O’Loan and Scott v MIB and AIG. On the meaning of ‘the tort’ in Article 4(3) Rome II’s displacement rule.

O’Loan and Scott v MIB and AIG (Fintan O’Loan and Elisabeth Scott v Motor Insurance Bureau and AI Europe SA) involves the same Loi Badinter that was also the subject of Marshall v MIB. I was alerted to the case buy Ian Denham’s post. Judgment is as yet unreported and I am grateful to Ian for having sent me copy.

The contested claim is the one of Ms Scott v AIG. She was the front seat passenger of the hire car, insured by AIG and driven by Mr O’Loan, her partner, when the car was driven into by an uninsured, French registered car. Ms Scott therefore turns to the driver, her partner (in reality, the insurer of the hire car), to have her damage covered under the strict liability (no need to show fault) rule of the French Loi Badinter.

To get to French law however she needs to overcome Article 4(2) Rome II’s provision that in case victim and party claimed to be liable are habitually resident in the same country at the time the damage occurs, the laws of that country apply. A4(3) is the portal to that escape route:

(3) Where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, such as a contract, that is closely connected with the tort/delict in question.

It was conceded by both parties [12] that the district judge cut quite a few corners on the A4(3) analysis and Platts J therefore started afresh. Winrow v Hemphill of course was referred to, as was Owen v Galgey (the conclusions of which I disagreed with).

The judge notes (as does the Handbook: para 4.39) that it is important to identify what is meant by “the tort/delict’ in A4(3) before considering whether that tort/delict is more closely connected with a country other than England. A4(3) holds that ‘the tort’ (not individual elements of the tort, such as the event and/or the damage and /or anything singular at all) needs to be ‘more closely connected’.

I disagree with the judge [23] that ‘the tort’ or ‘delict’ clearly refers to the event which caused the damage, or ‘the incident’ [24]. In the case of a tortious obligation ‘the tort’ arguably refers to the classic 3 elements of event, damage, and causal link between the two (all three here clearly referring to France). I do agree it does not refer to the cause of action which arises from the incident [24]. While linguistically speaking that may be caught be ‘the tort’ for it would be one of its consequences, it would also mean that remedies available, or not, for instance would play a role in determining lex causae. Where Rome II envisages such assessment, it says so explicitly: such as in Article 7’s environmental damage rule.

The judge’s reasons for opting for displacement are [30]

I therefore consider the connection with France to be manifestly closer than the connection with England: the collision was in France; it was between two vehicles registered in France; the damage was caused in France in that the initial injury was suffered in France. Further, the circumstances were such that the claim of first claimant is to be dealt with under French law.

That last element is in slight contradiction I find to the judge’s consideration signalled above, that an advance on (remedies available or not under the) lex causae, must not play a role. If that is the case for claimant seeking to overturn A4(2)’s presumption, arguably there must not be a role either for the lex causae of other claims involved in the case.

Of note is the judge’s emphasis on the vehicles both being registered in France. If that is an element, travellers of countries without strict liability rules, might have a strong incentive indeed to hire cars rather than drive their own when driving in EU Member States with strict liability rules such as the Loi Badinter.

Appeal dismissed, for the result is the same (French law applies) even if the route to it was quite different from the first judge.

I do not think the analysis on ‘the tort’ is quite there yet.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 4.5.2 (para 4.39 ff).

 

Silverman v Ryanair. The High Court unconvincingly on the Montreal Convention, lex fori as lex causae for the interpretation of ius gentium, qualifying air carriage claims under Rome I, II, and displacing lex loci damni under the latter.

In Silverman v Ryanair DAC (Rev1) [2021] EWHC 2955 (QB), claimant was injured whilst going down stairs at an airport terminal in England. The claim is subject to EU private international law. Jurisdiction for the English courts in this personal injury claim is not disputed.

Under A5 Rome I, contracts for carriage of goods are subject to the ordinary lex voluntatis rule, while for carriage of passengers, parties can only choose from a limited selection of leges contractus. The standard approach is for  general terms and conditions to select the law of the carrier’s habitual residence or his place of central administration, which is entirely kosher under Rome I. Unless the booking qualifies as package travel, it essentially means that passengers are generally less protected than ordinary consumers under A6 Rome I.

In the case of Ryanair, the default choice inevitably leads to Irish law, except in this case (because Irish law would lead to higher damages), the airline unusually seeks to divert from its default choice of law.  The airline’s relevant clause, reads

8.2.4: Governing Law: “Except as otherwise provided by the Convention or applicable law, your contract of carriage with us, these Terms and Conditions of Carriage and our Regulations shall be governed by and interpreted in accordance with the laws of Ireland and any dispute arising out of or in connection with this contract shall be subject to the jurisdiction of the Irish Courts.”

The Montreal Convention for the Unification of Certain Rules for International Carriage by Air 1999 is unaffected by Rome I as a result of the Regulation’s A25, which gives clear priority to multilateral Conventions at least if the Convention concerned also includes non-EU Member States. The Convention also operates to make the choice of court provision invalid, as discussed ia in CJEU  C-213/18 Adriano Guaitoli et al v Easyjet.

Claimant however argues that assessment of quantum of damages is not regulated by Montreal and therefore remains subject to the lex voluntatis. This is where the second line of Ryanair’s defence comes in, namely an attempt to qualify the claim as one in tort, subject to Rome II’s lex loci damni rule, rather than Rome I’s lex voluntatis.

In essence therefore the question is a matter of Treaty interpretation viz the Montreal Convention (what does it mean to regulate in its provisions on liability and damages), subsequently secondary EU law interpretation viz Rome I and II (qualification: is it a claim in contract or tort, and once that held, does the lex casuae indicated by the relevant Regulation, cover quantum of damages).

Master McCloud turns to international comparison not by way of binding authority but pro inspiratio seeing as the case concerns an international Convention [52]. Scalia J’s ‘Pass-through’ approach to the lex fori’s choice-of-law rules in Zicherman (1996) is the approach also followed in this judgment. The judge uses the formulation by Bader Ginsburg J in El Al Israelthat Warsaw drafters intended to resolve whether there is liability, but to leave to domestic law (the local law identified by the forum under its choice-of-law rules or approaches) determination of the compensatory damages available to the suitor.”

Comparative case-law analysis makes sense. However one would have thought a starting point should have been analysis of the Convention and its travaux itself. Master McCloud does get to that when considering the rather awkward , counsel-inspired idea that there needs to be a discussion of the law that applies to the interpretation of the Convention. Determining the ‘Applicable law to matters of interpretation of the Convention’ might perhaps make sense in a dualist jurisdiction like the UK?

At [59] the judge holds the lex causae for interpretation of the Convention is the lex fori, English law therefore. At [61] he calls this

Convention law as understood by this court, ie the lex fori in that rather special international sense.’

Here I am lost.

The judge then employs the ‘natural language’ approach to determine what parts of the Montreal liability scheme parties can and cannot contractually be negotiated away.

Only the liability issues that have ‘passed through’ to the lex fori are then considered with a view to determining the qualification exercise: is the claim one in contract or one on tort. The judge raises the possibility that the claimant could have construed the claim as being a ‘Convention claim incorporated in the contract’ [64] however he holds that claim is not brought on that footing:

‘the Claim and Particulars are clear: they plead a claim for damages for breach of the Convention, they do not plead a claim in the law of contract’ [64].

That, I would submit, is wrong. The claim is subject to European conflict of laws rules. These require the judge to qualify the claim subject to the autonomous interpretation of ‘contract’ and ‘non-contractual obligation’ as most recently discussed by the CJEU in Wikingerhof. While I am the first to acknowledge claim formulation is a powerful tool to manage qualification (indeed Wikingerhof confirms as much), I do not think deference to claimant may be as large as suggested here.

The judge proceeds with the non-contractual nature (causing injury to the claimant through negligence [65]), points out that the Convention covers both contractual and non-contractual claims [66] and seeks support in his analysis on tort and contract in Prof. Thomas Kadner Graziano’s 2016 paper in the Yearbook of Private International Law. With respect, I do not think Thomas’ paper supports the conclusions in this case.

At [72][73] the judge then rather summarily and using A4(3) Rome II displaces the lex loci damni for the ‘passed through’ claim, in favour of Irish law, the lex contractus to the contract of carriage. Once the Rome II path chosen (of which, per above, I am not convinced), I do not think the lex loci damni may be pushed aside quite as concisely as this.

The relationship between international Conventions and European conflicts rules is not always straightforward. Yet here I think it has been presented a touch too convolutedly.

Geert.

The Brazilian orange juice cartel: successful claimants on among others Article 34 Brussels Ia ‘forum non light’, with lingering doubts on A4 ‘domicile’..

Viegas & Ors v Cutrale & Ors [2021] EWHC 2956 (Comm) (05 November 2021) concerns an alleged cartel between several Brazilian companies which produce orange juice, including Sucocítrico Cutrale: 3rd defendant. The other two defendants, Mr Cutrale Sr and Mr Cutrale Jr,  are natural persons Claimants are orange farmers who are all domiciled in Brazil.  The claim relates to alleged antitrust infringements committed in Brazil and said to have restricted competition in markets in Brazil, causing harm to the Claimants there.

Claimants claim to be entitled to maintain proceedings in England and Wales on the bases that:

i)                   although Sucocítrico Cutrale is a Brazilian company, it has its central administration in London and is therefore domiciled in the UK pursuant to A63(1)(b) Brussels Ia;

ii)                 alternatively, the Claimants were entitled to serve Sucocítrico Cutrale, pursuant to CPR 6.3(c)/6.9(2) at a “place within the jurisdiction where [it] carries on its activities; or any place of business of the company within the jurisdiction”.

iii)               Cutrale Snr is domiciled in England; and

iv)               Cutrale Jnr is domiciled in Switzerland and the claims against him are so closely connected with the claims against Sucocítrico Cutrale and Cutrale Snr that it is expedient to hear and determine them together so as to avoid the risk of irreconcilable judgments, pursuant to Article 6 Lugano Convention.

The Defendants’ position is in outline as follows:

Sucocítrico Cutrale

i)                   Sucocítrico Cutrale has its “central administration” in Brazil and is therefore not domiciled in the UK for the purpose of A63(1)(b) BIa.  There is therefore no right to bring proceedings against the company in England under Article 4(1). The court must apply common law principles to determine jurisdiction.

ii)                 Alternatively, the claims against Sucocítrico Cutrale should be stayed under A33 and/or 34 BIa because of ongoing proceedings in Brazil concerning the alleged cartel.

iii)               The Claimants were not entitled to serve Sucocítrico Cutrale at an address within the jurisdiction, and so the company has not been validly served.

iv)               Alternatively, applying common law forum non conveniens principles, Brazil is the proper place for the claims against Sucocítrico Cutrale and the court should not exercise jurisdiction against it.  The claims against Sucocítrico Cutrale should be stayed even if (contrary to the Defendants’ primary case) Cutrale Snr is domiciled in England. Cutrale Snr has confirmed that he would submit to the jurisdiction of the Brazilian court. The risk of inconsistent judgments in England and Brazil therefore carries little weight because it would be caused by the Claimants’ unnecessary pursuit of litigation in England. In such circumstances, the court may stay the claims against the foreign defendant notwithstanding the presence of a UK domiciled anchor defendant (reference is made to Vedanta Resources plc v Lungowe [2020] AC 1045 . I flagged the ‘submission to foreign jurisdiction’ issue in my review of Vedanta).

Cutrale Snr

v)                  Cutrale Snr is not domiciled in the UK. There is therefore no right to bring proceedings against him under A4(1) BIa.

vi)               Further or alternatively, the court should stay the claims against Cutrale Snr pursuant to A34 BIa because of the ongoing proceedings in Brazil.

vii)             Although Cutrale Snr was served in the jurisdiction, applying common law forum non conveniens principles Brazil is the proper place for the claim.  Accordingly, the court should decline jurisdiction.

Cutrale Jnr

viii)           If neither Sucocítrico Cutrale nor Cutrale Snr is English domiciled there is no basis to assume jurisdiction against Cutrale Jnr.

ix)               If Cutrale Snr is English domiciled but the claims against Sucocítrico Cutrale are to proceed in Brazil, the criteria under A6 Lugano are not met because it would be more expedient for the claims against Cutrale Jnr to be heard in Brazil alongside the claims against Sucocítrico Cutrale.

x)                  Further or alternatively, the court should stay the claims pursuant to a reflexive application of A28 Lugano Convention because of the ongoing proceedings in Brazil.

Henshaw J held that the court lacks jurisdiction over Sucocítrico Cutrale however that it does have jurisdiction over Cutrale Snr and Cutrale Jnr and  that there is no proper basis on which to stay the claims against them.

Domicile of Sucocítrico Cutrale (‘SuCu’)

A63 BIa determines corporate domicile as the place where the corporation has its (a) statutory seat; (b) central administration; or (c) principal place of business. Claimants suggest place of central administration as being in London. Anglo American came to my mind as indeed it did to counsel and judge in current case. At 31 ff a concise look into the travaux is offered as are references to CJEU case-law under freedom of establishment (including Uberseering). I would be cautious however with too much emphasis on those cases, which are judged in quite a different context to the one in a jurisdictional assessment.

SuCu are in in essence a family-run business [55]. This is also emphasised in the witness statement of Cutrale Sr himself. SuCu refer extensively to its internal by-laws and the role in same for the ‘Executive Board’ which is made up of professionals. However there is also a, by-laws sanctioned, Family Board (in which Cutrale Sr until recently had a 99% stake). The Executive Board, by defendant’s own admission [55], runs the company on a day to day basis. The Family Board seemingly meets at various places worldwide, and the role of London in the family Board’s direction is not small, given that Cutrale Sr has secretarial assistance for his business interests there, and that his daughter (who also sits on the Family Board) conducts all her business interests there [57].

In Anglo American, the CA held

 ‘the correct interpretation of “central administration” in Article 60(1)(b)when applied to a company, is that it is the place where the company concerned, through its relevant organs according to its own constitutional provisions, takes the decisions that are essential for that company’s operations. That is, to my mind, the same thing as saying it is the place where the company, through its relevant organs, conducts its entrepreneurial management; for that management must involve making decisions that are essential for that company’s operation’

[75] ff the judge does not see London as that place where the entrepreneurial management takes place. This is to some degree a factual appraisal however I I am minded to see quite strong arguments in favour of London. I do not think for instance that BIa’s DNA of predictability for the defendant knowing where it might be sued, carries too much weight here seeing as the complex structure and the diverse effective location of the Family Board’s meetings is of its own making. By failing clearly to implement one centre of entrepreneurial management, visible to outsiders, the defendant in my view brings the risk of positive conflicts of jurisdiction upon itself.  All the more so in my view in cases where, such as here, the accusation is involvement in a cartel, which is unlikely to have happened with the firm controller of the Family Board having been kept in the dark.

Alternative serving under CPR 6.9.(2) [“Any place within the jurisdiction where the corporation carries on its activities; or any place of business of the company within the jurisdiction.”] is also dismissed: [104] ff.

[112] ff the judge discusses the domicile of Cutrale Sr which, per A62(1) BIa is to be determined under English law. This [129] ff is held to be England.

Cutrale Jr being undisputably domiciled in Switserland, the question arises whether the claim against him may be anchored upon the claim against his father, per A6(2) Lugano. The judge is reminded of his own judgment in PIS v Al Rajaan. Defendants submit that if the claims against Sucocítrico Cutrale must be pursued in Brazil, it is more expedient for the claims against Cutrale Jnr to be pursued in that jurisdiction, even if the Claimants are entitled to sue Cutrale Snr as of right in England. However [142] the judge agrees with Claimants’ point that somewhat different policy considerations arise when considering the risk of inconsistent judgments within the EU (or between Lugano States), compared to the position vis-à-vis so-called ‘third States’, and that the latter context does not involve the same particular impetus to remove obstacles to the single market and observe the principle of ‘mutual trust’ between the courts of different Member States.

Whilst the claims against Cutrale Jnr are of course connected with those against Sucocitrico, they are also bound to involve important issues in common with the claims against Cutrale Snr which (subject to the issue of an A34 stay, see below) are to be pursued in England  [143].

[144] In conclusion the expediency threshold under A6 Lugano is held to have been reached.

Next, a stay of the proceedings against Cutrale Snr under A34 BIa is rejected [147] ff. Much of the A34 authority, all of which I have discussed on the blog, is flagged. The judge observes the tension between Kolomoisky and EuroEco Fuels (Poland) as to whether the power to stay depends on there being a procedural means by which the two actions could, in fact, be tried together. At [163] the judge thankfully notes the important distinction between A33-34 and A29-30, despite citing A29-30 authority with some emphasis:

I would observe, however, in disagreement with the Defendants, that despite the similarity of language it may well make a difference whether a stay is sought (a) under Article 28 as such or (b) under Article 34 or under Article 28 as applied reflexively vis a vis proceedings in a third country (see § 238 below).  The observation quoted above that there might be a presumption in favour of a stay seems considerably easier to justify in a case where the intra-EU internal market considerations referred to in § 142 above apply than where the overseas proceedings are in a non-Member State.  On the contrary, a presumption of a stay in favour of a third country state of proceedings prima facie brought as a right against a defendant in his place of domicile may well be hard to square with the fundamental principles underlying the Brussels and Lugano regimes.

At [221], too, and in an in my view important and marked departure from Justice Turner in Municipio, Henshaw J here holds that

whilst recital 24 indicates that the court should consider all the circumstances of the case, it does not follow that the court can grant a stay pursuant to Article 34 which is in substance no more than a forum non conveniens stay.  It follows that the factors listed in § 213.iv) above are relevant only insofar as they support the granting of a stay based on the Favero and Costa claims as related claims.

This puts the horse back before the cart.

At [164] ff the ‘rival’ Brasil claims are discussed, [197] of which only two predate the current E&W claim against Cutrale Sr and a conclusion [210] that these are related in a broad sense to the present claims, but that degree of relationship would be insufficient to make it expedient to stay the present claims by reference to them.

[213] ff the various arguments that a stay would be in the ‘interest of justice’ are rejected: these include in particular [216] suggestions of consolidation or joint case management, whilst theoretically possible, are unrealistic in practice (reference is made ia to the fact that none of the current Brazilian claims have been consolidated); [217] neither rival claim is likely to reach a conclusion in the reasonably foreseeable future: on the contrary, both have been mired in procedural disputes for many years.

Similar arguments are made obiter when considering an A33-34 stay against Sucocitrico (in the event the A4 analysis, above, were to be wrong): [241] ff.

At 237, the possibility of a stay of the proceedings against Cutrale Jr, under a reflexive application of A28 Lugano is rejected with mere reference to the reasons listed viz the A34 stay. The judge has to follow the Court of Appeal’s finding in Kolomoisky, that reflexive application of A28 Lugano is possible. Clearly, I submit, it is not and this will be an important point to clarify when and if the UK accede to Lugano.

The judge concludes [249] ff by obiter upholding a forum non stay. His arguments here are interesting among others for they lead to a different result than the A33-34 application – which serves to confirm the very different nature of both mechanisms.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.15.3.

Consumer contracts, settlements and choice of court ‘after the dispute has arisen’. The Danish courts in Thomas Higgins v Saxo Bank.

I discussed settlement agreements viz Brussels Ia’s protected categories before, in particular in my review of Yukos v Merinson. Choice of court between consumers and employees one the one hand, and the business and employer on the other, is valid inter alia when the parties ‘enter into’ the (choice of court agreement) ‘after the dispute has arisen’. The assumption is that the consumer will have had an opportunity to consult lawyers and that therefore the inequality of arms has disappeared.

A dispute will have ‘arisen’ for the purposes of these Articles only if two conditions are satisfied: (a) the parties must have disagreed upon a specific point; and (b) legal proceedings in relation to that disagreement must be imminent or contemplated.

Many thanks to Henrik Gisløv who sent me copy of the judgment of the City Court and subsequently the High Court in Thomas Higgins v Saxo Bank. Henrik represented Mr Higgins and I have included Henrik’s English translation of the relevant sections of the High Court’s judgment below – I do not read Danish.

I understand from Henrik that Saxo Bank claimed an amount for “CFD financing charges” of EUR 230,000 accrued in less than one month. Mr Higgins, domiciled at Ireland, disputed the claim, and a settlement agreement was entered into. Mr Higgins had no legal advise when entering the settlement agreement – whether the actual, as opposed to assumed, benefit of legal advice is required for A10 to apply, is not discussed.

In the opinion of Mr Higgins the bank breached the terms of the settlement agreement, and he raised several complaints with the staff of the bank. These complaints went unanswered and Mr Higgins decided to terminate the settlement agreement: ‘Further to my email of Friday March 3rd, I confirm that the live price feeds have not been restored. Accordingly, our Contract is now void. Unless you wish to negotiate terms that address the contractual failings, the only option open to me is to reactivate my original Complaint and refer it for regulatory adjudication.’ This was in March 2017.

The bank then filed a case in the Danish courts, in January 2019 only. It argued  jurisdiction on the basis that a choice of court clause had been part of the  settlement agreement which Mr Higgins had terminated in March 2017. The City Court found first of all that Mr Higgins was a consumer (CJEU Petruchova comes to mind). Secondly, the City Court found that the dispute related to whether or not the terms of the settlement agreement had been breached or not. Therefore that the dispute that is being litigated had only arisen after that settlement agreement had been made and that the choice of court made in the settlement agreement was not a valid agreement after the dispute had arisen. The Eastern High court upon appeal however overturned the decision. Leave to appeal to the Supreme Court was rejected.

Of note in my view is that for there to be valid choice of court within the meaning of A19 BIa, legal proceedings in relation to that disagreement must be imminent or contemplated. From my admittedly half baked, Google translate assisted understanding of the judgments, this condition is not discussed in the judgments (it is clear, from the quote, in English, at the time of Mr Higgins’ cancellation of the agreement, legal proceedings are contemplated at that moment; yet the settlement with the choice of court agreement was formed much earlier). Rather, the High Court unconvincingly focuses on the synergy between the complaints under the original platform agreement and the nature of the subsequent complaints. This could have done with SC insight.

The judgment puts the spotlight on the nature of settlement agreements in the context of protected categories, and the stronger role consumer and employment law might have to play to ensure both the twin goal of settling disputes before they go to court, whilst at the same time not depriving the protected categories of their Regulation-sanctioned protection.

Geert.

EU private international law, 3rd ed. 2021, Heading 2.2.9.2.7, 2.270 ff.

 

____Henrik Gisløv translation of the High Court judgment in relevant part:___

It is undisputed before the High Court that the settlement agreement entered into between Thomas Martin Higgins and Saxo Bank A / S, is a consumer agreement in the sense of the term has applied the Judgment Regulation. Cases against consumers must, according to the Judgment Regulation Article 18, paragraph 2, as a starting point is brought before the courts in the Member State in which the consumer resides.

The main issue in this case is then whether the condition of the judgment Article 19 (1) to derogate from this starting point is met. According to the provision is it decisive whether the settlement agreement, including the agreement’s provision on venue, may be deemed to have been concluded after the dispute has arisen. If the condition is fulfilled, the venue agreement is binding on Thomas Martin Higgins.

It is assumed as undisputed that the settlement agreement of 11 July 2016 was entered into as a result of a disagreement as to whether Thomas Martin Higgins had obligation to pay the fees of 231,320 euros that Saxo Bank A / S had charged for the period from 1 to 29 April 2016.

It appears from clause 1 of the settlement agreement, that Thomas Martin Higgins should withdraw its complaint about the fees that Saxo Bank A / S should separate Thomas Martin Higgins’ two accounts and credit one account with one amount of 115,660 euros, corresponding to half of the fees charged. The other account then had a balance of -87,565.16 euros, which Thomas Martin Higgins undertook to pay to Saxo Bank A / S in 12 instalments.

Thomas Martin Higgins paid six instalments until February 2017, after which he by letter dated 6 March 2017, terminated the settlement agreement.

The question then is whether the lawsuit relates to the dispute that was tried resolved by the settlement agreement, or whether it relates to subsequent matters.

Thomas Martin Higgins has argued that Saxo Bank A / S on several points has breached the settlement agreement and that it is these breaches of agreement that are the background for the present case. He has during his explanation to the city court alone referred to the one concrete example that he during his continued trading on the bank’s platform continued to lose so-called live prices (real-time prices).

On the other hand, it is undisputed that Thomas Martin Higgins under the settlement agreement concluded continued to trade on the platform provided by Saxo Bank A / S available to him. Saxo Bank A / S has in accordance with the settlement agreement written down its fee claim to half, and the settlement agreement does not contain detailed terms for the continued trading on the platform, including on live prices.

In view of this and the fact that the amount of 41,297.28 euros that Saxo Bank A / S has withdrawn subpoena for, constitutes the difference between the amount paid by Thomas Martin Higgins had to pay after the settlement and the instalments paid of 45,412.41 euros plus the deposit on account 176283INET / DK4011490100705836, the High Court finds that the present dispute does not concern one which arose after the conclusion of the settlement agreement [and is a, GAVC] disagreement on the interpretation of the agreement, but that the dispute had already arisen when settlement agreement including the venue agreement, was entered into.

…0Saxo bank A / S can bring the case before the bank’s venue at the Court in Lyngby, …and the High Court therefore accepts Saxo Bank A / S ‘claim that the judgment of the district court be set aside and that the case be remanded for consideration at the Court in Lyngby, as a result.”

Court Amsterdam on the impact of the lex fori prorogati’s consumer laws for choice of court. A high net value Australian businessman sails away from Dutch jurisdiction.

I am catching up a little on recent case-law and am focussing it seems on the consumer section (see also yesterday’s post). This Court Amsterdam judgment published on 8 September caught my eye for it discusses choice of court, applicable law for the substantive validity of same, and ‘consumers’ in the context of buying yachts (now that I write that, in my exams I often have consumers buying yachts). Thank you Haco van der Houven van Oordt for signalling the case.

A purchase agreement for a yacht worth €5.4 million was signed in Singapore between buyer, an Australian living in Australia, and a Dutch shipyard. Seller’s GTCs mention

‘Article 17 – Settlement of disputes 1. Each agreement between [claimant] and the other party is subject exclusively to the laws of the Netherlands. 2. Any disputes which arise between the other party and [claimant], including disputes relating to the interpretation of these terms and conditions, will be put exclusively before the competent judicial body in Amsterdam.’

Pre-delivery was scheduled for December 2018 in Italy. Buyer changes his mind a week after signature, saying he will not be able to honour the agreed price. Vendor pursues the contractual penalty clause of 25% of the sale price. 

The judge finds the consent to choice of court to have been validly expressed on the basis of A25 BIa, under the classic Colzani formula. References to the GTCs had been properly made in the written contract. A duly diligent contracting party could and should have read these GTCs. Defendant’s argument that the choice of court clause in the GTCs should have been the subject of specific negotiation, is rejected [4.3.3].

As for the substantive validity of choice of court, the Dutch court (unlike eg the Belgian Supreme Court in Happy Flights) does add renvoi to the mix per recital 20 BIa. Dutch private international law (like the BE rules, nota bene) makes Rome I applicable to contracts even for the subject-matter excluded of its scope of application, among which choice of court agreements. Lex voluntatis therefore rules and the court holds that the choice of law for Dutch law for the contract as a whole, extends to choice of law for the forum clause [4.3.7].

The defendant finally alleges invalidity of the choice of court agreement on the basis of the lex fori prorogati’s rules on ‘potestative’ (unreasonably onerous) clauses. On this point, the defence succeeds: [4.3.9]: the defendant has to be qualified as a consumer under Dutch law, despite his high net value and the object of purchase, and the GTCs per article 6.236 n BW should have included a clause giving the consumer the option to opt for the default court with jurisdiction (which one that would be is not clear to me and the judgment does not specify it).

Seeing as the choice of court agreement is held to be invalid, that the defendant is domiciled in Australia, and in the absence of a relevant bilateral agreement between the two countries, Dutch residual rules are applied to assess alternative grounds for jurisdiction. There is no Dutch forum contractus, given delivery in Italy [4.5.1, with reference ia to CJEU Car Trim] and no other jurisdictional grounds have any traction.

Conclusion: no jurisdiction for the Dutch courts. The case is good material for the lex fori prorogati rule and for the realisation that even outside the context of the consumer title of Brussels Ia (defendant not being domiciled in the EU, that title was not triggered), consumer law plays an important role in choice of court.

Geert.

Dooley v Castle. On Gibraltar, the Brussels Convention and trust management as consumer contracts.

After Eastern Pacific Chartering Inc v Pola Maritime Ltd, judgment in Dooley & Ors v Castle Trust & Management Services Ltd [2021] EWHC 2682 (Comm) is the second recent case to apply the 1968 Brussels Convention in relations between the UK and Gibraltar. This time it is the consumer section of the Convention which is at the core of the jurisdictional discussion.

Defendant is a company registered in Gibraltar which operates as a professional trustee company. The litigation concerns overseas pension schemes, promoted principally by Montegue Smythe, a Cypriot firm which operated from an English address. The court did not have before it any contractual terms evidencing the relationship between Castle and Montegue Smythe [66].

Common law negligence or breach of regulatory or statutory rules are the claim. Applicable law [15-16] is announced to be a contested issue at trial but not one that featured in the current jurisdictional challenge.

Readers may be aware that prior to the Brussels I Regulation (2001) amendments to the consumer section, requirements to trigger it were quite different. Defendants argue that the consumer section is not engaged for claimants have not shown that the conclusion of the contract was preceded in the consumer’s domicile by a specific invitation addressed to them or by advertising. In support of their case that the requirement of A13.3(b) Brussels Convention was satisfied, claimants plea an extract from Castle’s website which was said to be an act of advertising in the UK.

CJEU Kalfelis, Engler, Gabriel and Pammer (the latter mutatis mutandis and with focus on the CJEU’s view as to its own previous authority under the Convention; for Pammer Alpenhof is a Brussels I case) were the core cases discussed. At [64] Russen J rejects ia Petruchova and Reliantco as relevant authority given their Brussels I(a) context.

The judge emphasises the restrictive interpretation of the consumer section and holds that Castle’s obligations to claimants rested fundamentally upon its trusteeship of the QROPS rather than any separate contract for the provision of financial administration services. There is no plausible evidential basis for saying a contract was concluded for the supply of services outside those which were identified by the Deeds and the Rules which were incorporated by Castle [68].

Any claim against Castle based upon non-performance of services would have to be based upon the Trust Deeds and the Rules incorporated by them. Any such claim would fall within Article 5.6 (equivalent to A7(6) BIa) which would lead to the same court – the Gibraltar court – having jurisdiction as it would under the general rule of A2 Brussels Convention [70].

The judge also held that even on the assumption that a particular claimant read the extract on the website before investing in the QROPS, the fact is that there is no evidence to suggest that the territorial requirement identified in  CJEU Gabriel was satisfied.

The tort gateway under A5(3) Brussels Convention was not much entertained for claimants did not put much weight on it. At [73] the judge located locus delicti commissi in Gibraltar and did not hold on locus damni possibly being in England or the UK (the signing away of the transfer of the funds in the UK potentially qualifying as locus damni. With interesting potential discussion of course of the EU v the E&W approach on same per UKSC Brownlie I and II.

The jurisdictional challenge succeeds.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.9.2.1 and 2.2.9.2.2.

The UK Supreme Court in Brownlie (II). With the tort jurisdictional gateway widened to consequential losses, forum non conveniens emerges as the default gatekeeper.

I have posted before on the Brownlie v Four Seasons litigation, please refer to the earlier post for context. The case revolves around whether courts should hear cases where the only damage sustained in their jurisdiction, is ‘indirect’ damage.

The litigation is not terribly good publicity for English civil procedure. The length of the proceedings resembles that of systems often referred to when in ordinary circumstances the English courts are much speedier. Moreover the outcome of the final Supreme Court judgment on 20 October on the jurisdictional gateway for torts inevitably will lead to a carrousel of future litigation and long-winded jurisdictional argument.

Even though the court was seized much before Brexit day, the jurisdictional issues are not subject to Brussels Ia. (The applicable law is, however, determined by Rome II and that this is Egyptian law is not disputed). The Court of Appeal as I discussed in my earlier post,  upheld ‘damage in the jurisdiction’ on the basis of a wider notion of ‘damage’ under residual English rules than under the EU rules. The UKSC has now agreed by a majority of four to one, confirming the obiter outcome of the earlier, ‘Brownlie I’ (in current judgment recalled at [45] ff) obiter views of the Court in a different composition.

Lord Lloyd-Jones reminds us [25] of the 3 requirements to meet the jurisdictional threshold. Claimant must show firstly ‘a good arguable case’ that the claims fall within one of the gateways in the civil procedure rules – CPR, introduced by Statute; further a serious issue to be tried on the merits (this is designed to keep out frivolous suits); and finally that England is the appropriate forum for trial and the court ought to exercise its discretion to permit service out of the jurisdiction that is the ‘forum non conveniens’ test.

The only issue under consideration before the SC was the first one, in particular, whether the case meets the conditions of CPR PD 6B paragraph 3.1(9):

“Service out of the jurisdiction where permission is required. 3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where -…

Claims in tort

(9)       A claim is made in tort where –

(a)        damage was sustained, or will be sustained, within the jurisdiction; or

(b)       damage which has been or will be sustained results from an act committed, or likely to be committed, within the jurisdiction.”

Candidates for Lady Brownlie’s claim satisfying the tort gateway in England, are [27] (a) a claim for damages for personal injury in her own right; (b) a claim for damages in her capacity as executrix of the estate of her late husband for wrongful death; and (c) a claim for damages for bereavement and loss of dependency in her capacity as her late husband’s widow.

Under EU jurisdictional rules, the only one of these three which in my view would have any chance of success under A7(2) BIa, is the latter. Despite CJEU Lazar (on the equivalent rule for applicable law under Rome II) I still do not see clear in the application of A7(2) to claims based on bereavement and loss of dependency. For these, I submit, Lloyd-Jones suggestion [73] fits even if the test, like in the EU, is based on direct effect only: ‘the event giving rise to the damage directly produced its harmful effects on Lady Brownlie in England and Wales.’

In essence the SC confirms the Court of Appeal’s insistence that the residual English rules must not ‘parrot’ the CJEU’s interpretation of ‘damage’ with its insistence on only direct damage satisfying the tort gateway – Pike in particular echoed the same feeling. Great emphasis is put on the perceived very different nature of the English private international law exercise as opposed to the EU, ‘Brussels’ regime. See for instance [55] ‘fundamental differences between the two systems would have made such an assimilation totally inappropriate’ – ditto, ex multi, [74].

This now Supreme Court confirmed ‘fundamental’ [74] difference between the regimes must and will, I submit, play a role in pending cases under Brussels Ia, such as those involving Articles 33-34 lis pendens provisions.

I do agree with Lloyd-Jones’ remark [50] that he is unconvinced of the suggested link between damage completing a cause of action (highly relevant at the applicable law stage] and the identification of an appropriate jurisdiction. Yet unlike him I would take that in a different direction. Not therefore in the direction of an in principle unlimited jurisdictional gateway for tort (Lord Leggatt, dissenting, at 171 remarks all English tourists travelling abroad will now have such gateway, without anyone suggesting ‘any principled basis for it’, and at [194] he suggests forum shopping will be encouraged eg by non-English tourists employing medical treatment in England as an anchor for jurisdiction), disciplined only by forum non conveniens (which was not under appeal here [79]; although Lord Lloyd-Jones does remark obiter at 80 that the judge had rejected forum non referring in particular referring to the fact that to a significant extent the claimant’s losses had been experienced in England ). Rather, I would revisit the original (for the EU at least) and contra legem (for A7(2) BIa like its predecessors does not mention damage) introduction of damage as a gateway in CJEU Bier.

The SC puts great trust in forum non conveniens as a gatekeeper: [79]

The discretionary test of forum non conveniens, well established in our law, is an appropriate and effective mechanism which can be trusted to prevent the acceptance of jurisdiction in situations where there is merely a casual or adventitious link between the claim and England. Where a claim passes through a qualifying gateway, there remains a burden on the claimant to persuade the court that England and Wales is the proper place in which to bring the claim. Unless that is established, permission to serve out of the jurisdiction will be refused (CPR rule 6.37(3)). In addition – and this is a point to which I attach particular importance – the forum non conveniens principle is not a mere general discretion, the application of which may vary according to the differing subjective views of different judges creating a danger of legal uncertainty. On the contrary, the principle applies a structured discretion, the details of which have been refined in the decided cases, in a readily predictable manner.

I have less trust in forum non as the predictable gatekeeper suggested by the majority. Consider Lord Leggatt’s dissenting view [200]:

In the absence of any prescribed decision procedure or ranking of factors, different judges assessing whether England and Wales is the appropriate forum will inevitably attach different degrees of weight to different factors and may reach differing conclusions on similar facts without either conclusion being susceptible to legal challenge. Not only is such inconsistency of outcome itself a source of injustice, but it also encourages satellite litigation and causes defendants who have no real connection with England to have to incur the difficulty and expense of instructing English lawyers to apply in England to contest the jurisdiction of the English courts. That gives a claimant a significant and unfair tactical advantage.

Moreover, as already highlighted by Joshua Folkard, cases of purely economic loss are likely to provoke much (and expensive) discussion. Lloyd-Jones L [43] himself notes: ‘Within the Brussels system, the distinction between direct and indirect damage is, however, sometimes elusive.’ He refers immediately to financial losses as the example with the least jurisdictional grip. He repeats this point ia [76], seeking to distinguish it from the more complex tort suffered by Lady Brownlie.

Cases of purely economic loss will continue to be litigated extensively at the jurisdictional level for current judgment does not offer any instruction on them. [76]: ‘the mere fact of any economic loss, however remote, felt by a claimant where he or she lives or, if a corporation, where it has its business seat would be an unsatisfactory basis for the exercise of jurisdiction. However, this is not such a case.’

An end to the jurisdictional tussle in current case therefore, nine years (8  years and 11 months) after the claim was issued. Yet continuing consequential uncertainty for many other pending and future claims.

Geert.

High Court refuses capped cost order for English corporate defendant in Malawi sexual exploitation case, emphasising access to justice. Noli sequitur forum non arguments dress up as cost application.

Cavanagh J (unusually assisted by Brown J, who has extensive experience in cost orders) last week in Thomas & Ors v PGI Group Ltd [2021] EWHC 2776 (QB) refused to grant a ‘Capped Cost Order’ or CCO (these also exist for judicial review proceedings and in arbitration). This application for a CCO was reportedly the first made under CPR 3.19.

In the case, brought before Brexit date under Article 4 Brussels Ia, a group of Malawi claimants are suing tea company Lujeri’s English parent company PGI alleging complicity in exploitation and abuse, including sexual abuse.  Claimants allege the Defendant owed a duty of care to them on the basis that it promulgated relevant policies, standards and guidelines, that it exercised supervision and control over Lujeri, and/or that it held itself out as exercising such supervision and control. The Claimants further allege that the Defendant breached that duty of care and that they suffered loss and damage as a result.

English proceedings against Lujeri were dropped following claimants’ admission that they were unlikely to meet a jurisdiction challenge against same on the basis of Malawi being the natural forum for that claim [14]. The defendant does not resist A4 jurisdiction, acknowledges the UK is the natural forum for the claims against it, that there is no abuse of process (neither in my view have any place in A4 jurisdiction) and that the case is at least arguable.

Had the CCO been granted, it would have the effect of limiting the future costs recoverable by the Claimants, should they ultimately be successful, to £150,000 (or thereabouts). It would not impact the recoverable costs of the defendants if they are successful, although [25] they are unlikely to be able to recover any. As the judge notes [13] even if the core claim is successful, compensation will be far below parties’ legal costs in the case. The non-financial, ‘vindication’ [13] objectives are more important.

Despite defendants’ acknowledgment that a jurisdiction challenge is effectively impossible under A4 (A33-34 do not seem engaged), their arguments for a CCO [28 ff] are forum non via the backdoor:

Whilst not disputing that the Claimants are entitled to bring these proceedings against the Defendant in England, the Defendant submits that it is still open to the Claimants to bring proceedings in Malawi against Lujeri, their former, or, in some cases, their current, employer, and, indeed, against the Defendant. The Defendant submits that it would be more appropriate for the Claimants to bring their claims against Lujeri, in Malawi, especially as such claims would be advanced on the simple and straightforward basis of vicarious liability, rather than on the basis of a more complicated claim against the UK-domiciled parent company.

At 43 claimants make the obvious point that this is a ‘(lightly) disguised attempt to strike out these proceedings on the basis that they are an abuse of process, or that England is a forum non conveniens’.

At 72 the judge holds that claimants are right that it would not be appropriate, having regard to the CPR required principle of proportionality [‘the overriding objective [of the CCO, GAVC] of enabling the court to deal with cases justly and at proportionate cost’] to cap the costs at a figure that is less than the minimum costs that are required for them to litigate their claims effectively in the High Court. Costs in other words cannot be disproportionately incurred if they are below the amount that is required by the party to litigate its claims effectively, unless [74] parties’ costs are out of proportion to the potential benefits to the Claimant of the litigation’ – quod non in casu: [79]: ‘The sums that are likely to be recoverable, though small by English standards, are very significant for poor Malawian plantation workers, and they may indeed be life-changing. I accept the Claimants’ submission that in any event, the Claimants’ objectives in bringing these proceedings are not entirely, or even principally, about money.’

At 82-83 the resurrected forum non arguments feature again,  with the judge holding

In any event, in the present case, one of the parties, the Defendant, is domiciled in England. It is a matter of public importance in this country whether a company that is domiciled here is in breach of a duty of care to workers on plantations in Malawi, owned by a subsidiary company. CPR 44.3(5)(e) states that the extent to which a claim is in the public interest is a matter to be taken into account when considering proportionality.

That is an important consideration for future CCOs, outside the Brussels Ia context and indeed an argument that would feed into an A33-34 analysis, too.

At 91 ff the judge reinforces his findings on the basis of access to justice:

‘I think that it is highly significant, in this regard, that the imposition of a CCO would almost certainly have the effect of forcing the Claimants to abandon their claims…

this is not a case in which a wealthy Claimant is deliberately pursuing a low-value claim, at great expense, in order to harass the Defendant, or to cause as much unnecessary cost to the Defendant as possible. Rather, this is a case in which extremely poor Claimants are pursuing a relatively low-value claim for a number of legitimate reasons, only one of which is the prospect of damages.

This is an important finding, both under A4 Brussels Ia and beyond it, under residual English conflicts rules.

Geert.

European Private International Law, 3rd ed. 2021, Chapter 7.

Commerzbank. The CJEU adopts a flexible approach on the ‘international’ in ‘private international law’, at least for the protected category of consumers.

I reviewed the AG’s Opinion in C-296/20 Commerzbank here. The CJEU held a few weeks back, rejecting the AG’s main proposal and instead following him on the subsidiary argument – I lean towards the AG’s first option. For the consumer section, it now suffices the international element surfaces only after the contract has been concluded, provided of course (I am assuming; the CJEU refers to the case but is not quite clear) the contract at issue meets with the Pammer Alpenhof criteria: the business concerned need not necessarily actively pursue a commercial activity in the State in which the consumer is now domiciled, yet its organisation of operations and marketing is such as to meet the ‘directed at’ criteria of the consumer section.

It is to be assumed that the Court’s flexible interpretation (for which it relies to a large degree on mBank) of the international element to this far-reaching extent, only applies given the protective intent of Lugano’s (and Brussels Ia’s) consumer, potentially employees’ and insurance title. It carries far les authority for B2B contracts I would suggest.

Geert.

EU Private International Law, 3rd ed. 2021, 2.222 ff.

GtFlix. Hogan AG suggests the jurisdictional gateway for economic damage, not defamation, catches malicious falsehood between economic operators.

As I noted when I signalled the reference, the French Supreme Court in C-251/20 GtFlix has not referred the question whether Bolagsupplysningen is good authority for acts of unfair competition between competitors. Rather, it queries whether Bolagsupplysningen means that a claimant who requests both rectification /retraction and damages, has to necessarily turn to courts with full jurisdiction or whether they can continue to turn for the damages part, to all courts with locus damni jurisdiction.

Hogan AG in his Opinion a few weeks ago (more analysis by  Marta Requejo Isidro here) right up to (94) revisits the wisdom of applying Shevill’s Handlungsort/Erfolgort distinction and the possibility of using GtFlix to overturn. I agree that this is not the case to do it. (On the CJEU and overturning its authority, see excellently the departing Bobek AG in C‑205/20).

At 95 he then essentially requalifies and answers the question which the SC had not referred. The action at the French courts is one in dénigrement, which is a form of malicious falsehood which, the AG suggests, does not call into question the Bolagsupplysningen line of cases but rather Tibor Trans and the cases before it.

An action relating to an infringement of unfair competition law may be brought before the courts of any Member State where that act caused or may cause damage within the jurisdiction of the court seised. Where the market affected by the anticompetitive conduct is in the Member State on whose territory the alleged damage is purported to have occurred, that Member State must be regarded as the place where the damage occurred for the purposes of applying Article 7(2) (99).  A final reference at (102) ff is to the applicable law level under (Article 6) Rome II. 

Should the CJEU follow, one of the left-over questions following Bolagsupplysningen will not be answered, yet another issue on falsehoods spread between competitors, will.

Geert.

(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2

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