The Dutch MH17 judgment and the conflict of laws. On civil claims anchored to criminal suits, and the application of Article 4(3) Rome II’s escape clause.

Their relevance is of course insignificant in light of the dreadful events that  triggered the judgments, however I thought I would flag the private international law elements in this week’s four Dutch judgments following the criminal prosecution of the suspects (now culprits) in the downing of MH17.

The judgment against Mr Pulatov was the  only one to respond to defence arguments actually made: he was the only one to have been represented (the other judgments were held in absentia). The judges extrapolate his arguments to the  other defendants to ensure some kind of proper representation, however they also explore further elements not raised by Mr Pulatov in the other judgments. This includes precisely the private international law elements for, it seems, no private claim was attached to the prosecution of Mr Pulatov while it was against the other defendants.

In this post I take the judgment against Mr Dubinskiy as the relevant text (structure and content of the other 2 judgments are essentially the same).

[12.4.1] discusses the possibility of judging the civil leg of a criminal suit. That the crimes could be prosecuted in The Netherlands is established on the basis of international criminal law of course, which is not the area of this blog. Jurisdiction for the civil leg is justified by reference to this being accepted international practice. Support (not: legal basis per se) is found by the court in Article 7(3) Brussels Ia:

A person domiciled in a Member State may be sued in another Member State:

as regards a civil claim for damages or restitution which is based on an act giving rise to criminal proceedings, in the court seised of those proceedings, to the extent that that court has jurisdiction under its own law to entertain civil proceedings;

and in the similar regime under the Lugano Convention. The court rejects a potential (this judgment as noted was issued in absentia) lis pendens argument vis-a-vis proceedings  in the United States. The court remarks that these judgments had already been issued before the Dutch criminal prosecution was initiated; that therefore there are no concurrent proceedings unto which a lis pendens argument could be raised; and that the US judgments reached the same conclusion.

Res judicata of the US judgments is dismissed as an element which would impact the Dutch judgments at this stage. The court does point out that res judicata may return at the enforcement stage of the damages part of the judgments, in that the victims will not be entitled to double compensation. Note that the US judgments included punitive damages which as readers will know is also a complicating factor for enforcement in the EU.

At 12.14.2 the court then turns to applicable law, for which it of course applies Rome II. With reference to CJEU C-350/14 Lazar, it dismisses the ‘extraordinary suffering’ of the relatives of the victims as ‘indirect damage’ under Rome II, instead exclusively taking the direct damage (the passing away) of the victims on Ukrainian territory as determinant for locus damni.

Dutch law is held not to be ‘manifestly more closely connected’ per A4(3) Rome II, despite the majority of the victims being Dutch. The court in this respect refers firstly to the link with Ukraine not being accidental (such as might be the case in ‘ordinary’ mass claims) but rather directly linked to the hostilities in Ukraine), moreover to the need to guard what it calls the ‘internal harmony’ of the judgment seeing as there are also non-Dutch relatives involved. This I find a touch unconvincing, particularly seeing as the court itself in the same para, with reference to Jan von Hein in Callies’ 2nd ed. of the Rome Regulations commentary, refers to the need to consider A4(3)’s escape clause individually, not collectively.

Geert.

Links to all 4 judgments:

https://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2022:12219

https://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2022:12218

https://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2022:12217

https://deeplink.rechtspraak.nl/uitspraak?id=ECLI:NL:RBDHA:2022:12216

Sweden v Serwin. (Inter alia) on lex causae for (alleged) fiduciary duty and Rome II.

Kingdom of Sweden v Serwin & Ors [2022] EWHC 2706 (Comm) concerns an attempt by Sweden to gain compensation of a number of defendants whom it alleges were parties to a substantial fraud.  The fraud resulted in the misappropriation of in excess of €115m from the pension saving accounts of some 46,222 Swedish pension savers.

I may have to think one or two things through however I wanted to collect my initial thoughts at any rate.

Of note is that the application was one for summary judgment and that quite a few of the respondents did not file an acknowledgment of service or a defence. However, Sweden obtained permission from the court to obtain summary judgment on the merits even against them, rather than entering judgment in default (ia because that makes enforcement more straightforward). Other defendants are serving prison sentences in Sweden and they did enter a defence.

I do not want to turn this post into a banking and finance one however some background is required: [20] ff

The Swedish pension system has various types of pension provision, including a compulsory premium pension (PPM), in which a percentage of a pension saver’s earnings is put into an account, which is invested in investment funds selected by the pension saver from an online platform that the Swedish Pension Authority (SPA) maintains. Each pension saver has a PPM account. Among the investments which might be made were investments in so-called UCITS funds where these had been approved by the Swedish Financial Supervisory Authority (SFSA). UCITS funds are those meeting the requirements of the Undertakings for Collective Investment in Transferable Securities Directive 209/65/EC.

A company that wished to participate in the PPM was required to
enter into a cooperation agreement with the SPA. This case arises from two UCITS funds which were listed on the PPM online platform:

i)            the Optimus High Yield Fund (Optimus), managed by Optimus Fonder which entered into a co-operation agreement with the SPA on 26 March 2012; and

ii)          the Falcon Funds SICA V plc (Falcon) which entered into a co-operation agreement with the SPA in relation to three funders under its management.

The events concerning these two separate funds have been described in the evidence as the Optimus phase and the Falcon phase..

There was consensus ([38]) that the law applicable to the Swedish claims so far as they concerned the Optimus phase was Swedish law, whether by virtue of Article 4(1) or (3) Rome II. That Sweden’s claims relating to the Optimus phase were barred by the doctrine of res judicata, merger, cause of action estoppel or the allied doctrine in Henderson v Henderson, was dismissed by Foxton J [44].

Falcon then was incorporated and authorised by the Maltese Financial Services Authority as a UCITS fund on 22 November 2013. Sweden’s summary judgment claim in relation to the Falcon phase argued that its claims in delict and for breach of fiduciary duty relating to that phase are governed by Maltese law and not Swedish law.

As far as the delict issue is concerned (misappropriation), application of A4(2)  to some of the defendants was clear, and Sweden argued application of A4(1) for the remainder, seemingly arguing (judgment is a bit unclear on this point) that the damage was suffered in Malta when funds held in Falcon were applied to the various classes of loss-making investments.  Reference was made by counsel and judge to Dicey 16th ed. 35-027: “in misappropriation cases … it seems appropriate to locate damage at the place where an asset … is taken from the control of the claimant or another person with whom the claimant has a relationship” – the judge held that it is strongly arguable that this happened when Sweden’s funds became subject to the control of Falcon and the powers of its directors or those operating behind the scenes; the judge seems to locate this in Sweden, not Malta, and to some degree it does not matter for with reference ia to Avonwick and reasons listed [81] it is held that A4(3) arguably is engaged to make the lex causae Swedish law.

[86] reference is again made to Dicey for the applicable law issue as far as breach of fiduciary duties is concerned: Dicey, Morris & Collins [36-069]-[36-070]:

i)                 If equitable obligations of a fiduciary character arise in the context of a contractual relationship, there is a strong argument that the law applicable to the parties’ contractual relationship under Rome I determines whether a fiduciary relationship exists and the nature and content of the duties imposed.

ii)               If, however, the equitable obligations are characterised as incidents of a company law relationship rather than as “contractual”, common law principles determine the applicable law ( company law matters are excluded from Rome I and Rome II).

iii)             If a fiduciary duty arises where the parties were not in a prior relationship, such as in the case of a recipient of trust property, then the “better view” is that the obligation is non- contractual in nature and falls within the ambit of Rome II.

Unlike Sweden, the judge holds there are strong arguments that Swedish law applies, by reference it seems to Dicey, above, i) and with the ‘anchor’ agreement being the one by which Falcon becomes eligible to received PPM funds. Rule ii) seems to be moved aside by the judge here, and at any rate the extent of that rule is not clear-cut (see the CJEU itself recently). It is clear and it was correct to hold that the discussion is not one for summary judgment material.

An interesting final, obiter point comes [91] ff re the ‘reflective loss’ rule (a shareholder (and some others) cannot claim for a fall in the value of their holdings due to loss suffered by the company, if and when the company has a cause of action against the same wrongdoer) under Maltese law. Falcon itself is currently asserting claims against some of the alleged wrongdoers in relation to those same misappropriations, however Sweden argues an exception to that rule on the basis of Maltese expert evidence that was not considered to be robust enough for the summary judgment stage.

I wonder though whether the suggested relevance of the reflective loss rule, does not serve as ammunition for the suggestion that Rome I and II’s corporate carve-out is engaged viz the breach of fiduciary duties claim. For is the DNA of the rule not one of clear lex incorporationis?

To be further pondered.

Geert.

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

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

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

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

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

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

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

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

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

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

Geert.

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

 

The CJEU confirms a corporation’s general duty of care is not caught by the corporate carve-out. Judgment in ZK v BMA (Peeters Gatzen suit) impacts on business and human rights litigation, too.

The CJEU a little while back held in C‑498/20 ZK v BMA on the applicable law for the Dutch ‘Peeters Gatzen’ suit, for which I reviewed the AG Opinion here. The suit is  a tortious suit brought by a liquidator. In Nk v BNP Paribas the CJEU held at the jurisdictional level it is covered by Brussels Ia, not by the Insolvency Regulation.

A first issue of note, which I discuss at some length in my earlier post, is whether the liability is carved-out from Rome II as a result of the lex societatis provision. The CJEU confirms the AG’s contextual analysis, without repeating his general criterion, emphasises the need for restrictive interpretation, and specifically for the duty of care holds that liability resulting from a duty of care of a corporation’s bodies and the outside world, is covered by Rome II. This is important for business and human rights litigation, too: [55]

Pour ce qui concerne spécifiquement le manquement au devoir de diligence en cause au principal, il convient de distinguer selon qu’il s’agit du devoir spécifique de diligence découlant de la relation entre l’organe et la société, qui ne relève pas du champ d’application matériel du règlement Rome II, ou du devoir général de diligence  erga omnes, qui en relève. Il appartient à la seule juridiction de renvoi de l’apprécier.

The referring judge will have to decide whether the case engages the duty of care vis-a-vis the wider community (including the collectivity of creditors) however it would seem most likely that it does. If it does, locus damni is held, confirming the AG view, to be The Netherlands if the referring judge finds that the insolvent corporation’s seat is based there. The financial damage with the creditors is indirect only and does not establish jurisdiction.

[44] Should a judge decide that they do not have jurisdiction over the main claim, they also and necessarily have to relinquish jurisdiction over the warranty /guarantee claim against a third party under A8(2) BIa. CJEU Sovag is referred to in support.

Geert.

Abu Dhabi Commercial Bank v Shetty. Rome II applicable law for fraud, misrepresentation, instructs forum non conveniens stay.

Abu Dhabi Commercial Bank Pjsc v Shetty & Ors [2022] EWHC 529 (Comm) engages Rome II by way of the applicable law to the claim playing a role in the forum non conveniens challenge. (Compare BRG Noal v Kowski for a similar discussion under Rome I). The case confirms the importance of retained Rome I and II discussion. The stage is set at [7]

at the heart of the jurisdiction challenge is an assertion that England is manifestly not the most suitable forum for the resolution of this dispute which all defendants maintain should be resolved by the UAE courts. Unsurprisingly, ADCB places significant reliance for its case that England is the most suitable forum for resolution of this dispute on the fact that Plc was a FTSE 100 quoted company, that the contracts by which the two most important of the Core Facilities were given contractual effect (the Syndicated Facility Agreement and the Club Facility Agreement) were drafted and completed in London by a prominent London law firm and were subject to London arbitration clauses and on its contention that England is the governing law of the dispute. Equally unsurprisingly the defendants emphasise that Plc was a holding company that carried on no active business activity, that the activity in London was essentially administrative in nature, that the lending which it is alleged lies at the heart of the scheme was lending by ADCB (a UAE registered entity trading in the UAE) to entities within the Group including principally Healthcare, all of which were based elsewhere than England and Wales. They maintain that if what is alleged is true then this was from first to last a conspiracy that was conceived and carried into effect in the UAE. They maintain that the governing law is beyond argument UAE law.

I shall limit the post to the Rome II element: Pelling J discusses this [64] ff, with the core element [68-69]:

the damage occurred when a UAE based company drew down against or otherwise benefitted from the Core Facilities offered by a UAE based bank. …ADCB … ultimately acted upon the representations in Abu Dhabi, from where the relevant loan funds were drawn down by NMC Healthcare“.

In the case of a misrepresentation or fraud, the locus damni is held to be the place where that misrepresentation is acted upon. UAE law as lex causae is in fact also and primarily confirmed by A4(2) Rome II: joint place of habitual residence, held [71] to be the UAE. Application of the A4(3) escape clause is dismissed [77], and a passing reference to a potential for A12 Rome II’s culpa in contrahendo leading to English law as the lex contractus, is summarily dismissed [78].

A stay is granted.

Geert.

BRG NOAL v Kowski. A debatable applicable law consideration under A4 Rome I decides a forum non stay.

BRG NOAL GP SARL & Anor v Kowski & Anor [2022] EWHC 867 (Ch) continues the current trend of forum non conveniens applications galore, following Brexit. In the case at issue, with Luxembourg suggested as the appropriate forum, applicable law determination, under (retained) Rome I’s ‘characteristic performance’ rule plays a core role.

Applicable law needs to be determined essentially viz an undertaking as I understand it, by a, validly removed, investment fund General Partner, not to torpedo the subsequent orderly continuation of the fund. The core commitment reads

“I, [name], hereby acknowledge that [NOAL GP] is the managing general partner (“General partner”) of [the Fund] with effect from 27 August 2021 and unconditionally and irrevocably undertake (a) not to assert otherwise, or to induce or procure an assertion to the contrary or otherwise challenge or question the validity of its appointment or induce or produce such challenge or question, in any applicable forum and (b) to cooperate with and assist the General Partner in completing a full, orderly and timely transfer of the control of the Partnership and all of its assets and any obligations to the General Partner”.

Claimant [57] suggests the specific Undertaking in and of itself meets the CJEU Handte definition of a stand alone contractual obligation, however Smith J does not specifically hold on this for in her view even if this were correct, the overall contractual construction would have an impact on the applicable law consideration, seeing as in her view:

no choice of law was made; no default ‘passe partout’ contract as listed in A4(1) Rome I applies; A4(2) Rome I’s ‘characteristic performance’ test does not lead to an answer ([61]: there is no ‘characteristic performance’] and at any rate even if there were, the judge would have applied A4(3)’s escape clause to lead to Luxembourg law; and the ‘proper law of the contract’ per A4(4) Rome I ‘clearly’ [63-64] leads to Luxembourgish law.

In conclusion, a stay is ordered and the forum non application is successful. In my view the judge jumped too easily to Articles 4(3) and (4), denying Article 4(2)’s or even Article 3 choice of law’s effet utile. It is not unusual for judges to let their predetermination to apply A4(3) and /or (4) determine their A4(2) search for a lex contractus. Yet that frequency does not make the judgment right.

Geert.

EU Private International Law, 3rd ed, 2021, Heading 3.2.6.2.

Clarke v Kalecinski. On rules of safety and conduct under Rome II, but also on the implications of marketing language for duty of care.

Update 20 April 2022 Daniel Clarke reviews the issue of proof of foreign law here.

Clarke v Kalecinski & Ors [2022] EWHC 488 (QB) concerns a claim for damages for personal injury sustained during cosmetic surgery undergone by claimant on 7 January 2015. Claims is against the surgeon (domiciled and habitually resident in Poland; but also registered with the UK General Medical Council) who performed the breast and thigh procedures in Poland, and against the Clinic (a company incorporated in Poland in which  the surgeon and his wife are the sole shareholders and directors), where the operations were carried out and she received pre-and post-operative treatment. Claimant also sues the insurer of the Clinic.

Jurisdiction is not disputed. Both surgeon and clinic are being sued under the consumer title of Brussels Ia. The insurance company is being sued under CJEU Odenbreit: subject to the applicable law of the tort and the existence under same of a direct right of action against an insurer, section 3 BIa gives claimant a right to sue in claimant’s domicile.

Claimant sues both surgeon and clinic, both in contract and in tort. She seeks to hold the clinic either directly or vicariously liable for the failures of the surgeons who treated her – one other Polish surgeon was involved in her care – and the nurses who cared for her at the clinic in Poland. Total potential liability for the insurance company, under the indemnity of the clinic (they do not insure the surgeon) is limited to approximately £38,500.

Proper law of the contract is English law, per A6(1) of the consumer title of Rome I. This is not disputed. It had been anticipated by claimant until trial that it was also a matter of agreement that the proper law of the claim in tort was Polish law, per Rome II. However in its skeleton argument, for the first time, the insurer raised an issue about the adequacy of claimant’s pleading arguing they had failed to plead the Polish law upon which they relied, so the proper law of the tortious claim was by default, English law.  That was rejected by the judge on the basis of the exchange between parties.

At [104] ff Foster J discussed the application of A17 Rome II: the judge must take into account as a matter of fact, the rules of safety and conduct in force at the place and time of the event, i.e. Poland. However [107] the judge insists on the importance of the English standard of care

where it is a term of the contract that the first defendant would operate to the same standard as a UK surgeon, skilled in this specialism, and registered with the GMC, it is that standard, that applied to the activities in issue here. The care offered by the clinic likewise. [emphasis in the original]

Those terms of the contract were deduced by the judge [77]:

[claimant] does not allege that she signed any contract or document, save for a consent form which the court has not seen. However, in my judgement the substance of the representations on the website upon which Ms Clarke clearly relied, were incorporated into the contract between her and the clinic together with Mr Kaleciński. In my judgement this was one contract but involving both parties: the surgeon and all the other care givers at the clinic, by means of the clinic (Noa Clinic Uslugi Sp. z o.o), those incorporated representations were to the following effect. The first defendant would carry out the surgery and he would carry it out to the standard to be expected of a GMC registered surgeon proficient in plastic surgery.

This emphasis by the judge imparts once again the relevance of language, no doubt for marketing purposes, for the consequential legal obligations. Foster J moreover holds [108]

That standard applies to the tortious duty also by reason of the  representations made to which reference is made above.

and [109] she holds

the findings of [the expert] are couched in such stringent terms that they cover any surgical and indeed clinical practice whether governed by local Polish customs or not. The conclusions of [the expert] put paid to any subtlety of distinction between local custom and English practice that might … in other circumstances be considered relevant. What took place fell so far below acceptable standards I cannot accept the contention that local standards or practices might have rendered the egregious failings in this case acceptable as a matter of contractual or tortious obligation.

The judge’s findings on A17 Rome II are interesting. Yet I find her conclusions on website representations even more relevant.

Geert.

Lambert v MIB. On foreign applicable law, and how the motor insurance Directives engage with Rome II for accidents abroad, litigated in England.

It is interesting to imagine the legal position in Lambert v Motor Insurers’ Bureau (Rev1) [2022] EWHC 583 (QB) in a scenario of retained EU law post Brexit, rather than firmly within the scope of the Brussels Ia Regulation and applicable law under Rome II. By the mechanisms of EU consumer law and EU insurance law, mixed with the finest legal machinery in the area of subrogation, a UK resident party injured in a motor accident (here: at a private racing circuit in Spain) abroad is entitled to claim compensation from the Motor Insurers’ Bureau (‘MIB’) in certain circumstances, clarified by the UKSC in Moreno v MIB [2016] UKSC 52. Crowther DJ summarises these circumstances as [6]

broadly speaking, that the guarantee fund of the member State in which the accident occurred would be liable to compensate the injured person on the facts of the individual case, when applying the rules of the local law which govern such actions by injured persons against the local guarantee fund. In other words, if Mr Lambert can show that the Spanish guarantee fund would have been liable to him in respect of the accident, he can claim such compensation from the MIB as would have been payable by the local guarantee fund. It is common ground in this case that the scope of the insurance obligation for use of motor vehicles under Spanish law extended to cover participation in the track event, notwithstanding the fact that it was not on a road or other public place.

The latter element is unlike the UK where seemingly third party motor insurance for motor sport is not commercially available.

The law applicable to the claim is agreed to be English law. While not specified in the judgment, this is presumably because of Article 4(2) Rome II (where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply): both Mr Lambert, claimant, and Mr Prentice, said to be responsible for the accident, were participants in a track event, organised by a UK based track day operating outfit called Track Sense; both travelled to Spain from the UK.

Spanish law however determines the preliminary issue as highlighted by the Supreme Court, Spanish law being the law which would have been applicable to any hypothetical claim which Mr Lambert might have brought against the Spanish guarantee fund. This is where things get interesting. The Motor Insurance Directives support a direct claim against one’s national MIB, subject to the law of the MS where the accident happened, sustaining liability in the circumstances. However Rome II somewhat curtails its action radius by declaring that it does not apply to ‘evidence and procedure’. This is a carve-out which is problematic in specific instances as I explain ia here. On such instance are issues of limitation however these it seems ([14)] were not pursued.

In the case at issue, parties’ agreement ([9]) is that by analogy to A1(3) Rome II, matters of evidence and procedure are outside the scope of the material substantive law and fall to be determined in accordance with English law as the law of the forum (lex fori in principle determines issues of evidence and procedure). Equally, on an analogous basis to A22(1) Rome II, parties agree that Spanish law will apply insofar as it contains rules which raise presumptions of law or determine the burden of proof.

The common law treating foreign law as fact, means the content of that foreign law is established often with the help of parties (if need be cross-examined) experts however [17] is for the English judge to determine. The remainder of the case therefore is spent discussing the expert evidence (with the judge doing some fine distinguishing of the case-law both experts referred to) together with the factual elements, to conclude [94]

Mr Lambert’s actions were 25% causative of the accident and Mr Prentice’s 75%. It follows that Mr Lambert’s claim for damages against MIB succeeds to the extent of 75% of his loss or damage.

Lest my understanding of the insurance Directives fails me (which it could well do), this means that claim on 75% of the damage remains to be judged under English  tort law. With presumably a repeat of the causation test, this time under English law.

A clearly written judgment which no doubt benefitted from the considerable practice experience of the judge on the matters at hand.

Geert.

 

Zubaydah v Foreign Office. Court of Appeal reverses not altogether convincingly on the law applicable to illegal rendition cases.

Zubaydah v Foreign And Commonwealth Office & Ors [2022] EWCA Civ 334  discusses the same issue as Rahmatullah and Ali v MOD and FCO which I review here (and in which I later inserted the High Court judgment in current case).

What law is applicable to torts allegedly committed by the UK Security Services against a detainee subjected to “enhanced interrogation techniques” by the US CIA. The essence of the claimant’s claim is that the Services were aware that the claimant was being subjected to extreme mistreatment and torture at secret CIA “black sites” in six different countries, but nevertheless sent numerous questions with a view to the CIA eliciting information from him, expecting and intending (or at any rate not caring) that the claimant would be subject to such mistreatment and torture at interrogation sessions conducted for the purpose of attempting to obtain this information.

The first instance judge had refused to overturn the mosaic of six applicable laws (of the countries involved: Thailand, Poland, the US’ base at Guantanamo Bay, Morocco, Lithuania and Afghanistan) which follows from the standard application of the residual English conflict of laws rules (the EU Rome II Regulation does not apply): these point to lex locus damni. Males LJ to my mind unconvincingly does overturn that general rule, with  some reliance on the Supreme Court in VTB Capital Plc v Nutritek

The Court holds [37] that the judge had failed to focus on the tort allegedly committed by the UK Services (with too much emphasis on the treatment of claimant in the six countries, by the CIA); [38] wrongly discounted the reasons advanced by claimant for saying that the factors connecting the tort with the Six Countries were of reduced significance (this includes the fact that the claimant had no control whatever over his location and in all probability no knowledge of it either; and that there was a (jurisdictional) forum shopping element in the transfers to the 6 countries: keeping him away from jurisdictions with less forgiving rules on the practices concerned); and [40] the fact that the actions taken by the Services were undertaken “for the perceived benefit of the UK”, that is to say in the interests of this country’s national security.

The reasonable expectations of claimant play a big role in the analysis: claimant could have expected [41] that the conduct of any country’s security services having to do with him would be governed by the law of the country concerned. As for the Services, they would reasonably have expected that their conduct here would be subject to English law.

Throughout the judgment Males LJ puts great emphasis on what he notes [22] as an overarching aim of the relevant Act, which is ‘the reasonable and legitimate expectations of the parties to a transaction or an occurrence.’ However that is the Law Commission’s view on the raison d’être of conflict of laws full stop. I am not so sure it can serve as a determinative principle in the application of a specific rule of the Act.

I am not saying that the outcome of the case is wrong. Yet the judgment gives the impression of a correction of the judge’s factual balancing act between the different factors, rather than an error of law, and the emphasis on legitimate expectations feels a bit artificial in the circumstances. Add to this that [35] nobody suggested on the facts of this case that one applicable law might apply to the tort of misfeasance in public office and another to the tort of false imprisonment. Both parties proceeded on the basis that the law applicable to the claimant’s claims as a whole was either English law or the law of the Six Countries, and so did the Court of Appeal. This, too, may make the judgment’s authority limited.

Finally Males LJ holds obiter [51 ff] and correctly that it is too early to decide whether the application of the foreign laws, had they been applicable, would have had to be set aside on the basis of ordre public: while some evidence on the law of the 6 countries had been presented, there had not yet been proper discussion of same.

Geert.

Mahmood v The Big Bus Company. At cruise-speed getting to choice of law under the Rome Convention.

Mahmood v The Big Bus Company [2021] EWHC 3395 (QB) is a good illustration of the applicable law process under the 1980 Rome Convention and its inclusion on the blog is mostly for pedagogic /teaching purposes. It even might be a good illustration of the bootstrap principle (meaning an issue on the very existence of the contract needs to be determined by the putative lex contractus) except [94] parties agree that whatever the conclusion as to the applicable law, UAE law can be deemed to be the same as English law in relation to the validity, construction, and effect of the Heads of Terms.

On 27 July 2001, during discussions in London regarding a possible joint venture to operate tour buses in Dubai, the parties signed a document entitled “Heads of Terms”.

Claimant says the Heads of Terms gave rise to a binding contract between the parties, which the Defendant subsequently breached.  The claim is resisted by the Defendant, arguing that, whether assessed under the law of England and Wales or under the law of the UAE, the claim is time-barred.  In the alternative, the Defendant contends there was no binding contract between the parties, or, if there was, that it was superseded by events that took place in 2002, or that the Claimant acted in repudiatory breach of any such contract, whereas the Defendant itself did not breach a contractual obligation owed to the Claimant.  It further disputes that there is any basis for the damages claimed by the Claimant in these proceedings.

The blog’s interest in in the first Q only and this is where [65] ff Eady J does a good job at applying the Convention without verbosity. Reference is best made to the judgment itself.

Geert.

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