The Antwerp court of first instance in CMB (Bocimar NV), ‘The Mineral Water’: In dubio pro reo or a perfect excuse for forum shopping?

The Antwerp court of first instance (criminal section) has held last Friday, 25 June (I have copy of the judgment (in Dutch) on file) in the prosecution against CMB (an Antwerp based shipowner; specifically: Bocimar NV) and a number of individuals for the alleged illegal transport of waste, in the shape of the discarded ship the Mineral Water, destined for beaching at Chittagong, Bangladesh (the same location of relevance in Begum v Maran).

The Mineral Water was built in 1999, bought by CMB in 2007. A decision was made ‘end 2015’ (the judgment does not clarify specific date and /or circumstance of that decision) to sell  her, with a view to recycling. That sale was approved on 19 January 2016 by Bocimar Board Decision, to a cash buyer based on the British Virgin Islands, when the ship was anchored at Fangcheng, China. Actual transfer of the ship happened at Malaysia a few weeks later. The ship’s registry was changed from Antwerp to Niue after the transfer and she was beached at Chittagong in February.

The case is a criminal prosecution which of course carries with it a high burden of proof. Seeing as the ship sailed under Belgian flag, the principled application of Belgian and EU law was not as such disputed. Neither do the original owners dispute that at the time of the January 2016 decision, the ship met with the definition of waste ia per CJEU Shell. However defendants argue the EU Waste Shipments Regulation – WSR does not apply for, they argue, the Mineral Water never sailed in European waters and was not physically exported from the EU with a view to recycling (p.5 in fine).

[The court later (p.8) notes this is not quite correct: occasionally EU ports were used for (un)loading and in 2015 there was rare bunkering at Malta].

The court held for the defence. Core to the decision is Article 2, 30 31 and 32: the definitions of ‘import’, ‘export’, ‘transfer’. The prosecutor seeks support in Article 2.22: ”country of dispatch’ means any country from which a shipment of waste is planned to be initiated or is initiated’. The court however held that neither the place of decision nor the flag State is of relevance to the territorial scope of application of the WSR. (Note the contrast on that point with the Ships Recycling Regulation – SRG 1257/2013, not applicable to the facts at issue).

One imagines more on that issue can and should be said upon appeal.

The countries of dispatch, transfer and destination of the ship are all ex-EU. Importantly, at p.8 the court notes there is no indication that the owners would have gamed the system to ensure the ship lay outside EU territorial waters at the time of the decision to discard.

The case shows the importance of the flag State in the SRG (itself not free of difficulties; the IMO Hong Kong Convention should avoid gaming). Of note is also that the place of decision-making (relevant for conflict of laws: locus delicti commissi, eg under A7 Rome II as discussed in Begum v Maran) did not play a  role. The crucial element was the almost complete lack of physical contact between the ship and the EU.

One assumes the prosecution will appeal.

Geert.

Handbook of EU Waste law, 2015, Chapter 3.

Applicable law (Article 4 and 7 Rome II) in the Dutch Shell climate ruling. Not quite as momentous as the core message.

I have an article forthcoming on the application of Rome II’s Article 7, ‘environmental damage’ rule. Last week’s widely reported first instance ruling in the Dutch Shell climate case will of course now feature.

I reported on application of A7 in Begum v Maran. There I submit, the Court of Appeal engaged without sufficient depth with the Article. It held against its application. Xandra Kramer and Ekaterina Pannebakker then alerted us to the use of Article 7 in last week’s momentous Milieudefensie v Shell (umpteen) ruling [Dutch version here, English version here], in which Shell by a first instance judge has been ordered to reduce its CO2 emissions. In that ruling, too, the judges leave a lot of issues on Rome II underanalysed. The conclusion  however goes in the opposite direction: the court held A7 is engaged and leads to Dutch law as the lex loci delicti commissi (Handlungsort or ldc).

I have taken the Dutch version of the judgment as the basis for the analysis for the English version is a touch under par when it comes to the finer detail. The Dutch version it has to be said is not entirely clear either on the conflict of laws analysis.

Firstly, Milieudefensie argue that A7 is engaged, and it suggests it opts for Dutch law given the choice left to it by that Article. Whether it does so as lex loci damni (Erfolgort or ld) or lex loci delicti commissi is not specified. It is reported by the courts that in subsidiary fashion Milieudefensie argue that per A4(1)’s general rule, Dutch law is the lex causae: that has to be Erfolgort.  (Lest the court inaccurately reported parties’ submissions here and the argument made under A4 focused on Article 4(3)’s displacement rule) [4.3.1].

The judges further report [4.3.2] that parties were in agreement that climate change, whether dangerous or otherwise, due to CO2 emissions constitutes ‘environmental damage’ in the sense of A7 Rome II (and the judges agree) and that they were in disagreement on the locus delicti commissi. Milieudefensie argue that Shell’s holding policy viz climate change and emissions, dictated from its corporate home of The Netherlands, is that Handlungsort. Shell argue that the place of the actual emissions are the Handlungsorts (plural), hence a Mozaik of applicable laws. (This nota bene has interesting applications in competition law, as I suggest here).

Then follows a rather sloppy reference to Jan von Hein’s note bene excellent review of Article 7 in Calliess; distinguishing of the arguments made by Shell with reference to ia product liability cases; and eventually, with reference to ia the cluster effect of emissions (‘every contribution towards a reduction of CO2 emissions may be of importance’ [4.3.5]) and the exceptional, policy driven nature of A7, the conclusion [4.3.6] that the holding policy is an independent cause of the CO2 emissions and hence imminent climate damage and obiter [4.3.7] that A4(1) would have led to the same conclusion.

The ruling will of course be appealed. It would be good to get the application of Article 7 right, seeing as environmental law is a core part of strategic and public interest litigation.

Geert.

EU Private International Law, 3rd. ed. 2021, Chapter 4, Heading 4.6.3 (4.54 ff).

Begum v Maran. A hopeful Court of Appeal finding on duty of care; however open issues on its engagement with Rome II’s environmental heading.

I am late in reporting  Begum v Maran (UK) Ltd [2021] EWCA Civ 326, in which the Court of Appeal rejected an application for strike-out. I reported on the High Court judgment here and I should add I am instructed for claimant in the case. Oliver Holland, the lead Leigh Day solicitor in the case, discusses its implications together with Rachel Bonner (who was led by Richard Hermer) here.

Coulson LJ held that it is at least arguable (reminder: the specific action that was being discussed was an application for strike-out) that Maran does have a duty of care. His analysis essentially leans heavily on the fact that Maran availed itself of a disposal route, the consequences of which it was much aware of. It is clear that the well-known Bangladesh route to escape health, safety and environmental standards for the dismantling of ships, is questionable under the Basel Convention on Hazardous wastes and their disposal, and that shipowners have been using privity of contract in an attempt to shield themselves from any liability for consequences which are neither unexpected nor infrequent.

Others have written on the duty of care issue and I will focus on the A7 Rome II discussion: the lex specialis for environmental damage – on which I have a paper forthcoming (but to find more time!).  At 78 ff Coulson LJ firstly links the requirement of causality (the use of the flimsy ‘arising out of’) to the non-contractual obligation claimed (here: corporate duty of care), rather than the one immediately following the damage (here: negligence, recklessness causing death). That duty of care does not, it was held, ‘arise out of’ environmental damage. [82]: ‘In essence, it is the duty to take all reasonable steps to ensure that the sale of the vessel for demolition purposes did not endanger human life or health. That duty did not arise out of environmental damage; it had nothing to do with environmental damage at all. It arose out of the complete absence of workplace safety.’ And at 86: ‘even if the court had to consider whether the death (rather than the duty) arose out of environmental damage, the result would be the same…the death arose out of the absence of safe working practices and, in particular, the absence of a safety harness.’ Support is found in scholarly sources suggesting a narrow interpretation of A7; other sources are not discussed (despite having been submitted) and I continue to be convinced such limiting interpretation is not supported by the travaux. Males J, in his mostly concurring opinion, agrees that the last thing on A7 is far from said although he, too, holds that A7 is not engaged in casu.

Lord Justice Coulson obiter considers locus delicti commissi (which would be  the alternative lex causae under A7) and at 91 succinctly holds (pro memoria: obiter) that this would not have been England. There is authority I would suggest for the opposite finding and the judge’s interpretation of Arica Victims, I submit,  leaves room for discussion: at 91 he correctly refers to the Ovre Norrland Court of Appeal having pointed to ‘key decisions’ having been made in Sweden. These to me seem present in current case, too (and here: located in England).

At 110 ff the ordre public argument under A26 Rome II, which could displace the shorter statute of limitation of the Bangladeshi lex causae, for the longer English one, is succinctly dismissed as not meeting A26’s high hurdle. This leaves a narrower (and perhaps curiously indirect) ‘undue hardship’ argument under the E&W Foreign Limitation Periods Act 1984 to be discussed as a preliminary issue at the remanded trial in the High Court.

A most relevant case, also highlighting the many unresolved issues under A7 Rome II.

Geert.

EU Private International Law, 3rd ed. 2021, para 4.54 ff.

Mutton dressed as lamb. The ‘new’ proposed proportionality angle to the innovation principle.

A quick post on an issue I actively published on last year, including with Kathleen Garnett: the innovation principle. My post here is a bit of a documentation gateway on same. I just wanted to draw readers’ attention to two developments.

First, the European Risk Forum which stood at the cradle of a proposed innovation ‘principle’ has been rebranded into the ‘European Regulation and Innovation Forum’ – ERIF. This of course even more than ‘Risk Forum’ is meant to conjure up positive feelings: who could possibly be against Regulation let alone innovation? It calls itself a think tank but it is in fact a trade association – interest group.

Further, the focus of the campaign has now changed. No longer it seems is the introduction of a new innovation principle the aim of the campaign. Rather, a restrictive take on regulation using cost benefit analysis and ‘proportionality’ – both existing principles of e.g. EU environmental law and at odds e.g. with the recently proposed essential use idea within the EU’s chemicals policy. It seems ERIF looks among others to the EU’s Regulatory Scrutiny Board to keep proposed laws in check.

Worth keeping an eye on, I suggest.

Geert.

Okpabi v Shell. The Supreme Court reverses the Court of Appeal and the High Court on jurisdictional hurdles in parent /subsidiaries cases. Guest blog by professor Robert McCorquodale.

Update 12 07 2021 Shell have now dropped further jurisdictional objections. The Nigerian daughter companies will therefore be joined to the case at the High Court, together with the English-incorporated mother corporation (Shell dual list in England and The Netherlands).

Those who combine my excitement of having professor McCorquodale contribute to the blog, with his enthusiasm at the end of his post, may find themselves in a perennial game of complimentary renvoi.

Robert, who represented interveners CORE in Okpabi v Shell (one-line summary in live tweeting here), signals the jurisdictional take-aways. The wider due diligence context of the case is considered by Ekaterina Aristova and Carlos Lopez here, Lucas Roorda signals ia the merits bar following the jurisdictional findings and Andrew Dickinson expressed his hope of an end to excessively lengthy jurisdictional proceedings here.

 

Okpabi v Shell: Judges’ Approach to Jurisdictional Issues is Crucial

In Okpabi v Shell [2021] UKSC 3, Nigerian farmers brought a claim against Shell’s parent company (RDS) and its Nigerian subsidiary (SPDC) for environmental and human rights impacts of oil pollution. The claim had been struck out at the initial state on the basis of lack of jurisdiction in relation to the actions of SPDC, and this decision had been upheld by the Court of Appeal.

The Supreme Court unanimously swept aside these decisions. It held that when considering issues of the court’s jurisdiction over such a claim, a court must start from the basis that the alleged facts of the claim are true and from there determine if the claim has a real prospect of success.  The defendant should not bring evidence of its own to dispute the alleged facts unless the facts are demonstrably untrue or unsupportable, as otherwise it risks showing that there is an issue to be tried.  If a judge engages with the evidence and makes findings on it in a summary judgment, the more likely it is that the decision to strike out will be overturned. Further, the Court considered that there was a danger of a court determining issues which arise in parent/subsidiary cases without sufficient disclosure of material documents in the hands of the defendants. Both courts below had acted incorrectly and conducted a “mini-trial”, and so the appeal by the claimants was successful.

The Court affirmed Vedanta that parent companies can have a duty of care towards those affected by a subsidiary’s actions, and that the Caparo test was inapplicable to these types of cases. The Court also clarified the scope of the duty of care by making clear that control is not determinative, it is the level of management involvement by the parent which is crucial. A parent company’s group-wide policies and standards were relevant in this respect. The Court, unfortunately, did not refer in its decision to any comparative law cases or international developments, even though these had been drawn to its attention.

This decision embeds the position that parent companies can have a duty of care towards those affected by a subsidiary’s actions, and that de facto management is a factor to consider. It examined the legal process by which courts consider these jurisdictional issues and made it much harder for a judge to strike out a case at the jurisdictional stage unless the facts on which the claim is based are demonstrably untrue or unsupportable. This could enable quicker proceedings towards the merits in these types of cases.

—Robert McCorquodale – it is my honour to contribute to this excellent blog.

My thoughts on the polluter pays principle in an interview with the European Environment Agency.

Seeing as legacy pollution issues, essential use etc. have brought this very much in the news again, I thought I’ld flag an interview I had with the European Environment Agency magazine on the operationalisation of the polluter pays principle. That’s it. That’s the post.

Geert.

EU environmental law, with Leonie Reins, 2017, Chapter II, 7.

Tanchev AG in Esso supports broad application of animal welfare to REACH chemicals registration process.

In Case C‑471/18 P in which Tanchev AG Opined last month, Germany is asking the CJEU to set aside judgment in  T‑283/15 Esso Raffinage ECHA by which the General Court annulled entitled a European Chemical Agency (‘ECHA’)  letter entitled ‘Statement of Non-Compliance following a Dossier Evaluation Decision under  [REACH]’. The letter concerned the outcome of ECHA’s compliance check of Esso Raffinage’s registration dossier for a particular chemical substance. The main thrust of its appeal is that the REACH Regulation does not provide for further examination by ECHA of the conformity of the information submitted with the first compliance check decision, and that this matter falls within the competences of the Member States pursuant to the REACH enforcement provisions. In support of its position, it argues that a registrant must conduct animal testing specified in the Evaluation Decision, and cannot submit adaptations at that stage.

Esso and ECHA find themselves in an unusual alliance with animal rights activists who argue that a registrant must be able to submit adaptations in lieu of performing animal testing specified in a first compliance check decision.

The case mostly concerns the respective competences of Member States and ECHA under Reach, I highlight it here for the AG’s emphasis on the relevance of animal welfare in the Regulation: consideration of animal welfare through the reduction of animal testing is one of the objectives pursued by the REACH Regulation. At 158: ‘Viewed more broadly, as indicated by Esso Raffinage and [NGO], the promotion of animal welfare and alternative methods to animal testing in the REACH Regulation reflects Article 13 TFEU, pursuant to which, in formulating and implementing the European Union’s policies, the European Union and the Member States are to pay full regard to the welfare requirements of animals.’

Animal welfare has come a long way since Michael Rose and I submitted it in CJEU C-1/96 Compassion in World Farming.

Geert.

 

Applicable law and statutes of limitation in CSR /business and human rights cases. The High Court, at least prima facie, on shipbreaking in Bangladesh in Begum v Maran.

Update 28 August 2020 permission to appeal and cross-appeal has been granted and is being additionally sought by both parties on various issues.

Hamida Begum v Maran UK [2020] EWHC 1846 (QB) engages exactly the kinds of issues that I have just posted about, in court rather than in concept. On 30th March 2018 Mr Mohammed Khalil Mollah fell to his death whilst working on the demolition of a defunct oil tanker in the Zuma Enterprise Shipyar in Chittagong (now Chattogram), Bangladesh. On 11th April 2019 the deceased’s widow issued proceedings claiming damages for negligence under the UK Law Reform (Miscellaneous Provisions) Act 1934 and the Fatal Accidents Act 1976; alternatively, under Bangladeshi law. The scope of the proceedings has subsequently been broadened inasmuch as draft Amended Particulars of Claim advance a cause of action in restitution: more precisely, unjust enrichment.

Application in the current case is for strike-out and /or summary judgment (denying liability) hence the legal issues are dealt with at prima facie instead of full throttle level. One or two of the decisions deserve full assessment at trial. Trial will indeed follow for the application was dismissed.

The case engages with the exact issues in exchanges I had at the w-e.

Proceedings have not been brought against the owner of the yard and/or the deceased’s employer. Both are Bangladeshi entities. Maran (UK) Ltd,  defendant, is a company registered in the UK and, it is alleged, was both factually and legally responsible for the vessel ending up in Bangladesh where working conditions were known to be highly dangerous.

Focus of the oral argument has been whether claim discloses viable claims in English law on the basis of tort of negligence (answer: yes) and in unjust enrichment (answer: no).

The issue of liability in tort is discussed on the basis of English law, which is odd at first sight given Rome II might suggest as a starting point Bangladeshi law as the lex causae ; Justice Jay himself says so much, but only at 76 ff when he discusses Rome II viz the issue of limitation. In applications for summary judgment however, reasoning and order of argument may take odd form as a result of the prima facie nature of the proceedings and the conversations between bench and parties at case management stage.

On the tort of neglicence claimant argues under English law, with direct relevance to the current debate on environmental and human rights due diligence, that a duty of care required the defendant to take all reasonable steps to ensure that its negotiated and agreed end of life sale and the consequent disposal of the Vessel for demolition would not and did not endanger human health, damage the environment and/or breach international regulations for the protection of human health and the environment. The EU Ship Recycling Regulation 1257/2013 was suggested as playing a role, which is dismissed by Justice Jay at 24 for the Regulation was not applicable ratione temporis.

At 30, claimant’s case on negligence is summarised:

First, the vessel had reached the end of its operating life and a decision was taken (perforce) to dispose of it. Secondly, end-of-life vessels are difficult to dispose of safely. Aside from the evident difficulties inherent in dismantling a large metal structure, a process replete with potential danger, an oil tanker such as this contains numerous hazardous substances such as asbestos, mercury and radio-active components. Although these were listed for Basel Convention purposes and for the attention of the buyer, and the deceased was not injured as a result of exposure to any hazardous substance, the only reasonable inference is that waste such as asbestos is not disposed of safely in Chattogram. Thirdly, the defendant had a choice as to whether to entrust the vessel to a buyer who would convey it to a yard which was either safe or unsafe. Fourthly, the defendant had control and full autonomy over the sale. Fifthly, the defendant knew in all the circumstances that the vessel would end up on Chattogram beach. Sixthly, the defendant knew that the modus operandi at that location entailed scant regard for human life.

The gist of the argument under tort therefore is a classic Donoghue v Stevenson type case of liability arising from a known source of danger.

At 42 ff Justice Jay discusses what to my mind is of great relevance in particular under Article 7 Rome II, should it be engaged, giving claimant a choice between lex locus delicti commissi and lex locus damni for environmental damage, in particular, the issue of ‘control’. One may be aware from my earlier writings (for an overview see my chapter in the 2019 OUP Handbook of Comparative environmental law) that the determination of the lex causae for that issue of control has not been properly discussed by either the CJEU or national courts. This being a prima facie review, the issue is not settled definitively of course however Justice Jay ends by holding that there is no reason to dismiss the case on this issue first hand. This will therefore go to trial.

As noted Rome II is only discussed towards the end, when the issue of limitation surfaces (logically, it would have come first). Claimant does not convince the judge that the case is manifestly more closely connected with England than with Bangladesh under A4(3) Rome II. Then follows the discussion whether this might be ‘environmental damage’ under Article 7 Rome II, which Justice J at 83 ff holds preliminarily and prima facie, it is. Analysis of Article 7 is bound to be of great importance at trial and /or appeal.

At 85 a further issue for debate is trial is announced, namely whether the one-year statute of limitation under Bangladeshi law, should be extended under Article 26 Rome II’s allowance for ordre public (compare Roberts and CJEU C-149/18 Martins v DEKRA – that case concerning lois de police and statutes of limitation. 

Plenty of issues to be discussed thoroughly at trial.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.

 

 

Jurisdiction, applicable law and the Draft Business and Human Rights Treaty. Some serious conflicts material in CSR /business and human rights laws.

I thought I should post briefly, including for archiving purposes, on one or two developments and recommendations viz the draft UN Business and Human Rights Treaty. This also follows exchanges I had at the w-e on the issue.

See Nadia Bernaz here for an introduction and see here for a document portal. The overview of statements made, shows some attention being paid to forum non conveniens, universal jurisdiction, and applicable law – a summary of those comments re applicable law is here at 84. That same document in Annex II contains the list of experts and further in the Annexes, their views on jurisdiction etc. (incl. forum necessitatis) which anyone wishing to write on the subject (that would include me had I not a basket already thrice full) should consult.

Claire Bright at BIICL also posted her views on the applicable law issues last week, including a proposal to exclude renvoi from the applicable law Article.

Things, they are moving. Including in case-law. That will be my next posting.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.

 

 

Inspection of SPS standards by ricochet. The CJEU on extra-EU enforcement of process standards in BRF v EC.

The CJEU (General Court) held in Case T-429/18 BRF SA et al v European Commission  this week.  I need to think a bit more about the implications of the judgment, particularly as I am keen to submit a research grant somewhere to investigate how, practically speaking, the EU may enforce EU process standards on production taking place abroad.

The GC refers to this challenge at 79 in fine where  it says ‘neither the Commission nor the Member States have enforcement powers in respect of establishments outside the European Union or countries not directly subject to obligations imposed by EU law.’ In the case at issue, Regulation 854/2004 provides that the possibility for third country establishments to export products of animal origin (for BRF: poultry) to the EU market requires, first, the country in question and, second, the establishment concerned be included on the lists provided for in those provisions.

The Court held that the Commission is within its rights to establish the reliability threshold of the guarantees provided by the competent authorities of a third country at a particularly high level and may thus go so far as to require, by reference to essential parameters, practically irreproachable performance on the part of the competent authorities of third countries (at 80). As far as its duty to state reasons is concerned, at 84:

The Commission stated, in recitals 4 and 5 of the contested implementing regulation, that the Brazilian authorities had been requested to take the necessary corrective actions to remedy the serious and repeated cases of non-compliance with EU requirements due to the presence of salmonella in poultry meat and poultry meat preparations. It is apparent from the information provided by those authorities and from the results of the official controls carried out at the borders of the European Union, however, that the necessary actions had not been taken, so the placing on the market of the products from the establishments concerned constituted a risk for public health. Those reasons relate to the 10 establishments belonging to the applicants and set out in the second table of the annex to that implementing regulation.

At 88: detailed reasons per establishment, for removal from the list, are not required.

More can be said about the judgment however at this stage I jus want to point out the somewhat messy implications of lack of extraterritorial enforcement powers. It puts foreign establishments at the mercy of their own food and feed inspection authorities. For  while EU law requires that some level of tailor-made information be available at individual establishment level, ultimately lack of diligent inspection by the local authorities will ricochet unto individual corporations’ export opportunities.

Geert.