Place of performance of multimodal transport. Tanchev AG in Zurich Insurance seeks support in flightright, and in the CMR and Hamburg rules.
Not just my blog posts on both cases follow each other closely. Tanchev AG in his Opinion in C-88/17 Zurich Insurance v Metso, takes inspiration from the Court’s findings in flightright (which I reported this morning). He emphasises the objective of predictability of the Brussels I Recast Regulation.
The case concerns multimodal transport of goods from one Member State to another. Pursuant to an agreement entered into with a Finnish undertaking, a British haulier undertook to carry goods from Finland to the United Kingdom. After the goods concerned were lost while being transported in the United Kingdom, the Finnish undertaking and the insurer of the goods sued for damages before a Finnish court. Does that court have jurisdiction per Article 7(1)b, second indent ?: in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided.
ALS concluded a contract for the carriage of goods with Metso Minerals Oy (‘Metso’), a Finnish manufacturer of equipment for the mining and construction industries. A cylindroconical crusher was to be transported from Pori in Finland to Sheffield in the United Kingdom. The crusher was insured by Zurich Insurance plc (‘Zurich’). Both Metso and Zurich are the plaintiffs in the main proceedings.
ALS, with the help of subcontractors, transported the crusher as follows. It was first transported from Pori to Rauma in Finland by a lorry with a low loader. At Rauma, it was unloaded from the lorry and driven on to a ship under its own power. After transport by sea to the United Kingdom, the crusher was again driven under its own power off the ship in the port of Hull and loaded onto another lorry. As Metso’s consignee did not have sufficient or adequate storage capacity, it asked a sub-contractor of ALS to drive the crusher to its own warehouse and keep it there temporarily for a couple of days. However, the crusher was stored there for a longer period, and disappeared before it could be delivered to the consignee in Sheffield.
ALS argues that only the place of unloading may be deemed to be the place of performance, claiming that the place of performance can only be one single place and that the place of final destination is of considerably greater importance than the place of dispatch. This, according to ALS, is consistent with the determination of the applicable law in respect of contracts for the carriage of goods under Rome I, which gives a degree of preference to the place of delivery and is to be interpreted taking into account the Brussels I Regulation.
The Commission, referring to CJEU predecent Rehder, Wood Floor Solutions Andreas Domberger and Color Drack, acknowledges that, in any event, the place of arrival is a place of performance, as it is the final place in the chain of transportation. The Commission further argues, however, that, bearing in mind the requirements of proximity, foreseeability and legal certainty, it would be appropriate to recognise in addition the place of dispatch as a place of performance.
The question of international jurisdiction arises in the main proceedings because the case has connections not only with Finland but also with other countries: Finland is the country in which the goods were dispatched and the consignor has its seat, whereas the destination of the goods being carried and the location of the haulier’s seat is in the United Kingdom, where, moreover, the goods were ultimately lost. Finally, in order to convey the crusher from Finland to the United Kingdom, it had to be transported through the waters of other Member States or waters under the sovereignty of no State. In ordinary language, the AG suggests (at 28) all these territories and waters are places where the contract was performed.
According to their wording, both sections (a) and (b) of Article 5(1) of the Brussels I Regulation refer to ‘the place of performance’ and, in the case of section (b), additionally to ‘the place in a Member State’. In consideration of the singular form employed, it seems, the AG suggests at 30, that only one single place can be regarded as having special jurisdiction in respect of contractual matters. However, this conclusion is not borne out by the case-law.
In color Drack the Court ruled that, if it is not possible to determine one single principal place of performance, each of the places of performance has a sufficiently close link of proximity to the material elements of the dispute and, accordingly, a significant link as regards jurisdiction. In a dispute concerning the sale of goods, the Court has held that, in such a case, the plaintiff may sue the defendant at one of the places of performance — at his choice.
In flightright, as far as delayed flights are concerned, the Court considers both the place of departure and the place of the final destination to be equally significant under the contract, thereby establishing a sufficient territorial link between these places and any proceedings arising from the contractual situation.
(At 59) In the present situation, where the means used to transport the goods change as the journey progresses, particularly in harbours, the fact that the goods are carried in a number of different stages is also an inevitable feature of such transport. In the AG’s view, however, even the fact that it was necessary to unload heavy and bulky goods such as the crusher in question and transfer it across land under its own power, with the dangers in terms of loss or damage inherent in a procedure of that kind (including the possibility of theft), does not alter the situation in such a way as to give the places of reloading or transhipping an importance equal to that of the place of dispatch. Therefore, recognising the latter place, along with the place of destination, as one of two ‘places of performance’ does not enhance the number of available fora in a way as to give reason for concerns of forum shopping.
The AG clearly struggles between limiting forum shopping and enhancing predictability, and suitability of various places to assess the litigation at issue. The AG (at 60) finds support for his view that the intermediate stages should not so be given jurisdiction, in the fact that it is common practice not to mention the places of reloading or reshipping in contracts of the kind in issue in the main proceedings.
The AG concludes therefore that the place of dispatch and the place of destination are thus both ‘main places of performance’ under the second indent of Article 7(1)(b), whereas the loading places in general are not.
A good case to further complete analysis under Article 7(1).
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 18.104.22.168
flightright. The extensive CJEU notion of ‘contract’. Mumbles on effet utile and residual private international law.
One of my PhD students, Michiel Poesen, has an extensive case-note coming up on C-274/16 flightright – when it is out I shall include a link here. For the time being therefore I shall be very brief. In summary, the Court held
- first of all that the special jurisdictional rules of the Brussels I Recast do not apply to defendants domiciled outside of the EU. That was as such an obvious finding: these suits are subject to residual national rules on jurisdiction. However the Court makes a point, at 54, to emphasise that in accordance with the principle of effectiveness (effet utile), rules under national law cannot make it impossible or excessively difficult to exercise the rights conferred by EU law. Here: the rights of passengers under the flight delay compensation rules, Regulation 261/2004. Is that CJEU shorthand for suggesting that if a Member State were not to allow claimants based in the EU, to claim compensation against third-country defendants, it would contravene EU law?
- second, where an operating air carrier which has no contract with the passenger performs obligations under Regulation 261/2004, it is to be regarded as doing so on behalf of the person having a contract with that passenger. (At 64) that carrier must be regarded as fulfilling the freely consented obligations (a reference to the Handte formula) vis-à-vis the contracting partner of the passengers concerned. Those obligations arise under the contract for carriage by air. Consequently, an application for compensation for the long delay of a flight carried out by an operating air carrier such as (here) Air Nostrum, with which the passengers concerned do not have contractual relations, must be considered to have been introduced in respect of contracts for carriage by air concluded between those passengers and the carrier with whom they bought tickets. (Per the first bullet-point above, provided that carrier does have domicile in the EU). Of note is that this finding of a jurisdictional trigger under the rule of contracts (7(1), does not necessarily imply that at the substantive level, the court with jurisdiction will eventually decide that there is a contract on the basis of the lex causae.
- finally, to determine per Article 7(1)b second -, the court of ‘the place in a Member State where, under the contract, the goods were delivered or should have been delivered’, a contract for carriage by air, such as the contracts at issue in the cases in the main proceedings consisting of a single booking for the entire journey, establishes the obligation, for an air carrier, to carry a passenger from a point A to a point C. Such a carriage operation constitutes a service of which one of the principal places of provision is at point C. That finding is not called into question by the fact that the operating operates only the carriage on a flight which does not finish at the place of arrival of the second leg of a connecting flight in so far as the contract for carriage by air relating to the connecting flight covers the carriage of those passengers to the place of arrival of the second leg.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 22.214.171.124.
Clearing up my backlog.
In  EWCH 2208 (Comm) Zavod Ekran v Magneco the Blair J held in September 2017 that a company must not hide behind documents initiating arbitration being drafted in Russian, when a properly observant litigant should have known that arbitration proceedings were being commenced. The most important point from a practical perspective was found to be that the heading of a letter, in English, states that it comes from the Moscow arbitration body—the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation. From that alone it should have been obvious that an arbitration was being commenced. There was no other reason for ICAC to be writing to the company.
An utterly practical approach.
I reported earlier on the Aldi abuse of process principle: a party who intends to bring a subsequent action against existing parties or their privies must raise the issue with the court, which on case-management grounds may hold that all claims must be brought simultaneously.
In 2016 BVIHC 0059 (COM) Serena Chi Yang Hsueh et al v Equity Trustee ltd. et al Chivers J has now held that the principle applies in the British Virgin Islands. Harneys have the report here, and a big thank you to Kimberley Crabbe-Adams and Ian Mann for providing me with copy. Telling, at 94 is Chivers J’s conclusion (following review of authority) that while the specific Aldi requirement may not as such have been promulgated in BVI, there can be no doubt of the obligation of a litigant to put all their cards on the table, before the other party and the court, at an early stage. The CPR demand so, specifically as their overall objective (at 90, referring to CPR 1.1(1) is to deal with cases ‘justly’.
I have pondered before whether there ought not to be an Aldi rule in EU conflicts law, however one can see the difficulty particularly as in the EU context an Aldi principle might favour the actor sequitur forum rei rule to the detriment of special jurisdictional rules: not an outcome supported by the current rules.
JSC BTA Bank v Khrapunov. UK Supreme Court confirms the conspiracy itself, not its implementation, as locus delicti commissi under Lugano. Does not entertain locus damni.
The UK Supreme Court held in  UKSC 19 JSC BTA Bank v Khrapunov late March. Defendant is based in Switzerland, hence triggering the Lugano Convention. Addleshaw Goddard have the history of the case and I am happy to refer for those facts. Suffice to say that at the core is a claim in tort of conspiracy, alleging that Mr Khrapunov and his father in-law Mr Ablyazov conspired to injure the Bank by preventing it from enforcing its judgments against Mr Ablyazov’s assets.
First let’s have a look at was not discussed at the SC: domicile and locus damni. As for the former, domicile once held but now fleed from was correctly rejected by Teare J as establishing domicile under Lugano (or indeed Brussels). The argument that jurisdiction should, nevertheless, be taken still to be domiciled in England because defendant was in breach of an obligation under the worldwide freezing order prohibiting him from leaving the jurisdiction, was likewise rejected. An interesting proposition though.
Now, for the location of the locus damni. At 29 the SC refers to the Bank’s argument at the High Court and Court of Appeal stage. The Bank’s argument was that the damage occurred in England. This was based on the contention that its worldwide freezing order and its judgments against Mr Ablyazov were located here and had been reduced in value by the alleged conduct in relation to assets in other jurisdictions. The High Court and Court of Appeal considered that the element of damage proximate to the harmful event was the Bank’s inability or reduced ability to execute against those assets in the places where they were located. Another fine example of the difficult implications of Bier and not one which the CJEU has hitherto had the occasion to review. (But current case will not reach it).
As for locus delicti commissi, the Bank submit that the event giving rise to the damage was the conspiracy itself, which was hatched in England. At the High Court Teare J rejected this submission, because he considered that the cause of the damage was not the conspiracy but its implementation: a suggestion I like in the context of competition law, as readers of the blog will be aware. Teare J was not followed by the Court of Appeal though, which identified the place where the conspiratorial agreement was made as the place of the event which gives rise to and is at the origin of the damage.
The SC refers to CJEU authority to conclude with CDC and at 41 it reiterates the CA’s core reasoning: ‘As Sales LJ explained (at para 76), in entering into the agreement Mr Khrapunov would have encouraged and procured the commission of unlawful acts by agreeing to help Mr Ablyazov to carry the scheme into effect. Thereafter, Mr Khrapunov’s alleged dealing with assets the subject of the freezing and receivership orders would have been undertaken pursuant to and in implementation of that agreement, whether or not he was acting on instructions from Mr Ablyazov.’
The Supreme Court concludes that the making of the agreement in England should be regarded as the harmful event which set the tort in motion.
The judgment keeps open many issues, however. For starters, to have a sole birthplace of conspiratorial agreement is handy in the case at issue however it is likely not often to be so clearly the case (as Dan and Tom point out, particularly not in a digital context). Moreover, for those instances where Mr Khrapunov were not to be acting on instructions from Mr Ablyazov, questions of ultra vires so to speak and hence of a separate tort would arise.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 126.96.36.199
A flag simply to lead readers to a recent textbook application of Spiliada forum non conveniens authority: Moulder J in  EWHC 1078 (Comm) KMG v Chipper.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 188.8.131.52
Forum non conveniens, lis alibi pendens ex-EU following Brussels I Recast. High Court adopts limiting approach in UCP v Nectrus.
In  EWHC 380 (Comm) UCP Plc v Nectrus Limited Cockerill J takes the same conclusion on the new lis alibi pendens rule ex-EU in the Brussels I Recast, which I had suggested in the Handbook (p.182). A court in a Member State seized of an action other than those based on Articles 4, 7, 8 or 9 cannot refuse jurisdiction in favour of a court based ex-EU.
From Herbert Smith’s summary of the case: Nectrus, a Cypriot company, commenced proceedings in the Isle of Man seeking payment of sums withheld by UCP, an Isle of Man company, on the sale of a company, Candor. UCP then commenced proceedings in England claiming that Nectrus was in breach of an Investment Management Agreement (IMA), the loss being the amount by which the sale consideration of Candor had been reduced, hence the amount withheld on its sale.
The IMA contained a non-exclusive jurisdiction agreement in favour of the English courts. UCP disputed the jurisdiction of the Manx court, but in the event the proceedings continued, indicated they would raise the cause of action relied on in the English proceedings by way of equitable set off. Nectrus disputed their right to do so.
Nectrus disputed the jurisdiction of the English court on the basis that the Manx courts were the most appropriate forum to determine the dispute and were first in time.
Other than for the articles listed above, the CJEU’s findings in Owusu continue to apply. That includes English jurisdiction on the basis of non-exclusive choice of court, covered by Article 25 of the Recast Regulation. Justice Cockerill is entirely correct in unhesitatingly (at 39) rejecting forum non conveniens.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.4 (International impact of the Brussels I Recast Regulation), Heading 184.108.40.206.2.