Posts Tagged applicable law
Comparative conflict of laws is often a useful source for exam (essay) questions. I used People of State of New York v. PriceWaterhouseCoopers, LLP, No. 3685N (N.Y. App. Div. May 23, 2017) to ask my students to surmise how an EU-base court would judge the issue raised.
Keith Goldberg over at LAw360 has the following great summary:
A New York appellate court [.. ] upheld a decision to force ExxonMobil’s outside auditor PricewaterhouseCoopers LLP to comply with New York Attorney General Eric Schneiderman’s demand for documents in his probe of whether the oil giant lied to investors about the climate change risks to its business.
The Appellate Division backed state Supreme Court Judge Barry Ostrager’s Nov. 26 order that PwC turn over documents related to its audit of Exxon subpoenaed by Schneiderman, saying the judge correctly held that New York law, not the law of Texas, where Exxon is headquartered, applies to questions of evidentiary privilege and that the Empire State doesn’t recognize accountant-client privilege.
Mr Ostrager’s decision is here – it has more choice of law considerations than the appelate court’s order. Eversheds have excellent analysis here of the overall issue of considering applicable law for privilege under the first and second restatement of the law. In the case at issue, ExxonMobil as well as the documents disclosure of which is sought (such as projected carbon costs and their application to Exxon’s capital allocation decisions, as well as documents provided to Exxon by PwC concerning the auditor’s role in compiling Exxon’s submissions about greenhouse gas emissions for the Carbon Disclosure Project, a nonprofit that collects information on greenhouse gas emissions) are based at Texas. But the trial is underway in New York.
Now, to the essay Q: how would an EU-based court hold on the issue? (For the purpose of last week’s exam I had a Belgian court rule on the issue, with the oil company based at Belgium, and the accountant at England, with the agreement between company and accountants subject to English law.
I am marking these exams later this week and hope to read some or all of the following: reference to overall principle that procedure is subject to lex fori; that statement being of little use in a system (like the EU) that thrives on predictability: for what is procedure to one, is substantive law to another; arguments existing both pro this being procedure (closely tied up with evidence, clear links with public policy) as well as substantive (privilege despite its public nature also protecting private, including commercial interest; parties wishing to manage the issue of sensitive information and forum); need for autonomous interpretation and tendency within the EU to define the ‘scope of the law applicable’ (eg both in Rome I and II); no trace in said Regulations of privilege being included in the scope of law applicable.
As always, I am hoping for students to surprise me. Undoubtedly they will.
It does not happen all that often: this is a call for assistance. Following a student’s Q re ‘habitual residence’ in Rome I, I have now noticed something I had not before (I more often than not use the English version of the Regulation in my teaching and practice): Article 6(1) on ‘consumer contracts’ uses the term ‘habitual residence’ ‘gewone verblijfplaats’ (defined, or not, for natural persons, in Article 19) in the introductory para (which identifies applicable law). However in littera a it then uses ‘domicile’ ‘woonplaats’: a term which is not otherwise used in Rome I and which is not defined by it.
A quick scan of other language versions (French, English, German) reveals no such error: they all use the equivalent of ‘habitual residence’ in both instances. Now, evidently the error must be pushed aside given the other language versions however: is any reader of the blog aware of a corrigendum ever published? For if it has, I cannot locate it.
(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.5.
Many thanks to Jan von Hein for flagging the ultimate judgment (the link is to a press release) of the Bundesarbeitsgericht in Nikiforidis. I had of course reported earlier my serious misgivings about the CJEU’s judgment in same, upon preliminary review.
The judgment eventually declined to employ the opening left by the CJEU, to take Greek law into account ‘as a matter of fact’. Thank you, but no thank you: there was no suitable point of entry in German law to take account of the Greek austerity laws. Still, as Jan points out, the judgment in Luxembourg undoubtedly will feature as precedent in future cases.
It does not get more The Hague than this. Footballing around jurisdiction, applicable law and corporate finance in ADO Den Haag v United Vansen (PRC)
Thank you Bob Wessels for alerting me to ADO Den Haag v United Vansen (of China). ADO Den Haag NV (the corporate vehicle of a Dutch Premier League club) domiciled at The Hague, sue United Vansen International Sports Co. Ltd, domiciled at Beijing, essentially for the latter to pay a deposit on the premium due for the shares it acquired in the club. Vansen did not appear.
First of all, were Vansen properly summoned in accordance with the Hague Service Abroad Convention (which both China and The Netherlands have ratified)? The court holds that it cannot yet decide that this has actually happened (relevant steps taken via the Dutch judicial authorities only recently having taken place) however it applies Article 15(3)’s provisions for extreme urgency: ‘Notwithstanding the provisions of the preceding paragraphs the judge may order, in case of urgency, any provisional or protective measures.‘
Next up: do the Dutch courts have jurisdiction? Given the defendant’s domicile outside of the EU and the non-applicability of any of Brussel I’s rules where domicile is irrelevant, the Court applied Dutch residual rules of private international law. These grant it jurisdiction essentially in respect of urgent proceedings of attachment.
Of more interest to this blog is the court’s consideration of applicable law, which the Court conducts with reference to Rome I. The share purchase agreement seemingly did not contain choice of law, either implicit or explicit: at 2.15, the court suffices with a mere observation of the absence of choice of law. None of the standard contracts of Article 4(1) Rome I applies [there is some discussion in scholarship whether share purchase is covered by Article 4(1)a’s ‘contract for the sale of goods’], hence the relevance of Article 4(2)’s ‘characteristic performance’ test. Here, the Court declared unequivocally (and most probably correctly) that the characteristic performance is the transfer of the share premium. The habitual residence of the party required to carry out that performance is the relevant connecting factor. In casu therefore, Chinese law in principle is the applicable law.
However the Dutch court finally settles for Dutch law after all, employing Article 4(3)’s escape clause. It holds that all circumstances of the case indicate that Dutch law is more closely connected: at 2.15: the agreement originated in The Netherlands; the performance has to be carried in The Netherlands (transfer of the sums into a Dutch bank account), and the transfer of the premium will benefit a Dutch company. Although the judgment does not give much detail on the contract, its origins etc., it would seem that in finally opting for Dutch law, the court does make proper application of the rather strict conditions of Article 4(3).
A good illustration of Article 4’s waterfall /cascade.
(Handbook of) European private international law, 2nd ed. 2016, Chapter 3, Heading 3.2.6.
Update 10 November 2017:  UKEAT 0056_17_1011: The Appeals Tribunal has confirmed.
Thank you Steve Peers for alerting me to the relevance of the conflict of laws and the Rome I Regulation in particular in the recent Aslam et al v Uber Employment Tribunal decision. The case essentially revolves around whether claimants are employees – it is a pivotal case determining the immediate regulatory context for this part of the ‘sharing economy’. Para 87 is a particularly delightful expression of scepticism towards the sharing economy’s claims (further highlights are here).
Conflict of laws is addressed at para 103 onwards, a completion of the analysis in case of rejection of the tribunal’s view that the UK company in the Uber group employs claimants, and instead one would have to regard Uber BV (of The Netherlands) as employer. I do not think the tribunal expresses itself entirely clearly on Rome I.
If Uber BV is the employer, reclassification of the contract as one of employment (as opposed to one for the provision of services), makes the choice of law for Dutch law partially inoperable (not, as the tribunal notes at para 105 in fine, replaced with the laws on England and Wales). Next the tribunal (paras 106-109) continues to speak of ’employer’ but reviews application of Article 3 (including the application of Article 3(3)’s ‘purely domestic contracts’. If there is a contract of employment, in my view only Article 3(1) and (2) can have any impact on the analysis: the remainder of Article 3 concerns provisions for which Article 8 itself provides exhaustive rules.
From para 110 onwards, the tribunal does more tidily address Article 8 Rome I and holds, after reference to counsel view, that if indeed the Dutch BV is the employer (for it does not suggest that the contract would have to be qualified as one of services), Dutch law would largely apply, except for a limited number of provisions of English law by way of mandatory rules. (Reference to Article 21’s ordre public is justifiably rejected).
I am assuming Uber are appealing. Expect the conflicts analysis to return.
(Handbook of) European private international law, Chapter 3, Heading 3.2.5.
Which strap on which boot? CJEU rejects von Munchausen in Nikiforidis, without suggesting alternative. And it leaves effet utile stranded in the mud.
As my review of Szpunar AG’s Opinion in C-135/15 Nikiforidis highlighted, on the issue of temporal applicability to continued contracts, the AG suggested along the lines of Rome I Article 10’s regime (the von Munchausen or the ‘bootstrap’ principle) that the lex causae has to determine the moment of ‘conclusion’.
The employment relationship at issue is conducted in Germany and subject to German law, which does not permit reductions in remuneration similar to those to which the Hellenic Republic had recourse (as a result of austerity).
The Court held last week and points out (at 20) that if the Rome I Regulation did not apply to the main proceedings, Article 34 of the EGBGB (the relevant provisions of residual German private international law concerning contractual relationships) would permit it to take into account the overriding mandatory provisions of another State. Provisions like those are exactly why the UK and Luxembourg in particular (concerned about financial services contracts subject to their laws) insisted on Article 9 Rome I seriously constraining the room for manoeuvre of the forum.
Different from its AG, the Court squarely rejects (at 30) any role here for Article 10. In support, it refers to the original proposal of the European Commission with a view to the adoption of what eventually became Rome I. COM(2005) 650 referred to ‘contractual obligations’: ‘‘contractual obligations arising after its entry into application’; as opposed to the Regulation’s eventual use of ‘‘contracts’ concluded as from 17 December 2009.
At 34: ‘Whilst the reference, proposed by the Commission, to contractual obligations arising after the entry into application of that regulation covered, in addition to contracts concluded after its entry into application, the future effects of contracts concluded before then, that is to say, obligations arising from the latter after then, this is not so in the case of the wording of Article 28 of the Rome I Regulation, which covers exclusively contracts concluded on or after 17 December 2009, the date on which that regulation became applicable pursuant to Article 29 thereof. It follows that, contrary to what the referring court envisages, any agreement by the contracting parties, after 16 December 2009, to continue performance of a contract concluded previously cannot have the effect of making the Rome I Regulation applicable to that contractual relationship without thwarting the clearly expressed intention of the EU legislature.’
Now, I have admittedly only quickly scanned the travaux preparatoires in writing up this post, yet I do think the Court’s conclusion on this point may be misguided. It was Parliament which introduced ‘contracts’ as opposed to ‘contractual obligations’. It did so in response to the EC’s proposed sentence which read in full
‘It shall apply to contractual obligations arising after its entry into application. However, for contractual obligations arising before its entry into application, this Regulation shall apply where its provisions have the effect of making the same law applicable as would have been applicable under the Rome Convention of 1980.’
Parliament proposed lifting the first sentence into a separate Article and to drop the second sentence altogether, citing ‘Unlike in the case of torts and delicts, contracts are entered into deliberately and voluntarily. It is essential for the parties to know that the provisions on applicable law contained in this Regulation will apply only to contracts concluded after its date of application. Therefore proceedings brought after the date of application concerning contracts concluded before that date will apply the Rome Convention.’
This intervention therefore I believe was targeted at avoiding debates on equality between Rome I and Rome Convention outcomes. No indication was given that the change from ‘contractual obligations’ to ‘contract’ was of any specific relevance for the debate.
However, in the end that discussion in my view does not really matter because the Court itself does subsequently admit that its observation, that the Regulation cannot mean that ‘any, even minor, variation made by the parties, on or after 17 December 2009, to a contract initially concluded before that date were sufficient to bring that contract within the scope of the Rome I Regulation’ (at 35) , should not negate that
‘the possibility remains, as the Commission has pointed out in its written observations, that a contract concluded before 17 December 2009 may be subject, on or after that date, to a variation agreed between the contracting parties of such magnitude that it gives rise not to the mere updating or amendment of the contract but to the creation of a new legal relationship between the contracting parties, so that the initial contract should be regarded as having been replaced by a new contract, concluded on or after that date, for the purposes of Article 28 of the Rome I Regulation.’ (at 37).
Whether such ‘new legal relationship’ has been formed in casu, is down to the national court to decide. The CJEU does not give any indication whatsoever of what law is to guide that court in that decision. A European ius commune? I don’t see it. Lex fori? Perhaps. But that would encourage forum shopping. Lex causae? But the Court had dismissed Article 10 of having any relevance. I am at a loss.
Now, to the question of overriding mandatory requirements (please refer again to my review of Szpunar AG’s Opinion for context): here the Court I believe misses the mark. After pointing out, justifiably (and in contrast with the AG), that Article 9 needs to be interpreted restrictively, it holds that ‘the list, in Article 9 of the Rome I Regulation, of the overriding mandatory provisions to which the court of the forum may give effect is exhaustive. (at 49).
This means Article 9 of the Rome I Regulation must be interpreted ‘as precluding the court of the forum from applying, as legal rules, overriding mandatory provisions other than those of the State of the forum or of the State where the obligations arising out of the contract have to be or have been performed. Consequently, since, according to the referring court, Mr Nikiforidis’s employment contract has been performed in Germany, and the referring court is German, the latter cannot in this instance apply, directly or indirectly, the Greek overriding mandatory provisions which it sets out in the request for a preliminary ruling.’ (at 50).
But then, at 52:
‘On the other hand, Article 9 of the Rome I Regulation does not preclude overriding mandatory provisions of a State other than the State of the forum or the State where the obligations arising out of the contract have to be or have been performed from being taken into account as a matter of fact, in so far as this is provided for by a substantive rule of the law that is applicable to the contract pursuant to the regulation.‘
And in conclusion, at 53:
Accordingly, the referring court has the task of ascertaining whether Laws No 3833/2010 and No 3845/2010 are capable of being taken into account when assessing the facts of the case which are relevant in the light of the substantive law applicable to the employment contract at issue in the main proceedings.
Err, here I really do not follow. Surely such de facto circumvention of Article 9’s restrictive scope, negates its effet utile. If and when a law other than the lex causae may be taken into account ‘as a matter of fact’, the Rome modus operandi is to say so: see in this respect in particular Article 17 Rome II. And what would ‘taking into account as a matter of fact’ mean for the case at issue?
Now you see it, now you don’t. In West Tankers the Court took effet utile to extreme length. Here it arguably entirely negates it. I am not convinced.
(Handbook of) European Private international law, 2nd ed. 2016. Chapter 2, Heading 188.8.131.52, Chapter 3, Heading 3.2.5 , heading 3.2.8.
Infringement of personality rights, including invasion of privacy, is exempt from the Rome II Regulation on applicable law for non-contractual relations. TLT at the High Court shows how distinct national laws may look upon the issue of quantification of damages very differently. Robin Hopkins reviews precedent and the case itself here, and One Crown Office Row zoom in on the case itself here. This case did not involve conflict of laws, however I thought I would highlight it anyway, for it is common knowledge that national laws assess damages in cases like these very differently.
It is worth pointing out in this respect that infringement of personality rights is exempt from Rome II not because it is irrelevant. Rather the contrary: it is very relevant indeed and no agreement could be found on an applicable law rule.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 4.