Agrégateur de flux

San Marino, the independent State surrounded by Italy, is home to about 5,000 undertakings. Unsurprisingly, given the size of the country (61 km2) and its population (33,344), a significant part of the business carried out in the small Republic is related to Italy. In fact, it is not infrequent for Italian courts to be seised of disputes opposing businesses based in Italy and San Marino, respectively.

Service of Judicial Documents Between Italy and San Marino

Where this occurs, the issue arises, among others, of the (cross-border) service of the document instituting the proceedings.

San Marino is a party to the 1965 Hague Service Convention, since 2002. Italy, too, is a party to that Convention.

However, the application of the Convention between the two countries is proving problematic, at least in Italy.

The difficulties revolve around the declaration issued by San Marino under Article 21(2)(a) of the Convention, whereby San Marino made known its opposition to service by postal channels. In fact, Article 10(a) stipulates that the Convention ‘shall not interfere with … the freedom to send judicial documents, by postal channels, directly to persons abroad’, provided, however, that ‘the State of destination does not object’.

In practice, the above declaration implies that service on a Sammarinese defendant for the purposes of proceedings in Italy may not occur otherwise than in accordance with Article 3 to 6 of the Convention, i.e. by a request conforming to the model annexed to the Convention itself, forwarded to the Sammarinese Central authority.

The View of the Italian Supreme Court

In a judgment of 29 January 2019 (No. 2482), the Italian Supreme Court ruled that the above declaration could (and in fact ought to) be disregarded. It actually concluded that, in the circumstances of that case, service – made by post on a Sammarinese company – was in all respects valid and effective.

The Supreme Court noted that the Government of San Marino, when acceding to the Convention, issued two separate instruments – the instrument of accession itself, and the declarations accompanying it. But while the former was drawn up in the form of a law, the latter resulted from a mere executive act. The Supreme Court characterised the latter, on account of its form, as an act incapable of affecting the operation of the convention (‘un atto inidoneo a ridurre l’ambito di applicazione alla predetta Convenzione’).

Assessment

The ruling is unpersuasive for a number of reasons.

It is not for the courts of one State to scrutinise the appropriateness of the forms employed by another State’s authorities in their international relations.

This is all the more true for declarations issued by the latter State in respect of a multilateral international convention, such as the Hague Service Convention.

In fact, it is for the depositary of the convention concerned (here, the Ministry of Foreign Affairs of the Netherlands) to assess whether the declarations received are in such a form as to effectively serve their purpose.

It appears that the Ministry of Foreign Affairs of the Netherlands received the Sammarinese declaration, and recorded it as such. No objections and no remarks have been raised at a diplomatic level concerning that declaration.

According to Article 77(1)(d) and (e) of the Vienna Convention on the Law of Treaties, the tasks of the depositary include ‘examining whether the signature or any instrument, notification or communication relating to the treaty is in due and proper form and, if need be, bringing the matter to the attention of the State in question’, and ‘informing the parties and the States entitled to become parties to the treaty of acts, notifications and communications relating to the treaty’. If the declarations of a State were to be reviewed by the other Contracting States individually, this would likely frustrate the function of the depositary and undermine its practical advantages.

One would be tempted to label the Italian Supreme Court’s ruling as unfortunate, and to ignore it altogether.

But this is in fact the second such ruling by the Cassazione. The first one, given on 9 November 2011 (No. 23290), was criticised for the above reasons (including by the author of this post: ‘Sulla notifica degli atti giudiziari mediante la posta secondo la Convenzione dell’Aja del 1965’, Rivista di diritto internazionale privato e processuale (2012), 341-362). The fact is that the Court reiterated its views.

In fact, the stance staken by the Court appears to amount, now, to the official position of the Italian Supreme Court on the (not so firm) value of declarations issued in connection with the Service Convention (and, possibly, in connection with any other multilateral convention contemplating similar instruments).

The author of this post is not aware of any diplomatic protests by the Government of San Marino as regards the Italian Supreme Court’s rulings.

It is hoped that, for the sake of the proper functioning of the Hague Service Convention, the approach be reconsidered at the earliest occasion.

 

– Photo credit: Max_Ryazanov, Wikimedia Commons

In cooperation with the Asian Academy of International Law, the Hague Academy of International Law will hold its first edition of its Advanced Courses in Hong Kong from 7 to 11 December 2020.  The topic will be: “Current Trends on International Commercial Dispute Settlement“.

For this special programme, the Secretary-General of The Hague Academy of International Law has invited leading academics and practitioners from Paris (Professor Diego P. Fernández Arroyo), New York (Professor Franco Ferrari), Bonn (Professor Matthias Weller), Singapore (Ms Natalie Morris-Sharma), and Beijing (Judge Zhang Yongjian) to present expert lectures on the United Nations Convention on International Settlement Agreements Resulting from Mediation, Investor-State Dispute Settlement, international commercial arbitration, settlement of international commercial disputes before domestic courts, and the developments of the International Commercial Court. Registered participants will have pre-course access to an e-learning platform that provides reading documents prepared by the lecturers. At the end of the course, a certificate of attendance will be awarded.

For more information see here.

For the flyer see here.

In Ivanishvili, Bidzina v Credit Suisse Trust Ltd [2020] SGCA 62, the Singapore Court of Appeal considered a number of issues: (1) whether a plaintiff could amend its Statement of Claim at the appellate stage to tilt the balance of connecting factors towards Singapore; (2) whether a clause in the trust deed identifying Singapore as the “forum of administration” of the trust was a jurisdiction clause, and if so; (3) whether the clause covered hostile litigation in relation to the trust; and depending on the answers to the previous questions, (4) whether the Singapore proceedings ought to be stayed.

The case concerned Mr Ivanishvili, the former Georgian prime minister, who was a French and Georgian dual national. Mr Ivanishvili had set up the Mandalay Trust which was domiciled in Singapore. The trustee of the Mandalay Trust was Credit Suisse Trust Ltd, a Singapore trust company (“the Trustee”). The trustee’s asset management powers were delegated to the Geneva branch of Credit Suisse AG (“the Bank”). The Mandalay Trust suffered losses purportedly due to the actions of one the Bank’s employees (Mr Lescaudron) who was the portfolio manager of the Mandalay Trust. Mr Lescaudron was convicted in Swiss criminal proceedings for various forms of misconduct in relation to the Mandalay Trust. At first instance, Mr Ivanishvili and his wife and children, who were the beneficiaries of the Mandalay Trust, sued both the Trustee and the Bank alleging, inter alia, breaches of duties of care and skill and misrepresentation. A stay was granted by the court below on the grounds that Switzerland was a more appropriate forum for the action. At the Court of Appeal, Mr Ivanishvili et al strategically chose to discontinue proceedings against the Bank to strengthen their argument that Singapore was the appropriate forum for trial of the action and sought to amend their Statement of Claim to this effect. This also entailed reformulating some of the claims against the Trustee to remove references to the Bank. This was allowed by the Court of Appeal on the basis that absent bad faith, the appellants had the freedom of choice to choose its cause of action and to sue the party it wishes to sue.

On the second issue, the relevant clause provided that:

“2. (a) This Declaration is established under the laws of the Republic of Singapore and subject to any change in the Proper Law duly made according to the powers and provisions hereinafter declared the Proper Law shall be the law of the said Republic of Singapore and the Courts of the Republic of Singapore shall be the forum for the administration hereof.”

Clause 2(b) granted the Trustee the power to change the proper law and provided that if so, the courts of the jurisdiction of the new proper law would become the “forum for the administration” of the trust. Contrasting clause 2 with the equivalent clause in Crociani v Crociani (17 ITELR 624) where the relevant clauses referred to a country being the “forum for the administration”, the Court of Appeal noted that the references to “forum for the administration” in clause 2 was tied up with a reference to the courts. It therefore held that clause 2(a) was a jurisdiction clause. As a point of interest, it should be noted that it is immaterial whether clause 2(a) is an exclusive or non-exclusive jurisdiction clause after the Court of Appeal’s decision in Shanghai Turbo v Liu Ming [2019] 1 SLR 779 (previously noted here); as Singapore is a named forum, the “strong cause” test would apply to cases falling within the scope of the jurisdiction clause.

The question which had to be considered next was whether clause 2(a) covered hostile litigation concerning breach of trust issues (such as in the present case) or was confined to litigation over administrative matters. On this, the Court engaged in an extensive review of case law in other off-shore trust jurisdictions. While tentatively observing that “there is no legal rule limiting the meaning of the phrase ‘forum for [the] administration’ to an administration action in the traditional sense”(at [75]), the Court ultimately followed the reasoning of the Privy Council in Crociani and held that that the phrase “is intended to refer to the court or jurisdiction which would settle questions arising in the day to day administration of the trust, and to denote the supervisory and authorising court for actions the trustee might need to take which were not specifically by the trust deed or where its terms were ambiguous”(at [76]). Such clauses did not cover hostile litigation between trustees and beneficiaries. The Court observed that: “The trust deed is not a contract between two parties with obligations on both sides – rather, it is a unilateral undertaking by the trustee, and in our view this difference must play a part when we consider whether the intention of the drafters was to impose a mandatory jurisdiction clause for the resolution of contentious disputes regarding allegations of breach of trust”(at [78]).

That meant that whether a stay ought to be granted was to be determined under the Spiliada test on forum non conveniens rather than the “strong cause” test. On this point, the Court split. A majority of the Court (Menon CJ and Prakash JA), held that the balance of connecting factors pointed towards Singapore and allowed the appeal against the stay. The appellants argued that with the amended claim, the focus was on the Trustee’s breaches of trust, all of which occurred in Singapore. The Court was unconvinced of the respondents’ argument that most of the relevant witnesses, such as Mr Lescaudron, were located in Switzerland and not compellable to appear before the Singapore court. The location of witnesses was but a weak factor pointing in favour of Switzerland being forum conveniens relative to Singapore. The respondents had also argued that Swiss banking secrecy laws meant that disclosure of certain documents could only be ordered by the Swiss court but the Court gave little weight to this, holding that it was not clear that the Trustee could not obtain the requisite documents from the Bank itself. In contrast, the shape of litigation post the re-framing of the actions by the appellants meant that the trust relationship, rather than the banking relationship, was at the forefront of the claims. This pointed towards Singapore being the centre of gravity of the action. Further, Singapore law was the governing law of the Mandalay Trust and the rights of all parties under the Trust Deed: “There is no doubt that the Singapore courts are the most well-placed to decide issues of Singapore trust law, and the Swiss courts, operating in a civil law jurisdiction with no substantive doctrine of trusts, would be far less familiar with these issues”(at [110]). This comment may be to understate the competence of the Swiss courts in this regard, as internal Swiss trusts which are governed by a foreign law are not an uncommon wealth management tool in Switzerland. The Court was also not persuaded by the Trustee’s argument that there was a risk of conflicting findings of fact due to related proceedings elsewhere, holding that this was not a “sufficiently real possibility” (at [114]). Thus, a majority of the Court held that, on an overall assessment of the connecting factors, Singapore would be the more appropriate forum vis-à-vis Switzerland.

There was a strong dissent by Chao SJ on the application of the Spiliada test. His Honour was of the view that whether the Trustee would be prejudiced by having to defend itself in Singapore formed the crux of the stay issue. In relation to this, His Honour observed that Mr Ivanishvili was a hands-on investor who corresponded directly with the Bank officers. The Trustee was not always copied into Mr Ivanishvili’s instructions to the Bank. The alleged losses occurred in Switzerland and the acts and omissions of the Bank and its officers and the role of Mr Ivanishvili himself remained relevant in determining the Trustee’s liability. In contrast, the Trustee played a passive role and the operative events in Singapore were merely secondary in nature (at [153]). This belied the appellants’ insistence that the Bank’s alleged wrongdoing was no longer relevant in the Singapore proceedings given the amended claim. His Honour was concerned about the respondents’ ability to defend itself properly in Singapore given that the evidence and witnesses central to defending the claims were mainly located in Switzerland. Chao SJ was therefore of the view that the action had a greater connection with Switzerland than with Singapore “by a significant margin”(at [154]). His Honour went on to say that if he was wrong on stage one of the Spiliada test, stage two would also point towards Switzerland. On stage two, Chao SJ agreed with the High Court that the ends of justice would best be met by the Swiss court applying Singapore trust law. This is as the trustee’s conduct may only be properly understood against the backdrop of Mr Ivanishvili’s relationship with the Bank and the Bank’s conduct in relation to its asset management duties (at [154]).

A pdf of the judgment can be downloaded here.

An overdue post on the Hungarian Supreme Court’s judgment 2020.3.72.a, finding an implied choice of law pro Hungarian law, made by a Serbian and Hungarian party to a contract for agency and business counseling. In the absence of choice of law, per Article 4 Rome I, applicable law would have been Serbian law. Yet the SC held that the conduct of the Serbian business party in the litigation, made for implicit choice of law.

Under Rome I, choice of law may be made and changed at any time during the course of the contract. Whether it can also be made by conduct of litigation is somewhat disputed. Arguments pro rely heavily on a parallel with impromptu choice of court in Brussels Ia, by submission. The Hungarian courts had assessed the merits of the case on the basis of Hungarian law, and the Serbian defendant had engaged in that discussion in a detailed, substantive statement of defence without any objections to Hungarian law being the lex contractus. This, the courts held and the SC agreed, meant parties had made an implied choice of law by their conduct. A change of heart by defendant upon appeal was a unilateral change of law, which cannot bind the parties.

Richard Schmidt sent me the judgment and has additional analysis here– on which I relied for I do not read Hungarian. Scholarship has engaged with the issue and this SC judgment will be highly relevant material for that discussion.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.4.

 

 

I have reported earlier on the Commisimpex case and the various decisions of the French Supreme Court on civil and criminal matters (Cour de cassation) which have eventually excluded from the scope of the waiver of immunities of the Republic of Congo assets protected by diplomatic immunity.

On 8 June2020, Commisimpex attached a Falcon 7X business jet belonging to the presidency of Congo on the French airport of Bordeaux-Merignac where it was undergoing maintenance. Rumour has it that the markers of the aircraft were off for several years, but they were mysteriously turned on recently, allowing Congo’s creditors to track it down …

Congo immediately initiated proceedings before the Paris enforcement court to set aside the attachement on the ground that the jet was covered by diplomatic immunity.

In a judgment of 29 June 2020, the Paris Enforcement Court rejected all arguments of the Republic of Congo and confirmed the validity of the attachement.

Diplomatic Clearance

The first argument of Congo in favour of the extension of diplomatic immunity to the jet was that it was a State Aircraft in the meaning of the Chicago Convention on International Civil Aviation and could not, as such, fly over French territory without being authorised to do so. Indeed, it had received “diplomatic clearance” (DIC) from the French Ministry of Foreign Affairs to that effect.

The Paris Court found, however, that the only reason why the various authorisations that the French Ministry could grant were labelled “diplomatic” was that they were issued by the Ministry of Foreign Affairs. The label was unrelated to the use of the aircraft, and did not create any presumtion that the aircraft was used for diplomatic activities. Indeed, it did not even imply that the owner of the relevant aircaft was a state.

Sovereign Immunity, but Which One?

The Paris Court recognised that State Aircrafts must be protected by an immunity against enforcement. The crucial issue, however, was not so much whether the aircraft was covered by some sovereign immunity, but by diplomatic immunity. The Paris Court underscored that French courts have ruled that while the diplomatic immunity of Congo remains intact after its general waiver, Congo has waived all other enforcement immunities.

The Court noted that the 2016 French statute which has established a special regime for diplomatic immunity refers to “assets used (…) in the exercise of the diplomatic mission of foreign states” (French Code of Civil Enforcement Proceedings, Art L. 111-1-3). It further noted that the 1961 Vienna Convention on Diplomatic Relations also referred to the “diplomatic mission”. The Court concluded that Congo enjoyed  diplomatic immunity in France only over assets affected to the Congolese Embassy in Paris.

Congo put forward an additional argument. It argued that the aircraft was used by the presidentcy of Congo, and was thus used by President Sassou Nguesso for his diplomatic activities. The Court noted that the logbook of the aircraft showed that it had been essentially used for domestic flights within Congo. It was also used once to fly to Madagascar, in order to bring back “Covid Organics CVO”, which  was not a diplomatic activity.

In truth, the Court found, in the last two years, each time President Nguesso had travelled internationally for official visits, he had used another plane, a Boeing 787.

In the absence of any evidence of diplomatic use of the Falcon 7X business jet, the Court concluded, it is not protected by diplomatic immunity, and could thus be attached.

The general press has reported that President Nguesso is really upset. One trusts that the fight over this asset, which is worth over € 20 million, is only beginning. Congo has lodged an appeal against the judgment, but it should not suspend its enforcement, which means that a sale by auction can be immediately organised.

L’accord portant extinction des traités bilatéraux d’investissement (TBI) entre États membres de l’Union européenne a été publié le 29 mai 2020 (JOUE L169). Il constitue à la fois l’épilogue d’une longue controverse relative à la comptabilité des traités d’investissement entre membres de l’UE et la suite logique de l’affaire Achmea.  

en lire plus

Pourvoi c/ cour d'appel de Paris, 3 juin 2020

Cour d'appel d'Angers, 30 juin 2020

Pourvoi c/ cour d'appel de Paris, 9 avril 2020

Pourvoi c/ chambre de l'instruction, 14 novembre 2019

Cour d'appel de Douai, 10 juillet 2020

Cour d'appel de Paris, 14 mai 2019