Tag: Article 23

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Tilman v Unilever. CJEU supports choice of court in GTCs even if no possibility of click-wrap is offered.

Update 22 December 2022 see additional comment by Marion Ho-Dac here.

Update 29 November 2022 see here for questions between Marco Farina and myself re the CJEU’s discussion [28-31] of the applicability at all of Lugano, in light of the Withdrawal Agreement.

The CJEU last week held in C-358/21 Tilman v Unilever, the context of which I reviewed here. Krzysztof Pacula has initial analysis here and also refers to the application of the consent for choice of court issues in Ebury Partners.

One of the parties’ (Unilever’s) GTCs  are contained on a website, and their existence is ‘flagged’ in the written main contract, without there bring a tickable box that click-wraps the agreement. Does that suffice to bind the parties as to the GTC’s choice of court (in favour of the English courts)? Note the courts were seized pre-Brexit; the UK’s Lugano troubles are not engaged.

The CJEU answers exactly along the lines I suggested in my earlier post: no impeding of commercial practice; need for the contracting party relying on the clause to have drawn the attention to the GTCs; need for that clause to be durably consultable and storable; finally it is the national court’s task to verify  the formation of consent in these factual circumstances. That there is no box that can be ‘ticked’ is not conclusive [52].

All in all a welcome support for commercial choice of court.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.10.

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Tilman v Unilever. A preliminary reference on flag-wrap B2B choice of court under Lugano.

A puzzling title perhaps I agree but let me explain. Thank you Matthias Storme for alerting me to the May 2021 preliminary reference by the Belgian Supreme Court, a reference now known at the CJEU as Case C-358/21 Tilman SA (of Belgium) v Unilever Supply Chain Company AG (of Switserland). Elucidation is asked of Article 23 of the Lugano 2007 Convention, the choice of court provision in the Convention.

The question referred, reads

Are the requirements under Article 23(1)(a) and (2) of [Lugano 2007], satisfied where a clause conferring jurisdiction is contained in general terms and conditions to which a contract concluded in writing refers by providing the hypertext link to a website, access to which allows those general terms and conditions to be viewed, downloaded and printed, without the party against whom that clause is enforced having been asked to accept those general terms and conditions by ticking a box on that website?

Article 23 Lugano 2007 is identical (mutatis mutandis: the only difference being that A23 Lugano refers to ‘States to the Convention’ instead of ‘Member States’) to the former Article 23 of the Brussels I Regulation, Regulation 44/2001.  A23 Lugano 2007 reads in relevant part

    1. If the parties, one or more of whom is domiciled in a State bound by this Convention, have agreed that a court or the courts of a State bound by this Convention are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either: (a) in writing or evidenced in writing; or (b) in a form which accords with practices which the parties have established between themselves; or (c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.
    2. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to ‘writing’.

The case at issue therefore does not question so-called ‘click-wrap’ consent to general terms and conditions – GTCs. These require the contracting partner to tick the relevant box which then ‘wraps up’ the agreement, including choice of court (and law). They were the subject of CJEU El Majdoub v CarsOnTheWeb. In that judgment, the CJEU held that in a B2B context, where the GTCs that have to be ticked can be saved and printed, they can be a ‘durable’ record of consent. (Not: consent itself: that is subject to a separate analysis, under the relevant lex causae, see below).

Rather, the title of this post calls the issue one of ‘flag-wrap’: one of the parties’ (Unilever’s) GTCs  are contained on a website, and their existence is ‘flagged’ in the written main contract. Does that suffice to bind the parties as to the GTC’s choice of court (in favour of the English courts; note the courts were seized pre-Brexit; the UK’s Lugano troubles are not engaged)?

The provisions on forum clauses are drafted in a way ‘not to impede commercial practice, yet at the same time to cancel out the effects of clauses in contracts which might go unread’ (Jenard Report), or otherwise ‘unnoticed’ (CJEU Colzani). The Brussels Convention and now the Regulation show great support for choice of court agreements and aim not to be as overly formalistic as the conditions imposed upon them.

Importantly, valid choice of court does require both a clearly and precisely demonstrated consent to be bound by choice of court and one or another Article 25-sanctioned form of expression of that consent. In Colzani the CJEU held [7]:

the requirements set out in Article [25] governing the validity of clauses conferring jurisdiction must be strictly construed. By making such validity subject to the existence of an ‘agreement’ between the parties, Article [25] imposed upon the court before which the matter is brought the duty of examining, first, whether the clause conferring jurisdiction upon it was in fact the subject of a consensus between the parties, which must be clearly and precisely demonstrated. The purpose of the formal requirements imposed by Article [25] is to ensure that the consensus between the parties is in fact established.

CJEU authority of Colzani and Coreck Maritime impose on the court the duty of examining ‘whether the clause conferring jurisdiction upon it was in fact the subject of a consensus between the parties’ and this had to be ‘clearly and precisely demonstrated’.

In practice, many courts conflate the check for consent with the check for expression of that consent and even the CJEU is not always clear in distinguishing it. In particular, absence of proof of any of the three possible avenues for expression of consent, included in Article 25(1) a, b or c, or then taken as an absence of consent, full stop. In Colzani, the CJEU held

[T]he mere fact that a clause conferring jurisdiction is printed among the general conditions of one of the parties on the reverse of a contract drawn up on the commercial paper of that party does not of itself satisfy the requirements of Article 17, since no guarantee is thereby given that the other party has really consented to the clause waiving the normal rules of jurisdiction. Where a clause conferring jurisdiction is included among the general conditions of sale of one of the parties, printed on the back of a contract, the requirement of a writing under the first paragraph of Article 17 of the Convention is fulfilled only if the contract signed by both parties contains an express reference to those general conditions.

The CJEU here, wrongly, seems to suggest lack of compliance with the expression of consent indicates a lack of that consent full stop.

Importantly, the CJEU in its rulings on what was then Article 23 and its Brussels Convention predecessor keeps utterly silent on national conditions relating to the actual formation or existence of consent. This, as regular readers of the blog will know, is at least for cases covered by Brussels Ia, subject to the lex fori prorogati, with renvoi, an issue which both national courts and the CJEU struggle with.

How then should the CJEU respond to the question (I asked my conflict of laws students at Leuven this question in a first exam on 18 June)?

Firstly, the Court should (and will) remind us of the Jenard /Colzani core instruction: the need to ensure consent is established, without being overly formalistic. Different from the context of the protected categories, there is no ‘weaker category’ to protect here.

Secondly,  there needs to be durability of the record of consent. That seems to be guaranteed here via the technicalities of the Unilever platform (downloadable GTCs) and in line with aforementioned CJEU Al Majdoub (the June students were not given technical details but should still flag durability).

Thirdly, despite the formal A23  requirement most probably being met, the consent requirement to me seems far from certain. In a click and wrap context ― lest there be issues of agency, duress, consumer protection laws etc. (in a context where the consumer title’s conditions are not met) which need to be held under the law applicable to consent ― the box ticking solidifies establishment of consent. In a mere flag and wrap context, that to me seems far less certain. If the reference were to a url where GTCs are properly and collectively displayed (if need be, updated with clear reference to chronology; see housekeeping), consent by an ordinary careful business (the proverbial (business)man on the Clapham omnibus). Yet if such as here, the link communicated in the formal contract refers to a platform where the  GTCs are not the first thing the contracting party sees, rather, where it is expected that that contracting party registers and /or downclicks, search and retrieve etc., that consent to me seems far less certainly established. [Again my students were not given the details on the platform which the reference includes, they did however have to signal the issue of consent).

Finally, under BIa, the lex fori prorogati, incl renvoi, would determine the above considerations of consent. Here, therefore, English law including its conflict of laws rules on choice of court. However seeing as the case is not subject to Brussels Ia, but rather to Lugano, the lex causae for consent will be an issue for the courts seized (here, the Belgian courts) to determine. Under the Belgian rules, this means application of Rome I (Rome I excludes choice of court agreements however Belgium’s private international law Act makes Rome I applicable even to carved-out contractual arrangements).

An interesting reference.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.10.

 

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(Rejected) appeal in PIFSS v Banque Pictet leads to renewed criticism of the intensity of jurisdictional litigation – as well as continuing uncertainty on anchor jurisdiction.

The appeal in The Public Institution for Social Security v Banque Pictet & Cie SA & Ors [2022] EWCA Civ 29 has been dismissed. I reviewed the first instance judgment here. I conclude that review writing ‘Those criticising the intensity of jurisdiction squabbles will find ammunition in this 497 para judgment.’ The Court of Appeal judgment is another 152 paras and as Andrew Dickinson also notes, Carr LJ, too, is critical: [12]

There will of course be cases where a novel and/or complex point of law needs to be debated fully and decided and, as foreshadowed above, this litigation raises some new, albeit relatively short, legal issues. Further, the sums involved are substantial and the allegations made are serious. However, these features did not create a licence to turn a jurisdictional dispute into an extensive and essentially self-standing piece of litigation. The costs incurred below ran to many, many millions of pounds: the interim payment orders in respect of the Respondents’ costs amounted to £6.88 million against a claimed total of some £13.5 million.

The issues on appeal are listed [41] ff and they of course reflect the discussion I summarised in my post on the first instance findings. I list them below and summarise the Court’s findings.

Article 23 formal requirements (involving Banque Pictet and Mr Bertherat only):

i) For the purposes of the requirement in Article 23(1)(a) that a jurisdiction agreement must be in or evidenced in writing, was the Judge right to conclude that it was unnecessary for the GBCs containing the EJCs (‘exclusive jurisdiction clauses, GAVC) actually to have been communicated to PIFSS?

ii) If so, was the Judge right to find that Banque Pictet did not have the better of the argument that the GBCs were communicated to PIFSS prior to 2012?

Lady Justice Carr is right in my view e.g. [67] that CJEU authority does not require material communication of GTCs etc which contain EJCs. Rather, the judge needs to establish ‘real consent’,  in the spirit of the Raport Jenard with a rejection of excessive formality.

Article 23 material validity (involving all Pictet and Mirabaud Respondents (save for Pictet Asia, Pictet Bahamas and, for the avoidance of doubt, also Mr Amouzegar and Mr Argand)):

i) Was the Judge right to conclude that the “particular legal relationship(s)” in connection with which the EJCs were entered into for the purpose of Article 23 was the totality of the legal relationships between the parties forming part of the banker/customer relationship between them?

ii) Was the Judge right to conclude that the relevant Respondents had the better of the argument that the disputes relating to (a) the Pictet/Mirabaud bribery claims; (b) the Pictet/Mirabaud accessory claims “ar[o]se out of” those “particular legal relationship(s)”?

The term ‘material validity’ is employed both in first instance and at the Court of Appeal although it is not quite correct; what is really meant is what Henshaw J called the ‘proximity’ requirement: which ‘disputes’ ‘relate to’ the matters covered by the EJCs? Here, Carr LJ sides eventually [98] with the judge mostly as a matter of factual analysis: neither CJEU Apple nor CDC require a restrictive approach where parties have formulated the EJC very widely. The judge carefully considered the wording of the clause and on contractual construction was right to find that the disputes at issue fell within it.

Scope of EJCs (as a matter of the relevant domestic law) (involving all Pictet and Mirabaud Respondents (save for Pictet Asia and Pictet Bahamas and again, for the avoidance of doubt, Mr Amouzegar and Mr Argand)):

i) Was the Judge right to find that PIFSS had the better of the argument that, on the true construction of the relevant EJCs, the disputes relating to the wider accessory claims fell outside the scope of the applicable EJCs?

ii) (Mr Mirabaud only): Was the Judge right to conclude that PIFSS had the better of the argument that claims against Mr Mirabaud relating to events after 1 January 2010 fell outside the scope of the relevant EJCs?

This issue relates to whether the EJCs, as a matter of construction under Swiss (or Luxembourg) law – which the judge had discussed obiter, did not extend to cover the wider accessory claims. [101]: in summary the relevant parties suggest that, having correctly recognised that what was alleged by PIFSS were unitary schemes arising out of continuing courses of conduct, the Judge was then wrong to conclude that they did not have the better of the argument that the wider accessory claims also fell within the EJCs.

Carr LJ deals rather swiftly with these discussions, again I feel finding mostly that the judge’s analysis was mostly factual (albeit seen from the viewpoint of Swiss and /or Luxembourg law) and not incorrect.

Article 6: (the number of Respondents to whom the Article 6 challenge is relevant will depend on the outcome of the appeals on the issues above, but on any view the issue of principle arises in relation to Mr Amouzegar and Mr Argand):

i) Was the Judge right to conclude that, for the purpose of Article 6, the Court was not required to consider solely the risk of irreconcilable judgments between the claim against the anchor defendant and the claim(s) against the proposed Article 6 defendant(s) but rather was permitted to consider other relevant circumstances including, in particular, the risk of irreconcilable judgments between the claims sought to be made against the proposed defendant and other claims in other member states?

ii) Did the Judge apply the test correctly in relation to each relevant Respondent?

This I find is the most important part of the judgment for it is in my view the one which most intensely deals with a point of law. Readers may want to refer to my earlier post for a summary of the A6 (Lugano) issues. The judge had found against A6 jurisdiction, also following Privatbank‘s ‘desirability’ approach. Parties upon appeal argue [110] that the Judge’s interpretation results in exclusive jurisdiction clauses having practical effects well beyond the scope of their application, with the collateral effect of conferring on them a “gravitational pull” which is inconsistent with the proper interpretation of A23 Lugano. PIFSS submits that it undermines the drive for legal certainty that motivates the strict approach to A6 identified in the authorities. They also suggested (in oral submission) that for A6 purposes only actual, and not merely potential, proceedings are properly to be taken into account. 

The CA however [112] confirms the relevance of future as well as extant claims and generally supports the flexible approach to A6. Carr J concedes [131] that this approach can be said to give “gravitational pull” to A23 and suggests ‘(t)here is nothing objectionable about that, given the respect to be accorded to party autonomy.’

I do not think this is correct. Including broadly construed ‘related’ claims in choice of court would seem to deny, rather than protect party autonomy: for if parties had really wanted to see them litigated in the choice of court venue, they ought to have contractually include them.

The issue of desirability per Privatbank is not discussed and therefore remains open (compare EuroEco Fuels).

Forum non conveniens: Pictet Asia and Pictet Bahamas:

i) Depending on the outcome of the issues above, was the Judge right to conclude that PIFSS had not shown that England was clearly the appropriate forum for the resolution of the claims against Pictet Asia and Pictet Bahamas?

Here the swift conclusion [143] is that the judge’s finding that PIFSS had not shown that England was clearly the proper forum is unimpeachable.

A lot is riding on this jurisdictional disagreement.  Permission to appeal to the Supreme Court was refused by the CA but may still be sought with the SC itself.

Geert.

EU Private International Law, 3rd ed. 2021, big chunks of Chapter 2.

 

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PIS v Al Rajaan. An intensive Brussels Ia and Lugano choice of court (by incorporation) and anchor defendant discussion.

The Public Institution for Social Security v Al Rajaan & Ors [2020] EWHC 2979 (Comm) engages in lengthy discussion anchor jurisdiction (A6) and choice of court (A23) under the Lugano Convention which of course, albeit with some important mutatis mutandis, echoes Brussels I and Brussels Ia.

Henshaw J summarises the key issues at 74:

i)                    whether the exclusive jurisdiction clauses (‘EJCs’) relied on were agreed between the parties and incorporated into their respective contracts, applying;

a)                  the formal validity requirements set out in Lugano Convention Article 23/Recast Brussels Regulation Article 25, and

b)                 if relevant, the laws governing the contracts i.e. Swiss or Luxembourg law;

ii)                  if so, whether the EJCs satisfy the requirements for material validity under Lugano Convention Article 23/Recast Brussels Regulation Article 25;

iii)                if so, how the EJCs are to be interpreted under their respective governing laws;

iv)                whether, and if so to what extent, the EJCs apply to claims against the applicants;

v)                  if and to the extent that the EJCs apply to only some claims against particular applicants, or apply to some but not all of the applicants, whether this court has jurisdiction over the remainder of the claims pursuant to Lugano Convention Article 6(1)/Recast Brussels Regulation Article 8(1); and

vi)                whether the court should decline jurisdiction over the claims against Pictet Asia and Pictet Bahamas (seeing as they are neither EU or Lugano States domiciled) on forum non conveniens grounds.

 

The judgment is lengthy. These are my highlights:

  • At 107 following review of CJEU authority including Refcomp and Hoszig, the finding that the issue of validity of choice of court by incorporation are to be addressed solely by reference to the requirements of what is now A25 BIa and the corresponding provision in Lugano Convention Article 23. This requires real consent which is discussed with reference ia to Profit Investment Sim at 109 ff.
  • At 127 ff Henshaw J discusses the issue obiter under Swiss cq Luxembourg law as putative leges contracti for choice of court. At 142 the judge concludes that under Swiss law, as under EU law, it is sufficient, in order to incorporate a jurisdiction agreement into the parties’ contract, that the parties have made a written agreement which incorporates by reference general terms including a jurisdiction clause. Ditto with less discussion under Luxembourg law, at 148.
  • At 187 ff: the issue of material validity under EU law. This discussion kicks off with a review of what one of the parties calls the ‘proximity requirement’: per C-214/89 Powell Duffryn (CDC, too, is discussed), the fact that choice of court (only) extends to a ‘particular legal relationship’ (reference here is also made to Etihad, at the time of the judgment this had not yet benefitted from the Court of Appeal‘s judgment). At 201 ff Justice Henshaw takes a broad view:

In principle I would agree that if a jurisdiction clause is not clear, then it may be restrictively construed, consistently with the policy expressed in the relevant EU case law of promoting certainty and avoiding parties being taken by surprise.  On the other hand, I see no reason why parties cannot make a jurisdiction clause in deliberately wide-ranging terms which covers many, or indeed all, of their present and future contractual relationships.  I do not read the Opinion of the Advocate General in Refcomp as indicating the contrary.  Refcomp was essentially concerned with whether a jurisdiction clause could be relied on against a sub-purchaser of goods, and it is notable that the CoJ referred in its judgment to “the principle of freedom of choice on which Article 23(1) is based” (§ 40).  Nor do I read Powell Duffryn as restricting the parties’ ability to choose the scope of the particular legal relationships to which a jurisdiction clause is to apply.

  • Whether the claims at issue meet the ‘proximity’ requirements is then discussed at length, under EU law and again, obiter, under Swiss and Luxembourg law, largely leading to a conclusion of lack of jurisdiction in England and Wales for many of the claims.
  • Anchor jurisdiction is discussed for some of the claims at 403 ff, leading to a classic discussion of the (CJEU Kalfelis introduced) close connection requirement, and at 418 support for the fragile Court of Appeal finding in Privatbank, that that the word “expedient” in the context of the lis alibi pendens provision in Lugano Convention Article 28 must mean “desirable” as opposed to merely practicable or possible. At 427 the issue of fragmentation of proceedings is discussed: what should the court do where a claimant is required to sue a defendant in an overseas jurisdiction under A23 Lugano in relation to some claims, but seeks to pursue in this jurisdiction (a) connected claims against the same defendant, or (b) connected claims against another defendant, in reliance on A6? Henshaw J concludes the E&W courts should not entertain the accessory claims.
  • Forum non is discussed at 480 ff, with the final conclusion being that E&W does not have jurisdiction for any of the claims.

I fully expect there is scope for appeal.

Those criticising the intensity of jurisdiction squabbles will find ammunition in this 497 para judgment.

Geert.

EU Private International Law, 3rd ed. 2021, big chunks of Chapter 2.

 

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Mastermelt v Siegfried Evionnaz highlights the continuing torpedo under Lugano, as opposed to the Brussels regime. Suggests cautious application of the Privatbank authority on reflexivity.

In Mastermelt v Siegfried Evionnaz [2020] EWHC 927 (QB), at issue is negative declaratory relief on contractual performance. 

Claimant Mastermelt is an English company specialising in the reclamation of precious metals. The defendant, Siegfried Evionnaz SA (“Siegfried”), is a Swiss company. There is a dispute between the parties over the quality of Mastermelt’s performance. Siegfried’s standard terms and conditions of contract (“STC”) include a clause stating that the governing law is Swiss law and that the Swiss courts have exclusive jurisdiction.

Relevant pending proceedings, are: very shortly after Siegfried had informed Mastermelt that it was going to issue proceedings against Mastermelt in Switzerland, Mastermelt issued the present claim in England on 5 February 2019. It seeks negative declaratory relief against Siegfried. Proceedings were subsequently issued by Siegfried against Mastermelt in the Zurich Commercial Court on 23 July 2019. Meanwhile, on 24 May 2019, Siegfried applied to the High Court in London for a declaration that it had no jurisdiction to try Mastermelt’s claim and so the Claim Form and service should be set aside, alternatively stayed. Further, on 29 January 2020 Mastermelt applied to the Swiss court (1) for a stay of those proceedings pending the UK decision, or (2) for the Swiss proceedings to be limited at that stage to a consideration of the court’s own jurisdiction there and nothing else, or (3) an extension of time for service of a response to Siegfried’s claim. By an order of 4 February 2020, the Swiss court rejected all three applications. On 7 February Mastermelt filed an appeal to the Federal Supreme Court of Switzerland which initially suspended enforcement of the Zurich Commercial Court’s decision pending the appeal. However, on 13 February Siegfried objected to any such suspension. The Supreme Court directed Mastermelt to file any response to that objection by 9 March. As far as the English courts know, that has been done but at the moment the Supreme Court has not given its decision on the suspension issue, let alone any substantive appeal, nor has there been any decision yet on the jurisdiction or otherwise of the Swiss court to hear the claim.

Siegfried argues, and has convinced the Swiss courts, that A27 Lugano needs to be applied ‘in harmony’ with A31(2) Brussels Ia: this now provides that regardless of which court was seised first, the court which was the subject of the putative exclusive jurisdiction clause, must decide the question of its jurisdiction first and the other proceedings must be stayed in the meantime. At 13 Waksman J refers to the Swiss court’s reasoning, where it takes an expansionist view of the Lugano Convention‘s protocol no2, that the Lugano States shall take ‘due account’ of each other’s courts decisions. The Swiss court suggests that in principle it should follow CJEU authority in Gasser (which introduced the torpedo mechanism by giving strict interpretation to the lis alibi pendens rule, even in case of choice of court) but that it has reasonable justification to deviate from Gasser given that the judgment has become ‘obsolete’ following A31(2) BIa.

Waksman J is first invited to accept the Swiss court’s reasoning as res iudicata, per CJEU C-456/11 Gothaer. (I did say at the time the CJEU may find its ruling in Gothaer would come back to haunt it). This he finds is a stretch of that authority but also not applicable given the limited findings of the Swiss court at any rate: ‘here the actual and only decision of the Swiss court thus far is simply to refuse to stay its own proceedings’.

He then discusses how A27 Lugano needs to be applied. A first reference is to the Court of Appeal’s most problematic view in Privatbank, to my mind, of applying Article 28 Lugano reflexively to third States. At 23-24 Waksman J distinguishes Privatbank (clearly he cannot hold it no relevant authority should he think so); then holds correctly that Gasser is not entirely obsolete following BIa; and finally at 30 that the harmonised regime per Lugano’s Protocol does not mean that one should now interpret Article 27 Lugano like 31.2 and (b) i Brussels Ia.

I agree most firmly. Note this has Brexit implications: one of the routes post Brexit, as readers know, is for the UK to become part of Lugano. In doing so it will surrender BIa’s forum non-light regime (Articles 33-34) in favour of Lugano which most definitely does not have a forum non-application – as well as, as is at issue here, re-arming the Italian torpedo. (Update 7 May 2020 Many thanks to Elijah Granet for pointing in the comments section to A6 of the Hague Choice of Court Convention which in future might serve towards disarming the torpedo to some degree: pursuant to Article 6 of that Convention, a court of a Contracting State other than the contractually chosen court must suspend or dismiss proceedings in that court to which an exclusive choice of court applies. There are exceptions however and in my view these could be used quite extensively: asymmetric choice of court, for instance, might well by some jurisdictions be classed as ordre public). (Update 28 May 2020 see also Aygun Mammadzada in the meantime here for similar and further comments re Lugano).

This leaves the issue of the putative choice of court agreement. England is the forum contractus per Article 5(1)a Lugano, hence will have jurisdiction less choice of court stands. Authority is well-known and recently applied in Pan Ocean, referred to here at 85. After much factual consideration it is accepted to a good arguable case standard that the parties contracted on the basis of the STC for the obligations concerned.

In conclusion therefore the action is stayed.

Quite a few relevant issues here. I for one note the cautious approach of the Court, in handling the Court of Appeal’s Privatbankauthority – following SCOR v Barclays.

Geert.

Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2.

 

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Kinsella et al v Emasan et al. Documenting choice of court under the Lugano Convention.

[2019] EWHC 3196 (Ch) Kinsella et al v Emasan et al is not quite as extensive an analysis on choice of court as Etihad Airways v Prof Dr Lucas Flöther which I review here.  Nevertheless the required ‘good arguable case’ standard is again responsible for the extensive discussion of the issue.

Issues are similar as under A25 BIa – in the case at issue it is the Lugano Convention (Article 23) that is engaged. Teverson M’s analysis is very much a factual, contractual one: the basis of Emasan’s (defendant, domiciled at Switzerland) jurisdiction challenge is that: it is domiciled in Switzerland; an alleged 2002 Agreement was an oral agreement which was not subject to any jurisdiction agreement; that alleged 2002 Agreement was not varied by 2006 and 2007 Deeds in such a way as to bring claims for breaches of its alleged terms within the ambit of the jurisdiction clauses contained in those later Deeds, but was superseded by them; there is no other basis upon which the jurisdiction of the English Courts is established in relation to claims based on the 2002 Agreement.

Whether choice of court was made for the 2002 agreement depended on whether A23 Lugano’s conditions were fulfilled that the agreement be made in writing or evidenced in writing; or in a form which accords with practices which the parties have established between themselves (the lex mercatoria gateway was not relevant at issue).

Every one of the written agreements made to give effect to claimant’s entitlement under the original, oral 2002 Agreement included a jurisdiction clause recognising the jurisdiction of the English Courts. A great deal of emphasis was placed on witness statements. At 101 Master Teverson holds that the agreement on jurisdiction under the 2002 agreement can properly in the circumstances of this case be regarded as evidenced by the jurisdiction clauses in the 2006 and 2007 Deeds.

Geert.

(Handbook of) European Private international law, 2nd ed. 2016, Ch.2, Heading 2.2.9

 

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Choice of court (in tender file) under Brussels I. CJEU confirms Szpunar AG in Hőszig /Hoszig – keeps schtum on Brussels I Recast.

The CJEU has confirmed the views of Szpunar AG in C-222/15 Hőszig /Hoszig, without (much as expected) entertaining the lex fori prorogati rule of the Brussels I Recast.

Can choice of court made in underlying documentation in the context of a tender, for which Hőszig entered a winning bid, be considered valid under Article 23 of the Brussels I Regulation (now: Article 25 Brussels I Recast)? Yes, the Court said, with explicit reference to the AG. Crucial point in the consideration is whether per Case 24/76 Colzani an explicit reference to the choice has been made, reference which can be controlled by a party applying normal diligence and where it is established that the general conditions containing the jurisdiction clause was actually communicated to the other contracting party (at 40 in Hoszig). This was so in the case at issue. The court points out that Article 23 (and now Article 25) includes mostly formal requirements (expression of consent, see the references in my posting on the AG’s Opinion) and only one substantial requirement (choice of court needs to relate to an identified legal relationship between the parties). The remainder of discussion on the substantive requirements with respect to the choice of court agreement, is subject to the lex causae of that separate choice of court agreement (exactly why the current Regulation now includes the lex fori prorogati rule; Szpunar AG’s discussion of this clause however was not required to settle the issue and therefore the Court does not look into it).

‘(T)he Paris Courts [have exclusive and final jurisdiction]’ is sufficient for the CJEU to determine the choice of court with precision: it is perfectly acceptable that it will subsequently be French civil procedure laws that will determine precisely which court will have jurisdiction.

A sensible judgment following clear Opinion of the Advocate General, together further completing the choice of court provisions of Brussels I.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9 Heading 2.2.9.4. Chapter 3, Heading 3.2.2 .

 

 

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Once again: Choice of court (this time in tender docs) under Brussels I. Szpunar AG takes the sensible route in Hőszig /Hoszig.

In C-222/15 Hőszig /Hoszig, Advocate General Szpunar opined using the sensible route, on the application of Article 23 of Regulation 44/2001 . His excursus though on Article 25 of the Brussels I Recast and the new lex fori prorogati rule is the part of his judgment which I read with most interest.

First things first: can choice of court made in underlying documentation in the context of a tender, for which Hőszig entered a winning bid, be considered valid under Article 23 of the Brussels I Regulation (now: Article 25 Brussels I Recast). Pursuant to Clause 23.1 of these ‘general conditions of purchase’, headed ‘applicable law and settlement of disputes’, ‘[t]he Order shall be governed by and interpreted in accordance with French law. The application of the United Nations Convention on the International Sale of Goods dated April 11, 1980 is excluded. Any dispute arising out of or in connection with the validity, construction, performance or termination of the Order, which the parties are unable to settle amicably shall be finally and exclusively settled by the courts of Paris, including in the case of a summary procedure, injunctions or conservatory measure.’

Hőszig tried to sue instead in what it considered to be the place of performance of the contract, per Article 5(1) (now 7(1) in the Recast). Its torpedo of the choice of court included in the general conditions of purchase, was based on recourse to Article 10(2) Rome I, which holds that the putative law of the contract does not apply to consider a party’s consent if it would not be reasonable to do so. In such case the law of the habitual residence of said party applies. Here this would lead to Hungarian law rather than French law and Hungarian law, it is argued, would not accept such incorporation of general terms and conditions. Szpunar AG however simply refers to the fact that choice of court agreements are excluded from the Rome I Regulation. Recourse to Article 10(2) is barred by that exclusion.

What needs to be considered under Article 23 Brussels I is whether parties have reached consensus, ‘clearly and precisely demonstrated’, the AG suggests. This wording is typically associated with choice of law under Rome I however I would support its use in the context of the Brussels I (and Recast) Regulation, too, for that is what the Court’s case-law on the Article amounts to. Applying Case 24/76 Colzani mutatis mutandis, and taking into account that express reference to the general terms and conditions in documents exchanged between the parties prior to the tender being awarded, the AG concludes that agreement had been reached.

Now, is the expression ‘courts of Paris’ sufficiently precise? Szpunar AG suggests it is and I would concur, albeit that the last word on  that is probably not yet said. The Advocate General refers to Capotorti AG in Case 23/78 Meeth, who had advised that a clause worded such as here, refers by implication to the system of rules of territorial jurisdiction (typically on the basis of a combination of value and subject-matter) to determine precisely at which court proceedings must be instituted. The Court itself did not at all elaborate in the eventual judgment. Szpunar AG suggests it must have taken Capororti’s suggestion for granted. Therefore (at 44 of the Opinion) it is French procedural law which governs the question of precisely which Paris court is competent.

This leaves open the question, though (which I understand is not sub judice here) whether parties can employ choice of court to trump national rules of civil procedure. What if they agree that the courts of say province X in Member State A are preferable to settle the issue, e.g. because of perceived know-how, even if national civil procedure would ordinarily assign the case to province Y? Not an issue which to my knowledge has been settled by EU case-law.

By way of sign-off, the Advocate General then reviews whether the new text, Regulation 1215/2012, has in any way altered or added to the discussion on choice of court agreements. Readers will be aware (via this blog or the Handbook or otherwise) that the new Regulation refers to the lex fori prorogati to determine the validity of the choice of court agreement:  ‘[i]f the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State’ (emphasis added by Szpunar AG).

Under Brussels I, various options were defended. Szpunar AG refers to Slynn AG having defended lex fori prorogati in Case 150/80 Elefanten Schuh,  and Szpunar AH himself suggest (at 47 in fine) lex fori additi under the former Brussels I Regulation (44/2001).

The AG is most certainly correct in my view that the lex fori prorogati is not meant to cover all aspects of the validity of the agreement. In my Handbook I distinguish between the expression of consent (harmonised by Article 25), and the formation of consent (not touched upon by Brussels I and now subject to the lex fori prorogati). He then suggests that the insertion of lex fori prorogati was meant to align the Brussels I (Recast) with the 2005 Hague Convention on Choice of Court Agreements, to which the EU have now acceded. I do not recall any such reference in the travaux preparatoires of Regulation 1215/2012 – however it has been a while since I consulted them extensively and the AG presumably has.

The Court of course will be much more succinct than its AG.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9 Heading 2.2.9.4. Chapter 3, Heading 3.2.2 .

 

 

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Choice of court in bond prospectus. The CJEU in Profit Investment Sim.

The CJEU has in my view taken the sensible approach in C-366/13 Profit Investment Sim, on (among others) whether choice of court included in a bond prospectus, binds not just the original transactional parties but also the buyers of such bonds on the secondary markets or via intermediaries. (An issue which many of us pondered in Kolassa but which was not sub judice there).

Parties at issue were Commerzbank (formerly Dresdner), the bond issuer; Redi, financial intermediary licensed by the UK FSA and subscriber of all relevant bonds on the primary market; and Profit, an Italian company, who bought part of the bonds of Redi, on the secondary market. Dresdner’s prospectus contains choice of court in favour of the English courts.

First, on the issue of the jurisdiction clause. The referring court asks, in essence, whether Article 23(1)(a) and (c) of Regulation 44/2001 (both now part of Article 25) must be interpreted as meaning that a jurisdiction clause, such as that at issue in the main proceedings, satisfies the formal requirements laid down in Article 23(1)(a) [‘in writing or evidenced in writing’] where (i) it is contained in a prospectus produced by the bond issuer concerning the issue of bonds, (ii) it is enforceable against third parties who acquire those bonds through a financial intermediary and (iii), in the event that the first two parts of the second question are answered in the negative, it corresponds to a usage in the field of international trade or commerce for the purpose of Article 23(1)(c).

Choice of court in the prospectus and the impact on the primary market.

The Court first of all holds that the ‘formal requirement’ of (now Article 25 a (a) ”in writing or evidenced in writing’ for the issue of choice of court between Dresdner and Redi is only met (along the lines of Colzani Case 24/76) if the contract signed by the parties upon the issue of the bonds on the primary market expressly mentions the acceptance of the clause by Redi, or contains an express reference to the prospectus. The latter in particular is quite likely.

Choice of court in the prospectus and enforceability against third parties acquiring through a financial intermediary.

Next, the Court (at 30) holds that the same two alternatives apply for the relationship between Redi and Profit. Here the court refers to Refcomp and  distinguishes it, basically by pointing to the specific examples of bills of lading and choice of court in shareholders registries, cases in which the CJEU had previously accepted transferability of choice of court to third parties, in specific circumstances. (Please refer to both the Refcomp judgment and to current judgment (at 33 ff) for detail).

The Court consequently held (at 37) that choice of court contained in a prospectus produced by the bond issuer concerning the issue of bonds may be relied on against a third party who acquired those bonds from a financial intermediary if it is established, which it is for the referring court to verify, that (i) that clause is valid in the relationship between the issuer and the financial intermediary, (ii) the third party, by acquiring those bonds on the secondary market, succeeded to the financial intermediary’s rights and obligations attached to those bonds under the applicable national law, and (iii) the third party had the opportunity to acquaint himself with the prospectus containing that clause. (Emphasis added).

The emphasis I added is quite important: the CJEU does not hold that such succession is somehow part of an EU Ius Commune.

Finally, if the answer to the first two questions is negative, is there usage in international trade or commercial custom between the parties? 

This, the Court holds, has to be determined by the national court. The CJEU (at 48) recalls its earlier case-law in particular C-106/95 MSG:  actual or presumed awareness of a usage on the part of the parties may be made out, in particular, by showing either that the parties had previously had commercial or trade relations between themselves or with other parties operating in the sector in question, or that, in that sector, a particular course of conduct is sufficiently well known because it is generally and regularly followed when a particular type of contract is concluded, so that it may be regarded as being an established practice.

The Court does though give a few more practical things which the national court needs to look out for: at 49. In order to determine, in the main proceedings, whether the insertion into the prospectus of a jurisdiction clause constitutes a usage in the sector in which the parties operate, of which those parties were aware or ought to have been aware, the referring court must take into account, inter alia, the fact that that prospectus was approved in advance by the Irish Stock Exchange and made available to the public on the latter’s website, which does not seem to have been contested by Profit in the proceedings on the merits. In addition, the referring court must take account of the fact that it is undisputed that Profit is a company active in the field of financial investments as well as of any commercial relationships it may have had in the past with the other parties to the main proceedings. The national court must also verify whether the issue of bonds on the market is, in that sector, generally and regularly accompanied by a prospectus containing a jurisdiction clause and whether that practice is sufficiently well known to be regarded as ‘established’.

 

Lest one forgets, the Court’s judgment is also relevant for a more general query on the nature of (now) Article 7(1): must the action seeking the annulment of a contract and the restitution of the amounts paid on the basis of a document the nullity of which is established, be regarded as ‘matters relating to a contract’ (the existence of which plaintiff seeks to dispute)? Yes, it does: if only (at 54) to ensure that Article 7(1) cannot simply be torpedoed by one party claiming that there is no contract.

(The judgment also reviews the conditions of application of (now) Article 8(1), with respect to ‘irreconcilability’ of judgments).

This judgment is quite relevant in yet again the CJEU having to defer to national law on the issue of transferability (see the emphasis I added, above). The Court very clearly does not wish to overplay its hand in trying to force a European Ius Commune in private law, via the use of private international law.

Geert.

(Handbook of) European Private International Law Chapter 2, Heading 2.2.11.1; Heading 2.2.11.1.a; 2.2.9.3;.2.2.9.7; 2.2.12

 

 

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Unilateral jurisdiction not necessarily invalid under French law – Cour de Cassation in Apple.

The French Cour de Cassation’s in Banque Privee Edmond de Rothschild Europe v X held that a unilateral jurisdiction clause was invalid under (doubtful) reference to (then) Article 23 of the Brussels I Regulation. The clause was held not to be binding under the French doctrine of clauses potestatives, even though the agreed forum was Luxembourg (whence the validity of the clause was judged under the lex fori derogati, not prorogati; that will no longer be possible under the recast Jurisdiction Regulation). In Credit Suisse, it extended this view (without reference this time to clauses potestatives) to choice of court in the context of the Lugano Convention.

In Apple Sales international v eBizcuss.com, the Cour de Cassation effectively qualifies its Rotschild case-law. The Court of Appeal held as unacceptable, under the theory of clauses potestatives, choice of court obliging eBizcuss to sue in Ireland, while allowing Apple Sales International to sue either in Ireland, or the place of registered office of eBizcuss, or any place where Apple Sales would have suffered damage. The Cour de Cassation now held that this clause is perfectly acceptable under Article 23 (now 25)’s regime for it corresponds to the need of foreseeability. (Which more extreme unilateral clauses arguably do not have). As always, the judgment is scant on details of the underlying contract whence it is not entirely clear whether French law was lex contractus or whether the Cour stuck to lex fori as determining validity of choice of court.

Geert.

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