Agrégateur de flux

It does not happen often that an arbitral award is successfully challenged in England for serious irregularity under section 68 of the Arbitration Act 1996.

This happens even less often when an award is rendered by a tribunal as prominent as the one in Process and Industrial Developments Ltd v Nigeria, which included Lord Hoffmann (former UKSC judge) as Chairman, Sir Anthony Evans (former EWCA judge), and Chief Bayo Ojo SAN (former Attorney General of Nigeria).

It is outright extraordinary for a judgment to conclude by urging reform of international commercial arbitration and noting that a copy of the judgment will be referred to the Bar Standards Board and the Solicitors Regulation Authority to consider the professional consequences of the conduct of two lawyers involved in an arbitration.

And yet Knowles J did all of this in his judgment of 23 October 2023 in Nigeria v P&ID.

Facts

In 2010, the parties entered into a gas supply and processing contract that provided for arbitration in London. Under the contract, Nigeria was to supply gas to processing facilities constructed and operated by P&ID, a BVI company. The stated duration of the contract was 20 years. Neither party performed its obligations, and a dispute arose. A tribunal was constituted. It ruled in favour of P&ID, and ordered Nigeria to pay USD6.6b. Interest was awarded at a rate of 7%, eventually ballooning to USD11b. Nigeria argued that the contract and the arbitration were compromised due to corruption, bribery, and fraud. Knowles J describes the surrounding circumstances in great detail in his judgment that spans 595 paragraphs or 140 pages with annexed materials. Jonathan Bonnitcha provides a useful summary of the facts in his post of 23 March 2021, reporting on a 2020 High Court judgment in this case (footnotes omitted):

“the contract was based on an unsolicited proposal presented to the Nigerian government by P&ID. No tender was conducted. Moreover, P&ID did not appear to have the experience in the gas sector that would be expected of a company responsible for a multibillion-dollar project—it was an offshore entity with ‘no assets, only a handful of employees, and was without a website or other presence.’

… the arbitration was conducted in private. Indeed, even the fact that the arbitration was taking place did not become public knowledge until 2015, following a change of government in Nigeria, at which point in time the jurisdictional and merits phases of the arbitration had already concluded. Despite a number of ‘red flags’ of corruption relating to the contract, Nigeria did not directly raise the issue of corruption in its defence of the arbitration. (Nigeria’s lawyers in the arbitration did obliquely describe the Minister of Petroleum Resources at the time the contract was signed ‘as having been a “friendly” Minister who purported to commit the Government to obligations and concessions which exceeded his powers.’) Based on documents that are publicly available, it seems that the tribunal also did not take any steps to determine whether the contract might have been procured through corruption.

Given the many billions of dollars at stake, the way the arbitration unfolded was also unusual. Nigeria’s lawyers failed to file expert evidence on jurisdictional issues of Nigerian law, or insist on an oral hearing on jurisdiction where P&ID’s evidence might have been tested through cross-examination. At the merits phase, Nigeria failed to challenge the key claims contained in the statement of P&ID’s central witness, its chairman, Michael Quinn. It put forward only one ineffectual witness of its own who did ‘not claim to have first-hand knowledge of any of the relevant events.’ The tribunal did hold a hearing on the merits, but it lasted only a few hours. The tribunal concluded that Nigeria had repudiated the contract.

The tribunal’s decision on quantum was based on a single witness statement from the investor. It did not order the production of documents that might have proved (or disproved) these self-serving claims… the investor had not commenced construction of the gas facility and estimated its own expenditure in relation to the project at around USD 40 million. (In the subsequent British court proceedings, the investor conceded that this expenditure had not been incurred by P&ID at all but, rather, by another company owned by a former Nigerian general.)”

Judgment

Knowles J made three key findings. First, P&ID provided to the tribunal and relied on Mr Quinn’s false evidence. Mr Quinn omitted to mention that the legal director at the Ministry of Petroleum Resources had been paid a USD5,000 bribe before the conclusion of the contract and a USD5,000 bribe after ([494]). Second, P&ID continued to pay bribes, in the total amount of USD4,900, to this official “to keep her ‘on-side’, and to buy her silence about the earlier bribery” ([495]). Third, P&ID improperly retained Nigeria’s privileged internal legal documents that it had received during the arbitration ([496]). The two lawyers, whose conduct in relation to these documents Knowles J referred to the Bar Standards Board and the Solicitors Regulation Authority, were set to receive payments of USD850m and USD3b, respectively, if P&ID had been successful. Relying on these facts, Knowles J found that there were serious irregularities of the kind set out in section 68(2)(g) of the 1996 Act (“the award being obtained by fraud or the award or the way in which it was procured being contrary to public policy”), which caused Nigeria substantial injustice.

Comment

This case concerned a dispute arising out of a gas development project, typically a matter within the purview of international investment arbitration tribunals. However, it was argued based on a breach of contract, falling under the jurisdiction of an international commercial arbitration tribunal. These two forms of arbitration differ significantly in several aspects, most notably for the purposes of the present discussion in terms of transparency, non-party participation, and the ability and willingness of tribunals to consider wider social, economic, and political circumstances (I am not implying here that international investment tribunals take public interest consideration sufficiently seriously, only that they tend to be more open to such considerations). The inadequacy of international commercial arbitration for cases of public interest was laid bare in P&ID v Nigeria. The public only became aware of the arbitration after a change of government. The tribunal did not examine, of its own motion, whether corruption, bribery, and fraud tainted the contract and the arbitration. There was no assessment of whether wider social, economic, and political circumstances justified the finding of liability and exceptionally high damages. And two lawyers involved in the case were to make fabulous fortunes if the claimant won against a country where corruption is endemic and public officials can apparently be bribed for a few thousand dollars.

This is why Knowles J made important comments urging reform of international commercial arbitration in cases of public interest. His words are worth reproducing in full:

“582. … I hope the facts and circumstances of this case may provoke debate and reflection among the arbitration community, and also among state users of arbitration, and among other courts with responsibility to supervise or oversee arbitration. The facts and circumstances of this case, which are remarkable but very real, provide an opportunity to consider whether the arbitration process, which is of outstanding importance and value in the world, needs further attention where the value involved is so large and where a state is involved.

583. The risk is that arbitration as a process becomes less reliable, less able to find difficult but important new legal ground, and more vulnerable to fraud. The present case shows that having (as here) a tribunal of the greatest experience and expertise is not enough. Without reflection, then a case such as the present could happen again, and not reach the court.

584. With diffidence and respect, I draw attention to 4 points, which are to some degree interconnected.

(1) Drafting major commercial contracts involving a state

585. It was a complete imbalance in the contributions of the parties that enabled the GSPA [the contract] to be in the form it was. Many reading this judgment will recognise that, although in the present case bribery and corruption were behind that imbalance, it happens in other cases without bribery and corruption but simply where experience, expertise or resources are grossly unequal. This underlines the importance of professional standards and ethics in the work of contract drafting, including in the approach to other parties to the proposed contract. It is why some contributions of pro bono work by leading law firms to support some states challenged for resources…is so valuable, in the interests of their, often vulnerable, people…

(2) Disclosure or discovery of documents

586. It has been disclosure or discovery of documents that has enabled the truth to be reached in this case… In all the recent debates about where disclosure or discovery matters, this case stands a strong example for the answer that it does.

(3) Participation and representation in arbitrations over major disputes involving a state

587. Notwithstanding Nigeria’s allegations, I have not found Nigeria’s lawyers in the Arbitration to be corrupt. But the case has shown examples where legal representatives did not do their work to the standard needed, where experts failed to do their work, and where politicians and civil servants failed to ensure that Nigeria as a state participated properly in the Arbitration. The result was that the Tribunal did not have the assistance that it was entitled to expect, and which makes the arbitration process work. And Nigeria did not in the event properly consider, select and attempt admittedly difficult legal and factual arguments that the circumstances likely required. Even without the dishonest behaviour of P&ID, Nigeria was compromised.

588. But what is an arbitral tribunal to do? The Tribunal in the present case allowed time where it felt it could and applied pressure where it felt it should. Perhaps some encouragement to better engagement can be seen as well. Yet there was not a fair fight. And the Tribunal took a very traditional approach. But was the Tribunal stuck with what parties did or did not appear to bring forward? Could and should the Tribunal have been more direct and interventionist…? Should the Tribunal have taken the initiative to encourage exploration of new bounds of contract law and the law of damages that may today be required where major long term contracts are involved?

(4) Confidentiality in significant arbitrations involving a state

589. The privacy of arbitration meant that there was no public or press scrutiny of what was going on and what was not being done. When courts are concerned it is often said that the ‘open court principle’ helps keep judges up to the mark. But it also allows scrutiny of the process as a whole, and what the lawyers and other professionals are doing, and (where a state is involved) what the state is doing to address a dispute on behalf of its people. An open process allows the chance for the public and press to call out what is not right.

…

591. … unless accompanied by public visibility or greater scrutiny by arbitrators, how suitable is the process in a case such as this where what is at stake is public money amounting to a material percentage of a state’s GDP or budget? Is greater visibility in arbitrations involving a state or state owned entities part of the answer?”

These are important questions. It is a shame that the Law Commission of England and Wales does not deal with them in its recent final report on the review of the Arbitration Act 1996.

After the first successful conference in Aarhus in 2022, the next conference of the European Association of Private International Law (EAPIL) will be held from 6 to 8 June 2024 at the University of Wrocław, Poland. The local host will be Agnieszka Frąckowiak-Adamska. 

The Wrocław conference will focus on Private International Law and Global Crises. The general question discussed is whether private international law can respond to crises, and if so, how. Four thematic blocks are planned, concerned respectively with war and armed conflict, the rule of law, climate change and global supply chains.

In addition, reports from the Court of Justice of the European Union, the European Court of Human Rights and the European Commission will provide insights into current challenges in the creation and application of EU PIL.

Thursday, 6 June 2024

14:00
Registration

15:30
Welcome addresses

16:00
Keynote
Mateusz Pilich, University of Warsaw

17:00
Reports from Luxembourg, Strasbourg and Brussels
Lucia Serena Rossi, Court of Justice of the European Union (tbc)
Raffaele Sabato, European Court of Human Rights
Andréas Stein, European Commission

19:00
Reception

Friday, 7 June 2024

9:00
Revisiting the Functions of Private International Law

Can Private International Law respond to crises and if yes, how?
Patrick Kinsch, University of Luxembourg
Veronica Ruiz Abou-Nigm, University of Edinburgh

10.40
Private International Law, War and Armed Conflicts

Dealing with war-induced migration: Family law aspects
Iryna Dikovska, Taras Shevchenko National University Kyiv

Dealing with war-induced effects: Contractual relationships
Tamasz Szabados, ELTE Eötvös Loránd University

13.00
Private International Law and the Rule of Law

Protection of the Rule of Law I: Jurisdiction and applicable law
Alex Mills, University College London

Protection of the Rule of Law II: Enforcement and mutual trust
Matthias Weller, University of Bonn

15.00
Private International Law and Climate Change

Liability for climate change induced harm: Jurisdiction and Applicable law
Eduardo Alvarez Armas, Universidad Pontificia Comillas
Olivera Boskovic, Université Paris Cité (France)

17:00
General Assembly (EAPIL members only)

19:00
Reception

Saturday, 8 June 2024

9:00
Private International Law and Global Supply Chains 

Protection of human rights in global supply chains I: Jurisdiction
Rui Dias, University of Coimbra

Protection of human rights in global supply chains II: Applicable law
Klaas Eller, University of Amsterdam

Protection of human rights in global supply chains III: Ordre public
Laura Carpaneto, University of Genova

10:00
Discussion

11.00
How Can Private International Law Contribute to a More Sustainable Life?
Roundtable

12.30
Lunch

13.30
End of conference

 

The website of the conference (including the registration form) will be available soon.

Information about the University of Wrocław is here and about the city of Wrocław is here.

In November 2023, the Fourth Chamber of the Court of Justice, with C. Lycourgos presiding and O. Spineau-Matei reporting, will hand down her decision in case C-497/22, Roompot Service. The scheduled delivery date is Thursday 16. The request for a preliminary ruling, from the Landgericht Düsseldorf (Germany), was lodged on 22 July 2022, focuses on Article 24 of the Brussels I bis Regulation. The question reads:

Must the first sentence of Article 24(1) of [the Brussels I bis Regulation] 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?

Advocate General J. Richard de la Tour’s opinion was published on June 29. He offers a principal answer and a subsidiary one:

The first subparagraph of Article 24(1) of [the Brussels I bis Regulation] must be interpreted as meaning:

principally, that it does not apply to a contract under which holiday accommodation in a holiday park is made available by a tourism professional for short-term personal use;

in the alternative, that it covers a claim for repayment of part of the price paid following a change by one of the parties to the terms of a contract for the rental of holiday accommodation.

This double proposal relates to the fact that, according to Mr. Richard de la Tour, in light of the decision in C-289/90, Hacker, the contractual relationship in the case at hand should be classified as a ‘complex contract’ within the meaning of that case-law. By way of consequence, the provision by a tourism professional of accommodation in a holiday park for short-term personal use does not fall within the scope of the first subparagraph of Article 24(1) of the Brussels I bis Regulation. The subsidiary answer comes into play only if the Court of Justice gets nevertheless to a different conclusion, thus holds that the contract in question relates exclusively to the letting of holiday accommodation, as in the judgment in C- 8/98, Dansommer.

The next PIL event will take place on Thursday 30. Advocate General N. Emiliou’s opinion on C-339/22, BSH Hausgeräte, will then be published. The main proceedings, before the Svea hovrätt, Patent- och marknadsöverdomstolen (Sweden), concern international jurisdiction regarding patents under the Brussels I bis Regulation. Here are the questions referred:

1. Is Article 24(4) of [the Brussels I bis Regulation] 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 [the Brussels I bis 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?

A hearing on the case took place last May. The deciding chamber is composed by judges C. Lycourgos, O. Spineanu-Matei (reporting), J.C. Bonichot, S. Rodin, and L.S. Rossi.

Finally, I would like to report on the hearing on case C-632/22, Volvo (Assignation au siège d’une filiale de la défenderesse), which actually happened on October 18. The request, from the Spanish Supreme Court, was lodged on 10 October 2022. On the website of the Court of Justice it falls under the category ‘Competition’. On the merits, the problem is rather one of service of process in a cross-border setting:

1. In the circumstances surrounding the litigation relating to the trucks cartel, described in this order, is it possible to interpret Article 47 of the Charter of Fundamental Rights of the European Union, in conjunction with Article 101 of the Treaty on the Functioning of the European Union, in such a way that service of process on a parent company against which an action for damages for the harm caused by a restrictive trade practice has been brought is considered to have been properly effected when such service was effected (or attempted) at the place of business of the subsidiary company established in the State in which the legal proceedings were brought, while the parent company, which is established in another Member State, has not entered an appearance in the proceedings and has remained in default?

2. If the previous question is answered in the affirmative, is that interpretation of Article 47 of the Charter compatible with Article 53 of the Charter, in the light of the case-law of the Spanish Tribunal Constitucional (Constitutional Court) on the service of process on parent companies established in another Member State in disputes relating to the trucks cartel?

The background of the request is easy to understand. Following publication of the Decision of the European Commission of 19 July 2016 (Case AT. 39824 – Trucks), in Spain thousands of proceedings for damages have been lodged by purchasers of vehicles affected by the trucks cartel. Almost all actions were brought by small or medium undertakings which had purchased a very small number of trucks, or even just one truck, in the period in which the cartel operated. None of the undertakings (parent companies) penalised by the European Commission has its registered office in Spain. Given that, in the majority of the proceedings, the amount claimed is not very high, the costs involved in having to translate the application and, where necessary, any annexes, may be disproportionately high. To avoid such costs and the time delay entailed by the necessary international judicial cooperation, the applicants in those proceedings frequently ask for the service of process at the business address of the subsidiary company in Spain, even though the defendant parent company is established in another Member State.

The preliminary reference has been assigned to the Fifth Chamber (judges E. Regan, M. Ilešič, I. Jarukaitis, D. Gratsias, and, exceptionally, K. Lenaerts), which will supported by the opinion of Advocate General M. Szpunar.

This is the first of a series of posts which will present how the issue of the applicable law to the time limit to enforce or recognise foreign judgments is addressed in comparative private international law.

In a judgment of 2 August 2022, the Swiss Federal Tribunal ruled that the law governing the time limit applicable to foreign judgments is that of the state of origin of the foreign judgment.

Background

The case was concerned with the recognition in Switzerland of an English judgment delivered in 2013.

After insolvency proceedings were opened in Switzerland against the judgment debtor, the jugdment creditor lodged a claim in the insolvency proceedings based on the English judgment.  Another creditor challenged the lodging of the claim on the ground that the English judgment was time barred.

The parties disagreed on whether the applicable statute of limitations was the Swiss Statue, which provides a 10 time limit, or the English statute, which provides a 6 year time limit.

Judgment

The issue of the applicable law to the time limit to enforce foreign judgments was debated among Swiss scholars. In particular, Swiss scholars debated whether art. 137 of the Swiss code of obligations, which provides a specific time limit of 10 years for claims confirmed by a judgment, applied to foreign judgments.

The Federal Tribunal rules that it does not. The starting point of its analysis is the Swiss  choice of law rule governing time limitations. Article 148 of the Swiss federal statute on private international law provides that “the law applicable to a claim governs time limitations applicable to it and its extinction“. In other words, time limitations are substantive in nature under Swiss private international law, as they are in general in civil law jurisdictions. As a result, the applicable law is the law governing the relevant claim, and not the law of the forum.

The determination of the relevant claim, however, is not obvious, and was indeed debated among Swiss scholars. A first view is that the claim is the one made in the foreign proceedings and decided by the foreign court. The applicable time limit would thus depend on the law applied on the merits by the foreign court. A second view is that the claim is the foreign judgment itself. The application of Article 148 would thus lead to the application of the law court of origin.

The Federal Tribunal endorses the second view. It rules that the relevant claim is the foreign judgment, because judgments are constitutive in nature. Although the Federal Tribunal is pretty concise on this point, it seems to mean that judgments create autonomous titles, which are distinct from the claims made originally in the proceedings on the merits. As a result, the Federal Tribunal rules that the applicable time limit was s. 24 of the English Limitation Act 1980.

The judgment of the Federal Tribunal also addresses several issues related to characterisation. The first is that it was necessary to determine which rules under English law corresponded to the concept of prescription under Swiss law. It was not hard to conclude that these were the rules found in the Limitation Act. The second is the Tribunal confirms that whether time limitations are characterised as procedural or substantive in nature under English law is irrelevant: characterisation for choice of law purposes is an issue for the forum.

Relevance of the Lugano Convention?

It is interesting to note that the recognition of the English judgment was governed by the Lugano Convention. The issue of whether this could have influenced any of the above was not raised.

The CPR Institute’s Awards Program honors outstanding scholarship and practical achievement in the field of alternative dispute resolution.

Annual Awards Categories

Submissions for 2023 Annual Awards are due November 17, 2023.

CPR expects to designate winners in these categories:

Book Award
A Book published by academics and other professionals during the publication period (November 2022-October 2023 for 2023 Awards) that advances understanding in the field of ADR.  Books must be submitted in pdf or similar format.  We regret that we cannot accept hard copy submissions.

James F. Henry Award
Beginning in 2002, the James F. Henry Award honors outstanding achievement by individuals for distinguished, sustained contributions to the field of ADR. Candidates for the James F. Henry Award will be evaluated for leadership, innovation and sustaining commitment to the field.

Joseph T. McLaughlin Original Student Article or Paper
Joseph T. McLaughlin Original Student Article or Paper on events or issues in the field of ADR in November 2022-October 2023. Outstanding papers prepared for courses requiring papers as substantial part of grade must be recommended for submission by professor.

Professional Article & Short Article
Professional Article & Short Article published by academics and other professionals in November 2022-October 2023 that advance understanding in the field of ADR.

Other CPR Institute Awards

Submissions for these 2023 awards are due December 15, 2023. These awards are decided by a group of judges that differs from the Annual Awards judges.

Outstanding Contribution to Diversity in ADR 
Recognizes a person or organization who has contributed significantly to diversity in the alternative dispute resolution field. Submissions are reviewed by a panel consisting of past winners, along with CPR’s Co-Chairs of the National Task Force on Diversity and CPR’s President. The submission deadline is December 15, 2023.

James P. Groton Award for Outstanding Leadership in Dispute Prevention
Recognizes a person or organization who has contributed significantly to the development and/or practice of dispute prevention. The submission deadline is December 15, 2023.

Submission Guidelines for 2023 Awards

Submission Deadline:
Friday, November 17, 2023

Submission Guidelines:
Send electronic file nominations (in PDF or Word format), via email to Helena Tavares Erickson, SVP, CPR Institute & Corporate Secretary at herickson@cpradr.org. Please include a cover letter with your submission with your name, address, telephone, and email address. If you are nominating someone for an award, please supply their contact information as well.

While it is expected that submissions will be in the English language (or accompanied by a translation), CPR reserves the right to consider submissions not in English. CPR also reserves the right to submit outstanding candidates that have not been nominated.

For more information: https://www.cpradr.org/events/2023-annual-awards. 

The third issue of 2023 of the Dutch Journal of Private International Law (Nederlands Internationaal Privaatrecht) is out. It features the following contributions.

An editorial by M.J. de Rooij titled Het leed van de circulerende Unieburger en het Europese begrip van de favor divortii (The distress situation of the European citizens moving abroad and the European concept of favor divortii), freely available here.

C. Vanleenhove, The Hague Judgments Convention versus national regimes of recognition and enforcement: a comparison between the Convention and the Belgian Code of Private International Law (available here)

The adoption of the Hague Judgments Convention marks a landmark step in the Judgments Project that the Hague Conference on Private International Law has undertaken since 1992 in the context of transnational disputes in civil and commercial matters. The creation of a uniform set of core rules on the recognition and enforcement of foreign judgments in a cross-border civil and commercial setting promotes effective access to justice and facilitates multilateral trade, investment, and mobility. As far as Belgium is concerned, in the relationship with other non-EU Contracting States the Convention will replace the Code of Private International Law that since 2004 has governed the recognition and enforcement of third State judgments in Belgium. The entry into force of the Convention calls for a comparison of the Convention’s regime with that of the Code of Private International Law. As the two instruments fall within the same ballpark in terms of their openness and given the Convention’s deferral to more favourable domestic rules, the Convention adds another avenue through which a successful party can enforce its foreign judgment in Belgium. From the Belgian perspective the potential circulation of Belgian judgments in other Contracting States with stringent national rules on enforcement perhaps constitutes the most considerable benefit of the Convention.

G. van Calster, Brussles Ia and the Hague Judgments Convention: a note on non-domiciled parties and on reflexive jurisdictional rules

The process that led to the Hague Judgment Convention was inspired by the ‘Brussels regime’(the EU’s approach to encouraging the free movement of judgments in civil and commercial matters). In the present note I explore two likely areas of tension between Brussels Ia and the Hague Convention: the limited circumstances where non-EU domiciled defendants will nevertheless be captured by the EU jurisdictional rules; and the developing ‘reflexive effect’ of exclusive jurisdictional gateway. I suggest that the EU would do well seriously to consider a reflexive application of its exclusive jurisdictional rules, and that the current review of Brussels Ia would be a good opportunity to do so.

A.A.H van Hoek and F. van Overbeeke, Over open eindes en nauwere banden: a nieuw hoofdstuk in de Van den Bosch/Silo-Tank-saga (About open endings and closer ties: A new chapter in the Van den Bosch/Silo-Tank-saga).

In this brief contribution we pay attention to the latest judgment of the Dutch Supreme Court in the protracted litigation over the employment conditions of Hungarian truck drivers who perform international transport operations on behalf of a Dutch logistics company while being officially employed by a Hungarian sister company of the Dutch firm. The case led to the CJEU judgment FNV/Van den Bosch, C-815/18, ECLI:EU:C:2020:976 (NIPR 2021-55) where the application of the Posting of Workers Directive to this scenario was discussed. The current case pertains to the law that is applicable to the individual employment contracts under Article 8 Rome I.

We comment on the problem of identifying the place from where the work is habitually performed in the case of highly mobile transport operations, the root of which lays in pertaining EU caselaw. We also discuss the fact that the Dutch Supreme court applied the criteria mentioned in the Schlecker case (C-64/12, ECLI:EU:C:2013:551, NIPR 2013-347) in a strict manner, without taking the specific context of the Schlecker case fully into account. Finally, we recommend that the Court of Appeal of Amsterdam (to which the case has been referred) should submit further preliminary questions to the CJEU: 1. Should the reason why workers are covered by the social security system of their home country be taken into account when weighing the relevance of this criterion – and more particularly, what relevance does the insurance status have in transport cases?; 2. Which factors should (or may) be taken into account to establish a closer connection when the applicable law is determined on the basis of the establishment through which the worker was employed?

Conventions & Instruments

On 6 October 2023, Rwanda deposited its instrument of accession to the HCCH 1961 Apostille Convention and applied to become a Member of the HCCH. Following a six-month voting period, and provided a majority of votes have been cast in its favour, Rwanda will be invited to become a Member by accepting the Statute of the HCCH. With the accession of Rwanda, the 1961 Apostille Convention now has 126 Contracting Parties. It will enter into force for Rwanda on 5 June 2024. More information is available here.

 

Meetings & Events

From 2 to 4 October 2023, the second meeting of the HCCH-UNIDROIT Joint Project on Law Applicable to Cross-Border Holdings and Transfers of Digital Assets and Tokens was held at the premises of the Secretariat of the International Institute for the Unification of Private Law (UNIDROIT) in Rome, in hybrid format. More information is available here.

On 5 October 2023, the Permanent Bureau of the HCCH organised CODIFI Edition 2023 – CBDCs, an online colloquium on selected topics related to the HCCH’s CBDCs Project, established in March 2023 to study the private international law implications of Central Bank Digital Currencies. More information is available here, and recordings of all the sessions are available here.

On 11 October 2023, the Permanent Bureau of the HCCH participated in the APEC Workshop on Secured Transaction Reform, organised by APEC, the United States, and Rikkyo University. During the workshop, the HCCH’s Deputy Secretary General, Dr Gérardine Goh Escolar, spoke about the private international law issues relevant to secured transactions reform, including the HCCH’s instruments and projects that may impact on choice-of-law rules relating to secured transactions.

From 10 to 17 October 2023, the Eighth Meeting of the Special Commission on the Practical Operation of the 1980 Child Abduction Convention and the 1996 Child Protection Convention was held in The Hague. The meeting was attended by over 470 delegates, in person and via videoconference, representing HCCH Members, non-Member Contracting Parties, and Observers. The meeting resulted in the adoption of 103 Conclusions & Recommendations providing guidance to (prospective) Contracting Parties on a wide range of issues relating to the implementation and practical operation of this Convention. More information is available here.

On 14 October 2023, Members of the International Hague Network of Judges (IHNJ) from over 30 jurisdictions met in The Hague on occasion of the 25th anniversary of the IHNJ. Established in 1998, the IHNJ facilitates international cooperation and communication between judges on the cross-border protection of children. More information is available here.

 

Publications & Documentation

On 3 October 2023, the Permanent Bureau of the HCCH announced the publication of the Proceedings of the Twenty-Second Session. The Twenty-Second Session of the HCCH, held from 18 June to 2 July 2019, resulted in the adoption of the 2019 Judgments Convention. More information is available here.

 

These monthly updates are published by the Permanent Bureau of the Hague Conference on Private International Law (HCCH), providing an overview of the latest developments. More information and materials are available on the HCCH website.

The second and the third issue of 2023 of the Rivista di diritto internazionale privato e processuale (RDIPP) are out.

The second issue features three contributions.

Yuriko Haga, Avatars, Personalities in the Metaverse: Introductory Analysis on Conflict-of-Laws

When people perform various activities in the metaverse, another world on the Internet, they make avatars as their “proxy”, representing their personality. However, the connection between an avatar and its user is often unclear. In fact, avatars do not necessarily resemble to their user’s figure or face because people can decide its appearance at their disposal. The first question thus arises as to whether the attack on an avatar can be assimilated to an attack on the personality of a user, a person in real world. An avatar should be deemed part of the online personality of its user, and, considering the existing theory of personality rights, it is not completely separate from the person in the real world. Therefore, an attack brought against an avatar can deemed more or less an infringement against the user’s personality. The second question is then how to select the applicable law to such cases. An infringement of personality rights in the metaverse is by nature “international” because users can connect to that virtual “world” from all corners of the world. This leads to a difficulty in determining the place that the connecting factor designates. This paper examines the applicability of actual Japanese conflict-of-laws rule to issues occurring in the metaverse to show its boundary. The traditional theory posits to apply national laws to resolve legal issues, but the world of metaverse is often governed by rules of its own. It follows that the conflict-of-laws theory should now consider the applicability of the rules of other communities, such as the metaverse..

Pietro Franzina, La Cassazione muta indirizzo su Incoterms e luogo della consegna dei beni (The Court of Cassation Changes Approach on Incoterms and the Place of Delivery of the Goods)

The ruling by the Joint Chambers of the Italian Court of Cassation examined in this paper (Order No 11346 of 2 May 2023) innovates the Court’s case law regarding the relevance of Incoterms to the determination of the place of delivery of goods for the purposes of the rule of special jurisdiction in Art 7 No 1 of Regulation EU No 1215/2012 (Brussels I-bis). The Court of Cassation has eventually aligned its views on this issue to the interpretation provided by the Court of Justice in Electrosteel, for it acknowledged that the place of delivery must be determined, as a rule, in accordance with the agreement of the parties, whereas, on previous occasions, the Court of Cassation had rather expressed the opinion that the place of delivery normally coincides with the place of the final destination of the goods, and that only by way of exception (and subject to strict standards) the parties should be permitted to agree on a different place of delivery. The Joint Chambers of the Court of Cassation have also asserted, again realigning their approach to that of the Court of Justice, that the Incoterm «EXW» is not merely concerned with the allocation between the parties of the costs and risks of the transaction, but also entails an agreement as to the place of delivery. The ruling, the paper contends, must be welcomed, since it corrects a questionable approach that the Court of Cassation has followed for a long time. Nevertheless, the decision is not entirely convincing. One reason for criticism regards the fact that, like previous rulings of the Court of Cassation, the decision fails to properly distinguish between agreements on the place of performance and choice-of-court agreements. As observed by the Court of Justice in Zelger, only the latter are submitted to special conditions of form, imposed by the Regulation. For their part, agreements on the place of performance need to be concluded in writing only if the law applicable to the contract so provides, which is relatively uncommon. The Court of Cassation, it is suggested, should reassess the formalistic approach it has followed regarding Incoterms, if it is to fully comply with the indications of the Court of Justice.

Federica Sartori, Sull’ammissibilità di un’eterointegrazione tra legge straniera e lex fori in materia di risarcimento del danno non patrimoniale (On the Admissibility of Hetero-Integration between Foreign Law and Lex Fori in Matters of Compensation for Non-Pecuniary Damage)

This article focuses on an order issued by the Italian Supreme Court over the interpretative question about the possible integration of the foreign applicable law with the lex fori for the compensation of non-pecuniary damage. Through the analysis of opposing legal reasonings, this article examines the legal and jurisprudential bases of each thesis, leaning towards a negative solution in the present case according to the principle of the global application of foreign law, while awaiting for the Court to give its final decision in a public hearing on this relevant issue.

Two contributions appear in the third issue.

Pietro Franzina, Un nuovo diritto internazionale privato della protezione degli adulti: le proposte della Commissione europea e gli sviluppi attesi in Italia (A New Private International Law on the Protection of Adults: The European Commission’s Proposals and the Developments Anticipated in Italy)

The European Commission has presented on 31 May 2023 two proposals aimed to enhance, in cross-border situations, the protection of adults who are not in a position to protect their interests due to an impairment or the insufficiency of their personal faculties. One proposal is for a Council decision that would authorise the Member States to ratify, in the interest of the Union, the Hague Convention of 13 January 2000 on the international protection of adults, if they have not done so yet. The decision, if adopted, would turn the Convention into the basic private international law regime in this area, common to all Member States. The other proposal is for a regulation the purpose of which is to improve, in the relationships between the Member States, the cooperation ensured by the Convention. The paper illustrates the objects of the two proposals and the steps that led to their presentation. The key provisions of the Hague Convention are examined, as well as the solutions envisaged in the proposed regulation to improve the functioning of the Convention. The paper also deals with the bill, drafted by the Italian Government and submitted to the Italian Parliament a few days before the Commission’s proposals were presented, to prepare for the ratification of the Convention by Italy and provide for its implementation in the domestic legal order. The bill, it is argued, requires extensive reconsideration as far as the domestic implementation of the Convention is concerned. Alternative proposals are discussed in the paper in this regard.

Riccardo Rossi, Reflections on Choice-of-Court Agreements in Favour of Third States under Regulation (EU) No 1215/2012

The article deals with the absence of a provision addressing choice-of-court agreements in favour of third States under Regulation (EU) No 1215/2012 (“Brussels Ia Regulation”). The CJ case law and the present structure of the Regulation leave no room for the long-debated argument of effet réflexe. In light of Arts 33 and 34 (and Recital No 24), enforcing such agreements is now limited to the strict respect of the priority rule in the trans-European dimension. The first part of the article deals with the consequences of such a scheme. Namely, forum running, possible interferences with the free circulation of judgments within the EU pursuant to Art 45(1)(d), and inconsistencies with the 2019 Hague Convention. In its second part, from a de lege ferenda perspective, the article examines the most delicate issues raised by the need for introducing a new provision enforcing jurisdiction agreements in favour of third States: from the jurisdiction over the validity of such agreements, to the applicable law, to the weight to be given to the overriding mandatory provisions of the forum. Finally, it proposes a draft of two new provisions to be implemented in the presently-discussed review of the Brussels Ia Regulation.

Gustavo Cerqueira and Hugues Fulchiron have recently edited a new volume (in French) on the appliation of foreign law in the draft code of French private international law (Le droit étranger dans le projet de code de droit international privé – Connaissance et applicationdroit). They have kindly provided us with the following English summary:

On the occasion of the public consultation on the draft code of French private international law launched by the Ministry of Justice on 8 June 2022, the Société de législation comparée organized a debate in Paris on 13 September of the same year on the provisions relating to the knowledge and application of foreign law – Articles 13 and 14 of the draft.

Between consolidation of case law, methodological clarification, new procedural perspectives and recourse to institutional cooperation, the choices made by the drafters of the proposed Code offered a great opportunity for collective reflection, bringing together the key players in the field. This reflection was all the timelier given that these provisions were not given particular attention either in the explanatory memorandum to the draft code or in the commentaries on the draft code by academic writers.

The purpose of this book is therefore to bring to public debate the most salient issues relating to this often-neglected chapter of conflict of laws, while at the same time putting forward singular proposals to ensure that the content of foreign law in France is established as accurate as possible.

In recent years, the Société de législation comparée has taken an interest in the issue of understanding and applying foreign law. Through this new initiative, the Société works to enhance French private international law, in line with the goals set out in Article 1 of its Articles of Association.

Authors: Jean-Pierre Ancel, Gustavo Cerqueira, Nicolas Cornu Thénard, Sophie Couvez, Dominique Foussard, Hugues Fulchiron, Lukas Heckendorn Urscheler, Alice Meier-Bourdeau, Marie-Laure Niboyet, Sylvaine Poillot-Peruzzetto, Cyril Roth, Bernard Stirn.

Gustavo Cerqueira, Nicolas Nord, and Cyril Nourissat have recently edited a new volume on the “Certificat de coutume – Pratiques en droit des affaires internationales” (in French). The editors have kindly provided us with an English translation of the blurb available on the publisher’s website:

Statement or written certificate on the content of a foreign law rule, the Certificat de coutume is subject to a heterogeneous practice both in terms of its establishment and its processing Ignored by many jurists, its reliability is often called into question due to a double insufficiency that it may conceal: about the law attested when it is issued by a public authority, about the impartiality when a private person issues it.

However, these criticisms are not insurmountable. In addition to the combination with other means of establishing the content of the foreign law rule in question, the Certificat de coutume does not avoid obliterating any contradictory discussion and the freedom of interpretation of the authority before which it is produced. The liabilities associated with the Certificat de coutume, whether that of the drafter, the counsel of the parties or the notary using such a certificate, constitute a formidable safeguard against tendentious approaches. Above all, we must not ignore the virtues of empiricism, which could – in these times of debates regarding a future codification of French private international law – reveal important and good practices to be considered de lege ferenda.

The book contains the reflections of several experts on the practice –  little known to the public  – of the Certificat de costume in international affairs at a symposium held on 12 April 2022 at the Conseil supérieur du notariat français. The real added value of this book therefore lies in the desire to lift the veil on the Certificat de coutume, which currently constitutes a blind spot in private international law. Its name is certainly known to all, but its legal system still appears to be embryonic. The ambition of the symposium is to do constructive work and to offer concrete proposals, fruit of a collective reflection, bringing together the essential players in this field.

This book aims to be constructive and to come up with concrete proposals, the fruit of collective reflection, bringing together the key players in the field.

Authors: Bertrand Ancel, Oliver Berg, Marc Cagniart, Gustavo Cerqueira, Louis Degos, Karlo Fonseca Tinoco, Jacques-Alexandre Genet, Giulio-Cesare Giorgini, Kevin Magnier-Merran, Daniel Mainguy, Pierre Jean Meyssan, Pierre Mousseron, Nicolas Nord, Cyril Nourissat, Sylvaine Poillot-Peruzzetto, Pierre Tarrade, Jean-Luc Vallens, Pascal de Vareilles-Sommières.

The Centre for Private international Law of the University of Aberdeen’s Law School is continuing this year its series on Crossroads in Private International Law.

The aim of the series is to explore the intersection between Private International Law and substantive areas of law, with the outcome of featuring cutting edge interdisciplinary research carried out by the Centre members.

The format is hybrid, with presentations and room for discussion.  Find out more and register for the individual events here; and sign up for selected seminars of for the entire series here.

Claimants suing multinational enterprises for business-related human rights abuses have recently had a good run in England. The Supreme Court cleared the jurisdictional hurdles for the claimants in Vedanta and Okpabi. This was followed by the Court of Appeal judgment in Begum and the High Court judgment in Josiya, which opened the door for value chain litigation. In Fundão dam, the Court of Appeal allowed a claim brought by over 200,000 Brazilians in the aftermath of the collapse of a dam in Brazil to proceed (meanwhile, the number of claimants has grown to 700,000, who are seeking £36bn in damages). And in Bravo, the High Court held that the law of a civil law country (Colombia) did not preclude the possibility of liability on the part of a parent company registered in England for the activities of its Colombian subsidiary. Although in Jallah (here and here), the courts held that a claim following an oil spill off the Nigerian coast was time-barred.

Business and human rights cases have even made their way to Scotland. The Court of Session (Outer House) allowed a claim brought by over 1,000 Kenyan tea pickers against a company registered in Scotland to proceed in Campbell v James Finlay (Kenya) Ltd.

Many other business and human rights cases, some of them quite innovative, are currently pending in English courts. All of this has cemented London’s reputation as a (and probably the) global centre for business and human rights litigation.

Ever since Brexit, however, there has been a sense that this type of litigation is running on borrowed time. The UK’s withdrawal from the Brussels system has expanded the use of forum non conveniens and, consequently, has significantly raised the risk of claims failing on jurisdictional grounds.

Limbu v Dyson Technology Ltd, in which the High Court (Deputy High Court Judge Sheldon KC) handed down its judgment on 19 October 2023, is the first post-Brexit case where this risk has materialised.

Facts

Dyson is a multinational enterprise specialising in designing and manufacturing premium household appliances. Its founder and chairman, Sir James Dyson, was a prominent Brexiteer. That is why he caused quite a stir when he announced in early 2019 that his company would move its headquarters to Singapore, although he stated that this move was ‘not linked to the departure from EU’. Dyson’s operational headquarters is now in Singapore, but its registered headquarters is still in England. Dyson has an elaborate value chain. Many of its suppliers are based in East Asia.

Two of Dyson’s suppliers are the Malaysian companies ATA Industrial (M) Sdn Bhd and Jabco Filter System Sdn Bhd. The claimants, who are migrant workers from Bangladesh and Nepal, were employed by the suppliers in their Malaysian factories. They allege that they were victims of various human rights abuses, including violations of labour standards by the suppliers and violations of human rights directly committed by the Malaysian police in which the suppliers were complicit. The claimants commenced proceedings against three companies that are part of the Dyson group, two of which are domiciled in England and one in Malaysia. No proceedings were commenced against the suppliers and the Malaysian police.

The claim was brought in negligence and unjust enrichment. Negligence is a well-known legal basis for remedying business-related human rights violations. The claim in this case builds on Begum and Josiya. The defendants’ duty of care is claimed to have originated from their control over the manufacturing operations and the working conditions at the suppliers’ factories, and out of their public declarations – in mandatory policies and standards – regarding upholding human rights in their value chain. Unjust enrichment is a relatively novel legal basis in this context. The essence of the unjust enrichment claim is that the defendants obtained an unjust benefit as a result of claimants’ circumstances. The claim was brought on 27 May 2022, which is well after the Brexit transition period ended on 31 December 2020. The Brussels I bis Regulation, therefore, did not apply.

The question before the court was one of jurisdiction. The court had jurisdiction over the English companies on the basis of their presence in England. The English companies, however, asked the court to stay the proceedings on the basis of forum non conveniens. The claimants sought permission to serve the claim form on the Malaysian company out of the jurisdiction. The defendants had not made an application to strike out the claim, nor had they made an application for summary judgment. The court, therefore, assumed that the claim was arguable and had a reasonable prospect of success. The claimants relied on the necessary and proper party jurisdictional gateway in relation to the Malaysian company. But was England the proper place in which to bring the claim? The Malaysian company sought to set aside the service of the claim form on the basis that England was not the forum conveniens.

The defendants made a number of undertakings to the court as to how they would conduct the proceedings if their application succeeded and the claim was brought in Malaysia. In essence, they undertook to submit to the jurisdiction of the Malaysian courts, to assist the claimants with some of the disbursements and costs, to agree to remote attendance at a hearing and the trial in Malaysia, and not to challenge the lawfulness of any success fee arrangement between the claimants and their Malaysian lawyers.

Judgment

The jurisdictional question was about forum non conveniens. Referring to Spiliada, the court said that the question had to be addressed in two stages. First, was England or Malaysia the natural forum for the litigation? Second, if Malaysia was the natural forum, where there any special circumstances by reason of which justice requires the trial to take place in England? In other words, was there a real risk, based on cogent evidence, that substantial justice would not be obtainable in Malaysia?

The court held that Malaysia was indeed the natural forum. The following factors in particular pointed to this conclusion: Malaysian law applied and the case raised novel points of law; and Malaysia was the centre of gravity of the case due to the harm and the underlying mistreatment occurring there. Interestingly, the availability of remote hearings and communication technology meant that the location of parties and witnesses was not regarded by the court as a particularly important factor.

The court then proceeded to Stage 2. It held that there was no reason for the trial to occur in England. The court found no cogent evidence that: migrant workers had no access to justice in Malaysia; there were no suitably qualified lawyers with necessary expertise who could team up in Malaysia; the proceedings in Malaysia would take too long; the disbursements to be paid by the claimants in Malaysia would be significant; the claimants could not find representation in Malaysia; the defendants or their lawyers would act outside the law, unethically or unprofessionally in Malaysia; it was inappropriate to rely on the defendants’ undertakings; the gaps in funding in Malaysia could not be filled by NGOs; and that partial contingency fee arrangements were unlawful or impracticable. In other words, there was no cogent evidence that the claimants would not obtain substantial justice in Malaysia.

Comment

Dyson is significant because it illustrates the effects of Brexit on business and human rights litigation in England. The combination of general jurisdiction under Brussels I bis and the CJEU’s judgment in Owusu no longer offers a safe jurisdictional haven for victims of business-related human rights abuses. It is clear from Dyson and the cases cited above that the natural forum is almost always going to be in the country where abuses and direct damage occur. There are cases, like Vedanta, where it is possible to prove that substantial justice cannot be obtained in the natural foreign forum. But, as Dyson shows, achieving this is difficult. Many alleged human rights abusers will benefit from this and, thus, collect a handsome ‘Brexit dividend’.

Nevertheless, Dyson has a silver lining. The court assumed that the claim was arguable and had a reasonable prospect of success because the defendants had not made an application to strike out the claim, nor had they made an application for summary judgment (see [18]). The judge reiterated, at [141], that it was reasonable to assume that the claimants had good prospects of success in their claims and would obtain substantial damages if successful. Furthermore, the claimants are likely to appeal and it is not inconceivable that the Court of Appeal might disagree with the judge on the forum non conveniens issue.

In cooperation with the Department of Law, Economics and Cultures of the University of Insubria (Italy), the Law Faculty of the University of Murcia (Spain) and the Law Faculty of the Jagiellonian University in Kraków (Poland), the European Association for Private International Law (EAPIL) has created a Winter School in European Private International Law.

The School’s inaugural session will take place from 12 to 16 February 2024 at the University of Insubria, in the cloister of the Basilica di Sant’Abbondio in Como, Italy. It will dedicated to the topic of ‘Personal Status and Family Relationships’. More information on the programme, which has been put together by Silvia Marino (University of Insubria), Javier Carrascosa González (University of Murcia), and Anna Wysocka-Bar (Jagiellonian University in Kraków), can be found on the official flyer. More information on the registration process can also be found here.

The organisers are also offering a teaser seminar on 4 December 2023, at 6pm (Italian time), which can be joined here.

The Roma Tre University and the Catholic University of the Sacred Heart have jointly organised a conference titled The Italian Scholars and The Hague Academy of International Law – A retrospective on the occasion of the Academy’s Centennial Anniversary, under the patronage of the Italian Ministry of Foreign Affairs and the Hague Academy itself.

The conference, due to take place on 30 November 2023 in Milan, at the Catholic University of the Sacred Heart, will discuss the contribution provided by Italian scholars to the development of both public and private international law through courses delivered at the Academy since 1923.

A final roundtable will be devoted to the challenges that face, today, those teaching and researching public and private international law, including the law of international arbitration.

Speakers include: Giulio Bartolini, Tullio Treves, Luca Radicati di Brozolo, Robert Kolb, Sergio Marchisio, Marina Castellaneta, Francesco Salerno, Sara Tonolo, Pasquale De Sena, Beatrice Bonafè, Annamaria Viterbo, Paolo Palchetti, Chiara Tuo, Giuseppe Nesi, Jean-Marc Thouvenin, Attila Tanzi, Giuditta Cordero-Moss, Massimo Benedettelli, and Verónica Ruiz Abou-Nigm.

A detailed programme can be found here.

The working languages will be English, French and Italian, with Italian presentations being simultaneously translated into English.

Attendance is on-site only. Prior registration is required through the form available here.

Written by Kamakshi Puri[1]

Arbitrability is a manifestation of public policy of a state. Each state under its national laws is empowered to restrict or limit the matters that can be referred to and resolved by arbitration. There is no international consensus on the matters that are arbitrable. Arbitrability is therefore one of the issues where contractual and jurisdictional natures of international commercial arbitration meet head on.

When contracting parties choose arbitration as their dispute resolution mechanism, they freely choose several different laws that would apply in case of disputes arising under the contract. This includes (i) the law that is applicable to the merits of the dispute, (ii) the institutional rules that govern the conduct of the arbitration, (iii) law that governs the arbitration agreement, including its interpretation, generally referred to as the ‘proper law of the arbitration agreement’. Similarly, contracting parties are free to choose the court that would exercise supervisory jurisdiction over such arbitration, such forum being the ‘seat’ of arbitration.

Since there is no global consensus on the matters that are arbitrable, and laws of multiple states simultaneously apply to an arbitration, in recent years, interesting questions surrounding arbitrability have presented themselves before courts adjudicating cross-border disputes. One such issue came up before the Singapore High Court in the Westbridge Ventures II v Anupam Mittal, succinctly articulated by the General Court as follows:

 

“which system of law governs the issue of determining subject matter arbitrability at the pre-award stage? Is it the law of the seat or the proper law of the arbitration agreement?”

 

In this piece, I will analyze the varied views taken by the General Court at Singapore (“SGHC”), Singapore Court of Appeal (“SGCA”) and the Bombay High Court (“BHC”) on the issue of the law(s) that would govern the arbitrability of the disputes in international commercial disputes.

The Westbridge Ventures-Anupam Mittal dispute began in 2021 when Mittal approached the National Company Law Tribunal in Mumbai (“NCLT Mumbai”) alleging acts of minority oppression and mismanagement of the company, People Interactive (India) Private Limited, by the majority shareholder, Westbridge Ventures. In response to the NCLT proceedings, Westbridge Ventures approached the Singapore High Court for grant of permanent anti-suit injunction against Mittal, relying on the arbitration agreement forming part of the Shareholders’ Agreement between the suit parties. Since 2021, the parties have successfully proceeded against one another before various courts in Singapore and India for grant of extraordinary remedies available to international commercial litigants viz anti-suit injunctions, anti-enforcement injunctions and anti-arbitration injunctions.

 

Singapore General Court Decision on Pre-award Arbitrability

 

Oppression and mismanagement claims are arbitrable under Singapore law but expressly beyond the scope of arbitration under Indian law. To determine whether proceedings before the NCLT were in teeth of the arbitration agreement, the court had to determine if the disputes raised in the NCLT proceedings were arbitrable under the applicable law. Thus, the question arose as to the law which the court ought to apply to determine arbitrability.

At the outset, the SGHC noted that the issue of arbitrability was relevant at both initial and terminal stages. While at the initial stage, non-arbitrable subject matter rendered arbitration agreements inoperative or incapable of being performed, at the terminal stage, non-arbitrability rendered the award liable to be set aside or refused enforcement. Since at the post-award stage, arbitrability would be determined by the enforcing court applying their own public policy, the lacuna in the law was limited to the issue of subject matter arbitrability at the pre-award stage.

Upon detailed consideration, the SGHC concluded that it was the law of the seat that would determine the issue of subject matter arbitrability at the pre-award. The court reasoned its decision broadly on the following grounds:

• Contracts are a manifestation of the party autonomy principle. States being asked to give effect to a contract ought to respect party autonomy but for very limited grounds, such as public policy considerations. Power of the seat court to limit the arbitral tribunal’s jurisdiction, and consequently affect party autonomy, ought to be limited to necessary constraints posed by such seat State’s public policy;
• Since seat courts their own law at the post-award stage (in setting-aside and enforcement proceedings), it would be a legal anomaly for the same court to rely on different systems of law to determine subject-matter arbitrability at pre and post-award stages. This could also result in a situation where a subject matter, being arbitrable under the law of the arbitration agreement despite being non-arbitrable under the law of the seat, is first referred to arbitration however later the resulting award is set aside;
• Courts should, as a general position, apply their own law unless specifically directed by law to another legal system. Public interest and state policy favoured the promotion of International Commercial Arbitration. It was neither necessary nor desirable for a court to give effect to a foreign non-arbitrability rule to limit an otherwise valid arbitration agreement. Arbitrability was therefore a matter to be governed by national courts by applying domestic law.

Interestingly, despite noting that arbitrability was an issue of jurisdiction and that non-arbitrability made an agreement incapable of being performed, the SGHC distinguished the scenarios where a party’s challenge was based on arbitrability and where parties challenged the formation, existence, and validity of an agreement. The court held that for the former, the law of seat would apply, however, for the latter, the proper law of arbitration agreement could apply.

Accordingly, the SGHC held that oppression and mismanagement disputes were arbitrable under the law of the seat, i.e., in Singapore law, the arbitral tribunal had exclusive jurisdiction to try the disputes raised by the parties. An anti-suit injunction was granted against the NCLT proceedings relying on the arbitration agreement between the parties.

 

Appeal before the Singapore Court of Appeal  

 

Mittal appealed the SGHC judgment before the Singapore Court of Appeal. The first question of law before the SGCA was whether the SGHC was correct in their holding that to determine subject matter arbitrability, lex fori (i.e., the law of the court hearing the matter) would apply over the proper law of the arbitration agreement. Considering the significance of the issue, Professor Darius Chan was appointed as amicus curie to assist the court.

Professor Chan retained the view that lex fori ought to be the law applicable to the question of arbitrability. This was for reasons of predictability and certainty, which weighed on the minds of the drafters of the UNCITRAL Model Law. Although the Model Law was silent on the question of pre-award arbitrability since it was clear on the law to be applied post-award, a harmonious reading of the law was preferable. The courts ought to generally apply lex fori at both, pre and post-award stages.

The SGCA disagreed. It held that the essence of the principle of arbitrability was public policy. In discussing issues of predictability, certainty, and congruence between law to be applied at pre and post-arbitral stages, the parties had lost sight of the core issue of public policy in considering the question of arbitrability. Public policy of which state? – it unequivocally held that it was public policy derived from the law governing the arbitration agreement. Where a dispute could not proceed to arbitration under the foreign law that governed the arbitration agreement for being contrary to the foreign public policy, the seat court ought to give effect to such non-arbitrability.

The SGCA relied on the same concepts as the General Court albeit to come to the opposite conclusion:

• Arbitration agreements are the manifestation of party consensus. When parties expressly adopt a system of law to govern their arbitration agreement, public policy enshrined under such law ought to be given effect. Further, if arbitrability is a question of jurisdiction, then it necessarily follows that the law of the agreement from which jurisdiction of the tribunal is derived be considered first.
• As regards the potential anomaly with the seat court applying different laws pre and post-award, SGCA held that non-arbitrability under the law of the seat would be an additional obstacle to the enforcement of the arbitration agreement. This could, however, not go to say that the law of the seat would be the only law to govern arbitrability. Accordingly, the SGCA upheld a composite approach:

“55. Accordingly, it is our view that the arbitrability of a dispute is, in the first instance, determined by the law that governs the arbitration agreement. … where a dispute may be arbitrable under the law of the arbitration agreement but Singapore law as the law of the seat considers that dispute to be non-arbitrable, the arbitration would not be able to proceed. In both cases, it would be contrary to public policy to permit such an arbitration to take place. Prof Chan refers to this as the “composite” approach.”

• On the state policy to encourage International Commercial Arbitration, the court noted that principles of comity, requiring the court to respect public policy under foreign undoubtedly outweighed the policy to encourage arbitration. This was despite Prof. Chan’s concerns that expanding the grounds for refusal of reference of arbitration was “unnecessarily restrictive and not in line with the general tendency to favor arbitration”.

 

On facts, however, the court noted that the law of the arbitration agreement was in fact Singapore law itself, and Indian law was but the law of the substantive contract. Accordingly, arbitrability had to be determined under Singapore law and the appeal was dismissed.

 

Anti-Enforcement Injunction by the Bombay High Court

 

Mittal approached the Bombay High Court seeking an anti-enforcement injunction against the SGHC decision, and for a declaration that NCLT Mumbai was the only forum competent to hear oppression and mismanagement claims raised by him.

The BHC did not directly consider the issue of the law governing arbitrability, however, the indirect effect of the anti-enforcement injunction was the court determining the same. The BHC’s decision reasoned as follows – the NCLT had the exclusive jurisdiction to try oppression and mismanagement disputes in India, such disputes were thus non-arbitrable under Indian law. The enforcement of any ensuing arbitral award would be subject to the Indian Arbitration Act. An award on oppression and mismanagement disputes would be contrary to the public policy of India. Enforcement of an arbitral award in India on such issues would be an impossibility – “What good was an award that could never be enforced?”. The court noted that allowing arbitration in a case where the resulting award would be a nullity would leave the plaintiff remediless, and deny him access to justice. An anti-enforcement injunction was granted.

The BHC’s decision can be read in two ways. The decision has either added subject matter arbitrability under a third law for determining jurisdiction of the tribunal, i.e., the law of the court where the award would inevitably have to be enforced or the decision is an isolated, fact-specific order, not so much a comment on the law governing subject matter arbitrability but based on specific wording of the arbitration clause which required the arbitral award to be enforceable in India, although clearly the intent for the clause was to ensure that neither parties resist enforcement of the award in India and not to import India law at the pre-award stage.

 

Concluding Thoughts

 

The SGHC is guided by principles of party autonomy and Singapore policy to encourage International Commercial Arbitration, on the other hand, the Court of Appeal was driven by comity considerations and the role of courts applying foreign law to be bound by foreign public policy. Finally, the Indian court was occupied with ensuring “access to justice” to the litigant before it, which according to the court overrode both party autonomy and comity considerations. Whether we consider the BHC decision in its broader or limited form, the grounds for refusing reference to arbitration stand invariably widened. Courts prioritizing different concerns as the most significant could potentially open doors for forum shopping.

 

 

[1] Kamakshi Puri is an LLM graduate from the University of Cambridge. She is currently an Associate in the Dispute Resolution Practice at Cyril Amarchand Mangaldas. Views and opinions expressed in the text are the author’s and not attributable to any organization.

The Netherlands International Law Review (NILR) has issued a call for papers, in particular for private international law perspectives of public interest litigation.

 

Public interest litigation

Globally, we are witnessing an increase in what is called ‘public interest litigation’. In particular, climate change lawsuits taking place in several countries (e.g. in the Netherlands the Urgenda and Shell cases) are generating global attention. Another example of this type of litigation concerns the protection of privacy (e.g. the lawsuits against Facebook and TikTok). Although there is not yet a well-defined definition of the phenomenon, it is generally accepted that public interest litigation is understood to mean legal action that is taken on a human rights or equality issue of broad public concern.

 Call for papers

The Netherlands International Law Review (NILR) invites researchers to submit abstracts for an upcoming Special Issue devoted to Public Interest Litigation. We are interested in papers focusing on questions of private international law and/or public international law with regard to this phenomenon in a broad sense. We particularly encourage contributions that address private international law questions.

Abstracts should be no longer than 500 words and should be submitted by January 2nd 2024 to nilr@asser.nl. Submissions are limited. The selection criteria will be based on the quality of the research and its originality. We also strive to ensure a diversity of represented legal systems and topics. If an abstract is accepted, this will be communicated by February 1st 2024. After acceptance, draft papers are to be submitted at the latest by May 1st 2024. The draft papers will be assessed by the editorial board of the NILR according to standard criteria. This assessment will be communicated to the author shortly afterwards.

NILR

The Netherlands International Law Review (NILR) is one of the world’s leading journals in the fields of public and private international law. It is published three times a year, and features peer-reviewed, innovative, and challenging articles, case notes, commentaries, book reviews and overviews of the latest legal developments in The Hague. The NILR was established in 1953 and has since become a valuable source of information for scholars, practitioners and anyone who wants to remain up to date concerning the most important developments in these fields.

As announced on this blog, the inaugural edition of the European Association of Private International Law Winter School will take place in Como between 12 and 16 February 2024.

Organised by the University of Insubria, in cooperation with the Jagiellonian University in Kraków, the University of Murcia and the University Osijek, this year’s edition of the Winter School will be devoted to Personal Status and Family Relationships.

The lectures, in English, will discuss a range of issues relating to the cross-border continuity of status, filiation, and family relationships between adults. Both Hague conventions and EU legislative measures will be examined, with an approach combining theory and practice. There will be ample room for interaction with (and among) the participants.

The teaching staff consists of Silvia Marino (University of Insubria, director of the School), Laura Carpaneto (University of Genova), Javier Carrascosa González (Universidad de Murcia), Ester di Napoli (University of Ferrara), Cristina González Beilfuss (Unversity of Barcelona), Satu Heikkilä (LL.D., Administrative Law Judge), Katja Karjalainen (University of Eastern Finland), Máire Ní Shúilleabháin (University College Dublin), Etienne Pataut (University of Paris 1), Paula Poretti (University of Osijek), Nadia Rusinova (Hague University), Raffaele Sabato (Judge of the European Court Human Rights), Ian Sumner (Tilburg University), Camelia Toader (former-Judge of the Court of Justice), Ioan-Luca Vlad (University of Bucharest), Michael Wilderspin (EU Commission Legal Advisor), Anna Wysocka-Bar (Jagiellonian University), Mirela Župan (University of Osijek).

The detailed programme can be found here.

The School is aimed primarily at law graduates, law practitioners and PhD candidates with an interest in private international law, EU law and human rights law.

Those interested in attending the School are invited to submit their application through this form before  25 January 2024.

Admission fees are as follows: early bird (by 12 December 2023): 180 Euros; ordinary: 250 Euros.

A reduced fee of 80 Euros is offered to one student from any of the Universities that are partners in the project  and one for a Ukrainian student.

For information: eapilws@gmail.com.

Visite à la Cour de justice de l'Union européenne de la présidente de la République de Slovénie, Mme Nataša Pirc Musar

Staatsanwaltschaft Berlin (EncroChat)
Espace de liberté, sécurité et justice
Selon l’avocate générale Tamara Ćapeta, un procureur peut émettre une décision d’enquête européenne (DEE) ayant pour objet la transmission d’éléments de preuve déjà en la possession d’un autre État membre

LATAM Airlines Group
Transport
Refus d’embarquement anticipé : les passagers ont droit à une indemnisation même s’ils ne se sont pas présentés à l’enregistrement et s’ils ont été informés de ce refus d’embarquement au moins deux semaines avant l’heure de départ du vol prévue