GAVC

Spain v The London Steam-Ship Owners’ Mutual Insurance Association Ltd [2020] EWHC 142 (Comm) reports on the CMR (case management conference) re what promises to be interesting litigation. A Spanish judgment concerning liability for the pollution damage caused when the vessel PRESTIGE broke in two off the coast of Spain in 2002, needs to be enforced in the UK. Brussels Ia’s contestation of recognition is involved: particularly Articles 34(1) and (3).

At 2 Teare J summarises the story so far:

The parties have been in dispute about liability for many years. Criminal proceedings were brought against the master of PRESTIGE in Spain in 2002 and, after the conclusion of the investigative stage of the proceedings, civil proceedings were brought against the master, the Owners of PRESTIGE and the Club, as liability insurer of the Owners, in 2010. (I am told that in addition to Spain there are some 264 other claimants.) In 2012 the Club commenced arbitration proceedings in London against Spain and in February 2013 obtained an award from the sole arbitrator Mr. Alistair Schaff QC which declared that, as a result of the “pay to be paid” clause in the policy the Club had no liability to Spain. In this court Spain challenged the jurisdiction of the arbitrator but the court (Hamblen J. as he then was) held in 2013 that the arbitrator had jurisdiction. Later that year the court in La Coruna dismissed the civil claim against the master, Owners and Club but convicted the master of the crime of disobeying orders by the Spanish authorities to accept a tow of the vessel. In 2015 the English Court of Appeal upheld the decision of Hamblen J. In 2016 the Spanish Supreme Court reversed the decision of the court in La Coruna and held that the master had been seriously negligent and that the Owners and Club were liable for the damage caused. In execution proceedings in Spain, the court in La Coruna declared the Spanish State entitled to enforce a claim up to approximately €2.355 billion against the defendants in the Spanish proceedings and declared the master, Owners and the Club liable in respect of the claims, although subject (in the case of the Club) to a global limit of liability in the sum of approximately €855 million.’

Thus the Club has an arbitration award in its favour but Spain has a judgment of the Spanish Supreme Court in its favour. Spain obtained an order from Master Cook pursuant to which the Spanish judgment was registered so that it could be enforced here against the Club. The Club seeks to appeal from that order. One of the grounds on which it seeks to appeal is that the Spanish judgment is irreconcilable with the judgment of Hamblen J. and the Court of Appeal (A34(3) BIa). Another ground is that recognition of England is contrary to the public policy of England (A34(1)).

This particular CMS concenrs disclosure requirements: the Club’s seeking of disclosure from Spain is resisted by the latter on grounds that is clashes with BIa’s intention of swift recognition.

One of the issues on which disclosure is sought, is Spain’s position under the insurance title of BIa: “Are the English Judgments not qualifying judgments within article 34(3) because the English Judgments conflict with Section 3 of Chapter II of the Brussels 1 Regulation ? In particular …(b) Is the respondent [Spain] entitled to rely on the exclusive rules for jurisdiction in Section 3 of Chapter II. In particular: (i) Is the respondent [Spain] a qualifying party that is entitled to the protective rules in Section 3 ?” Reference is made to Aspen Underwiting: the Club states that it is necessary for Spain to show that it is a member of the class protected by Section 3, which (per Aspen Underwriting, GAVC] excludes “professionals in the insurance sector or entities regularly involved in the commercial or otherwise professional settlement of insurance related claims who voluntarily assumed the realisation of the claim as part of its commercial or otherwise professional activity”. Aspen Underwriting in the meantime (Teare J’s judgment was issued in January; it has been in the blog queue) has been varied by the Supreme Court.

It will therefore be necessary, submitted counsel for the Club, for Spain to disclose documents which show “the class of business” conducted by it. If it is a member of the relevant class it can rely on section 3. If it is not, it cannot.

The second class of document of which disclosure is sought is very different and relates to the public policy defence. Did the Spanish Courts refuse to allow the master to participate in an underwater investigation of the strength of the vessel’s hull and refuse to disclose the results of the investigation (so that there was a breach of the master’s right to equality of arms and to be able to prepare a defence) or were the results disclosed to the master in sufficient time to allow him to prepare his defence. The Club therefore seeks disclosure of the documents relating to that question held by Spain. Here Teare J at 21 assumes that Spain’s evidence can be expected to support its case and to rely upon the documents which show when the results were disclosed to the master and in what terms. If the evidence does not deal with this issue then Spain will be unable to advance its factual case. ‘I therefore consider it very likely that no disclosure under this head will be required. In the unlikely event that it is required a focused application can be made after Spain has provided its evidence.’

The Order eventually imposes a timetable for exchange of evidence (including expert reports) and later settlement of disclosure issues should they arise. Hearing in principle in December 2020.

This could turn out to be a most relevant case.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2, Heading 2.2.16.

[2020] EWCA Civ 122 deals upon appeal with the judgment of Williams J in [2018] EWFC 54 Akhter v Khan which I reviewed at the time here – readers may want to read that post before considering current one. Of note is that applicable law is firmly English law, the judgment is not really one in the conflict of laws.

Williams J had declared the marriage at issue void under the Matrimonial Causes Act 1973, the wife was granted a decree of nullity. This has extremely relevant consequences in terms of ‘matrimonial’ property, and maintenance obligations, including those vis-a-vis the children: non-marriage creates no separate legal rights while a decree of nullity entitles a party to apply for financial remedy orders under the 1973 Act.

Williams J’s judgment was reversed: at 106, following review of ECHR authority: ‘i) Whilst the Petitioner’s Article 8 right to respect to family life is undoubtedly engaged, the failure of the state to recognise the Nikah as a legal marriage is not in breach of those rights; ii) The right or otherwise to the grant of a decree of nullity does not in itself engage Article 8; the fact that at the time of the Nikah ceremony both parties knew that in order to contract a legal marriage they had to go through a civil ceremony, and intended to do so, does not undermine either of those conclusions or permit reliance on Article 8 as a means to allow a flexible interpretation of s. 11 of the 1973 Act.’

With respect to the impact of the children’s interests on this finding, at 111: ‘In our view the decision before the court cannot properly be described as an action concerning children and we cannot see how it can be said that the best interests of a child can turn what was neither a void nor valid marriage, into a void or valid marriage. In our judgment, the action in question relates solely to the status of the adult applicant.’

The Court of Appeal found therefore that the interests of children can play no part in a determination as to whether a ceremony is a non-qualifying ceremony or is a void marriage, and that neither ECHR or UNCHR can make a difference in this respect (at 119); whilst there is inevitably a tangential impact upon a child dependent upon the status of his or her parents’ relationship, an application brought before the court made in order to establish the status of that relationship cannot properly be regarded as an “action concerning children” (at 118).

Geert.

In [2020] EWHC 40 (Ch) Easygroup v Easyfly and ATR Aircraft the issue is the jurisdiction of the English court to hear claims of trade mark infringement, passing off and conspiracy against a Colombian domestic airline, its founder and chief executive, and a French aircraft manufacturer. As always the blog’s interest is not in the substantive issues concerning trademark and passing off, they do however make for interesting reading.

Nugee J considers the jurisdictional issues at 26 ff with respect to the first two defendants and with respect to the French defendant, in para 127 ff. Here the relationship between the EU Trade Mark Regulation 2017/1001 and Brussels Ia comes to the fore. (I continue to find my colleague Marie-Christine Janssens’ 2010 paper most informative on the issues; see also the link to Tobias Lutzi’s analysis of AMS Neve in my report of same). The relevant provisions of the Regulation (previously included in Regulation 207/2009, applied ia in CJEU AMS Neve), read

Article 125. International jurisdiction
1. Subject to the provisions of this Regulation as well as to any provisions of Regulation (EU) No 1215/2012 applicable by virtue of Article 122, proceedings in respect of the actions and claims referred to in Article 124 shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.
2. If the defendant is neither domiciled nor has an establishment in any of the Member States, such proceedings shall be brought in the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.

3. If neither the defendant nor the plaintiff is so domiciled or has such an establishment, such proceedings shall be brought in the courts of the Member State where the Office has its seat.

4. Notwithstanding the provisions of paragraphs 1, 2 and 3:

(a) Article 25 of Regulation (EU) No 1215/2012 shall apply if the parties agree that a different EU trade mark court shall have jurisdiction;

(b) Article 26 of Regulation (EU) No 1215/2012 shall apply if the defendant enters an appearance before a different EU trade mark court.

5. Proceedings in respect of the actions and claims referred to in Article 124, with the exception of actions for a declaration of non-infringement of an EU trade mark, may also be brought in the courts of the Member State in which the act of infringement has been committed or threatened, or in which an act referred to in Article 11(2) has been committed.

Article 126. Extent of jurisdiction
1. An EU trade mark court whose jurisdiction is based on Article 125(1) to (4) shall have jurisdiction in respect of:

(a) acts of infringement committed or threatened within the territory of any of the Member States;

(b) acts referred to in Article 11(2) committed within the territory of any of the Member States.

2. An EU trade mark court whose jurisdiction is based on Article 125(5) shall have jurisdiction only in respect of acts committed or threatened within the territory of the Member State in which that court is situated.

The first two defendants are not based in the EU. Here, Article 125(2) grants jurisdiction to the UK courts.

Controversially, at 36 Nugee J applies a forum non conveniens test. It is disputed whether this is at all possible in the Trademark Regulation. He decides England clearly is the appropriate forum: ‘there is no other court that can try the UK trade mark claims, and for the reasons just given [French and  Spanish courts might have partial jurisdiction, GAVC] no other court that can grant pan-EU relief in respect of the EU trade mark claims.’

At 37 ff Nugee J then also still considers with reference ia to CJEU Pammer and the discussions on ‘accessibility’ (see also ia Football Dataco) whether there is a ‘serious issue to be tried’ and answers in the affirmative. Here I am assuming this must be seen as part of case-management rather than a jurisdictional test (viz Article 8(1) BIa’s anchor defendant mechanism, a ‘serious issue to be tried’ test is said to be part of the ‘related cases’ analysis; see related discussions ia in Privatbank), unless he reformulates the application of Article 126 as a ‘serious issue to be tried’ test – the structure of the judgment is leaving me confused.

Eventually however the previous Order made by the High Court, granting permission to serve out of jurisdiction, is set aside by Nugee J on grounds of lack of full and frank disclosure at the service hearing – an issue less exciting for this blog however dramatic nevertheless.

The French defendant (who issued a relevant press release (only 11 copies of which were distributed at the Farnborough airshow; this was found to be de minimis; not as such a mechanism available under the EUTMR I don’t think; but it might be under case management) and was also responsible for organising (ia by having the logo painted) the offending branding in France), at the jurisdictional level is dealt with in para 127 ff., first with respect to the trademark claim.

‘By art. 125(1) the default position is that the proceedings shall be brought in the courts of the Member State where the defendant is domiciled: in ATR’s case this is France. Neither art. 125(2) nor art. 125(3) applies to ATR because each only applies if the defendant is neither domiciled nor has an establishment in a Member State. Art. 125(4) does not apply as it is not suggested that ATR has either (a) agreed that the English court should have jurisdiction, or (b) entered an appearance before the English court. That leaves art. 125(5) under which proceedings may also be brought in the courts of the Member State in which the act of infringement has been committed or threatened. In the present case that would also be France (and possibly Spain). It follows that none of the provisions of art. 125 confer jurisdiction on the English court to hear actions based on acts of infringement said to have been carried out by ATR in France and Spain.’

Counsel for EasyGroup accepted ia per AMS Neve that the Trademark Regulation is lex specialis vis-à-vis Brussels Ia but that nevertheless the general spirit of BIa should blow over Regulation 2017/1001. They refer at 130 to the ‘general desirability of avoiding duplicative proceedings and the risk of inconsistent judgments (as exemplified by arts 29 and 30 of Brussels I Recast),’ and argue that ‘it followed that once the English court had jurisdiction over the Defendants for the acts taking place in France (as it undoubtedly did under art. 125(2)), then it must also have jurisdiction over anyone else alleged to be jointly liable for the same acts of infringement.’

This therefore is a makeshift joinder mechanism which Nugee J was not impressed with. He pointed to the possibility under A125(5) to sue the other defendants and the French defendants in one jurisdiction, namely France. An A7(2) BIa action is not possible: A122(2)(a) EUTMR expressly provides that in proceedings based on A124, A7(2) BIa does not apply.

Finally, a claim in conspiracy against the French defendant is not covered by the EUTMR and instead by A7(2) BIa, discussed at 142 ff with reference to (Lugano) authority [2018] UKSC 19, which I discussed here. Locus delicti commissi, Nugee J finds, is not in England: no conspiratorial agreement between ATR and the Defendants in relation to the branding of the aircraft took place in England. At 145: ‘the Heads of Agreement, and Sale and Purchase Agreement, were each signed in France and Colombia, and there is nothing that can be pointed to as constituting the making of any agreement in England.’

As for locus damni, at 148 Nugee J holds this not to have been or potentially be in England:

‘The foundation of easyGroup’s claims in relation to the branding of the aircraft is that once painted they were flown on test flights, and en route to Colombia, in full view of the public. But the public which might have viewed the planes were the public in France and Spain, not the public in the UK. That might amount to a dilution in the brand in the eyes of the French and Spanish public, but it is difficult to see how it could affect the brand in the eyes of the UK public, or otherwise cause easyGroup to sustain loss in the UK. Mr Bloch said that if such a plane crashed, the news would not stop at the Channel and it might adversely affect easyGroup’s reputation in the UK, but no such damage has in fact occurred, and it seems to me far too speculative to say that it may occur. As already referred to, Mr Bloch also relied on easyGroup having suffered damage on the user principle (paragraph 82 above), but it seems to me that damages awarded on this basis would be damages for the loss of an opportunity to exploit easyGroup’s marks by licensing them to be used in France and Spain, and that for the purposes of the first limb of art. 7(2) such damage would therefore be suffered in France and Spain as that is where the relevant exploitation of the asset would otherwise take place.’

This last element (place where the relevant exploitation of the asset would otherwise take place) is interesting to me in Universal Music (purely economic loss) terms and not without discussion, I imagine.

Conclusions, at 152:

(1) There is a serious issue to be tried in relation to each of the claims now sought to be brought by easyGroup against the non-EU defendants.

(2) There was however a failure to make full, frank and fair disclosure at the service out of jurisdiction hearing, and in the circumstances that Order should be set aside.

(3) The question of amending to bring claims against the French defendant. But if it had, Nugee J would have held that there was no jurisdiction for the English court to hear the claims based on the acts in France (or Spain), whether based on trade mark infringement or conspiracy. There is jurisdiction to hear the claims based on the issue of the Press Release in the UK, but Nugee J would have refused permission to amend to bring such claims on the basis that they were de minimis.

A most interesting and thought provoking judgment.

Geert.

In Representation of Lydian international Limited [2020] JRC 049 MacRae DB refers to universality in insolvency proceedings only once,  namely where he refers to authority at 20. Yet his approach in honouring the request for assistance, made by the courts at Ontario ‘on the basis of comity’, walks and talks like universality. This is of course reminiscent of Menon CJ’s recent speech on the issue, or similar decisions elsewhere.

‘Though there is no precedent in Jersey for a Canadian CCAA order or similar order being enforced or recognised in relation to a Jersey company, we had no doubt that we should assist the Canadian Court in this case.  There were no reasons of Jersey public policy impeding the court making the orders sought.  To the contrary, it is consistent with Jersey’s status as a responsible jurisdiction for the Royal Court to lend assistance in order to facilitate an international insolvency process in a friendly country that has a potential to benefit the creditors of the Lydian Group as a whole.’ The Deputy Bailiff also notes that key Jersey creditors and the Jersey corporation of the Lydian group itself were represented in the Canadian proceedings.

Geert.

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

#Insolvency.
Request honoured of the courts of Ontario to assist with proceedings on the basis of comity, universalism. https://t.co/vUelMOKdId

— Geert Van Calster (@GAVClaw) April 15, 2020

A quick note on [2020] EWHC 893 (Fam) I and L (children), in which Mostyn J berates and effectively disciplines a father’s abuse forum and process shopping.

At 11:

‘I pause at this point to reflect on the actions taken by the father. Not only did he act in bad faith, as I have explained, but he also was guilty not only of blatant forum shopping but also of process shopping. If the father had genuinely developed misgivings about the wisdom and merits of the parenting agreement signed by him on 5 August 2019 then the appropriate place to raise those misgivings was the court in South Africa [the habitual residence of the children, GAVC]. Instead, by a ruse de guerre he lured the mother and children to this jurisdiction where he immediately started proceedings in the forum which he considered to be most favourable to him. By striking pre-emptively he also selected the process which he considered most favourable to him. Had he merely retained the children on 3 January 2020 and awaited the mother to take steps in response she would, unquestionably, have raised a case under the 1980 Hague Convention on the Civil Aspects of Child Abduction. In such a process the welfare of the children, while being an important consideration, would not have been the paramount consideration. Instead, the court would have started with the position that the children should be returned to the place of their habitual residence unless the father could demonstrate a defence.’

In the end he held that under the Children Act, in which the welfare of the children is the paramount criterion, a return to their habitual residence (to be effected as fast as possible following the end of Covid-19 lock-down) is in their best interest, thus torpedoing the abuse. Clearly like in QD, the English courts do not appreciate cloak and dagger manipulation of forum or process.

Geert.

A late post (I am slowly trying to mop up my back issues; none of them thankfully going back quite as far as this one) on Roberts v The Soldiers, Sailors, Airmen And Families Association & Anor [2019] EWHC 1104 (QB) in which Soole J had to hold on whether the Civil Liability (Contribution) Act 1978 (the 1978 Act) has mandatory/ overriding effect and applies automatically to all proceedings for contribution brought in England and Wales, without reference to any choice of law rules. A tortious and residual private international law (as opposed to Rome I or II) take therefore on similar issues as in the contracts case of Lamesa Investments.

Claimant was born at the Hospital in Viersen, North-Rhine Westphalia, Germany on 14 June 2000. The Hospital provided medical services to UK Armed Forces stationed in Germany, with whom the Claimant’s father was serving, and their families. His claim is that he sustained an acute profound hypoxic brain injury as a result of negligence in the course of his delivery by a British midwife supplied by the First Defendant charity (SSAFA). On his behalf it is alleged that SSAFA and/or the Second Defendant (MOD) are vicariously liable for her acts or omissions.

The Hospital contends that the application of the 1978 Act is subject to choice of law rules, whose effect is to apply German law to a claim for contribution. By the combined effect of the German law of limitation and s.1 Foreign Limitation Periods Act 1984 the contribution claim is time-barred; and therefore must fail. SSAFA/MOD accept that, if choice of law rules prevail, the relevant law is German and the claim time-barred. However they contend that the 1978 Act has overriding effect. Since the limitation period under the 1978 Act expires 2 years from the date of judgment award or settlement (s.10 Limitation Act 1980), the claim can proceed.

Rome II is not engaged ratione tempore (it may have varied the outcome).

Soole J first summarises at lenghth the submissions of the parties, including their scholarly references. He then, at 81, reminds us of the common law approach to characterisation (one which we successfully pleaded in a continental court in a trust case recently): ‘the first question in such a dispute is the characterisation (or classification) of the claim or issue in question. Such classification should not be constrained by particular notions or distinctions of the domestic law of the lex fori, or that of the competing system of law, which may have no counterpart in the other’s system; and should be taken in a broad internationalist spirit in accordance with the principles of conflict of laws of the forum’.

He then holds that the questions of lois de police do not justify cutting corners in conflict of laws analysis: one does not jump straight to application of a local act. Rather, one dutifully follows conflicts analysis and then applies the local act only if and to the extent the foreign law impedes it. Then follows at 92 his classification of the act as lois de police indeed (the terminology used here also includes ‘extraterritorial application’ which however suggests a disconnect from the usual conflicts exercise): ‘In my judgment it is implicit from the provisions of the 1978 Act that the statute does have overriding effect; and that the presumption to the contrary is accordingly rebutted. And at 93: ‘I consider that the express references in the 1978 Act to private international law (ss.1(6), 2(3)(c)) support this implication. Parliament having chosen to identify specific circumstances in which choice of law rules are to apply (and the extent of that application) in a claim under the statute, the natural implication is that the availability of this statutory cause of action was not itself to be subject to choice of law rules.’

Most interesting judgment.

Geert.

This item has been in the queue a long time – apologies. Thank you Marco Vogels for reporting end of 2019 on the Rotterdam court’s approach re privilege in ECLI:NL:RBROT:2019:7856, a criminal prosecution involving Shell. Marco’s report is most complete and I am happy to refer.

Compare the Dutch approach to my earlier reports on the issue in England and in the US. The Rotterdam court takes the law of the place of establishment of the (self-employed) solicitors as the connecting factor, ditto for in-house lawyers (on which The Netherlands takes an unusual (bu continental European standards) position of professional privilege). However the court also held that privilege falls away for the whole in-house legal department and all its lawyers, foreign established or not, if the head of legal is member of the Executive Committee.

Geert.

In Terre Neuve SARL & Ors v Yewdale Ltd & Ors [2020] EWHC 772 (Comm), Bryan J entertains almost the entire jurisdictional chapter of the Handbook.

The proceedings are concerned with the alleged misappropriation of a sum of €10.6 million paid by the First Claimant (“Terre Neuve”) to the First Defendant (“Yewdale”) between July 2009 and September 2012, and thereafter allegedly misapplied with the alleged participation of other Defendants. The sums were paid pursuant to a tax optimisation scheme ultimately for the benefit of the Third Claimant (“Mr. Zahut”), who beneficially owned Terre Neuve and the Second Claimant (“Largely”). The scheme was allegedly created by a Mr. Sasson (now deceased), who gave tax advice through his company, the Third Defendant (“GPF”) and controlled Yewdale (an English company) and the Second Defendant (“REDS”) (a New York company).

In this preliminary judgment, plenty of the defendants challenge jurisdiction, even if as discussed at 11 ff, following judgment by Hancock J in [2019] EWHC 1119 (Comm), confirmed in [2019] EWHC 1847 (Comm), the action is already proceeding in England against Yewdale (which has been found to be a valid anchor defendant per Article 4 Brussels Ia) as well as a number of the overseas defendants: both those domiciled in Switzerland, and elsewhere. Co-defendants in current case were not involved in those earlier hearings.

Firstly, GPF, third defendant, challenges jurisdiction under Article 23 Lugano, more or less but not quite the same as Article 25 BIa. At 22 ff Bryan J cuts too many corners in my view. He extends CJEU precedent on Brussels I and Ia without question to Lugano construction. He unhesitatingly adopts English law (with Fiona Trust in the authority driver’s seat and with reference to the recent Etihad case) as the lex causae for the choice of court agreement. This is as lex fori additi I assume; the actual text of the choice of court agreement is not included in the judgment lest I looked over it however one can deduct the choice points to Switzerland. He is right in holding that the answer to the contractual construction of the choice of court agreement cannot be found in either Lugano or Brussels itself.

At 44 ff he decides that Claimants’ claims do not fall within the scope of any of the jurisdiction clauses in the Written Agreements, pointing away from England.

Next, a group of co-Defendants, who the Claimants allege were involved in and/or benefited from the misappropriation, challenge the jurisdiction of the English Court on various grounds, inter alia: that the claims against them are not sufficiently closely connected to be heard with the claims against the other Defendants in this jurisdiction, pursuant to Article 6(1) Lugano, and should instead be tried in Switzerland pursuant to Article 2 Lugano; that the claims against them would be more conveniently heard in Switzerland; that bringing proceedings against them in England is an abuse of process; that they should be tried in Switzerland pursuant to Article 5 Lugano; that proceedings against them in England are a breach of their rights under Article 6 ECHR; and that various agreements contain jurisdiction clauses which prevent the English Court from hearing the case against them.

In short (note all the authority he employs has been reviewed on this blog, both CJEU (e.g. Melzer) and English) Bryan J finds the cases are clearly related under Article 6 Lugano; forum non conveniens must not be entertained; and there is no abuse of EU law (a popular part of jurisdictional challenge following Vedanta); some of the defendants have submitted; Article 5 Lugano’s forum contractus is irrelevant for it only brings additional, not exclusive jurisdiction; Article 6 ECHR is clearly not breached (practical difficulties of attending, for instance, may be solved by modern means); arbitration in New York first of all does not engage an EU court and secondly of course arbitration is exempt from Lugano.

Finally the one co-defendant domiciled in Israel is nevertheless pulled into the English jurisdictional bath by application of residual English rules (serious issue to be tried; necessary and proper party).

Quite a lot to discuss by way of preliminary jurisdictional issue…

Geert.

A Lugano /Brussels I jurisdictional fest. Includes consideration of anchor defendants, A25 choice of court, A4 jurisdiction. https://t.co/vyrRJ9zIkS

— Geert Van Calster (@GAVClaw) March 31, 2020

Many thanks, Dr Richard Schmidt for signalling and reviewing  the recent Hungarian Supreme Court judgment (in Hungarian) discussing unilateral aka asymmetric aka hybrid choice of court. I do not have Hungarian and happily rely on Richard’s analysis and review.

As Richard reports, the contract was governed by the law of Liechtenstein and provided that any legal disputes would be brought before the court of Vaduz (Liech). However, the claimants had the option of seeking the performance of the contract before the courts of the defendant’s domicile. The defendant failed to pay the service charges and the claimants sued him in Hungary.

Upon appeal it seems the lower courts had held that choice of court ex-EU is not covered by Brussels Ia (compare CJEU Gothaer) and stayed the case in favour of the court at Vaduz. The Supreme Court however in principle would see to have upheld the choice of court provision as exercised by the claimant even if it decided the case ultimately on a finding of submission.

As I said I do not read Hungarian, text search however does not suggest that the SC looked at the issue at all viz Brussels Ia. Which is odd.

Richard justifiably refers to the approaches of both the English (see e.g. here) and the French Courts (contrast Rotschild with Apple). Thankfully there is now also the volume edited by Mary Keyes, looking comparatively at the issue (Michiel Poesen and I contributed the Belgian chapter).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9, Heading 2.2.11.1, Heading 2.2.11.2 .

Most interesting Hungarian SC judgment on asymmetric choice of court.
Case in the end turned on submission (voluntary appearance). Adopts an approach on such unilateral jurisdiction clauses somewhere between the EN and (former) FR approach. https://t.co/u2a5mpYBss

— Geert Van Calster (@GAVClaw) March 11, 2020

In Lecta Paper [2020] EWHC 382 (Ch), Trower J picks up where Zacarolii J left off in [2019] EWHC 3615 (Ch) (which I briefly flagged in my post here and which is referred to in current judgment 12) and goes through the usual matrix for assessing the international impact of an English scheme of arrangement on the European continent.

Ultimate parent company is a Luxembourg company, with further controlling interests held by yet another Luxembourg and a Spanish company. A 10-11 Trower J flags a sensitive issue for credit and other financial arrangements: financial instruments subject to New York law, where amended to English law as governing law and the courts at England as non-exclusive jurisdiction. This was done in accordance with New York law, and approved by over 90% of the instruments’ holders. Yet again therefore a crucial question viz schemes of arrangement and the Brussels jurisdictional and applicable law regimes remains unaddressed, namely the event of opposition of a sizeable stake of creditors.

At 33 ff the issue of jurisdiction is discussed along the lines of Apcoa, Codere and NN2 Newco. Under residual private international law, the sufficient connection to England, engineered by the aforementioned change of governing law and jurisdiction in line with the law governing the instruments at the time (New York law, at 38), was held not to be unfair viz the creditors even in the case of the mother company with COMI in Luxembourg. At 44 ff Trower J returns to the issue of whether Brussels Ia can apply at all to the case, particularly via Article 4 juncto Article 8(1), holding for application of Article 25 in the end. However as in the authority he applies, there continue to be a lot of assumptions in this analysis which, failing substantial opposition by creditors, still have not been settled by either UK, CJEU or continental authority.

At 40 follows the equally standard reference to national experts testifying to the scheme’s recognition in the jurisdictions concerned: France, Italy, Spain, Luxembourg.

At 41 Trower J then briefly mentions Brexit (see my reference to similar cases here). Referring again to the national experts but also to his own insight, Justice Trower simply notes that

‘The Recast Judgments Regulation will continue to apply to the recognition of an English judgment in EU member states, notwithstanding the occurrence of Brexit, provided that the judgment has been given in proceedings which were instituted before 31 December 2020, being the end of the transition period. This follows from Article 67(2) of the Withdrawal Agreement. It follows that any sanction order made in this case should be recognised in EU member states, pursuant to the Recast Judgments Regulation, as will their own domestic law dealing with the recognition of judgments. It is also the case that the application of the Rome I Regulation ought to be unaffected by Brexit in any event. As I read the expert reports, they each confirm that that Regulation will continue to apply after the end of the transition period so that the law of the jurisdiction in respect of which they give evidence will recognise the governing law of the relevant contracts, in this case English law, as applying to the variation and discharge of rights under that contract.’

Note as I did above, the continuing Brussels IA cover assumptions, as well as the position post Brexit (whether under Lugano 2007 or not, remains to be seen).

Geert.

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

In Islandsbanki & Ors v Stanford [2020] EWCA Civ 480, upon appeal from Fancourt J in [2019] EWHC 1818 (Ch), Asplin LJ discussed whether purported execution of a foreign judgment registered in the High Court pursuant to the Lugano Convention, can be execution issued in respect of the judgment debt (for the purposes of section 268(1)(b) of the Insolvency Act 1986), if the execution occurred before the period for appealing the registration of the judgment has expired and, if not, whether the defect can be cured.

An unpaid Icelandic judgment debt from 2013 which together with interest, is now in excess of £1.5 million sterling equivalent. The judgment was given against Mr Stanford in the Reykjanes District Court in Iceland on 26 June 2013. A certificate was issued by the Icelandic court on 16 October 2013, pursuant to Articles 54 – 58 Lugano. IB applied to register the Icelandic judgment in England and Wales on 16 March 2016. A registration order was sealed on 23 March 2016 (the “Registration Order”).

Some of the issues in the Appeal (and before Fancourt J) concern purely English procedural rules however their effect is of course to facilitate, or obstruct, recognition and enforcement under the Lugano Convention. The confusion to a great degree results from the UK, despite Lugano’s direct effect, having implemented the Convention in the CPR rules anyway (at 24). The submission made by appellant (the Bank) before the Court is essentially that a narrow interpretation of the English CPR rules which would not allow remedying an error in the procedure, would run counter Lugano’s objective of facilitating recognition and enforcement (reference is made to the Pocar report and the recitals of Lugano itself).

Asplin LJ at 38 points to the language of Lugano itself: ‘during the time specified for an appeal pursuant to Article 43(5) against the declaration of enforceability and until any such appeal has been determined, no (emphasis in the original) measures of enforcement may be taken other than protective measures against the property of the party against whom enforcement is sought. The ordinary and natural meaning of those provisions is quite clear.’ She also at 37 points to the Convention’s objectives not being restricted to ease of enforcement: ‘the underlying policy of Articles 43(5) and 47(3) is that a fair and proportionate balance must be struck between the interests of the party which applies for a registration order having obtained a judgment in a foreign jurisdiction to which the Convention applies, and the defendant/debtor whose rights of appeal are prescribed by law and should not be undermined by allowing irreversible measures of enforcement.’

Conclusion, at 40: ‘It is for that reason that CPR 74.6(3) provides that a registration order must contain reference to the period in which an appeal against registration can be lodged and that no measures of enforcement can be taken before the end of that period and the reason why that prohibition was repeated in the Registration Order itself at paragraph 2. Accordingly, any attempt to remedy the premature issue and execution under the Writ of Control by means of an exercise of the discretion under CPR r3.10(b) or the use of CPR r3.1(2)(m) or 3.1(7) (or the inherent jurisdiction of the court, for that matter) would fundamentally undermine Article 47(3) and section 4A(3) in a way which is impermissible.’

at 62 ‘The defect in the execution in this case, if it can be called a defect, was fundamental….It was not a mere technicality or a formal defect which might be rectified pursuant to what is now Rule 12.64 of the Insolvency Rules 2016. It went to the heart of the execution process’.

Appeal dismissed following an interesting and clear application of both Lugano’s provisions and its spirit.

Geert.

Recognition and enforcement, Lugano.
Whether purported execution of foreign judgment can be issued in respect of the judgment debt, for purposes of Insolvency Act, if execution occurred before the period for appealing the registration of the judgment has expired. https://t.co/bPt9U1IaHt

— Geert Van Calster (@GAVClaw) April 2, 2020

A late-ish flag to keep an eye on Greenpeace’s class-action suit filed in the Austrian courts to have the Austrian tax breaks on air traffic (tax exemption on kerosene fuel for domestic flights and a VAT exemption on international flights) lifted. It is certain to engage the Chicago Convention and the European implementation of same. The argument is inter alia that the non-exemption for rail is a form of State Aid to the airlines. I wrote on the issues in 2016, featuring T-351/02 Deutsche Bahh, arguing that the CJEU could have forced the issue then. What would be most excellent would be for the Austrian courts to refer to Luxembourg so as the CJEU may revisit the issue 14 years on from the judgment of the then Court of First Instance, in a world were many look a lot less forgivingly at the exemptions’ implications for internalising negative environmental externalities.

Geert.

EU environmental law (with Leonie Reins), Edward Elgar, 2018.

BREAKING: first ever climate change case directly targeting aviation emissions, as @GreenpeaceAT asks Austria's Constitutional Court to repeal laws offering tax credits on plane fuel, alleging violation of international human rights law, Articles 2/8 ECHR.https://t.co/Bmozqd8M3b pic.twitter.com/B0p1MKGrh5

— Sam Varvastian (@SamVarvastian) February 20, 2020

Sánchez-Bordona AG issued his opinion in C‑343/19 Verein für Konsumenteninformation v Volkswagen last Thursday. He relies heavily of course on CJEU authority almost all of which is reviewed on the blog – with Tibor Trans making a star appearance given its recent nature as well as its focus, like in Volkswagen, on financial damage.

Not long after, yesterday, the High Court in England in [2020] EWHC 783 (QB) held on a first preliminary issue in the class action suit pending there. Matthias Weller has already reviewed that judgment here. In that judgment, a lex causae argument on the binding authority of a German public body’s decision was advanced by claimants in subsidiary fashion. This was not entertained by the High Court for it had already found a binding effect on other grounds. Incidentally, the nature and timing of the High Court’s ruling suggest that there is no contestation of jurisdiction being brought forward by Volkswagen – I am enquiring with counsel in the case.

Returning to CJEU C-343/19, though: Raphael de Barros Fritz has analysis here and I am happy to refer, for timing for the release of my own ponderings on the Opinion suffered from a Friday afternoon call on injunctive relief and jurisdiction. A few additional notes of interest and subject to further pondering:

Firstly, the AG is too kind when he suggests that the Brussels Convention had left open the (now) Article 7(2) question. The Court’s locus damni /locus delicti commissi distinction was not at all required by then Article 5(3). Much as the distinction may have been clear to make in the Bier case itself, it was not at all advanced by the text of the Brussels Convention. Many of us have been pointing out the fallacy, including Cruz Villalon AG in his Opinion in Pez Hejduk, case C-441/13 which I reviewed here and Szpunar AG in his Opinion in Universal Music reviewed here. As Sánchez-Bordona AG points out in Volkswagen, the distinction has become a paradigm (at 2); ‘obstinance’ might also be a good word for it. The result of the CJEU refusing formally to reverse its Bier distinction, means itself and the national courts have been having to conjure up all sorts of distinguishing to respect both the Handlungsort /Erfolgort distinction, and the predictability of Brussels Ia as well as the need to interpret special jurisdictional rules restrictively.

Raphael makes a most valiant effort to do justice to the AG’s attempt at systemisation, yet the reality remains that most certainly on the locus damni front, the ever unclearer distinction between direct and indirect aka ‘ricochet’ damage is a Valhalla for reverse engineering – and we have not even thrown Lazar into the mix.

The AG suggests that not only the first purchasers of the vehicle may be direct victims, but also downstream purchasers of second-hand vehicles, however in each case constrained (if I understand the Opinion properly) to those purchasers, first or not, where the loss of value of the vehicles did not become a reality until the manipulation of the engines was made public: at 41; ‘ The loss of value of the vehicles did not become a reality until the manipulation of the engines was made public. In some instances, the applicants may be end users who obtained the vehicle from another, previous buyer; however, the latter did not experience any loss because, at that time, the damage was latent and was not disclosed until later when it affected the then owner. Therefore, it is not possible to describe the damage as being passed on from the original buyers to successive buyers.’

Further, given that the location of the vehicle is unforeseeable, the Advocate General considers that the place where the damage occurred is the place where that transaction was concluded, pursuant to which the product became part of the assets of the person concerned and caused the damage. However even for these cases other elements (per Universal Music) will have to be shown to avoid forum shopping and for these other elements, the AG suggests in particular a minimum contacts rule such as in US conflict of laws: at 75: ‘the defendant’s intention to sell its vehicles in the Member State whose jurisdiction is in issue (and, as far as possible, in certain districts within that State).’

On locus delicti commissi, the AG suggests at 34 that the event giving rise to the damage in this case consists of the installation, during the vehicle manufacturing process, of software which alters the vehicle’s emissions data. I do not think that is the only possible Handlungsort: other events in the Dieselgate chain arguably may qualify as Handlungsort, too: the executive decision to go ahead with the program, for instance. Or the regulatory steps (including type approval under EU law such as discussed in [2020] EWHC 783 (QB), above; or other steps required under EU or national law) needed to market the product in the country.

The last words on this Opinion have far from been said.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.7

Many thanks again María Barral for continuing her updates on C-186/19 Supreme v Shape; see her summary of Thursday’s opinion of the AG below. I just wanted to add two things.

Firstly, the AG’s suggestion that in spite of the intervening Court of Appeal judgment which would seem to make the CJEU case nugatory, the case should continue for against the appeal’s court decision, a further appeal is underway with the Supreme Court.

Second, at 93 etc. the AG advises that the immunity or not of the defendant, bears no relevance to the scope of application of BIa for it does not feature in the concept of ‘civil and commercial’ as developed by the Court.

That in my view is at odds with the CJEU’s very statement in Eurocontrol, at 4: the Court’s seminal judgment on civil and commercial itself in so many words links the scope of application to the practicality of recognition: in Eurocontrol the CJEU interprets ‘civil and commercial’ ‘in particular for the purpose of applying the provisions of Title III of the Convention‘: there is little use bringing issues within the scope of the Convention and now BIa, if ab initio there is no prospect of recognition and enforcement.

In other words I am not at all sure the Court will follow the AG on that part of the analysis. I should emphasise this is my view: María’s review independent of that follows below.

Geert.

Immunity does not impact jurisdiction based on Regulation Brussels I bis, AG Saugmandsgaard Øe dixit

María Barral Martínez

Following up on the previous posts (see here and here) discussing the contractual dispute between Supreme site Services v. SHAPE, today’s post addresses  the Opinion of Advocate General Saugmandsgaard Øe in C-186/19 Supreme v Shape.

While the questions posed by the referring court concerned the interpretation of articles 1(1) and 24(5) Brussels Ia, ‘at the CJEU’s request’ (5) limits his analysis to Article 1(1).

In a nutshell, the analysis in his Opinion is twofold: on the one hand, he examines whether the action brought by SHAPE – an international organisation- seeking the lift of an interim garnishee order falls within the meaning of “civil and commercial matters” laid down in article 1(1) of the Brussels I bis Regulation. On the other hand, he analyses whether the fact that SHAPE had invoked its immunity from execution in the interim relief proceedings has any significance on the above evaluation.

In tackling the first prong of his analysis, AG Saugmandsgaard Øe recalls the public hearing held at the CJEU back in December 2019. There, the focus was put on how the  “civil and commercial” nature of the interim relief measures sought by SHAPE is to be assessed – in the light of the features of the proceedings on the merits, based exclusively on the interim relief proceedings or only in relation to the nature of the rights the interim measures intend to safeguard matters. AG Saugmandsgaard Øe rejects the first two alternatives and follows the thesis supported by the Governments of The Netherlands and Belgium and by the European Commission: in line with the judgments de Cavel I and de Cavel II, the nature of the rights whose recognition is sought in the proceedings on the merits and whose protection is the purpose of the interim or protective measures sought is decisive. (Point 46 and 51)

Furthermore, AG conducts a thorough analysis on the immunities recognised under Public International Law vis-à-vis the application of Brussels Ia. He argues that to determine whether a dispute should be excluded from the scope of BIa on the grounds that it concerns “acts or … omissions in the exercise of State authority” – A1(1) in fine-, it is necessary to assess whether the action is based on a right which has its source in acta iure imperii or in a legal relationship defined by an exercise of State authority. (at 90)

On that basis, he concludes that an action for interim measures such as the one in the present case, seeking the lift of a garnishee order, must be regarded as “civil and commercial” in so far as the garnishee order was aimed to safeguard a right arising from a contractual legal relationship which is not determined by an exercise of State authority. (at 104)

Finally, AG Saugmandsgaard Øe posits that the fact that an international organization as SHAPE has invoked immunity from execution, has no bearing in the assessment of the material application of Brussels Ia. What’s more, it cannot serve as an obstacle for a national court to establish its international jurisdiction based on the aforementioned Regulation.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.2.2.

In Wallis Trading Inc v Air Tanzania Company Ltd & Anor [2020] EWHC 339 (Comm), at stake is a claim by Wallis Trading, a Liberian company which carried on the business of acquiring and leasing aircraft, against Air Tanzania and the Government of Tanzania in respect of sums which Wallis says are due to it from the Defendants arising out of a lease of an aircraft by Wallis to ATCL.

Of interest to the blog is the discussion of the Rome Convention at 74 ff. Defendants contend that the Lease is invalid, and ‘null and void’ because it was entered into in breach of the Procurement Legislation. Butcher J holds that the Lease expressly provided that English law was to be its governing law. The putative law of the lease therefore is English law (the bootstrap of Article 8 Rome Convention, now Article 10 Rome I. The Procurement Legislation is not part of English law, and non-compliance with it does not, as a matter of English law, render the Lease invalid, null or void.

What however about the application of A7 Rome Convention’s rule on lois de police /mandatory law?

1. When applying under this Convention the law of a country, effect may be given to the mandatory rules of the law of another country with which the situation has a close connection, if and in so far as, under the law of the latter country, those rules must be applied whatever the law applicable to the contract. In considering whether to give effect to these mandatory rules, regard shall be had to their nature and purpose and to the consequences of their application or non-application.

2. Nothing in this Convention shall restrict the application of the rules of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the contract]

Here, Butcher J points out that Article 7(1) of the Rome Convention does not have the force of law in the United Kingdom: the UK had entered an Article 22 reservation viz the lois de police rule. The impossibility of same viz Rome I led to the stricter language in Article 9. In the event of Rome I not being part of the future relations between the UK and the EU, the Convention and its reservation will once again be applicable.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.8, Heading 3.2.8.3.

Interesting re applicable law.
Choice of court and law pro England.
Includes consideration of mandatory law (alleged invalidity under Tanzanian procurement law) under the Rome Convention. Rome I does not apply ratione temporis.
UK reservation viz Article 7 Rome Convention. https://t.co/ONQ1oO9YGX

— Geert Van Calster (@GAVClaw) February 24, 2020

I wrote earlier on the judgments at the High Court and the Court of Appeal in Aspen Underwriting v Kairos Shipping. The Supreme Court held yesterday and largely upheld the lower courts’ decisions, except for the issue of whether an economically equal party may nevertheless enjoy the benefit of the insurance section of Brussels Ia.

Reference is best made to my earlier posting for full assessment of the facts. The Supreme Court considered four issues.

Issue 1: Does the High Court have jurisdiction pursuant to the exclusive English
jurisdiction clause contained in the Policy? This was mostly a factual assessment (is there a clear demonstration of consent to choice of court) which Lord Hodge for the SC held Teare J and the Court of Appeal both had absolutely right. Lord Hodge refers in support to a wealth of CJEU and English (as well as Singapore) courts on assignment and contractual rights v obligations.

Issues 2 and 3: Are the Insurers’ claims against the Bank matters ‘relating to
insurance’ (issue 2) within section 3 of the Regulation and if so, is the Bank entitled to rely on that section (issue 3)?

On issue 2, Teare J and the Court of Appeal had held that the Insurers’ claim against the Bank was so closely connected with the question of the Insurers’ liability to indemnify for the loss of the Vessel under the Policy that the subject matter of the claim can fairly be said to relate to insurance.

On this issue the insurers had appealed for they argued that a claim can be regarded as a matter relating to insurance only if the subject matter of the claim is, at least in
substance, a breach of an obligation contained in, and required to be performed by,
an insurance contract. They referred in particular to Brogsitter and also to Granarolo and Bosworth.

Lord Hodge disagreed with claimant, upholding Teare J and the CA: the need for restrictive interpretation is mentioned (at 38) and at 35 it transpires that of particular relevance in his analysis is the very wording of the title of the insurance section: unlike all other special jurisdictional rules of interest, it does not include ‘contracts’. Further (at 36),

‘the scheme of section 3 is concerned with the rights not only of parties to an insurance contract, who are the insurer and the policyholder, but also  beneficiaries of insurance and, in the context of liability insurance, the injured party, who will generally not be parties to the insurance contract.’

At 40 he holds that in any event the Brogsitter test is met:

‘The Insurers’ claim is that there has been an insurance fraud by the Owners and the Managers for which the Bank is vicariously liable. Such a fraud would inevitably entail a breach of the insurance contract as the obligation of utmost good faith applies not only in the making of the contract but in the course of its performance.’

[Of note is that the ‘related to’ issue was discussed in Hutchinson and is at the CJEU as C-814/19, AC et al v ABC Sl as I flag in my review of Hutchinson).

However (issue 3) both Teare J and the CA eventually held that the insurance title failed to provide the bank with protection for they argued (as I noted with reference in particular to CJEU Voralsberger) that protection was available only to the weaker party in circumstances of economic imbalance between the claimant insurer and the defendant.

Here the SC disagrees and overrules. Lord Hodge’s reasons are mentioned at 43 ff, and I will not repeat them fully here. They include his view on which he is entirely right and as I have pointed out repeatedly, that recitals may be explanatory but only the rules in the Regulation have legal effect). Bobek AG’s Opinion in C-340/16 Kabeg features with force. Hofsoe is distinguished for, at 56,

‘In none of these cases where the CJEU has relied on the “weaker party” criterion to rule on applications to extend the scope of the section 3 protections beyond those parties who were clearly the policyholder, the insured, the beneficiary or the injured party, did the court call into question the entitlement of those expressly-named persons to that protection by reason of their economic power.’

That assessment is not entirely consistent for as Lord Hodge himself notes, and the CJEU acknowledges, in KABEG, Vorarlberger, Group Josi and GIE the jurisdiction of the forum actoris had been extended under articles 11(1)(b) and 13(2) to include the heirs of an injured party and also the employer who continues to pay the salary of the injured party while he was on sick leave.

All in all, it agree following Lord Hodge’s convincing review of the cases, that it is acte clair that a person which is correctly categorised as a policyholder, insured or beneficiary is entitled to the protection of section 3 of the Regulation, whatever its economic power relative to the insurer. (Even if particularly following Hofsoe the application of the section as a whole might need a more structured revisit by the CJEU). In the case at hand the Bank is the named loss payee under the Policy and therefore the “beneficiary” of that Policy (at 60).

In conclusion: Under A14 BIa the Bank must be sued in The Netherlands.

Finally, whether claims in unjust enrichment fall within article 7(2) (answered by Teare J in the negative) ‘does not arise’ (at 60). I am not entirely sure what this means: was it no longer challenged or was Teare J’s analysis on this straightforward? A different reply than that of Teare J would have required overruling Kleinwort Benson Ltd v. Glasgow City Council (No. 2) [1999] 1 AC 153 (HL), that a claim in unjust enrichment for mistake was neither a matter ‘relating to contract’ nor a matter ‘relating to tort’ for the purposes of EU private international law – an issue I discussed in my earlier posting. With the SC’s refusal to entertain it, that authority therefore stands.

One does wish that the CJEU at some point have an opportunity further to clarify the insurance section and will do so in a holistic manner. The SC judgment here is one big step in the good direction.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2.

A long overdue post I fear (I hope in the next week and a half or so to turn to draft posts which for all sorts of reasons have gotten stuck in the queue, finally to be published) on Lamesa Investments Ltd v Cynergy Bank Ltd  [2019] EWHC 1877 (Comm). Latham and Watkins have had background for some time here.

The case concerns a standard clause in an English law governed contract on ‘mandatory law’ as an excuse for contractual non-performance. Here, the clause (in a (credit) facility agreement) read: clause 9.1: (party is not in breach of the agreement if) “… sums were not paid in order to comply with any mandatory provision of law, regulation or order of any court of competent jurisdiction”.

“Regulation” was defined in the Agreement as including “any regulation, rule, official directive, request or guideline … of any governmental, intergovernmental, or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation”.

Lamesa argued that Cynergy could not rely on clause 9.1 because:

• “provision of law” meant a law that applied to a UK entity, acting in the UK, that had agreed to make a sterling payment pursuant to a contract governed by English law; and
• “mandatory” meant that the relevant law made it compulsory for Cynergy to refuse payment

‘In order to comply’ was the focus of discussions, in particular whether there was any territorial limit to it. Pelling J took a flexible approach, holding that Cynery could not reasonably be expected to have excluded the only type of sanction which it could have reasonably foreseen, namely secondary sanctions imposed by US sanctions law (at the time the parties entered into the Facility Agreement, Cynergy was aware that it was possible that US sanctions would be imposed on Lamesa).

Of interest to the blog is the brief reference to Rome I (and the Convention), at 23:

‘It was submitted on behalf of CBL and I agree that English lawyers during the period the FA was being negotiated and down to the date when it became binding would have understood a mandatory law to be one that could not be derogated from. The context that makes this probable includes the meaning given to the phrase “… mandatory provision of law …” in the Rome Convention 1980 and the Rome 1 Regulation on Choice of Law. It was not submitted by CBL that the construction for which they contend applies by operation of either regulation. It submits however and I accept that they provide some support for the submission that lawyers at the relevant time would have understood the effect of the word “mandatory” to be as I have described. It goes without saying that it was not open at any stage to either party to dis-apply the US statutes that purported to apply secondary sanctions by their agreement, nor did the parties attempt to do so either in the FA itself or afterwards.’

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.8, Heading 3.2.8.3.

The CJEU last week confirmed Saugmandsgaard ØE AG’s Opinion in C-215/18 Libuše Králová v Primera Air Scandinavia. In a package of services acquired from a travel agent, where there is no direct agreement with the airline carrying out the flight part of the package, there is a ‘contract’ between the individual and the airline within the meaning of Article 7(1) BIa. However the consumer section of BIa must be interpreted less extensively. Only the direct relationship between the travel agent and the consumer is covered by that section, not the relationship with the airline who merely carries out the transport side of the arrangement. (Note again the different balance struck by the AG and now the CJEU as opposed to e.g. the High Court in Bonnie Lackey).

Geert.

(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

In Bournemouth, Christchurch and Poole Council v KC et al [2020] EWFC 20, Dancey J at  62 ff is the first UK judge to my knowledge to discuss the implications of the UK’s separation from the EU’s civil procedure /justice and home affairs agenda, particularly in the transition period. It includes a discussion of the UK’s Brexit (EU Exit) Regulations 2019/2003, reg 3, and the European Commission notice on transition provisions.

The care proceedings concern W, a girl aged 9, nearly 10. W’s parents, who were married, are Polish nationals and W was born there. Following the separation of the parents in Poland in April 2016, contested contact proceedings there resulted in an order providing that W live with the mother with contact to the father. The father’s parental responsibility was limited to decisions about medical treatment and education. Following the breakdown of the father’s contact with W, the mother brought her to the UK in June 2018 where they have remained since. That was done without the father’s agreement, although he was aware the mother planned to relocate and acquiesced once the move had taken place. The mother did not tell the father of her and W’s location within the UK.

The legal framework therefore is Brussels IIa, Regulation 2201/2003. Dancey J at 63 concedes that by reg 8 of 2019/2003, dealing with saving/transitional provisions, the UK’s revocation from Brussels IIa does not apply to proceedings before a court in a Member State seised before 31 December 2020. However he then refers to the EC Notice to Stakeholders: Withdrawal of the United Kingdom and EU Rules in the Field of Civil Justice and Private International Law: 18/1/2019, and suggests it means that EU rules on recognition and enforcement will not apply to a UK judgment, even if the judgment was given, or enforcement proceedings started, before 1 January 2021 unless the judgment has been exequatured (declared enforceable by the courts of the Member State where recognition or enforcement is required) before 1 January 2021. Support for his opinion is found I suspect mostly in Heading 2.2 of that Notice.

At 66 Dancey J suggests in practice the consequence should not be too dramatic in the case at issue for ‘one or other of the parents should apply promptly in Poland for a declaration recognising this judgment and the order that will follow (exequaturing the judgment).’ That absence of real delay in the case at issue may well be true (it is confirmed by a letter from the Polish consulate) however the  implications are already clear and no surprise. Enforcement of UK judgments will be a lot less smooth post Brexit.

Geert.

Bru IIA Regulation
Incl 1st (?)) application of Jurisdiction, Judgments (Family) part of the #Brexit (EU Exit) Regulations 2019/2003, reg 3.
EC notice on transition provisions
Exequatur needed even if judgment was given, or enforcement proceedings started, before 1 January 2021. https://t.co/Ve8MKYzMdd

— Geert Van Calster (@GAVClaw) March 20, 2020

Thank you Ennio Piovesani for signalling and reviewing one of the first conflicts-specific developments on the Corona /Covid 19 landscape.

In an effort to safeguard the economic position of the travel sector, the Italian Government by decree has essentially frozen the travel sector’s statutory duty to reimburse travellers whose package travel has become impossible due to the pandemic. Ennio reports that the decree refers specifically to Article 9 Rome I’s overriding mandatory law provisions (earlier applied in Unamar), (in his translation): ‘“The provisions of the present article constitute overriding mandatory provisions within the meaning of Article 17 of Law of 31 May 1995, No. 218 [“Italian PIL Act”] [5, 6] and of Article 9 of Regulation (EU) No. 593/2008 of the European Parliament and of the Council, of 17 June 2008 [“Rome 1 Regulation”]”.

Ennio signals and important issue: how much leeway may be given to Member States to push their own definition of the concept of ‘lois de police’ /overriding mandatory law in light of the CJEU definition in Joined Cases C-369/96 and C-376/96 Arblade. In Brussels Ia of course the CJEU has pushed the concept of ordre public in a limited direction. Lois de police however are different from ordre public and Rome I is not Brussels Ia, and I am therefore not so pessimistic as Ennio when it comes to leaving a lot of discretion to Member States. What to me looks a touch more problematic is the relation with the package travel Directive 2015/2302 which applies to many of the travel arrangements concerned and which is the source of many of the protections for travellers.

No doubt to be continued.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.8.3.