GAVC

There is a gale force wind out there and the girls and I are housebound: so I thought I’ld clear the blog queue a bit. It is generally not good practice to post poorly drafted choice of court provisions yet once in a while it helps illustrate what I often say in class: that even in sophisticated contracts, choice of court and -law provisions can be drafted extremely sloppily.

Tradin Organic Agriculture BV v Gold Grain [2024] EWHC 1562 (KB) is such an example. It is an application for set-aside of a default judgment (I will not focus here on the issue of jumbled papers in the service of the claim form).

On 31 October 2019 Tradin and Gold Grain entered into a five-year exclusive supplier agreement (“ESA”). Tradin made Gold Grain their exclusive supplier of certain products from certain areas. Tradin then entered into a series of loan agreements with Gold Grain, the first to finance the purchase of a processing facility (the Mersin facility) and then five pre-finance loan agreements (“the loan agreements”). The repayments for the loan agreements were made by way of the goods supplied with a backstop that all the sums would be payable within 12 months of the date of the agreement. The goods were supplied under a series of purchase agreements.

The ESA was governed by English law. There is no jurisdiction clause. The Mersin agreement was governed by Swiss law and was subject to an arbitration agreement. The purchase agreements contained a Dutch choice of law clause.

The loan agreements contained the following clauses:

“Governing law: Submission to Jurisdiction

(a) This loan agreement and the obligations of the Borrower [Gold Grain] shall be governed by and construed in accordance with the governing jurisdiction of law in English law with the exclusion of the Vienna Sales Convention…

(b) The Borrower also agrees not to bring any action or other proceeding with respect to this loan agreement or with respect to any of its obligations in any other court unless such courts determine that they do not have jurisdiction in the matter”

(Note the exclusion of the CISG just to be sure: English law does not include it anyways).

Application to set aside judgment in default is brought on three grounds: (i) service was defective because the particulars of claim were not verified by a statement of truth, (ii) Gold Grain has a real prospect of success in challenging the jurisdiction of the English court or alternatively, without prejudice to the jurisdictional challenge, that there is a real prospect of success in defending the quantum of the claim, and (iii) Tradin failed to satisfy the duty of full and frank disclosure in their application for default judgment.

Prima facie, first note the poor title of the clause. There is an amazing amount of contracts with ‘choice of court’ articles which merely contain choice of law, and vice versa, thereby giving the judge a window to hold on express, if implicit, choice of court or law. The second part is simply puzzling: Borrower may only bring claims to a court where such claim will be ineffective due to lack of jurisdiction?

Gold Grain’s position is primarily that they have a real prospect of arguing that the claim should be stayed either on forum non conveniens grounds or through case management powers due to the parallel proceedings in the Netherlands. [20]

In respect of the forum grounds, the argument is that the choice of law clause is choice of governing law not a choice of jurisdiction clause. Clause (b), set out at paragraph 8 above, is confusing and contains a double negative such that it is not possible to understand what the parties intended from the paragraph alone. Even if it does connote forum, it is not an exclusive clause. If it is not an exclusive jurisdiction clause, it is governed by common law. Whilst the English courts will give effect to an agreement to submit to their jurisdiction, the court has a discretion. It is submitted that in this case, the claim proceeding in the Netherlands is inextricably linked to these proceedings which, it is said, gives rise to risks of inconsistent judgments and England is not the proper forum as none of the parties have any connection to England. These arguments mean a forum non conveniens challenge has a real prosect of success or alternatively that the court should grant a stay under its case management powers.

[26] Master Sullivan holds

On the substantive jurisdiction issues, there is no real prospect of success, the title before the relevant clauses in the loan agreements in issue is “Governing law: Submission to Jurisdiction”. It is clear this is a jurisdiction as well as a governing law clause. The drafting is infelicitous but the meaning is clear. It is an asymmetric exclusive jurisdiction clause in favour of English courts.

That in my view is not at all convincing, Reminder, the clause reads

“Governing law: Submission to Jurisdiction

(a) This loan agreement and the obligations of the Borrower [Gold Grain] shall be governed by and construed in accordance with the governing jurisdiction of law in English law with the exclusion of the Vienna Sales Convention…

(b) The Borrower also agrees not to bring any action or other proceeding with respect to this loan agreement or with respect to any of its obligations in any other court unless such courts determine that they do not have jurisdiction in the matter”

The title of the clause is not that relevant and judges must look beyond it. Yet a) surely can only be read as choice of law in favour of English law; and for b) to be read as asymmetric choice of court, it would have to indicate which choice of court the lender is bound to; and it is difficult to overlook the incomprehensible double negative.

All in all this is one of these cases where parties’ fumbling in drafting cannot be rescued by a judge reconstructing what they might have meant. Despite the Etihad v Flóhter instruction that he approach to be adopted to construction is a “broad, purposive and commercially minded approach”, this clause in my view simply cannot be rescued.

Geert.

https://x.com/GAVClaw/status/1806216674548588748

I reviewed Richard de la Tour’s Opinion in C-526/23 VariusSystems digital solutions GmbH v GR Inhaberin B & G here. The CJEU held at the end of November, essentially following it and being very brief in doing so. The operative part of the judgment reads

The second indent of Article 7(1)(b) of Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters

must be interpreted as meaning that the ‘place of performance’ of a contract for the development and ongoing operation of software designed to meet the needs of a customer established in a Member State other than that in which the company that created, designed and programmed that software is established is the place where that customer accesses the software, that is to say, consults and uses it.

The Court [21] refers in particular to the European Commission’s submission that

With regard to a contract for the provision of software, such as that at issue in the main proceedings, it is necessary to find, in line with what has been set out by the European Commission in its written observations, that the design and programming of software do not constitute the obligation which characterises such a contract, since the service which is the subject of such a contract is not actually provided to the customer concerned until that software is operational. It is only from that moment, when the said software can be used and its quality can be inspected, that that service will actually be provided.

With respect, that is a nonsense. Is a banking service in the form of a loan (see CJEU Kareda) not provided until the money reaches my account and therefore becomes ‘operational’? Is my whisky merchant’s advice on single malt (see CJEU Maison du Whisky) not provided until I taste the malt with my own lips, hence ‘using the advice and inspecting it’?

This reference to use and inspection IMO is something the Court will come to regret: it is of very wide application and will undoubtedly upend the curt reference to BIa’s predictability [15]. The AG’s arguments were more focused and more convincing.

Geert.

EU Private International Law, 4th ed. 2024, 2.425.

https://x.com/GAVClaw/status/1862130498761310273

In Alame & Ors v Shell PLC & Anor [2024] EWCA Civ 1500 Stuart-Smith LJ delivered the unanimous judgment on the appeal against a range of procedural issues which I have previously discussed here. Judgments appealed are [2024] EWHC 510 (KB) and [2023] EWHC 2961 (KB)

The Rome II evidence and procedure issue which I signaled in my earlier post does not feature in the appeal.

Essentially the issue in the case is the extent to which claimants in litigation viz diffuse, often legacy pollution, need to show a causal link between their damage and individual acts of pollution. The stricter that requirement, the stronger the polluter’s get out off jail free card.

The first instance judge had ordered a ‘global claims’ trial. Stuart-Smith LJ [17]:

the concept of “global claims” originates in decisions of the English and Scottish courts concerned with the proof of causation in contractual disputes relating to delay or disruption in the course of building projects. In broadest outline, it allows that causation may be established by showing that a loss is caused by multiple events, for all of which the Defendant is responsible, even if the loss attributable to individual events cannot be identified. … [I]t is inherent in the concept of “global claims” that causation will not be established on this basis if a material contribution to the claimant’s loss is made by an act or event for which the defendant is not responsible: it is in that sense an “all-or-nothing” approach to causation and liability.

As claimants’ solicitors, Leigh Day, put it

Under a Global Claim, the Bille and Ogale communities would have had to prove that Shell was responsible for 100% of the pollution that has impacted their environment. If there were any other sources of pollution for which Shell was not responsible, the claim would fail entirely.

In response to an earlier order, each individual claimant was to advance an SOI or Schedule of Information. [24] each SOI

i) Identifies all of the particular spills that the individual claimant relies upon, with such precision as they are presently able to achieve;

ii) Indicates that they rely upon the VPOCs (the Voluntary Particulars of claim in regard of Causation); or

iii) Identifies one or more spills or possible spills without limiting their claim to those spills and while also relying on the VPOCs.

“Claimants explain their inability to provide further particularisation of their case on causation as being not least because of (a) the difficulties imposed by the migration of oil, which renders the attribution of damage to particular spills “invariably not straightforward and in many instances impossible without specialist expert analysis and assistance”; and (b) the Claimants being “members of a rural Nigerian fishing community with limited resources, a lack of expertise, and the absence of a contemporaneous record of the dates, locations and volumes of all spills which have occurred in Bille.” ” [23] further detail is given on some elements of the particulars of claim (POC): 

“7. For the avoidance of doubt, the Claimants do not advance a “global claim”. The Claimants’ position is that the principles described in construction law cases … have no application to their claims because, inter alia:

a. As a matter of English law, the concept of a global claim is unique to contractual disputes in the context of construction law, and it has no application to common law tort claims concerning environmental damage;

b. The claims are governed by Nigerian law and to the Claimants’ knowledge the concept of a “global claim” has never been referred to in Nigerian case law; and

c. The Claimants do not, and have never purported to, rely upon the concept of a global claim.”

(Point b, nota bene, is where Rome II comes in).

[30] Mr Richard Hermer KC (now attorney-general) had argued that further particulars would be given once the necessary disclosure obtained and once expert evidence procured. [31] the first instance judge, while rejecting Shell’s application to strike out the claims,

“was satisfied that the Claimants’ cases were “not at present sufficiently underpinned by information which enables the court or the parties to link the event(s) to breach and breach to loss, even by inference.” Having expressed concern (at [39]) that the Claimants’ route to selecting cases would not reliably cover all the issues arising on an events-based claim she turned at [41] to the suggestion that the Claimants’ claims should proceed as “global claims”, tracing some of the relevant authorities as she did so. She concluded (at [42]) that there was no relevant distinction to be drawn between construction claims and environmental claims and that “on the present state of the pleadings and associated information” all bar 5 of the Claimants’ cases were “global claims.” “

The Court of Appeal had to hold on a variety of issues advanced by both claimants and defendants, all of them procedural in nature. Arguably the most eye-catching issue is the one on the global claim. [77] Claimants intend to assert and prove a link between their loss and damage and a specific event for which the Defendants are alleged to be responsible. However [78] they

openly acknowledge and assert that they cannot plead (let alone prove) such a case at the moment. That does not mean that they are pursuing a global claim. What it means is that the Claimants cannot progress this very substantial litigation on the basis of the information they have. They assert that there is reason to believe that there is further information in existence that is not at present available to them but which, if they had it and had the benefit of appropriately supportive expert evidence, would enable them to plead and prove a case adopting conventional principles of causation. It may be that they will never be in a position to do so, in which case this litigation will fail. It is easy to see that there are formidable logistical and evidential difficulties for the Claimants to overcome; but that is the route they have chosen.

[79] the Court of Appeal swiftly sets aside the first declaration by the first instance judge that “the Claimants’ claims are to be progressed on the basis that they are “global claims”, i.e. “all-or-nothing” claims.”  It does so on the basis of the continuously pleaded and written assertion by claimants that they are not advancing the claims as such a ‘global claim’. And, [75]

There is a short and direct route to the conclusion that this declaration must be set aside. No judge or court is entitled to require a party to establish their case by a particular method. A party should be permitted to formulate their claims as they wish, not forced into a straitjacket (or corner or cul-de-sac) of the judge’s or their opponent’s choosing. It will be for the trial judge to determine whether the party can establish their claim:

As a result the status of “global claims” in English law and whether such an approach could ever appropriately be applied to environmental claims such as those being brought by the Claimants, is not held on, “Still less would it be appropriate in this judgment to address the question whether such an approach could have validity under Nigerian law.”

[Note [98] Males LJ (who like Bean LJ, is in agreement with Stuart-Smith LJ), flagging the interesting causation issue that will follow at trial:

What the Claimants will need to prove in order to make good their claims must depend on the relevant principles of Nigerian law, including the applicable principles relating to causation. There was some debate before us as to the principles of causation which would apply under English law. We were referred, for example, to an interesting article by Professor Jane Stapleton suggesting that in a case where an indivisible loss is caused by multiple factors, an “extended but-for test” may now apply, so that a claimant need only prove that the factor for which the defendant is responsible made a contribution to the loss (Unnecessary and Insufficient Factual Causes, Journal of Tort Law (2023)). It is, as I understand it, the Claimants’ position that this is all they need to prove in the present case, but whether that position is sound as a matter of Nigerian law remains to be decided.]

The second declaration on which the appeal was allowed, was the first instance judge’s declaration that Claimants’ pleaded case precluded the case management of the litigation being organised by reference to the selection of lead claimants.

Here the Court of Appeal emphasises the inherent inequality of arms in the litigation, despite both parties having excellent counsel throughout: [81]:

Despite the Claimants having the benefit of legal representation of the highest calibre, there is a substantial inequality of arms in the litigation. Two particular aspects of that inequality can be mentioned specifically here. First, there is a major inequality in access to information. The evidence submitted by the Claimants suggests that the Defendants have considerable quantities of relevant information that are not available to the Claimants. The Defendants’ primary response is to shield behind the submission that the Claimants have not particularised their case properly. Ultimately all future case management decisions are for the High Court and not for this Court on these appeals. However, the evidence advanced by the Claimants can be relied on in these appeals as demonstrating significant inequality of arms in access to information. Second, the Claimants cannot fund the litigation out of their own resources and have to rely upon their lawyers being prepared to act on CFA terms. The inequality that flows from this is best illustrated by the £7 million that the Claimants have had to expend on the SOIs. It is a very substantial sum for the Claimants; but it would be relatively (I emphasise the word “relatively”) trifling for the Defendants as part of a global organisation such as Shell.

[82] Stuart-Smith LJ emphasises the importance of disclosure, and [83]

while the Court should always be alert to disallow applications that are nothing more than “fishing expeditions”, in a case such as the present where the case that the Claimants wish to bring has been clearly articulated in their pleadings and associated documents, the Court should scrutinise with care any suggestion that the Defendants do not know the nature of the case they have to meet for the purposes of disclosure because it has not yet been pleaded with sufficient particularity. In principle, at least, the Court’s approach to the Claimants’ assertion that they need further disclosure should be informed more by the explanations they have given about why they need the disclosure before pleading a case with full particularity than by the present state of their pleadings. This is not to cast doubt for a moment upon the equally important principle that, before this litigation or any part of it can be brought to trial, the Claimants will be required to plead their case with sufficient particularity so that the Defendants know what case they have to meet and have a fair opportunity to meet it. That stage has evidently not yet been reached.

and [84]

this is a paradigm example of a case which can only be progressed by reference to lead cases and that the co-operative selection of lead cases by the parties (with the intervention of the Court if required) is an essential step that is required to break the circularity of the present impasse. It is not necessary to refer expressly to the multiple examples of complex litigation with wide-ranging factual and legal issues in many disparate fields that have been successfully case-managed using lead cases as the vehicles for determining important issues. I echo and endorse what was said by the Court in Municipio de Mariana v BHP Group (UK) Ltd [2022] EWCA Civ 951, [2022] 1 WLR 4691 at [139]:

“The courts have developed a wide range of case management tools in group litigation including, importantly, the selection of lead cases, the trial of preliminary issues and the adoption of a staged approach, either in parallel with other progress in the litigation or as a stand-alone procedure. These operate in what is now a digitalised environment which includes sophisticated e-disclosure, data sampling and algorithm mechanisms.”

Finally, Lord Justice Bean [102] emphasises the time issue:

I particularly wish to endorse the observations of Lord Justice Stuart-Smith that, in a case such as this where there is both a substantial inequality of arms and asymmetry of information between the parties, all case management decisions should be informed by the overriding objective, in particular by the court’s obligation to ensure so far as reasonably practicable that the parties are on an equal footing and can participate fully in the proceedings. I also agree that, because of the time taken up by the Defendants’ jurisdictional challenge and the distraction of the global claims issue, there is a compelling need for the litigation to be progressed promptly from now on.

A very important case which emphasises again how, when hopefully one can conclude in a few years time that English courts have been trailblazers in holding business to account for human rights, and environmental abuse, procedural judgments like these will have proven to be pivotal, as will the skill of the lawyers not losing sight of the ‘boring bits’ of such claims (civil procedure rules, claim financing, etc)

Geert.

 

https://x.com/GAVClaw/status/1865056147461284280

On 3 December I held a talk at University College, London, on ‘Muscles from Brussels‘, at the invitation of prof Ugljesa Grusic. The text of that talk is here.

It was an interesting evening! Many thanks to Ugljesa for hosting.

Geert.

 

In Case C-70/23 Mesto Rimavská Sobota the CJEU held on 21 November on an important trigger for many an EU product- and import /export related environmental regulation. In the case at issue the context is the EU Timber Regulation 995/2010 also known as ‘EUTR’. The EUTR in essence aims to prevent illegally harvested timber from being lawfully marketed. [Of note is that the EUTR has been replaced by the EU Deforestation Regulation – EUDR 2023/1115. Entry into force of the EUDR was to be postponed by a year at the time of writing].

The core issue in the case was the concept of ‘operator’. It is the operator who needs to ensure there is an adequate due diligence system in place in the supply chain. Article 2(c) EUTR states that an ‘operator’ means

any natural or legal person that places timber or timber products on the market.

Article 2(b) of the Timber Regulation further explains that ‘placing on the market’ means

the supply by any means, irrespective of the selling technique used, of timber or timber products for the first time on the internal market for distribution or use in the course of a commercial activity, whether in return for payment or free of charge.

In the case at issue a Slovak municipality had tendered access to its wood, including the right to harvest a specified amount of trees. Harvesting was to be carried out under the supervision of employees of the municipality, however they were not actually felling the trees. Was the municipality the ‘operator’? Or  was it the contractor?

The CJEU’s judgment is in essence one of statutory construction. It is settled case-law that to interpret a provision of EU law, one needs to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part.

At para 26 the Court points out that Article 2(c) of the EUTR defines, the concept of ‘operator’ as any natural or legal person that places timber or timber products on the market. Article 2(b) in turn as noted defines the notion of ‘placing on the market’ as covering ‘the supply by any means, irrespective of the selling technique used, of timber or timber products for the first time on the internal market for distribution or use in the course of a commercial activity, whether in return for payment or free of charge’.

At para 28 the Court holds that the term ‘supply’ in Article 2(b) “must, according to its usual meaning, be understood as referring to the transfer of ownership of a quantity of timber or timber products.” That in my opinion is a bit of an interpretative shortcut. Even in its ordinary meaning, ‘supply’ arguably is a broader category than ‘transfer of ownership’. The Court’s take is impacted by the fact that ‘standing trees’ are not included as ‘timber and timber‘ products’ in relevant Annex.

The Court continues some of that focus on ownership and its transfer, this time with emphasis on the first time such ownership is transferred, holding ‘ a natural or legal person must be regarded as being an ‘operator’, ‘placing on the market’ ‘timber and timber products’, within the meaning of Article 2(a) to (c) of Regulation No 995/2010, where, irrespective of the selling technique used, it transfers for the first time and for the purposes of distribution or use in the course of a commercial activity, the right of ownership in wood in the rough or fuel wood to a person who carries out transactions in the internal market.’ (para 31). When that transfer occurs is dependent upon the applicable law: if it already occurs viz the trees still standing, there is no transfer of ownership of timber or timber products and the due diligence requirements are imposed upon a party further down the chain.

The judgment illustrates the continuing need for the legislator to define core regulatory requirements with the specific intentions of the regulation in mind.

Geert.

 

In Jaffe & Anor Greybull Capital LLP & Ors [2024] EWHC 2534 (Comm) one of the issues was the applicable law for misrepresentation about the source of funds being injected into a company. Cockerill J, applying Article 4 Rome II and referring to earlier judgments all reviewed on the blog, in the end [300] holds for German law:

In terms of direct damage, damage occurred when those misrepresentations took effect in the minds of those attending the meeting in Germany and were subsequently relied upon. The alleged key decisions were said to have been taken at the November meeting of Wirecard’s Management Board; and this seems to have taken place in Germany. The direct links to Germany are simply much stronger than any links to this jurisdiction.

This echoes Abu Dhabi Commercial Bank v Shetty’s ‘in the case of a misrepresentation or fraud, the locus damni is held to be the place where that misrepresentation is acted upon’ (not a direct quote, rather my summary at the time). I believe this is the right conclusion. It is a stronger justification than [299]’s inclusion of the place where the loss is ultimately held, for instance:

Overall – and despite the clear and careful arguments advanced for the Claimants, I conclude that the preferable analysis is that the applicable law is German Law. There are many immediate factors linking the case to Germany both in terms of direction, causation and ultimate feeling of the loss. By contrast Wirecard is forced to rely on the effects of Side Letter 7. But Side Letter 7 did not immediately cause Wirecard damage and would not inevitably do so. It took a further contingency (administration) and the application of the relevant rules to manifest the chargebacks. The links to England are too derivative (described by the Claimants in closing as manifesting at “the fourth and fifth stages” of the analysis) and too poorly evidenced.

Geert.

https://x.com/GAVClaw/status/1844671980462575965

 

I reported on the jurisdictional issues in the Brasilian orange juice cartel before. In Viegas & Ors v Estate of Jose Luis Cutrale & Anor [2024] EWCA Civ 1122 the Court of Appeal has now held on a claim amendment issue viz the continuing claim against some of the defendants (the claim against others having failed the jurisdictional test).

The issue of interest to the blog is first of all the situs of ‘choses in action’, that is, per P. Torreman’s Cheshire, North and Fawcett ‘the right of proceeding to obtain a sum of money or to claim damages’ or an enforcement right vis-a-vis an object (French: ‘une chose’ hence the odd use of ‘choses in action’ in the common law). That situs is fairly easily located if the enforcement relates to a physical object. Things are slightly more complicated when the object is immaterial, such as shares, or financial interests such as investments— which also incidentally explains why the issue often comes up in investment arbitration (the locus of the investment there, determining the applicability or not of a specific BIT or MIT).

In the case at issue, parties agreed on the situs: [77]

“It was common ground before us that the claims which the claimants are seeking to pursue are to be regarded as situate in this jurisdiction. In this connection, the defendants submitted that choses in action such as the claims “generally are situate in the country where they are properly recoverable or can be enforced” (see Dicey, Morris & Collins on the Conflict of Laws, 16th ed., at rule 136) and that the bringing of a claim in a particular jurisdiction reduces it into possession in that jurisdiction. The defendants relied in this respect on Trendtex Trading Corporation v Credit Suisse [1980] QB 629 (affirmed: [1982] AC 679), where Lord Denning MR said at 652:

“The right of action of Trendtex against C.B.N. was a chose in action. It was reduced into the possession of Trendtex by the issue of the writ in the High Court in England. It was situate in England.”

In the course of his oral submissions, [counsel for claimant] confirmed that he accepted that the claims which the claimants are seeking to advance in these proceedings are to be considered to be situate (sic) here.”

Further of interest to the blog is the standing of those claimants which are heirs of the original victims and the relevance of characterisation for same. 639 of the claimants listed across the claim forms bring claims as heirs on the basis that they are entitled to do so under Brazilian law. Some of these are expressly stated in the claim forms to be representing the estates of deceased persons, but in many other instances the claim forms simply give the claimants’ names. Three claimants were granted letters of administration in England and Wales on 11 July 2023, but that long post-dated the issue of the claim forms. None of the relevant claimants had obtained a grant of representation in England and Wales when the claims were instituted.

The first instance judge had concluded that the heirs could not pursue their claims in this jurisdiction in the absence of grants of representation here. “Insofar as the claim is brought before the distribution of assets to the beneficiaries”, she said [198], “this stage is the administration of the estate and an English grant is required in order for the heirs to bring the claim and collect the assets on behalf of those entitled to the assets of the estate”. Claimants challenge the Judge’s conclusions. 

This issue is where characterisation comes in: assigning the situation to a specific legal category so as to apply the relevant connecting factor and consequently the correct jurisdictional and applicable law consequences. Characterisation is done by the lex fori (except of courts where it is harmonised, such as, not always successfully, in EU law or the Hague instruments). Reference is made in the judgment to professor Briggs’ ‘pigeon holing’ analogy: [82]

the available categories are those created by the common law rules of private international law; and the placing within one or more of them is done according by reference to the same rules – for those who find analogies helpful, English law designs the pigeonholes, and an English sorter decides which facts belong in which pigeonhole.

Claimants essentially argue that  what matters for the purpose of characterisation is that the heirs’ claims are not brought as representatives of the estate, but as personal claims of the heirs in respect of the deceased person’s losses. The mere fact that the claim is being pursued in England should not be treated as giving rise to an estate in England so that the pursuit of the claim would have to be treated as being the administration of the estate – which would have required an English grant of representation.

This led on appeal [90] ff to consideration of classic civil law v common law distinctions on the passing of an estate, the need for probate in England etc.

[118]

for the purposes of characterisation, the law of England and Wales distinguishes between, on the one hand, the administration of an estate and, on the other, succession. It is clear, too, that under the law of England and Wales “succession to the movables of an intestate is governed by the law of his or her domicile at the time of his or her death”. If, therefore, the relevant issue is one of succession, Brazilian law must be applicable. The deceased persons from whom the heirs claim to have inherited causes of action were domiciled in Brazil, the causes of action represent “movables” and [counsel for claimants] confirmed that the deceased persons did not make wills extending to those causes of action.

Newey LJ [120]:

In broad terms, it seems to me that, under the law of England and Wales, matters relating to the collection of a deceased person’s assets and the payment of debts are considered to relate to the “administration of estates” and the distribution of assets after that is considered to relate to “succession”.

and [123-124]

If, as I consider to be the case, the collection of a deceased person’s assets and the payment of debts must be distinguished from the distribution of assets after that, the question whether the heirs have title to sue must, I think, fall to be treated as one relating to the administration of the deceased persons’ estates rather than one of succession. While a person’s assets are immediately and automatically transmitted to his heirs under Brazilian law and, on the Judge’s findings, an heir can bring proceedings relating to the estate, an heir does not acquire an “individualised interest” until “sharing”. Up to that point, any claim that an heir makes is “in defence of the common patrimony”, “the common heritage” and “the whole inheritance” …. Heirs can doubtless be expected to bring proceedings in their own interests, but “the proceeds awarded to the heir in the legal proceedings will not be considered, automatically, as personal patrimony of that heir” (in [expert’s] words). A particular heir may find that the fruits of a claim pass to one or more other heirs or are used to discharge debts. It is only when the “sharing” is carried out that an heir obtains an “individualised” absolute interest in an asset which had belonged to the deceased person. It is only then, too, that in the eyes of English law there is “succession” rather than the “administration of estates”.

In the present case, there is no suggestion that any relevant cause of action of a deceased person has been the subject of a “sharing”. As matters stand, therefore, the heirs are, for the purposes of characterisation, to be viewed as seeking to administer the estates of the deceased persons, not as having succeeded to any causes of action of the deceased persons. It follows that Brazilian law is not applicable and that the heirs cannot advance the claims in this jurisdiction without obtaining letters of administration here.

The appeal therefore fails, also nota bene on the question of whether the heirs should be given extension of time to obtain the required letters of administration.

I am not sure I agree. A cause of action of a deceased person, passed on to the heirs, is an asset, whether or not can successfully be acted upon. But I don’t suppose I had the benefit or all the expert evidence etc. Whatever the outcome, the case is an interesting example of the relevance of characterisation.

Geert.

https://x.com/GAVClaw/status/1844653916232774051

I signaled the preliminary reference and background here and Kokott AG Opined end of September in C‑393/23 Athenian Brewery SA, Heineken NV v Macedonian Thrace Brewery SA.

Can a person damaged by an infringement of the competition rules sue the company which committed that infringement at the seat of its parent company in another Member State?

The case clearly has echoes of the economic unit theory in EU competition law see eg ENI. On the other hand the CJEU in a MOL v Mercedes Benz, in a judgment issued before the Opinion, did not resort to the economic unit theory in the inverse sense, holding that a mother corporation cannot simply claim its registered office as locus damni in Article 7(2) Brussels Ia jurisdiction when one of its subsidiaries suffered damage resulting from a breach of competition law. (The AG in Athenian Brewery only refers to the Opinion of Emiliou AG in MOL).

(37) ff the AG points to Article 8(1)’s condition of joinders being possible of there is a risk of irreconcilable judgments arising from diverging judgments on the same situation of law and fact, existing in all likelihood where mother and daughter have both been found to have infringed competition law. However less clear (41) is

whether a close connection within the meaning of Article 8(1) of the Brussels Ia Regulation may be present even if the joint liability of the parent company and the subsidiary for the infringement has not yet been established. This may arise in particular in the case of stand-alone actions, which, unlike follow-on actions, cannot be based on a (binding) decision of a competition authority, be this the Commission (Article 16(1) of Regulation No 1/2003) or a national authority (Article 9 of Directive 2014/104).

(43) ff

“the fact in support of the presumption of control that the parent company holds (almost) all of the capital in the subsidiary is such a strong indication of the existence of a close connection between the actions directed against the parent company and the subsidiary for the purposes of Article 8(1) of the Brussels Ia Regulation that no further evidence of the existence of that close connection is usually required (see in this regard section a). That interpretation does not infringe the requirement as to the foreseeability of the court having international jurisdiction… What is more, it ensures the practical effectiveness of Article 8(1) of the Brussels Ia Regulation without leaving open the possibility of the applicant’s being accused of abusive behaviour…”

The AG explains all these elements in turn and I agree with her analysis.  (60) for instance she supports the ‘good forum shopping’ implications of the anchor defendant mechanism:

 It is not a circumvention of the rule of jurisdiction for the injured party to sue the Greek subsidiary too in the place where the Netherlands parent company is domiciled and thereby to remove the former from the jurisdiction of the Greek courts. If, after all, the defendants are domiciled in different Member States, Article 8(1) of the Brussels Ia Regulation allows the applicant to select the place before the courts of which it brings its claim. That freedom of choice includes the possibility for the applicant to bring the dispute only before the court that best suits its interests.

I do wish the CJEU would also recognise the alternative: the misuse of forum shopping using A7(2)’s forum delicti rule, by corporations committing infringement of competition law, as I discuss ia here.

Geert.

EU Private International Law, 4th ed. 2024, 2.516.

I know I have Tweeted that I would add my tuppence on the Court of Appeal at The Hague on Wednesday reversing (English translation of the Court of Appeal here) the first instance judgment in Milieudefensie v Shell.

That judgment had imposed CO2 reduction emissions targets on Shell. (In my post on the first instance judgment I focus on the applicable law, Article 7 Rome II issue; that issue was not appealed).

I then however read my learned colleague and academic neighbour Quinten Jacobs’ most excellent thread on the case and, being a firm believer in progress by assimilation, I am most pleased he has accepted to turn that thread into a post, below (my contribution merely consisted of editing).

*  * * * * * *

 

Quick recap: In 2021, the District Court in The Hague ruled upon Milieudefensie’s claim which is based on the overall (tortious) duty of care (A6:162 Dutch Civil Code) that Shell must reduce its CO2 emissions by 45% by 2030 compared to 2019 levels. This was unprecedented. For the first time outside the context of an environmental permit, a court imposed reduction obligations on a private company. Shell argued that this ruling would force the company to halt investments and sell off assets, and it appealed the decision.

In its judgment, the Court of Appeal in The Hague first fairly succinctly summarised  the scientific evidence on climate change, referencing the Greenhouse Gas Protocol, reports from the IPCC, and the IEA. The court also covered several legal instruments, such as the UN Climate Convention, the Kyoto Protocol, the Paris Agreement, and the EU’s Fit for 55 initiative. Additionally, it cited the non-binding “expression of principles” in which the Dutch government and Shell agreed on Shell’s ambition to reduce CO2 emissions by 3.9 megatons.

The ruling then examines the climate targets Shell set for itself over the years, from 1986 to 2024. Notably, Shell’s self-imposed goals frequently shift, sometimes based on emissions, and at other times based on a percentage of its spending on emission-free products.

One interesting point is admissibility. The Court of Appeal confirmed the first instance judgment that “collective claims are inadmissible insofar as they serve the interests of the global population.” However, the interests of current and future generations of Dutch citizens and residents of the Wadden area were deemed “sufficiently similar.” The court found it undesirable that only individual citizens would have to file claims separately.

Shell’s argument that the claim  is a “political issue” does not, according to the Court of Appeal, prevent the claim from being admissible seeing as the claimants—several NGOs—are seeking to assert a “legal duty” allegedly violated by Shell.

On the substantive issues: According to Milieudefensie and other claimants, Shell breaches the “general duty of care,” a duty to act “in a manner befitting society,” which depends on the circumstances of each case. This is akin to what Belgium once called “a bonus pater familias”, now referred to as “a prudent and reasonable person” [in the common law known as the Man on the Clapham Omnibus] and as noted in the case at issue grounded in Article 6:162 of the Dutch Civil Code. Specifically, Shell is accused of violating this standard by infringing on human rights.

One key question is whether protection against dangerous climate change should be regarded as a human right, specifically under the right to life (Article 2 of the ECHR) and the right to privacy (Article 8 of the ECHR). Referring to the Dutch Supreme Court’s Urgenda judgment, the very recent Swiss climate ruling by the European Court of Human Rights- Verein KlimaSeniorinnen Schweiz and Others v. Switzerland , and judgments in Pakistan, Colombia, Brazil, and India (Ranjitsinh and Others/Union of India and Others), as well as UN reports and resolutions, the Court of Appeal concluded [7:17] that

“there can be no doubt that protection from dangerous climate change is a human right.”

This is as such not unexpected yet important to see it confirmed by the Court of Appeal. Additionally and importantly, the court reasoned [7.17] that it is

“primarily up to legislators and governments to take measures to minimise dangerous climate change. That being said, companies, including Shell, may also have a responsibility to take measures to counter dangerous climate change.”

Shell and Milieudefensie have jumped on different sections of that sentence to declare victory.

The confirmation of Shell’s responsibility brings the court to discuss ‘indirect horizontal effect of human rights’ [7.18] ff. Human rights traditionally apply to relations between individuals and the state (so-called ‘vertical applicability’, not between private parties (‘horizontal applicability’) It is generally not possible, for example, to sue a neighbor for their alleged violation of one’s freedom of religious expression (unless a crime such as hate speech is committed). However, the court noted—correctly, in line with accepted legal principles—that human rights can also apply “horizontally,” for instance, between a citizen and a corporation. This can occur via “general private law principles,” such as the duty of care, with human rights considerations incorporated into these broad and general standards.

The court [7.24] identified several factors to determine whether a company breaches this “social standard of care” [which seems to be posited by the Court as that special form of the general duty of care: duty of care, with human rights considerations incorporated, GAVC]:

the seriousness of the threat posed, the contribution to its emergence, and the capacity to contribute to addressing it.

The court referenced several “informal and non-binding agreements” that detail companies’ responsibilities regarding climate, such as the UNGP, OECD guidelines, and ISO guidelines, which Shell has endorsed. [7:26] Even if public regulations do not explicitly compel them to do so, particularly those companies whose products contribute to the climate problem are still expected to help mitigate it.

The Court of Appeal concluded on the issue [7:27]

In summary, the court of appeal is of the opinion that companies like Shell, which contribute significantly to the climate problem and have it within their power to contribute to combating it, have an obligation to limit CO2 emissions in order to counter dangerous climate change, even if this obligation is not explicitly laid down in (public law) regulations of the countries in which the company operates. Companies like Shell thus have their own responsibility in achieving the targets of the Paris Agreement.

The next question is whether a court can impose additional reduction obligations beyond existing legislation.

In this context it is usual to recall the summary by the Court [3.5] of ‘scope emissions’, with reference to the global accounting ‘GHG Protocol’:

– scope 1: direct emissions from installations that are owned or controlled in full or in part by the company;

– scope 2: indirect emissions from third-party installations from which the company purchases electricity, steam or heat for its business activities;

– scope 3: other indirect emissions not included in scope 2 generated in the company’s value chain, including emissions generated from the use or consumption of products the company supplies to third parties, such as other organisations or consumers.

The court observed [7:28] that “a considerable amount of new climate legislation” has been enacted, some after the initial ruling. It cited the updated EU-ETS system, which already covers a significant portion of Shell’s so-called scope 1 and 2 emissions, [7:35] placing them almost entirely beyond the reach of the first instance court’s reduction order. Furthermore, a significant portion of its European scope 3 emissions will fall under the EU-ETS-2 system introduced in 2023. Due to two other directives, CSRD and CSDDD, Shell must also develop a climate transition plan aligned with the Paris Agreement.

Is this sufficient? Not entirely, according to the Court of Appeal [7:53]. These measures are “not exhaustive,” and the duty of care could still lead to a tailored reduction order, though existing legislation should be considered in assessing this duty.

The key question is whether the court imposes a reduction order on Shell. This requires a “threat of a breach of a legal duty.” Regarding scope 1 and 2 emissions, the court was brief: [7:64] no reduction order is imposed, as Shell had largely achieved the 45% reduction target compared to 2019 by the end of 2023 and committed to continue these efforts. There is no “threat of a breach” of a legal duty.

For the remaining scope 3 emissions, the court noted a consensus that emissions must be reduced by a net 45% by 2030 to keep global warming below 1.5°C. However, the court found it could not  specify a particular reduction obligation for Shell Applying a general standard of -45% to Shell is [7:75] “not sufficiently case-specific” [the original Dutch text uses ‘fijnmazig’, best translated by ‘tailored’ in this case, GAVC] given evidence that reduction paths vary by sector and country, as indicated by reports from the IEA and the European Commission. The Court of Appeal [7:75] uses the simple example that

if Shell starts supplying gas to a company that previously obtained its energy from coal (which necessarily comes from a supplier other than Shell), this will lead to an increase in Shell’s scope 3 emissions, but on balance may lead to lower global CO2 emissions. It follows from that example alone that applying the general standard to Shell of a 45% reduction by the end of 2030 (or 35% or 25% in the alternative and further alternative claims) is not sufficiently case-specific.

The court acknowledged that as a major oil company, Shell has a “special responsibility,” but its product mix does not reflect the global product range, making an individual reduction order inappropriate.

[7:82] ff the Court then discusses whether a sectoral reduction target for the oil and gas portfolio is possible. Both Milieudefensie and Shell have enlisted experts who have written reports on this. According to the court, [7:91] “no sufficiently unequivocal conclusion can be drawn from all these sources regarding the required reduction in emissions from the combustion of oil and gas on which to base an order by the civil courts against a specific company.”

The contested assumptions, including the percentages from the IEA, call for “great caution in elevating numbers based on these reports to a legal norm.” It also plays a role that Milieudefensie itself contradicts or qualifies those numbers. According to the court [7:96] the available data do not provide “sufficient support”  to oblige Shell to reduce its CO2 emissions by a certain percentage in 2030.  Therefore, Milieudefensie’s claims are dismissed.

Obiter, the court went on to consider [7.97] ff whether scope 3 reduction obligations would be ‘effective’. Shell argued that if it complied with the reduction order by ceasing sales of fossil fuels from other producers, those companies would simply continue supplying fossil fuels to other buyers, with another company taking over Shell’s trading activities.

Both parties submitted reports from climate scientists on this reasoning. The court concluded that it had not been demonstrated that a reduction obligation imposed on a single company would positively impact the fight against climate change. There was no proven causal link between restricting sales and a reduction in emissions. The court found the “signaling function” of such an order “too speculative.” Core is [7:106]:

The district court rejected Shell’s contention that an obligation to reduce its scope 3 emissions by a certain percentage is not effective on the basis that any reduction in greenhouse gas emissions has a positive effect on combating climate change (paragraph 4.4.49 of the district court’s judgment). This consideration is correct in itself and is also in line with what the Supreme Court considered in the Urgenda judgment (legal ground 5.7.7 and 5.7.8). However, this does not mean that a reduction obligation imposed on a specific company will have such a positive effect, especially if this reduction obligation can also be realised by selling less fossil fuels. After all, in that scenario, the specific company would only disappear from the value chain and the (already produced) fossil fuels would still reach the end consumer via another intermediary. There may be a causal relationship between a production limitation and emission reduction, as assumed by the district court (cf. section 4.4.50 of the district court’s judgment), but Milieudefensie et al. have failed to put forward sufficient grounds to assume that in this case a causal relationship (also) exists between a sales limitation and emission reduction.

This is what Geert referred to as the ‘drug dealer defence’. [And note the obiter and cautious opening which the Court leaves for production obligations, GAVC].

This appears to be a significant barrier for future climate litigation. If only one party is brought before the court, Shell’s argument—that other companies will simply take over its role—could always come into play.

The court’s conclusion: Shell has a responsibility in the climate transition, but this does not translate into a specific reduction order. A single reduction target of 45% for one company is too general, and it has not been demonstrated that such an order would effectively lower (global) emissions. Or, in the Court’s words [7:111]:

While it follows from the foregoing that Shell may have obligations to reduce its scope 3 emissions, this cannot lead to the award of Milieudefensie et al.’s claims on this point. The court of appeal has come to the conclusion that Shell cannot be bound by a 45% reduction standard (or any other percentage) agreed by climate science because this percentage does not apply to every country and every business sector individually. The court has answered in the negative the question whether a sectoral standard for oil and gas can be established on the basis of scientific consensus. This entails that based on the available climate science, it cannot be said that a 45% reduction obligation (or any other percentage) applies to Shell in respect of scope 3. In addition, it could not be established that an obligation on Shell to reduce its scope 3 emissions by a certain percentage is effective, so that, at any rate, Milieudefensie et al. have no interest in their scope 3 claim.

Quinten.

 

 

Many thanks to Marta Pertegás for flagging Medeon Sarl v Siem Industries S.A. ECLI:NL:GHDHA:2024:1248, in which the Gerechtshof Den Haag (upon appeal in summary proceedings) confirmed recognition and enforcement of a High Court (London) default order for payment.

Exclusive choice of court for the English courts had been made by the parties in a Bond Transfer and Purchase Agreement – BTPA.

(Both parties are domiciled at Luxembourg. That the case contained enough ‘international’ elements was not at issue, see the limitations on this point in A1(2) of the 2005 Hague Choice of Court Convention and see CJEU Inkreal’s reference to same).

Medeon’s grounds for refusal of recognition were all held to fail:

• [6.8] ff:  re A8(4) a Hague Convention: “Recognition or enforcement may be postponed or refused if the judgment is the subject of review in the State of origin or if the time limit for seeking ordinary review has not expired.”

The Court held that  A13(3) 2 of the English Civil Procedure Rules (CPR)’s ‘In considering whether to set aside or vary a [default] judgment (…), the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.” (emphasis added) clearly does not include a time limit yet clearly must be made timely.

A passing reference was made to English authorities seemingly referred to by Medeon. However the Dutch court generally held that it would be ‘unreasonable’ (6.11) to deny the enforceability to Siem, seeing as Medeon had all manner of time and options to introduce an opposition to the default order, even alongside negotiations on the amounts due. Its failure to do so must have consequences. Nemo auditur proprium turpitidnimen allegans, in other words.

 

• [6.13] ff: re A9 (c) Hague Convention:  [recognition may be refused if] “the document which instituted the proceedings or an equivalent document, including the essential elements of the claim,….i)  was not notified to the defendant in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant entered an appearance and presented his case without contesting notification in the court of origin, provided that the law of the State of origin permitted notification to be contested..”:

Here the Court held that the part of a form prescribed by the English CPR rules which had not been duly notified to Siem to an agent’s address in London (identified in the BTPA) – but it was notified in Luxembourg, was not a relevant form for the Hague Convention-instructed notification of the document instituting the proceedings: this, it held, is the claim form, which was duly notified to Medeon in Luxembourg (permission for service out for that was not required seeing as there is exclusive choice of court for England).

 

• [6.18] ff the Court held that ordre public was not engaged and neither was the principle of compensation only for actual damages suffered: [6.22] Medeon’s arguments would require the type of révision au fond [6.21] which is proscribed by the Convention.

 

A good example of the impact of the Convention. Clearly, pre-Brexit this procedure would have been a lot more straightforward.

Geert.

 

 

In my August conflict of laws exams I asked the students the following question:

In Case C-494/23 Maha, facts are as follows. On 19 August 2017, applicants purchased a motor vehicle in Germany. On 12 September 2017, the vehicle was seized by the Police of the Czech Republic on the ground that it is the subject of suspicion of the criminal offence of theft committed in France. Subsequently, the Police placed the vehicle in custody. Applicants then filed an application with the Czech court for the release of the vehicle from custody.

Given that, in previous proceedings, other persons had claimed a right to the vehicle, according to Czech law consent of all of the persons concerned is required for the release of the subject of custody, or the substitution of their consent by a court ruling. Consequently, applicants filed an application with the same court against defendants resident in France, for the substitution of their consent to the release of the item from custody. The defendants did not attend the proceedings

The CJEU is asked to determine

1. 1. 1. 1. whether proceedings concerning the substitution of the defendant’s consent to the release of an item from judicial custody in which the item was placed by a law enforcement authority in criminal proceedings, falls within the autonomous term of EU law of a ‘civil and commercial matter’ as defined in Brussels Ia.; and
         2. if it indeed does fall within that term, whether an application initiating such proceedings may be deemed to constitute an application in ‘any other third-party proceedings’ within the meaning of A8(2) Brussels Ia.

How in your view should the CJEU respond? Answer both questions, even if you argue that the answer to question 1 should be in the negative.

I was of course expecting students to review the core ‘civil and commercial’ cases as reviewed extensively on the blog -and in class; I don’t just ask students to read the blog ;-¬ , to highlight the continuing confusion /uncertainty, and to make a determination either way.

My two cents was on the claim indeed being civil and commercial. It is a claim in the periphery of a criminal investigation yet the claim itself is one in pure restitution /confirmation of ownership, between parties neither of whom are public authorities, where no extraordinary powers are being used by any of the parties involved.

The CJEU held differently two weeks ago. It is imo indicative of the state of confusion over this core trigger for Brussels Ia that another commentator, perfectly legitimately, finds the judgment ‘not surprising’.

Consider the reasons for the referring court to suggest the case might be civil and commercial, [19]:

The referring court is of the opinion that certain considerations lead to the conclusion that the proceedings for substituting consent to the release from court custody come within the concept of ‘civil and commercial matters’ within the meaning of Article 1(1) of Regulation No 1215/2012 and, consequently, within the material scope of that regulation. Accordingly, the purpose of court custody is to dispel, in the context of a civil action, any doubt as to which of the persons concerned may have the item returned to them by reason of a right to property or another right. Furthermore, those proceedings, which are inter partes, are governed by rules of civil procedure, more specifically by those relating to special court proceedings.

I won’t repeat all the references included by the CJEU seeing as they are the classic ones (all reviewed on the blog); this time the core port of call would seem to have been Lechouritou where the Court had summarised its position (in 2007) and with reference to other classics [Eurocontrol, Rüffer [7]; Gemeente Steenbergen [28]; Préservatrice foncière TIARD SA v Staat der Nederlanden [20]; Land Oberösterreich v ČEZ [22]] as follows:

It is to be remembered that, in order to ensure, as far as possible, that the rights and obligations which derive from the Brussels Convention for the Contracting States and the persons to whom it applies are equal and uniform, the terms of that provision should not be interpreted as a mere reference to the internal law of one or other of the States concerned. It is thus clear from the Court’s settled case-law that ‘civil and commercial matters’ must be regarded as an independent concept to be interpreted by referring, first, to the objectives and scheme of the Brussels Convention and, second, to the general principles which stem from the corpus of the national legal systems …

According to the Court, that interpretation results in the exclusion of certain legal actions and judicial decisions from the scope of the Brussels Convention, by reason either of the legal relationships between the parties to the action or of the subject matter of the action …

Thus, the Court has held that, although certain actions between a public authority and a person governed by private law may come within the scope of the Brussels Convention, it is otherwise where the public authority is acting in the exercise of its public power.

Core of the CJEU’s Lechoritou reference in current case is in [44]. The referring court and the claimants had argued that the preliminary proceedings take place between individuals not involving law enforcement authorities, that the procedure is inter partes and that the detailed rules for its exercise are governed by rules of civil procedure (the kind of arguments which in other cases assisted in coming to a finding of ‘civil and commercial’). In Mahá the CJEU answers [44] with reference to Lechoritou ([41)}

the fact that the plaintiff acts on the basis of a claim which arises from an act in the exercise of public powers is sufficient for his action, whatever the nature of the proceedings afforded by national law for that purpose, to be treated as being outside the scope of the Brussels Convention

Pro memoria: Lechoritou involved a claim by Greek nationals against the German State, on the basis of a nazi massacre in 1943. A money claim by private individuals against a foreign state (unlike current case between private parties) directly ‘arising from’ the ultimate act of sovereign power namely warfare.

The situation in current case is very very different.

[36] the CJEU insists that the current action is “based on”  –I do not think it is: it follows from it, it is not based on it– “the seizure proceedings ordered by the law enforcement authorities and the placing of the property in question in the custody of the court.” This, it says [36] “is an essential prerequisite for the release of the property from the custody of the court and the restoration of the property” and [37] “It follows that, in the light of both its subject matter and its basis, since proceedings to substitute consent are inextricably linked to the seizure of the property at issue by the law enforcement authorities and to the subsequent placing of the property in the custody of the court, they cannot be examined without having regard to those proceedings.” (emphasis added)

This focus on ‘inextricably linked’, the ‘prerequisite’ of the property claim and the vicinity of the criminal proceedings brings us close in my view to the context criterion adopted by the Court in Kuhn and  in my view is likely to lead to yet further confusion, as well as forum shopping possibilities. There is an infinite amount of civil claims which are inextricably linked to criminal proceedings which are the prerequisite of the civil claim at issue or arise form such a claim. Take libel actions which in many States are a criminal offence, or take follow-on damages claims in competition law or unfair competition: both are criminally sanctioned in all EU Member States. Leaving it up to national courts to decide whether the link is intimate enough to warrant exclusion from Brussels Ia is likely to endanger Brussels Ia’s number one DNA, which last time I looked, continues to be predictability.

Geert.

EU private international law, 4th ed. 2024, Heading 2.2.2.2.

 

In C-425/22 MOL Magyar Olaj- és Gázipari Nyrt. v Mercedes-Benz Group AG Emiliou AG had opined in that a parent company cannot rely on the competition law concept of economic unit to establish jurisdiction where it has its registered seat, re a claim for damages for the harm suffered by its subsidiaries. I referred in my review of the Opinion to my colleague Joeri Vananroye summarising it as :

“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.”

The CJEU confirmed early July (yes, I have a blog queue to tackle…): [44]

the objectives of proximity and predictability of the rules governing jurisdiction and consistency between the forum and the applicable law, and the unhindered possibility of claiming damages for the harm arising from an infringement of competition law affecting a member of the economic unit, preclude a reverse application of the concept of ‘economic unit’ for the determination of the place where the damage occurred, for the purposes of Article 7(2) of Regulation 1215/2012.

The CJEU further explains these principles in current context with reference to the same case-law as the AG and as reviewed in my post.

Geert.

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

https://x.com/GAVClaw/status/1809233522462183689

The CJEU in Grand Chamber held 10 days back in C‑633/22 Real Madrid Club  de Fútbol, AE v EE, Société Éditrice du Monde SA. No English version was yet available at the time of writing.

The Court in essence confirms Spzunar AG’s Opinion which I reviewed here.

Its findings echo the language and sentiment of Article 16 of the EU’s anti-SLAPP Directive 2024/1069 (that Article addressing non-recognition of third country judgments).

The Grand Chamber emphasises mutual trust and the consequential very narrow room for refusal of recognition on ordre public grounds, even in the context of the application of the Charter’s Article 11 freedom of expression grounds: refusal must be exceptional, case-based, and not based on an entirely new balancing act.

However the court of enforcement must refuse to recognise if the Article 11 rights are fundamentally impacted. In exercising that assessment, it must i.a. take account of the distinction between the reputation of a legal cq natural person (the former lacking the ‘moral’ element of impacting on the ‘dignity’ of the person: [58]), the financial capacity of the defendant (accused to have libeled) [68], and the stiffing impact caused by a disproportionate difference between the actual damage suffered, and the libel award [62 ff].

Geert.

EU Private International Law, 4th ed, 2024, 2.619 ff.

 

I reviewed Emiliou AG’s first Opinion in C‑339/22 BSH Hausgeräte GmbH v Electrolux AB here.  Seeing as the case was now reassigned to Grand Chamber (compare with CJEU IRnova where a 3 member chamber rejected reflexivity en stoemelings) and as a new hearing was held solely on the issue of reflexivity, the AG got a second go at the issue.

As I reported in my earlier post I do not think his views on the reflexivity issue (as opposed to his solid views on the A24(4) patent jurisdiction issue) are convincing. This second Opinion is a great resource for the conceptual thinking on reflexive effect (incl its relation to public international law issues of comity) however it does not sway me and neither do I believe will it convince the court.

Lydia Lundstedt has summarised and reviewed the Opinion here and (among others because I am swamped at Melbourne where term is in full swing) I am happy to refer.

The essence of the Opinion is that in the AG’s view under residual private international law (and civil procedure) rules, Member States may refuse to exercise Article 4 (or other) Brussels Ia derived jurisdiction if the claim engages with the validity of third States patents or, as Lydia summarises it: Member States may (1) decline to adjudicate a claim that has as its object the validity of a third-State patent (erga omnes) and (2) refuse to rule (inter partes) on an invalidity defence raised in an infringement action and stay that action while waiting for the authorities in the third State to rule on validity.

I have in fact advocated a change to the rules, de lege feranda. I do not believe reflexive effect exists de lege lata however, even under the roundabound way of letting Member States effect it under their residual rules.

Geert.

EU private international law, 4th ed. 2024, 2.218.

The CJEU this morning has entirely and in succinct fashion confirmed the Opinion of Emiliou AG which I discuss here.

[30] that the contract between the parties, both domiciled in the same Member State, is meant to be performed either in another Member State or a third State, by its nature triggers the question which court might have jurisdiction (reference to CJEU Inkreal) and sufficiently qualifies as the international element required to trigger Brussels Ia. Like the AG, the CJEU also refers to the use of the wording in A18(1) ‘regardless of the domicile of the other party’ to corroborate that finding.

[35]-[36] the Court like the AG also warns against a symmetric  application of non-BIa authority to Brussels at least one that is assumed too readily.

Confirmation of the consumer title assigning not just national but territorial jurisdiction is backed up ia by reference to CJEU Allianz (on the insurance title).

After the solid AG Opinion, an equally solid judgment.

Geert.

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

https://x.com/GAVClaw/status/1817834126927446343

 

As we go through summer I am trying to catch up with posts I did not find the time for sooner. Readers will know that they may want to keep an eye on my Twitter feed to keep up with recent developments.

A failed forum non conveniens challenge in Lunn v Antarctic Logistics Centre International (Pty) Ltd [2024] EWHC 1662 (KB) led to an interesting discussion on applicable law under the Rome II Regulation.

The claim concerns injuries sustained by claimant whilst he was working as a self-employed aircraft engineer for a Malta-based company, Jet Magic Limited. At the time of the accident he was in the process of carrying out checks on a Boeing 757 operated by Jet Magic, which was stationary on the blue ice airstrip of the Novolazarevskaya Air Base, also known as the Novo Air Base, Schirmacher Oasis, Queen Maud Land, Antarctica. Claimant is a British citizen and was resident in the UK at the material time.

The Defendant, Antarctic Logistics Centre International (Pty) Limited, is a company incorporated under the law of South Africa. At the material time it was the occupier and operator of the Novo Airstrip pursuant to an agreement with the Russian Federation. The Defendant chartered the aircraft to transport scientists and workers to and from research stations in Antarctica.

Defendant concedes that the Claimant’s evidence of continuing symptoms from his injuries whilst in England is sufficient to establish an arguable case that the tort gateway for jurisdiction per Brownlie, is met.

Issues between the parties are first the merits test: has the Claimant has established that his pleaded case has a reasonable prospect of success / that there is a serious issue to be tried on the merits (CPR 6.37(1)(b))? Secondly, forum conveniens and discretion: has the Claimant established that England and Wales is the proper place to try the claim and, if so, in all the circumstances, ought the court to exercise its jurisdiction to permit service out of the jurisdiction (CPR 6.37(3))?

The dispute between the parties as to the applicable law is relevant both to the determination of whether the Claimant’s case has real prospects of success and to the determination of the forum issue.

The particulars of claim contend that English law applies by virtue of A4(3) of Rome II, the “manifestly closer connection” correction to the general rule. In the pleadings however focus became different: namely that English law should be applied at this stage of the proceedings pursuant to the “default rule” or, alternatively, on the basis of the “presumption of similarity”, namely that English law is substantially similar to any relevant foreign applicable law in relation to the core tortious principles arising in this case. Claimant’s counsel submits that English law should be applied unless and until the Defendant pleads a Defence in due course which alleges the application of foreign law and establishes its case in that regard.

Defendant contends that Russian law is the applicable law pursuant to A4(1) Rome II on the basis that the Novo Airstrip is said to be located in an area which is subject to Russian jurisdiction and law. There is a disagreement between the parties as to whether the Novo Airstrip is in an area of Antarctica claimed by Norway or by Russia or both and, accordingly, as to what the “law of the country” should be deemed to be pursuant to A4(1) Rome II in respect of damage occurring on the Novo Airstrip. [37] The difficulty of Antarctica as a ‘country’, and the challenge of applying Rome I and II to vessels is also flagged in Dicey.

Defendant also advances two further contentions in relation to the applicable law:

a. First, South African law is said to be the applicable law pursuant to A4(2) Rome II on the basis that, pursuant to A23(2) of Rome II, the principal place of the Claimant’s business should be deemed to be South Africa. It is said that as a self-employed engineer working on the aircraft, Claimant’s principal place of business was wherever the aircraft was located from time to time. It is contended that the aircraft was based in Cape Town, South Africa at the material time. It is submitted that this is relevant to the merits test as the Claimant has adduced no evidence of South African law, as well as to issues of forum.

b. Second, it is said that it is clear that English law does not apply to this case and that South African or Russian (or, potentially Norwegian) law applies and that “as there is no pleaded case of Russian, South African or Norwegian law, the case does not disclose any arguable case” and so the Claimant cannot succeed on the merits test.

As things turned out, the A4(1) discussion was not pursued by parties at this stage. Per Tulip Trading Ltd (a Seychelles company) v Bitcoin association for BSV and others [2023] EWCA Civ 83 applicable law discussions a the jurisdictional stage must be conducted summarily.  [38] Both parties have been attempting to liaise with the Foreign Office and are still attempting to collate evidence as to the potential application of A4(1) to cases concerning damage which occurs in Antarctica. [39] The possibility of either Russian or Norwegian law applying is in any event irrelevant to the issue of forum (as opposed to the merits test) because no party is asserting that the claim should be heard in either Russia or Norway.

In the circumstances, the primary dispute between the parties on applicable law therefore is whether English law should be deemed to apply at this stage of the proceedings pursuant to the default rule or the presumption of similarity (claimant’s take) or whether South African law is the applicable law pursuant to A4(2) Rome II (defendant).

Webb DJ [40] ff rejects the submission that A4(2) implies application of South African law to the case.  [48] he holds there is something artificial to place too much “weight for jurisdiction purposes on the location of a place of business which is itinerant or peripatetic in nature.” (Compare nb somewhat CJEU Ryanair). “If and insofar as [claimant] can be said to have had a principal place of business at the material time, I consider that the weight of the evidence currently before me points, albeit somewhat weakly given the artificiality of applying the test to an itinerant business, to his principal place of business being England.”

The judge then applies [57] the default rule:

In the present case, for the reasons set out at [38] to [39] above, it has not been established that either Russian or Norwegian law is applicable under Article 4(1); nor can I be satisfied, on the present evidence, that there is a well-founded case (to adopt the words used by Lord Leggatt in Brownlie II at [116]) that Russian law applies, nor that Norwegian law applies, pursuant to Article 4(1). For the reasons set out at [47] above it has not been established (and nor do I believe there to be a well-founded case for arguing) that South African law is applicable under Article 4(2) of Rome II. It has also not been established that any foreign law is applicable under Article 4(3). In such circumstances it is appropriate, in my judgment, for the court to apply English law on the default basis at this jurisdictional stage.

(and note [58]: “If the matter proceeds in this jurisdiction, then the Defendant will have the option of pleading, and attempting to establish, that foreign law applies, whether Norwegian, Russian or South African. It is, of course, possible that neither party elects to establish that any foreign law is applicable in such circumstances or that, if applicable, there are any material differences between that alleged applicable law and English law for the purposes of this claim.”)

The obiter fallback [59] is reliance on the presumption of similarity.

The remainder of the discussion then runs through the various forum non and merits issues, and concludes [116]

Claimant has, in my judgment, satisfied the burdens upon him to show (a) that the claim has a reasonable prospect of success, (b) that there is a good arguable case that the claim falls within the relevant jurisdictional gateway (a point rightly conceded by the Defendant), and (c) that England and Wales is the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice and is clearly and distinctly the proper place to bring the claim. In all the circumstances, I am satisfied that this is a case in which it is appropriate for the court to exercise its discretion to permit service of these proceedings out of the jurisdiction on the Defendant.

Of note, and an A4 Rome II discussion to be continued.

Geert.

EU Private International Law, 4th ed. 2024, 4.37 ff.

 

https://x.com/GAVClaw/status/1808153657340244375

Nicholls & Anor v Mapfre Espana Compania De Seguros Y Reaseguros SA [2024] EWCA Civ 718 is the unsuccessful appeal against Sedgwick v Mapfre Espana Compania De Seguros Y Reaseguros Sa [2022] EWHC 2704 (KB) which I discuss here and against Nicholls v Mapfre and Sonia Woodward v Mapfre [2023] EWHC 1031 (KB) which I discuss here.

The case centres around the difference in the Rome II Regulation between matters of procedure on the one hand and substantive law on the other hand, for the purposes of private international law and the interpretation of A1 and 15 Rome II.

In the appeals Mapfre contend that the interest payable under Spanish Insurance Contract Act Act 50/1980 is penal in nature because it rises to 20 per cent per annum in the third year of application, is payable as a matter of Spanish procedural law to encourage early settlement of disputes by insurance companies, and is a matter of procedure which is not covered by Rome II. This means that in their view the laws of E&W apply to the assessment and award of interest. Mapfre also contend that it is wrong to use the statutory discretion under either section 35A of the (English) Senior Courts Act or section 69 of the County Courts Act to allow Spanish penal interest in by the back door when it relates to a different procedural environment to which different procedural rules apply, and where the laws of England and Wales contain within Part 36 of the Civil Procedure Rules procedural provisions to encourage the early settlement of disputes.

Respondents contend that Act 50/1980 is a matter of substantive law because it is an integral part of the way in which damages and interest are assessed in proceedings in Spain for personal injuries in actions against insurers. Therefore it should be ordered to be paid as Spanish law governs the action. As an alternative, the respondents also contend that if Act 50/1980 is a matter of procedure for the purposes of Rome II, then all of the judges were right, and made no error in the exercise of their discretion, in ordering the payment of an equivalent rate of interest under Act 50/1980 as a matter of discretion under section 35A of the Senior Courts Act or section 69 of the County Courts Act.

Dingemans LJ referred to Wall, Lazar, and Actavis as most relevant authority. I agree with his view [33] which I have expressed before (eg in the Handbook, 4th ed, 4.83), that the the evidence and procedure carve-out need not be given either a narrow, strict, or broad interpretation. It simply needs to be applied as intended. [34] he argues

In order to carry out the task of determining whether the interest payable under article 20.4 of Act 50/1980 is a matter of procedure, it is necessary to undertake a consideration of Act 50/1980. That is not to discover whether the provision is considered to be substantive law or a matter of procedure under either Spanish law or the laws of England and Wales, because what is a matter of procedure for the purposes of article 1(3) of Rome II is an autonomous concept under Rome II. The purpose of undertaking a consideration of Act 50/1980 is to determine whether the issue of interest under that provision is so “intertwined” with the assessment of damages, which is a matter of substantive law under Rome II, that interest payable under Act 50/1980 should be considered a matter of substantive law and not a matter of procedure.” (emphasis added)

The test put forward by the Court of Appeal therefore would seem to be the intensity of intertwinedness of the issue at stake, with one of the elements that are clearly listed in A15’s ‘scope of the law applicable’ (here: “assessment of damage”). (Note Stuart-Smith LJ’s concurrence [79] not to look at the issue through an “overly-Anglo/Welsh prism”).

This leads here [58] to the conclusion that

the interest payable under Act 50/1980 is not a matter of procedure for the purposes of article 1(3) of Rome II, and is governed by the law applicable to the non-contractual obligation, namely the law of Spain.

[68] ff then discusses subrogation under A19 Rome II with reference [70] to relevant CJEU authority.

Of note.

Geert.

EU Private International Law, 4th ed 2024, ia Heading 4.8.

https://x.com/GAVClaw/status/1806583047313121464

 

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.