Category: Conflict of Laws /Private international law

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A death prolonged or hope renewed? The ‘Apartheid’ twist to Kiobel and the ATS.

Update 19 June 2017. SCOTUS held today in BMS and rejected jurisdiction.

Update 8 May 2017. Transcipt of pleadings issued in BMS and background here.

Update 12 January 2017 Bristol-Myers, if certiorari will be granted, will further define the limits to the Daimler case-law. Notice how Bristol-Myers, in their certiorari submission, emphasise predictability for the defendant: a sentiment often found in EU private international law. Update 19 January 2017. Certiorari granted.

Update 6 January 2017 a new case has just been launched in New York, against Germany, re its colonial past in Namibia, which one imagines will test both sovereign immunity and ATS. Update 29 06 2021 that case has now reached end of the road as the USSC denied certiorari, leaving the Court of Appeal’s dismissal on the basis of foreign sovereign immunity.

(Update 3 September 2014: case dismissed end of August). Previous Update 25 July 2014: Docket still shows active case but no further development).

(Update on linked development: in April 2015, SCOTUS denied certiorari in Chiquita, in whuich the CA had applied Kiobel restrictively).

In Kiobel, the USSC /SCOTUS held on the basis of extraterritoriality: under what circumstances may US courts recognize a cause of action under the Alien Torts Statute, for violations of the law of nations, occurring within the territory of a sovereign other than the United States? In focusing on this question (and replying in the negative), the SC did not entertain the question which actually led to certiorari, namely whether the law of nations recognises corporate liability.

Soon after the same USSC held in Daimler that general jurisdiction other than in the State of incorporation applies only (in the case of foreign companies) when a foreign company’s “continuous corporate operations within a state [are] so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.”

In the ‘Apartheid litigation’ [Lungisile Ntsebeza et al v Ford General motors and IBM], the Southern District of New York picked up the issue where SCOTUS had left it: can corporations be held liable under the Alien Tort Statute (“ATS”) for violations of “the law of nations”‘? Scheindlin USDJ held they can on 17 April last [Xander Meise Bay has a good overview of the successive litigation here]. She firstly held that it is federal common law that ought to decide whether this is so – not international law itself (ATS being a federal US Statute). Next she argued that the fact in particular (withheld by Jacobs J in Kiobel) that few corporations were ever held to account in a court of law for violations of public international law was not instrumental in finding against such liability.

Counsel have now been instructed to brief on the ‘touch and concern’ test put forward by the Supreme Court in Kiobel, with the warning that they must show in particular that the companies concerned acted ‘not only with the knowledge but with the purpose to aid and abet the South African regime’s tortious conduct as alleged in these complaints’.  A strict timetable for arguments has been laid down whence the wait for further development should not be too long. (Update 25 July 2014: Docket still shows active case but no further development; Update 3 September 2014: case dismissed end of August).

Geert.

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Apcoa scheme of arrangement: Convening hearing gives firm but considered go-ahead for English Scheme of Arrangement following change in governing law

Update 2 February 2024 in Tele Columbus AG, Re (Re Companies Act 2006) [2024] EWHC 181 (Ch) Hildyard J (with references to many of the cases discussed here and elsewhere on the blog) and for creditors meeting purposes only, gives a cautious OK for England and Wales jurisdiction for a scheme of a company incorporated in Germany, based and operating there with no office or operations or public “face” in E&W.

Postscript 3 May 2023 A Codere-type form of extreme forum shopping was sanctioned by Leech J in AGPS Bondco Plc, Re [2023] EWHC 916 (Ch); the Court’s jurisdiction was unsuccessfully challenged on the basis that the Issuer Substitution was ineffective or invalid as a matter of German law. Update 24 January 2024 that judgment has been successfully appealed as I report here.

Postscript January 2016 in Re Codere Finance (UK) Ltd [2015] EWHC 3778 (Ch)  the High Court at an earlier stage had expressed its concern at the ‘extreme forum shopping going on (creating a special purpose vehicle with COMI in England but no prior connection to the territory; a Luxembourg company had issued notes governed by New York law. It then acquired an “off-the-shelf” English company, which acceded to the notes as a co-issuer. The English company then promulgated a scheme to discharge the notes) however for reasons expertly summarised by Iain White, Newey J eventually sanctioned. (The application was made by Codere Finance (UK) Ltd., an English incorporated subsidiary of Codere SA, a Spanish company. Codere SA is the ultimate parent of a group of companies that carries on business by way of gaming and similar activities in Latin America, Italy and Spain. Codere SA’s shares are listed on a number of Spanish stock exchanges). Update 14 September 2020 forum shopping was again referred to in a 2020 scheme application by Codere ( [2020] EWHC 2441 (Ch) and sanction in Codere Finance 2 (UK) Ltd, Re Companies Act 2006 [2020] EWHC 2683 (Ch)– and likewise not considered to be too big an obstacle. Jurisdiction was accepted on the basis of domicile in England: A4 BIa grounds, linked to A8, the anchor ‘defendant’ mechanism.

Postscript July 2015 Forum shopping possibilities were further expanded in [2015] EWHC 2151 (Ch) Van Gansewinkel, which had the additional peculiarity that the only territorial link with England was the establishment of (only) one creditor there (full disclosure: I was the expert heard on the Belgian side of recognition and enforcement).

Postcript 8 May 2015 in DTEK, a challenge was made by one disgruntled creditor to the change of governing law from New York law to English law. However reportedly this challenge was withdrawn in the nick of time, leaving this point as far as I am aware at this stage unaddressed by the English courts. (Not that in my view that change ought to be problematic). (Update 11 June: judgment is now available here).

Postscript 25 November 2014. Hildyard J’s judgment in both convening and sanction hearings was released 19 November 2014, [2014] EWHC 3849 (Ch), with leave to appeal granted. (Hearing at the CA is scheduled for December 2014).

The title of this piece is as considered as Hildyard J’s approval of the application for an order to convene scheme meetings for the purpose of considering, and if thought fit approving, schemes of arrangement, nine in all, pursuant to Part 26 of the Companies Act 2006, in a scheme of arrangement relating to the Apcoa group of companies.

At the time of writing Bailii did not yet feature a transcript of the hearing however I have a copy for those interested. Hildyard J aptly lists the potential booby traps given the international context of the case (the Scheme Companies comprise two English incorporated companies, a holding company and another company incorporated in Germany, and five other subsidiaries incorporated elsewhere in Europe): jurisdiction under English private international law (not all companies having COMI in England); related to this, establishment of jurisdiction only following a change on governing law of the initial finance agreements, approved by a majority but not all creditors; and, as a related pre-condition to English approval, the likelihood of recognition and enforcement of the Scheme, once adopted, elsewhere in the EU (full disclosure: I was the expert heard on the Belgian side of recognition and enforcement).

The application to convene hearings was approved, justifiably. Schemes of arrangement are, arguably, excluded from the Insolvency Regulation. Recognition and enforcement much facilitated by the Brussels I Regulation. The one big sticky point in any future challenge is likely to be the change in governing law which enabled English jurisdiction in the first place. This was not sub judice in the current proceedings and the scheme at this stage is not opposed by any of the creditors.

Apcoa is not insolvent; it is being restructured. The case highlights the relevance of the ongoing amendments to the Insolvency Regulation. (At the time of writing waiting for first reading by Council; not likely to appear any time soon, given the European elections). The jury is out (and case-law increasing; see e.g. Zlomrex International) whether it would be better for Schemes of Arrangement to be included in the Annex to the Insolvency Regulation. In my view cover by Brussels I is much preferred.

No doubt to be continued.

Geert.

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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 C-438/12 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. This will change however following the Brussels I recast). 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.

Geert.

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Wall v Mutuelle De Poitiers Assurances: what is ‘procedure’ under Rome II?

Update 4 June 2020 see 1 Chancery Lane’s Richard Collier and Mike Hagan’s paper here, focusing on determination of quantum by foreign (legal) experts.

Update 5 April 2019 see also application in [2019] EWHC 801 (QB) Joshua Folkes v Generali Assurances.

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:

Article 15
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 AG, ([2011] EWHC 2806 (QB)], [2012] EWCA Civ 1001, and Cox v Ergo Versicherung AG [2014] UKSC 22, [23]].

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.

Geert.

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Pike & Doyle (Mumbai terror) 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 upheld 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 upholds 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.

Geert.

 

 

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Stockholm 2.0 (or Strasbourg 1.0). The EU Justice Agenda for 2020.

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.

Geert.

 

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EU to become party to The Hague Choice of Court Convention. Not necessarily a good idea.

Update 21 May 2018. Denmark has now also acceded. Update 2 October 2015. The Convention entered into force on 1 October. Update 5/12/2014: Approval is now final (p.16) and (update 10/12) has been published in OJ. Update 16/10/2014:

////

The European Commission has adopted its proposal for a Council decision on the approval, on behalf of the EU, of the Hague Convention of 30 June 2005 on Choice of Court Agreements. The Convention, which has not yet entered into force (but will be, once the EU ratifies), contains three basic rules that give effect to choice of court agreements (from the Convention’s website):

1.The chosen court must in principle hear the case (Art.5);
2. Any court not chosen must in principle decline to hear the case (Art.6); and
3. Any judgment rendered by the chosen court must be recognised and enforced in other Contracting States, except where a ground for refusal applies (Arts 8 and 9).

The Commission does propose that the EU make a declaration, excluding the application of the Convention to insurance contracts (unlike the recast Brussels I Regulation’s provisions re consumers and employees, insurers not domiciled in the EU continue to fall outside the Regulation), in spite of objections.

The downside of the complete exclusion of insurance contracts, from the point of view of European insurers, is that choice of court clauses they have negotiated with non-European policyholders would not be recognised and enforced in third States which are Contracting Parties to the Convention. From the perspective of the European policyholders, these would lose the advantage of having the decisions of EU courtsʼ (chosen by the parties) recognised and enforced outside the Union under the Convention – the EC is however more concerned about the position of the European insureds (as opposed to the insurers): if the Convention were to be concluded without excluding insurance contracts, there would be a lack of parallelism with the protective policy established in the Brussels I Regulation which allows the insured party to sue an EU insurer (or a EU branch of third State insurer) in his own place of domicile irrespective of any other jurisdiction available under a choice of court agreement. not all Member States agree with the Commission hence one will have to wait and see how this issue will be decided.

At any rate and more generally, were the EU to accede, this does of course put into question the relationship between the Brussels I Regulation, the Convention, and the Lugano Convention. The EC notes that Brussels I does not “govern the enforcement in the Union of choice of court agreements in favor of third State courts”. (Ignoring, incidentally, the judgment in Gothaer, which does achieve the same result in specific circumstances).

This would, in the EC’s view, rather be achieved by the Convention. The amendments to the Brussels I regulation introduced with the recast of 2012 “have strengthened party autonomy” and now “ensure that the approach to choice of court agreements for intra-EU situations is consistent with the one that would apply to extra-EU situations under the Convention, once approved by the Union”.

A ‘disconnection clause’ set out in Article 26(6) provides that the Convention shall not affect the application of the regulation “where none of the parties is resident in a Contracting State that is not a Member State” of the Union and “as concerns the recognition or enforcement of judgments as between Member States”.  “(T)he Convention affects the application of the Brussels I regulation if at least one of the parties is resident in a Contracting State to the Convention”, and shall “prevail over the jurisdiction rules of the regulation except if both parties are EU residents or come from third states, not Contracting Parties to the Convention”.

As regards the recognition and enforcement of judgments, the Regulation “will prevail where the court that  made the judgment and the court in which recognition and enforcement is sought are both located in the Union”.

Hence in summary, according to the proposal, the Convention will “reduce the scope of application of the Brussels I regulation”, but “this reduction of scope is acceptable in the light of the increase in the respect for party autonomy at international level and increased legal certainty for EU companies engaged in trade with third State parties”.

Hum. I am not convinced. The above signals a fairly complex regime of scope of application of Convention cq Regulation. The Regulation continues to differ from the Convention. (E.g. in not requiring written agreement for choice of court). Neither does it clearly (in contrast with the recast Regulation) settle applicable law to determine validity of the clause: is it lex fori prorogati?). In my view it adds a layer of complexity rather than removing some.

Geert.

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Cartier v Ziegler: No positive action required by court first seized to trigger lis alibi pendens.

In Cartier v Ziegler, Case C-1/13, the Court of Justice held that the application of Article 27’s Lis Albi pendens rule (Brussels I Regulation) does not require a formal decision by the national court first seized (or exhaustion of national remedies against such acceptance of jurisdiction). In a multi-party case involving insurance companies, forwarders and transporters (sub-sub contracted) of a shipment of Cartier goods, the UK High Court was undeniably first seized vis-a-vis at least some of the parties involved in the litigation in France, however the question was how Article 27’s lis alibi pendens rule needs to be applied.

Under Article 27(1) of Regulation 44/2001, where there are parallel proceedings before the courts of different Member States, the court second seised must stay its proceedings of its own motion until the jurisdiction of the court first seised is established. Furthermore, Article 27(2) provides that, where the jurisdiction of the court first seised is established, any court other than the court first seised must decline jurisdiction in favour of that court.

The French Cour de Cassation asked essentially whether Article 27(2) of the Brussels I-Regulation must be interpreted as meaning that it is sufficient, for the jurisdiction of the court first seised to be established within the meaning of that provision, that no party has contested its jurisdiction or whether it is necessary that that court has impliedly or expressly assumed jurisdiction by a judgment which has become final.

The referring court referred to scholarship suggesting that the jurisdiction of the court first seised may be established only by a judgment from that court explicitly rejecting its lack of jurisdiction or by the exhaustion of the remedies that are available against its decision to assume jurisdiction.

The ECJ held ‘Article 27(2) of Council Regulation (EC) No 44/2001 (…)  must be interpreted as meaning that, except in the situation where the court second seised has exclusive jurisdiction by virtue of that regulation, the jurisdiction of the court first seised must be regarded as being established, within the meaning of that provision, if that court has not declined jurisdiction of its own motion and none of the parties has contested its jurisdiction prior to or up to the time at which a position is adopted which is regarded in national procedural law as being the first defence on the substance submitted before that court.’

The Court’s finding does of course require the court seized later (or the lawyers appearing before it) to be au fait with the procedural law of the alternative court (such as in France, the possibility to raise objection against jurisdiction verbally only).

The ECJ’s overall consideration here lies with obliging but also enabling the court seized second, not to linger indefinitely with the application of Article 27.

Geert.

 

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Rolex v Blomqvist. ECJ confirms irrelevance of ‘focus and target’ or ‘direction’ in intellectual property cases.

After its withholding of mere accessibility of a site as a jurisdictional trigger for copyright infringement in Pinckney, the ECJ has now accepted that the mere acquisition of a good by a person domiciled in an EU Member State, suffices to trigger the application of the EU Customs Regulation’s provisions on counterfeit and pirated goods. It is not necessary, in addition, for the goods at issue to have been the subject, prior to the sale, of an offer for sale or advertising targeting consumers of that State.

In Case C-98/13 Martin Blomqvist v Rolex Mr Blomqvist, a resident of Denmark, ordered a watch described as a Rolex from a Chinese on-line shop. The order was placed and paid for through the English website of the seller. The seller sent the watch from Hong Kong by post. The parcel was inspected by the customs authorities on arrival in Denmark. They suspended the customs clearance of the watch, suspecting that it was a counterfeit version of the original Rolex watch and that there had been a breach of copyright over the model concerned. In accordance with the procedure laid down by the customs regulation, Rolex then requested the continued suspension of customs clearance, having established that the watch was in fact counterfeit, and asked Mr Blomqvist to consent to the destruction of the watch by the customs authorities. Mr Blomqvist refused to consent to the destruction of the watch, contending that he had purchased it legally. Is there in the present case any distribution to the public, within the meaning of the copyright directive, and any use in the course of trade, within the meaning of the trade mark directive and the trade mark regulation?

The ECJ re-iterated earlier case-law (in particular L’Oreal /E-bay) that the mere fact that a website is accessible from the territory covered by the trade mark is not a sufficient basis for concluding that the offers for sale displayed there are targeted at consumers in the EU. However proof that the goods are intended to be put on sale in the European Union, is being provided, inter alia, where it turns out that the goods have been sold to a customer in the European Union, such as clearly in the case at issue.

That sales to the EU have taken place is enough. Proof that EU consumers were actually targeted is not required – at least not with a view to triggering intellectual property protection (cf consumer protection under i.a. the jurisdiction Regulation).

In the view of the EU of course this is not an ‘extraterritorial’ application of EU law: the territorial link is firmly established through the customer’s domicile.

Geert.

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Schmid v Hertel: ECJ confirms ‘extraterritorial’ reach of insolvency Regulation’s Seagon extension – Actio Pauliana

(Postscript April 2015: The ECJ confirmed these principles in C-295/13, H v HK).

Less is more, I know – Apologies for the long title and thank you to Matthias Storme for highlighting the case. In Case C-328/12 Ralph Schmid v Lilly Hertel, Schmid was the German liquidator of the debtor’s assets, appointed in the insolvency proceedings opened in her regard in Germany on 4 May 2007. The defendant, Ms Hertel, resides in Switzerland. Mr Schmid brought an action against Ms Hertel before the German courts to have a transaction set aside, seeking to recover EUR 8 015.08 plus interest as part of the debtor’s estate.

In Case C-339/07 Seagon the ECJ had ruled that the courts of the Member State within the territory of which insolvency proceedings have been opened have jurisdiction to decide an action to set a transaction aside (actio pauliana) that is brought against a person whose registered office is in another Member State. However does Seagon also apply where insolvency proceedings have been opened in a Member State, but the place of residence or registered office of the person against whom the action to have a transaction set aside is brought is not in a Member State, but in a third country?

The ECJ held that it does. Bob Wessels has a very good analysis here and I am happy to refer. Let me just add one or two things. The Brussels I Regulation, the overall Regulation on jurisdiction on civil and commercial matters, displays bias in favour of the defendant: actor sequitur forum rei. The overall jurisdictional angle of the Insolvency Regulation is different: avoiding forum shopping to the detriment of creditors is its main aim, and its insistence on verifiable and predictable criteria to determine COMI (which in turns determines jurisdiction) needs to be seen in that light. That non-EU domiciled defendants get caught up in EU proceedings on the basis of COMI is not generally seen as problematic within the context of the Regulation.

The ECJ is rather realistic with respect to the potential recognition and enforcement problems associated with judgments under the Regulation held against non-domicileds. In the absence of assets in the EU held by the non-dom (if there were, enforcement would be straightforward), classic bilateral treaties may come to the rescue and if there is no such treaty, so be it: the Regulation’s jurisdictional rules should not be held up by potential problems end of pipe.

An important judgment for the reach of the Insolvency Regulation.

Geert.