Banca Intesa v Venezia: An excellent illustration of the relevance of characterisation. (And of the application of the ‘purely domestic contracts’ rule, with a pudding of the ‘consideration’ theory as lois de police)).

Banca Intesa Sanpaolo SPA & Anor v Comune Di Venezia [2022] EWHC 2586 (Comm) is an excellent illustration of the relevance of characterisation and of the international harmonisation of same. It also discusses the application of the ‘purely domestic contracts’ rule of Article 3(3) Rome Convention, carried over into the Rome Regulation.

Background is long-running litigation involving derivative transactions used by Italian municipalities to hedge their interest rate risk, as Sarah Ott summarises the context here (she discusses Dexia Crediop SpA v Provincia di Pesaro e Urbino [2022] EWHC 2410 (Comm), a case with many similar issues).

Venice contends that, for various reasons, it lacked the substantive power to enter into the Transactions as a matter of Italian law, and that, applying English conflict of law principles, that means that it did not have capacity to enter into the Transactions and that they are not valid. It also contends that the Transactions breached various rules of Italian law which have the status of “mandatory rules of law” for the purposes of A3(3) Rome Convention 1980 (which is applicable and not the Rome I Regulation) and that as a result the Transactions are void and/or unenforceable.

The Banks deny that the entry into the Transactions contravened any provisions of Italian law, on the basis of arguments as to the effect of Italian law and its application to the facts of this case, and further deny that any such contravention would deprive Venice of capacity to contract as a matter of English conflict of laws principles in any event.

Capacity to enter into contractual relationship itself is not caught by the Rome Convention as a result of the Convention’s carve-out of Article 1(2) c (most legal systems make such capacity subject to the lex incorporationis, and [115] is determined by reference to the law in force when the Transactions were entered into). Foxton J refers as authority to Credit Suisse International v Stichting Vestia Groep [2014] EWHC 3103 (Comm) [185].

Who then is to decide whether a particular issue of Italian law raises a question of capacity, or authority, or some other kind of legal challenge to the validity and efficacy of the Transactions? Here Foxton J wrongly in my view simply refers to lex fori, English law. In reality of course it is the Rome Convention that does so, although as I have pointed out before, neither the Rome Convention nor Rome I excels at clarifying.

[129] ff then follows lengthy analysis of the issues of capacity under Italian law as the lex causae, with the conclusion being that Venice did indeed so lack capacity under Italian law.

The issue of mandatory Italian law replacing the English lex contractus as a result of Article 3(3) Rome Convention’s ‘purely domestic contracts’ rule, is dealt with obiter. It fails at the first hurdle with Foxton J holding [341] that the scenario is not purely domestic. He does not much entertain the issue of whether under Italian law (lack of) a theory of contractual consideration might be of mandatory nature, referring [356] to the similar issues of consideration and privity of contracts under English law (which in effect might subsequently become relevant under the overriding mandatory rules of the forum).

An interesting judgment.

Geert.

ROI Land Investments. The CJEU on letters of comfort and their leading to a qualification as employment cq consumer contract for jurisdictional purposes, and on more generous national rules for the protected categories.

In an interesting judgment, the CJEU yesterday held (no English edition yet) in C-604/20 ROI Land Investments Ltd v FD on protected categories suing a defendant not formally associated with the claimant by a clear contract of employment. That the defendant is not domiciled in the EU is in fact of less relevance to the issues.  I had somehow missed Richard de la Tour AG’s Opinion on same (it happens to the best of us).

Claimant in the main proceedings is FD, domiciled in Germany. Defendant is not his current employer and is not domiciled in a Member State. Yet by virtue of a letter of comfort it is directly liable to the employee for claims arising from an individual contract of employment with a third party. The gist of the case is whether an employee can sue this legal person under the employment title if the contract of employment with the third party would not have come into being in the absence of the letter of comfort.

The slightly complex three part construction, transferring relationships of employment, essentially is one of tax optimisation via Switserland. FD used to be employed by ROI Investment, a Canadian corporation, before his contract was transferred to R Swiss, a Swiss SPV created for the very purpose of the operation. ROI Investment via a letter of comfort effectively guaranteed the outstanding wages due to FD. FD’s contract with Swiss was ended, a German court held this to have been done illegally and ordered Swiss to pay a substantial sum whereupon Swiss went into insolvency. FD now wishes to sue the Canadian ’employer’.

CJEU Bosworth is the most recent case which extensively discusses the existence of ’employment’, referring to CJEU Shenavai and Holterman. In ROI Land the CJEU [34] instructs the national court in particular to assess whether there is a relationship of subordination between individual and corporation, even if subordination is actually only one of the Shenavai /Holterman criteria.

Erik Sinander has already noted here (his post came in as I was writing up mine) that this is a different emphasis from the AG: he had suggested a third party who was directly benefitting from the work performed by the employee (“un intérêt direct à la bonne exécution dudit contrat”) should be considered an employer. That to my mind is way too large a criterion and the CJEU is right to stick to the earlier ones.

[35] the CJEU suggests relevant circumstances in the case most probably confirming the relationship of subordination hence of employment: the activities which FD carried out for his two respective employers stayed the same, and the construction via the  SPV would not have been entered into by FD had it not been for his original employer’s guarantee.

The forum laboris in the case at issue is then I assume (it is not discussed quite so clearly in the judgment) determined by the place of habitual performance of the activities for the third party, the formal (now insolvent) employer, not the activities carried out for the issuer of the letter of comfort: for there are (no longer) such activities.

[37] ff the Court entirely correctly holds that more protective national rules cannot trump Brussels Ia’s jurisdictional provisions for the  protected categories: both clear statutory language and statutory purpose support that  conclusion.

[52] ff the CJEU entertains the subsidiary issue raised in the national proceedings as to whether the contract may be considered a consumer contract. It holds that the concept of ‘a purpose outside (a natural person’s) trade or profession’ does not just apply to a natural person in a self-employed capacity but may also apply to an employee. [56] seeing as FD would not have signed the new employment agreement without the letter of comfort, the employment agreement cannot be considered to be outside FD’s profession. Therefore it cannot qualify as a consumer contract.

Geert.

 

 

Soleymani v Nifty. The Court of Appeal does not convince on Brussels Ia’s arbitration exception (as applied to consumers) yet does lift a stay to allow scope of consumer rights under English law to be litigated in the UK.

Soleymani v Nifty Gateway LLC [2022] EWCA Civ 1297 is the appeal against [2022] EWHC 773 (Comm) which I reviewed here. That post will give readers the necessary background. The Court of Appeal partially overturned. The judge had issued a stay of English proceedings under s9 Arbitration Act 1996, effectively allowing a US arbitrator to decide the validity of the arbitration agreement. That stay has now been lifted and E&W proceedings on that issue will go ahead.

Of note is that the discussion takes place under retained EU law, with the relevant provisions in ia s15b of the Civil Jurisdiction and Judgments Act 1982 (as amended) mirroring the consumer section of Brussels Ia and Directive 93/13 on unfair terms in consumer contracts, as amended.

A first ground of appeal concerned the core of the Brussels Ia issue: whether the Court had jurisdiction under s. 15B CJJA because the exception for arbitration under Article 1(2)(d) of the Recast Regulation did not apply to the Arbitration Claim. In other words whether the exclusion for arbitration is engaged when a consumer, ordinarily protected by the forum actoris provisions in A17 ff BIa, calls upon that protection to seize a UK court.

The first instance judge held that the principal focus and subject matter of Mr Soleymani’s claim is whether he is legally obliged to arbitrate, hence engaging the arbitration exception. The Court of Appeal agrees for largely the same reasons as the judge, and with Popplewell J [89] indicating no change in his views following CJEU Prestige. The CA’s own finding in [2021] EWCA Civ 1589 The Prestige is recalled:  “the question is whether a principal focus of the proceedings is arbitration, the essential subject matter of the claim concerns arbitration, or the relief sought can be said to be ancillary to the arbitration process, these being alternative ways of expressing the same idea”.

The Court of Appeal’s focus seems to be on avoiding abuse by the consumer, who could circumvent the arbitration exception by bringing his claim within the scope of BIa hence characterising it as a claim to enforce his consumer rights.

I continue to find the alternative more convincing: that the consumer section could be easily circumvented, particularly by non-EU based traders and /or in the event of arbitration outside the EU, simply by inserting an ADR clause in the contract, depriving the consumer of the forum actoris. Claimant’s counsel’s nine reasons [51] in my view have convincing appeal, and not Popplewell J’s suggestion [93] ff that in practice the consumer would be protected anyways, either by the ability to sue in the UK and have the ADR clause declared void under consumer protection law, or by the ability to have any foreign award declared unenforceable under the New York Convention’s ordre public exception. The very case at hand show the real difficulties (and costs) the consumer will be put through if and when the business party to the transaction decides to pursue the arbitration proceedings abroad.

The second ground of appeal was dismissed for it relied on s. 15D(1) being construed as invalidating the arbitration clause, which the Court had already held it did not, however ground 3 was accepted, for reasons formulated by Birss LJ.

Mr Soleymani’s claim consisted of claims for three distinct declarations: (i) a declaration that the arbitration clause was unfair and not binding, (ii) a declaration that the governing law clause was unfair and not binding, and (iii) a declaration that the contract formed in the auction was illegal under the Gambling Act 2005.

The jurisdiction issues under Grounds 1 and 2 of the appeal relate only to the first of these three, the arbitration clause claim. The judge as discussed decided that the Arbitration Claim was within the arbitration exception which now forms part of the CJJA (and had its origin in the Brussels Convention and the later Recast Regulation), and the appeal from that decision was dismissed.

The judge however also decided that the other two claims, that is the Governing Law Claim and the Gambling Act Claim were not clearly within the arbitration exception, yet she stayed the E&W proceedings to give way to the arbitration in New York. Therefore these claims were at least capable of falling within the jurisdiction gateway provided for in s15B(2)(b) CJJA 1982.  Ground 3 argued that the first instance judge erred in staying these proceedings under section 9 of the arbitration Act without determining the fairness question or directing a trial before the English Court on the issues raised by that objection.

That ground was upheld for three reasons [151] ff which all go towards limits to Kompetenz Kompetenz in consumer (and other?) cases.

Firstly, the public importance of decisions vindicating (or not) consumers’ rights. The case Mr Soleymani is seeking to make has implications for  consumers in general in this jurisdiction and it is important that they are considered and ruled upon in public in a court. Therefore it was held the s9(4) issues should be decided at a trial and not left to be decided in the arbitral tribunal.

Further [152] the consumer protection rights under UK law involve domestic concepts which UK court are far better placed to adjudicate upon than a New York arbitrator. Even if it were certain that the New York Tribunal would apply UK law (a late proffered undertaking to do so was made and discussed [155] ff), it engages principles which are the subject matter of our domestic jurisprudence, not simply some general notion of fairness.

Thirdly whether the arbitration agreement does in fact operate unfairly on Mr Soleymani is not suited to summary determination. “If the invalidity argument is good, the very reasons which make it good, namely that it places an unfair burden on Mr Soleymani, weigh against allowing the tribunal to decide the issue under its Kompetenz-Kompetenz jurisdiction. The Judge’s finding that there would be nothing unfair about leaving it to the arbitrator to decide that issue is inconsistent with her recognition that there was a triable issue whether this was an unfair arbitration agreement.”

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.3.2, and 2.2.9.2.

Maceió victims v Braskem. Rotterdam court refuses application for Article 34 lis pendens stay.

The (first instance) court at Rotterdam has upheld anchor jurisdiction and refused an application for an Article 34 Brussels Ia stay. The case concerns victims of earthquakes in the Brasilian Maceió region, which they argue are caused by the mining activities of Braskem. The judgment is only available in Dutch.

The Dutch anchor defendants are intra-group suppliers of ia specialty chemicals, and finance. The main target of the claim of course is the Brasilian mother holding. Whether the latter can be brought into the proceedings is not subject to Brussels Ia but rather to Dutch residual rules. However just as in e.g. Shell, the Dutch rules are applied with CJEU authority on Article 8(1) Brussels Ia firmly in mind. In much more succinct terms than the English courts in similar proceedings, the Dutch courts [6.16] finds the cases so ‘closely related’ that it is expedient to hear the cases together. It emphasises that while the respective roles and liabilities of the various undertakings concerned is likely to be very different, there is a bundle of legal and factual questions that runs jointly throughout the various claims. [6.18] it emphasises that the decision to base the European headquarters of the group, and the finance activities at Rotterdam, implies that the concern reasonably could have foreseen it would be sued here.

Equally succinctly [6.19 ff] the Court rejects the argument that the use of the Dutch corporations as anchor defendants is an abuse of process. Such abuse must be narrowly construed and  it is far from obvious that the claim against the anchors is entirely without merit.

Seemingly defendants tried to argue forum non conveniens however [6.23] the court points out such construction does not exist in The Netherlands and obiter it adds (like the Court of Appeal in Municipio) that practical complications in either hearing of the case or enforcement of any judgment are not a reason to dismiss jurisdiction.

Request for a stay in the procedures viz the Brasilian corporations [6.26] is rejected on (Dutch CPR) lis pendens rules for the parties in the proceedings are not the same. Article 34 is dealt with in two paras (quite a contrast with the E&W courts). The pending procedures vis-a-vis Article 34 are not, it seems, Brasilian Civil Public Actions – CPAS (these were at issue in Municipio de Mariana (of some interest is that the law firm behind the claims is the same in both cases)). Rather, pending liquidation proceedings are considered as the relevant assessment points. [6.28] obiter the court finds that the cases are most probably not related. It grounds  its decision however on a stay not being in the interest of the sound administration of justice. The court holds that the Brasilian proceedings are not likely to be concluded within a reasonable time. Defendants’ commitment at hearing to speed up the process in Brasil, are met with disbelief by the court given the defendants’ attitude in the Brasilian procedures hitherto.

[6.32] permission to appeal the interim judgment on jurisdiction is denied. This means that, like in Airbus, discussion on the private international law issues is likely only to resurface at the stage of appealing the judgment on the merits, too.

An important judgment: other than Petrobas, there are to my knowledge no continental judgments discussing Article 34 in this intensity (there are E&W judgments, as readers of the blog will know).

Geert.

See also ‘Dude, where’s my EU court? On the application of Articles 33-34 Brussels Ia’s forum non conveniens- light rules’, Journal of Private International Law, forthcoming 2022.

 

QBE Europe v Generali. Move over, West Tankers!

Update 16 September 2022 see Francisco Quintay, mine and others’ pondering on the enforcement implications, here and here. I agree the position of EU-based parties faced with an ASI, is interesting. Ignoring an ASI leads to a contempt judgment, infringement of which is a criminal offence. Unlike Francisco I am not convinced that enforcement of a contempt order would fail under ordre public in the EU.

QBE Europe SA/NV v Generali Espana De Seguros Y Reaseguros [2022] EWHC 2062 (Comm) is not a surprising judgment of course. I flagged it on Twitter early August and I post it here for the sake of blog completeness.

The judgment grants an urgent anti-suit injunction (ASI) to restrain proceedings brought by the Defendant (Generali) against QBE UK in Spain, and to prevent Generali from commencing similar proceedings against QBE Europe. The proceedings in Spain assert a direct claim against QBE UK under a Spanish statute, by reference to a liability insurance policy. The judgment is exactly the kind of ASI outlawed by CJEU West Tankers and will reinforce the position of London in the arbitration market.

Geert.

IRnova v FLIR. CJEU would seem casually to reject reflexivity, and confirms narrow interpretation of A24(4) BIa’s exclusive jurisdictional rule for (in casu non-EU) patents.

Lydia Lundstedt has prior review of the judgment in CJEU C-399/21 IRnova AB v FLIR Systems AB (who had been business partners in the past) here. Swedish courts are clearly busy referring the private international law elements of patent cases to the CJEU.

Of particular note is that a 3 judge chamber would seem to have ruled out reflexive effect as casually as if it were swatting a fly.

On 13 December 2019, IRnova brought an action before the Patent and Market Court seeking, inter alia, a declaration that it had a better right to the inventions covered by international patent applications, subsequently supplemented by European, US and Chinese patent applications deposited by FLIR in 2015 and 2016, and by US patents granted to FLIR on the basis of those latter applications. In support of that action, IRnova had stated, in essence, that those inventions had been made by one of its employees, meaning that that employee had to be regarded as their inventor or, at the very least, as their co-inventor. IRnova therefore argued that, as the inventor’s employer and thus successor in title, it had to be regarded as the owner of the inventions. However, FLIR, without having acquired those inventions or otherwise being entitled to do so, deposited the applications in its own name.

The court had dismissed jurisdiction viz the Chinese and US patent applications, and the US patents, on the ground, in essence, that it regarded the action concerning the determination of the inventor as being linked to the registration and validity of the patents, and it applied A24(4) BIa reflexively. The Appeals Court referred the issue on reflexive effect to the CJEU, in the following terms:

‘Is an action seeking a declaration of better entitlement to an invention, based on a claim of inventorship or co-inventorship according to national patent applications and patents registered in a non-Member State, covered by exclusive jurisdiction for the purposes of Article 24(4) of [the Brussels Ia Regulation]?’

however the CJEU reformulated [22-24] the case as not concerning reflexive effect at all, rather, enquiring about the scope of the A24(4) gateway.

The Court first of all [25] ff makes a point of confirming its broad reading of the ‘international’ element required to trigger European private international law, referring to CJEU Owusu.

It then [35] would seem to rule out reflexivity in a very matter of factly way (and as Lydia also noted, without AG Opinion) and despite as noted having earlier reformulated the question away from reflexivity:

as has already been pointed out in paragraph 26 of the present judgment, the patent applications at issue in the main proceedings were deposited and the patents concerned were granted not in a Member State, but in third countries, namely the United States and China. As Article 24(4) of the Brussels Ia Regulation does not envisage that situation, however, that provision cannot be regarded as applicable to the main proceedings.

This may have already answered a core question in  BSH Hausgeräte v Aktiebolaget Electrolux.

[36] ff it adds (‘in any event’) reference ia to CJEU Hanssen and to the exceptional nature of A24 [39]. It holds that [42]

the main proceedings relate not to the existence of the deposit of a patent application or the grant of a patent, the validity or lapse of a patent, or indeed an alleged right of priority by reason of an earlier deposit, but to whether FLIR must be regarded as being the proprietor of the right to the inventions concerned or to a portion of them.

[47] it refers ia to the fact that fact that

an examination of the claims of the patent or patent application at issue may have to be carried out in the light of the substantive patent law of the country in which that application was deposited or that patent was granted [however it ] does not require the application of the rule of exclusive jurisdiction laid down in Article 24(4) of the Brussels Ia Regulation

The operative part of the judgment refers both to the A24(4) restrictive interpretation element and to the third countries element hence once cannot simply regard the reflexivity issue as obiter.

Much relevant and surprisingly succinct on the reflexivity issue.

Geert.

EU Private International Law, 3rd ed. 2021, 2.208 and 2.548.

BSH Hausgeräte v Electrolux. An opportunity for the CJEU to clarify reflexive effect of exclusive jurisdictional rules, and stays under Article 24(4) (intellectual property law).

I mentioned the pending case C-339/22 BSH Hausgeräte v Aktiebolaget Electrolux yesterday at our excellent (if I say so myself) Max Planck Institute – EAPIL – KU Leuven workshop on Brussels Ia reform. Questions referred, are

Is Article 24(4) [BIA] to be interpreted as meaning that the expression ‘proceedings concerned with the registration or validity of patents … irrespective of whether the issue is raised by way of an action or as a defence’ implies that a national court, which, pursuant to Article 4(1) of that regulation, has declared that it has jurisdiction to hear a patent infringement dispute, no longer has jurisdiction to consider the issue of infringement if a defence is raised that alleges that the patent at issue is invalid, or is the provision to be interpreted as meaning that the national court only lacks jurisdiction to hear the defence of invalidity?

Is the answer to Question 1 affected by whether national law contains provisions, similar to those laid down in the second subparagraph of Paragraph 61 of the [Swedish] Patentlagen (Patents Law), which means that, for a defence of invalidity raised in an infringement case to be heard, the defendant must bring a separate action for a declaration of invalidity?

Is Article 24(4) [BIa] to be interpreted as being applicable to a court of a third country, that is to say, in the present case, as also conferring exclusive jurisdiction on a court in Turkey in respect of the part of the European patent which has been validated there?

BSH hold a European patent relating to a vacuum cleaner. The patent has been validated in Austria, Germany, Spain, France, the United Kingdom, Greece, Italy, the Netherlands, Sweden and Turkey. Electrolux of Sweden has subsidiaries in a number of other Member States, such as Germany. A number of disputes have arisen between BSH and companies in the Electrolux group concerning the patent in question. Inter alia, the European patent validated in Germany was invalidated in 2020 by a German court at the request of a subsidiary of Electrolux. That judgment has been appealed.

On 3 February 2020, BSH brought an action against Electrolux before the Patents and Market Court in Sweden and claimed inter alia that Electrolux should be prohibited from using the patented invention in all the abovementioned States and ordered to pay reasonable compensation for the unlawful use. BSH also claimed compensation for the additional damage caused by Electrolux’s alleged patent infringement. Electrolux argue that the Court should dismiss the action in relation to the foreign parts of the patents. In its view the foreign patents are invalid and the Swedish court therefore lacks jurisdiction to hear infringement actions concerning those patents.

End of December 2020 the court agreed, citing A24(4) viz the EU patents (the claim being issued prior to Brexit implementation day, this includes the UK) and ‘an internationally accepted principle of jurisdiction’ (in essence, the Moçambique rule) viz the Turkish patent.

BSH of course appeal.

A asked students in the August resit exams how they think the CJEU should answer. On Q1 I would expect them to cite the need to interpret A24 restrictively, with reference to one or two cases confirming same (there are plenty); and the lack of solution in the Brussels Recast. Contrary to what Electrolux contend, a proposal to allow a court to merely stay the case pending the foreign court’s decision on validity, was never rejected. Such a proposal was never made. BIa merely confirmed CJEU Gat v Luk’s holding that exclusive jurisdiction kicks in regardless of whether the argument of invalidity is introduced as a claim of by way of defence.

On Q2 I would like to seem them argue something to the effect that national CPR must not infringe the effet utile of BIa. (Only) if the effect of the Swedish rules is that it requires the defendant to initiate IPR invalidity claims in all the relevant States, or lose its possibility of an invalidity defence, this would in my view run counter BIa’s intention and scope.

Finally, on the 3rd Q they should engage with the lack of BIa clarification on reflexive effect, other than in the strict confines of A33-34 and its related recitals. Relevant case-law of course includes Ferrexpo and Central Santa Lucia L.C. v. Meliá Hotels International S.A. Interested readers may wish to consult Alexander Layton KC’s most excellent paper on same. Some students may refer to the UPC developments and the jurisdictional consequences in Article 71 BIa (operational 2023?).

Geert.

Airbus Investors Recovery v Airbus. Rechtbank Amsterdam unconvincingly on applicable law under Rome II in investor suits.

The blog is back from summer recess with a post on Airbus Investors Recovery Limited v Airbus SE, where the first instance court at Amsterdam by way of preliminary judgment deals with the law applicable to an investor suit. Claimant has had the investment claims of a number of Airbus investors assigned to it. The core of the claim is that Airbus has tortiously caused damage to the investors in both the act, and in the correspondence leading to, and after, settlement with various financial authorities following allegations of corruption in securing aircraft orders. 

Oddly, no reference at all is made to Petrobas, despite the issues there being similar – perhaps the court in Airbus rejected relevance of the Petrobas decision for that case was held prior to CJEU Vereniging voor Effectenbezitters (VVE v BP).

I flagged many of the issues at issue in the judgment, in my post on applicable law which followed the jurisdictional discussion by the CJEU in VVE v BP.

The judgment is in Dutch of course however non-Dutch speakers may refer to it anyway, for the extract of Airbus’ choice of law provisions in the 2019 annual accounts [2.6]. This is relevant with a view to the discussion on transparency obligations following CJEU VVE v BP

The court, and one assumes parties were in agreement for the issue is not discussed, first of all assumes the liability is non-contractual. I continue to be of the view that this need not necessarily be the case. Focusing the discussion on Rome II therefore, the court also accepts readily that the lex societas carve-out of Rome II does not apply (reference is made [5.3] to CJEU Treuhand). Parties are in agreement [5.6] that for Dutch investors, Dutch law applies per Article 4(2) Rome I (shared habitual residence).

[5.10] Airbus absolutely correctly in my view insist that the CJEU’s Brussels Ia application in VVE must not simply be extrapolated to the applicable law issues at stake here. The court essentially disagrees ([5.10] in fine) and in my view it is wrong to do so.

It then [5.111], not entirely convincingly in my view, dismisses application of Article 4(1), holding that this Article in its view always leads to two applicable laws in each investor-Airbus relationship: that of the market in which the shares were bought (which will have subjected the sales to information requirements), always accompanied by Dutch law for that is where in any event listing information needed to be given.

Having ruled out A4(1), it settles for Dutch law under Article 4(3) as the law of the place of the seat of the corporation that issues financial instruments, largely citing predictability. I am not convinced.

Reference to the CJEU, requested by Airbus, is dismissed, as is [5.17] immediate appeal against the applicable law finding. Airbus will no doubt appeal the final judgment to review the issue of applicable law, too. I would suggest they have plenty of reason to do so.

Geert.

EU Private International Law, 3rd ed. 2021, Chapters 2 and 4.

 

Rome I’s corporate carve-out and agency /principal relations in Canara Bank v MCS.

Canara Bank v MCS International [2022] EWHC 2012 (Comm) is interesting with respect to Cooper J’s discussion of privity of choice of court and law, and the corporate carve-out of retained (post Brexit) Rome I.

Canara (an Indian bank) say that the Guarantee at the core of the issues, with English choice of law and court, was transmitted automatically to MCS France under the French Civil Code as a result of an amalgamation or merger of two French companies, namely the original guarantor and MCS France.

On the impact of Rome I, the judge [53] presumably with parties’ counsel approval, remarks that ‘pursuant to Article 1(2)(e) and (f), Rome 1 does not apply to questions governed by the law of companies or to the issue of whether or not an agent is able to bind a principal in relation to a third party. For both these issues, it is necessary to look to common law principles.’

[88] It is said again that whether an agent is able to bind a principal in relation to a third party is excluded from Rome 1 further to article 1(2)(g), the corporate carve-out. I do not think that is necessarily the case, even in combination with the Article 1(2)(e) carve-out for choice of court. The judge at any rate continues by applying the Dicey Rule 243 that where an agent acts or purports to act on behalf of a principal, their rights and liabilities in relation to each other are in general governed by the law applicable to the relationship or contract between them, with Dicey Rule 244(1) adding a bootstrap /von Munchausen /putative law element:

The issue whether the agent is liable to bind the principal to a contract with a third party, or a term of that contract, is governed by the law which would govern that contract or term, if the agent’s authority were established.”

[89] In light of the foregoing, ‘it was common ground between the parties, and rightly so, that Mr. Maurel’s actual authority on behalf of MIF fell to be determined under French law and the question of whether and to what extent Mr. Maurel was able to bind MIF in respect of the Guarantee given Canara’s knowledge of the resolution is a matter of English law.’

Common English conflict of laws is held to apply to the issue of transfer of a guarantee during the dissolution of a company, and parties agree [76] that whether a corporation has been amalgamated with another corporation is to be determined by the law of its place of incorporation: French law is held to be the relevant law for the dissolved guarantor issue, and expert reports were discussed.

Overall conclusion is [125]

Having considered the issue of good arguable case by reference to each of the issues raised by the parties in relation to the question of whether MCS France was a party to the Guarantee and therefore the jurisdiction agreement contained within it, it seems to me to appropriate to step back and consider whether overall Canara has a good arguable case on whether or not MCS France was a party to that jurisdiction agreement. In this regard, I consider that it does. Even were I to be wrong on one of the issues considered above, the balance of the evidence supports the conclusion that MCS France is a party to the Guarantee and to the jurisdiction agreement contained within it. In circumstances, where the evidence establishes that Canara, MCS France and MCS UK have done business since 2014 on the basis that the Guarantee was binding on MCS France, it would be a surprising conclusion that there was no good arguable case that MCS France was a party to the jurisdiction agreement.

Interesting, if flimsy on the corporate carve-out issue.

Geert.

Otsuka v GW Pharma. When does a tussle about intellectual property rights engage the Moçambique rule?

I tweeted the case on 4 May….slowly I am getting trough the backlog. In Otsuka v GW Pharma [2022] EWHC 1012 (Pat) Karet DJ upheld jurisdiction to hear a dispute about a patent licence in circumstances where the licensee has indicated it will challenge the validity of licensed patents granted outside the UK.

On 7 January 2022 GW commenced proceedings against Otsuka in a state court in New York. There is a significant overlap between the matters raised in the New York claim and the E&W claim (as GW have indicated they will defend it). GW seek a declaration that under the Agreement between the parties none of the relevant patents Covers Epidyolex, including because the patents are invalid. Epidyolex is a drug for the treatment of seizures associated with various conditions or epileptic syndromes. The active ingredient in Epidyolex is cannabidiol (“CBD”).

[47] ff the judge considers the Moçambique rule which means that an English court has no jurisdiction to adjudicate a claim of title to foreign land. In Lucasfilm v Ainsworth the UKSC with some reference to the CJEU’s application of Brussels Ia’s Article 24, held that there is no jurisdiction in proceedings for infringement of rights in foreign land where the proceedings are “principally concerned with a question of the title, or the right to possession, of that property” (including intellectual property). [51] Reference is also made to Chugai Pharmaceutical Co Ltd v UCB Pharma SA and to Unwired Planet International Ltd v Huawei Technologies (UK) Co Ltd.

The judge [73] holds GW’s intended challenge to a foreign patent in this case is not direct in the sense suggested in Chugai and the rule in Moçambique is not engaged. Claim formulation in the US proceedings features as a strong argument in that conclusion. [81] ff a forum non challenge is rejected.

Geert.

EU private international law, 3rd ed. 2021, 2.196 ff.

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