Lis alibi pendens rule does NOT apply (to the court seized second having such jurisdiction) in the event of exclusive jurisdictional rules – The ECJ in Weber v Weber
In Weber v Weber the ECJ gave helpful clarification of the non-application of the strict lis alibi pendens rules of the Jurisdiction Regulation in the event of infringement of the Regulation’s exclusive jurisdictional rules. This to my knowledge at least had not yet been clearly established by the Court.
Ms I. Weber (I’) and Ms M. Weber (‘M’), are co-owners to the extent of 6/10 and 4/10 of a property in Munich. On the basis of a notarised act of 20 December 1971, a right in rem of pre‑emption over the four-tenths share belonging to M was entered in the Land Register in favour of I. By a notorial contract of 28 October 2009, M sold her four-tenths share to Z. GbR, a company incorporated under German law, of which one of the directors is her son, Mr Calmetta, a lawyer established in Milan. According to one of the clauses in that contract, M, as the seller, reserved a right of withdrawal valid until 28 March 2010 and subject to certain conditions.
Being informed by the notary who had drawn up the contract in Munich, I exercised her right of pre-emption by letter of 18 December 2009. On 25 February 2010, by a contract concluded before that notary, I and M once more expressly recognised the effective exercise of the right of pre-emption by I and agreed that the property should be transferred to her for the same price as that agreed in the contract for sale signed between M and Z. GbR. However, the two parties asked the notary not to carry out the procedures for the registration of the transfer of property in the Land Register until M had made a written declaration before the same notary that she had not exercised her right of withdrawal or that she had waived that right arising from the contract concluded with Z. GbR within the period laid down, which expired on 28 March 2010. On 2 March, I paid the agreed purchase price of EUR 4 million.
By letter of 15 March 2010, M declared that she had exercised her right of withdrawal from the contract of 28 October 2009. By an application of 29 March 2010, Z. GbR brought an action against I and M, before the District Court, Milan, seeking a declaration that the exercise of the right of pre-emption by I was ineffective and invalid, and that the contract concluded between M and that company was valid.
On 15 July 2010, I brought proceedings against M before the Landgericht München, seeking an order that M register the transfer of ownership of the four-tenths share with the Land Register.
The Court of Justice first of all had to decide whether an action seeking a declaration that a right in rem in immovable property has not been validly exercised, falls within the category of proceedings which have as their object right in rem in immovable property, within the meaning of Article 22(1) of Regulation No 44/2001. It held that it did, with the required amount of deference to national law: a right of pre-emption, such as that provided for by Paragraph 1094 of the BGB, which attaches to immovable property and which is registered with the Land Register, produces its effects not only with respect to the debtor, but guarantees the right of the holder of that right to transfer the property also vis-à-vis third parties, so that, if a contract for sale is concluded between a third party and the owner of the property burdened, the proper exercise of that right of pre-emption has the consequence that the sale is without effect with respect to the holder of that right, and the sale is deemed to be concluded between the holder of that right and the owner of the property on the same conditions as those agreed between the latter and the third party.
The next core question was whether Article 27′s lis alibi pendens rule applies in the event of the court second seized having exclusive jurisdiction. Here, the ECJ distinguished Gasser, in which it declined freedom for the court second seized to assume priority on the basis of a choice of court agreement. (A particular use of torpedoeing which is now addressed by the Brussels I-bis Regulation). It refers in particular to the positive obligation included in Article 35 of the Jurisdiction Regulation for courts not to recognise earlier judgments which were held in contravention of Article 22′s exclusive jurisdictional rules. Article 23′s choice of court agreements, by contrast, does not feature in Article 35.
The ECJ’s reference to Article 35 in my view means that the Court’s reasoning extends to all jurisdictional rules included in that article, including the protected categories of consumers and insureds (not, strangely, employees). There is lingering doubt however over the impact of the judgment on the application of Article 22(4)’s rule on intellectual property. In Weber (at 56) the Court holds that ‘ In those circumstances, the court second seised is no longer entitled to stay its proceedings or to decline jurisdiction, and it must give a ruling on the substance of the action before it in order to comply with the rule on exclusive jurisdiction.‘ In the application of Article 22(4), this continues to raise the question whether ‘the substance of the action before it’ only concerns the validity of the intellectual property, or also the underlying issue of infringement of such property.
Weber v Weber is a crucial further step in clarifying the lis alibi pendens rule. Sadly, family tussles do often advance the state of the law.
I reported earlier on Kokott AG’s view in Cascina tre Pini re the declassification of sites under the habitat Directive. The Court agreed, albeit with emphasis on the more than just passing degradation of the site: ‘It must, however, be pointed out that a mere allegation of environmental degradation of an SCI, made by the owner of land included in that site, cannot suffice of itself to bring about such an adaptation of the list of SCIs. It is essential that that degradation should make the site irretrievably unsuitable to ensure the conservation of natural habitats and of the wild fauna and flora or the setting up of the Natura 2000 network, so that that site can definitively no longer contribute to the achievement of the objectives of the directive set out in Articles 2 and 3 thereof.‘ (at 30). ‘Thus, not all degradation of a site on the list of SCIs justifies its declassification.‘ (at 31)
The judgment makes common sense to owners (and in view of the right to property), as it emphasises authorities’ duties under the habitats Directive however it is good to read it in ECJ print.
As readers will be aware, the Rome II Regulation on the law applicable to non-contractual obligations, harmonises Member States’ governing law rules on non-contractual obligations (not entirely accurately known in short as ‘tort’). Article 15 clarifies that the scope of the law applicable is very wide:
Scope of the law applicable
The law applicable to non-contractual obligations under this Regulation shall govern in particular:
(a) the basis and extent of liability, including the determination of persons who may be held liable for acts performed by them;
(b) the grounds for exemption from liability, any limitation of liability and any division of liability;
(c) the existence, the nature and the assessment of damage or the remedy claimed;
(d) within the limits of powers conferred on the court by its procedural law, the measures which a court may take to prevent or terminate injury or damage or to ensure the provision of compensation;
(e) the question whether a right to claim damages or a remedy may be transferred, including by inheritance;
(f) persons entitled to compensation for damage sustained personally;
(g) liability for the acts of another person;
(h) the manner in which an obligation may be extinguished and rules of prescription and limitation, including rules relating to the commencement, interruption and suspension of a period of prescription or limitation.
The provision is important, because jurisdictions may differ quite substantially as to which parts of the dispute they consider to relate to the substantive matter of ‘tort’, as opposed to procedural law. Procedural matters are governed by the lex fori and continue to be so under the Rome II Regulation: Article 1(3) provides specifically
‘This Regulation shall not apply to evidence and procedure, without prejudice to Articles 21 and 22.’
Article 15 clearly has a limiting effect on Article 1(3), given that it qualifies a number of issues as being substantive law, even though national law may have considered these to be procedural.
Despite the clarification in the Regulation, combined with the EC proposal and with the recitals, difficulties do of course remain. However in particular ‘assessment of damage’ under Article 15(c) has a very wide scope indeed. For instance the scope of the applicable law arguably includes the determination of whether damages need to be determined ‘net’, taking into account subsequent history which impacts upon the dependency of the party that is being compensated, or rather ‘gross’, at the moment of death: see Cox v Ergo Versicherung, ( EWHC 2806 (QB)] and  EWCA Civ 1001].
In Wall v Mutuelle De Poitiers Assurances, following a severe road accident, plaintiff sued the insurance company in the UK - jurisdictional issues were not under discussion. The Court of Appeal had to review the extent to which French law, the lex causae, had to be applied by the English Courts: utterly and totally, with all its practical implications? Or with due regard for the distinction which the Regulation continues to make between procedure and substance? Tugendhat J unsurprisingly opted for the latter – much more eloquently than this posting can do justice: an English court must not strive to reach the same result as a French court would, let alone insist that evidence given to the English court be in the form of a French-style expert report (no more indeed than a French court would in the reverse hypothesis). As Tugendhat J summarises at 16, in fine: “Rules” as to the assessment of damages are therefore to be “imported”; if there is a rule as to what kind of loss is recoverable, that rule is to be imported. But mere methods of proving recoverable loss are not to be imported.
With reference to Dworkin no less on soft law, the Court did hold that applicable law should be understood to include “judicial conventions and practices”, for example “particular tariffs, guidelines or formulae” used by judges in the calculation of damages under the applicable law: in France, these are the so-called Dintilhac Headings.
Dworkin at the Court of Appeal: that was bound to catch my interest.
In Church of Jesus Christ of Latter-Day Saints v the UK, the ECtHR discussed ‘place of public religious worship’ within the context of a UK tax dispute. For the Church (aka the Mormons) to receive favourable (local) tax treatment for the real estate part of their portfolio, their places of worship had to be ‘public’ – while for doctrinal reasons at least part of the Church buildings must not be public. The House of Lords had already held previously (2008, 1964)in related cases.
The purpose of the UK exemption is to benefit religious buildings which provided a ‘service to the general public’. The same regime applies to all religions and the Church of England, for instance, likewise sees part of its churches, in particular its private Chapels, not exempt.
The ECtHR held that the policy of exempting from rates buildings used for public religious worship fell within the State’s margin of appreciation under Articles 14 and 9 taken together. The legislation is neutral, in that it is the same for all religious groups as regards the manifestation of religious beliefs in private; and indeed produces exactly the same negative consequences for the officially established Christian Church in England (the Church of England) as far as private chapels are concerned. Moreover, the remaining liability to rates is relatively low, in monetary terms.
The finding under Article 9 also led to rejection of the arguments under Article 1 of the first protocol) protection of property). On the facts of this case, the Court considered that the margin of appreciation to be afforded to the State in respect of those provisions would be similar to, if not more generous than, that afforded under Article 14 taken in conjunction with Article 9.
The case arguably is a further, fairly uncontroversial, step in the Court’s case-law on freedom of religious beliefs and ditto expression. The real tests will lie in challenges to bans on religious slaughter (schechita and halal; where European secondary law and international and European economic law have far the more immediate impact) and of course in bans on male circumcision.
Pike & Doyle at the High Court: forum non conveniens and the need for distinguishing Rome II and Brussels I
In Pike & Doyle v the Indian Hotels Company Limited, the High Court withheld its jurisdiction in the case of two (surviving but injured) victims of the Mumbai terror attacks. The UK Human Rights Blog has a posting on the forum non conveniens side of the case. I would like to point to some interesting observations in the judgment on the impact of the interpretation of the special jurisdictional rule for tort under the Jurisdiction Regulation (Brussels I).
The First Claimant suffers continuing pain and loss of amenity and substantial economic losses caused by his injuries. The Second Claimant sustained loss of earnings in England and Wales and has a continuing loss in the form of counselling. On that basis both Claimants have therefore suffered indirect or secondary damage as a result of the Defendants’ alleged negligence in Mumbai. The Claimants’ submission is that this is sufficient to found jurisdiction. The Defendants challenge this.
In support of their claim, defendant relied essentially on the impact which EU law suo arguendo has on the interpretation of the relevant English rules of procedure: as summarised by Stewart J (at 12):
The Defendants’ submission is as follows:
(i) Before 1 January 1987 RSC order 11 rule 1(1)(h) required a plaintiff to establish that the action was “founded on a Tort committed within the jurisdiction”. The test was “where in substance did the cause of action arise?” (Distillers Co Ltd v Thompson [reference omitted]).
(ii) On 1 January 1987 the rule changed such that the new RSC order 11 rule 1(1)(f) became “the claim is founded on a Tort and the damage was sustained, or resulted from an act committed, within the jurisdiction.” The change was made to give effect to Article 5(3) of the Brussels Convention and the decision of the European Court in Handelskwekerij G.J. Bier B.V. v Mines Potasse d’Alsace S.A. [reference omitted]
[references to further precedent omitted]
(iii) The European Rules do not allow indirect secondary damage to found jurisdiction.
Dumez France v Hessische Landesbank [reference omitted]). Marinari v Lloyds Bank plc [reference omitted]). [references to further precedent omitted]
(iv) This is all accepted and is in line with the original Bier case where the European Court held that where an act occurred in one Member State and the damage occurred in another, the Claimant could sue the Defendant in the Courts of either state. (…)
(v) Given the above, the Court should apply normal principles of interpretation to the rule namely: delegated legislation is construed in the same way as an Act, the starting point is to ascertain the legislative intention and the person seeking to understand that intention must do so in the light of the enactment and its purpose. The interpretation must be an informed one [references omitted]
(vi) Therefore since the pre 1987 law would not have allowed indirect secondary damage to found jurisdiction and since the purpose of the change was to align the RSC (subsequently CPR) with the European rules which do not allow such a founding of jurisdiction, the rules should be interpreted consistently with the European cases.
Stewart J disagreed and precedent did before him. Absent the European context – for defendant is not domiciled in the EU and the Brussels I-Regulation does not otherwise apply, there is no reason to assume that the relevant English rules cannot be applied taking into account indirect damage as a jurisdictional basis for the English courts: Tugendhat J had already held so with reference to the preparatory works of the relevant change to the Rules of Procedure. He effectively found that Parliament did not fully assimilate the rules relating to non party states with those relating to states which are a party; it effectively wanted their to be a wedge between the application of the jurisdictional rule for tort in and outside the Brussels-I context.
Neither, Stewart J held, can Rome II come to the defendants’ rescue. This was an attempt by defendants to recycle the limitation to Article 5(3) of the Brussels I Regulation. No reference to this was made in the judgment however a prima facie forceful recital in the Rome II Regulation is recital 7: The substantive scope and the provisions of this Regulation should be consistent with Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I) and the instruments dealing with the law applicable to contractual obligations.
Since Rome II harmonises applicable law for tort even if the national court withholds jurisdiction on the basis of its residuary jurisdictional rules (such as here, given that Brussels I does not apply), this bridge between the various Regulations might resurrect the relevance of the Dumez France and Marinari limitations to the judgment in Bier.
Stewart J however was not swayed and referred to Sir Robert Nelson in Stilyanou:
- Brussels 1 relates to a different subject matter, namely jurisdiction, and has to be construed as a separate regulation, albeit consistently with the other regulations forming part of the compatible set of measures.
- Rome II does not abolish the discretion which has to be exercised under the CPR in relation to non Member States.
- Article 2 on its face is wide enough to include any damage direct or indirect which the regulation as a whole covers. Article 4(1) expressly excludes indirect damage which would otherwise be included by virtue of Article 2. There is no reason why “damage” under the CPR should be interpreted as in a specific Article such as Article 4 which defines the applicable law, rather than interpreted as a general article such as Article 2 which applies to the regulation as a whole (apart from Article 4).
- Inconsistencies in the meaning of damage may exist as the tests are different under Brussels 1, Rome II and CPR. The latter includes the exercise of the discretion and hence consideration of forum conveniens to ensure the proper place for the trial is selected, whereas Brussels 1 and Rome II do not.
- Rome II does not concern jurisdiction and does not override CPR 9(a). Where Brussels I does not apply, the issue of jurisdiction will be governed by a country’s own rules ie. in England and Wales the CPR
Neither Stewart J nor Sir Robert refer to recital 7 Rome II however their arguments in my view are supported post their findings by the ECJ judgment in Kainz.
A very interesting case for many aspects of conflicts law.
The EU Commission has launched its update to the Stockholm program, its agenda for the EU’s judicial area. Conflict of laws is part of the EU’s judicial area program, whence part of the new program (with reference to its professed location of adoption one ought to call it the Strasbourg program) relates to conflicts.
It is in this respect heartening to see that conflicts is mentioned in particular with respect to the ambition to codify (or at least the ambition to review the suitability of codification). However stock taking and slowing the legislative pace is not mentioned. Whether that will happen, one imagines, will to a considerable degree depend on the priorities of the future commissioner.
Ragn-Sells: Court leaves open violation of primary EU law by waste shipments Regulation – Free movement of services question left unanswered
The ECJ’s December judgment in Ragn-Sells Case C-292/12 came recently to my attention in revisiting the waste ownership and freedom to provide services question for a brief. The case concerns the combined application of the waste framework Directive, the waste shipments Regulation, the public procurement Directives, the free movement of goods and of services, and, for good measure, competition law, exclusive rights and abuse of dominant position.
The dispute in the main proceedings concerns the lawfulness of contract documents stipulating that mixed municipal waste had to be transported to the landfill facility which was the subject-matter of an earlier public procurement procedure — located 5 km from the contracting town, whilst industrial and building waste was to be taken to a landfill site, located 25 km away.
Not all of these issues were addressed by the ECJ, though: for the issue relating to competition law /creation of exclusive rights which might lead to abuse of dominant position, not enough information had been furnished by the national court.For the issue of free movement of services, there was nothing in the file submitted to the Court indicating that undertakings established in other Member States have been interested in treating waste produced in the territory of the municipality at issue.
The latter especially is a pity (on the competition issue there is plenty of case-law): for the extent of free movement of services in the waste sector (and environmental services generally), is not at all clearly laid out in case-law. Hint for those wanting to use free movement of services arguments in their struggle against restrictive national measures: ensure paper trail of, or indeed if need be, trigger, foreign interest in the waste streams provided.
The Court did entertain the free movement of goods questions. As regards, first of all, waste destined for disposal operations and mixed municipal waste, it follows, the Court held, from Article 11(1)(a) of Regulation No 1013/2006, read in the light of recital 20 in the preamble thereto, and Article 16 of Directive 2008/98, that the Member States may adopt measures of general application restricting shipments of that waste between Member States, in the form of general or partial prohibitions of shipments, by way of implementation of the principles of proximity, priority for recovery and self-sufficiency under Directive 2008/98. By analogy the court then applied Case C‑209/98 Sydhavnens to find eventually that ‘Accordingly, in the case of waste destined for disposal operations and mixed municipal waste collected from private households and, as applicable, other producers, a Member State may confer on local authorities, on the geographical scale it deems appropriate, powers to manage the waste produced on their territory in order to ensure compliance with its obligations under Article 16 of Directive 2008/98. Those authorities may, as part of the powers conferred upon them, provide that those types of waste will be treated in the nearest appropriate facility (at 63).
I continue to argue that especially with respect to mixed municipal waste, this room for manoeuvre provided for by the Regulation combined with the Directive, itself is incompatible with primary EU law. However I am not sure how much longer I can argue that as a result of judicial economy, the ECJ has never really properly addressed this question.
As regards, secondly, shipments of waste destined for recovery operations, other than mixed municipal waste, the Court by contrast held that the combined effect of Regulation and Waste Framework Directive does not provide for the possibility for a national authority to adopt a measure of general application having the effect of prohibiting, totally or partially, shipments of such waste to other Member States for treatment.
In summary, some remaining doubt re free movement of goods (primacy EU law) in my mind. Undoubtedly a lot of remaining doubt re free movement of services. Waste law and free movement: they continue to fascinate!