Shenzen Senior Technology Material v Celgard. On Rome II’s rule applicable law rule for unfair competition, distinguishing ‘direct’ from ‘indirect’ damage, and the Trade Secrets Directive.

Shenzhen Senior Technology Material Co Ltd v Celgard, LLC [2020] EWCA Civ 1293 concerns an appeal against service out of jurisdiction (the judgment appealed is [2020] EWHC 2072 (Ch)). Celgard allege that the importation and marketing by Senior of battery separator film involves the misuse of Celgard’s trade secrets.

Senior (of China) contend that the judge fell into error in concluding, first, that Celgard (incorporated in Delaware) had established a serious issue to be tried (here part of the jurisdictional threshold) assuming that English law applies to its claims and, secondly, that England is the proper forum to try the claims. As to the latter the core argument is that in limiting its claims to remedies in respect of acts in the UK, Celgard could not establish the requisite degree of connection to England. As for the former, they argue the law applicable to Celgard’s claims is Chinese law, which would count against jurisdiction.

Strategically, Celgard’s case against Senior is not based on breach of the NDA applicable between Celgard and one of its former employees,  Dr Zhang who, when he left Celgard, told its then COO that he was going to work for General Electric in California, which does not compete with Celgard in the field of battery separators. It later transpired that he had in fact joined Senior in China, where he was using the false name “Bin Wang”. This element of the facts triggers the question whether Senior is liable for the acts of another, even if that other is its employee.

The Celgard – Zhang NDA is governed by the law of South Carolina, application of which would also have triggered A4(3)(b) or (c) of the Trade Secrets Directive 2016/943. Celgard do rely on the NDA as supporting its case that the trade secrets were confidential. Rather Celgard claim that Senior’s employee acted in breach of an equitable obligation. This engages Rome II,  specifically Article 6(2) because Celgard’s claims are concerned with an act of unfair competition affecting exclusively the interests of a specific competitor, namely Celgard. In such circumstances, Article 6(2) provides that “Article 4 shall apply”.

Of note is that this is one of those cases that show that Rome II applies to more than just tortious obligations: as Arnold LJ notes at 51, as a matter of English law, claims for breach of equitable obligations of confidence are not claims in tort.

Celgard’s case, accepted by Trowe J at the High Court, is that A4(1) leads to English law because the ‘direct damage’ (per Rome II and CJEU Lazard indirect damage needs to be ignored) caused by the wrongdoing it complains of has occurred (and will, if not restrained, continue to occur) in the UK, that being the country into which the infringing goods (namely the shipment to the UK Customer and any future shipments of the same separator) have been (and will be) imported, causing damage to Celgard’s market here.

Senior’s case is that confidential information is intangible property and that damage to intangible property is located at the time and place it became irreversible (support is sought in extracts from Andrew Dickinson’s Rome II volume with OUP). At 58 ff Arnold LJ gives 7 reasons for rejecting the position. I will not repeat them all here. Of note is not just the (most justifiable) heavy leaning on the travaux but also the support sought in secondary EU law different from private international law (such as the Trade Secrets Directive 2016/943) as well as in the consistency between Brussels Ia and the Rome Regulations [on which Szpunar AG has written excellently in Burkhard Hess and Koen Lenaerts (eds.), The 50th Anniversary of the European Law of Civil Procedure]. This is not an easy proposition however given the lack of detail in Rome I and the need for autonomous EU interpretation, understandable.

The Trade Secrets Directive is further discussed at 65 ff for in A4(5) it makes importation of infringing goods an unlawful use of a trade secret “where the person carrying out such activities knew, or ought, under the circumstances, to have known that the trade secret was used unlawfully within the meaning of paragraph 3”. One of the possibilities embraced by paragraph 3 is (a), the person “having acquired the trade secret unlawfully”. Arnold LJ then asks: what law is to be applied to determine whether it was acquired “unlawfully”? Is A4(5) read together with A4(3)(a) an implicit choice of law rule pointing to the law of the place where the trade secret was acquired? Arnold LJ suggests this is not acte clair and may need CJEU clarification however not at this stage for his provisional view (with an eye on the jurisdictional threshold test) is that the Directive is not an implicit choice of law rule and that per Rome II, English law applies.

Plenty applicable law issues to discuss at the merits stage.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 4, Heading 4.6.2. Third ed. forthcoming February 2021.

 

 

PJSC Tatneft v Bogolyubov. Privilege under English law as lex fori.

PJSC Tatneft v Bogolyubov & Ors [2020] EWHC 2437 (Comm) is another example of a case where privilege is firmly considered to be subject to lex fori, like in the New York courts but unlike the approach of the Dutch courts. Moulder J did discuss the extent to which the rule applies to foreign unregistered, in-house lawyers. However she does this purely from the English point of view and without any consideration of either Rome I or Rome II. That is not very satisfactory in my view. As I have signalled before, one can discuss whether privilege is covered by the evidence and procedure exception in the Rome Regulations, however it must be discussed and cannot be just brushed under the carpet.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Chapter 4.

(3rd ed forthcoming February 2021).

 

First analysis of the European Parliament’s draft proposal to amend Brussels Ia and Rome II with a view to corporate human rights due diligence.

Update 28 October 2020 see also Chris Tomale’s further critical reflection here.

Update 22 October 2020  see for comparative purposes Jan von Hein’s critical comments on the EP draft work for a Regulation on the civil liability for artificial intelligence. There is a clear tendency in the institutions to draft tailor-made regimes for the PIL aspects of whatever hot topic hits them – it is generally neither a wise nor a necessary move.

Update 12 October 2020 Jan von Hein has weighed in on the debate here. Update 9 October 2020 Giesela Ruhl has further review of the Rome II elements here.

Thank you Irene Pietropaoli for alerting me to the European Parliament’s draft proposal for a mandatory human rights due diligence Directive. The official title proposed is a Directive on Corporate Due Diligence and Corporate  Accountability). Parliament also proposes insertions in both Brussels Ia and Rome II. For the related issues see a study I co-authored on the Belgian context, with links to developments in many jurisdictions.

I do not in this post go into all issues and challenges relating to such legislation, focusing instead on a first, preliminary analysis of the conflicts elements of the proposal.

A first issue of note in the newly proposed Directive is the definitional one.  The proposal’s full title as noted uses ‘corporate due diligence and corporate accountability’. However in its substantive provisions it uses ‘duty to respect human rights, the environment and good governance’ and it defines each (but then with the denoter ‘risk’) in Article 3. For human rights risks and for governance risks these definitions link to a non-exhaustive list of international instruments while for the environment no such list is provided.

The proposed Directive points out the existence of sectoral EU due diligence legislation e.g. re timber products and precious metals, and suggests ‘(i)n case of insurmountable incompatibility, the sector-specific legislation shall apply.’ This is an odd way to formulate lex specialis, if alone for the use of the qualifier ‘insurmountable’. One assumes the judge seized will eventually be the arbitrator of insurmountability however from a compliance point of view this is far from ideal.

As for the proposed amendment to Brussels Ia, this would take the form of a forum necessitatis as follows:

Article 26a
Regarding business-related civil claims on human rights violations within the value chain of a company domiciled in the Union or operating in the Union within the scope of Directive xxx/xxxx on Corporate Due Diligence and Corporate Accountability, where no court of a Member State has jurisdiction under this Regulation, the  courts of a Member State may, on an exceptional basis, hear the case if the right to a fair trial or the right to access to justice so requires, in particular: (a) if proceedings cannot reasonably be brought or conducted or would be impossible in a third State with which the dispute is closely related; or (b) if a judgment given on the claim in a third State would not be entitled to recognition and enforcement in the Member State of the court seised under the law of that State and such recognition and enforcement is necessary to ensure that the rights of the claimant are satisfied; and the dispute has a sufficient connection with the Member State of the court seised.

This proposal is a direct copy paste (with only the reference to the newly proposed Directive added) of the European Commission’s proposed forum necessitatis rule (proposed Article 26) at the time Brussels I was amended to Brussels Ia (COM (2010) 748). I discussed the difficulty of such a forum provision eg here (for other related posts use the search string ‘necessitatis’). The application of such a rule also provokes the kinds of difficulty one sees with A33-34 BIa (including the implications of an Anerkennungsprognose).

Coming to the proposed insertion into Rome II, this text reads

Article 6a
Business-related human rights claims
In the context of business-related civil claims for human rights violations within the value chain of an undertaking domiciled in a Member State of the Union or operating in the Union within the scope of Directive xxx/xxxx on Corporate Due Diligence and Corporate Accountability, the law applicable to a non-contractual obligation arising out of the damage sustained shall be the law determined pursuant to Article 4(1), unless the person seeking  compensation for damage chooses to base his or her claim on the law of the country in which the event giving rise to the  damage occurred or on the law of the country in which the parent company has its domicile or, where it does not have a domicile in a Member State, the law of the country where it operates.

I called this a choice between lex locus damni; locus delicti commissi; locus incorporationis; locus activitatis. Many of the associated points of enquiry of such a proposal are currently discussed in Begum v Maran (I should add I have been instructed in that case).

A first obvious issue is that the proposed Article 6a only applies to the human rights violations covered by the newly envisaged Directive. It does not cover the environmental rights. These presumably will continue to be covered by Rome II’s Article 7 for  environmental damage. This will require a delineation between environmental damage that is not also a human rights issue, and those that are both. Neither does the proposed rule apply to the ‘good governance’ elements of the Directive. These presumably will continue to be covered by the general rule of A4 Rome II, with scope for exception per A4(3).

My earlier description of the choice as including ‘locus incorporationis’ is not entirely correct, at least not if the ‘domicile’ criterion is the one of Brussels Ia. A corporation’s domicile is not necessarily that of its state of incorporation and indeed Brussels Ia’s definition of corporate domicile may lead to more than one such domicile. Does the intended rule imply claimant can chose among any of those potential domiciles?

Locus delicti commissi in cases of corporate due diligence (with the alleged impact having taken place abroad) in my view rarely is the same as locus damni, instead referring here to the place where the proper diligence ought to have taken place, such as at the jurisdictional level in CJEU C-147/12 OFAB, and for Rome II Arica Victims. This therefore will often co-incide with the locus incorporationis.

Adding ‘locus activitis’ as I called it or as the proposal does, the law of the country where the parent company operates, clearly will need refining. One presumes the intention is for that law to be one of the Member States (much like the proposed Directive includes in its scope ‘limited liability undertakings governed by the law of a non-Member State and not established in the territory of the Union when they operate in the internal market selling goods or providing services’). Therefore it would be be best to replace ‘country where it operates’ with ‘Member State’ where it operates. However clearly a non-EU domiciled corporation may operate in many Member States, thereby presumably again expanding the list of potential leges causae to pick from. Moreover, the very concept of ‘parent’ company is not defined in the proposal.

In short, the European Parliament with this initiative clearly hopes to gain ground quickly on the debate. As is often the case in such instances, the tent pegs have not yet been quite properly staked.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 8, Heading 8.3.

(3rd ed forthcoming February 2021).

 

 

 

Avonwick Holdings. The High Court awkwardly on locus damni, and on ‘more closely connected’ in Rome II.

In Avonwick Holdings Ltd v Azitio Holdings Ltd & Ors [2020] EWHC 1844 (Comm), Picken J among quite a few other claims, at 146 ff discussed a suggested defrauding by misrepresentation of the best available market price for a bundle of stocks. Toss-up was between Ukranian law and English law and, it was suggested, was only relevant with respect to the issue of statute of limitation. Counsel for both parties agreed that the material differences between Ukranian and English law were minor.

They omitted, it seems, to discuss the relationship between statute of limitations and the carve-out in Rome II for procedural issues.

At 151:

It was not in dispute…that the default applicable law under Article 4(1) is the law of Cyprus in that this was the country in which the event giving rise to the damage occurred since, although Avonwick was incorporated in the BVI and its entry into the Castlerose SPA was formally authorised in Ukraine, Avonwick’s directors were based in Cyprus and the steps necessary to transfer its shares in Castlerose to Azitio and Dargamo would, therefore, have been taken by those directors in Cyprus.

Here I am simply lost. A4(1) does not suggest locus delicti commissi (‘country in which the event giving rise to the damage occurred’) rather it instructs specifically to ignore that. Even if a locus damni consideration was at play, for purely economic loss as readers will know, there is considerable discussion on that exact location. How the judgment could have ended up identifying locus delicti commissi is a bit of a mystery.

At 153 then follows a discussion of a displacement of Cypriot law by virtue of A4(3)’s ‘manifestly more closely connected’ rule, including interesting analysis of any role which Article 12’s culpa in contrahendo provision might play.

For the reasons listed at 166 ff, the judge agrees that A4(3) applies to replace Cypriot law with Ukranian (not: English) law. Those reasons do seem to make sense – yet despite this, the A4(1) analysis should have been carried out properly.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 4, Heading 4.5.2.

 

Wallis v Air Tanzania. A good reminder of the (soon to be resurrected) UK reservation viz the Rome Convention.

In Wallis Trading Inc v Air Tanzania Company Ltd & Anor [2020] EWHC 339 (Comm), at stake is a claim by Wallis Trading, a Liberian company which carried on the business of acquiring and leasing aircraft, against Air Tanzania and the Government of Tanzania in respect of sums which Wallis says are due to it from the Defendants arising out of a lease of an aircraft by Wallis to ATCL.

Of interest to the blog is the discussion of the Rome Convention at 74 ff. Defendants contend that the Lease is invalid, and ‘null and void’ because it was entered into in breach of the Procurement Legislation. Butcher J holds that the Lease expressly provided that English law was to be its governing law. The putative law of the lease therefore is English law (the bootstrap of Article 8 Rome Convention, now Article 10 Rome I. The Procurement Legislation is not part of English law, and non-compliance with it does not, as a matter of English law, render the Lease invalid, null or void.

What however about the application of A7 Rome Convention’s rule on lois de police /mandatory law?

1. When applying under this Convention the law of a country, effect may be given to the mandatory rules of the law of another country with which the situation has a close connection, if and in so far as, under the law of the latter country, those rules must be applied whatever the law applicable to the contract. In considering whether to give effect to these mandatory rules, regard shall be had to their nature and purpose and to the consequences of their application or non-application.

2. Nothing in this Convention shall restrict the application of the rules of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the contract]

Here, Butcher J points out that Article 7(1) of the Rome Convention does not have the force of law in the United Kingdom: the UK had entered an Article 22 reservation viz the lois de police rule. The impossibility of same viz Rome I led to the stricter language in Article 9. In the event of Rome I not being part of the future relations between the UK and the EU, the Convention and its reservation will once again be applicable.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.8, Heading 3.2.8.3.

 

Lamesa Investments v Cynergy. Rome I-like ‘mandatory law’ provisions applied to US secondary sanctions.

Update 30 June 2020 the decision was upheld upon appeal,[2020] EWCA Civ 821, albeit for different reasons. Not much was added to the Rome discussion other than that the chancellor did not subscribe to the view that ‘mandatory’ had to be seen in a Rome /lois de police sense (at 35).

A long overdue post I fear (I hope in the next week and a half or so to turn to draft posts which for all sorts of reasons have gotten stuck in the queue, finally to be published) on Lamesa Investments Ltd v Cynergy Bank Ltd  [2019] EWHC 1877 (Comm). Latham and Watkins have had background for some time here.

The case concerns a standard clause in an English law governed contract on ‘mandatory law’ as an excuse for contractual non-performance. Here, the clause (in a (credit) facility agreement) read: clause 9.1: (party is not in breach of the agreement if) “… sums were not paid in order to comply with any mandatory provision of law, regulation or order of any court of competent jurisdiction”.

“Regulation” was defined in the Agreement as including “any regulation, rule, official directive, request or guideline … of any governmental, intergovernmental, or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation”.

Lamesa argued that Cynergy could not rely on clause 9.1 because:

  • provision of law” meant a law that applied to a UK entity, acting in the UK, that had agreed to make a sterling payment pursuant to a contract governed by English law; and
  • mandatory” meant that the relevant law made it compulsory for Cynergy to refuse payment

‘In order to comply’ was the focus of discussions, in particular whether there was any territorial limit to it. Pelling J took a flexible approach, holding that Cynery could not reasonably be expected to have excluded the only type of sanction which it could have reasonably foreseen, namely secondary sanctions imposed by US sanctions law (at the time the parties entered into the Facility Agreement, Cynergy was aware that it was possible that US sanctions would be imposed on Lamesa).

Of interest to the blog is the brief reference to Rome I (and the Convention), at 23:

‘It was submitted on behalf of CBL and I agree that English lawyers during the period the FA was being negotiated and down to the date when it became binding would have understood a mandatory law to be one that could not be derogated from. The context that makes this probable includes the meaning given to the phrase “… mandatory provision of law …” in the Rome Convention 1980 and the Rome 1 Regulation on Choice of Law. It was not submitted by CBL that the construction for which they contend applies by operation of either regulation. It submits however and I accept that they provide some support for the submission that lawyers at the relevant time would have understood the effect of the word “mandatory” to be as I have described. It goes without saying that it was not open at any stage to either party to dis-apply the US statutes that purported to apply secondary sanctions by their agreement, nor did the parties attempt to do so either in the FA itself or afterwards.’

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.8, Heading 3.2.8.3.

Petrobas securities class action. Applicable law update: Dutch court holds under Rome II on lex causae in tort for purely economic loss. Place of listing wins the day (and leads to Mozaik).

Thank you Matthias Lehmann for flagging and reviewing the Rotterdam Court’s judgment late in January on applicable law in the Petrobas case. I had earlier reviewed the jurisdictional issues, particularly the application of Brussels Ia’s Article 33-34.

The case relates to a Brazilian criminal investigation into alleged bribery schemes within Petrobras, which took place between 2004 and 2014. The court first, and of less interest for the blog, deals with a representation issue, holding that Portuguese speakers cannot be represented in the class, for the Portuguese version of the relevant dispute settlement provisions, unlike the English translation, was not faulty.

Turning then to applicable law at 5.39 ff. Events occurring on or after 12 January 2009 are subject to the Rome II Regulation. For those before that date, Dutch residual PIL applies which the Court held make Brazilian law lex causae as lex loci delicti commissi: for that is where the alleged fraud, bribery and witholding of information happened.

For the events which are covered by Rome II, the court does not wait for the CJEU finding in VEB v BP and squarely takes inspiration from the CJEU case-law on purely financial damage and jurisdiction: Kronhofer, Kolassa, Universal Music. The court notes that the CJEU in these cases emphasised a more than passing or incidental contact with a State (such as: merely the presence of a bank account) as being required to establish jurisdiction as locus damni. At 5.47 it rejects the place of the investor’s account as relevant (for this may change rapidly and frequently over time and may also be easily manipulated) and it identifies the place of the market where the financial instruments are listed and traded as being such a place with a particular connection to the case: it is the place where the value of the instruments is impacted and manifests itself. It is also a place that meets with the requirements of predictability and legal certainty: neither buyer nor seller will be surprised that that location should provide lex causae.

Conclusion therefore is one of Mozaik: Brasil, Argentina, Germany, Luxembourg are lex causae as indeed may be other places where Petrobas financial instruments are listed. (At 5.49: Article 4(2)’s joint domicile exception may make Dutch law the lex causae depending on who sues whom).

Geert.

(Handbook of) EU private international law, 2nd ed.2016, Chapter 4, Heading 4.4.

 

 

 

 

GDE v Anglia Autoflow. Governing law for agency agreements under the Rome Convention.

Update 26 May 2020 for a Greek SC judgment discussing choice of court v choice of law in agency, and applying CJEU C-159/97 Trasporti Castelleti, see here.

In GDE LLC & Anor v Anglia Autoflow Ltd [2020] EWHC 105 (Comm) (31) the Rome I Regulation does not apply ratione temporis; the Agency Agreement was concluded on about 9 April 2009 which is a few months before the kick-off date of the Regulation (note there is no default rule for agency in Article 4 Rome I in the event of lack of lex voluntatis). Dias DJ therefore turns to the 1980 Rome Convention.

Parties are in dispute as to the governing law of the Agency Agreement by which the claims should be determined. AAL alleges that the governing law is that of Ontario while the Claimants allege that the Agency Agreement is governed by English law. The point is of critical importance because the Claimants concede that, if AAL is correct, their claim is time-barred under Ontario law: although this, as readers know, assumes statutes of limitation are subject to the governing law – which is far from certain: see Jabir v KIK and Spring v MOD.

Parties’ arguments are at 10 and 11 and of course they reverse engineer. In essence (at 20) claimants say that there was an implied choice of English law. Alternatively, if that is not correct, the presumption in Article 4(2) of the Rome Convention, which would otherwise point to Georgia law, falls to be disapplied in favour of English law. The Defendant says that there was no implied choice and that application of Article 4(2) leads to Ontario law. Alternatively, if (which it denies) the presumption in Article 4(2) leads to any other governing law, the presumption is to be disapplied in favour of Ontario.

At 21 ff follows a rather creative (somewhat linked to the discussion of ex officio Rome Convention application in The Alexandros), certainly unexpected (yet clearly counsel will do what counsel must do) argument that essentially puts forward that under the common law approach of foreign law = fact hence must be proven, any discussion of a law as governing law, not suggested by the parties (here: the laws of (the US State of) Georgia) that is not English law (which clearly the English curia does ‘novit’), cannot go ahead. At 22 Dias DJ already signals that ‘once the wheels of the Convention had been put in motion, they could not be stopped short of their ultimate destination. The idea that the process dictated by the Convention should be hijacked halfway, as it were, on the basis of a pleading point was, to my mind, deeply unattractive.’

At 31 she sinks the argument. I think she is right.

Having at length considered the facts relevant to the contract formation, discussion then turns again to the Rome Convention with at 105 ff a debate on the role to be played by factors intervening after contract formation with a view to establishing [implicit, but certain: see at 117 with reference to the various language versions of the Convention and the Regulation essentially confirming the French version] choice of law or closest connection. (Dias J refers to the Court of Appeal in Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Ltd, [2013] EWCA Civ 365[2013] 2 Lloyd’s Rep 98 where, at paragraphs 21-27, it pointed out that the common law approach frequently blurred the distinction between the search for the parties’ inferred intention and the search for the system of law with which the contract had its closest and most real connection).

At 120: the hurdle is high: choice of law implicitly made must have nevertheless been made: ‘The court is not looking for the choice that the parties probably would have made if they had turned their minds to the question.’ at 122: In the present case the evidence established that there was no reference by the parties to the question of governing law at all. Choice of court for England (discussed ia with reference to Rome I and to Brussels Ia Article 25) does not change that. At 160 ff therefore follows the discussion of Article 4 of the Rome Convention, leading to a finding of the laws of Ontario as the lex contractus under Article 4(1). Article 4(5) does not displace it.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.4, Heading 3.2.6.

Rahmatullah and Ali v MOD and FCO. The High Court on the law applicable in (allegedly) irregular rendition cases.

In [2019] EWHC 3172 (QB) Rahmatullah and Ali v Ministry of Defence and the Foreign and Commonwealth Office claimants argue on the basis of the torts of negligence and misfeasance in public office. They are Pakistani nationals both of whom allege that they were captured by British forces in Iraq in February 2004. They contend that they were subsequently handed over to United States’ control and, thereafter, taken to Afghanistan where they were subjected to prolonged detention, torture and mistreatment.

At issue in this civil case is whether the English PIL rule of locus damni (for personal injury cases) needs to be displaced in favour of English law, by virtue of the exceptions to this rule including, all else failing, ordre public. (For the relevant text, see the judgment).

Rome I does not apply given the case clearly is one of acta iure imperii. Note that this does not, in England and Wales, displace the residual rules of the Private International Law (Miscellaneous Provisions) Act 1995.

Turner J keeps the discussion very to the point, holding that there is no reason to displace the general rule: the law of Iraq applies to the claims prior to the claimants’ rendition from Iraq to Afghanistan and that of Afghanistan thereafter. His clear application of the precedents is much enjoyable.

One particularly interesting point is raised at 34:

The claimants make the further point that transferring a detainee from one country to another in breach of Article 49 [of the Fourth Geneva Convention, GAVC] would legitimise forum shopping by illegal rendition. The defendants accepted during the course of oral submissions that circumstances could arise in which this was a legitimate concern where, for example, a detainee had been relocated in a rogue state selected for its lack of adequate legal protection for those within its geographical and jurisdictional boundaries. However, in this case there is no evidence to suggest that any consideration of the putative advantages of the application of Afghan jurisprudence lay behind the rendition decision or indeed to the effect that Afghan law would provide, as a matter of fact, a particularly suitable environment within which to achieve any such darker purpose.

Of note is also, at 29, claimants’

‘point that those in senior positions who are to be held accountable for the alleged failures under the return claim were based in England and were acting (or failing to act) in the exercise of state authority.’

An argument which, Turner J finds, has been found to be relevant in the authorities, however not striking with sufficient force in casu to meet the very high burden of proof for displacing the standard rule.

Geert.

CeDe Group v KAN. Bobek AG on the intricate applicable law provisions of the Insolvency Regulation (here: concerning set-off for assigned claims).

Update 22 November 2019 the CJEU yesterday confirmed the AG’s Opinion.

Bobek AG opined end of May in C-198/18 CeDe Group v KAN. I am posting a touch late for well, readers will know I have not been fiddling my thumbs. The Opinion concerns the lex causae for set-off in accordance with the (2000) Insolvency Regulation – provisions for which have not materially changed in the current version of the EIR (Regulation 2015/848). At stake are Articles 4 cq 6 and 7 cq 9 in the two versions of the Insolvency Regulation.

The liquidator of PPUB Janson sp.j. (‘PPUB’), a Polish company the subject of insolvency proceedings in Poland, lodged before the Swedish courts an application against CeDe Group AB (‘CeDe’), a Swedish company, claiming payment for goods delivered under a pre-existing contract between PPUB and CeDe, which is governed by Swedish law. In the course of those proceedings, CeDe claimed a set-off in respect of a larger debt owed to it by PPUB. The liquidator had previously refused that set-off within the framework of the Polish insolvency proceedings. During the course of the procedure before the Swedish courts, PPUB’s liquidator assigned the claim against CeDe to another company, KAN sp. z o.o. (‘KAN’), which subsequently became insolvent. However, KAN’s liquidator refused to take over the claim at issue, with the result that KAN (in insolvency) is now party to the litigation

The Supreme Court, Sweden doubts the law applicable to such a set-off claim. Before the referring court, KAN claimed that the set-off claim should be heard under Polish law, whereas CeDe submitted that that issue should be examined under Swedish law. Both of course reverse-engineered their arguments to support opposing views.

The Advocate General in trademark lucid style navigates the facts and issues (not helped by the little detail seemingly given by the referring court). Complication is of course that the general Gleichlauf rule of the EIR is repeatedly tempered by ad hoc regimes for specific claims or claimants.

The AG advises on the main question (should the CJEU follow then his reply to the other questions becomes redundant), at 36, that ‘that Article 4(2) of the Insolvency Regulation makes reference to the conditions for invoking set-offs and to the effects of insolvency on current contracts cannot entail, in my view, that any claim relating to a contract where a party to that contract is subject to insolvency proceedings (and/or where a set‑off is invoked against that claimant) falls automatically within the concept of ‘insolvency proceedings and their effects’ for the purposes of determining which provision governs the applicable law. The mere fact that it is the liquidator who has lodged such an action does not, in my view, change that conclusion.. At 37 he adds powerful argument for same: ‘A case like the present one neatly demonstrates why any other conclusion would lead to unpredictable, or even bizarre, results. The law governing the contractual claim would not only differ from the one that the parties agreed on, but it would also change repeatedly, due to subsequent assignments and/or the assignees themselves eventually becoming subject to insolvency proceedings. All such changes to the applicable law would be based on events not only post-dating the conclusion of the contract and the choice of applicable law, but also largely unconnected to the contract. In addition, all this could be happening while proceedings are pending before the same court.’

Like the Commission, for the final, very interesting question [that question from the referring court boils down to the issue of whether the ‘non-permissibility’ of set-offs in the lex concursus under Article 4 EIR is to be addressed in concrete or abstract terms in order to trigger the exception laid down in Article 6(1)] Bobek AK focuses on the Regulation’s stated aim (recital 26 of the 2000 EIR; recital 70 in the 2015 EIR) of having the set-off regime fulfill its role as a guarantee for international commercial transactions: at 74: ‘adopting an approach focused on the concrete outcomes produced by the respective applicable laws in conflict in a given case, the test to be applied must zero in on the specific solution that would be arrived at by the law applicable to the main claim’.

An Opinion very much soaked in commercial reality.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.7.