EAPIL blog

Tobias Lutzi (University of Augsburg), Ennio Piovesani (University of Turin), Dora Zgrabljic Rotar (University of Zagreb) edited a book titled Jurisdiction Over Non-EU Defendants – Should the Brussels Ia Regulation be Extended?, with Bloomsbury.

The book is the result of the third project of the EAPIL Young Research Network.

This book looks at the question of extending the reach of the Brussels Ia Regulation to defendants not domiciled in an EU Member State. The Regulation, the centrepiece of the EU framework on civil procedure, is widely recognised as one of the most successful legal instruments on judicial cooperation. To provide a basis for the discussion of its possible extension, this volume takes a closer look at the national rules that currently govern the question of jurisdiction over non-EU defendants in each Member State through 17 national reports. The insights gained from them are summarised in a comparative report and critically discussed in further contributions, which look at the question both from a European and from a wider global perspective. Private international lawyers will be keen to read the findings and conclusions, which will also be of interest to practitioners and policy makers.

The table of contents is available here.

The Council of the European Union adopted on 9 June 2023 a political agreement on the proposal for a directive on the protection of persons who engage in public participation from manifestly unfounded or abusive court proceedings, also known as strategic lawsuits against public participation (SLAPPs).

Based on this common position, the Council will now start discussions with the European Parliament with a view to settling on the final text of the directive.

The text resulting from the Council’s general approach departs from the initial proposal (analysed by Marta Requejo in a previous post on this blog), in various respects. The suggested changes have been presented as underlying a concern for  more balanced solutions, and for increased discretion left to national courts, but have been criticised by some stakeholders as involving a watered-down compromise.

The most significant innovations include the following.

The Council, while agreeing that the future directive should apply only to matters with cross-border implications,  advocates the suppression of the provision in the Commission’s proposal that defined what matters should be considered to have such implications.

According to Article 4 of the proposal, a matter ought to be considered to have cross-border implications “unless both parties are domiciled in the same Member State as the court seised”. The proposal added that, where both parties are domiciled in the same Member State, the matter would still be deemed to have cross-border implications if (a) the act of public participation targeted by the SLAPP “is relevant to more than one Member State”, or (b) the claimant have initiated concurrent or previous proceedings against the same defendants in another Member State.

The rule providing early dismissal of manifestly unfounded claims should, according to the Council, be rephrased as follows: 

Member States shall ensure that courts may dismiss, after appropriate examination, claims against public participation as manifestly unfounded at the earliest possible stage, in accordance with national law.

The proposed rewording includes language that was not in the initial proposal (“after appropriate examination”, “at the earliest possible stage, in accordance with national law”). Conversely, the Council’s text fails to retain the paragraph in the initial proposal according to which “Member States may establish time limits for the exercise of the right to file an application for early dismissal”, provided that such time limits are “proportionate and not render such exercise impossible or excessively difficult”.

The Council further suggests the deletion of the provision in the proposal which asked Member States to “ensure that if the defendant applies for early dismissal, the main proceedings are stayed until a final decision on that application is taken”.

According to the Council, the provision on compensation in the Commission’s proposal should likewise be suppressed (arguably, because it was considered to be unnecessary, in light of the existing law). It read as follows:

Member States shall take the necessary measures to ensure thata natural or legal person who has suffered harm as a result of an abusive court proceedings against public participation is able to claim and to obtain full compensation for that harm.

The Council also seeks to modify the wording of the provision in the initial proposal whereby Member States should deny recognition to judgments given in a third State in the framework of a SLAPP brought against natural or legal person domiciled in the Union. The amended version of the provision no longer refers to violation of public policy as the reason for non-recognition.

As regards jurisdiction, the text agreed by the Council retains the rule whereby those targeted by a SLAPP brought in a third State should be able to seek compensation in the Member State of the courts of their domicile, for the damages and the costs incurred in connection with the proceedings in the third country, but adds that Member States “may limit the exercise of the jurisdiction while proceedings are still pending in the third country”.

Finally, according to the Council’s general approach, the Member States should be given three years, instead of two as initially contemplated, to implement the directive in their legal systems.

This post was written by Cécile Pellegrini who is Associate Professor at Lyon Catholic University (UCLy). It summarises a contribution to Metaverse and the Law, edited by L. Di Mateo and M. Cannarsa, Edward Elgar Publishing, forthcoming.

The Metaverse Beyond Real Life

Beyond the world as we know it, often referred to by the acronym “IRL” (for “In Real Life”, stands the so-called “Metaverse”, a concept that private international lawyers are only beginning to embrace.

Coined 30 years ago in the prophetic “Snow Crash” dystopic novel by Neil Stephenson, this Janus, both fearsome and full of promises, was described as a “form of human life and communication in a virtual three-dimensional space through a digital avatar”. Since the digital twins of Second Life (i.e. a free access software allowing users to embody virtual characters in a world created by the residents themselves) Metaverse has taken many shapes. Beyond its known main use as an online multiplayer 3D game (such as Fortnite and Roblox) empowered by virtual and augmented reality (“VR” and “AR”), it has already found numerous applications evolving from being “a place” to shop, work, advertise, buy virtual land, be educated or trained, get a doctor’s appointment, get married, attend a court hearing, travel, be entertained, trade and use cryptocurrencies, sell real-world goods virtually or create and use nonfungible tokens (“NFTs”). The list could go on.

Despite its growing importance, highlighted with the recent rebranding of Meta, the Metaverse is neither defined nor  regulated. Attempts to streamline common features differ from one expert to another (for e.g., see here, here and here). However, all retain the persistence of identity and objects, a shared environment, the use of avatars, synchronization, being three-dimensional, interoperability, and a user experience that is interactive, immersive, and social. For now, the word “Metaverse” itself appears as a catchall term for advanced technologies that point to these types of immersive virtual experiences accessible from anywhere in the world. In consequence, it calls for a more precise and common definition, especially in the perspective of its regulation.

The Metaverse Beyond Borders

Considering the international intrinsic nature of Metaverse litteraly located “beyond the universe”, conflict of laws questions are necessarily in order. Especially considering that such a transnational cyberspace is destined to become the privileged place of many international transactions bringing ineluctably their lots of conflicts. In the absence of international substantial regime, conflict of laws rules are called upon to play a decisive part in the identification of the applicable legal regime to those transactions.

The Metaverse or Several Metaverses?

Yet, when trying to consider the applicable law, there is no certainty on whether to address the Metaverse as a whole, the metaverses’ operators (many metaverses’ iterations exist, such as Decentraland, Sandbox, Roblox, or Horizon World) or the various situations arising from, or in the Metaverse. Indeed, a metaverse could either be seen as an online platform or as the future generation of our internet, i.e. the forthcoming Web3, following Web1 (accessing static webpages) and Web2 (interactive social experiences). Web3, which is a work in progress, will be about digital ownership within an open, decentralized environment and orchestrated with tokens. Whether we are looking at one single Metaverse (with a capital letter like “the Internet”) or at several metaverses (with a lower case as it refers to the technology) depends essentially on the metaverses’ interoperability. Several projects are working in that direction (such as Open Metaverse Interoperability Group, the web standardization body W3C, or Metaverse Standards Forum). If the various existing metaverses become interoperable in a close future, it will inter alia  allow for any transaction taking place in a given virtual world to be transferred in another. Enabling users to switch between multiple virtual reality platforms while “carrying” online properties together will become important, as users will be able to seamlessly switch between various platforms. This will facilitate users to engage in various projects that are taking place on multiple platforms. For instance, a user buying virtual items in the form of NFTs and obtaining titles in one virtual world will technically hold the same items in another virtual world. An avatar with a digital identity in one place would be the same in the other, and he/she could go from a work meeting in one virtual place to another.

For now, the single “Metaverse”, called for by all the prophetic dystopias and the Silicon Valley behemoths has given way to many growing virtual worlds unconnected one to another. There might still be a long way to go to develop the necessary access technologies before we can affirm the existence of a global Metaverse but its future existence seems ineluctable. Hence, the applicable legal framework to Metaverse depends on whether we consider the actual various existing metaverses as online platforms or if we take a prospective view, and already consider the upcoming unique “Metaverse”.  Based on those two scenarios, the conflict of laws solutions differ.

Metaverse as a Platform: The Growing Importance of the “Directed Activity Criterion” and its Inadequacy

Most of the metaverses behave like online platforms. As such, they feature a contract-based architecture where accepting general terms and conditions (“GTCs”) is most of the time a prerequisite to access their services. Far from being an extraterritorial creation with its private own rules – as called for by proponents of Lawrence Lessig – such terms and conditions, whenever the contract is concluded with a European user-consumer, may trigger the application of EU protective rules for consumers, regardless of the defendant’s domicile outside the Union.

This scenario is increasingly frequent since the exchange of personal data is deemed equivalent to a price and constitutes consideration (in particular based on Directive (EU) 2019/770 regarding the supply of digital content and digital services, Art. 3.1). As a consequence, the contractual relationship between the services’ provider and the user answers to the European definition of a B2C contract. It will especially be the case when the activity of the platform is directed toward European consumers-users. Such rules are far from being ignored by large players.

For example, Meta’s T&C’s choice of jurisdiction clause conforms with EU consumer protection as it cares to distinguish conditions for businesses from conditions for consumers  especially when they are in the EU. The Brussels I Recast Regulation helds the protective forum of the consumers domicile competent, whenever the contract has been concluded with a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, by any means, directs such activities to that Member State or to several States including that Member State, (Brussels I Recast, Art. 17 & 18). In the same time, any choice of jurisdiction clause is strictly regulated (Brussels I Recast, Art. 19). A choice of law in Metaverse’s T&C is also limited by the protective rules of Rome I Regulation and especially, Article 6 on Consumer contracts, which also resorts to the “directed activity” criterion as interpreted by the Pammer and Alpenhof case law (see Rome I Reg., Recital 24).

With this view, all the difficulties already encountered to define connecting factors regarding applicable law to online service operators are not new. As an example (outside the B2C legal sphere), we can just think of the difficulty to establish the place of performance of an immaterial service in a metaverse. The “directed activity” criterion can be criticised for its imprecision and growing inadequacy with the development of worldwide websites intended for a global audience. Pushed to the extreme, this criterion becomes completely irrelevant in the case of a unique interoperable Metaverse, that, contrary to a website which can answer to indications as to whether it addresses to a specific national audience, addresses a worldwide audience with no distinction. We can observe that the inadequacy of this “directed activity” criterion is progressively leading to a shift toward “unilateral extraterritorial European protection” (as already noticed on this blog in the context of the Digital Services Act).

EU Regulation of Metaverses’ Platforms Operators

Depending on the metaverse in question and the way it operates, the definition of platform could well be retained for the purposes of applying European Regulations. When they answer the definition, platforms operators are facing growing EU substantial-law regulations with extraterritorial effects, whether it is the P2B platform (see esp. Recital 9), the GDPR (Art. 3), the recent “European constitution for the Internet” combining the DSA (Art. 2.1) and DMA (Art. 1.2), the proposed ePrivacy Regulation (Art. 3.1) or the proposed Data Act (Art 1.2).

These EU instruments follow a strict “marketplace” approach  subjecting every service aimed at people located within EU territory to their provisions, independently of where the service operator is established or administered. This clearly reflects the will of the European legislator to ensure the primacy of EU internal market law and the protection of EU fundamental rights, underpinned by the European values in the digital space. Worldwide service providers aiming at the European market should be held under high European standards such as a high level of consumer protection and personal data protection. But in the future, metaverses’ operators could well be merged into a unique Metaverse and in that case, the question of applicable law will appear somehow differently.

Metaverse Considered as the Future Web3: A Methodology Shift?

No unique legal category applies to Internet as such. EU Private International Law rules rather approach each legal situation/relationship arising out of this “cyberterritory” (see eg here). In that view, it could be considered that determining the law applicable to online situations in the Metaverse merely bring the same difficulties already met with Internet’s situations ‘immateriality’. For example, it is difficult to resort to the “place of provision of service” connecting factor to determine the applicable law to an online contract of provision of service or the use of the “place of the harmful event” connecting factor in order to locate the law of the damage when a tortious situation is committed online that is everywhere at the same time on the globe.

These difficulties are known of PIL experts and sometimes found solutions. In order to answer these new digital situations, conflict of laws rules adapted progressively. In the absence of tangible material elements, the classic solutions have consisted in detaching localisation from material reality. Fictitious location have been favored considering that it remains possible to give a territorial account of immaterial phenomena still marked by some tangible elements. For instance, the difficulties of locating harmful situations in digital spaces has led to shift toward more personal connections as fictional localisations to identify the seat of digital situations. These connections often favor thevictim’s or plaintiff’s center of interests and such a tendency is particularly spreading in the area of cybertorts (see the Roundtable on the method of localisation in digital space). However, such adaptation is reaching its limits. With the upcoming Metaverse, even the few existing tangible connections disappear,with the new underlying use of the blockchain technology, often seen as the bedrock on which Metaverse will rest.

Blockchain as the Metaverse’s Bedrock

The question of how the different blockchains will be able to become technically interoperable is not yet settled, but blockchain technology will contribute to the interoperable development of the Metaverse and to generate a virtual economy where nonfungible tokens (NFTs) are traded. For all the new possibilities it bring, blockchain technology will be the privileged way within metaverses to make all type of transactions, using cryptocurrencies, tokens and associate the later with smart contracts.

The use of crypto-currencies has already given rise to questions about the identification of the applicable law and resulted in Europe in the recent “MICA” Regulation. For crypto assets left out of the text, and in expectation for some States to adopt the recent Unidroit Principles on Digital Assets and Private Law, it is it far from clear how they are acquired and transferred and what law governs such transactions in a transnational Metaverse. Characterisation and transfer of property still need to be addressed and raise many concerns (see the upcoming joint Project between UNIDROIT and HCCH here and the work of the EAPIL Working Group here).

Real conflict of laws difficulty lies with decentralized public blockchains (i.e. open and permissionless as opposed to consortium or private blockchains) that will mostly be in use in the Metaverse. With blockchain, the extensive degree of immateriality undermines the ability to resort to connecting factors actually in use. Seemingly insurmountable problems occur because decentralized ledgers with no physical connecting factors are reluctant to any localisation exercise. Blockchain offers few useful connection points in PIL either through traditional connecting factors or even through the use of fictitious connections. There are no first place of distribution or place of registration. There are also no intermediaries or account providers.

Although, that last affirmation could be nuanced.  Even if it is often claimed that blockchain ‘disintermediates’ the economy, this remains to be seen as, for the time being, more intermediaries (the cryptos and NFTs’ platforms are multipying) have been created by the technology than replaced. Here, one solution would maybe lie in setting obligations on the intermediary secondary platforms creating and exchanging NFTs and giving access to metaverses. However, even this would only partially bring solutions as the usual links to the territory of a State, however tenuous, do not even exist in the case of blockchain where transactions are anonymous.  This is why, behind the avatars, digital civil identity is becoming a major stake for the national sovereignty of States (on that question, see here). Hence, from known difficulties encountered to locate the seat of a situation in the Metaverse as a cyberspace, we move forward to major difficulties regarding the identification of parties to Metaverses’ transactions. With user’s anonymity in public blockchains, the lack of any grip between the situation and any national legal system, seat location becomes completely fictitious. The unseen immateriality, decentralization and anonymity characteristics of blockchain in the Metaverse are therefore calling for a change of regulatory approach.

On 7 March 2023, the Italian Court of Cassation rendered a judgment (No 6723/2023) on the public policy exception as a ground for refusing, pursuant to Articles 45 and 46 of the Brussels I bis Regulation, the recognition and enforcement in Italy of a decision rendered by a Danish Labour Court.

In its judgment, the Court of Cassation addressed (and sometimes dodged) a number of questions concerning the interplay between, on the one hand, the uniform regime of the public policy exception set out by the Brussels I bis Regulation and, on the other hand, Italian procedural law, read in the light of the case law of the CJEU and of the ECtHR.

Facts and Procedure(s)

On 8 December 2017, a Labour Court in Denmark, sitting in a single-judge formation and as a judge of first and last instance, ascertained that a company established in Italy had violated a number of provisions of Danish employment law. Said Italian company had seconded a group of construction workers in Denmark, whose working conditions were regulated by a collective agreement concluded between this company and Danish trade unions.  Subsequently, however, the Italian company breached the obligations stemming therefrom, by omitting to pay salaries, pension insurance contributions, holiday remuneration and other social benefits in accordance with the conditions set by said agreement. Based on these grounds, the Danish Labour Court condemned the company to pay (to the trade unions) a total amount of € 1.900.000,00 ca. This amount was calculated by taking into account the making of budgetary savings unlawfully realized by the company (essentially, by underpaying its workers and omitting to comply with social security obligations) complemented by a 7% increase for deterrence (ca. € 129.000,00). In Danish law, this fine (bod) finds its legal basis in Article 12 of Act. No 106 of 2008.

The Danish trade unions subsequently sought to enforce that judgment in Italy. At this stage, the Italian company filed an application under Articles 45 and 46 of the Brussels I bis Regulation, claiming, inter alia, a breach of the Italian public policy stemming from:

1. an alleged lack of impartiality of the Danish judge, based on the remark that “the majority of the members of the deciding court were designated by one of the trade unions who were parties to the procedure”.
2. the Danish court’s refusal to submit a preliminary reference to the CJEU concerning the interpretation of a number of provisions of (primary and secondary) EU law, deemed relevant for the resolution of the dispute(notably, the freedom to provide services, the principle of non-discrimination based on nationality, Article 12 of the Charter, Article 3 of Directive 96/71/CE and Article 6 of Directive 98/49/CE).
3. the “criminal” nature of the fine (bod) imposed by the Danish Tribunal and/or its non-conformity with the criteria set by the Combined Civil Sections of the Cassation itself for the recognition and enforcement in Italy of punitive damages.

The Italian Court of first instance (Tribunale di Siracusa) refused the recognition and enforcement of the Danish decision, deeming that the sanction inflicted by the Labour Court was indeed criminal in nature, in application of the Engel criteria.

The Court of Appeal of Catania reversed this ruling and granted recognition and enforcement, holding that this sanction aimed at compensating the trade union for a breach of contract, consistently with the ordinary function of civil liability. While the Court of Appeal acknowledged that the 7% increase (bod) might have an inhibiting or repressive purpose, it found it in compliance with the criteria established by the Court of Cassation for the recognition of punitive damage in Italy.

Called by the applicant to assess whether the lower courts had correctly interpreted and applied the law, the Court of Cassation came back to questions 1), 2) and 3), mentioned above.

Unpacking the Cassation’s Ruling

The Cassation’s judgment addresses a number of legal questions, which should be separately assessed.

a. On the Possibility of Raising the Public Policy Exception Ex Officio

This issue was brought to the attention of the Court of Cassation in connection with the alleged lack of impartiality of the Danish judge, who – according to the applicant – had been unilaterally appointed by one of the trade unions who were parties to the dispute (Danish law, it seems, allows the parties to labour disputes to appoint the members of the deciding panel). The fact that the Danish legal order offered no possibility of appealing the decision rendered by this judge constituted, in the applicant’s view, an additional violation of the right to a fair trial, having particular regard to the ‘criminal’ nature of the inflicted sanction

The Court of Appeal had refused to rule on this allegation, deeming that this claim had not been (adequately) substantiated by the applicants in the original application submitted before the court of  first instance. It should therefore be regarded as a new claim raised first the first time on appeal and dismissed as inadmissible. According to the applicant, however, this ground of refusal (contrariety to public policy for the lack of impartiality of the deciding panel) should have been raised ex officio by the first instance judge.

The Court of Cassation briefly considers this line of argument in an obiter, where it acknowledged that this way of reasoning would lead to an additional legal question. It should be determined, in particular, whether the Italian judge

is empowered to raise ex officio a breach of the substantive or procedural public policy of the forum, in application of the domestic procedural rules that usually allow for this possibility (in Italy, Article 112 of the code of civil procedure), or whether, conversely, this ex officio control is precluded by the favor that [the Brussels I Bis] Regulation expresses towards the recognition [of foreign judgments], in that it explicitly requires the party who has an interest in not having that judgment enforced in the forum to take appropriate steps to that end [free translation by the author of this post].

To answer this question, the Court of Cassation would have had to take a stance on the interplay between the uniform procedural regime established (sometimes implicitly) by the Brussels I bis Regulation and the domestic rules of procedure of the forum, as well as on the leeway granted to the latter by the principle of procedural autonomy. Regrettably, the Court of Cassation decided to “dodge” this question. In fact, it continues its reasoning by remarking that: “even admitting that the applicant had properly raised the claim concerning the partiality of the deciding panel at the first instance” (as the company was also alleging), the terms in which this claim was formulated would be too generic and unsubstantiated. This claim was solely grounded in the letter of the Danish law, which allows for the abstract possibility that the trade unions appoint the members of the deciding panel under specific conditions. However, this was not what happened in that concrete case, since the case file evidenced that the judge who issued the contested judgment had been chosen (through a different procedure) among those serving at the Danish Supreme Court. Moreover, it had never been recused by the applicant in the proceedings in the issuing State.

The Court of Cassation also rejected the applicant’s argument whereby the sheer existence of a provision allowing for the appointment of the judicial panel by trade unions who are parties to the dispute could amount to a “structural deficiency” of the Danish legal order. To this end, the Italian Court reminded that the notion of “public policy” under the EU PIL Regulations shall not be construed with reference to purely internal values, but rather according to a broader international perspective. In this vein, the Court of Cassation remarked that many foreign states establish similar systems of judicial appointment and that , in any case,

it is not for the judge called to decide on a cause of non-recognition of a judgment issued by a court of a EU Member State to investigate about systemic deficiencies in legal order of the State of origin (‘structural deficiencies’), in the light of the respect and consideration paid to this State (specifically, Denmark) at the pan-European level.

b. On the Breach of the Obligation to Request a Preliminary Ruling and the Public Policy Exception

This issue was solved in a rather straightforward manner by the Court of Cassation. The applicant claimed that, as the judge of first and last resort, the Danish court should have referred a preliminary question to the CJEU, since the interpretation of a number of provisions of EU law was, in his view, essential for the resolution of the dispute. The non-respect of the obligation established by the CILFIT case law would then result in legal impossibility of recognizing and enforcing the ensuing foreign judgment, this being contrary to the public policy of the requested State.

The Court of Cassation evoked, in this respect, the case law of both the ECtHR and the CJUE. In Ullens dr Schooten, the former held that a national court’s refusal to grant the applicants’ requests to refer to the Court of Justice preliminary questions on the interpretation of EU law, that they had submitted in the course of the proceedings, does not violate Article 6 of the ECHR if this refusal has been duly reasoned. In Consorzio Italian Management, the CJEU specified that

if a national court or tribunal against whose decisions there is no judicial remedy under national law takes the view… that it is relieved of its obligation to make a reference to the Court under the third paragraph of Article 267 TFEU, the statement of reasons for its decision must show either that the question of EU law raised is irrelevant for the resolution of the dispute, or that the interpretation of the EU law provision concerned is based on the Court’s case-law or, in the absence of such case-law, that the interpretation of EU law was so obvious to the national court or tribunal of last instance as to leave no scope for any reasonable doubt (§ 51).

Against this backdrop, the Court of Cassation deemed that the Danish Court had sufficiently explained the reasons behind its refusal to refer a preliminary question to Luxembourg. It also added that this assessment should be made solely on the basis of the reasoning developed in the judgment whose recognition is sought: any further assessment on this point, extending to the correctness of the interpretation given to the Danish provisions and their application to the facts of the case, would amount to a review on the merits, explicitly forbidden under the Brussels regime.

c. On the Allegedly Criminal Nature of the Danish Fine (Bod)

Concerning the disputed nature of the fine inflicted with the judgment whose recognition was sought, the Court of Cassation aligned with the view expressed by the Court of Appeal. It noted that, in the Danish legal order, the bod is characterized as a financial penalty (sanzione pecuniaria) belonging to the toolbox of civil liability. It can be inflicted solely for breaches of collective work agreements and pursues a double objective: on the one hand, strengthening the binding effects of these contracts (whose purpose would be defeated if, in case of non-compliance, the compensation granted by the court was limited to the damage effectively suffered by the trade union) and, on the other hand, fighting social dumping. The Cassation therefore recognizes that the bod combines the functions typically vested in civil liability with a deterrent effect typical of criminal law, aiming at the preservation of the general welfare. However, this “duality of functions” of the bod cannot, as such, serve as a basis to qualify this financial penalty as a criminal sanction.

For the purposes of a correct characterization of a fine as being “criminal” in nature, the Court of Cassation pointed to the judgment No. 43 of 2017 of the Italian Constitutional Court, which in turn refers to the Engel criteria. Accordingly, a fine may be recognized as being criminal in nature – even despite a different explicit characterization in positive law – if (a) it affects the population at large; (2) pursues aims that are not merely reparatory, but also punitive and preventative; (3) has punitive character, its consequences being able to reach a significant level of severity (§ 3.3).

Assessed from this standpoint, the Court of Cassation concluded that the Danish bod could not be regarded as being criminal in nature. Its (partially) “punitive” function should rather be ascribed to the system of civil liability.

In Italy, the recognition of foreign (civil) judgments awarding punitive damages is regulated by a ruling of the Combined Sections of the Court of Cassation of 2017 (No. 16601). Therein, that Court admitted, for the first time, that punitive damages could be compatible with Italian public policy under specific conditions: (1) they shall comply, first and foremost, with the principle of legality and the principle that there must be a legal basis, pursuant to which conduct giving rise to the imposition of punitive damages must be defined beforehand in legislation; (2) secondly, and relatedly, punitive damages damages shall be foreseeable; and (3) their amount should not be disproportionate, ie grossly excessive in nature. Having regard to these criteria, the Cassation concluded that the Danish bod could be recognized in Italy, given that: it found a sufficiently specific legal basis in Danish law (ie in the provisions of Act. No 106 of 2008); the application of these provisions was adequately foreseeable, also as concerns the determination of the amount of the fine, given that Danish courts have issued specific guidelines for these purposes; the damage awarded for “punitive purposes” was not grossly disproportionate in relation to the amount of the prejudice effectively suffered by the trade unions and their members (7% thereof).

Based on these arguments, the Court of Cassation finally gave the green-light to the recognition and enforcement of the Danish judgment in Italy, thus rejecting the claimant’s application under Articles 45 and 46 of the Brussels I bis Regulation.

Edward Elgar Publishing has just published an Advanced Introduction to Cross-Border Insolvency Law, authored by Reinhard Bork (University of Hamburg).

The book is meant both for students who study company, commercial and private international law, and to practitioners who are not specialists of insolvency law. In its approach it provide both in-depth information for advance readers and accessible information for beginners and follows a comparative law approach to explore some of the most important issues of insolvency law.

The blurb of the book reads as follows:

The Advanced Introduction to Cross-Border Insolvency Law provides a clear and concise overview of cross-border insolvency law with particular focus on the rules governing insolvency proceedings that occur between and across countries. Increasingly, such proceedings have an international dimension, which may involve, for example, debtors with assets abroad, foreign creditors, contractual agreements with counterparties in different jurisdictions, or companies with offices or subsidiaries in a different country. The book expertly steers the reader through the complex interactions between national and supra-national rules, international model laws, and the principles that underpin them.

This post was written by Ugljesa Grusic, Associate Professor at University College London. It offers a preview of the upcoming developments relating to Zubaydah v Foreign and Commonwealth Office, a case pending before the UK Supreme Court.

While private international law is no longer regarded as an apolitical field, it is rare for it to become directly entangled in clandestine intelligence operations, secret state deals, and egregious human rights violations. However, the UK Supreme Court is set to hear precisely such a case on 14 and 15 June 2023 in Zubaydah v Foreign and Commonwealth Office. This case is important not only because of its context, but also because it raises a crucial question of private international law. Can reasonable/legitimate expectations, justice, convenience, fairness, and appropriateness, as fundamental principles underlying the application of foreign law, be of practical relevance for determining the applicable law in difficult cases?

Facts

Abu Zubaydah, the first detainee in a CIA black site and the first subject of what the CIA euphemistically refers to as ‘enhanced interrogation techniques’, but what should rightfully be recognised as torture and cruel, inhuman or degrading treatment, is currently a ‘forever prisoner’ in Guantánamo. He is suing the UK government for its alleged complicity in the CIA’s wrongful conduct, which itself was part of the US ‘war on terror’.

Claims

Zubaydah is suing the UK government for misfeasance in public office, conspiracy, trespass to the person, false imprisonment, and negligence. The crux of the claims is that the Security Service and the Secret Intelligence Service (better known as, respectively, the MI5 and the MI6) were aware that Zubaydah was being arbitrarily detained at CIA black sites, where he was being subjected to torture and maltreatment during interrogations conducted by the CIA, but nevertheless sent questions with a view to the CIA eliciting information from him, expecting and/or intending (or at the very least not caring) that he would be subjected to such torture and maltreatment. The defendants are neither confirming nor denying these allegations.

Central Issue

The claim is brought in tort. The Rome II Regulation does not apply due to the acta iure imperii exception. Section 15(1) of the Private International Law (Miscellaneous Provisions) Act 1995 states that the choice-of-law rules for torts in the Act apply ‘in relation to claims by or against the Crown as [they apply] in relation to claims to which the Crown is not a party’. The lex loci delicti applies pursuant to section 11 of the 1995 Act. However, section 12 provides an escape clause.

In this case, the claimant (respondent in the appeal) aims to plead and establish his claim by reference to English law. On the other hand, the defendants (appellants in the appeal) argue that the laws of Thailand, Poland, Cuba (Guantánamo Bay), Morocco, Lithuania, and Afghanistan (the ‘Six Countries’, where he was allegedly detained, tortured, and mistreated) should govern.

Private international law thus becomes the focal point of the power dynamics at play in this case. Of course, the defendants are not asserting that the MI5 and MI6 officers who sent questions to their CIA counterparts had the specific laws of the Six Countries in mind as governing their actions. Rather, they are arguing that the laws of the Six Countries apply because this would make the claimant’s claim more uncertain and resource intensive and, consequently, more challenging to establish. Lane J accepted the defendants’ argument, but Dame Sharp P, Thirlwall and Males LJJ unanimously allowed the appeal.

Importance of the Case

This case holds importance for private international law for two reasons. Firstly, it highlights the role of private international law in holding the executive accountable and vindicating fundamental rights, particularly in cases involving alleged wrongs arising out of the external exercise of British executive authority. I will not discuss this aspect of the case here, except to say that I have written a whole book on the topic, Torts in UK Foreign Relations, which will be published by Oxford University Press in their Private International Law series on 13 June 2023.

The focus here is on the second important aspect of the case, which involves the reliance by the parties and the courts on reasonable/legitimate expectations, justice, convenience, fairness, and appropriateness, as fundamental principles underlying the application of foreign law, as important factors in the choice-of-law process.

As elucidated by the editors of Dicey, Morris and Collins in paragraph 1-006, ‘The main justification for the conflict of laws is that it implements the reasonable and legitimate expectations of the parties to a transaction or an occurrence.’ In the following paragraphs, the editors further assert that failing to apply foreign law in ‘appropriate cases’ would lead to ‘grave injustice and inconvenience’. As private international lawyers, we recognise these and similar principles as the truths of our field. However, courts rarely delve into the reasons for applying foreign law and the practical relevance of these fundamental principles. It is in the most difficult cases, such as Zubaydah, that courts may have to go back to the drawing board.

Consider a scenario where a person negligently injures a Ruritanian victim while driving in Ruritania. It is well-established that Ruritanian law would govern the tort in such a case. The application of Ruritanian law can be justified based on the reasonable/legitimate expectations of the parties involved. By driving to Ruritania, the tortfeasor submits to Ruritanian law, and the Ruritanian victim naturally expects the application of its own country’s law. Additionally, the application of foreign law can be explained by notions of justice, either as the attainment of individual private justice or the systemic justice derived from the appropriate allocation of regulatory authority among states.

However, do these ideas still hold weight where the victim was forcibly and unlawfully ‘extraordinarily rendered’ from one country to another, where their senses of sight and hearing were deprived during transportation using goggles and earmuffs, and where they were kept unaware of their location by their captors and torturers? What if the defendant accomplice was oblivious and indifferent to the victim’s whereabouts? And what if the objective of the claims is to hold a government accountable and vindicate fundamental rights that are part of the forum state’s bill of rights?

Parties’ Arguments

These are big questions, and I address them all in my new book. Here, I want to limit myself to summarising the parties’ arguments, based on the arguments advanced in the High Court and the Court of Appeal.

The claimant is relying on three arguments. First, the focus should be on the defendants’ alleged tortious conduct of sending questions to the CIA, rather than the conduct of the CIA. Second, the factors connecting the tort to the Six Countries are weak because the claimant had no control or knowledge of his location, the defendants were unaware or indifferent to the claimant’s whereabouts, and the claimant was effectively held in ‘legal black holes’ in the Six Countries, outside any legal system. Third, the factors connecting the tort to England are strong because the relevant conduct occurred in England, it was undertaken for the perceived benefit of the UK, the defendants acted in their official capacity under UK law, and they were subjected to UK criminal and public law.

The defendants are relying on four arguments. The first and second arguments (the relevant conduct; the strength of the relevant factors) present a mirror-image of the claimant’s first two arguments. Third, the escape clause in section 12 of the 1995 Act should be strictly interpreted. Fourth, tortious claims arising out of the external exercise of British executive authority do not require the disapplication of the lex loci delicti and the application of the escape clause, as shown by a string of cases involving the wars in Afghanistan (Mohammed v MoD) and Iraq (R (Al-Jedda) v SoS for Defence; Rahmatullah v MoD), as well as the UK’s participation in the extraordinary rendition, arbitrary arrest, torture, and maltreatment by foreign states (Belhaj v Straw), where English courts refused to apply English law.

While the High Court aligned with the defendants’ arguments, adopting a broad view of the relevant conduct and a narrow interpretation of the escape clause, the Court of Appeal was sympathetic to the claimant’s arguments. The Court of Appeal relied in its decision on reasonable/legitimate expectations, justice, convenience, fairness, and appropriateness, as is clear from these paragraphs:

41. These are strong connections connecting the tortious conduct with England and Wales. They reflect also the parties’ reasonable expectations. While it is true that the claimant himself had no connection with this country, he could reasonably have expected, if he had thought about it during the 20 years in which he has been detained, that the conduct of any country’s security services having to do with him would be governed by the law of the country concerned. As for the Services, they would reasonably have expected that their conduct here would be subject to English law …

42. … This conclusion gives effect to the principles on which the 1995 Act is founded, including the reasonable expectations of the parties, and to the general principle of private international law identified by the Law Commission “that justice is done to a person if his own law is applied”… the Services can hardly say that it would be unfair (or to use the statutory term, inappropriate) for their conduct to be judged by the standards of English law, as distinct from (for example) Lithuanian or Moroccan law.

Conclusion

Zubaydah is now awaiting a decision from the UK Supreme Court, which will determine whether or not English applies. Regardless of the outcome, this case is likely to become a prominent authority on the reasons for applying foreign law and the practical relevance of fundamental principles underlying the application of foreign law.

The hearing at the UK Supreme Court will be streamed live for those interested, scheduled for Wednesday and Thursday, 14 and 15 June 2023. The live stream can be accessed by following the link ‘watch live court sittings’ on the court’s home page.

Luís de Lima Pinheiro (University of Lisbon) has posted Laws Applicable to International Smart Contracts and Decentralized Autonomous Organizations (DAOS) on SSRN.

The abstract reads:

International contracts, legal persons and other external organizations raise choice-of-law problems. Should smart contracts and DAOs in general be considered international? Are the choice-of-law rules in force for State courts and for arbitral tribunals appropriate for the determination of the applicable laws? To provide replies to these questions the present essay starts by general introductions to smart contracts and DAOs and also outlines the Private International Law framework of these realities. Solutions for difficulties on the application of the choice-of-law rules in force and more flexible approaches to address them are proposed.

A book by Alexander DJ Critchley, titled The Application of Foreign Law in the British and German Courts, has been published by Hart in its Studies in Private International Law Series.

This book explores the application of foreign law in civil proceedings in the British and German courts. It focuses on how domestic procedural law impacts on the application of choice of law rules in domestic courts. It engages with questions involved in the investigation and determination of foreign law as they affect the law of England and Wales, Scotland, and Germany. Although the relevant jurisdictions are the focus, the comparative analysis extends to explore examples from other jurisdictions, including relevant international and European conventions. Ambitious in scope, it expertly tracks the development of the law and looks at possible future reforms.

More information is available here.

The Legal High Committee for Financial Markets of Paris issued a report on the work of the international commercial chambers of Paris courts (Bilan du fonctionnement des chambres internationales du tribunal de commerce et de la cour d’appel de Paris) in March 2023.

The report discusses the competitive environment of the Paris international commercial courts, the resources of the courts, how they can be seized, and their procedural rules.

It concludes with 15 propositions for reform. They include:

• Offering to the parties the power to agree on specialised judges assigned to other chambers (than the international commercial chamber) of the commercial court of Paris,
• Reflecting on the possibility to appoint French and foreign lawyers to supplement the international chambers,
• Introducing the possibility to hear private experts retained by the parties
• Allowing the parties to agree on confidential proceedings in cases which could have gone to arbitration.

June 2023 begins at the Court of Justice with the decision in case C-567/21, BNP Parisbas, which will be read on 8 June. The request from the Social Chamber of the Cour de Cassation (France) had been lodged on September 15, 2021. It concerns the interpretation of Regulation 44/2001. The national court referred the following questions:

1. Must Articles 33 and 36 of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters 1 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?

Advocate General P. Pikamäe had delivered his opinion on 16 February 2023. As of today, no official English translation is available. My own one reads:

1. Articles 33 and 36 of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters should be interpreted in the sense that the recognition of a court decision rendered in a Member State, the law of which provides for a rule of concentration of claims prohibiting the same parties from initiating a new action relating to claims which could have been made at the initial instance, does not preclude the court of that second State ruling on such claims, even in circumstances where the law of the Member State in which recognition is invoked provides for a similar obligation of concentration of claims.

2. Articles 33 and 36 of Regulation 44/2001 should be interpreted as meaning that, in the event that the recognition of a decision given in a first Member State is invoked incidentally before a court of a second Member State, claims based on the same employment contract relating to some of the obligations arising from the execution of this contract, and claims based on the obligations arising from the breach of this contract have the same cause but do not have the same object.

A comment by Fabienne Jault-Seseke appeared on this blog.

The case was allocated to the Third Chamber, presided by K. Jürimäe; N. Jääskinen was reporting judge.

On 22 June, Advocate General J. Richard de la Tour will publish his opinion on case C-497/22, Roompot Service. The request comes from the Landgericht Düsseldorf (Germany), and was lodged on 22 July 2022. In a nutshell, the question relates to the relevant criteria to be taken into consideration in order to classify a contract relating to the transfer of short-term use of a bungalow in a holiday park as a lease contract within the meaning of Article 24(1), first sentence, of Regulation 1215/2012, or as a contract relating to the provision of services.

Must the first sentence of Article 24(1) of Regulation (EU) No 1215/2012 be interpreted as meaning that a contract which is concluded between a private individual and a commercial lessor of holiday homes in relation to the short-term letting of a bungalow in a holiday park operated by the lessor, and which provides for cleaning at the end of the stay and the provision of bed linen as further services in addition to the mere letting of the bungalow, is subject to the exclusive jurisdiction of the State in which the rented property is situated, irrespective of whether the holiday bungalow is owned by the lessor or by a third party?

The Fourth Chamber will decide, with C. Lycourgos presiding and O. Spineau-Matei reporting.

On the same day, a hearing is taking place on case C-339/22, BSH Hausgeräte. The request for a preliminary ruling has been sent by the Svea hovrätt, Patent- och marknadsöverdomstolen (Sweden), and lodged on May 24th, 2022. It comprises three questions on Regulation 1215/2012:

1. Is Article 24(4) of Regulation (EU) 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters to be interpreted as meaning that the expression ‘proceedings concerned with the registration or validity of patents … irrespective of whether the issue is raised by way of an action or as a defence’ implies that a national court, which, pursuant to Article 4(1) of that regulation, has declared that it has jurisdiction to hear a patent infringement dispute, no longer has jurisdiction to consider the issue of infringement if a defence is raised that alleges that the patent at issue is invalid, or is the provision to be interpreted as meaning that the national court only lacks jurisdiction to hear the defence of invalidity?

2. Is the answer to Question 1 affected by whether national law contains provisions, similar to those laid down in the second subparagraph of Paragraph 61 of the Patentlagen (Patents Law; ‘the Patentlagen’), which means that, for a defence of invalidity raised in an infringement case to be heard, the defendant must bring a separate action for a declaration of invalidity?

3. Is Article 24(4) of the Brussels I Regulation to be interpreted as being applicable to a court of a third country, that is to say, in the present case, as also conferring exclusive jurisdiction on a court in Turkey in respect of the part of the European patent which has been validated there?

In the case at hand, the parties to the main proceedings litigate on a European patent relating to a vacuum cleaner, validated in Austria, Germany, Spain, France, the United Kingdom, Greece, Italy, the Netherlands, Sweden and Turkey. BSH brought an action for infringement of this patent against Electrolux before a Swedish court, who raised an objection of invalidity of the patents in question. The court of first instance has dismissed BSH’s action on the basis of Article 24(4) read together with Article 27 of the Brussles I bis Regulation, insofar as it concerned patents validated in States other than Sweden – with the added element that one of them is a third State. BSH appealed to the referring court.

The case has been allocated to the Fourth Chamber (C. Lycourgos presiding, O. Spineanu-Matei reporting). An opinion will be delivered in due time by Advocate General N. Emiliou.

On 31 May 2023, the European Commission has proposed new rules aimed to ensure that the protection of adults is maintained in cross-border cases, and that their right to individual autonomy, including the freedom to make their own choices as regards their person and future arrangements is respected when they move within the EU.

The proposals, based on Article 81(2) TFEU, cover adults who, by reason of an impairment or insufficiency of their personal faculties, are not in a position to protect their own interests (e.g., due to an age-related disease).

Specifically, In the context of a growing cross-border mobility of people in the EU, this gives rise to numerous challenges. For instance, individuals concerned or their representatives may need to manage assets or real estate in another country, seek medical care abroad, or relocate to a different EU-country. In such cross-border situations, they often face complex and sometimes conflicting laws of Member States, leading to legal uncertainty and lengthy proceedings.

The proposed Regulation, which is meant to apply 18 months after its adoption, introduces a streamlined set of rules that will apply within the EU, in particular to establish which court has jurisdiction, which law is applicable, under what conditions a foreign measure or foreign powers of representation should be given effect and how authorities can cooperate. It also proposes a set of practical tools, including the introduction of a European Certificate of Representation, which will make it easier for representatives to prove their powers in another Member State.

The proposal for a Council Decision provides for a uniform legal framework for protecting adults involving non-EU countries. It obliges all Member States to become or remain parties to the 2000 Protection of Adults Convention in the interest of the Unione. Once the Decision is adopted, the Member States that are not yet party to the Convention will have 2 years to join it. Actually, some Member States have already launched their own ratification process, with the latest to announce (or re-announce) such a move being Italy, just a few days ago.

The approach underlying the package – in short, ensuring that the Hague Adults Convention enters into force for all Member States, and adopting a Regulation aimed to strengthen the operation of the Convention in the relations between Member States – reflects the suggestions that were put forward, inter alia, by the European Law Institute and the European Association of Private International Law, notably through a position paper issued in April last year.

Further analysis of the two proposals will be provided through this blog in the coming weeks.

On 10 May 2023, UNIDROIT adopted the Principles on Digital Assets and Private Law. The Principles contain recommendations to national legislators on how to deal with the private law issues raised by digital assets, such as cryptocurrencies or tokens. The final text can be found here.

Principle 5 concerns the conflict of laws. A previous draft and online consultation by UNIDROIT (see this blogpost) led the European Association of Private International Law to create a Working Group on the Law Applicable to Digital Assets, which has provided special input on this provision. Some of the Working Group’s suggestions are reflected in the final version, which reads:

Principle 5: Applicable law

(1) Subject to paragraph (2), proprietary issues in respect of a digital asset are governed by:

(a) the domestic law of the State expressly specified in the digital asset, and those Principles (if any) expressly specified in the digital asset; or, failing that,

(b) the domestic law of the State expressly specified in the system on which the digital asset is recorded, and those Principles (if any) expressly specified in the system on which the digital asset is recorded; or, failing that,

(c) in relation to a digital asset of which there is an issuer, including digital assets of the same description of which there is an issuer, the domestic law of the State where the issuer has its statutory seat, provided that its statutory seat is readily ascertainable by the public; or

(d) if none of the above sub-paragraphs applies:

OPTION A:

(i) those aspects or provisions of the law of the forum State as specified by that State;

(ii) to the extent not addressed by sub-paragraph (d)(i), those Principles as specified by the forum State;

(iii) to the extent not addressed by sub-paragraphs (d)(i) or (d)(ii), the law applicable by virtue of the rules of private international law of the forum State.

OPTION B:

(i) those Principles as specified by the forum State;

(ii) to the extent not addressed by sub-paragraph (d)(i), the law applicable by virtue of the rules of private international law of the forum State.

(2) In the interpretation and application of paragraph (1), regard is to be had to the following:

(a) proprietary issues in respect of digital assets, and in particular their acquisition and disposition, are always a matter of law;

(b) in determining whether the applicable law is specified in a digital asset, or in a system on which the digital asset is recorded, consideration should be given to records attached to, or associated with, the digital asset, or the system, if such records are readily available for review by persons dealing with the relevant digital asset;

(c) by transferring, acquiring, or otherwise dealing with a digital asset a person consents to the law applicable under paragraph (1)(a), (1)(b) or (1)(c);

(d) the law applicable under paragraph (1) applies to all digital assets of the same description;

(e) if, after a digital asset is first issued or created, the applicable law changes by operation of paragraph (1)(a), (1)(b) or (1)(c), proprietary rights in the digital asset that have been established before that change are not affected by it;

(f) the ‘issuer’ referred to in paragraph (1)(c) means a legal person:

(i) who put the digital asset, or digital assets of the same description, in the stream of commerce for value; and

(ii) who, in a way that is readily ascertainable by the public,

(A) identifies itself as a named person;

(B) identifies its statutory seat; and

(C) identifies itself as the person who put the digital asset, or digital assets of the same description, into the stream of commerce for value.

(3) The law applicable to the issues addressed in Principles 10 to 13, including whether an agreement is a custody agreement, is the domestic law of the State expressly specified in that agreement as the law that governs the agreement, or if the agreement expressly provides that another law is applicable to all such issues, that other law.

(4) Paragraphs (1) and (2) are subject to paragraph (3).

(5) Other law applies to determine:

(a) the law applicable to the third-party effectiveness of a security right in a digital asset made effective against third parties by a method other than control;

(b) the law applicable to determine the priority between conflicting security rights made effective against third parties by a method other than control.

(6) Notwithstanding the opening of an insolvency-related proceeding and subject to paragraph (7), the law applicable in accordance with this Principle governs all proprietary issues in respect of digital assets with regard to any event that has occurred before the opening of that insolvency related proceeding.

(7) Paragraph (6) does not affect the application of any substantive or procedural rule of law applicable by virtue of an insolvency-related proceeding, such as any rule relating to:

(a) the ranking of categories of claims;

(b) the avoidance of a transaction as a preference or a transfer in fraud of creditors;

(c) the enforcement of rights to an asset that is under the control or supervision of the insolvency representative.

As one can see, the Principle is quite long and complex.

The starting point is that the law applicable to a digital asset may be chosen either in the digital asset itself (Principle 5(1)(a)) or in the system in which the digital asset is recorded (Principle 5(1)(b)). Thus, precedence is given to the principle of party autonomy. This remarkably resembles the recently adopted sec. 12-107 US Uniform Commercial Code (UCC).

In the absence of a choice of law, the law of the statutory seat of the issuer of the digital asset shall apply, provided that this seat is readily ascertainable to the public (Principle 5(1)(c)). This was one of the key proposals of the EA PIL Working Group. Yet the Principles define the issuer as the person who has put the asset “in the stream of commerce for value” and has identified itself as such as well as its statutory seat (Principle 5(2)(f)). This considerably reduces the provision’s significance. It would, for instance, not apply to those who distribute their assets via airdrop or those who choose not to identify their statutory seat.

If none of these rules apply, the Principles give the national legislator two options: Under Option A, it can submit digital assets to special rules of its national law, to be supplemented by the UNIDROIT Principles. Under Option B, it can directly refer to the UNIDROIT Principles as governing law. In both cases, any remaining gaps will be filled by the law that is applicable according to the conflict-of-laws rules of the forum state.

This latter technique, which effectively substitutes the law of the forum for the search for an applicable law, is known in French law as a substantive rule of PIL (règle materielle de droit international privé). It provides a simple solution to the conflict-of-laws conundrum. That the Principles suggest themselves as applicable law is novel, but well understandable given their goal of legal harmonisation.

Less harmonisation is the default rule, which refers to the conflict-of-laws rules of the forum. No indication whatsoever is given what these conflicts rules should look like. One might fear that this will lead to divergence between national laws. It is to be hoped that they can be overcome by the Joint Project of the Hague Conference on Private International Law and UNIDROIT on Digital Assets and Token, which was recently announced.

— Thanks to Felix Krysa and Amy Held for contributing to this post.

In June 2022, this blog posted about a joint webinar between the Singapore-based Asian Business Law Institute (ABLI) and the Permanent Bureau of the Hague Conference on Private International Law (HCCH) on the Choice-of-Court and Judgments Conventions. The two organizations return this year with their third joint session, this time on the 1965 Service Convention. ABLI has been engaging in work related to judgments recognition and enforcement in Asia for some time.

Titled Cross-border Commercial Dispute Resolution – HCCH 1965 Service Convention, the webinar will take place on 27 June 2023 between 4 to 5:10pm (Singapore time) or 10 to 11:10am (CEST), and is expected to discuss, among others, the actual operation of the Service Convention in practice, how the Service Convention works with the other HCCH Conventions for cross-border dispute resolution, and Singapore’s accession to and upcoming implementation of the Service Convention.

Invited speakers include Sara Chisholm-Batten (Partner, Michelmores LLP), Melissa Ford (Secretary, HCCH), Delphia Lim (2Director, International Legal Division, Ministry of Law, Singapore), Professor Yeo Tiong Min (Singapore Management University), and Professor Yun Zhao (University of Hong Kong and Representative of Regional Office for Asia and the Pacific, HCCH).

For more information or to register, click here. Queries about the webinar can be directed to ABLI at info@abli.asia.

On 17 May 2023, the CJEU delivered its judgment in Fonds de Garantie des Victimes des Actes de Terrorisme et d’Autres Infractions (FGTI) v. Victoria Seguros SA (Case C‑264/22).

This is a case on the delineation of the respective scopes of the law governing torts and the law governing subrogation. The answer given by the Court seems obvious, and one wonders why the question was asked in the first place, at least in such terms.

One interesting issue (possibly the only one) is whether the existence of a French judgment could have changed the answer of the Court, but the question was not asked.

Background

On 4 August 2010, while swimming and snorkelling in the sea off the beach at Alvor (Portugal), a person of French nationality was struck by the propeller of a boat registered in Portugal and suffered serious physical injuries.

The victim brought a claim for compensation in France against Fonds de garantie des victimes des actes de terrorisme et d’autres infractions (FGTI), a public fund which can compensate victims of certain torts. After compensating victims, FGTI is subrogated in their rights that it can exercise against tortfeasors.

FGTI settled in 2014. The settlement was approved by a French court, and FGTI paid the victim in April 2014, which triggered the subrogation.

At the end of November 2016, FGTI brought proceedings against Victoria Seguros, the insurance company of the alleged tortfeasor, in Portuguese courts.

Victoria Seguros argued that the claim brought by FGTI was governed by Portuguese law and thus time-barred. FGTI replied that French law applied and that the claim was not time-barred.

Lex loci delicti or lex subrogationis?

The issue before the court was whether the time limit was governed by the law of the tort or the law governing the subrogation.

Victoria Seguros argued that the law of the tort applied. As the damage was suffered in Portugal, it was thus Portuguese law (Rome II Regulation, Article 4), and the starting point of the limitation period was the day of the accident, i.e. 10 August 2010. Under Portuguese law, the applicable time limit was 3 years.

FGTI argued that the law of the subrogation applied (Rome II Regulation, art. 19). As the duty of the Fund arose under French law, this was French law, which provides for a 10 year limitation period starting in 2014.

Article 19 of the Rome II Regulation reads:

Where a person (the creditor) has a non-contractual claim upon another (the debtor), and a third person has a duty to satisfy the creditor, or has in fact satisfied the creditor in discharge of that duty, the law which governs the third person’s duty to satisfy the creditor shall determine whether, and the extent to which, the third person is entitled to exercise against the debtor the rights which the creditor had against the debtor under the law governing their relationship.

This provision establishes in complex terms a pretty simple distinction. The law governing the obligation of a person (here, the Fund) to compensate a victim determines whether this person is subrogated in the rights of this victim, and to which extent (for instance, only to the extent of the actual payment made to that victim). But the result of the subrogation is clearly to transfer to the Fund the rights of the victims. Subrogation does not establish new rights. It merely transfers existing rights from one person (the victim) to another (here the Fund).

Thus, the answer to the question referred to the CJEU seemed pretty obvious, and one can understand that no opinion of an Advocate General was requested. FGTI was exercising the victim’s rights against the (alleged) tortfeasor. These rights were governed by the lex loci delicti, and as clarified by Article 15, this included the limitation period for exercising those rights.

This is what the CJEU rules:

Article 4(1), Article 15(h) and Article 19 of Regulation No 864/2007 must be interpreted as meaning that the law which governs the action of a third party subrogated to the rights of an injured party against the person who caused the damage and which determines, in particular, the rules on limitation in respect of that action is, in principle, that of the country in which that damage occurs.

The Court offers quite an impressive number of reasons to justify such an obvious solution.

The French Judgment

In Portuguese courts, FGTI argued that French law provides “for a limitation period of 10 years from the date of the judicial decision at issue, which, in the present case, was made in March 2014“.

It is difficult to assess this argument without any further information.

There is no doubt that there is no special time limit for subrogation under French law. The French supreme court rules regularly that subrogation does not trigger any new time limit, and that it is always the time limit applicable to the right of the victim which applies, which is of 10 years for personal injury cases, starting on the date of the damage. Maybe this is the rule FGTI relied upon (though the starting point should not have been the 2014 judgment then).

There is, however, a special time limit of 10 years applicable to the enforcement of judgments.  In this case, FGTI referred to a time limit starting on the day of the French judgment approving the settlement, i.e. March 2014.

From a PIL perspective, this raises the issue of whether this judgment could have been the basis for an action in Portugal. Clearly, the insurer of the alleged tortfeasor was not a party to the French proceedings, and the French judgment had not ruled on whether the alleged tortfeasor was liable. But maybe an argument could have been made that the judgment could be recognised in Portugal to the extent that it might have declared that FGTI was subrogated (I do not know that it did). From the perspective of Portugal, it could then have raised the issue of whether a new right was created by the judgment (novatio), or whether Portugal would still have recognised the pre-existing right of the victim.

Registration is open for the 9th Journal of Private International Law Conference.

The conference will be held on 3 to 5 August 2023 at the Yong Pung How School of Law at the Singapore Management University. The keynote address will be delivered by Philip Jeyaretnam, President of the Singapore International Commercial Court.

The deadline for speakers to register is 30 May 2023. The deadline for other registrants is 25 June 2023.

Registration is complimentary for speakers, Journal of Private International Law editorial board members and SMU faculty, staff and students. Preferential rates apply for academics, government officials, SMU alumni and non-SMU students – register with your institutional e-mail to enjoy the preferential rate.

More information, including the draft programme and link to register, can be found here.

A Summer School on Cross-border litigation and international arbitration will take place between 17 and 22 July 2023 both on-site at the Ravenna Campus of the University of Bologna and on-line, under the direction of Michele Angelo Lupoi (University of Bologna) and Marco Farina (LUISS, Rome).

The course will address a broad range of issues relating to transnational litigation, as they arise in contexts as diverse as climate change litigation, commercial and maritime litigation, and family and succession disputes. International arbitration will also be covered.

The lecturers include Apostolos Anthimos, Giovanni Chiapponi, Elena D’Alessandro, David Estrin, Francesca Ferrari, Chris Helmer, Albert Henke, Emma Roberts, Marco Torsello, Stefano Alberto Villata, and Anna Wysocka-Bar.

The Summer School is aimed at law students as well as law graduates and practitioners.

Registrations are open until 6 July 2023. Further information are found here.

Hanoch Dagan (Tel Aviv University) and Sagi Peari (University of Western Australia) have posted on Choice of Law Meets Private Law Theory on SSRN.

Choice of law can, and often should, be an important feature of an autonomy-enhancing law as it expands the possible frameworks within which people can govern their affairs. The theory of choice of law we develop in this article builds on three core notions that dominate existing doctrine — states, party autonomy, and what we loosely refer to as ‘limitations’; but it releases choice of law from its subordination to private international law (or its inter-state equivalent in federal contexts). As a freestanding concept, choice of law belongs to private law’s empowering sections and thus participates in the obligation of liberal states to proactively promote people’s self-determination. This foundation of the field refines its three fundamental notions in a way that facilitates their peaceable cohabitation. It also recalibrates the boundaries of choice of law doctrine, clarifies its prescriptions, and offers grounds for its reform.

The paper is forthcoming in the Oxford Journal of Legal Studies.

The author of this post is Lydia Lundstedt, Senior Lecturer at the Stockholm University.

Under Swedish copyright law, broadcasting organizations are granted certain exclusive rights over their broadcasts (“signal right”). A signal right is one of the “related” or “neighboring” rights to copyright along with the rights of performers and producers of phonograms. Pursuant to Section 48 of the Swedish Act (1960:729) on Copyright in Literary and Artistic Works (Swedish Copyright Act) broadcasting organizations have an exclusive right to inter alia authorize the rebroadcast or a communication to the public in places accessible to the public against the payment of an entrance fee. This section incorporates Sweden’s obligations under Article 8(3) of the EU Rental and Lending Directive 2006/115/EC.

As a general rule, the Swedish Copyright Act applies in relation to other countries only on condition of reciprocity, or if it follows from an international treaty. Article 6(1) of the 1961 International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (Rome Convention) requires that Sweden grant national treatment to foreign broadcasting organizations if (1) they are established in another contracting State; or (2) if the broadcast was transmitted from a transmitter situated in another contracting State. This treaty obligation is incorporated into Section 12 of the Swedish International Copyright Regulation (1994:193) (International Copyright Regulation). The second point of attachment is formulated slightly differently in the International Copyright Regulation. It refers to “broadcasts which have been made” but does not include the words “from a transmitter situated”.

In a case before the Swedish courts, the question arose of the interpretation of this point of attachment when a satellite broadcasting chain of transmission spans several States. On 12 May 2023, the Swedish Supreme Court held that a satellite broadcast should normally be considered to take place in the state where the transmission of the programme-carrying signals was initiated.

Facts

Two persons, acting in their capacity as representatives for a company established in Sweden, were prosecuted for intentionally or through gross negligence, retransmitting television broadcasts produced by another company established in Qatar. The Swedish company had retransmitted via IPTV the Qatari company’s broadcasts to its own customers all over the world without obtaining the Qatari company’s consent. The Qatari company brought a civil claim for damages in connection with the prosecution. A prerequisite for finding the two persons guilty of the offense of unlawful retransmission and liable for damages was that the Qatari company’s broadcasts were eligible for protection under Swedish law.

It is important to distinguish the question whether the Qatari company was eligible for protection under Swedish law, which deals with the rights of foreigners, from the traditional private international law question concerning the applicable law. In this case, the applicable law question did not arise. First, nationals courts only apply their own criminal law so it is clear that Swedish law applies in a Swedish criminal proceeding. Second, with respect to the Qatari company’s claim for damages, which it a private law question, the Qatari company claimed protection for Sweden so Swedish law was applicable under Article 8(1) Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II). As said, however, the application of Swedish law was never questioned. Instead, the question was whether the Qatari company was eligible for protection under Swedish law.

Qatar was not a contracting state to the Rome Convention at the time that the broadcasts took place. Although the Qatari company produced its television programmes in Qatar, it sent the programme signals via fibre cable to a related company in France and then to the United Kingdom and Spain. Via uplink stations in the United Kingdom and Spain, the signals were sent to satellites to be received by the public in the Middle East and Northern Africa.

The Swedish Patent and Market Court (PMD) found that the Qatari company’s broadcasts were made “at least” in the United Kingdom and Spain, which are both contracting states to the Rome Convention. On appeal, however, the Patent and Market Court of Appeal (PMÖD) reversed and held that the broadcast took place only in Qatar. The Supreme Court affirmed the decision of the PMÖD.

Swedish Supreme Court

Article 3(f) of the Rome Convention defines broadcasting as “the transmission by wireless means for public reception of sounds or of images and sounds”. Although the Rome Convention was drafted before the time of satellite broadcasts, the Court stated that such broadcasts could nonetheless be considered to fall under its scope.

The Court then observed that section 61 a of the Copyright Act deals specifically with satellite broadcasting and localizes the “copyright relevant act” “in the country where the broadcasting organization, under its control and its responsibility, introduces the subject matter into an uninterrupted chain of communication to the satellite and from there down towards the earth.” Section 61 a implements Article 1(2)(b) of the EU Directive 93/83/EEC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (SatCab Directive). The Court noted that the aim of this rule is to enable a broadcasting company that uses other people’s protected subject matters, to easily identify for which Member State it needs to obtain a license. The Court pointed out that the application of this rule presupposes that the subject matter (e.g. a broadcast) is protected under the Copyright Act. The Court therefore observed that this rule “had no immediate significance for the assessment of whether the broadcast as such is protected by that Act”.

The Court observed that neither Article 6 of the Rome Convention nor section 12 of the International Copyright Regulation contain specific provisions on where a broadcast is deemed to take place when the chain of transmission spans several different states. The Court noted however that “in a related context”, the Court of Justice of the European Union (CJEU) held that customary technical activities to prepare signals for their introduction into a satellite communication uplink cannot be regarded as interruptions in the transmission in the meaning of Article 1(2) of the SatCab Directive (see Airfield and Canal Digitaal (C-431/09 and C-432/09).

The Court found that this approach was consistent with the text of the Rome Convention and the International Copyright Regulation. The Court stated therefore that in the case of a broadcast involving several intermediate technical steps, the broadcast “was transmitted” (within the meaning of the Rome Convention) and “was made” (within the meaning of the International Copyright Regulation) in the state where the transmission of the signals was initiated. The Court added that the fact that the chain of transmission includes elements which, individually, are not covered by the rules of the Rome Convention, e.g. because the signals at one stage are not transmitted by wireless means, does not preclude such a reading of the provisions.

The Court also found that this interpretation was in line with the aim of protecting broadcasting organizations against the unauthorized exploitation of their broadcasts. The Court reasoned that broadcasting companies make their primary investments in the state from which the broadcast is initially generated and using the state of uplink or where other intermediate technical steps are taken would not satisfy this aim to the same extent.

Thus, the Court held that the entire chain of transmission starting with the transmission of the signals via fibre cable from Qatar and ending with their reception on the ground to subscribers was one single broadcast which must be regarded as having been made in Qatar. This meant that the Qatari company was not eligible for protection under Swedish law and the prosecution against the two individuals for a violation of the Copyright Act and the Qatari company’s damage claim were rejected.

Analysis

It is a bit surprising that the Court first states that section 61 a of the Swedish Copyright Act and the SatCab Directive “had no immediate significance” for the question of whether a broadcast is eligible for protection but then applies the approach set out in the SatCab Directive to determine whether a broadcast is eligible for protection. It can be questioned whether the situation regulated in the SatCab Directive really can be said to be “a related context” as the SatCab Directive regulates a different situation than the Rome Convention and the International Copyright Regulation.

As noted above, the SatCab Directive deals with cross-border licensing of protected subject matter and Article 1(2)(b) localizes where a user is said to exploit another person’s protected subject matter when the subject matter is transmitted to a satellite from one Member State but received by the public on the ground in several other Member States. In contrast, Article 6 of the Rome Convention and the corresponding provision in the International Copyright Regulation deal with the protection of foreign broadcasters and lay down the conditions for affording national treatment to their signals.

Moreover, the SatCab Directive has a different aim than the Rome Convention and the International Copyright Regulation. The SatCab Diective aims to promote pan-European broadcasting by localizing the copyright relevant act in a single Member State while at the same time requiring a minimum level of harmonization to ensure that the protection level is sufficiently high in all Member States. This facilitates cross-border licensing because users of protected subject matters only need to clear the rights in one Member State as opposed to all Member States where the subject matters can be received. In line with this aim of avoiding the cumulative application of several national laws to one single act of broadcasting, normal technical procedures relating to the programme-carrying signals are not to be considered as interruptions to the chain of broadcasting (see recital 14 SatCab Directive).

In contrast, as the Court itself notes, the aim of the Rome Convention is to protect broadcasting organizations against the unauthorized exploitation of their broadcasts. To fulfil this aim, the Rome Convention contains alternative points of attachment (i.e. the broadcaster’s state of establishment or the state where a transmitter that transmits the broadcast is situated). It would be consistent with the aim of the Rome Convention to localize a broadcast in all states with which the broadcast has a significant connection such as a transmitter, or in a cascade-like fashion stopping at the first contracting state that has a significant connection to the broadcast.

It can be noted that the Court did not seem to place any emphasis on the wording “from a transmitter situated in another Contracting State” that appears in the Rome Convention, although not in the International Copyright Regulation. Normally, this point of attachment allows a broadcasting organization that is established outside a Rome contracting state to enjoy protection if its transmitter is situated in a contracting state. While a contracting state may declare that they will apply both points of attachment cumulatively, Sweden has not done so. Still, the practical effect of the ruling seems to require this as it is likely that signals will usually be initiated from the state where the broadcaster is established.

One can make an analogy with the Berne Convention that allows authors who are not nationals of a contracting state to the Berne Union to be eligible for protection under the Convention by publishing their works first in a contracting state to the Berne Union, or simultaneously in a state outside the Berne Union and in a state of the Berne Union. That said, one might view the right of foreign broadcasters in their signals as less deserving of protection than the right of authors in their works. Moreover, non-contracting states would not have any incentive to join the Rome Convention if their broadcasters could secure protection by sending their signal through contracting states.

A question could be raised whether the Court should have referred a question to the CJEU on the interpretation of the Rental and Lending Directive. As noted above, section 48 of the Swedish Copyright Act fulfills Sweden’s obligation under the Rental and Lending Directive to afford broadcasting organizations the exclusive right to authorize or prohibit the communication to the public of their broadcasts against payment of an entrance fee. While the Directive itself does not define who is considered to be a broadcasting organization eligible for protection under the Directive, the concept should be interpreted consistently with the EU’s international treaty obligations. See Recorded Artists Actors Performers (C-265/19). In this case, however, the relevant obligation was under the Rome Convention and the EU is not itself a contracting party.

Article 3 of the TRIPS Agreement, which is an international convention concluded by the EU, obligates the EU to accord national treatment to the nationals of other Members in respect of the rights provided under the Agreement. Article 14.3 TRIPS provides broadcasting organizations a signal right, albeit to a more limited extent than the Rome Convention. Importantly, Article 1.3 of TRIPS incorporates the criteria for eligibility for protection in the Rome Convention to determine who is eligible for protection under TRIPS. Thus, the question concerning the interpretation of Article 6 of the Rome Convention arguably falls indirectly within the CJEU’s adjudicative competence, notwithstanding that the EU is not itself a contracting party, when the right claimed is one that implements Article 14.3 TRIPS. This is because the CJEU may need to interpret the rules in Article 6 of the Rome Convention to establish the EU and its Member States’ obligations under TRIPS. Thus, it is possible that the CJEU will have the opportunity in the future to have its say about where a satellite broadcasting chain of transmission that spans several different states takes place for the purpose of determining its eligibility for protection under TRIPS.

As noted earlier on this blog, on 24 May 2023, from 6 pm to 8 pm CEST, the forth and last webinar of the series that has been organised under the title The Future of Cross-Border Parenthood in the EU – Analyzing the EU Parenthood Proposal will take place. The webinar, chaired by Steve Heylen, will deal with the following relations:  Authentic documents and
parenthood: between recognition and acceptance (Patrick Wautelet), and The European certificate of Parenthood: A passport for parents and children? (Ilaria Pretelli).

Those wishing to attend have time until 23 May 2023 at noon to register. The registration form is available here.

Registered participants will receive the details to join the webinar by e-mail (please note the e-mails with these details occasionally end up in the spam folder).

The updated and final version of the program is available here.

On 30 June 2023, the second edition of the Austrian Private International Law Workshop will take place in Innsbruck. The organisers cordially invite all interested researchers and practitioners to participate and register via evip@uibk.ac.at. Participation is free of charge. The workshop will be conducted in German and will consist of two sessions, chaired by Florian Heindler and Andreas Schwartze, respectively.

Presentations will discuss, inter alia: Current trends in the case law of the CJEU on conflict of laws (Marlene Brosch, ECJ); The EU Succession Regulation and the Austrian Supreme Court – where it should have applied for a preliminary ruling (Gottfried Musger, Austrian Supreme Court); Parent in one country, parent in every country: The proposal for an EU Parenthood Regulation (Martina Melcher, University of Graz); International enforcement of legal rules on social networks (Brigitta Lurger, University of Graz); The corporation seat theory between connecting factor and domestic nexus (Chris Thomale, University of Vienna); Crypto assets in private international law (Matthias Lehmann, University of Vienna/Radboud University Nijmegen).

A forum chaired by Bernhard A. Koch (University of Innsbruck) and Simon Laimer (University of Innsbruck) on the the most pressing challenges for private international law in the coming years and decades will conclude the event.

The updated and final version of the program is available here.