Category: EU law – General

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The CJEU in CIHEF on French restrictions to marketing and advertising of rodenticides and insecticides. A masterclass on exhaustive legislation, and on Trade and Environment.

I am hoping for a few gaps in yet again a mad diary this week, to catch up on quite a few developments I tweeted on earlier. First up is judgment in C‑147/21 Comité interprofessionnel des huiles essentielles françaises (CIHEF) et al v Ministre de la Transition écologique ea. The case concerns the possibility for Member States to adopt restrictive measures on commercial and advertising practices for biocidal products. It is a good illustration of the mechanism of precaution or pre-emption in EU law, and of the classic application of Article 36 TFEU’s exceptions to free movement of goods.

Applicants contest the French restriction of commercial practices such as discounts and rebates, as well as advertising, for two specific biocides categories: rodenticides and insecticides. The secondary law benchmark is Biocidal Products Regulation 528/2012.

As for the first category, commercial practices such as discounts, price reductions, rebates, the differentiation of general and specific sales conditions, the gift of free units or any equivalent practices, the Court, also seeking report in the AG’s Opinion, held [33] that the Regulation’s definitions of ‘making available on the market’ and ‘use’ of biocidal products are as such sufficiently broad to cover commercial practices linked to the sale of those products, however [34] that the Regulation does not seek to harmonise the rules relating to commercial practices linked to the sale of biocidal products.

That leaves the classic CJEU Case 8/74 Dassonville test (all measures of a Member State which are capable of hindering, directly or indirectly, actually or potentially, trade within the European Union are to be considered as measures having an effect equivalent to quantitative restrictions within the meaning of that provision), tempered by Joined cases C-267/91 and C-268/91 Keck et Mithouard : there is no direct or indirect hindrance, actually or potentially, of trade between Member States, in the event of:

  • the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements [[39] of current judgment the CJEU confirms this is the case here]
  • on condition that those provisions apply to all relevant traders operating within the national territory [41 held to to be the case here] and that they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States [[42] held to have to be judged by the national court but 43 ff strongly suggested to be the case here (i.e. there not being distinctive affectation of domestic cq imported products)].

Should the national court decide that (unlike what the CJEU indicates) the French measures are not selling arrangements, carved out from Article 34’s scope altogether, the CJEU [48] ff holds that the French measures most likely  (the final arbiter will be the French judge) enjoy the protection of both Article 36 TFEU’s health and life of humans exception, and the Court’s Cassis de Dijon-inserted ‘overriding reason in the public interest’ aka the rule of reason aka the mandatory requirements exception: strong indications are that the measures are justified by objectives of protection of the health and life of humans and of the environment, that they are suitable for securing the attainment of those objectives and that they do not not go beyond what is necessary in order to attain them. The referring court will have to confirm.

As for the French obligations relating to advertisements addressed to professionals (which includes in particular adding a specific statement), here the Court holds [60] ff that the Regulation does exhaustively harmonise the  wording of statements on the risks of using of biocidal products which may appear in advertisements for those products. This precludes the relevant French rules.

[68] ff however the French prohibition of advertising addressed to the general public, is held not to have been regulated by the Regulation, with the Court coming to the same conclusions as above, viz Article 34’s selling arrangements carve-out and, subsidiarily, Article 36 TFEU’s and the rule of reason exceptions.

A final check therefore is to be done by the referring court however it seems most likely the French restrictions will be upheld.

Geert.

EU Environmental Law, 2017, Chapter 17, p.308 ff.

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Oxford University v Oxford Nanoimaging. On unfair trading terms in retained EU consumer law, the Brussels regime and substantive consumer law.

In Oxford University Innovation Ltd v Oxford Nanoimaging Ltd [2022] EWHC 3200 (Pat) Daniel Alexander KC in a lengthy judgment eventually held for the University in a dispute on the validity of the University’s contractual terms claiming intellectual property over research students’ work. The case is of interest to the blog in that it contrasts the consumer provisions in the ‘Brussels (conflict of laws) regime’ with those of substantive consumer law.

[8] The thrust of ONI’s case is that Oxford’s approach to allocation of the commercial fruits of research is unfair to DPhil students and, more particularly, unfair to Mr Jing, the young researcher, in the circumstances of the case. More specifically it is said that Oxford’s policies are unfairly weighted in favour of the University and senior academics, who may have contributed less to the detail of the work than more junior researchers or inventors.

Applicability or impact of consumer protection legislation on terms relating to intellectual property rights of students is core to the case. The Unfair Terms in Consumer Contracts Regulations 1999/2083 – UTCCR are derived from the European Directive on Unfair Terms in Consumer Contracts 93/13, the ‘Unfair Consumers Terms Directive’ UCTD, which is retained EU law and the CJEU authority on same is retained EU case law [240] . They only apply to contracts between a “consumer” and a “seller or supplier”. Was Mr Jing such a ‘consumer’?

UK courts regularly made recourse to Brussels  Convention and later Brussels Ia cases in the absence of much CJEU UCTD authority. The judge correctly holds [242] that one must be cautious with such approach pro inspiratio, as indeed I have also pointed out on this blog before, and discusses ia CJEU Benincasa, Gruber, Schrems, Milivojevic, albeit not CJEU Reliantco, and the UK cases of Standard Bank v Apostolakis, AMT Futures v Marzillier and Ang v Reliantco. In the discussion on whether the Brussels case-law has an impact on the UCTD, he refers ia to Weco Projects. [288] he points out that when later CJEU authority did interpret the term ‘consumer’ in the UCTD directly (eg Karel de Grote), it made fairly little reference to Brussels authority. [306] he decides the UCTD approach to ‘consumer’ is ‘more expansive’ and ‘not as strictly’ as under the Brussels regime and [310] rejects Oxford’s submission that it is necessarily the right approach to this case under the UCTD to adopt the framework of analysis of dual-purpose contracts of the Brussels Convention/Regulation case law. This also includes [320] a different approach to the burden of proof.

[410] the final conclusion is that a ‘DPhil student is normally entitled to be treated as a consumer under the UCTD and that it does not matter for this purpose whether the student is undertaking that educational qualification with a view to her career, profession and/or professional advancement’  and [425] that ‘Oxford has not shown that Mr Jing’s circumstances were such that it would be wrong to treat him as a consumer in entering into the DPhil Contract he did.’ However eventually [639] the terms were not judged to be ‘unfair’.

Many of the issues raised are new and one assumes permission to appeal may have been sought.

Geert.

EU private International Law, 3rd ed. 2021, 2.231 ff.

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Open Rights Group. The Court of Appeal on grace periods, the consequences of judicial review and remedies for breach of (supreme) retained EU law.

A posting that is long overdue but over at GAVC law  we have lots of things coming our way and the inevitable consequence is a bit of a queue on the blog. Open Rights Group & Anor, R (On the Application Of) v Secretary of State for the Home Department & Anor [2021] EWCA Civ 1573 was held end of October and discussed remedies for breach of retained EU law, that is in essence, EU law which has force in law in the UK by virtue of the Government’s copy /paste exercise following Brexit.

In April 2021 the CA had held that that the “Immigration Exemption” (which disapplies some data protection rights where their application would be likely to prejudice immigration control) of the UK Data Protection Act 2018 is contrary to Article 23 GDPR and Article 23 of the UK GDPR: [2021] EWCA Civ 800.  However in that judgment the CA had not specified at that stage what form of relief should be granted. It does now.

The claim form sought a declaratory order, the effect of which would be to “disapply” the Immigration Exemption. The Government argue it be granted a grace period to make regulations adding to or varying the provisions. The complicating factor is that even retained EU law enjoys supremacy (not by virtue of EU law but by virtue of the Government’s choice to do so). That means that any conflict between the GDPR and domestic legislation (including primary legislation) must be resolved in favour of the former: the domestic legislation must be overridden, treated as invalid or, in the conventional language, disapplied.

[15] A quashing order would not meet with the UK constitutional understanding and its limits to the rule of judges. However must supremacy, post Brexit, mean the courts must inevitably make an immediately binding order? Warby LJ sets out the principles of EU retained law as they follow from domestic legislation (the ‘EUWA’) at [23]:

(1) A UK court must now decide any question as to the validity, meaning or effect of any retained EU law for itself: it is no longer possible to refer any matter to the CJEU: EUWA s 6(1)(b).

(2) But the general rule is that the court must decide any such question in accordance with any retained case law and any retained general principles of EU law that are relevant: EUWA s 6(3). “Retained EU case law” and “retained general principles” mean principles laid down and decisions made by the CJEU before IP completion day.

(3) When it comes to principles laid down or decisions made by the CJEU after IP completion day, the court is not bound (EUWA s 6(1)) but “may have regard” to them (EUWA s 6(2)).

(4) The position is different in a “relevant court”, which includes the Court of Appeal. Subject to an exception that does not apply here, a relevant court is not absolutely bound by any retained EU case law: EUWA s 6(4)(ba) and Regulations 1 and 4. It can depart from that law; but the test to be applied in deciding whether to do so is “the same test as the Supreme Court would apply in deciding whether to depart from the case law of the Supreme Court”: EUWA 6(5A)(c) and Regulation 5.

(5) The test the Supreme Court applies is the one laid down by the House of Lords in its Practice Statement [1966] 1 WLR 1234, when Lord Gardiner LC said

“Their Lordships regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules. Their Lordships nevertheless recognise that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose, therefore, to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so. In this connection they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal law. This announcement is not intended to affect the use of precedent elsewhere than in this House.”

Relevant CJEU authority is Liberty: La Quadrature, A v Gewestelijke Stedenbouwkundige Ambtenaar van het Department ruimte Vlaanderen (Case C-24/19) (“Gewestelijke”), and B v Latvijas Republikas Saeima Case C-439/19, EU-C-2021-504 (“B v Latvia”). [24] Gewestelijke was decided before IP completion day. We are not absolutely bound by them, but we should decide this case in accordance with the principles they set out, unless we think it right to depart from those cases for the reasons set out by Lord Gardiner. B v Latvia was decided after IP completion day, so we can “have regard” to it.

[26] Warby LJ suggests 3 options:

One is to hold that since the power to suspend relief in respect of substantive laws that is identified in Gewestelijke is one that can only be exercised by the CJEU, it cannot be exercised at all in E&W. This is rejected [27] as an unduly mechanistic and literal approach, tending to subvert rather than promote the legal policy that underlies this aspect of the CJEU jurisprudence: it would remove from the judicial armoury a power that is, by definition, essential. 

An alternative would be what Warby LJ called “the Regulation 5 approach”: to apply the principles laid down in the 1966 HoL Practice Statement and depart from the CJEU case-law, holding that the power which, in that jurisprudence, is reserved to the CJEU should now be treated as available to at least some UK Courts. This [28] enable a court to perform one of its essential tasks: averting legal disorder and is an option which Warby LJ suggests is open to the Court of Appeal.

A third option is to follow and apply the CJEU jurisprudence as to the existence and limits of the power to suspend, but not that aspect of the case-law that reserves the exercise of that power to the European Court. That [31] is Warby LJ’s preferred route however he decides (and the other LJs agree) that there is at this time no need to choose between both options for in essence they lead to the same result in the case at issue. The Court concludes that the Government were given time until 31 January 2022 for the Data Protection Act 2018 to be amended so as to remedy the incompatibility. Whether the Government have done so, I leave to data privacy lawyers to verify.

Underhill LJ emphasises one point [57] ‘that, as Warby LJ says at para. 13 of his judgment, our power to suspend our declaration – in practice, to suspend the disapplication of the Immigration Exemption – derives entirely from retained EU law. It was not argued that the Court had any equivalent power at common law.’

This is an important judgment viz the application of retained EU law but also wider, viz the consequences of judicial review which is a hot topic at the moment in more than just the UK.

Geert.

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Lithuania v Veolia. How the CJEU’s ISDS judgments in Achmea, Komstroy etc revive interest in foreign public law limitations.

Many thanks Bruno Hardy, counsel at Liedekerke, for reconnecting me with a case I had seen in passing and then lost track off. Bruno also reports on the issues here; there is also a mainstream media report and a more specialised report.

On 18 January the Lithuanian Supreme Court held that the France-Lithuania BIT is no obstacle to Lithuania seizing the Lithuanian courts of a claim that Veolia and consorts unlawfully took over control of heating businesses in a dozen Lithuanian municipalities in 1993-2003, and excessively profited from same. The claim was initially formulated as a counterclaim in ongoing ICSID proceedings (note there are also ongoing commercial arbitration proceedings relating to the case under Stockholm Chamber of Commerce rules) and is now pursued in the courts in ordinary, using Article 7(2)’s locus damni gateway.

The SC first of all rejected Veolia’s claim that the case should at the least be stayed until the ICSID ruling has been issued. For the SC, CJEU Achmea (which declared dispute settlement via ISDS in intra-EU BITs incompatible with EU law) implies that the arbitration procedure under the BIT has now lapsed (and this ab initio, hence making the later entry into force of the EU Member States’ BIT termination agreement irrelevant) meaning Lithuania not merely may but indeed it must drop its claims in the ISDS procedure.

From what I understand, the SC did not hold on whether A7(2) BIa is a possible gateway, focusing instead on the fate of Lithuania’s involvement in the ISDS procedure. In a perhaps unexpected ruling, as Bruno reports, the Vilnius Regional Court subsequently found that it lacked international jurisdiction seeing as in its (prima facie unconvincing) view the Lithuanian claim falls under acta iure imperii, hence cancelling out Brussels Ia, instead making the claim subject to residual Lithuanian private international law rules. These seem to direct the suit to France, the domicile of the defendant.

This is where there is a final twist in the tail. What I assume to be the reason for the court to find acta iure imperii (that the claim’s origin and DNA are actions taken by a state in its sovereign capacity) may well result in the French court refusing to entertain the claim as well (potentially leading to the need for a Lithuanian forum necessitatis). Indeed as Bruno points out, under the French SC Guatemala rule, French courts do not rule on cases necessarily involving the application of foreign public law (this echoes some of the issues in Skatteforvaltningen, currently under appeal). The 1975 Institute of International Law’s Resolution on same comes to mind.

The judgment shows very clearly the urgency for a proper debate on the relationship between EU law, the CJEU, ISDS and other forms of international dispute settlement. I fear the rather unnuanced CJEU statements in cases like Komstroy do little to resolve many of the underlying issues.

Geert.

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Easygroup v Beauty Perfectionists. No huge make-over for acquired EU law on trademark jurisdiction.

In Easygroup Ltd v Beauty Perfectionists Ltd & Ors [2021] EWHC 3385 (Ch) defendants argue that even though the proceedings were initiated prior to IP completion day (31 December 2020), the English courts no longer have jurisdiction to grant a pan-EU injunction or other remedies in respect of alleged infringement of EU trade marks (“EUTMs”).  The suggestion is that lack of such jurisdiction post 1 January 2021 is a consequence of the relevant statutory UK instrument, the Trade Marks Amendment etc (EU Exit) Regulations 2019.

The jurisdictional impact  of the EU Trademark Regulation 2017/1001 was previously considered i.a. in another Easygroup case which I discuss here. In current case, defendants argue that as a result of (potentially an omission in) the 2019 UK Statute, the High Court no longer is an ‘EU Trade Mark Court’ and, that EU Regulation 2017/1001 was not part of EU retained law under section 2(1) of the EU Withdrawal Act 2018. Their submission is based entirely on statutory construction, involving ia reading of the EU Withdrawal Agreement Act 2020 and its alleged impact on Withdrawal Agreement rights.

[48] ff Flaux C takes a much shorter approach to siding with claimants, holding [50] that the clear intention of Article 67 of the Withdrawal Agreement, which has full legal effect, is that the High Court should retain the same jurisdiction under EU Regulation 2017/1001 as it had before IP completion day. He finds support in a more common sense reading of the various Statutes in the context of Brexit with arrangements (as opposed to the potential of a no-deal Brexit).

The application for strike-out was therefore dismissed.

I do not know whether appeal has been sought. The case is a good illustration of the many layers of complexity provoked by the presence of the Withdrawal Agreement (with UK commitment to provide direct effect in the same circumstances as would apply under EU law), the Trade and Co-operation Agreement, and all the statutory provisions designed to cater for both a deal and a no-deal Brexit.

Geert.

 

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Bank Melli Iran: How corporate social responsibility reports may act as a shield in export controls law.

A short (and late – I am in mopping-up mood it seems) post on the AG’s Opinion in Case C‑124/20 Bank Melli Iran – in which he also cites my former colleague proximus Cédric Ryngaert. Hogan AG’s Opinion addresses the rock and the hard stone, or the devil and the deep blue sea dilemma facing corporations in the light of diverging export laws /sanctions law. May a German bank refuse to do business indeed end business with an Iranian bank, under pressure from US secondary export control laws?

More on the external relations aspects of the case is ia here and of course in the Opinion itself. My interest here lies in part of the Opinion: the AG’s view that an EU undertaking seeking to terminate an otherwise valid contract with an Iranian entity subject to the US sanctions must demonstrate to the  satisfaction of the national court that it did not do so by reason of its desire to comply with those sanctions. It must show other motives, such as ethical reservations about doing business with Iran. These reservations may be documented by a genuinely rolled-out CSR compliance program: (88)

‘In order, however, to establish that the reasons given in respect of any decision to terminate a contract on this ground were in fact sincere, the person referred to in Article 11 of the EU blocking statute in question − in the present case Telekom Deutschland – would need, in my view, to demonstrate that it is actively engaged in a coherent and systematic corporate social-responsibility policy (CSR) which requires them, inter alia, to refuse to deal with any company having links with the Iranian regime.’

CSR programs have been used as carrot ia in Trafigura and as stick ia in Vedanta. The view here is very much the carrot or if one likes, the shield function: CSR policies as a defensive weapon against the rock and hard stone dilemma. That is most interesting for the EU corporations concerned and likely to draw the attention of export sanctions practitioners (both in-house and out) to part of the corporation’s blurb which they may otherwise ignore. Yet it may put too much emphasis on fairly unregulated CSR policy drafting, and compliance issues.

Geert.

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Greenaway & Rocks v Covea Insurance. On applying the EU’s multilinguistic laws post Brexit.

In Greenaway v Parrish & Ors [2021] EWHC 1506 (QB) ( I signaled it a while ago but the case has only recently appeared on BAILII), Spencer J had to consider the practical implications of the impossibility of referrals to the Court of Justice of the EU, by UK judges. Plenty of pending cases were introduced before Brexit day. Moreover, an even larger number of cases will be subject to retained EU law.

In a specific conflict of laws sense, this raises the particular (procedural and substantive) issue of foreign law being fact and hence needing to be proven. Retained and /or previously applicable EU law, will not be foreign law as such, yet clearly it is law of a different nature than UK statutory and common law across the isles.

The practical implications of all this have now surfaced in Greenaway. Following CJEU CILFIT, EU law is (usually) equally authentic in 22 languages. In the case at hand, this centres upon the meaning of the word ‘stolen’, in the motor insurance Directive 2009/103. How should a judge inform her /himself of the meaning of the word in the 22 languages, and potentially also of the implementation of the Directive across the Member States. 12 King’s Bench Walk have analysis of the case here. As they note, Mr Justice Spencer granted permission to each party to adduce four foreign law experts reports in EU jurisdictions of their choosing, so that the relevant foreign language versions of the Directive could be understood. He also gave permission for those experts to give evidence as to the implementation of the Directive in those member states, that material being part of the context in which the point at issue had to be decided.

This is an important procedural point which no doubt will surface in a variety of shapes in years to come.

Geert.

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

Update autumn 2022 my article on A7 Rome II has now been published: Lex ecologia. On applicable law for environmental pollution, a pinnacle of business and human rights as well as climate change litigation.

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).

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LugaNON. My brief thoughts on the European Commission’s refusal to support the UK’s accession to Lugano 2007, and a clarification of the procedure and required majorities.

Update 2 December 2022. No news on the horizon: the EC are still opposed to UK Lugano membership.

Update 9 July 2021 Thank you Ekaterina Pannebakker for flagging the momentarily definitive ‘no’: the EU’s official confirmation of non-consent.

Update 8 June 2021 for the Dutch regret of the EC’s approach yet de facto acceptance of the EC position, see  here – with thanks to Taco Van Der Valk for signalling. The Dutch Government also emphasises the fact that the issue is open-ended: it can be revisited in a later stage of EU-UK relations.

This post is my tuppenny worth on the European Commission’s Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention. These are my considered but of course not my exhaustive initial thoughts. For excellent review of the legal status quo, see Andrew Dickinson’s ‘Realignment of the Planets – Brexit and European Private International Law’ in IPRax 2021/3.

The background. 

In June 2020, Michel Barnier reportedly commented ‘Do we really want the UK to remain a centre for commercial litigation for the EU, when we could attract these services here?’. This illustrated what has been clear now for quite a while: legal services contribute directly to GPD, mostly as a result of law firms’ turnover and, more recently,  via the financial performance of third-party financing. More importantly, they have an impact on the reputation of a country. Courts’ know-how, speed and general performance are a particularly relevant factor here. Therefore the legal sector acts as one factor in attracting foreign direct investment, as the rise of  international commercial courts shows.

The quote also illustrates however that the European Commission and the Member States were keenly aware of the impact of Brexit on judicial co-operation. Throughout the process, this included early EU flags that, should judicial co-operation fail to be included in the EU-UK Trade and Co-operation Agreement – TCA, it should not be assumed that the EU would support UK Lugano membership. Scholarship, too, warned of the inferiority of Lugano viz Brussels IA, and the particular weakness of Lugano States only having to take  ‘due account’ (Article 1 Protocol 2 Lugano 2007) of CJEU case-law on Lugano.

As readers will be aware, the TCA as eventually negotiated includes precious little on judicial co-operation in civil and commercial matters. A Hard Brexit in this area, therefore. Amidst the many issues that needed to be discussed in the TCA, judicial co-operation did not make the grade. This was not a big surprise. As Peter Bert signalled from the start, judicial co-operation barely featured in the negotiation mandate on the EU side, and on the UK side the Government kept largely schtum about the issue.

The lack of provision in the TCA put back into the spotlights the UK’s April 2020 application to join Lugano. Of note is as I have signalled before, that the UK could accede to Lugano, bypassing EU approval , if it were to become a fully fledged EFTA Member State (A70(1)a Lugano). That of course is not the route the UK has followed in its disentanglement from the EU. Under A72 Lugano therefore accession requires consent from the current Lugano States, consent which they ‘endeavour to give’ at the latest within one year after the invitation to do so by the Depository (i.e., Switserland). 

The flip-flop? 

It is reporting in the Financial Times which subsequently put things into a bit of a spin, whether as a result of misinformation or lobbying, I cannot say. On the day of an important meeting of the relevant Working Party, the FT first reported the EC would support Lugano Membership – contrary to what the vast majority of observers had assumed. By the afternoon a U-turn in reporting was made, suggesting additionally that a split had emerged among the Member States. That split is simply not there, or not to a sufficient degree (see below re the voting procedure).

The morning’s reporting of white smoke made the lack of EC support look like a surprise or indeed a disappointment. Clearly it could not have been the former: most of us had assumed the EC would not support the application.

That leaves the feeling of disappointment. Quite aside from one’s view on Brexit as a whole, for legal practice clearly a continuing umbilical cord between the UK and the Brussels Regime in its widest form (BIa, Rome I and II etc etc) would have been most preferable. Lugano would have been a second best. I remind readers that Lugano not only lacks a unified solid judicial oversight. It also lags behind Brussels Ia in important aspects (Lugano 2007 instead mirrors Brussels I, Regulation 44/2001).

The reasoning.

In its Communication to the EP and the Member States, as Peter Bert reports, the EC’s core reasoning is

“For the European Union, the Lugano Convention is a flanking measure of the internal market and relates to the EU-EFTA/EEA context. In relation to all other third countries the consistent policy of the European Union is to promote cooperation within the framework of the multilateral Hague Conventions. The United Kingdom is a third country without a special link to the internal market. Therefore, there is no reason for the European Union to depart from its general approach in relation to the United Kingdom. Consequently, the Hague Conventions should provide the framework for future cooperation between the European Union and the United Kingdom in the field of civil judicial cooperation.”

The Commission specifically refers to the example of Poland as the direction of travel (closer integration with the EU), and to Lugano being a flanking measure of the Internal Market. The 1968 Brussels Convention quite clearly shows the DNA and the narrative of market integration. The development of the EU judicial area in the meantime has moved along in the direction of the EU citisen, rather than merely corporations, as consumers of EU judicial co-operation. Yet without Lugano States being part of the much wider judicial co-operation agenda of the EU proper, it is not absurd to suggest that Lugano 2007’s narrative is more closely aligned with market  integration than it is with ever deeper integration.

At the time of Poland‘s accession to Lugano, this was indeed clearly also linked to its impending membership of the EU, as also noted by David Lock QC, relevant UK Minister at the time. For current candidates, one could think e.g. of Georgia, and the Balkan countries, as stronger candidates for Lugano membership than the UK. Clearly, however, they may bump into opposition by the non-EU Lugano States.

The victims.

The general narrative, to which I subscribe, is that it is not Business to Business contracts, and the litigation by big business cases that will be much hit by this hard Brexit in judicial co-operation. They will turn to arbitration, they will agree exclusive choice of court (covered by the 2005 Hague Convention), and if need be they will simply absorb being litigated in, or having to litigate in the EU. Likewise, many UK judgments in standard business cases will find little difficulty, if some delay, in enforcement in the EU.

Rather: SMEs (lest they too enter into exclusive choice of court agreements per Hague 2005; and they will be less likely to be able to absorb the cost of parallel litigation), consumers and employees, travellers (including in direct action versus the insurer), and claimants in corporate due diligence cases will find it much harder to have a smooth judicial process between the UK and the EU. Consumers domiciled in the EU will still be able to sue UK corporations in the EU, provided they meet the Pammer Alpenhof criteria under the relevant Section of Brussels Ia; and employees carrying out their duties here, likewise will be able to sue a UK employer in the EU. Yet with the distinct possibility of parallel UK proceedings, and subsequent difficulties in having a European judgment enforced, there will be many a freezing effect on proactive judicial action by these protected groups. Clearly and mutatis mutandis, the same categories in the UK will see a major judicial protection avenue fall away, as non-EU cq non-Lugano domiciled consumers, employees and small insureds do not enjoy the protection of the relevant Sections in BIa cq Lugano.

A distinct category of claimants that will be hit, are those which recently have enjoyed the reigning in of forum non conveniens in business and human rights cases particularly under Lugano (where Owosu’s rejection of forum non rules) and even under Brussels Ia (where A33-34 does create some obstacles). Without Lugano, forum non in these cases will once again come to the fore, although recent Court of Appeal and Supreme Court authority on duty of care may alter that fear. 

The voting procedure and future options.

Greg Callus suggests a number of future options here. I have made the following admittedly lame football comparison: If BIa is the Champions League, then Lugano is the Premier League and the Hague Judgments Convention the Ruritanian Boy Scouts football conference. That is because the 2019 Convention does not impact on forum non theories of the signatory States; is a long, long way off entry into force (albeit as noted the EC signals it might speed up the accession process); has such a huge amount of exceptions, reservations and open questions, counsel will drive an entire tank company through it; and, like all Hague instruments, lacks a harmonising court with authority over interpretation.

The Lugano Convention encourages consent within a year of notification. Absence of an answer in other words simply continues a status of lack of consent.

An important final word on the voting procedure: it is NOT the case that the final word on the current initiative lies with the Member States under qualified majority – QMV voting. An EU yes to Switserland, the depository, requires a Council Decision with QMV. However that requires a COM proposal for such decision. This, the European Commission clearly is not willing to put forward. Article 241 TFEU enables Council to request the EC to put forward a proposal for decision. Yet to amend that proposal (which would have to be the case here, seeing as the EC will not propose consent), unanimity is required.

In conclusion

I return to my Barnier quote above: ‘Do we really want the UK to remain a centre for commercial litigation for the EU, when we could attract these services here?’ Free movement of judgments simply is too big a cherry to have the UK pick it in the absence of a more overall framework for judicial co-operation in civil and commercial matters. I fear the fall-out for the categories listed above, might not be enough to make the EC and indeed enough Member States deviate from the Brexit negotiation mandate, which continues to cast a long shadow over this particular initiative.

Geert.

EU private international law, 3rd ed. 2021, Heading 1.7.

Posted on

Lipton v BA City Flyer. EU flight delay law following Brexit.

Update 27 July 2021 see the most interesting Q by Jack Williams whether the  CA is not getting its retained EU law mixed up with acquired EU law and therefore whether the judgment might have been per incuriam.

A short flag of the Court of Appeals finding yesterday in Lipton & Anor v BA City Flyer Ltd [2021] EWCA Civ 454 in which Coulson LJ, in discussing whether the airline had given proof of ‘extraordinary circumstances’ justifying flight delay, gives a perfectly clear overview of the provisions in the EU-UK Trade and Cooperation Agreement – TCA and relevant statutory provisions in the UK itself. In the case itself, the impact of these rules on passengers’ claims under the Flight Delay Regulation was at issue.

Geert.

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