relatively early adopter, making it natural and often helpful for the English courts to grant worldwide freezing injunctions in support of litigation in jurisdictions where there was no conceptual opposition to freezing injunctions, but the jurisprudence had not yet developed). It is, rather, that French law has a philosophical objection to ASIs.

[83]

“ASIs are not in the French legal toolkit, but this is not a mere omission. It is a deliberate choice. French law considers ASIs to “contradict the fundamental principle of freedom of legal action.” ASIs are a tool that French law does not like.”

That would not [85] stop a French court from recognising an ASI validly issued elsewhere, but this, Bright J had held, was not the scenario at issue: [86]

The facts of this case do not fall within that paradigm. The seat of the arbitration being Paris, the procedural law that the parties have agreed upon is French law. I therefore understand this to be a case where the French court would not enforce an interim ASI granted by this court, were I to grant one. On the contrary, if requested to do so in its capacity of court of the seat of the arbitration, the French court might well grant an anti-ASI.

I do not do this often but it is worthwhile in this case to copy the entire conclusion by the first instance judge seeing as it engages with the important question to what degree an English court should shot across the bow of the seat of arbitration hence across the curial law: [91 ff]

Ultimately, SQD had two main points. 

The first was that the agreement to arbitrate is subject to English law, and the English courts have an interest in securing the performance of contracts that are subject to English law. I accept this in principle, but the English courts will not act in every case where the relevant agreement is subject to English law. This is obvious (i) from the fact that CPR 6.36 does not give the English courts jurisdiction in every case concerning a contract subject to English law – it is always necessary for England and Wales to be the proper forum; and (ii) from the fact that The Angelic Grace acknowledges that there may be exceptional cases where as an ASI should not be granted even though the foreign proceedings are in breach of the agreement to arbitrate. Indeed, Enka at [177] suggests that it should make no difference if the governing law is English or some other law – which may imply that the seat is more important than the governing law.

The second was that the fact that an ASI cannot be obtained in France makes this court the proper forum. SQD said that the availability of ASIs in England and Wales was a legitimate juridical advantage – cf. Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460. However, this begs the question whether it is right to consider the juridical advantage that English jurisdiction offers legitimate, in circumstances where the law of the seat of the arbitration takes a different view.

I have in mind Lord Mustill’s repeated urging in Channel Tunnel of the need to be cautious. I also have in mind the concerns of the DAC report to avoid any conflict or clash, in particular a conflict or clash with the court of the seat of the arbitration. In the light of the evidence that I have received in relation to French law, I consider that England is not the proper forum and that this court should not grant the interim ASI and AEI that SQD seeks.

I have reached that view in two complementary ways. The first is that to grant an interim ASI would be inconsistent with the approach of the courts of the seat of the arbitration and (therefore) with the curial law that applies. This court should have deference to the approach of French law. To do otherwise would or at least might give rise to a conflict or clash.

The second is that the court should also have deference to the objective intention of the parties. The parties deliberately chose Paris as the seat of the arbitration. They must be taken to have done so knowing that the French courts will not grant ASIs. I do not accept as realistic the suggestion that the selection of English law as the governing law indicates an intention that there might be an application to this court, despite the express selection of a French seat.

In some countries, ASIs are readily available to support arbitration. In others, they are not. Each country is free to form its own policy on this point. Similarly, contracting parties are free to arbitrate where they like. If the parties choose to arbitrate in a country such as France, where the policy is that ASI will not be granted and will not generally be enforced, this court should acknowledge the significance of these circumstances. Vive la différence.

It is generally right for the courts of England and Wales to support arbitration in this jurisdiction. It is not the job of the courts of England and Wales to support arbitration in France by granting ASIs, given the fundamentally inconsistent approach in France on whether such support is appropriate or desirable. Indeed, it seems that the support of this court would be unwelcome.

In reaching this conclusion, I note that Lord Mustill appears to have held similar views: see Channel Tunnel at p. 368E-G.

The point that has made me pause longest is that based on Spiliada – i.e., that it would be a virtue, not an insult, for this court to step in where the French courts cannot. The best way of developing that point (I think) would be that, while it is true that the parties have chosen French law as the curial law/law of the seat, they have also chosen to adopt the ICC Rules – which (as I understand it) permit the arbitrators to grant conservatory and interim measures, including ASIs. The French courts cannot grant ASIs, but the arbitrators can (including an emergency arbitrator). Accordingly, even if French law objects to ASIs, the parties do not. All SQD is seeking is an interim ASI to maintain the status quo until the ICC arbitrators can take over and grant their own ASI.

This approach assimilates an ASI granted by this court to one granted by the arbitrators, on the basis that the injunction I am asked to me is an anticipatory and temporary version of the relief that will in due course be given by the arbitrators.

I consider this a false equivalence. There are real differences between orders granted by courts and those made by arbitrators – which is why parties are often astute to ask for relief from the court, where they can find a way to justify this. Above all: court orders are backed by the coercive powers of the state; arbitrators’ orders are not.

This is exemplified by the draft order presented to me by SQD. Prominent on its front page is a penal notice, which threatens the recipient with being held in contempt of court and being fined or having assets seized. The ultimate penalty is imprisonment. This is exactly what the French system regards as unacceptable. The fact that the parties have agreed to the arbitrators being able to make orders for interim measures does not mean that they have implicitly accepted the availability of a court order such as that presented to me in draft.

Ultimately, therefore, I therefore am unmoved by this point and by SQD’s other arguments. SQD’s application is dismissed.

The Court of Appeal reversed and completed the analysis itself. It held that France does not so much have a philosophical objection to ASI, rather lacks the procedure to grant it. [32]

Bright J was hampered by having limited evidence of French law whose import was far from clear, and it is not perhaps surprising that he read that evidence as suggesting that French law had a philosophical objection to the use of ASIs, even to the extent of countenancing an anti-ASI injunction. But the evidence before us, as can be seen, is to a different effect. It is that although a French court does not have the ability to grant an ASI as part of its domestic toolkit, it will recognise the grant of an ASI by a court which does have that as part of its own toolkit, provided that in doing so it does not cut across international public policy.

That last bit is not in fact different from Bright J’s suggestion I believe.

[34] ff Nugee LJ first considers the jurisdiction of the E&W courts. [36]

…It is natural to regard the grant of an ASI to restrain proceedings brought in breach of an arbitration agreement as intimately connected with the arbitration (whether already on foot or proposed), and one can point to statements of high authority to the effect that where the seat of the arbitration is in England, the practice of the English court in readily granting ASIs is part of the “supervisory” or “supporting” jurisdiction of the English court: see, for example, West Tankers Inc v Ras Riunione Adriatica di Sicurtá SpA (The Front Comor) [2007] 1 Ll Rep 391 (“West Tankers (HL)”) at [21] per Lord Hoffmann; and Enka at [174] and [179] per Lords Hamblen and Leggatt. At first blush it might be thought to follow that the natural (and hence “proper”) place in which to bring any claim for an ASI would be the courts of the seat of the arbitration, and hence that where the seat is not in England, England is not the proper place for such a claim.

But he then [37] refers to Briggs LJ’s speech in Vedanta, and his mentioning of

that the task of the Court is to “identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice”.

[38]

There is no difficulty in identifying what English law regards as required by “the ends of justice” in a case such as the present. It is the policy of English law that parties to contracts should adhere to them, and in particular that parties to an arbitration agreement, who have thereby impliedly agreed not to litigate elsewhere, should not do so. The English court, faced with an English law governed contract containing a promise by a party not to do something and a threat by that party to do the very thing he has promised not to do, will readily and usually enforce that promise by injunction.

(reference ia to Enka).

1. 1. 1. The only claim in the present case is a claim for interim injunctive relief based on these well-established principles of English law. Such relief, regarded by English law as a valuable tool to uphold and enforce the arbitration agreement, can only in practice be obtained in England and not in France. Bright J, as explained above, thought, on the basis of the evidence before him, that that was because French law had a philosophical objection to the grant of ASIs. The evidence before us is to a different effect and strongly suggests that while French law does not have the ability to grant an ASI as part of its procedural toolkit, it has no objection in principle to (and will recognise) the grant of an ASI by a court which can by its own procedural rules grant one, at any rate where the basis for the ASI is the parties’ contractual agreement to submit disputes to a particular forum.
      2. In those circumstances it seems to me that the forum in which the claim for an interim ASI can be suitably tried for the interests of all the parties and for the ends of justice is the English court, on the simple basis that such a claim cannot be given effect to in France. I do not think it necessary to consider what the position would have been had Bright J’s understanding been correct – that is, if the French court would regard the grant of an ASI by the English court as inappropriate and unwelcome – which raises questions of some difficulty and on which we have heard very little argument. On the position as it appears to us, the choice is between the English court where an ASI can be granted and a French court where it cannot, not because of any hostility to the concept, but because of a lack of domestic procedural rules permitting them. Since it is not to be supposed that DB would take the futile step of applying to a French court for an ASI which it has been repeatedly and clearly advised the French court cannot grant, the real choice is not between two competing forums, but between the English court entertaining the claim and the claim not being brought at all. Seen in this light, I would hold that the English court is indeed the proper place to bring the claim. I would therefore grant DB permission to serve the claim out of the jurisdiction.

Having decided on the existence of ASI jurisdiction, only two paras are then spent to conclude that one must so granted in the circumstances, along with an anti-enforcement injunction AEI should a judgment be obtained in any Russian proceedings.

Compare nb also Commerzbank AG v RusChemAlliance LLC [2023] EWHC 2510 (Comm), and see Unicredit Bank GmbH v Ruschemalliance LLC [2024] EWCA Civ 64 which overturned G v R (In an Arbitration Claim) [2023] EWHC 2365 (Comm) and which is notable because here the ASI is final rather than interim and uncontested.

Note not everyone is happy with the E&W cours becoming the world’s ‘arbitral policeman’ – however the underlying contract being one with English law as the lex contractus would seem to be emerging as a natural boundary to the English courts’ intervention.

Geert.

Comparative CPR claxon
Successful appeal of https://t.co/NSvc3DfxVI
Anti-suit injunction granted
Considers ia France not so much having philosophical objection to ASI, rather lacks procedure to grant it
Deutsche Bank v RusChemAlliance [2023] EWCA Civ 1144https://t.co/sclNF45Ape

— Geert Van Calster (@GAVClaw) October 12, 2023

I am currently trying to have the Leuven conflict of laws students appreciate Article 7(1) Brussels Ia’s looking over the fence aka conflicts method. On Thursday we shall be reviewing CJEU Tessili v Dunlop and I wonder how many of the students will have seen this post (I am guessing perhaps 2 or 3 out of the 540 in class) for it might help them appreciate the exercise.

For contracts not caught by one of the passe-partout contracts listed in Article 7(1)b, per inter alia Jaaskinen AG (as he then was) in Cormans Collins, the CJEU Tessili v Dunlop formula still applies:  in the 4th ed of the Handbook 4.424 I put it like this

“For each specific obligation (later, as noted, subject to the Shenavai ‘principal obligation’ correction) the court(s) seised would establish ‘place of performance’ and hence jurisdiction on the basis of its own, residual private international law rules for applicable law. It applies its choice of law rules to determine which law governs the contract, and then uses that law to specify the place of performance, ultimately ruling whether it itself has or does not have jurisdiction, or has jurisdiction over only part of the claims. This is referred to as the ‘conflicts (of laws)’ method for deciding jurisdiction, also known as ‘looking over the fence’, seeing as the court looks over the fence between jurisdiction and applicable law in order to decide jurisdiction on the basis of applicable law. Per Tessili v Dunlop (para 13):

[the national court] must determine in accordance with its own rules of conflict of laws what is the law applicable to the legal relationship in question and define in accordance with that law the place of performance of the contractual obligation in question.

Prior to the 1980 Rome Convention, later the Rome I Regulation (see chapter three on applicable law for contracts), there was no harmonisation on deciding applicable law for contracts. This meant that, depending on which court is seised, the result of the looking over the fence exercise could and did have very different outcomes. (Even the Rome I Regulation, however (even more so under the Rome Convention), has gaps in its harmonising approach to the applicable law identification exercise, as I discuss in chapter three.)”

In current case, the agreement is one for the loan of a sum of money between a father and a son, albeit for an interest rate of 5% pa. Repayment of amounts due is now being pursued by a sibling, following the death of the father.

While loan agreements in the professional context arguably are services within A7(1)(b), in a family or friendship context arguably they are not. The Dutch court in current case [2.8] without expressing the family context issue follows Butcher J in Winslet & Ors v Gisel [2021] EWHC 1308 (Comm). As in Winslet, the court here then invited the parties (in an interlocutory judgment) to clarify their position on the conflicts method.

A first stop is Article 3 Rome I because the pursuing sibling argues [2.10] implicit choice of law was made for Dutch law.

The judge further points parties to Article 4(2) (the agreement not being covered by any of the default categories of Article 4(1) Rome I) Rome I’s

Where the contract is not covered by paragraph 1 or where the elements of the contract would be covered by more than one of points (a) to (h) of paragraph 1, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence.

and holds [2.11] that the characteristic performance in a loan agreement is carried out by the party loaning the sums. Defendant then argues that the father’s habitual residence at the time of the loan was in Sweden, making Swedish law the lex causae and leading to that law having to determine the place of performance for the purposes of A7(1). Claimant argues the father had already moved to The Netherlands.

In the later judgment once the further arguments of parties received, the judge refuses to entertain the question of implicit choice of court, seeing as the validity of a crucial document is uncertain, but does hold that the father was habitually resident in The Netherlands. Under Dutch law, the retained lex contractus, the payment of a sum of money owed to another, needs to be carried out at the creditor’s domicile at the time the payment is due. Claimant’s domicile (like the defendant’s) being in Sweden, that is where the forum solutionis is located.

Fun with conflicts….

Geert.

EU Private International Law, 4th ed. 2024, 2.424.

Gr8 example of looking over the fence, CJEU Tessili v Dunlop to determine forum contractus, loan agreement
Interlocutory ruling inviting parties' arguments on implicit choice of law A3 I and /or default lex contractus A4 Rome I
1st instance Den Haag, X v Y https://t.co/q850EHBjEe

— Geert Van Calster (@GAVClaw) March 12, 2024

Thank you very much confrère Lucian Ilie for sharing copy of the hitherto unreported Thomas Hilton Matthews v Mutuelle Assurance des Commercants et Industriels de France [2023] EWHC 2175 (KB) – Matthews v MACIF for short.

Maître Ilie successfully secured a High Court judgment (Ritchie J sitting on appeal) overturning registration with a view to enforcement under Brussels I (old: Regulation 44/2001) of a Paris Court of Appeal 2 April 2013 judgment, as his chambers report here.

The summons for the Court of Appeal proceedings (as Justice Ritchie’s judgment sets out in detail) had not reached Mr Matthews due to his return to England and the subsequent judgment, reducing an earlier pay-out (which had already been transferred to Mr Matthews) by insurance company MACIF for his injuries etc following collision with a car whilst cycling, was issued in his absence. MACIF unsuccessfully attempted to serve the Court of Appeal judgment on Mr Matthews at his previous location in France, and for 9 years no contact with the Matthews’ in England was made. (From the witness statements Ritchie J accepted that the fact that a copy of the judgment was left with Mrs Matthews’ father in France was not mentioned to the couple, let alone received). MACIF in June 2022 then obtained an Annex V Brussels I certificate of the judgment (which only mentioned that the amount to be paid out to Mr Matthews was now ‘less favourable’, without mentioning numbers) and waited another 9 months before seeking ex parte (judged by Ritchie J [34] to be ‘not right or fair’ in the circumstances) registration of the judgment in England, in language [34] not reflecting any of the background to the case and unlike the Annex V certificate, mentioning an exact amount. The application was granted.

Upon appeal the questions agreed [9] by parties were summarised by the judge as follows [10]

(1) Service: Was the Appellant sufficiently served with notice of (1.1) the start of the appeal and (1.2) the Paris Judgment, such that he could defend the appeal from the Tribunal Judgment and/or appeal the Paris Judgment?

(2) The EC Regulation: Is the Order made by the Master one which he was entitled to make in the light of the assertions that:

(2.1) it does not match the wording of the Annex V certificate summarising the Paris Judgment, the words of which made the Respondent the judgment debtor, not the Appellant and did not order any sum to be paid by the Appellant to the Respondent;

(2.2) the Appellant has recently appealed against the Paris Judgment so is it currently enforceable? The Appellant asserts that the Paris Judgment is a default judgment and not enforceable due to non-service;

(2.3) the Appellant asserts that the Respondent does not have an interest in the Paris Judgment as a creditor and that the Appellant was not ordered to pay anything;

(2.3) (sic) for public policy reasons due to the behaviour of MACIF it should not have been registered.

On the issue of service Ritchie J refers to first instance English judgments which however are backed up by continental scholarship and some indications in CJEU authority: the procedural rules of the lex fori are an indication of valid service but not decisive, and taking into account other points of departure listed [43], he holds that service was not valid, hence triggering Article 34 Brussels I, now Article 45 Brussels Ia (not materially different for the case at issue): lack of service in the Member State of origin shall (not just may) lead to refusal of recognition.

Obiter, the judge also refuses recognition on four more grounds

on form: the presentation of the foreign judgment was obiter held [49] to have amounted to re-writing;

seeing as the Paris Court of Appeal judgment is no longer enforceable in France pending the Mathews’ now launched appeal, it cannot be enforceable in the UK either [50];

[51] MACIF is not a judgment creditor under the Paris judgment: that judgment reduces the amount which Mr Matthews is to receive however it does not directly at least hold title for MACIF to receive payment from Mr Matthews;

[52] the delay in seeking enforcement causing substantial prejudice to Mr Matthews, the unfaithful transcription of the Annex V certificate, the insufficient efforts to locate Mr Matthews; the registration proceedings in E&W which really should have been conducted inter partes  also would have led to a refusal on ordre public grounds.

A rare and extensive Article 34 BI/45 BIa discussion and for that alone, of much note.

Geert.

EU Private International Law, 4th ed. 2024, 2.600 ff.

Emiliou AG opined the day before yesterday in C‑339/22 BSH Hausgeräte GmbH v Electrolux AB. I flagged the case and discussed its context here.

The case in essence concerns two issues: the extent of the exclusive jurisdiction of the Article 24(4) court in infringement (as opposed to direct invalidity actions); and the question whether A24 works reflexively: ie whether the surrender of jurisdiction should also be applied in cases where the A24(4) court is not in an EU Member State.

The AG’s extensive contextualisation has the merit of summarising established authority on Article 24(4). This allows the AG for instance to reflect on the oddity of GAT v Luk. Despite the ‘object of the proceedings’ often being infringement of intellectual property rights, the CJEU held in that case that the moment the validity of the patent (or other relevant intellectual property rights) is at issue, exclusive jurisdiction of the A24(4) court is triggered. The CJEU rather unsuccessfully attempted to justify the distinction with its approach on the remainder of A24 eg in CJEU BVG.

The AG justifiably signals his disapproval with the fall-out of the GAT v Luk authority, seeing ia that (54)

the judgment in GAT makes the consolidation of infringement claims concerning the different ‘parts’ of a European patent before those courts an unattractive option. It encourages patent holders to start separate proceedings in the various States of registration of those ‘parts’ instead, since, at least, it is certain that the courts of those States are competent to rule on both the infringement and validity of ‘their part’ (as explained in points 26, 28 and 29 above). This creates, in turn, a risk that different courts take contradictory views on the same infringement dispute.

Also note (59) the strong rebuke of the GAT v LUK line in terms of the very nature of private international law

…such considerations do not reveal why, with respect to proceedings concerned with the registration or validity of patents, those courts should have jurisdiction to the exclusion of all others. In particular, the patent law of the State of registration is not so unique that only the courts of that State would have the ability to comprehend it. While it may be harder for them to do so, the courts of another Member State are perfectly capable of applying such a foreign law. To imply the contrary would be tantamount to questioning the very foundations of the Brussels regime (and the entire field of private international law). …

Ia (64) the AG however points out that unfortunately any call for the CJEU to reverse is futile seeing as Brussels Ia has codified it.

The extent of the exclusive jurisdiction of the Article 24(4) court in infringement proceedings.

Ia (37) the remaining unclarity therefore lies in the GAT v Luk consequences. National practice varies. Some courts practice a stay of the infringement proceedings until the A24(4) court holds on validity, and then insist on a return to the ‘infringement’ court: the “narrow reading” of GAT v LUK. Others carry out a complete referral of the case, including infringement, to the A24(4) court: the “broad” reading”.

In both of these scenarios the stay or referral decision is precarious (73) for there is no procedure under EU law for such referral or mutually respected temporary stay: there is no guarantee the court referred to will act as the first seized court might prefer.

The AG is in favour of the narrow reading: (69) this fits with the exceptional nature of A24; (71) it serves predictability (an echo of A24(2) in BVG): in the broad reading the reach of the jurisdiction of the court seized would depend on the invalidity  raised or not raised as a defence; (73) the possibility under national civil procedure rules to raise an invalidity defence even for the first time upon appeal would lead to a constant threat of torpedoing and once the proceedings stayed, the court first seized loses all grip on the claim and (74) by the time the case returns at all, claimant’s case in infringement proceedings started afresh may meet with statutes of limitation.

(77) ff bifurcation or as the AG calls it the ‘split’ in the proceedings is far from ideal, as (78) is the general implication of GAT v LUK that it forms an exception to the principle that points of defence ought not to impact on jurisdiction, or the reliance on national CPR, the delays etc. Yet the AG calls this route even if ‘less than ideal’, the ‘lesser of two evils’.

He then offers practical guidelines, seeking to give these a foundation in (88) the TRIPS Agreement, the finding in CJEU C‑365/88 Hagen that national CPR must not impact the effet utile of EU law, the TRIPS Agreement, Directive 2004/48, on the patent holder side the right to an effective remedy and, on the alleged infringer’s side, the rights of defence, both protected under Article 47 of the Charter.

(92) the AG suggests in particular that courts should only consider granting a stay where that challenge has a genuine prospect of success (taking into account the presumption of validity following the patent office’s assessment).

In general I have much sympathy for the AG’s narrow reading of GAT v LUK (and one would have hoped the review of Brussels Ia might trigger a proposal to solidify it in the Regulation). I am also genuinely curious to see how far the CJEU will go in picking up some of the guidelines.

The reflexivity issue.

The CJEU 3 judge chamber in IRNova f FLIR was very brief on this question and answered it promptly in the negative. The AG (97) agrees the answer is obvious in the sense that BIa cannot instruct third States courts to hear specific cases.

Unlike the AG however in my view the answer to the question that ‘in essence’ (98) is implied (whether A24(4) deprives Member State courts of the power to adjudicate the validity of third-State patents in the same way that those courts are deprived with respect to patents registered in other Member States) is, rebus sic stantibus, also obvious. Namely that unless the conditions of Articles 33-34 (the forum non conveniens “light” regime) are fulfilled, Article 4 domicile jurisdiction simply stands. Or as the Commission puts it (113), the Courts are “bound” to exercise A4 jurisdiction save in a narrow set of circumstances (i.e. the A33-34 set).

The AG (108) refers to IRNova to suggest A24-25 BIa cannot apply, as such, to dispute having connections of the kind envisioned therein with third States.

The AG posits ia that (117) BIa was not designed to take into account circumstances such as these and that the CJEU therefore should fill the gap. First of all I believe this is incorrect. A4 BIa arguably is a well documented express policy choice to accept EU courts jurisdiction in principle even over matters prima facie strongly linked with territory etc out off the EU. Further, that only A33-34 (and then only in the recital of the Regulation) entertain the possibility to take into account exclusive non-EU courts jurisdiction is a very strong a contrario statutory argument against CJEU freewheeling. The suggestion (118) borrowed from Briggs and Mills that “nothing in the wording of those provisions or in the related recitals indicates that they are meant to regulate exhaustively the possibility for Member State courts to decline jurisdiction in favour of the courts of third States”, echoes Ferrexpo and  imho is simply wrong, and neither Coreck Maritime (121) nor Mahamdia (122) have displaced Owusu.

The AG’s link (128) to public international law and the general appeal of the Moçambique rule are interesting but really just to remote in my view from Brussels Ia’s travaux and statutory provisions and the AG does not I believe properly present A33-34’s travaux or intention (139) ff.

The “implicit derogation from the mandatory effect of Article 4(1)” BIa which the AG posits (147) ff for both A24 and A25 (choice of court) jurisdiction, even construed as a “narrow discretion” (159) ff, is a most optimistic view on inviting the CJEU to rewrite Brussels Ia.

In conclusion, while the CJEU is likely to follow the AG on the narrow reading of A24(4), I would wager it will succinctly reject the arguably contra legem reflexive effect construction. But then as I have said before, I am not a betting man.

Geert.

EU Private International Law, 4th ed. 2024, 2.217 ff.

1/2 ! Emiliou AG on 'reflexive effect' of exclusive jurisdictional rule (EU courts declining jurisdiction where third States would have had exclusive jurisdiction, had they been in the EU)https://t.co/naD1t51NQb
C‑339/22 BSH Hausgeräte

— Geert Van Calster (@GAVClaw) February 22, 2024

In Various parties obo minors v Anglo-American South Africa Limited and Others (2020/32777) [2023] ZAGPJHC 1474, the High Court of South Africa has refused to certify two class actions against Anglo American South Africa Limited (‘Anglo’). The proposed class action seeks monetary compensation for two classes from the Kabwe district in Zambia, who have been injured by lead exposure: children and women of childbearing age.

Kabwe is the capital of the Zambian Central Province and home to 225 000 people. Members of the proposed classes are estimated to make up approximately 140 000 members of this population. Kabwe is one of the most lead-polluted locations on the planet.

If forum non conveniens is now a classic hurdle for these kinds of cases in England and Wales (watch this space however for Lugano developments), then class certification presents itself in this judgment as a hurdle to an issue that in my view certainly should go to trial.

Windell J sets the scene [12]: (all footnotes in the quotes from the judgment have been omitted)

The application is unique. The applicants, who are citizens of Zambia and peregrini of this court (i.e, people neither domiciled nor resident in South Africa), are seeking redress in a South African Court, for a wrong committed in Zambia. They seek to hold Anglo liable for lead pollution that occurred during its involvement in the Mine from 1925 to 1974, beginning and ending 97 and 47 years ago respectively (the relevant period). The applicants’ cause of action is based on the tort of negligence. The parties agree that Zambian law will govern the substantive issues (the lex causae) and procedural matters will be governed by South African Law — the lex fori (the domestic law of the country in which proceedings are instituted).

[13] the main points of enquiry under Zambian law are laid out (and agreed)

The Zambian law mirrors the relevant English common law principles, which is part of Zambian law by virtue of section 2(a) of the English Law (Extent of Application) (Amendment Act 2011, Chapter 11). This means that English common law principles form part of Zambian law and are binding on Zambian courts, whereas the decisions of English courts are highly persuasive, even though not absolutely binding. Mr Musa Mwenye SC, the former Attorney General of Zambia, and the applicants’ Zambian law expert, opines that in deserving cases, Zambian courts may depart from English decisions if there are good and compelling reasons to do so but will not depart from established principles. The elements of the tort of negligence are therefore well-established. The Zambian Supreme Court has held that it requires proof of a duty of care; a breach of that duty through negligent conduct; actionable harm; a causal connection between the negligent conduct and the harm, involving both factual and legal causation; and damages.

[15] the criteria for the class action enquiry under South African law are listed:

In determining whether a class action is the appropriate procedural vehicle for the claims, the overarching requirement is the interest of justice (See Mukkadam v Pioneer Foods (Pty) Ltd. In Trustees for the time being of Children’s Resource Centre Trust and Others v Pioneer Foods (Pty) Ltd and Others (CRC Trust) the Supreme Court of Appeal (SCA) identified certain factors to be considered. First, there is a class or classes which are identifiable by objective criteria; Second, a cause of action raising a triable issue; Third, the right to relief depends upon the determination of issues of fact, or law, or both, common to all members of the class; Fourth, the relief sought, or damages claimed, must flow from the cause of action and be determinable and ascertainable; Fifth, if the claim is for damages, there is a suitable procedure for allocating the damages to members of the class; Sixth, the proposed representatives of the classes are suitable to be permitted to conduct the action and represent the class; Seventh, a class action is the most appropriate means of determining the claims of class members, given the composition of the class and the nature of the proposed action.

[19] the conclusion is summarised:

Anglo opposes the application on various grounds. Some of the grounds are valid, while others are not. Hence, I will commence with the three issues that do not pose an insurmountable obstacle to the certification of the class action. They are:  Suitability of the class representatives; Commonality and the Funding Agreements. Following that, I will then determine whether there is a cause of action raising a triable issue, which aspect, in my view, is fatal to the application. Finally, I shall discuss ‘Anglo’s alternative case’ which includes the damages claims, the suitability of an opt-out procedure and the class definitions.

In this blog post, in line with the blog’s general interests (here: the business and human rights angle), I will focus on the ‘triable issue’ analysis seeing as it engages with quite a few cases previously reported on the blog.

I do however also want to draw readers’ attention to the discussion [44] ff of the funding arrangements in light of my research grant (and also here) (research now conducted by Charlotte de Meeûs), with as conclusion

[81] As remarked in the interlocutory application, this court, ‘as the guardian of the child’s best interests, has a heightened duty to scrutinise the funding arrangements. Because the purported claims of thousands of Zambian children may be rendered res judicata by an action in a foreign jurisdiction, it is the duty of the court to ensure that these claims are adequately pursued by way of funding arrangements that are not only sufficient, but that do not deliver extortionate profits for third party funders at the cost of the children and that insulates the classes and their lawyers from undue influence from Kabwe Finance.

[82] Anglo’s concerns are without merit because the necessary safeguards developed by our class action jurisprudence have been built into the proposed funding arrangements. First, the applicants have provided detailed disclosure of the funding arrangements, which is without a doubt among the most detailed and transparent disclosures of any class certification proceeding to date. Second, the terms of the relevant funding agreements are explicit that neither the funder nor LD will exercise control over the case, which is to be conducted by MM on the instructions of the class representatives. Third, the applicants are represented by experienced attorneys and independent advocates who are bound by ethical rules to represent the interests of their clients.

[83] Fourth, the funder is part of the Augusta Group, a leading third-party litigation funder with a well-established track record and reputation. That reputation creates its own safeguard. Abuses and underhanded dealings, of the kind that Anglo alleges, would be disastrous to its professional standing and credibility with the courts. Fifth, the funder is bound by the Association of Litigation Funders’ Code (ALF), which explicitly prohibits funder control of litigation and other abuses. AVL is a member of the ALF and the Code’s requirements have been explicitly incorporated in the Claim Funding Agreement, thereby making them contractually binding on the funder.

[84]       Anglo’s attempt to characterise the Code as inadequate protection ignores the history and significance of the Code, as well as the weight it has been given by courts in England and Wales. The significance of the Code was recently explained in Akhmedova:….

[85]       Sixth, the applicants are protected by the provisions of the CFA, particularly s 5 which gives them the right to seek the review of any terms of the contingency fee agreement and the fees. Seventh, in response to Anglo’s repeated claims that the settlement will be hijacked by funders and lawyers to the detriment of the class, applicants and prospective class members are afforded two critical layers of protection: If the class representatives object to any settlement proposal, they may refer a dispute to an independent senior counsel, in terms of the dispute resolution mechanisms in the Claim Funding Agreement. And the applicants and class members are further protected by the court, as the parties would have to seek judicial approval of any settlement, in terms of the procedures approved in the Nkala settlement judgment

 

On the applicants’ case for there being a ‘triable issue’, [86] ff

applicants seek redress in a South African court on the basis that Anglo was the parent company and head office of the Anglo group that oversaw, managed and/or advised the Mine from its headquarters in Johannesburg, within the jurisdiction of this court, during the relevant period. It is asserted that Anglo exercised control over the Mine through an ever-changing set of subsidiaries, and although its organisational structure is quite complex, the Mine was firmly a part of Anglo’s ‘group system’….

applicants contend that the question of whether and when a multinational parent company owes a duty of care in respect of the actions of a foreign subsidiary is well-settled in English law, and they are confident that there is sufficient evidence to prove that Anglo owed a duty of care to the members of the classes.

Applicants refer ia to Vedanta and Okpabi.

[89] even Anglo’s expert on English law is of the opinion that ‘an English court would likely determine that the duty of care alleged in the draft POC together with its supporting affidavit raises a real issue to be tried’. He further stated that ‘[I]t will be a question of fact and degree whether or not the evidence adduced demonstrates a sufficient level of knowledge, control, supervision and intervention for the purposes of attaching legal responsibility.’

[90] ff the case for the applicants is further explained: that over the course of its almost 50-year involvement in the Mine’s affairs, Anglo negligently breached its duty of care by, inter alia, failing to conduct the necessary investigations on the impact of lead pollution on the surrounding communities by taking common sense measures, such as long-term sampling of air, water, soil and vegetation and monitoring the health impacts on the local communities in Kabwe [91]; Anglo’s negligence therefore caused or materially contributed to the existing levels of lead pollution in Kabwe and the resulting actionable harm. It is alleged that Anglo acted negligently in at least five material respects: it failed to investigate; it failed to protect; it failed to cease and relocate; it failed to remediate; and it failed to warn [92].

The judge however sides with Anglo’s arguments, outlined [98] ff. In effect Anglo lays all blame with ZCCM, ‘the obvious culprit’ [100], a Zambian state-owned entity and its predecessors in title who it is said at all times from 1905 to 1994 owned and operated the Mine.

Anglo also refer to the Zambia state-controlled Nchanga Consolidated Copper Mines Ltd (NCCM), established January 1970. It argues [105] that following the closure of the Mine in 1994, and in accordance with Zambian legislation enacted in 2000, ZCCM retained all historical liabilities associated with the Mine. It held the legal responsibility to address the environmental and health impacts on Kabwe residents and became responsible for the remediation and rehabilitation of the Mine. In the 2000s, the World Bank and the Zambian government attempted on multiple occasions to assist ZCCM in remediating the Mine’s surroundings. These efforts it is said are ongoing, but they have been largely unsuccessful to date.

[106] Anglo argue that ZCCM’s negligence and omissions is an unforeseeable intervening event (novus actus interveniens), that absolves Anglo of all liability.

 

The test at certification stage is “not a difficult hurdle to cross” ([113], with reference to authority) yet Windell J concludes the case is both factually and legally hopeless.

“Factually hopeless” 

[117] ff the judge takes issue with applicants’ so-called ‘Broken Hill attitude’ in support of their argument against Anglo. In doing she, she focuses it seems on the much troubled history of Broken Hill, NSW. Australian readers and students of mine sadly will be very familiar with that name and with the 1893 report.

In essence, the judge dismisses relevance of the 1893 Report [120] referring to the unlikelihood, in her view, of Anglo’s knowledge of the report:

Anglo was only established in 1917. There is not any evidence that the Report came to the attention of Anglo at any point (including between 1925 and 1974). The applicants do not explain how an entity, established 24 years after the Report was published, located in a different country and on a different continent, and in an age of basic forms of communication technology, came to know of this Report. In these circumstances, it cannot be suggested that Anglo had knowledge of the harms set out in the Report.

And [121] the judge refers to alleged levels of nuance in the report.

Applicants’ suggestion [119] that Anglo knowing of the issues will be further established following discovery and further research is not further entertained. That would seem an extraordinary lack of engagement with the evidence. All the more so as it would seem that applicants’ reference to a ‘Broken Hill attitude’, which the judge dismisses, is not their shorthand for a particular safety attitude linked to the NSW mine and the 1890s reporting. Rather a reference to an internal Anglo document commissioned in the 1970s with the very title ‘Broken Hill attitude’, that is: Broken Hill, Kabwe. The ‘attitude’ of lack of regard, and of neglect, is one that is signalled in an internal Anglo document, not catch phrased by applicants.

Anglo’s novus actus interveniens argument referred to above, prima facie sits uneasy with the material contribution element of the law of causation and simply cannot be dealt with at this interlocutory stage.

The judge moreover arguably overlooks applicants ‘modicum of common sense’ [119]. It is, with respect, absurd to suggest there is no prima facie proof of Anglo’s historic knowledge of the harm of lead and more specifically knowledge of harm to the historical Kabwe community. Knowledge of the “adit to alloy” so to speak harm associated with all aspects of lead is historically exceedingly well established. Anglo’s approach to it at a mine in which it was clearly involved for a long period, cannot be readily dealt with at certification stage.

The judge concludes [128] that before the early 1970s, there is no evidence to imply that Anglo was specifically aware of the risks that lead pollution posed to the historical Kabwe community.

The contentions and counterarguments about what ought to have taken place from an engineering point of view to mitigate the risk, in my view are to be discussed at trial, not at certification stage, and the judge’s suggestions [134] ff that at trial applicants would not fair better would seem to exceed the prima facie level required at certification stage (as well as sitting uneasily with the Supreme Court finding in Okpabi).

 

“Legally hopeless”

[145] ff the applicants’ legal arguments, too, are held not to be sufficient in most succinct manner. In essence, the judge dismisses the relevance of ‘current’ authorities such as Vedanta etc. She distinguishes it as follows [148]

to establish that Anglo owed a duty of care 50 years and more ago to the proposed class members currently living in the Kabwe district, this court must be satisfied that there is prima facie evidence to find that between almost 100 and nearly 50 years ago, Anglo must have foreseen that the current community, not the historical community, would suffer harm from lead released into the environment by the Mine during the relevant period.

Relevant authority in the judge’s view is rather Cambridge Water [1994] 2 A.C. 264.

One imagines English tort lawyers will have a lot to say on the most concise (8 paras) discussion of the common law duty of care authority, that leads the judge to her finding that the case is legally untenable.

 

I understand permission to appeal is being sought, as it should.

Geert.

The judgment denying class certification in claim against Anglo American on behalf of Zambian claimants re lead pollution in Kabwe, Zambia is now here https://t.co/N9m9HEZZih

Appeal likely

Held [117] ff case is factually and legally flawed
More on the blog soon (eg re funding) pic.twitter.com/tF9kojek7A

— Geert Van Calster (@GAVClaw) January 31, 2024