BNP Paribas: The impact of earlier jurisdictional findings on res judicata /issue estoppel.

I reported earlier on the jurisdictional issues in BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA [2020] EWHC 2436 (Comm) . In current judgment the issue of interest to the blog is the possibility of res judicata /issue estoppel on  the substance of the claim as a result of arguments made in the jurisdictional challenge.

The issue is an important one given the English (potentially other States’) courts’ inclusion of a ‘serious issue to be tried’ test in which the judge has to decide to ‘much the better of the argument’ standard at the jurisdictional gateway level. While aimed at determining jurisdiction, this inevitably engages with some discussion on the merits.

Cockerill J is justifiably cautious in accepting much estoppel, given the clear separation between jurisdictional and substantial discussions. I do feel she might have pointed out the relevance of the case being heard under Brussels Ia rules as opposed to residual English rules. Under the former, a certain amount of merits engagement may be required for some jurisdictional gateways as discussed repeatedly on the blog (and in the jurisdictional rulings there was clearly a lot of engagement with the facts, to establish Article 25 consent for choice of court). But there can certainly not be a ‘serious issue to be tried’ condition for the substance of the case, in the jurisdictional gateways of BIa (summary dismissal proceedings are an entirely different matter).

Geert.

 

Wikingerhof v Booking.com. Saugmandsgaard AG on the qualification in contract or tort of alleged abuse of dominant position between contracting parties. Invites the Court to confirm one of two possible readings of Brogsitter.

Saugmandsgaard AG opined yesterday in C-59/19 Wikingerhof v Booking.com (no English version of the Opinion at the time of writing). At issue is whether allegations of abuse of dominant position create a forum contractus (Article 7(1) Brussels Ia) or a forum delicti (A7(2) BIa).

I published on jurisdiction and applicable law earlier this year and I am as always genuinely humbled with the AG’s (three) references to the handbook.  Wikingerhof submits inter alia that it only ever agreed to Booking.com’s general terms and conditions (‘GTCs’) because Booking.com’s dominant position leaves it no choice. And that it had most certainly not agreed to updates to the GTCs, effected via amendments on the ‘Extranet’, which is the portal via which the hotel may update its information and retrieve reservations.

At 16 of its referral, the Bundesgerichtshof holds acte clair and therefore without reference to the CJEU that there is no durable record of the alleged consent by Wikingerhof of the amended GTCs, including choice of court. Booking.com claimed these amounted to a ‘form which accords with practices which the parties have established between themselves’ pursuant to Article 25(1)(b). This finding echoes the requirements of housekeeping which I signalled yesterday.

In my 2020 paper I point out (p.153) inter alia that in the context of Article 25’s choice of court provisions, the CJEU in C-595/17 Apple v eBizcuss suggested a fairly wide window for actions based on Article 102 TFEU’s prohibition of abuse of dominant position to be covered by the choice of court. At 28 in Apple v eBizcuss: ‘the anti-competitive conduct covered by Article 102 TFEU, namely the abuse of a dominant position, can materialise in contractual  relations that an undertaking in a dominant position establishes and by means of contractual terms’. The AG as I note below distinguished Apple on the facts and applicable rule.

In the request for preliminary ruling of the referring court, CJEU C-548/12 Brogsitter features repeatedly. The Bundesgerichtshof itself is minded to hold for forum delicti, given that (at 24 of its reference)

‘ it is not the interpretation of the contract that is the focus of the legal disputes  between the parties, but rather the question of whether the demand for specific contractual conditions or the invoking of them by a company with an — allegedly — dominant market position is to be regarded as abusive and is therefore in breach of provisions of antitrust law.

In fact on the basis of the request, the court could have held acte clair. It referred anyway which gives the AG the opportunity to write a complete if  to begin with concise précis on the notion of ‘contract’ and ‘tort’ in BIa. At 38, this leads him to conclude inter alia that despite the need strictly to interpret exceptions to the A4 actor sequitur forum rei rule, these exceptions including the special jurisdictional fori contractus ut delicti, must simply be applied with their purpose in mind.

He calls it an application ‘assouplie’, best translated perhaps as ‘accommodating’ (readers may check this against the English version when it comes out) (viz tort, too, the AG uses the term assouplie, at 45, referring eg to CJEU C-133/11 Folien Fisher).

Further, the AG notes that in deciding whether the claim is one in contract, necessarily the claimant’s cause of action has an impact, per CJEU C-274/16 Flightright (at 61 of that judgment, itself refering to C‑249/16 Kareda which in turn refers to 14/76 De Bloos). The impact of claimant’s claim form evidently is a good illustration of the possibility to engineer or at least massage fora and I am pleased the AG openly discusses the ensuing forum shopping implications, at 58 ff. He starts however with signalling at 53 ff that the substantive occurrence of concurrent liability in contract and tort is subject to the laws of the Member States and clearly differs among them, making a short comparative inroad e.g. to English law, German law and Belgian /French law. (Michiel Poesen recently wrote on the topic within the specific context of the employment section).

The AG’s discussion of CJEU authority eventually brings him to Brogsitter. He he firmly supports a minimalist interpretation.  This would mean that only if the contractual context is indispensable for the judge to rule on the legality or not of the parties’ behaviour, is forum contractus engaged. This is similar to his Opinion in Bosworth, to which he refers. He rejects the maximalist interpretation. This approach puts forward that contractual qualification trumps non-contractual (arguably, a left-over of CJEU Kalfelis; but as the AG notes at 81: there is most certainly not such a priority at the applicable law level between Rome I and II) hence the judge regardless of the claimant’s formulation of claim, must qualify the claim as contractual when on the facts a link may exist between the alleged shortcomings of the other party, and the contract.

The maximum interpretation, at 76 ff, would require the judge to engage quite intensively with the merits of the case. That would go against the instructions of the CJEU (applying the Brussels Convention (e.g. C-269/95 Benincasa)), and it would (at 77) undermine a core requirement of the Brussels regime which is legal certainty. That the minimalist approach might lead to multiplication of trials seeing as not all issues would be dealt with by the core forum contractus, is rebuked at 85 by reference to the possibility of the A4 domicile forum (an argument which the CJEU itself used in Bier /Mines de Potasse to support the Mozaik implications of its ruling there) and by highlighting the Regulation’s many instances of support for forum shopping.

The AG then discusses abusive forum shopping following creative claim formulation at 88 ff. This  is disciplined both by the fact that as his comparative review shows, the substantive law of a number of Member States eventually will not allow for dual characterisation and hence reject the claim in substance. Moreover clearly unfounded claims will be disciplined by lex fori mechanisms (such as one imagines, cost orders and the like). This section confuses me a little for I had understood the minimalist approach to lay more emphasis on the judge’s detection of the claim’s DNA (along the lines of Sharpston AG in Ergo) than on the claim’s formulation.

The AG then continues with further specification of the minimalist approach, including at 112 a rejection, correct in my view (for the opposite would deny effet utile to A7(2), of the suggestion to give the A7(1) forum contractus the ancillary power to rule of over delictual (A7(2)) issues closely related to the contractual concerns.

Applying the minimalist test to the case at issue the AG concludes that it entails forum delicti, referring in support to CDC and distinguishing Apple v eBizcuss (which entails choice of court and relies heavily on textual wording of the clause).

It will be interesting to see which of the two possible interpretations of Brogsitter the CJEU will follow and whether it will clarify the forum shopping implications of claim formulation.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9.

 

Koksokhimtrans v Cool Consulting. The Dutch SC on E-mail proof and dispute resolution.

An interesting exchange with fellow practitioners on Twitter yesterday reminded me of this post which I have had in the draft folder since some time in June.  Back in February, the  Dutch SC confirmed the approach of the lower courts and the Court of Appeal on the correct approach to e-mail evidence and the existence of specific dispute resolution clauses. Here: an agreement to arbitration. The result is that a London-issued arbitral award cannot be enforced in The Netherlands.

When I flagged the case on Linked-in in June I observed there were two approaches to the judgment. Some emphasise the Courts’ refusal to recognise the validity of the agreement to arbitrate made by e-mail, in the face of what is common and very informal practice in the shipping industry /charterparty; others point more practically to parties having to be prepared to prove the authenticity of electronic correspondence.

Defendant did not enter an appearance but the lower Court in earlier ruling was alarmed by the print-out of e-mails allegedly containing the ‘agreement’ in the charterparty looking dodgy (there were for instance various white blots). It proprio motu pursued originality research. In subsequent rulings confirmed and completed by the Court of Appeal, the courts were not satisfied by the originality research, among others because the claimant’s ‘independent’ expert was an ICT employee with the law firm involved in the case.

Procureur Generaal Vlas with the Hoge Raad in his Opinion in December 2019, discussed the slight differences between the 1958 New York Convention and the Dutch law on the evidence required (with the Dutch rules in fact being more relaxed), and the nature and content of guidelines issued for the interpretation of the Convention. He advised to follow the lower court’s approach not because of some grand statement in principle but rather because he could not see fault in the courts’ factual observation of lack of independent and objective proof of authenticity. The Supreme Court followed in the most succinct of ways, without justifying rejection of the appeal. It is entitled to do so in cases where its findings have no impact on the unity in application of the law, indicating that the factual observations swayed the SC.

‘Before e-mail’ (my kids would respond to that ‘yes dad, when you got to work on horse and cart’) printers and warehouse assistants where a key link in the chain of general terms and conditions – GTCs. They needed to ensure the right content ended up on the right printed, blank order forms, and ended up with the right wholesalers, sales agents etc. – to be repeated every single time these GTCs were amended; and many a litigation has begun with sales agents continuing to use old forms ‘because it would be a shame to throw all that paper’. Fast forward to electronic correspondence, and website managers and general ICT staff have now assumed that role. In the context of any dispute resolution, they need to ensure everyone has the right e-mail footer, properly functioning link to the right version of the GTCs on the website, etc. They also need to have protocols in place to ensure authentication is thought of proactively. Lack of such proper electronic housekeeping leads to results no different than when sales agents continued to use the old paper forms.

Geert.

 

 

Stephenson Harwood v MPV (and Kagan). On interpleader (‘stakeholder’) actions and when engagement with the merits of the case leads to submission under Lugano.

In Stephenson Harwood LLP v Medien Patentverwaltung AG & Ors [2020] EWHC 1889 (Ch), proceedings were triggered by funding arrangements and alleged success fee entitlements following patent infringement proceedings. MPV is Swiss-based.

The action is an ‘interpleader’ one, now called a ‘stakeholder’ action: as Lenon DJ at 34 described, it is a ‘means by which a court (at the request of claimant, who typically holds property on behalf of one of the parties, GAVC) compels competing claimants to the subject matter of the application to put forward their claims and have them adjudicated on, thereby enabling the stakeholder to drop out of the picture.’

In the English residual private international law, stakeholder actions ground jurisdiction on the basis of the defendant’s property being present there. This is the kind of assets- based jurisdiction which the EC, but not the other Institutions, had wanted to introduce in Brussels Ia. As a result of the Brussels Convention’s Article 3 (materially the same as Article 3 Lugano), these actions became part of residual rules which could no longer be invoked against EU /Lugano States based defendants.  In the Schlosser report on the UK’s accession to the Brussels Convention, to which the judge refers at 40, it was said

“Interpleader actions (England and Wales) … are no longer permissible in the United Kingdom in respect of persons domiciled in another Member State of the Community, in so far as the international jurisdiction of the English or Scottish courts does not result from other provisions of the 1968 Convention. This applies for example, to actions brought by an auctioneer to establish whether ownership of an article sent to him for disposal belongs to his customer or a third party claiming the article.”

An alternative jurisdictional gateway therefore needs to be found. The discussion turned to submission (aka voluntary appearance) and CJEU C-150/80 Elefanten Schuh GmbH v Pierre Jacqmain. In particular, MPV completed the acknowledgment of service form indicating that it intended to contest Stephenson Harwood’s claim, did not tick the box saying that it intended to dispute jurisdiction and set out its own claim for payment of the Monies which it intended to pursue in the stakeholder application and stating its intention to exchange evidence. It then served and filed two witness statements in support of that claim addressing the merits and rebutting Mr Kagan’s claim. As the judge notes at 49,

MPV’s case that it has not submitted to the jurisdiction depends on the Court accepting the premise that it is open to MPV to distinguish for jurisdictional purpose between Stephenson Harwood’s claim (in relation to which MPV has raised no jurisdictional dispute) and Mr Kagan’s claim made as part of the stakeholder proceedings (in relation to which MPV does dispute jurisdiction). It is on this basis that MPV simultaneously asks the Court to order payment of the Monies to itself, as a disposal of the stakeholder application, while disputing the jurisdiction of the Court to determine Mr Kagan’s claim to the Monies.

However Lenon DJ holds that appearance was entered, as Mr Kagan’s claim is part and parcel of the stakeholder application and cannot be separately rejected at the level of jurisdiction. The level of engagement with the claim amounts to voluntary appearance viz both parties. At 53 obiter discussion of other gateways is pondered but not further entertained for lack of proper discussion by the parties.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 1, Heading 1.3.1,

Bank of Baroda v Maniar. The impact of the lex concursus on personal guarantees.

It was a year ago since I started writing up this post – I must have gotten distracted, for I continue to find the issues both relevant and interesting. In Bank of Baroda v Maniar & Anor [2019] EWHC 2463 (Comm) (not appealed to my knowledge),  Pearce J considered the attempt by an Indian Bank (with business activities in the UK) to enforce personal guarantees given in respect of the liability of an Irish-registered company (which had been set up by the guarantors) under a credit facility. The Irish company had entered into examinership under Irish law, and the Irish courts had approved a scheme of arrangement. Of interest to the blog is whether the bank had properly served notice on the guarantors, in accordance with the Companies Act 2014 (Ireland) s.549.

Claimant referred inter alia to the Gibbs rule, which I discussed in my posting on [2018] EWHC 59 (Ch) International Bank of Azerbaijan , since confirmed by the Court of Appeal. Defendants rely ia on Article 4 of the EIR 2000, Regulation 1346/2000, materially applicable to the proceedings:  “(1)…the law applicable to insolvency proceedings and their effects shall be the law of the Member State within the territory of which such proceedings are opened…(2) The law of the State of the opening of proceedings shall determine the conditions of the opening of those proceedings, their conduct and their closure. It shall determine in particular: .. j. The conditions for and the effects of closure of insolvency proceedings, in particular by composition; k. Creditors’ rights after the closure of insolvency proceedings.”

Claimant concedes that law of the State of the opening, namely Irish law, may be required to be given effect under the EIR, however argues that effect is limited to those aspects of Irish insolvency law which are necessary for the insolvency proceedings to fulfil their aim, and that Section 549 of the Irish Company Act (which concerns the preservation of the right to pursue guarantors) does not fall within the ambit of “the law applicable to insolvency proceedings” to which Article 4(1) of EIR applies.

In other words Claimant does not entertain the possibility of what was Article 13 in the 2000 EIR and is now Article 16 in the 2015 EIR, also applied by the CJEU in Nike, Kornhaas and Lutz. Rather, it more straightforwardly argues that relevant sections of the Irish Company Act are simply not within the scope of the lex concursus and that (at 84) the law governing the guarantees is English law per Article 4 Rome I.  At 109 Pearce J ultimately rather concisely holds

The important point here is the potential effect of a Section 549 offer on creditors’ meetings. The fact that the making of such an offer gives rise to the possibility of the guarantor accepting the offer and exercising the voting rights of the creditor at a members’ meeting creates a significant connection between the notice and the conduct of the examinership itself. This brings the procedure within the ambit of Article 4 of EIR. (now Article 7 EIR 2015 – GAVC)

Why the relation with the carve-out of Article 13 (now 16) was not discussed is not clear to me, particularly as at 156 ff there is discussion of Article 15 (now 18)’s provision : The effects of insolvency proceedings on a lawsuit pending concerning an asset or a right of which the debtor has been divested shall be governed solely by the law of the Member State of which that lawsuit is pending.”) 

Claimant not having discussed Article 13 (16), presumably did not raise the possibility of an appeal, either. 

The remainder of the discussion then turns to the validity of service under Irish law,  to be judged by an English judge. With Pearce J at 138 and 143 I see no reason why the EIR would stand in the way of an English judge so applying the lex concursus, even if an Irish judge would do so with an amount of discretion. At 152 and 154, after consideration, service was deemed not to have been valid.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 5, Heading 5.7.

Supreme Sites Services: Immunity of international organisations and ‘civil and commercial’. CJEU holds with emphasis on the provisional nature of the proceedings and the ordinary contractual nature of the goods supplied.

María Barral Martínez and I reviewed Saugmandsgaard Øe’s Opinion in C-186/19 Supreme Site Services v SHAPE here – see also references to earlier postings in that report. The Court held yesterday. The case involves both Article 1 Brussels Ia, on the issue of ‘civil and commercial’ and the impact on same of claimed immunity; and on the application of Article 24(5)’s exclusive jurisdictional rule for proceedings ‘concerned with the enforcement of judgments’.

The case concerns SHAPE’s appeal to a Dutch Court to lift the attachment aka ‘garnishment’ of a Belgian NATO /SHAPE escrow account by Supreme Services GmbH, a supplier of fuel to NATO troops in Afghanistan. In 2013, Supreme and Allied Joint Force Command Brunssum (JFCB), the Netherlands-based regional headquarters of NATO, set up an escrow bank account in Belgium with the goal of offsetting any contingent liabilities on both sides at the end of Basic Ordering Agreements (BOAs). Supreme Services in 2015 initiated proceedings against SHAPE and JFCB in the Netherlands arguing that the latter parties had not fulfilled their payment obligations towards Supreme. It also attached the account in Belgium.

Maria earlier discussed the oddity that the Dutch Court of Appeal in the meantime has already held on the merits of the case. Shape submitted at the CJEU that this, and the fact that the Belgian courts executed their Dutch counterpart’s lifting of the garnishee order following the Dutch-Belgian 1925 Bilateral Convention, meant the questions had become largely inadmissible. The CJEU disagrees: the case before it has been referred by the Supreme Court, and that court has exclusive power under national law to determine how much it can still interfere in the substance of the case, which is still very much ‘alive’ therefore.

A first issue under discussion was whether the garnishment order, which the Court per C‑261/90 Reichert and Kochler qualifies as ‘provisional, including protective measures’ under (now) Article 35 BIa, concerns ‘civil and commercial matters’. Among others Greece and Shape argue that the nature of the substantive proceedings determines this exercises, while the CJEU, following the view of ia the EC, BEN and NL, insists it is the nature of the rights which the provisional and protective measure seek to safeguard, that must rule that exercise – support is found in 143/78 de Cavel. This finding reinforces the particular nature of ‘provisional, including protective measures’ in the set-up of the Regulation.

On the impact of claimed immunity on the subsequent qualification as ‘civil and commercial’, reference is of course made to the CJEU’s May judgment in C-641/18 Rina which I reviewed here. The Court extends its reasoning there to here despite the fact that as it notes at 61, States’ immunity is automatic and based on par in parem non habet imperium, while for international organisations it is not automatic and has to be conferred by the treaties establishing those organisations. Per Rina the CJEU assesses whether the international organisation acted iure imperii, for which of course it has a range of predecent available. At 66 it emphasises that how the organisation uses the supplied goods (here: to support the military campaign in Afghanistan) does not impact on the nature of the relationship it has with the supplier. The Court ends by instructing the Dutch SC to carry out the necessary factual checks however it suggests that in casu neither the legal relationship between the parties to an action such as that in the main proceedings nor the basis and the detailed rules governing the bringing of that action (here: the ordinary Article 705(1) of the Dutch CPR) can be regarded as showing the exercise of public powers for the purposes of EU law.

On the issue of Article 24(5), the Court takes a restrictive view as it becomes all elements of Article 24: reference here is made to CJEU C-722/17  Reitbauer: only proceedings relating to recourse to force, constraint or distrain on movable or immovable property in order to ensure the effective implementation of judgments and authentic instruments fall within A24(5)’s scope.

I trust public international lawyers will have more to say about the PIL implications of the judgment.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.2.2.

East-West logistics: debatable COMI determination in the case of an insolvent virtual trading company, and proprio motu obligations of the judge.

In  East-West Logistics LLP v Melars Group Ltd [2020] EWHC 2090 (Ch), at issue was COMI – Centre of Main Interests determination under Regulation 2015/848 of a  trading company incorporated in BVI, until 10 December 2015. It then moved its registered office to Malta, two months after service of the claim form in BVI proceedings and a month after acknowledging service, with regard to a charterparty gone wrong.

CJEU Interedil including its insistence on third-party observability, is the main authority called upon by parties. Baister DJ adds Northsea Base Investment in particular and notes at 22

Because this company traded virtually rather than physically, much of the case law is of little assistance: it deals largely with companies of substance that have a headquarters, offices, a tangible physical presence or assets or staff who are located and work somewhere or other.

He also notes, at 23 and I agree, that the forum shopping which the company had clearly engaged in, is not of itself of material relevance (despite nota bene the Regulation’s recitals betraying a contempt for forum shopping): ‘a debtor is entitled to move his centre of main interests and to do so for self-serving reasons. The question is whether the move is real or illusory.’ Baister DJ refers to Shierson v Vlieland-Boddy [2005] EWCA Civ 974 which albeit held early in the life of the (previous) EU Insolvency Regulation continues to have relevance.

The judge comments at 22 that ‘there appears to have been no attempt to notify any third party of the move: no evidence is given of the company’s having done so; on the contrary,…, the company continued to use a BVI address after the move’ – which could make one think that in fact BVI should emerge as a strong contender for COMI – even if seemingly neither party suggested it was.

The judge at 27 emphasises the proprio motu instruction of the EIR, i.a. in Article 4: a judge cannot ‘avoid the obligation imposed on it by the Regulation to “examine of its own motion whether the centre of the debtor’s main interests…is actually located within its jurisdiction,..”: the place of registered office is not a fallback in case parties do not provide proper evidence: the judge must examine COMI on the facts himself.

Then follows an admirably serious engagement with the few elements present in the case, leading to Baster J opting for England as COMI: at 54:

I conclude on the basis of the documentary material, the location of the company’s banking facilities from time to time, the location of its legal advisers, the location of at least one judgment creditor to which a debt was to be paid and the place where the company was involved in litigation that at the relevant time the company was administering its interests in both the UK and Switzerland so that both were centres of the company’s interests. I conclude, by a narrow margin and with misgivings, that on balance the greater use of English law for contracts, the greater use of London as a seat of arbitration, the actual recourse to or forced involvement in legal proceedings here and the consequential use of English lawyers makes the UK, on the balance of probabilities, the main centre of those interests. The company’s affairs seem to have been conducted in this country more than in Switzerland, certainly as far as contractual and litigation interests were concerned, although it is, I accept, hard to be precise.

I tend to disagree and I believe it is at 35 that the mistake is being made:

Locating the company’s centre of main interests in Malta rests on its registered office being there and no more than that. There is unchallenged evidence from the petitioner that there is no operational office and no one conducting the business of the company there. The registered office is a “letter box” and no more. It follows that if the company “conducts the administration of its interests on a regular basis elsewhere” such that that “is ascertainable by third parties,” that “elsewhere” can only be either the UK or Switzerland.

The Registered office presumption despite its rebuttability, remains a presumption. If on the facts, ‘the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties’ (definition of COMI in A3(1) EIR) does not clearly point to another place than the registered office, the presumption must remain in place. In the case at issue, the starting point seems rather to have been to establish either the UK or Switserland as COMI. In doing so the judge I feel did not give enough weight to the COMI presumption. Even with the proprio motu instruction, the judge must not scavenge for alternative COMI; there must be convincing evidence of the alternative, which I do not think from the judge’s description, is available here.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.2.Heading 5.6.1.2.4.

Traxis: on forum non and burden of proof.

Traxys Europe SA v Sodexmines Nigeria Ltd [2020] EWHC 2195 (Comm)  concerns the alleged dishonest substitution by Sodexmines Nigeria Limited in Nigeria in 2018 of a virtually worthless product in place of a valuable tin product which it had agreed (with choice of court and law pro England) to sell to the Claimant, Traxys Europe SA.  Second defendant is the beneficial owner and alter ego of the First Defendant (note at 31 Teare J’s insistence that they are legally separate and distinct persons). Permission to serve Mr. Ali out of the jurisdiction was granted on the basis that he was a necessary and proper party to the claim against First Defendant and that England is the proper place in which to bring the claim.

Mr Ali has applied for a stay (oddly not: an application to set aside the service order) on forum non conveniens grounds, which would ordinarily per Lord Goff in Spiliada (see discussion at 9 ff) with Teare J here at 11 holding he

‘should have regard to the substance of the matter, namely, that this is a case where the Claimant was not entitled to commence proceedings against Mr. Ali “as of right” (the expression used by Lord Goff at p.481 E) but needed to persuade the court, not only that there was a jurisdictional gateway permitting service out, but also that England was the forum conveniens for the claim against Mr. Ali. Thus, notwithstanding that as a matter of form and language Mr. Ali is seeking a stay, I consider that once battle lines were drawn as to whether England was the forum conveniens the burden lay on the Claimant to establish that England was the forum conveniens.’

At 16-17 arguments for both are listed, summarily discussed (per Lord Briggs’ instruction in Vedanta) with conclusion at 38

the claim against him lies in tort. The events which have given rise to those claims took place (in the main) in Nigeria. The witnesses upon whom the Claimant will rely to establish their claim against Mr. Ali are in Nigeria. In truth this is a Nigerian case, not an English case. The centre of gravity of the case is in Nigeria, not in England. To use the phrase used in one of the cases to which I was referred “the fundamental focus of the litigation” is on Nigeria, not England.

Of note is that the contractual and in all likelihood tort case against the first defendant will go ahead. I am not au fait whether leave to appeal was granted. On burden of proof, Teare J’s findings are quite relevant and must be I imagine subject to differences of view.

Geert.

Bauer v QBE Insurance. Brussels IA, Rome I and Rome II in Western Australia.

It is not per se unheard of for European conflict of laws developments to be referred to in other jurisdictions. In Bauer v QBE Insurance [2020] WADC 104 however the intensity of reference to CJEU authority and EU conflicts law is striking and I think interesting to report.

The context is an application to serve out of jurisdiction – no ‘mini trail’ (Melville PR at 20) therefore but still a consideration of whether Western Australia is ‘clearly an inappropriate forum’ in a case relating to an accident in Australia following an Australian holiday contract, agreed between a German travel agent and a claimant resident (see also below) in Germany but also often present in Australia – which is where she was at the time the contract was formed. Defendant contests permission to serve ia on the basis of an (arguable) choice of court and governing law clause referring exclusively to Germany and contained in defendant’s general terms and conditions.

Two other defendants are domiciled in Australia and are not discussed in current findings.

In assessing whether the German courts have exclusive jurisdiction and would apply German law, the Australian judge looks exclusively through a German lens: what would a German court hold, on the basis of EU private international law.

Discussion first turns to the lex contractus and the habitual residence, or not, of claimant (who concedes she is ‘ordinarily’, but not habitually resident in Germany) with reference to Article 6 Rome I’s provision for consumer contracts. This is applicable presumably despite the carve-out for ‘contracts of carriage’ (on which see Weco Projects), seeing as the contract is one of ‘package travel’. Reference is also then made to Winrow v Hemphill.  Melville PR holds that claimant’s habitual residence is indeed Germany particularly seeing as (at 38)

she returned to Germany for what appears to be significant and prolonged  treatment after the accident rather going elsewhere in the world and after only apparently having left her employment in Munich in 2014, is highly indicative of the fact the plaintiff’s state of mind was such that she saw Germany as her home and the place to return to when things get tough, a place to go to by force of habit.

Discussion then turns to what Michiel Poesen has recently discussed viz contracts of employment: qualification problems between contract and tort. No detail of the accident is given (see my remark re ‘mini-trial’ above). Reference to and discussion is of Rome II’s Article 4. It leads to the cautious (again: this is an interlocutory judgment) conclusion that even though the tort per Article 4(3) Rome II may be more closely connected to Australia, it is not ‘manifestly’ so.

Next the discussion gets a bit muddled. Turning to jurisdiction, it is concluded that the exclusive choice of court is not valid per Article 25 Brussels Ia’s reference to the lex fori prorogati.

  • Odd is first that under the lex contractus discussion, reference is made to Article 6 Rome I which as I suggested above presumably applies given that the carve-out for contracts of carriage does not apply to what I presume to be package travel. However in the Brussels Ia discussion the same applies: contracts of carriage are excluded from Section 4’s ‘consumer contracts’ unless they concern (as here) package travel.
  • Next, the choice of court is held to be invalid by reference to section 38(3) of the German CPR, which to my knowledge concerns choice of court in the event neither party has ‘Gerichtsstand’ (a place of jurisdiction’) in Germany.  Whatever the precise meaning of s38(3), I would have thought it has no calling as lex fori prorogati viz A25 BIa for it deals with conditions which A25 itself exhaustively harmonises (this argument might be aligned with that of defendant’s expert, Dr Kobras, at 57). Moreover,  the discussion here looks like it employs circular reasoning: in holding on the validity of a ‘Gerichtsstand’, the court employs a rule which applies when there is no such ‘Gerichtsstand’.
  • Finally, references to CJEU Owusu and Taser are held to be immaterial.

In final conclusion, Western Australia is not held to be a clearly inappropriate forum. The case can go ahead lest of course these findings are appealed.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2.

Free movement of capital and sustainable forest management. The CJEU in Huijbrechts.

Disclosure I represented the Flemish Region at the Court of Justice. I wrote this post on 11 December 2018. Given that the interpretation of the judgment has a bearing on the proceedings in the national court, I decided to hold back on posting  until those proceedings would have met their national end – which they still have not. Seeing as I thought the case might be of interest I decided to go ahead now anyway.

In C-679/17 Huijbrechts the European Court of Justice held in a fashion which is fairly typical of free movement of capital cases. The Court treads carefully. Positive harmonisation of tax law is difficult for the EU to achieve for this requires unanimity. Tax measures having a direct impact on free movement of capital, too strict an enforcement of the latter may be read as tax harmonisation via the back door.

The case at issue concerns a measure by the Flemish Region of Belgium to exempt sustainable managed forests from death duties (inheritance tax). The exemption is subject to there being a forest management plan, agreed with the relevant agency, and subject to a 30 year follow-up period (should in the interim the forest no longer be sustainably managed, the heirs pay the tax pro rata the remainder of the 30 year period). The heirs concerned did not enjoy the exemption for the forests are located outside the region and suggest this is an infringement of the free movement of capital.

Defence against suggestions of infringement of Article 63 TFEU’s free movement of capital rule typically follow the following sequence: free movement is not impacted; should this fail: the domestic and foreign situation are not objectively comparable; should this fail, per C‑256/06 Jäger, public interest requires an exemption (subject to a suitability and a proportionality test).

A crucial part of free movement judgments entails having to read the judgment with an eye on the factual circumstances: the Court typically employs a formula that reads something like ‘in circumstances such as those at issue in the national proceedings’ or ‘in circumstances such as those at issue in the national law’.

In Huijbrechts, the Court at 25-26 finds that Flemish and foreign forest are objectively comparable (only) where they are transboundary and concern woods that are part of one unit or landscape (lest my geographic knowledge fails me here, this limits the impact of the judgment to French and Dutch estates; Belgium has a land border with Luxembourg and Germany, too, but Flanders does not). Interestingly, at 22 the Court indicates that in making the like forest comparison (GATT, WTO and generally free movement scholars will know where I am heading here), the regulatory goal of sustainable forest management plays a role. (See the like product /service distinction in the WTO).

For that limited group of forest, the public interest exception imposes constraints: a blanket ban on considering sustainable management outside of Flanders fails the Treaty test, for it does not assist with the protection of the forests. Flanders will for that limited group have to allow the heirs (again: only where the forests are transboundary and concern woods that are part of one unit or landscape) to provide proof of sustainable management; should such proof be delivered, the burden of proof will revert to the Flemish tax authorities: they cannot blankly assume that they cannot get the necessary data from the foreign administration during the 30 year period: they have to request such data (typically: on a 30 year basis) and only should they fail to get them, can they still refuse to exempt.

The Court implicitly recognises the specific (dire) circumstances of forests in Flanders (at 31). It does not accept the heirs’ submission that the myriad of international and European policy documents on forest management somehow amount to positive harmonisation.

Geert.