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).

Trappit v American Express Europe. On choice of court in NDAs, privity, and lis pendens viz provisionally closed Spanish proceedings.

Trappit SA & Ors v American Express Europe LLC & Anor [2021] EWHC 1344 (Ch) confirms an application to strike out or stay proceedings claiming infringement of intellectual property rights in a computer programme called ARPO (relevant to fare re-booking), and breach of non-contractual obligations of confidence that are said to have arisen when ARPO was made available by claimants (Panamanian and Spanish special purpose vehicles of 2 software engineers) to first Defendant AmEx (a Delaware corporation with a registered branch in England), for assessment. AmEx after inspection declined to take a licence. AmEx reorganised and second defendant GBT UK (a joint AmEx and private equity venture) acquired AmEx Europe’s travel management services business in the UK. GBT use an alternative software which claimants argue is effectively an ARPO rip-off facilitated by AmEx’ consultation of ARPO.

The application is made by the Defendants, who argue Claimants are contractually bound to litigate the claims in Spain rather than England (an A25 Brussels Ia argument), or that in light of proceedings that have already been brought and provisionally determined against the Second Claimant in Spain, the E&W  should decline jurisdiction (A29 BIa) or strike out the English proceedings as an abuse of process.

First on the issue of choice of court and privity under A25 BIa. Relevant authority discussed includes CJEU CDC and UKSC AMT Futures v Marzillier. At 6 ff the genesis of choice of court and law provisions in the NDA is mapped (drafts had been sent to and fro). As Snowden J notes at 76,

it is the parties related to Trappit SA who are the claimants, who sought the NDA before making ARPO available to AmEx Europe, and who asked for a Spanish law and jurisdiction clause. However, it is those parties who now contend that the jurisdiction clause does not bind them and that they are free to issue proceedings in England for breach of confidence and copyright infringement arising (so they say) from the unauthorised copying of the source code to ARPO. In contrast, it was the parties related to AmEx Europe who would most naturally be the defendants to any claim under the NDA and who originally proposed an English law and jurisdiction clause. But it is those parties who are now contending that the jurisdiction clause in the NDA binds all parties and requires all of the claims made in the English Proceedings to be litigated in Spain.

The eventual clause reads “18. Governing law and jurisdiction. This Agreement (including any non-contractual obligations arising out of or in connection with the same) shall be governed in all respects by the laws of Spain without regard to conflict of law principles. Any dispute or controversy arising in connection with this Agreement shall be submitted before the courts of the city of Madrid, Spain.”

At 77 the judge notes that the scope and the circumstances in which persons other than Trappit SA and AmEx Europe might become a party to the NDA are matters to be determined in accordance with Spanish law as the governing law of the NDA. This underestimates the impact of A25 itself and discussion of in particular CJEU Refcomp rather than the tort /contract discussion in CDC would have been appropriate. Snowden J relies on expert reports on Spanish law with respect to (i) the proper approach to contractual construction, and (ii) the circumstances in which third parties can be bound by contracts.

Conclusion on these report is that a narrow construction of the clause must be rejected: [94] ‘all types of claims arising from misuse of the information which the NDA envisaged would be provided by one party to the other. This would include claims based upon unauthorised copying and infringement of intellectual property rights as well as claims for breach of confidence,..’ (At 97-98 a side-argument based on A8 Rome II is dismissed).

As for the privity element, Snowden J finds there was no contractual intention for other corporate entities also to be parties entitled to enforce the agreement and there was no indication that any other company was intended to acquire rights (or be bound) under the NDA. Spanish (statutory) law on assignment, subrogation and the like does not alter this.

Conclusion [138]: ‘the jurisdiction clause in the NDA applied to all the claims in the English Proceedings, but that it only binds AmEx Europe and Trappit SA as the original signatories to the NDA. The effect of Article 25 is that the English courts therefore have no jurisdiction over the claims brought by Trappit SA against AmEx Europe in the English Proceedings.’ Proceedings against GBT on that basis may continue on a A4 BIa basis (neither of the UK Defendants were named defendants to the Spanish Proceedings, hence an A29 ff lis alibi pendens argument against them has no object).

Obiter viz AmEx Europe yet of relevance to the UK defendants, on Article 29 lis pendens, of note is first of all that the Spanish proceedings are criminal ones, with an embedded civil liability claim. The English Proceedings were issued prior to the provisional dismissal of the Spanish Proceedings but after the delivery of the Expert Report in those proceedings whose findings were part incorporated into the Spanish judge’s provisional dismissal.

The first, threshold issue on A29 is whether the Spanish courts are still seised of the Spanish Proceedings seeing as there is a provisional dismissal in the Spanish criminal proceedings. Authority discussed was Easygroup v Easy Rent a Car [2019] EWCA Civ 477 and Hutchinson v Mapfre was also referred to. A29 only applies where there are concurrent proceedings before the courts of different member states at the time when the court second seised makes its determination [147]. Following the reasoning in Hutchinson, the judge decides  that the Spanish courts are no longer seized of the case: experts are agreed that the case has been closed and archived, and that it is unlikely in the extreme that any new evidence would come to light so as to justify reopening the case after more than five years of extensive investigatory proceedings in Spain [158].

A final set of arguments by the defendants, based on issue estoppel (the Expert Report had found that there had been no plagiarism or copying of the ARPO source code by the Defendants), Henderson v Henderson abuse, and vexatious ligation (all under an ‘abuse of process‘ heading) is dismissed.

Conclusion [195]: no jurisdiction to entertain any of the claims made in the English proceedings between Trappit SA and AmEx Europe by reason of the application of A25 BIa. The case against the UK defendants may continue.

Geert.

EU Private International Law, 3rd ed. 2021, 2.296 ff (2.355 ff), 2.532 ff.

 

Axis Corporate Capital v Absa. On poorly worded choice of court and the possibility of anti-suit to protect Brussels Ia jurisdiction against non-European proceedings.

Axis Corporate Capital UK Ltd & Ors v Absa Group Ltd & Ors [2021] EWHC 225 (Comm) is a good illustration of choice of court and law clauses that are a gift to conflict of laws practitioners. Choice of law and in particular choice of court was as Calver J put it [35] ‘somewhat poorly worded’. This is what the clauses look like in the various (re)insurance agreements [36 ff]

The primary reinsurances contain the following provision: “Any disputes concerning the interpretation of the terms, conditions, limitations and/or exclusions contained in this policy is understood and agreed by both the Reinsured and the Reinsurers to be subject to England Wales Law. Each party agrees to submit to a worldwide jurisdiction and to comply with all requirements necessary to give such court jurisdiction.”

The excess reinsurances contain the following provision: “Any dispute concerning the interpretation of the terms, conditions, limitations and/or exclusions contained in this policy is understood and agreed by both the insured and the insurers to be subject to England and Wales. Each party agrees to submit to the jurisdiction of England and Wales to comply with all requirements necessary to give such court jurisdiction. In respect of claims brought against the Insured and indemnified under this policy, as more fully described herein, the choice of law applicable is Worldwide and the choice of jurisdiction is Worldwide.”

Thirdly, the ARR [aggregate retention reinsurance, GAVC] contains the following two provisions: “Supplemental Clauses … “Policy Interpretation, Jurisdiction and Service of Suit Clause.” And then: “Choice of Law and Jurisdiction. “Any dispute concerning the interpretation of the terms, conditions, limitations and/or exclusions contained in this policy is understood and agreed by both the (re)insured and the (re)insurers to be subject to England and Wales. Each party agrees to submit to the jurisdiction of Worldwide to comply with all requirements necessary to give such court jurisdiction.”

The policy interpretation, jurisdiction and service of suit clause, which is specifically referred to as a supplemental clause, provides as follows and was contained in a schedule: “Any dispute between the Reinsured and the Reinsurer alleging that payment is due under this reinsurance shall be referred to the jurisdiction of the courts of the England and Wales and the meaning of this reinsurance policy shall be decided by such courts in accordance with the law of England and Wales.”

Claimant submits that, on the proper construction of the reinsurance contracts, the defendants were obliged to submit to and to submit any dispute arising under or in connection with any of the reinsurances contracts to the exclusive (A25 BIa imposes exclusive choice of court in principle: [56]) jurisdiction of the English courts. Calver J agrees that that is the case with a high degree of probability (this is an interlocutory stage). Generali Italia v Pelagic features as authority. Note the ‘worldwide’ reference in some of the clauses means that parties agree that all courts worldwide should ensure that the dispute be referred to the English courts.

The formulation in the excess reinsurance agreements, include what is construed as a carve-out of worldwide jurisdiction, which is non-exclusive, for claims brought against the insured and indemnified under the excess reinsurance. This is taken by the judge to mean that for all other claims, choice of court for E&W is, a contrario, exclusive.

At 81 ff, the judge grants an interim anti-suit injunction against proceedings in South Africa. The very possibility for this is not discussed at all (possibly as a result of the nature of the proceedings). It is not established that anti-suit to protect jurisdiction of a court in the EU, against that of courts outside the EU, is at all possible. In Gray v Hurley the Court of Appeal suggested it is not possible within the context of A4 BIa, yet referred to the CJEU where the case was withdrawn. This might become a contested issue.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.24, para 2.296 ff.

Semtech v Lacuna. When do proceedings alleging copyright violation ‘relate to’ contract of employment.

Semtech Corporation & Ors v Lacuna Space Ltd & Ors [2021] EWHC 1143 (Pat) at its core concerns an alleged breach of copyright between competitors, with former employees of one acting as a trojan horse in the conspiracy. Purvis DJ held [52 ff] with little difficulty (and with reference ia to Bosworth) that the claim however ‘relates to’ the contract of employment of the two main alleged culprits: ‘ the issues of the scope of their authority and the question of vitiation will be at the centre of their defence, and will have to be considered by reference to the contracts of employment which set out their duties and obligations with regard to Semtech. Thus, the employment contracts are not merely context and opportunity, they provide the entire legal framework for resolving Sornin and Sforza’s defence.’ The case against the two therefore needs to be brought in the employees’ domicile, France, and not in E&W.

Directing the judge away from what seems a prima facie applicable gateway in Brussels Ia is something creative counsel may of course attempt. In the case at issue, the employment DNA was all over the place rather than merely incidental. At 73-74 the judge adds that the protected categories section must of course be considered in isolation to give it its full effect: that the litigation will now splinter against various defendants cannot be rescued by an A8(1) anchor mechanism ‘sound administration of justice’ argument, nor any type of forum conveniens analysis.

Geert.

EU Private International Law, 3rd ed. 2021, 2.278 ff.

Vereniging van Effectenbezitters. Prospectus liability, purely financial damage and collective actions. The CJEU reigns in jurisdiction using statutory reporting obligations, at odds with its approach in Volkswagen.

Update 21 May 2021 for additional analysis see Mathias Lehmann here.

As I suggested when I reviewed the Advocate-General’s Opinion in C‑709/19 Vereniging van Effectenbezitters, the CJEU was likely to be much more succinct, which has proven true with the judgment this morning (no English version available as yet).

The CJEU ignored of course the AG’s calls fundamentally to reconsider the locus damni introduction in Bier. Yet it re-emphasised its willingness to reign in the repercussions of Bier, insisting places of jurisdiction under Article 7(2) Brussels Ia need to correspond to those with a certain link to the case. Its core reference throughout is its judgment in Lober, itself an odd case for the court did not assign territorial jurisdiction (an issue also sub judice in Volvo Trucks). Clearly Universal Music features heavily, too.

The Court’s instruction in Universal Music, that the mere presence of a bank account in which damages materialise, does not suffice to establish jurisdiction, is expanded in Vereniging van Effectenbezitters with the use of statutory reporting requirements: [35] For listed companies (clearly, an entry for distinguishing: how about those unlisted?), only the courts of the Member States in which they are under a statutory reporting duty with a view to its listing, are reasonably foreseeable to it, as places in which a market in its financial instruments may emerge.

The Court also adds [36] that the collective action nature of the suit is of no relevance. The referring court had asked whether in such suits the domicile of the aggrieved could be dropped as being relevant, however the CJEU insisted that domicile has no stand-alone relevance in purely financial damage at all, even in non-collective action.

To the degree that the existence of such statutory obligations is not exhaustively harmonised across the EU (on that subject, I am no expert), this opens op possibilities of course for Member States to assist its consumers with forum shopping, by expanding reporting requirements. (Albeit such extra requirements may themselves by vulnerable under free movement of establishment and /or services; but now my mind is racing ahead).

The Court’s limiting approach here is in stark contrast with the much wider consequences of its findings on jurisdiction viz material consumer products in  Volkswagen.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.459

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 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.

Skatteforvaltningen v Solo Capital Partners. Unfinished business on endangering Brussels Ia’s effet utile, ‘civil and commercial’ in revenue matters, enforcing foreign public law and Dicey Rule 3.

At issue in Skatteforvaltningen (The Danish Customs And Tax Administration) v Solo Capital Partners LLP & Ors [2021] EWHC 974 (Comm)  is ‘Dicey Rule 3’ which states that “English courts have no jurisdiction to entertain an action: (1) for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign State; or (2) founded upon an act of state“. The assertion of such claims is an extension of a sovereign power of taxation and, per Lord Keith of Avonholm in Government of India v Taylor [1955] A.C. 491, 511: “an assertion of sovereign authority by one State within the territory of another, as distinct from a patrimonial claim by a foreign sovereign, is (treaty or convention apart) contrary to all concepts of independent sovereignties“.

By its claims, SKAT (Danish customs and excise) seeks the return of amounts it says it was wrongly induced to pay out as tax refunds.

Brussels Ia and Lugano (the latter viz a number of defendants domiciled in Lugano States) feature in the discussion because SKAT argue that [22] ‘: (i) this is a ‘civil and commercial matter’, not a ‘revenue, customs or administrative matter’, under A1(1) BIa; and (ii) it is therefore not possible to invoke Dicey Rule 3 to dismiss its claims against Brussels-Lugano defendants, because to do so would be to decline to exercise a jurisdiction conferred by the Brussels-Lugano regime otherwise than in accordance with its rules.’

If the argument were upheld, any claims falling within Dicey Rule 3 would proceed against Brussels-Lugano defendants while being dismissed against other defendants. 

Dicey Rule 3 is not a jurisdictional rule: it is a substantive rule of English law. Yet SKAT’s argument in my view essentially means that an application of Dicey Rule 3 to the matter, would deprive A1(1) BIa of its effet utile.

Logically the BIa /Lugano argument would have had to have been considered first. Baker J does the opposite (his thinking process, unlike writing up, may of course first have considered the BIa argument) and holds at 120 after thorough consideration of the authorities on Dicey Rule 3, that the rule applies: SKAT’s claims seek indirectly to enforce in E&W, Danish revenue law.

In an interesting Coda at 121 ff, he also considers obiter the argument that, in essence, was that in line with a long public international law history, the cross-border recovery of tax refunds wrongfully procured is seen as or assumed to be a matter of revenue law requiring to be dealt with (if at all) by supranational legal instrument. Refence here is made ia to 1925 League of Nations reports.

Justice Baker starts [132] the BIa /Lugano argument along familiar lines: need for autonomous interpretation. QRS 1 ApS et al v Frandsen [1999] EWCA Civ 1463 is English authority under the Brussels Convention, and CJEU C-49/12 Sunico (to which both the AG and the CJEU refer in C-73/19 Belgische Staat v Movic BV et al) CJEU authority.

[142] In Sunico, the CJEU considered claims brought by HMRC alleging missing trader VAT carousel frauds. The substantive claims, for damages at common law for an alleged tortious conspiracy to defraud, were pursued in E&W against defendants domiciled in Denmark. HMRC also brought ancillary  proceedings in Denmark to attach assets with a view to enforcing any damages judgment obtained in England. Those Danish proceedings were objected to on the basis that they were a ‘revenue [etc] matter’ excluded from BI.

[144] The CJEU concluded at [41]-[43], essentially, that because the claim was framed in tort and not as a claim under a tax law, the proceedings were a ‘civil and commercial matter’ and not a ‘revenue [etc] matter’ for the purpose of Article 1(1) of the Brussels Regulation, so long as “the commissioners were in the same position as a person governed by private law in their action against Sunico and the other non-residents sued in the High Court of Justice” (ibid at [43]).

At 149 Baker J concedes that the decision of the Court of Appeal in Frandsen was incorrect per Sunico, however then holds that the result would be the same: the classification of proceedings as a ‘civil and commercial matter’ or a ‘revenue [etc] matter’ for the purpose of applying the Brussels-Lugano regime does not touch the question whether Dicey Rule 3 applies so as to defeat the claim. He suggests [149] a search for the lex causae under Rome II would be largely irrelevant for per A16 Rome II Dicey Rule 3 qualifies as lois de police, and finds support for his view that despite scholarly suggestion (i.a. by prof Briggs), Frandsen must not be displaced, in The Law Debenture Trust Corporation [2017] EWHC 655 (Comm) [and in Andrew Dickinson’s reporting on same], in which the English Act of State doctrine was upheld despite Rome II’s classification of the matter as civil and commercial.

At 165 ff he, somewhat superfluously still considers the more recent CJEU authority of Buak and the aforementioned Movic, and decides at 174 that per BUAK and Movic (on the use of evidence etc.) that SKAT was neither attempting nor able to change the rules of the litigation game, either as to the substantive rules of law that would apply in determining its claims, or as regards the procedural rules applicable in the litigation, or as regards the status or effect of any of the evidence it might deploy or disclose. SKAT was not by this litigation pursuing public law proceedings, in which liabilities are determined as if this were a judicial review of SKAT’s actions, decisions or exercise of public law powers.

Yet that the matters are of a civil and commercial nature, in the end does not matter at all: [176]

To the extent that SKAT relied on the Brussels-Lugano regime as the basis for this court having jurisdiction over the Brussels-Lugano defendants that have been sued, including it may be for serving proceedings out of the jurisdiction, in my judgment it was right to do so. But its having been entitled to do so did not oust or disapply Dicey Rule 3 in respect of those defendants.

Using prof Dickinson’s words (26-27), there is a dissonance here between Brussels Ia and the applicable law. One that, I would suggest, endangers the effet utile of Brussels Ia. Dicey Rule 3’s character as a substantive rather than a jurisdictional rule, does not to my mind save that.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.28 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.

Johnson v Berentzen. The doubtful Pandya conclusions on service as lex causae confirmed.

Cressida Mawdesley-Thomas has overview of the facts and issues in Johnson v Berentzen & Anor [2021] EWHC 1042 (QB) here. Stacey J essentially confirms the conclusions of Tipples J in Pandya.

The case concerns the extent of the ‘evidence and procedure’ exclusion from the Rome II Regulation on applicable law in the event of non-contractual obligations.  For the reasons I outlined in my review of the latter (readers please refer to same), I continue to disagree. With counsel for claimant I would suggest Pandya wrongly interpreted A15(h) Rome II in concluding that the provisions of A15 (‘scope of the law applicable) are to be construed widely , and the evidence and procedure exclusion (not: ‘exception’), narrowly.

Something for the Court of Appeal to look into, I would suggest.

Geert.

EU Private International Law, 3rd ed. 2021, para 4.79 ff.

 

WWWRT v Tyshchenko. Interesting if contestable engagement with Brussels IA’s Article 34’s forum non-light regime.

In WWRT Ltd v Tyshchenko & Anor [2021] EWHC 939 (Ch) and following an earlier Worldwide Freezing Order, Bacon J engages with Article 34 Brussels Ia’s forum non conveniens ‘light’ regime.

The proceedings are brought by WWRT ltd against Mr Serhiy Tyshchenko and his ex-wife, Mrs Olena Tyshchenko. The claim is founded on an allegation that the Defendants carried out an extensive fraud on the Ukrainian bank, JSC Fortuna Bank during which time the bank was (it is claimed) ultimately owned by Mr Tyshchenko. The bank was subsequently declared insolvent and was liquidated, in the course of which a package of its assets, including the disputed loans, was sold to Ukrainian company Star Investment One LLC.  Star in turn sold those rights and assets to WWRT in March 2020. WWRT’s case is that following those two assignments it has now acquired the rights to bring the claim relied upon in the present proceedings, which is one in tort under Article 1166 of the Ukrainian Civil Code.

In current proceedings, defendants contest jurisdiction, on the basis of 3 alternative grounds:

Firstly, the principle of ‘modified universalism’ (which I have discussed ia here) which should ground a stay under common law so as to prevent WWRT from bypassing the Ukrainian insolvency proceedings. The suggestion is that CJEU Owusu did not deal with a potential stay to allow the judge in one EU Member State to stay proceedings so as to support insolvency proceedings in another Member State. Bacon J held [57], in my view justifiably, that even if indeed the CJEU in Owusu did not specifically deal with this issue, its reasoning (particularly the insistence on predictability and legal certainty) extends to the current scenario. Insolvency proceedings may well (and indeed clearly) fall outside BIa’s scope, however the claim at issue is one in tort, which falls squarely within it. At 62 ff he discusses obiter that even if such stay would have been theoretically possible, he would not have exercised his discretion to grant it.

Secondly, at 89 ff, a stay by analogy with A34 BIa. It is seemingly common ground between the parties and the judge that the bankruptcy exclusion in A1 BIa precludes the express application of A34 if the pending action in the third State is in the nature of bankruptcy or insolvency proceedings. Support is found in Baker J’s views in BB Energy. This is not a settled issue. Neither is much discussion, pro or contra, of the in my view unjustifiable finding of reflexive application of A28 Lugano in JSC Commercial Bank v Kolomoisky [2019] EWCA Civ 1708. The more sound rejection of an A34 stay in the case at issue  in my view lies in the judge’s obiter finding at 95 that the proceedings in E&W are not ‘related’ to those in the Ukraine.

Thirdly, a more straightforward argument of lack of domicile of one of the defendants in the UK, hence room for a forum non conveniens stay. This argument was in fact dealt with first, at 38 ff, with Bacon J  holding on the basis of a pattern of settled residence that domicile was in fact established. At 98 ff he holds obiter that even if A4 hence BIa had not been engaged, he would not have allowed a stay on forum non grounds.

In conclusion, the freezing orders were continued.

Geert.

EU Private International Law, 3rd ed 2021, para 2.539 ff