Archive for category Conflict of Laws /Private international law

Ships classification and certification agencies: The immunity ship ain’t sailing according to Szpunar AG in Rina.

In C‑641/18 Szpunar AG opined on Tuesday and notes that the request of the referring court brings to mind the current debate about the influence of human rights on private international law. It seeks to ascertain whether and, if so, to what extent the scope of ‘civil and commercial’ in the Brussels Ia Regulation may be influenced by the interest in ensuring access to the courts, a right guaranteed by Article 47 Charter.

(The case itself is subject to Brussels I which did not yet include ‘acta iure imperii’. As the AG notes at 56, this is merely a clarification following CJEU interpretation of the previous concept.

Relatives of the victims, along with survivors of the sinking of the Al Salam Boccaccio ’98, a ship sailing under the flag of the Republic of Panama, which happened in 2006 on the Red Sea and caused the loss of more than a thousand lives, have brought an action before the District Court, Genoa against the companies Rina SpA et Ente Registro Italiano Navale. Claimants argue that the defendant’s certification and classification activities, the decisions they took and the instructions they gave, are to blame for the ship’s lack of stability and its lack of safety at sea, which are the causes of its sinking.

Defendants plead immunity from jurisdiction. They state that they are being sued in respect of certification and classification activities which they carried out as delegates of a foreign sovereign State, namely the Republic of Panama. They argue activities in question were a manifestation of the sovereign power of the foreign State and the defendants carried them out on behalf of and in the interests of that State.

The AG first of all reviews how the principle of customary international law concerning the jurisdictional immunity of States relates to the scope ratione materiae of Brussels Ia. He starts his analysis noting that in the absence of codification at international level (international conventions on the issue not having met with great success), the principle concerning the jurisdictional immunity of States remains to a large extent governed by customary international law.

There is little use in quoting large sections of the Opinion verbatim so please do refer to the actual text: the AG opines (referring ia to C-154/11 Mahamdia) that it is unnecessary to refer to the principle of customary international law concerning State immunity from jurisdiction when considering the scope ratione materiae of Brussels Ia. Those principles he suggests do play a role when it comes to enforcing any exercise of such jurisdiction against the will of the party concerned.

At 46: ‘the distinction between disputes which are civil or commercial matters and those which are not must be drawn by reference to the independent criteria of EU law identified by the Court in its case-law. Consequently, an act performed in the exercise of State authority (acta iure imperii) from the perspective of the law relating to immunity, is not necessarily the same as an act performed in the exercise of State authority according to the independent criteria of EU law.’ (The latter as readers of the blog will know, are not always clearly expressed; see ia my review of Buak).

In the second place, the AG then considers whether an action for damages brought against private-law entities concerning their classification and/or certification activities falls within the scope of BIa. At 83, following extensive review of the case-law (almost all of which I also reviewed on the blog and for earlier cases, in Chapter 2 of the Handbook), the AG opines that neither the fact that the acts in question were performed on behalf of and in the interests of the delegating State nor the possibility of the State’s incurring liability for harm caused by those acts, in itself conclusively characterises those acts as ones performed in the exercise of powers falling outside the scope of the ordinary legal rules applicable to relationships between private individuals. 814/79 Rüffer also makes a non-conclusive appearance.

At 95 then follows the core of the factual assessment: defendants’ role is limited to carrying out checks in accordance with a pre-defined regulatory framework. If, following the revocation of a certificate, a ship is no longer able to sail, that is because of the sanction which, as the defendants admitted at the hearing, is imposed by Panama law. Not acta iure imperii – the issue falls under Brussels Ia.

Finally, must as a result of a plea of immunity from jurisdiction a national court decline to exercise the jurisdiction which it ordinarily derives from the Regulation? In a section which will be interesting to public international lawyers, the AG reviews international and EU law (particularly Directive 2009/15) and concludes that there is no principle in international law which grants immunity to certification agencies in cases such as the one at hand.

To complete the analysis, the AG opines that should the Court disagree with his views on immunity, the national court’s views on jurisdiction would not be impacted by the right to court guarantees of the Charter, for there is no suggestion at all that the victims would not have proper access to Panamian courts for their action.

Note of course that the Opinion does not address lex causae.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.16.1.1.

 

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Suing the Chief of the Israeli General Staff in The Netherlands. Ismail Ziada v Benjamin Gantz tests Dutch forum necessitatis rules.

Since the news broke in Mid-September of a Dutch claimant of Palestinian descent, suing former Chief of the General Staff Benjamin Gantz in The Netherlands, I have regularly checked ECLI NL for any kind of judgment. So far to no avail. I report the case now summarily, for it will be good to have a judgment (presumably first interlocutory: on the jurisdiction issue) to chew on.

The claim invokes the Dutch forum necessitatis rule (Article 9 CPR; other European States have similar rules), often also known as ‘universal jurisdiction’ however clearly the rule has its constraints. Claimant’s lawyer, Meester Liesbeth Zegveld, argues the application of the rule here. The piece includes assessment of sovereign immunity, and the involvement of Article 6 ECHR. Its outcome will also play a role in issues of corporate social responsibility and jurisdiction.

Clearly the moment I have a court opinion I shall post more.

Geert.

 

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Spanish Supreme Court eases exequatur requirement under (2001) Brussels I.

A short post and thank you Laura Ruiz for flagging a ruling by the Spanish Supreme Court  in which it essentially seems to have pre-applied the Brussels Ia Regulation (1215/2012) to proceedings governed by its predecessor, Brussels I (44/2001). In particular, the Supreme Court would seem to have waived the requirement for exequatur in a proceeding governed by Brussels I. I have limited Spanish and no access to the ruling so I am relying on Laura’s post for reporting purposes.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter I, Heading 2.2.16.

 

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McDonald v Broadspectrum. When does a claim by an employee against her employer ‘relate to’ the contract of employment?

[2019] QSC 313 McDonald v Broadspectrum can go straight into the comparative binder – thank you Angus Macinnis for signalling it. A teacher employed by Broadspectrum on Nauru, sues it for personal injury. Amongst other things, Ms McDonald alleges Broadspectrum failed to provide a safe place or system of work, to warn her about the mould contamination, to provide protective clothing or respirators, to prevent exposure, and to provide adequate ventilation, in each instance in Nauru.

Broadspectrum applied for a declaration at the Supreme Court of Queensland that the substantive law applicable to her claims is the law of New South Wales and for an order setting aside or staying and transferring her claims to the Supreme Court of that State.

The relevant compensation schemes, in Queensland and New South Wales, each exclude from their scheme an employer’s liability arising under the law of another country. Bradley J however held that lex loci delicti is Nauru law,  which therefore is lex causae. The argument that the employment contract contained implied term to the contrary was rejected.

As I discussed with Angus, I was confused by the court’s qualification of the facts as ‘tort’ (particularly as it also refers to claimant’s argument re forum contractus being Nauru); is this not a contractual claim rather than one in tort? (and one relating to the employment contract, for that matter). Angus however pointed out that in Australia workplace injury claims are usually brought as tortious breach of care claims rather than breach of a contractual obligation to provide a safe system of work. Comparatively speaking, the EU approach would probably be different. For a comparative (consumer contracts, health and safety) angle see e.g. [2018] EWCA Civ 1889 Committeri v Club Med.

On the issue of concurrent liabilities and  EU PIL see recently also Bosworth.

Geert.

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Punjab National Bank. In a complex set of claims, Owusu is never easily applied and material non-disclosure severely punished by the High Court.

In [2019] EWHC 3495 (Ch) Punjabi National Bank v Ravi Srnivasan et al three loan transactions lie at the core of the case. They were made between 29th March 2011 and 1st December 2014, and totaled some US$45 million. They were made for the purposes of oil re-refining and wind energy generating projects in the USA. Most defendants are all allegedly guarantors domiciled either in India or the USA. The borrowers themselves, with the exception of two defendants, both ex-EU, are not party to the proceedings because they are insolvent.

Proceedings concern both the enforcement of the loans but also allegations of fraud, and have also been started in the US and in India however these were not disclosed to the court at the time the original permission was sought to serve out of jurisdiction.

At first glimpse the case might be easily held, along the lines suggested by lead counsel for claimant: at 5 (iii). ‘A combination of the exclusive jurisdiction clauses and the strongly arguable claims in fraud pointed towards the need to try the whole matter in one jurisdiction. England was the only possible jurisdiction. The omission to disclose the US proceedings and the Chennai proceedings caused the defendants no prejudice as they knew from the loan documentation that PNB was at liberty to bring parallel enforcement proceedings in different jurisdictions. The Chief Master ought to have placed strong reliance on articles 3 and 5 of the Hague Convention on Choice of Court Agreements (the “Hague Convention”), and article 25 of The Recast Brussels Regulation (“Brussels Recast”), which obliged the court to accept jurisdiction where there were such exclusive jurisdiction clauses.’

Owusu v Jackson would suggest no entertainment at all of forum non conveniens. However the fraud allegations initially opened the door to a point of entry for forum non seeing as none of the defendants are EU based. Sir Geoffrey Vos at 63 lists the relevant factors: ‘the most important being the choice of jurisdiction clauses in both loan agreements and guarantees, the effect of Brussels Recast and the Hague Convention, the fact that some parallel proceedings can be necessary where enforcement against real property is required, and the centre of gravity of the lending relationship which was indeed in London. In addition, the US and Chennai proceedings did not cover the Pesco loans at all, so that disallowing English jurisdiction for those contractual claims prevented PNB from bringing proceedings in its main chosen jurisdiction in respect of that lending and the guarantees given in respect of it.’

In the end however Vos agreed with the initial assessment of the High Court which emphasised non-disclosure (undoubtedly an example of procedural fraus): notwithstanding England being the most appropriate forum for those contractual claims without clear choice of court, and without a doubt the English jurisdiction guarantees of the other loans, but also for the fraud claims, had they been (which they were not) seriously arguable as presently pleaded, (at 72) jurisdiction must be dismissed in light of the need to protect the administration of justice and uphold the public interest in requiring full and fair disclosure.

That is a strict approach in light of the choice of court made and an awkward way around the forceful nature of Article 25 Brussels Ia. An outcome of my discussion with Andrew Dickinson and Alex Layton, is (per Alex’ suggestion) that the High Court seems to have applied an Elefteria approach to choice of court rather than Article 25 BIa.

Geert.

 

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UB v VA (Tiger SCI): The CJEU dots the i’s on forum rei sitae in insolvency.

In C-493/18 UB v VA, proceedings took place between UB, on the one hand, and VA, Tiger SCI, WZ, as UB’s trustee in bankruptcy, and Banque patrimoine et immobilier SA, on the other, concerning the sale of immovable property originally owned by UB and mortgages granted over that property by UB and the action taken by WZ to have those transactions declared ineffective as against the bankruptcy estate.

A little bit of factual background may be useful – for that reference is best made to the judgment. Essentially, an avoidance (insolvency pauliana) action was launched given suspicious transactions between UB and his sister. On 10 May 2011, UB was, on his own petition, declared bankrupt by Croydon County Court. On 1 July 2011, WZ was appointed UB’s trustee in bankruptcy, with effect from 6 July 2011.  At WZ’s request, Croydon County Court authorised WZ on 26 October 2011 to bring an action before the French courts in order, first, to have the bankruptcy order registered and, second, to obtain a ruling that the sale of the properties referred to in paragraph 12 above and the mortgages granted over those properties to VA (‘the sales and mortgages at issue’) were transactions at an undervalue or for no consideration under the relevant United Kingdom bankruptcy law provisions. WZ thus sought a decision authorising the restitution of those properties to UB’s bankruptcy estate, for the purposes of their disposal. The French courts granted the declaration.

The legal issue under consideration is the reach of the Insolvency Regulation’s establishment of jurisdiction for the courts of the Member State of COMI. Does it extend to an action by a trustee in bankruptcy appointed by a court of the Member State in which the insolvency proceedings were opened (here: the UK) the purpose of which is to obtain a declaration that mortgages registered over immovable property situated in another Member State (here: France) and the sale of that property are ineffective as against the bankruptcy estate.

The CJEU correctly emphasises that the Insolvency Regulation old or new does not impose any rule conferring on the courts of the place where immovable property is located international jurisdiction to hear an action for the restitution of those assets to the bankruptcy estate in insolvency proceedings. Furthermore, concentrating all the actions directly related to the insolvency proceedings before the courts of the Member State within the territory of which with those proceedings were opened is consistent with the objective of improving the efficiency and speed of insolvency proceedings having cross-border effects. Support for this ex multi: Wiemer & Trachte.

The English courts therefore should have exercised jurisdiction per vis attractiva concursus – the file before the CJEU does not reveal its hesitation to do so. It does reveal that UB claims among others that the insolvency proceedings in England had already been concluded and presumably therefore the pauliana time-barred.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5 Heading 5.4.1. Chapter 2 Heading 2.2.2.10.1

 

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A few recent examples of English Courts and English law’s knack for regulatory competition.

Happy 2020 reading, all!

At the back of my mind I have a number of interesting examples of the English Courts and English law’s awareness of the relevance of courts and substantive law in regulatory competition. I post them here together by way of illustration.

Sir Vos’ speech on how English law on cryptoassets should develop so as to boost the
confidence of would-be parties to ‘smart’ legal contracts; a further analysis of same by the ‘UK jurisdiction taskforce’, and Outer Temple’s reaction to ditto.

Also however RPC’s review of Davey v Money [2019] EWHC 997 (Ch), in which Snowden J declined to cap a litigation funder’s liability for adverse costs at the amount of funding provided: essentially adding a potential risk to be considered by third-party litigation funders and illustrating that attractive as England may be as a forum for litigation, the sector is not a free for all.

Finally, the English courts are not of course alone in the realisation of the issues: witness this 2017 report by the French Supreme Court: ‘”Le juge et la mondialisation”.

Geert.

 

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