EAPIL blog

The EAPIL Working Group on the Reform of the Brussels I bis Regulation has issued a preliminary position paper formulating proposals for reforming the Regulation.

The proposals are based on the opinions expressed by the members of the working group and the participants at the conference held at the Max Planck Institute Luxembourg in September 2022. The proposals of the members of the Members Consultative Committee were also forwarded to the drafters of the position paper.

The chairs of the Working Group (Burkhard Hess and Geert van Calster) now invite all interested members of EAPIL and readers of the blog to participate in a survey on the proposals formulated in the position paper until 13 March 2023. The survey can be accessed here.

This post has been written by Silvana Canales Gutiérrez, who is a Postdoctoral Researcher at Rovira i Virgili University (Tarragona).

The “First International Seminar on rights in rem in the European Union: General Aspects and International Jurisdiction”, directed by Georgina Garriga (Universitat de Barcelona) and Maria Font (Universitat Rovira i Virgili), took place at the Faculty of Legal Sciences of the Universitat Rovira i Virgili in Tarragona, on 10 and 11 November 2022.

The conference focused on rights in rem, approached from the standpoint of EU private international law (EUPIL) and comparative law, trying to identify the problematic aspects of the “in rem” qualification under the regulatory instruments applicable in the EU (mainly, Regulation (EU) 1215/2012), as well as under Spanish domestic law, owing to the plurilegislative nature of its legal system.

A. The Contents of Rights in Rem from a Comparative Law Perspective

The conference was permeated by an analytical and comparative approach that began with the presentation by Héctor Simón Moreno (Universitat Rovira i Virgili) on “Rights In Rem in Europe: A Comparative Perspective”.  The speaker explained the essential differences in the conception of rights in rem existing in common law and civil law legal systems. He argued that these differences affect the dimension of these rights and directly influence their material content, as well as the ways of acquiring, transmitting, or losing these rights, their effects on third parties and the legal actions for claiming them, which can change from system to system.

In the same line of thought, Francisco J. Garcimartín Alférez (Universidad Autónoma de Madrid) pointed to the difficulties in delineating rights in rem in the EU legal order. These difficulties stem from the uncertainties that surround the definition and the terminology relating to this subject-matter both in the normative instruments and in the case law of the EU. However, the speaker deemed it possible to identify certain “key points” of rights in rem, such as the right of ownership and their enforceability against third parties. It is even possible to shape a relatively consistent general definition of rights in rem: although such exact definition cannot be directly extracted from normative texts, it is possible to identify the essential attributes of these rights, that could help in their characterization.

Eva-Maria Kieninger (Julius-Maximilians-Universität Würzburg), addressed the traditional distinction between rights in rem on movable and immovable property. The speaker explained that the general idea of rights in rem existing only on immovable property can also be extended to movable property, through a legal fiction which portrays them not only as an accessory, but also as an integral part of a piece of land. In this regard, the speaker gave the example of solar panels: according to Dutch case law, if their vocation is to remain in the real estate, they can change their status of movable property and become part of the land where they are located. However, the criterion to determine the legal conversion of movable property into real estate presents difficulties in the EU, taking into account that there are neither proposals for unification of the Member States’ land laws, nor domestic proposals within each State to define or regulate such conversion. To solve this legal vacuum at a global level, UNIDROIT developed a proposal for a convention that was adopted in 2019, the “Protocol to the convention on international interests in mobile equipment on matters specific to mining, agricultural and construction equipment” (MAC protocols), which, as of 20 September 2022, has only been signed by six countries and has been ratified by none.

B. The Contents of Rights in Rem in Plurilegislative Legal Systems

From a comparative perspective, rights in rem can be regulated in different ways, especially when dealing with plurilegislative legal systems. This premise was developed by Ángel Serrano Nicolás (Notary in Barcelona), who presented a comparative analysis of the different legal systems coexisting in Spain to regulate rights in rem. In particular, he explained the differences between the Spanish Civil Code and the foral civil regulations of Catalonia, the Basque Country and Navarra, in relation to legal institutions such as usucapio, surface rights, easements, the right of withdrawal and first refusal, and the right of use and habitation, among others.

In the same line of argument, but from a conflict-of-laws perspective, Albert Font i Segura (Universitat Pompeu Fabra) highlighted the exclusive competence of the State in registry matters. This exclusive competence unifies the access, publicity and regulation of rights in rem, facilitating their homogeneity of treatment despite the diversity existing in the Spanish civil regulations. This diversity impacts, in particular, on the regulation of inter-local conflicts (Basque Country), on the administrative control of the registry qualification, on procedural legislation and on the guarantees of the rights in rem. The application of one regulation or another is not easy to establish and this problem cannot always be avoided by means of an agreement on the applicable law. These legal frictions create an inter-regional conflict of laws that is at least debatable, and which has been the subject of decisions by the Constitutional Court on several occasions.

The analysis of the current situation of rights in rem within this panel revealed that there are different ways of conceiving their constituent elements. At the same time, it is not possible to say that there are currently new rights in rem, which are excluded from the applicable regulations, even where they involve electronic contracting with innvoative elements, such as transactions with cryptocurrencies or 3D property rights.

C. International Jurisdiction

Moving on to the subject of international jurisdiction, specifically on Regulation (EU) 1215/2012, the remaining speakers analyzed the most important aspects of this Regulation, pointing to the problems of application of certain of its articles, the alternative interpretations of some of its provisions and, in some cases, making proposals on how to improve its wording or application to meet its objectives in the light of the new challenges facing EUPIL.

Ilaria Pretelli (Institut Suisse de Droit Comparé) began by explaining that the maxim forum rei sitae applies when it comes to actions related to determining the extent, content, ownership or possession of property. This classic relationship between jurisdiction and the place where the property is located is justified by the fact that, for evidentiary purposes, it is necessary to carry out verifications, investigations and expert opinions in the place where the property is located, provided that the claim involves an assessment strictly linked to such place, in accordance with the doctrine developed by the CJEU. However, as regards mixed actions, these may generate a conflict of jurisdictions when they involve a personal right and a right in rem, taking into account that these actions are predominantly in personam. The fact that the contract in dispute concerns immovable property is irrelevant, the immovable nature of the subject matter of the contract being of marginal importance only (e.g. Case C-417/15). This being so, it may be necessary to reconsider the applicability of the forum rei sitae rule in cases where the main object of the action is the claim of a personal right and not of a right in rem.

Ivana Kunda (University of Rijeka) gave an interesting explanation on the recovery of cultural objects under Regulation (EU) 1215/2012. The speaker explained that cultural objects have a special protection, as they are part of the heritage and history of mankind, which means that they do not theoretically belong to a State, but are goods of interest to the society as a whole. Taking the above into consideration, art. 7.4 of Regulation (EU) 1215/2012, whose intention is to protect cultural objects located in the Member States by establishing a specific forum to recover them, has a limitation that is not in line with the objectives of the special protection needed by  this type of property. In fact, this provision requires both the defendant and the cultural object to be located in the Member States for the Regulation to be applicable. The speaker proposed a change of this provision, modeled on other RBIbis protective fora, in which the defendant is not required to be domiciled in the Member States in order to be sued in the EU. This same model could be replicated for Art. 7.4 of the Regulation.

Cristina González Beilfuss (Universitat de Barcelona) focused on the problematic assimilation (for civil law) of the trust. In English and Anglo-American law, it is not clear whether the trust is a right in rem: while being included within the property right, there is a split between the rights of the beneficiary and those of the trustee. In contrast, in civil law, the property right is absolute, which makes it necessary to adapt the trust. These different understandings of the trust in civil and common law systems have an impact on the determination of international jurisdiction, since it must be established whether it is an action related to a  right in rem, or whether the subject matter of the claim falls under the scope of personal rights. This distinction affects the determination of the forum (Articles 7 and 25 of Regulation (EU) 1215/2012). Additionally, other interpretative doubts arise, concerning, for example, the lack of uniformity and the difficulties in determining the domicile of the trust, or the application of Regulation (EU) 1215/2012 to testamentary trusts (considering that wills are excluded from the scope of application of the Regulation).

Carmen Parra Rodríguez (Universitat Abat Oliba CEU) put forth a proposal for improving Regulation (EU) 1215/2012 as concerns rights in rem over movable property. The speaker remarked that the concept of movable property is not defined in this Regulation, which does not contemplate a specific forum in this respect. Due to this, there are proposals that regard the forum rei sitae as a potential alternative for actions involving movable property, although the mobility of such assets generally makes it difficult to definitively determine the place where they are located. Thus, other fora may be more appropriate to the nature of movable property, such as the defendant’s domicile, the place where the property is registered, the court with the closest ties, or determining jurisdiction by express or implied submission.

Josep Maria Fontanellas Morell (Universitat de Lleida), argued for a relaxation of the exclusive forum of Article 24 of Regulation (EU) 1215/2012. The speaker argued, on the one hand, that the qualification adopted by the CJEU in this respect needs clarification, insofar as it should better delimit the category to distinguish it from other adjacent ones, such as contractual obligations or delictual or quasi-delictual matters. On the other hand, the arguments that justified, at the time, the creation of an exclusive forum should be reconsidered, as they have now partly lost their raison d’être.

D. Future Events

The ideas put forward in the Seminar are the beginning of a debate on the Private International Law of rights in rem, which will continue in the near future. Two other events (open to the general public) on this same subject are scheduled: the first is especially devoted to the perspective of the Spanish and European notary’s office and it will be held (in Spanish) on 13 and 14 June 2023 at the College of Notaries of Catalonia (Barcelona, Spain). The second will be focused on a future instrument on the law applicable to rights in rem. It will take place in 2024 at the University of Barcelona and it will be held entirely in English.

Matthias Lehmann (University of Vienna) and Gilles Cuniberti (University of Luxembourg) are considering establishing an EAPIL Working Group on the Law Governing Digital Assets.

The first project of the Working Group would be to write a position paper to be filed for the purpose of the online consultation of the Draft UNIDROIT Principles and Commentary on Digital Assets and Private Law. The consultation ends on 20 February 2023.

The EAPIL position paper would focus on the private international aspects of the UNIDROIT proposal.

Any EAPIL Member interested in joining the Working Group should contact either Matthias Lehmann (matthias.lehmann@univie.ac.at) or Gilles Cuniberti (gilles.cuniberti@uni.lu) as soon as possible.

In a decision of November 2022, the Swedish Labour Court held that Qatar had, at least in part, the right to invoke state immunity from jurisdiction in connection with proceedings relating to an employment matter.

Background

An employee at the Qatari embassy in Stockholm was summarily dismissed in September 2021. He filed a lawsuit against the State of Qatar in the Stockholm District Court requesting invalidation of, and compensation for, unfair dismissal. Qatar objected to Swedish jurisdiction by invoking State immunity under international law.

Decision

In a preliminary decision, the Stockholm District Court granted Qatar State immunity regarding the invalidation claim, but denied it with respect to the claim for compensation. The Labour Court, which was the court of appeal and last instance in the matter, agreed with the District Court’s conclusion.

In its decision, the Labour Court held that the dispute had such a “close connection” to Sweden that Swedish courts should be able to assert jurisdiction, unless Qatar had the right to invoke state immunity. The court continued by stating that whether or not state immunity from jurisdiction should be respected is dependent on customary international law. In this regard, the court held that the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property is representative of customary international law.

Article 11 of the 2004 UN Convention deals with employment law matters. The provision contemplates several exceptions to State immunity in this field, i.e., situations where a State, as a defendant before the courts of another State, are not entitled to immunity.

Article 11(2)(c) sets out that States are immune from jurisdiction whenever “the subject-matter of the proceeding is the recruitment, renewal of employment or reinstatement of an individual”. Although this provision does not explicitly deal with the invalidation of a dismissal, the Swedish Labour Court concluded that such invalidation is equivalent to reinstatement. With references to the European Court of Human Rights’ (ECtHR’s) judgments Naku v. Lithuania and Sweden and Cudak v. Lithuania, the Labour Court found that granting State immunity does not amount to a violation of the employee’s right to a fair trial under Article 6 in the European Convention of Human Rights (ECHR).

In its examination of the ECtHR’s judgments, the Labour Court noted that Naku had requested both reinstatement and damages and that the ECtHR had found that it was wrong to grant State immunity in that case. The Labour Court noted that the ECtHR made a point that an employee under Lithuanian law could be given severance pay instead of reinstatement. There is no possibility for a court to do so under Swedish law when a former employee has pleaded invalidation of an employer’s dismissal. Therefore, the Labour Court concluded that granting State immunity for Qatar was not a violation of Article 6 in the ECHR.

Analysis

The Swedish Labour Court’s decision is, in my opinion, problematic and can be criticized for at least three reasons. First, the Labour Court makes no references to EU private international law. Second, the Labour Court’s formalistic approach to public international customary law is erroneous. Third, the Labour Court only – selectively – referred to ECtHR case law on the balance of state immunity and the right to a fair trial. In the following, I will develop those three points of critique.

EU Private International Law Determines Jurisdiction

Whether or not a Swedish court has jurisdiction in an international employment law matter follows from the Brussels I bis Regulation.

Under Article 1, the Regulation shall apply in “civil and commercial matters.” This concept has, on several occasions, been interpreted by the Court of Justice of the European Union (CJEU) as including actions by public authorities, as long as they do not exercise public powers. Further, it is clear that this also extends to embassy employment cases (see, e.g., ZN, C-280/20, paras 26–28, and Mahamdia, C-154/11, para 56). Even under the old Brussels I Regulation, it was clear that the regulation was applicable to third countries’ embassies, as they are to be considered “establishments” (Mahamdia, p. 41). Under the Brussels I bis Regulation, Article 6 has been extended to apply to all matters in which an employee habitually carries out his or her work in the EU, regardless of where the employer is domiciled. In such cases, the Regulation must be applied in the EU Member States (Roi Land Investments, C-604/20 para 48).

With this in mind, it is misleading that the Swedish Labour Court seemingly applies the jurisdictional standard of “Swedish interest of adjudication” that is used against defendants domiciled in third countries, without mentioning the Brussels I bis Regulation.

The 2004 UN Convention Does Not Reflect International Customary Law

The Labour Court oversimplifies customary international law by referring mechanically to the 2004 UN Convention.

Customary international law is defined by its constantly evolving nature and the fact that it must be derived from state practice. Therefore, international customary law cannot ever really be codified. The convention may serve as one of many pieces of public international customary law, but cannot be applied mechanically.

When using the 2004 convention, one shall bear in mind that there were some controversies about the content of the convention when it was adopted and that it still has not gathered enough support to enter into force. Further, since the convention was drafted nearly 20 years ago, important case law development has been made by i.a. both the CJEU and the ECtHR regarding State immunity in embassy employment disputes. As case law from these courts is to be applied by Swedish courts, irrespective of customary international law, it is questionable that this case law was not taken into consideration. This leads me to my third point of critique: that the Labour Court did not correctly refer to relevant EU and ECtHR case law.

The Labour Court Did Not Correctly Refer to Relevant ECtHR and CJEU Case law

Over the last 15 years, the ECtHR has developed a unanimous approach to State immunity in embassy employment law cases. This approach is made clear in the 2019 judgment Ndayegamiye-Mporamazina v. Switzerland. In this judgment, the ECtHR makes clear that an important feature for granting state immunity from jurisdiction is that the employee can access courts elsewhere. In Ndayegamiye-Mporamazina v. Switzerland, the employee could initiate proceedings in the embassy state of Burundi. Access to courts elsewhere in the world has long been a cornerstone in the evaluation of upholding state immunity (see Prince Hans-Adam II of Liechtenstein v. Germany). In the Swedish Labour Court’s decision, the access to courts in Qatar was not assessed at all.

Concluding Remarks

In my opinion, it is a pity that the Labour Court did not pay attention to neither the EU private international law aspect nor the relevant case law developments from the ECtHR. For the development of customary international law regarding state immunity in embassy employment matters, well-motivated case law is needed. Due to the flaws described above, the Swedish Labour Court’s decision can hardly be seen as a contribution to the development of customary international law.

The European Commission is adopting a package of infringement decisions due to the absence of communication by Member States of measures taken to transpose EU directives into national law. Among these, the Representative Actions Directive (EU) 2020/1828, whose description can be found in this blog.

Since the Representative Actions Directive entered into force in December 2020, Member States had two years to transpose it into their national law and to inform the Commission, with a further six months for the new provisions to come into effect.

While there is work ongoing in most Member States on adopting the laws, a large number of Member States failed to notify national measures fully transposing the Representative Actions Directive by the deadline set for 25 December 2022 and will therefore be receiving letters of formal notice: Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Luxembourg, Malta, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden.

Member States concerned now have two months to reply to the letters of formal notice and complete their transposition, or the Commission may decide to issue a reasoned opinion.

In February 2023, the Court of Justice of the European Union will publish two decisions and one opinion, all three on Thursday 16.

The expected judgments concern case C-393/21, Lufthansa Technik AERO Alzey, and C-638/22 PPU, Rzecznik Praw Dziecka e.a. (Suspension de la décision de retour).

In C-393/21, the Lietuvos Aukščiausiasis Teismas (Lithuania) is asking the Court to interpret Article 23 of Regulation No 805/2004, as well as Article 36(1) and Article 44(2) of Regulation No 1215/2012.

1. How, taking into account the objectives of Regulation No 805/2004, inter alia the objective of accelerating and simplifying the enforcement of judgments of Member States and effective safeguarding of the right to a fair trial, must the term ‘exceptional circumstances’ in Article 23(c) of Regulation No 805/2004 be interpreted? What is the discretion that the competent authorities of the Member State of enforcement have to interpret the term ‘exceptional circumstances’?
2. Are circumstances, such as those in the present case, related to judicial proceedings in the State of origin which decide a question regarding the setting aside of the judgment on the basis of which a European Enforcement Order was issued to be regarded as relevant when deciding on the application of Article 23(c) of Regulation No 805/2004? According to what criteria must the appeal proceedings in the Member State of origin be assessed and how comprehensive must the assessment of the proceedings taking place in the Member State of origin that is carried out by the competent authorities of the Member State of enforcement be?
3. What is the subject matter of the assessment when deciding on the application of the term ‘exceptional circumstances’ in Article 23 of Regulation No 805/2004: must the impact of the respective circumstances of the dispute when the judgment of the State of origin is challenged in the State of origin be assessed, must the possible potential benefit or harm of the respective measure specified in Article 23 of the regulation be analysed, or must the debtor’s economic abilities to implement the judgment, or other circumstances, be analysed?
4. Under Article 23 of Regulation No 805/2004, is the simultaneous application of several measures specified in that article possible? If the answer to this question is in the affirmative, what criteria must the competent authorities of the State of enforcement rely on when deciding on the merits and proportionality of the application of several of those measures?
5. Is the legal regime laid down in Article 36(1) of Regulation (EU) No 1215/2012 … on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters to be applied to a judgment of the State of origin regarding the suspension (or cancellation) of enforceability, or is a legal regime similar to that specified in Article 44(2) of that regulation applicable?

I summarized the facts of the main proceedings here. AG Pikamäe made his opinion public on October 20, 2022. There is no English translation available so far. A non-official one could be:

1. Article 23 of Regulation (EC) No. 805/2004 … must be interpreted in the sense that the expression “exceptional circumstances”, for the purposes of this provision, includes the serious and irreparable damage that would be caused to the debtor by the immediate execution of the resolution certified as a European enforcement order, which (the damage) characterizes an urgent situation that corresponds to the debtor to demonstrate. If proven, it will be for the court or competent authority of the executing Member State to weigh the interests at stake in the light of all the relevant circumstances of the specific case.

Only the measures limiting the enforcement procedure, referred to in article 23, letters a) and b), of said Regulation may be subject to a combined application.

2. Articles 6 and 11 of Regulation No. 805/2004 shall be interpreted as meaning that where the enforceability of the decision certified as a European enforcement order in the Member State of origin has been suspended and the certificate provided for in Article 6(2) of that Regulation has been transmitted to the competent authority in the executing Member State, the latter will be obliged, within the framework of the application of the applicable national rules, to guarantee the full effectiveness of article 11 of said Regulation by means of the suspension of the enforcement procedure.

The deciding Chamber is composed by judges Lycourgos, Rossi, Bonichot, Rodin, and Spineanu-Matei acting as reporting judge.

My summary of the facts corresponding to Case C-638/21 PPU can be read here. The opinion of AG Emiliou, available only in a few languages – not English – were published on January 12. My translation would be:

On the one hand, Article 11(3) of Council Regulation (EC) No 2201/2003, read in conjunction with Articles 2 and 11 of the 1980 Hague Convention on the Civil Aspects of International Child Abduction, as well as, of the other hand, Articles 7 and 47 of the Charter of Fundamental Rights of the European Union, should be interpreted in the sense that they are opposed to national legislation entailing the suspension by operation of law, on a simple unsubstantiated request from certain authorized public entities, of the execution of a final decision to return pronounced at the end of two ordinary instances, during a first two-month period these entities dispose of to lodge an appeal in cassation and, as the case may be, for the entire duration of this appeal.

The decision will be taken by a Chamber of five judges, namely Safjan, Piçarra, Jääskinen, Gavalec and Jürimäe, with the latter as reporting judge.

Finally, AG Pikamäe will hand in the opinion in case C-567/21, BNP Paribas, a request from the Cour de Cassation (France). The main proceedings relate to an action for payment of various sums, brought in France against a French company by one of its former employees in connection with his dismissal . Previously, he had initiated proceedings in London, his last place of work, and he had obtained a judgment ordering that company to pay him compensation for unfair dismissal. The French courts must now determine if the previous decision (i.e. the English one) has any bearing in the admissibility of the claim filed with them.

1. Must Articles 33 and 36 of Council Regulation (EC) No 44/2001 (…) be interpreted as meaning that, where the legislation of the Member State of origin of the judgment confers on that judgment authority such as to preclude a new action being brought by the same parties for determining the claims that could have been raised in the initial proceedings, the effects which that judgment has in the Member State in which enforcement is sought preclude a court of that latter State, whose legislation, as applicable ratione temporis, provided in employment law for a similar obligation of concentration of claims, from adjudicating on such claims?
2. If the first question is answered in the negative, must Articles 33 and 36 of Council Regulation No 44/2001 be interpreted as meaning that an action such as a claim of unfair dismissal in the United Kingdom has the same cause of action and the same subject matter as an action such as a claim of dismissal without actual and serious cause in French law, so that the employee’s claims for damages for dismissal without actual and serious cause, compensation in lieu of notice, and compensation for dismissal before the French courts are inadmissible after the employee has obtained a decision in the United Kingdom declaring that there has been an unfair dismissal and making a compensatory award in that respect? Is it necessary in that regard to distinguish between, on the one hand, the damages for dismissal without actual and serious cause that might have the same cause of action and the same subject matter as the compensatory award and, on the other, the compensation for dismissal and compensation in lieu of notice which, in French law, are payable where the dismissal is based on an actual and serious cause, but are not payable in the event of dismissal based on serious misconduct?
3. Likewise, must Articles 33 and 36 of Council Regulation No 44/2001 be interpreted as meaning that an action such as a claim of unfair dismissal in the United Kingdom and an action for payment of bonuses or allowances provided for in the contract of employment have the same cause of action and the same subject matter when those actions are based on the same contractual relationship between the parties?

The decision on this case will be rendered by a Chamber of five judges – Jürimäe, Safjan, Piçarra, Jääskinen and Gavalec, this time with Judge Jääskinen reporting.

Asif Efrat (Reichman University, Israel) authored a book titled Intolerant Justice – Conflict and Cooperation on Transnational Litigation, with Oxford University Press.

In a globalized world, national legal systems often face dilemmas of international cooperation: Should our citizens stand trial in foreign courts that do not meet our standards? Should we extradite offenders to countries with a poor human rights record? Should we enforce rulings issued by foreign judges whose values are different from our own? Intolerant Justice argues that ethnocentrism—the human tendency to divide the world into superior in-groups and inferior out-groups—fuels fear and mistrust of foreign justice and sparks domestic political controversies. Skeptics portray foreign legal systems as a danger and a threat to local values and interests. Others, however, seek to dispel these concerns, arguing that legal differences among countries should be respected. Such disagreements often make it harder to establish cooperation on litigation.

The book traces this dynamic in a range of fascinating cases, including the American hesitation to allow criminal trials of troops in the courts of NATO countries; the dilemma of extradition to China; the European wariness toward U.S. civil judgments; and the controversy over the prosecution of foreign terrorist fighters for ISIS. Despite the growing role of law and courts in international politics, Intolerant Justice suggests that cooperation among legal systems often meets resistance, but it also shows how this resistance can be overcome. These insights will speak to anyone who seeks to strengthen the rule of law and international collaboration in an era of increasing nationalism. 

The table of contents can be accessed here.

In a judgment of 11 January 2023, the French supreme court for private and criminal matters (Cour de cassation) ruled that the exclusive jurisdiction of the courts of the place where a public registry is held under Article 24(3) of the Brussels I bis Regulation only covers actions concerned with the formal validity of an entry in such a registry.

Background

The case was concerned with the enforcement of an English judgment over the shares of a French company owned by the judgment debtor.

The creditor, English corporation Barclay Pharmaceuticals, had obtained a judgment in 2012 from the English High Court ordering its debtor, a French individual, to pay over £ 12 million. The judgment was declared enforceable in France under the Brussels I Regulation.

It seems that it was not  easy to find assets belonging to the debtor and the creditor sought and obtained from the English high court an order in 2018 declaring that the shares owned by the wife of the debtor in a French company were only held fictitiously by the wife, and that they should be considered as actually owned by the debtor, her husband.

On the basis of the English 2012 judgment and 2018 order, the creditor had a French enforcement authority carry out an enforcement measure over the shares.

Judgment

The debtor challenged the validity of the enforcement measure in French courts on a number of grounds.

Nouveau Tribunal de Commerce et Conseil de Prud’hommes de Bobigny (93)

One of them was that the 2018 English order could not be enforced in France, because the proceedings fell within the exclusive jurisdiction of French courts. The debtor argued that the proceedings had “as their object the validity of an entry in a public register” in the meaning of Article 24(3) of the Brussels I bis Regulation. As a result, the English High Court lacked jurisdiction, and its order could not produce effect in France.

The particular company was a Société Civile Immobilière (SCI). The shareholders of French SCIs appear in the French register for companies (Registre du commerce et des sociétés). The name of the wife presumably appeared in the register. A logical (but, importantly, not necessary, see below) consequence of the English order was that the entry into the registry would become inaccurate. There was, therefore, some potential influence of the English order over an entry into a French registry.

The issue before the Cour de cassation was thus to define the scope of the exclusive jurisdiction under Art. 24(3). The Court defines it as limited to proceedings concerned with the “formal validity” of entries into the registry.

In this case, the English court had ruled on the accuracy of an entry. This was an issue of substance, not form. Nobody was suggesting, and certainly not the English court, that the requirement for registering those shares had not been complied with. The English order had only ruled that the owner of the shares was different from that appearing in the register.

The appeal was thus dismissed, and the enforceability of the 2018 English order confirmed, since the English court had not violated the exclusive jurisdiction of French courts.

Assessment

The rationale for the exclusive jurisdiction over public registries seems to be that such registries are public authorities, and that foreign states cannot interfere with the operation of a public authority. This certainly explain why the procedure for registering a company in a public registry is necessarily governed by the law of the local state, and that only local courts could assess whether it was complied with. That is likely the idea behind the concept of “formal validity”.

Yet, whether formal validity can always be distinguished from  substantive validity is not obvious. This might well depend on the effect of the registration. If, under the applicable law, the registration determines the existence of the right (e.g. the ownership of the shares), then it is not easy to distinguish between formal and substantive validity.

But the law was simpler in this case. Under French law, the ownership of shares in SCIs is not determined by the registration. The effect of the registration is merely to extend the effects of the right to certain third parties. But registration is not mandatory. A transfer of ownership of shares would be valid as between the parties and third parties knowing about it without registration.

In this context, the distinction of the Cour de cassation makes sense. If the parties could transfer shares without registration, an English court could equally rule on the ownership of shares without interfering with the French registry.

Conclusion: it is unclear whether the concept of validity of an entry in a public registry under article 24(3) can be defined without reference to national law and the effect of registration in the relevant Member State.

UNIDROIT has started an online consultation on its Draft Principles and Commentary on Digital Assets and Private Law, which Marco Pasqua has thankfully posted on this blog.

Principle 5 titled “Conflict of laws” will be of special interest for our readers, yet even experts of the field may have trouble understanding this somewhat complex provision. As an observer in the Working Group, I would like to give some background.

Scope ratione materiae

The subject of Principle 5 is the law applicable to proprietary issues in digital assets. A digital asset is defined in a broad way as an “electronic record which is capable of being subject to control” (Principle 2(2)). This covers all cryptocurrencies and tokens. The term “proprietary issues” is not defined but can be understood as encompassing the existence and transfer of ownership as well as other rights in rem.

Party Autonomy

The law governing proprietary issues in digital assets is defined by a waterfall.

The first two levels are dominated by party autonomy. Principle 5(1)(a) refers to the law expressly specified in the digital asset itself, whereas Principle 5(1)(b) points to the law chosen for the system or platform on which the asset is recorded.

Free choice of law may be seen as a heresy in property law. Yet it must be borne in mind that the blockchain environment is relatively self-contained. A restricted choice of the applicable property law has already been accepted in the Hague Intermediated Securities Convention. This was a door-opener, even though the EU did not sign up.

The problem lies elsewhere. Virtually none of the existing digital assets or systems contains a choice of law. This is by no means a coincidence, but the result of the anti-etatist beliefs of the social circles in which the technology was conceived. Since these beliefs are unlikely to change any time soon (if ever), choice of law for a blockchain will remain as rare as hen’s teeth.

Options A and B

If the governing law is not chosen (i.e. virtually always), the draft provides two options (Principle 5(1)(c)). Under Option A, a state can specify the relevant rules of its forum law which should govern, and to the extent these are insufficient, refer to the UNIDROIT Principles as a kind of gap-filler. Under Option B, it can declare the UNIDROIT Principles to apply directly, without specifying any part of its domestic law.

What is striking is that the conflict-of-laws method is completely ignored here. The law of the forum or the UNIDROIT Principles govern, regardless of the connections of the case.

This may be justified insofar as substantive law harmonisation on the international level is achieved, i.e. in case of Option B. But where a state follows Option A by specifying certain rules of the forum as applicable, these rules would in fact govern all situations world-wide before its courts. Other states following Option A would also specify their own national rules. Divergences between these rules will not only be cast in stone, but exacerbated by substantive rules of PIL (règles matérielles de droit international privé). The result will be a global jumble, leading to the opportunities of forum shopping which PIL experts know so well. 

UNIDROIT Trumps National Law

If the governing law is not chosen, nor the substantive rules or the UNIDROIT Principles on Digital Assets apply, then the law applicable by virtue of the PIL rules of the forum governs (Principle 5(1)(c)). The PIL rules are thus relegated to the last level. What is more, no harmony is achieved, as not a single indication is given on how the states should fashion their PIL. Anything goes – hardly a recipe for global harmonisation.

Joint Project with HCCH

The Hague Conference on PIL has just published a joint proposal with UNIDROIT for a “Project on Law Applicable to Cross-Border Holdings and Transfers of Digital Assets and Tokens”. It shall deal specifically with Principle 5 of the UNIDROIT Draft. This is the first joint project between the two institutions. One may nurture the hope that it will result in more precise and elaborate connecting factors. Until then, the need for clearer conflicts rules may be highlighted in the UNIDROIT online consultation, which is open until 20 February 2023.

The rules on negotorium gestio in Article 11 Rome II Regulation have received little attention so far and are rarely well understood. Jonas Fritsch has written a PhD thesis on them, in which he compares the different legal systems of the Member States and examines in detail the connecting factors of Article 11 Rome II. He has kindly provided the following summary:

“Negotiorum gestio is a concept that can be described as multifaceted. Whilst in Germany it is subject to many controversial discussions in academia, other Member States of the EU barely know it. In any case, its scope is vague. This is why the EU’s ambition to create a uniform conflict of laws rule was described by the Hamburg Group for Private International Law as “a bold attempt”. The presented thesis sheds light on the end product of EU’s work by analyzing in particular Article 11 of EU’s Rome II Regulation. This provision is interpreted in detail and considered in the context of the other provisions of EU’s regulatory framework.

The analysis is preceded by a section deemed to create a methodological foundation for the later work. Here, for example, the question is addressed as to whether in European law a distinction must be made between “mere” interpretation and further development of the law (so-called “Rechtsfortbildung”). Whilst the CJEU does not differentiate between both concepts of methodology, it is shown that they differ considerably. For this reason, the author opts for identifying a legal finding that goes beyond mere interpretation and applying the appropriate methods to this. By referencing the discussion in German academia, it is shown that it is no longer a matter of “mere” interpretation when the law’s wording is exceeded.

On this basis, Article 11 Rome II is examined. Here, selected legal systems (in particular Germany, Austria, France, Spain and Italy) are studied with regard to their view on negotiorum gestio. From this, conclusions are drawn on the scope of application of Article 11 Rome II. At the end it becomes clear that the provision’s scope includes all claims that arise when a person (the intervenor) intervenes in the affairs of a third party (the principal), does not (exclusively) act in his or her own interest and is not obliged to do so.

Subsequently, the connecting factors provided for in Article 11 Rome II are analyzed. Particularly neuralgic is Article 11(3) Rome II. The “country in which the act was performed” is difficult to identify in some cases as there is uncertainty about the meaning of the term “act”. This causes problems, for example, when the actions of the intervenor are locally distinct from their effects – additional examples are presented in the book. It is demonstrated that Article 11(3) Rome II can be directly applied only if the intervenor’s actions immediately coincide with an interference with absolutely protected rights (such as body integrity or property) or the principal’s unpaid obligations (i. e. payment of the principal’s debts). In all other cases, the purpose (or “telos”) underlying Article 11(3) Rome II is missed. This is why the author states that Rome II contains an unconscious lacuna in this regard: It can be assumed that the European legislator intended to regulate all cases of negotiorum gestio; however, it has not been able to consider all possible constellations. This lacuna needs to be filled and this should be done by applying the law of the place where the specific interest of the principal is located; this constitutes a neutral connecting factor and is thus in line with the telos of Article 11(3) Rome II. Stating this, the author also mentions that other scholars might disagree with the presented way of solution and rather refer to the escape clause contained in Article 11(4) Rome II to handle those cases. However, he points to the uncertainties regarding the proper application of the escape clause and that it does not apply here on the basis of the proper understanding.

Finally, the European civil procedural law and the qualification of claims arising out of negotiorum gestio are discussed. The thesis reveals that such claims are subject to the jurisdiction according to Article 7 No. 2 Brussels Ibis and cannot be qualified contractually”.

Contact the author: jonas.fritsch@staff.uni-marburg.de

A conference on The Law of Treaties as Applied to Private International Law is scheduled to take place in Milan on 5 and 6 May 2023, under the auspices of the Italian Society of International Law and EU Law (SIDI) and the European Association of Private International Law (EAPIL).

The conference will be opened by two general presentations. Catherine Brölmann (University of Amsterdam) will present the rules of public international law relating to treaties and discuss the manner in which, and the extent to which, they can reflect the specificities of the subject-matter of the treaty concerned. Patrick Kinsch (University of Luxembourg) will outline the relevance of the law of treaties to the development and implementation of international conventions in the field of private international law.

Five thematic panels will follow, each featuring a discussion between experts in the law of treaties and speakers familiar with the practice relating to private international law treaties, respectively.

The first panel, on The conclusion and entry into force of private international law treaties, will be chaired by Hans Van Loon (former Secretary-General of the Hague Conference on Private International Law). The discussion will involve Jean-Marc Thouvenin (University of Paris Nanterre; Secretary-General of The Hague Academy of International Law) and Antonio Leandro (University of Bari).

The second panel, chaired by Sergio Carbone (University of Genova, Emeritus), will be devoted to The observance, application and interpretation of private international law treaties. Luigi Crema (University of Milan), Pedro De Miguel Asensio (Complutense University of Madrid) and Paul Beaumont (University of Stirling) will speak on the topic.

The third panel will be about The amendment and succession of private international law treaties: Catherine Kessedjian (University Paris II Panthéon-Assas, Emerita) will moderate a discussion between Jan Wouters (KU Leuven) and Andrea Schulz (German Federal Ministry of Justice).

Burkhard Hess (Director of the Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law) will chair the fourth panel, on The management of conflicts between private international law treaties, with Jan Klabbers (University of Helsinki, TBC) and Alex Mills (University College London) as speakers.

Finally, with Etienne Pataut (University Paris I – Panthéon-Sorbonne) chairing, Malgosia Fitzmaurice (Queen Mary University of London), Chiara Tuo (University of Genova) and Zeno Crespi Reghizzi (University of Milan) will discuss issues in connection with Avoiding, exiting and litigating commitments arising from private international law treaties.

A roundtable on The role of IGOs in the elaboration, implementation and coordination of private international law treaties, chaired by Fausto Pocar (University of Milan, Emeritus), will follow. Participants will include: Nicolas Nord (Secretary-General of the International Commission on Civil Status), Andreas Stein (Head of Unit (Civil Justice) at the European Commission Directorate-General for Justice and Consumers – Civil and commercial justice), Ignacio Tirado (Secretary-General of the International Institute for the Unification of Private Law (Unidroit), and Luca Castellani (Secretary of Working Group IV (Electronic Commerce) – Uncitral).

The conference, which will also feature a key-note speech by Maciej Szpunar (Judge at the Court of Justice of the European Union, TBC), will be closed by remarks by Stefania Bariatti (University of Milan).

The conference is organised by a scientific committee consisting of Stefania Bariatti, Giacomo Biagioni, Pietro Franzina and Lorenzo Schiano di Pepe, and will take place at the Catholic University of the Sacred Heart.

The full programme can be found here, together with additional practical information. Those wishing to attend must fill in the registration form available here. Early bird rates are offered to those registering before 6 March 2023.

For further information, please write an e-mail to: pietro.franzina@unicatt.it.

The International Institute for the Unification of Private Law (UNIDROIT) is presently conducting a public consultation regarding a set of Draft Principles and Commentary on Digital Assets and Private Law.

These Principles have been prepared by the Working Group on Digital Assets and Private Law over the course of 7 sessions between 2020-2022. Additional information about the Working Group and its meetings can be found here.

Comments should be provided in English, using this online form. The form is divided into seven sections consistent with the text of the Principles; section II is about private international law.

The deadline to submit comments is 20 February 2023. The Working Group will consider the comments received at its next session (8-10 March 2023).

For further information, please contact Hamza Hameed at h.hameed@unidroit.org.

The European Commission has announced earlier today that it has sent a letter of formal notice to Poland (INFR(2021)2001) for failure to fulfil its obligations under the Brussels IIa Regulation.

The infringement case concerns the non-conformity of the Polish law with the Brussels IIa Regulation, specifically the provisions relating to the enforcement of judgments or orders that require the return of abducted children to their place of habitual residence. The Commission considers that there is a systematic and persistent failure of Polish authorities to speedily and effectively enforce judgments ordering the return of abducted children to other EU Member States.

Poland now has two months to reply to the Commission’s letters of formal notice and take the necessary measures to remedy the breach of EU law identified by the Commission. Failing this, the Commission may decide to issue a reasoned opinion.

The editors of the blog welcome additional information on the background of this infringement action.

As announced on this blog, the Catholic University of the Sacred Heart, in Milan, will host, on 3 March 2023, a conference on the operation of Regulation (EU) No 655/2014 establishing a European Account Preservation Order (EAPO) procedure, in light of practice and case law.

The working languages of the conference will be English and Italian, with simultaneous interpretation.

Attendance is free, but prior registration is required. The registration form can be found here.

Speakers include Gilles Cuniberti (University of Luxembourg), Elena D’Alessandro (University of Torino), Fernando Gascón Inchausti (Complutense University, Madrid), Katharina Lugani (Heinrich Heine University, Düsseldorf), Antonio Leandro (University of Bari), Raffaella Muroni (Catholic University of the Sacred Heart), Elena Alina Ontanu (Tilburg University), Carlos Santalò Goris (Max Planck Institute, Luxembourg), María Luisa Villamarín López (Complutense University, Madrid), and Caterina Benini (Catholic University of the Sacred Heart).

The conference will also offer an opportunity to present an article-by-article commentary of the EAPO Regulation, edited by Elena D’Alessandro and Fernando Gascón Inchausti, recently published by Edward Elgar in its Commentaries in Private International Law series. Augusto Chizzini (Catholic University of the Sacred Heart) and Luca Radicati di Brozolo (formerly professor at the Catholic University of the Sacred Heart, now partner at ArbLit, Milan) will exchange views on this work.

The full programme of the conference is available, with additional details, on the event’s dedicated website.

… they sometimes forget to buy the compulsory toll ticket (“e-vignette”) in advance or make mistakes when filling out the online form. The company collecting the Hungarian toll – which is incorporated as a plc under Hungarian law – proved to be unforgiving and regularly sues the owners of the cars in German courts.

Twice was the German Federal Court called upon to decide on such actions in a relatively short timespan (judgments of 28 September 2022 – press release discussed by Matthias Weller here – and of 7 December 2022). Both rulings are of particular interest for our blog because the Court applied the Rome I Regulation.

Scope of Application of Rome I

The first issue the Federal Court had to decide was whether the actions were “civil and commercial matters” in the sense of Art 1(1) Rome I. This question had already been answered in the affirmative by the CJEU in another case (C-31/21, Nemzeti Útdíjfizetési Szolgáltató Zrt. v NW), testifying to the serious troubles Germans are in when not driving on their Autobahn.

Contractual Obligation

The second issue was trickier: Was there a contractual obligation?

The Federal Court argues that contractual obligations can arise from the simple act of driving over the highway, which can be constructed as the acceptance of an offer made by the toll service company to enter into a contract. The CJEU had decided as much for the use of a railway (C-349/18 to C-351/18, Nationale Maatschappij der Belgische Spoorwegen (NMBS) v Mbutuku Kanyeba and Others, para 37). It is hard to see why it should be different for highway usage.

The Contract Type

One may wonder which of the categories listed in Art 4(1) Rome I fits the contract over the usage of a highway: Is it a service contract, a tenancy, or another one?

The Federal Court cuts short this debate by underlining that both Art 4(1)(b) and Art 4(2) Rome I will lead to the application of Hungarian law. Undoubtedly, the characteristic performance is provided here by the toll payment company, not by the user. That the contract involves the tenancy of immovable property seems far-fetched, but even so, Art 4(1)(c) Rome I would have yielded the same result.

The Party Bound by the Contract

The Hungarian toll payment service company had not sued the driver, but the person on whose name the car was registered. The question thus arose whether the alleged liability was based on “obligations freely assumed by the defendant towards the claimant”, as required for a contractual obligation (see CJEU, C-334/00, Tacconi).

The Federal Court overcomes this obstacle by leaving it to the law applicable to the contract to decide who is debtor and creditor. It bases this view on Art 12(1)(b) Rome I, according to which the “performance” falls into the scope of this law. According to the Federal Court, this also encompasses the definition of the persons bound by the contract.

While this may be true, it would go too far to allow the law governing the contract to draw any person into its scope. This would be fundamentally incompatible with the requirement of a freely assumed obligation.

In the end, one cannot ignore the practical need to be able to sue the person in whose name the car is registered, as the driver will mostly be unknown. But perhaps this need could as well have been filled by non-contractual liability, which would have resulted in the applicability of the Rome II Regulation.

Punitive Damages?

The most disputed point of both cases concerned the amount that was claimed. Since the defendants had not acquired a proper ticket in advance, they were charged a price that was three times higher than the normal toll. Since in addition they let pass a deadline of 60 days after the first payment reminder, they also had to pay another fee, ratcheting up the bill to 20 times (!) of the normal ticket price.

The defendants claimed that these rules of Hungarian law would violate German public policy. Yet, the Federal Court sees this differently. First, it underlines that German public policy must be applied “in a restrictive manner” in relation to the law of another EU Member State. Second, the Federal Court points out that the relativity of public policy mandates restraint when invoking it, as the case bears only tenuous relations with Germany and all of the facts happened in Hungary.

Most importantly, the Federal Court rejects the defendants’ claim that the additional fees would amount to “punitive damages”, which are incompatible with German public policy. It characterises the increased price not as a penalty, but instead sees the original ticket price as a discount for early payment. Furthermore, it takes the view that the increase of the ticket price in case of later payment is justified by the additional administrative burdens and risks of the toll collection company in enforcing the claim against the user. Most interestingly, the Court also explicitly acknowledges that it is in the legitimate interest of the toll collection company to incentivise voluntary prepayment.

Finally, the Court does not take issue with the second fee, even though it was 20 times higher than the original ticket price. The Court characterises this fee as a (first) contractual penalty. It recalls that such fees are not unusual in German public transport, and thus can hardly be seen as incompatible with German public policy.

Currency of Payment

Although it confirmed the lower courts’ judgments on all other points, the Federal Court nevertheless vacated them because they had awarded payment in euros to the claimants. The Federal Court highlights that the Hungarian toll laws only provide for claims in Hungarian forint, not in euros. It sent back both rulings to the lower courts to enquire whether there are any additional rules of Hungarian law that allow conversion of the debt into a foreign currency.

Final Word

Besides shedding light on a number of aspects of the Rome I Regulation, both cases are also illustrative of a wider point. The German courts have lent a helping hand to the Hungarian toll payment services company in collecting unpaid fees. They have withstood the German residents’ anger over seemingly outrageous Hungarian fees by pointing out that such fees are not incompatible with the German legal system. Even though it is bad news for car drivers, it proves that judicial cooperation in the EU is working.

— Thanks to Paul Eichmüller and Verena Wodniansky-Wildenfeld for reading and commenting a draft of this post.

Mathilde Codazzi, who is a master student at the University Paris II Panthéon-Assas, contributed to this post.

In a judgment of 8 November 2022, the international commercial chamber at the Paris Court of Appeal (ICCP-CA) addressed the issue of the applicable law to a claim for loss due to fraudulent misappropriation of funds transferred on a bank account.

Facts

The plaintiff, a French farmer, invested over € 200,000 between 2013 and 2014 with an online trading platform on Forex. For that purpose, he transferred the monies on an account owned by the first defendant, an English company (Worldpay AP Ltd) and registered at the French subsidiary (or possibly branch, the judgment is not quite clear on this point) of the second defendant, a Scottish bank (Natwest Markets Plc, formerly Royal Bank of Scotland).

The plaintiff eventually brought proceedings before a Parisian court (tribunal judiciaire) in July 2020 against these two companies and the platform’s operator, a Dutch company. The judgment is not very detailed on his claims, but it seems that the plaintiff alleged that he had made gains that he could not eventually receive. It seems, therefore, that the claim is that his investment and gains were misappropriated fraudulently.

First Instance

On 3 December 2021, the pre-trial judge (juge de la mise en état) declared the claim inadmissible on the ground that it was time-barred. It does not seem that the issue of the applicable law was raised at this stage.

The plaintiff appealed on the ground that he disputed the starting point of the the five-year prescription period (Article 2224 of the French civil code). His lawyer had sent to the defendants a letter of formal notice dating from March 2015. The issue was whether the starting point was that letter, or whether it had not started to run when the letter of formal notice was sent because the plaintiff was not aware that he was a victim of the fraudulent scheme.

For a reason which is not detailed in the judgement, the judge only held that the claim against the two financial institutions (Natwest and Worldplay) was time barred. The plaintiff only appealed against them. It is unclear why, but it might be that, because the issue was one of misappropriation, the claim against the platform was always quite weak, and thus was not pursued.

Court of Appeal

In a judgment of 8 November 2022, the ICCP-CA upheld the decision of the pre-trial judge.

The Court of Appeal raised the issue of the applicable law ex officio and invited the parties to comment on it. It eventually confirmed that French law applied, however.

The ICCP-CA characterized the issue as tortious (quasi-delictual). It thus ruled that the Rome II Regulation applied, and the law governing the tort also governed  the prescription issue.

It applied Article 4.1 of the Rome II Regulation and relied on the case-law of the CJEU concerning financial damage under the Brussels I Regulation, after insisting on the consistency principle mentioned in Recital 7 of the Rome II Regulation.

The court thus ruled that the applicable law should be the law of the country where the victim is domiciled when the alleged financial damage materializes directly on the plaintiff’s bank account held with a bank established in this country and that, subsidiarily, the same law is applicable when the harmful even is manifestly more closely connected to this law (Kronhofer, C-168-02, Kolassa, C-375/13 and Löber, C-304/17).

The court found that the evidence provided by the plaintiff proved the transfer of funds from his bank account held with a French bank to the Worldpay’s account, held by Natwest’s French subsidiary (or branch). It further found that the monies had been made available to the online platform from that last bank account. It then concluded that the monies had “disappeared” after being transferred on this Natwest’s French bank account, and that this set the place of the damage suffered by the investor. As a result, the court ruled that the damage occurred in France and that French law was therefore applicable to the claim.

On the merits, the ICCP-CA confirmed that the claim was time barred.

Assessment

An interesting question is whether the outcome would have been the same depending on whether the claim was one of misappropriation of funds or negligence of the platform. In particular, would the loss have been suffered in both cases “directly” on the bank account where the monies had initially been transferred by the investor?

It is also interesting to note that the court relied on the consistency principle between Rome II and Brussels Ibis in a case where the provisions are quite different, in particular in that Article 4 of the Rome II Regulation is more complex than Article 7(2) of the Brussels I bis Regulation. But a reasonable argument could be that the case law of the CJEU on Article 7(2) in the field of financial loss has made the two rules very similar.

The latest issue of the IPRax (Praxis des Internationalen Privat- und Verfahrensrechts) has been published. The table of contents is available here. The following abstracts have been kindly provided to us by the editor of the journal.

R. Wagner, European account preservation orders and titles from provisional measures with subsequent account attachments

The enforcement of a claim, even in cross-border situations, must not be jeopardised by the debtor transferring or debiting funds from his account. A creditor domiciled in State A has various options for having bank accounts of his debtor in State B seized. Thus, he can apply for an interim measure in State A according to national law and may have this measure enforced under the Brussels Ibis Regulation in State B by way of attachment of accounts. Alternatively, he may proceed in accordance with the European Account Preservation Order Regulation (hereinafter: EAPOR). This means that he must obtain a European account preservation order in State A which must be enforced in State B. By comparing these two options the author deals with the legal nature of the European account preservation order and with the subtleties of enforcement under the EAPOR.

H. Roth, The “relevance (to the initial legal dispute)” of the reference for a preliminary ruling pursuant to Article 267 TFEU

The preliminary ruling procedure under Article 267 of the Treaty on the Functioning of the European Union (TFEU) exists to ensure the uniform interpretation and application of EU law. The conditions under which national courts may seek a preliminary ruling are based on the established jurisdiction of the European Court of Justice (CJEU) and are summarised in Article 94 of the Rules of Procedure of the CJEU. One such condition is that the question referred to the court must be applicable to the decision in the initial legal dispute. Any future judgement by the referring court must thereafter be dependant on the interpretation of Union law. When cases are obviously not applicable, the European Court dismisses the reference for a preliminary ruling as inadmissible. The judgement of the CJEU at hand concerns one of these rare cases in the decision-making process. The sought-after interpretation of Union law was not materially related to the matter of the initial legal dispute being overseen by the referring Bulgarian court.

S. Mock and C. Illetschko, The General International Jurisdiction for Legal Actions against Board Members of International Corporations – Comment on OLG Innsbruck, 14 October 2021 – 2 R 113/21s, IPRax (in this issue)

In the present decision, the Higher Regional Court of Innsbruck (Austria) held that (also) Austrian courts have jurisdiction for investors lawsuits against the former CEO of the German Wirecard AG, Markus Braun. The decision illustrates that the relevance of the domicile of natural persons for the jurisdiction in direct actions for damages against board members (Art 4, 62 Brussels Ia Regulation) can lead to the fact that courts of different member states have to decide on crucial aspects of complex investor litigation at the same time. This article examines the decision, focusing on the challenges resulting from multiple residences of natural persons under the Brussels Ia Regulation.

C. Kohler, Lost in error: The ECJ insists on the “mosaic solution” in determining jurisdiction in the case of dissemination of infringing content on the internet

In case C-251/20, Gtflix Tv, the ECJ ruled that, according to Article 7(2) of Regulation No 1215/2012, a person, considering that his or her rights have been infringed by the dissemination of disparaging comments on the internet, may claim, before the courts of each Member State in which those comments are or were accessible, compensation for the damage suffered in the Member State of the court seized, even though those courts do not have jurisdiction to rule on an application for rectification and removal of the content placed online. The ECJ thus confirms the “mosaic solution” developed in case C-509/09 and C-161/10, eDate Advertising, and continued in case C-194/16, Bolagsupplysningen, for actions for damages for the dissemination of infringing contents on the internet. The author criticises this solution because it overrides the interests of the sound administration of justice by favouring multiple jurisdictions for the same event and making it difficult for the defendant reasonably to foresee before which court he may be sued. Since a change in this internationally isolated case law is unlikely, a correction can only be expected from the Union legislator.

T. Lutzi, Art 7 No 2 Brussels Ia as a Rule on International and Local Jurisdiction for Cartel Damage Claims

Once again, the so-called “trucks cartel” has provided the CJEU with an opportunity to clarify the interpretation of Art. 7 No. 2 Brussels Ia in cases of cartel damage claims. The Court confirmed its previous case law, according to which the place of damage is to be located at the place where the distortion of competition has affected the market and where the injured party has at the same time been individually affected. In the case of goods purchased at a price inflated by the cartel agreement, this is the place of purchase, provided that all goods have been purchased there; otherwise it is the place where the injured party has its seat. In the present case, both places were in Spain; thus, a decision between them was only necessary to answer the question of local jurisdiction, which is also governed by Art. 7 No. 2 Brussels Ia. Against this background, the Court also made a number of helpful observations regarding the relationship between national and European rules on local jurisdiction.

C. Danda, The concept of the weaker party in direct actions against the insurer

In its decision T.B. and D. sp. z. o. o. ./. G.I. A/S the CJEU iterates on the principle expressed in Recital 18 Brussels I bis Regulation that in cross-border insurance contracts only the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules. In the original proceedings – a joint case – the professional claimants had acquired insurance claims from individuals initially injured in car accidents in Poland. The referring court asked the CJEU (1) if such entities could be granted the forum actoris jurisdiction under Chapter II section 3 on insurance litigation against the insurer of the damaging party and (2) if the forum loci delicti jurisdiction under Art. 7(2) or 12 Brussels I bis Regulation applies under these conditions. Considering previous decisions, the CJEU clarified that professional claimants who regularly receive payment for their services in form of claim assignment cannot be considered the weaker party in the sense of the insurance section and therefore cannot rely on its beneficial jurisdictions. Moreover, the court upheld that such claimants may still rely on the special jurisdiction under Art. 7(2) Brussels I bis Regulation.

C. Reibetanz, Procedural Consumer Protection under Brussels Ibis Regulation and Determination of Jurisdiction under German Procedural Law (Sec. 36 (1) No. 3 ZPO)

German procedural law does not provide for a place of jurisdiction comparable to Article 8 (1) Brussels Ibis Regulation, the European jurisdiction for joinder of parties. However, according to Sec. 36 ZPO, German courts can determine a court that is jointly competent for claims against two or more parties. In contrast to Art. 8 (1) Brussels Ibis Regulation, under which the plaintiff has to choose between the courts that are competent, the determination of a common place of jurisdiction for joint procedure under German law is under the discretion of the courts. Since EU law takes precedence in its application over contrary national law, German courts must be very vigilant before determining a court at their discretion. The case is further complicated by the fact that the prospective plaintiff can be characterised as a consumer under Art. 17 et seq. Brussels Ibis Regulation. The article critically discusses the decision of the BayObLG and points out how German judges should approach cross-border cases before applying Sec. 36 ZPO.

M.F. Müller, Requirements as to the „document which instituted the proceedings“ within the ground for refusal of recognition according to Art 34 (2) Brussels I Regulation

The German Federal Court of Justice dealt with the question which requirements a document has to comply with to qualify as the “document which instituted the proceedings” within the ground for refusal of recognition provided for in Art 34 (2) Brussels I Regulation regarding a judgment passed in an adhesion procedure. Such requirements concern the subject-matter of the claim and the cause of action as well as the status quo of the procedure. The respective information must be sufficient to guarantee the defendant’s right to a fair hearing. According to the Court, both a certain notification by a preliminary judge and another notification by the public prosecutor were not sufficiently specific as to the cause of action and the status quo of the procedure. Thus, concerning the subject matter of the claim, the question whether the “document which instituted the proceedings” in an adhesion procedure must include information about asserting civil claims remained unanswered. While the author approves of the outcome of the case, he argues that the Court would have had the chance to follow a line of reasoning that would have enabled the Court to submit the respective question to the ECJ. The author suggests that the document which institutes the proceedings should contain a motion, not necessarily quantified, concerning the civil claim.

B. Steinbrück and J.F. Krahé, Section 1032 (2) German Civil Procedural Code, the ICSID Convention and Achmea – one collision or two collisions of legal regimes?

While the ECJ in Achmea and Komstroy took a firm stance against investor-State arbitration clauses within the European Union, the question of whether this will also apply to arbitration under the ICSID Convention, which is often framed as a “self-contained” system, remains as yet formally undecided. On an application by the Federal Republic of Germany, the Berlin Higher Regional Court has now ruled that § 1032 (2) Civil Procedural Code, under which a request may be filed with the court to have it determine the admissibility or inadmissibility of arbitral proceedings, cannot be applied to proceedings under the ICSID Convention. The article discusses this judgment, highlighting in particular that the Higher Regional Court chooses an interpretation of the ICSID Convention which creates a (presumed) conflict between the ICSID Convention and German law, all the while ignoring the already existing conflict between the ICSID Convention and EU law.

L. Kuschel, Copyright Law on the High Seas

The high seas, outer space, the deep seabed, and the Antarctic are extraterritorial – no state may claim sovereignty or jurisdiction. Intellectual property rights, on the other side, are traditionally territorial in nature – they exist and can be protected only within the boundaries of a regulating state. How, then, can copyright be violated aboard a cruise ship on the high seas and which law, if any, ought to be applied? In a recent decision, the LG Hamburg was confronted with this quandary in a dispute between a cruise line and the holder of broadcasting rights to the Football World Cup 2018 and 2019. Unconvincingly, the court decided to circumnavigate the fundamental questions at hand and instead followed the choice of law agreement between the parties, in spite of Art. 8(3) Rome II Regulation and opting against the application of the flag state’s copyright law.

T. Helms, Validity of Marriage as Preliminary Question for the Filiation and the Name of a Child born to Greek Nationals in Germany in 1966

The Higher Regional Court of Nuremberg has ruled on the effects of a marriage on the filiation and the name of a child born to two Greek nationals whose marriage before a Greek-orthodox priest in Germany was invalid from the German point of view but legally binding from the point of view of Greek law. The court is of the opinion that – in principle – the question of whether a child’s parents are married has to be decided independently applies the law which is applicable to the main question, according to the conflict of law rules applicable in the forum. But under the circumstances of the case at hand, this would lead to a result which would be contrary to the jurisprudence of the Court of Justice on names lawfully acquired in one Member State. Therefore – as an exception – the preliminary question in the context of the law of names has to be solved according to the same law which is applicable to the main question (i.e. Greek law).

K. Duden, PIL in Uncertainty – failure to determine a foreign law, application of a substitute law and leaving the applicable law open

A fundamental concern of private international law is to apply the law most closely connected to a case at hand – regardless of whether this is one’s own or a foreign law. The present decision of the Hanseatic Higher Regional Court as well as the proceedings of the lower court show how difficult the implementation of this objective can become when the content of the applicable law is difficult to ascertain. The case note therefore first addresses the question of when a court should assume that the content of the applicable law cannot be determined. It examines how far the court’s duty to investigate the applicable law extends and argues that this duty does not seem to be limited by disproportionate costs of the investigative measures. However, the disproportionate duration of such measures should limit the duty to investigate. The comment then discusses which law should be applied as a substitute for a law whose content cannot be ascertained. Here the present decision and the proceedings in the lower court highlight the advantages of applying the lex fori as a substitute – not as an ideal solution, but as the most convincing amongst a variety of less-than-ideal solutions. Finally, the note discusses why it is permissible as a matter of exception for the decision to leave open whether German or foreign law is applicable.

M. Weller, Kollisionsrecht und NS-Raubkunst: U.S. Supreme Court, Entscheidung vom 21. April 2022, 596 U.S. ____ (2022) – Cassirer et al. ./. Thyssen-Bornemisza Collection Foundation

In proceedings on Nazi-looted art the claimed objects typically find themselves at the end of a long chain of transfers with a number of foreign elements. Litigations in state courts for recovery thus regularly challenge the applicable rules and doctrines on choice of law – as it was the case in the latest decision of the U.S. Supreme Court in Cassirer. In this decision, a very technical point was submitted to the Court for review: which choice-of-law rules are applicable to the claim in proceedings against foreign states if U.S. courts ground their jurisdiction on the expropriation exception in § 1605(3)(a) Federal Sovereign Immunities Act (FSIA). The lower court had opted for a choice-of -aw rule under federal common law, the U.S. Supreme Court, however, decided that, in light of Erie and Klaxon, the choice-of-law rules of the state where the lower federal courts are sitting in diversity should apply.

Uglješa Grušić has published on SSRN a policy brief titled Remote working and European private international law.

The brief was prepared for the European Trade Union Institute (ETUI) an independent research and training centre of the European Trade Union Confederation (ETUC) which itself affiliates European trade unions into a single European umbrella organisation.

Policy implications listed in the brief are as follows:

• The risk created by expanding the labour pool to workers based in other countries can, if necessary, be dealt with by EU legislative action, for example, through substantive EU employment law. Furthermore, the risk created by expanding the labour pool to workers based in non-EU countries can be dealt with by the overriding application of EU employment standards to situations sufficiently closely connected with the EU. Empirical data is needed to assess the policy implications of the risk created by the expansion of the labour pool to workers based in other countries. This risk should therefore be monitored in the years ahead.
• The Brussels I Regulation, the Lugano Convention and the Rome I Regulation give domestic courts an adequate tool to deal with the potential of remote working to put additional pressure on the employee/self-employed worker dichotomy. Nevertheless, application of the concept of ‘individual employment contract’ to remote working should be monitored in the years ahead.
• Employers might be able to use arbitration agreements to effectively escape the jurisdiction of domestic courts and employment laws. This issue requires further research.

This post was contributed by Catherine Kessedjian, Professor Emerita of the University Paris Panthéon-Assas and Chair of the ADI/ILA 2023 Organising Committee.

In a judgment of 16 November 2022 (pourvoi n° 21-17.338), the French Supreme Court for private and criminal matters (Cour de cassation) addressed, among many other issues, the application of anational norms such as the Unidroit Principles on International Commercial Contracts.

This post will only focus on this issue.

Background

Conforama, a French Company, was contractually linked to Mab Ltd, a US company until the latter became bankrupt. Two creditors of Mab Ltd made a “saisie conservatoire” in Conforama’s hands of a certain sum that it owed to Mab Ltd. However, Conforama declared that Mab Ltd did owe it another sum of money (via several invoices issued by Conforama) and intended to apply “compensation” (set-off of debts) between the two sums in order to reduce the amount that it would have to pay to the creditors.

The Paris Commercial Court (First Instance) (Tribunal de commerce de Paris, 19 June 2019, n°2008006861) decided that Conforama’s invoices were issued without cause. Consequently, it ordered Conforama to pay the entire sum due to Mab Ltd.

Conforama appealed to the Paris Court of Appeal.

Legal Issue: Applicable Law to the contracts

At the centre of the controversy are several contracts between Conforama and Mab Ltd, from 2004 onward, titled “Commercial Cooperation” according to which Conforama issued the contested invoices. Article 4.2 of these contracts provided for set-off. French law is very strict when it comes to these types of contracts because they have led to abuses in the past. Particularly, former Article L.442-6 of the commercial Code provided that, in absence of proven counterpart, these contracts were to be declared null and void. The provisions on restrictive practices are now codified in Articles L. 442-1 to L. 442-4 of the Commercial Code (see in particular Article L 442-1 I 1°).

In this context, in order to avoid the application of French Law, Conforama argued that its cooperation contracts with Mabs were regulated by “general principles of law as applied to international commercial relations together with usages of international commerce” (translation of a quote made by the Court of Appeal out of Conforama’s brief). In addition, Conforama pointed out to Article 17 of the supplier contract of 15 July 2004 and Article 11 of its general terms and conditions of purchase of 14 October 2004 and also to the Unidroit Principles (Disclaimer: we did not have access to the exact wording of these contractual documents).

However, according to Conforama’s opponents, the cooperation agreement of 10 January 2006 referred to (former) Article 1289 of the French civil code on set-off of debts (cf. current Article 1347 of the French civil code).

The question of the applicable law to a “commercial cooperation” contract, was at the centre of the dispute with the following sub-questions: (a) what method should apply to define the applicable law when the contract is silent? (b) is the theory of “goup of contacts” helpful for applicable law purposes? (c) what role can play anational rules of law?

Application of the 1980 Rome Convention by the Court of Appeal

From this complicated contractual picture, the Court of Appeal rendered a very well-motivated decision centred on the mandatory character of French Law on the type of services Conforama pretended to invoice Mab Ltd (Paris, 30 March 2021, 19/15655). Wisely, the Court did not enter into the discussion on the matter of the ‘group of contracts’ theory or on the matter of the applicability of anational law. It simply said that the cooperation agreement did not include an applicable law provision and that the Rome Convention of 1980 (applicable ratione temporis) led the court to apply French law. Since the provisions of French law are mandatory, there was no need to go further into the arguments presented by Conforama.

Exclusion of Unidroit Principles by the Court of Cassation

At the level of the Court of cassation, Conforama altered slightly its story. Its argument can be summarised as follows. First, it argued that Unidroit Principles might be applied even though they are not mentioned expressly in a contract. Second, it insisted on the ‘group of contracts’ theory and argued that applicable law clauses contained in some other contracts did apply to all contracts that are related, including the “cooperation agreement”. Third, even if the court did decide that the contract did not include a proper choice of law clause, the cooperation contract is closely related to the distribution agreement and must be regulated by the same law.

In an unusual move for a decision that confirms the appellate decision, the Court starts with a broad pronouncement (§14 of the decision) and decides that (a) general principles applicable to international contracts, such as the Unidroit principles, may not be considered as “law” and (b) that they may not be chosen by the parties to regulate their contract according to article 3.1 of the Rome Convention of 1980.

Critical Assessment

First, this pronouncement was not necessary to the decision of the Court. It is an obiter dictum. The Court could have, as did the Paris Court of Appeal, decided that the Unidroit Principles did not apply in the case at hand (and limited its pronouncement to that) because they were simply not referenced in the contract that, apparently (although this is only implied in the discussion of the facts by the Court of Appeal) was silent on the applicable law. The Court could also reach the same decision on the basis of the mandatory nature of the applicable French provisions. Therefore, it had two avenues to confirm the Court of appeal decision without making a strong, bold, broad and overarching declaration.

Instead, for an unknown reason or out of sheer conservatism and strict positive law conception, the Court reverses years of understanding under French law (see already in that sense, Cour de cassation, 13 January 2021, 19-17.157), or at least in French doctrine, that under French law, general principles such as the Unidroit Principles could indeed have some application.

In addition, and more importantly, it was always understood that freedom of contract allowed parties to reference such non-state rules of law. This is reflected in Recital 13 of the preamble to the Rome I Regulation that reads as follows:

This Regulation does not preclude parties from incorporating by reference into their contract a non-State body of law or an international convention.

It is true that such a reference is not very common in practice. Indeed, parties may run a risk by limiting their choice of law to a non-State body of law either because that document is incomplete or would not cover the very question underlying the dispute, or because of the lack of case law to ascertain proper interpretation of these rules.

A final remark as to the effect of that part of the decision by the Court of cassation: it is rendered under the 1980 Rome Convention and not the Rome I Regulation. Strictly speaking, the Court will have to change its decision the next time it will be confronted with a similar provision in a contract regulated by Rome I. Indeed, under the Regulation, it is clear that the Court would not be able to say that parties are not allowed to choose non-State body of law as the applicable law to their contract.

A new issue of the Revue Critique de Droit International Privé (4/2022) is out.

It contains one essay, one briefing note on the accession of the EU to the Hague Judgments Convention (by Y. El Hage, Lyon 3 University), as well as numerous case notes.

The editorial by Horatia Muir Watt (Sciences Po Law School), Dominique Bureau (University of Paris II) and Sabine Corneloup (University of Paris II) will soon be available in English on Dalloz website (Journey to Europa?).

In a comprehensive article, Symeon C. Symeonides (Alex L. Parks Distinguished Research Professor and Dean Emeritus, Willamette University College of Law) explores possible ways of reforming EU conflict-of-laws rules in torts (Rome II et la responsabilité délictuelle transfrontière : une nécessaire refonte).

Developments since the adoption of Regulation Rome II have demonstrated the need to extend the logic of Article 7 beyond environmental torts to other categories of cross-border torts. Recognizing this need, the Legal Affairs Committee of the European Parliament (JURI) proposed a similar pro-victim rule for one category of cross-border torts — those involving human rights violations — which would give victims even more choices than Article 7. Likewise, two academic groups, the Group européenne de droit international privé (GEDIP) and the European Law Institute (ELI), have also proposed a similar pro-plaintiff rule for these conflicts. This essay supports these proposals, but also goes beyond them by proposing a rule that would encompass all cross-border torts, in addition to environmental torts and those involving human rights violations. The essay will be soon available in English on Dalloz website.

More information is available here.