Tag: Article 27

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Wright v Granath. Lis alibi pendens in defamation. The Court of Appeal on Norwegian harpoons and ‘same cause of action’ under Lugano..

Wright v Granath [2021] EWCA Civ 28 is not the only litigation involving Mr Wright, defamation and bitcoin gossip: see my review of Wright v Ver [2020] EWCA Civ 672 (judgment to which Popplewell LJ refers for connections between Mr Wright and the UK) here. The judgment appealed here is Wright v Granath [2020] EWHC 51 (QB). Jurisdictional grounds evidently include the CJEU case-law right up to Bolagsupplysningen.

The title of this post is courtesy of Greg Callus, one of counsel for the claimant.

Defendant, Magnus Granath, is a citizen of Norway, resident in Oslo. He has tweeted on various technology issues, including cryptocurrencies, and has an interest in Bitcoin and its development. He believes that Dr Wright’s claim to be Satoshi Nakamoto (the developer of bitcoin) is false, a statement that was also tweeted at the since deleted @Hodlonaut account. By 15 May 2019 Dr Wright’s advisers thought they had identified Mr Granath as the owner of the @Hodlonaut account, and sent a further letter via Facebook and LinkedIn seeking confirmation. The letter was served by hand on Mr Granath on 20 May 2019. Meanwhile on the previous day, 19 May 2019, Mr Granath issued proceedings in the Oslo District Court seeking in effect a declaration of non-liability aka NDR: Negative Declaratory Relief: a classic (and as Popplewell LJ justifiably suggests, CJEU-blessed) flip side of the coin action to avoid jurisdiction of the English courts. 

It is common ground that the Norwegian court was first seised. Jurisdiction was accepted by the Norwegian courts right through to the Supreme Court (talk about speedy proceedings: within a year the jurisdictional issue was considered at first instance, appeal and SC) on the basis that the relief sought was “global” in the sense that it was not limited to any harm or loss suffered in Norway, and that A5(3) Lugano was applicable because the “harmful event” occurred in Norway, that being where Mr Granath lived and published the tweets (locus delicti commissi).

CJEU Gubish Machinenfabrik and The Tatry clarify for the English version of Brussels I hence also of Lugano (assuming the requirement of parrallel interpretation of the lis alibi pendens rule) what was already clearer in other language versions:  A27 Lugano requires three identities: identity of parties; identity of object or ‘ subject-matter ’; and identity of cause.

In the establishment of identity of cause of action, the ‘ cause of action’ comprises the facts and the rule of law relied on as the basis of the action (CJEU Gubbisch). 

Coming then to the decision, Popplewell J dissented, with Singh LJ and Moylan LJ allowing the appeal. At 41 ff Popplewell J discusses the cause of action criterion, with the core at 48-49: he identifies two core differences between the English and the Norwegian claims: 

there are two differences between the English and Norwegian Claims whose significance requires examination. The first is that the Norwegian Claim identifies negligence as a necessary ingredient of liability under Norwegian law, and asserts the absence of negligence on Mr Granath’s part. This gives rise to the possibility that Mr Granath could succeed in Norway on a basis that would not be inconsistent with liability to Dr Wright in England under English law: if the Norwegian Court were to hold that the tweet was untrue because Dr Wright is Satoshi Nakamoto, and there was no defence of lawfulness by way of public interest or freedom of expression, but that Mr Granath was entitled to his declaration on the grounds that although the tweet was wrong it was not negligently so, Dr Wright would have established all the ingredients of an English law defamation claim. However the consequence of the Court now declining jurisdiction under article 27 would be to preclude him from pursuing that English law claim or obtaining the relief it would provide.

The second difference between the claims is that were Mr Granath to fail in full in Norway, the relief available there to Dr Wright by way of counterclaim would not be co-extensive with that available in a successful English law claim. It would not include a s.12 statement; and it might not include an injunction. I say “might not” because it was in dispute as to whether that was so. Dr Wright sought to adduce expert evidence of Norwegian law before the Judge below, but permission was refused on the grounds that it came too late, with the result that there was no relevant evidence of Norwegian law or practice before the Court. Mr Tomlinson asserted that an injunction must be available in Norway as an effective remedy guaranteed by the EU Charter, but later confirmed that Norway was not a signatory to the Charter and not bound by it. He submitted in the alternative that such relief would be available as part of Dr Wright’s article 8 rights under the European Convention on Human Rights, but that is not self-evident to me and the point was not explored in argument. I shall assume for the purposes of my analysis that an injunction is not available in Norway because for the reasons explained below I do not regard any such unavailability as precluding the application of article 27.

At 51 ff, Popplewell J’s important take-aways from Gubisch, are that  when considering objet, the search is not for complete identity, but for identity on a question “which lies at the heart of” the two actions. Same does not mean same. The two claims need not be “entirely identical” (at 55). And at 56 that there can be the necessary identity of cause without complete identity of legal issues in the two sets of proceedings. Here too same does not mean same.

Further precedent is considered extensively (much of it discussed on the blog) leading to summary of the principles at 90 and application in fact at 93 ff: Popplewell J would have held that the claims have the same cause and the same objet and that A27 Lugano requires the EN claim to be dismissed.

At 99 ff he dismisses the argument,  which was encouraged (wrongly in my view, as readers know) by Vedanta and EuroEco, that the application of A27 to Mozaic claims as here, be an abuse of EU law. There is no authority to suggest that A27 is inapplicable to defamation claims, and no sound reason for restricting its applicability, and on this Singh LJ and Moylan LJ agree.

Of note is that Popplewell LJ is spot on at 101 where he says

in any tort claim in which article 5(3) confers a choice of jurisdiction on the claimant for a global claim, the choice is equally conferred on a defendant by way of an NDR claim; in each case the option is circumscribed by the simple and automatic mechanism (per Gantner paragraph 30) in article 27 of who starts first. That is not an abuse of the regime established by the Convention, but rather its implementation.

Singh LJ and Moylan LJ allowed the appeal, however: Moylan LJ for the majority summarises at 160 ff, largely on the basis of the same authority as that discussed by Popplewell (with The Alexandros at the core). At 168:

Although I agree with Popplewell LJ when he says, at paragraph 81, that irreconcilability may be a helpful tool in evaluating whether the article 27 test is met, the potential for conflicting decisions will not determine whether the causes of action are the same.

I should like to refer to the litmus test proposed by Adrian Briggs and applied eg in Awendale: whether a decision in one set of proceedings would have been a conclusive answer in the other. If it would, then there is identity of cause of action.

The appeal is allowed, the case may continue in E&W – clearly irreconcilability at the recognition stage might still be an issue.

Should the UK be successful in its Lugano accession attempt, this case will be crucial authority post The Alexandros. In the alternative, it will be among the last echoes of Lugano in the E&W courts.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.15.1.

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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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Supreme Site Services v Shape: Advocate General ØE on Brussels Ia’s scope of application (‘civil and commercial’ in light of claimed immunity. Opinion at odds with CJEU in Eurocontrol.

Update 12 June 2020 Maria has further analysis here.

Many thanks again María Barral for continuing her updates on C-186/19 Supreme Site Services v Shape, on which I reported earlier here and here; see her summary of Thursday’s opinion of the AG below. I just wanted to add two things.

Firstly, the AG’s suggestion that in spite of the intervening Court of Appeal judgment which would seem to make the CJEU case nugatory, the case should continue for against the appeal’s court decision, a further appeal is underway with the Supreme Court.

Second, at 93 etc. the AG advises that the immunity or not of the defendant, bears no relevance to the scope of application of BIa for it does not feature in the concept of ‘civil and commercial’ as developed by the Court.

That in my view is at odds with the CJEU’s very statement in Eurocontrol, at 4: the Court’s seminal judgment on civil and commercial itself in so many words links the scope of application to the practicality of recognition: in Eurocontrol the CJEU interprets ‘civil and commercial’ ‘in particular for the purpose of applying the provisions of Title III of the Convention‘: there is little use bringing issues within the scope of the Convention and now BIa, if ab initio there is no prospect of recognition and enforcement.

In other words I am not at all sure the Court will follow the AG on that part of the analysis. I should emphasise this is my view: María’s review independent of that follows below.

Geert.

 

Immunity does not impact jurisdiction based on Regulation Brussels I bis, AG Saugmandsgaard Øe dixit

María Barral Martínez

Following up on the previous posts (see here and here) discussing the contractual dispute between Supreme site Services v. SHAPE, today’s post addresses  the Opinion of Advocate General Saugmandsgaard Øe in C-186/19 Supreme v Shape.

While the questions posed by the referring court concerned the interpretation of articles 1(1) and 24(5) Brussels Ia, ‘at the CJEU’s request’ (5) limits his analysis to Article 1(1).

In a nutshell, the analysis in his Opinion is twofold: on the one hand, he examines whether the action brought by SHAPE – an international organisation- seeking the lift of an interim garnishee order falls within the meaning of “civil and commercial matters” laid down in article 1(1) of the Brussels I bis Regulation. On the other hand, he analyses whether the fact that SHAPE had invoked its immunity from execution in the interim relief proceedings has any significance on the above evaluation.

In tackling the first prong of his analysis, AG Saugmandsgaard Øe recalls the public hearing held at the CJEU back in December 2019. There, the focus was put on how the  “civil and commercial” nature of the interim relief measures sought by SHAPE is to be assessed – in the light of the features of the proceedings on the merits, based exclusively on the interim relief proceedings or only in relation to the nature of the rights the interim measures intend to safeguard matters. AG Saugmandsgaard Øe rejects the first two alternatives and follows the thesis supported by the Governments of The Netherlands and Belgium and by the European Commission: in line with the judgments de Cavel I and de Cavel II, the nature of the rights whose recognition is sought in the proceedings on the merits and whose protection is the purpose of the interim or protective measures sought is decisive. (Point 46 and 51)

Furthermore, AG conducts a thorough analysis on the immunities recognised under Public International Law vis-à-vis the application of Brussels Ia. He argues that to determine whether a dispute should be excluded from the scope of BIa on the grounds that it concerns “acts or … omissions in the exercise of State authority” – A1(1) in fine-, it is necessary to assess whether the action is based on a right which has its source in acta iure imperii or in a legal relationship defined by an exercise of State authority. (at 90)

On that basis, he concludes that an action for interim measures such as the one in the present case, seeking the lift of a garnishee order, must be regarded as “civil and commercial” in so far as the garnishee order was aimed to safeguard a right arising from a contractual legal relationship which is not determined by an exercise of State authority. (at 104)

Finally, AG Saugmandsgaard Øe posits that the fact that an international organization as SHAPE has invoked immunity from execution, has no bearing in the assessment of the material application of Brussels Ia. What’s more, it cannot serve as an obstacle for a national court to establish its international jurisdiction based on the aforementioned Regulation.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.2.2.

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Supreme Site Services v Shape: Dutch Appellate Court rules on the merits of immunity and A6 ECHR, takes Luxembourg by surprise.

Update 14 January 2020 see also review by Rishi Gulati here, with cross-references to the postings on gavclaw.com.

With the festive season approaching, I am happy to give the floor to María Barral Martínez, currently trainee at the chambers of Advocate General Mr Manuel Campos Sánchez-Bordona for her update on Supreme Site Services et al v Shape, on which I first reported here.

On 10 December, the Den Bosch Court of Appeal delivered its judgment on the main proceedings of the Supreme et al. v SHAPE case. The case concerns a contractual dispute between Supreme (a supplier of fuels) and SHAPE (the military headquarters of NATO). Supreme signed several agreements (so-called “BOA agreements”) to supply fuels to SHAPE in the context of a military operation in Afghanistan-ISAF-, mandated by the UNSC. Supreme also signed an escrow agreement with JFCB (Allied Joint Force Command Brunssum, a military headquarters subject to SHAPE´s authority) to cover mutual potential payments after the mission/contract termination. In December 2015, Supreme instituted proceedings in the Netherlands against Shape/JFCB requesting the payment of certain costs. Moreover, Supreme sought, in the context of a second procedure, to levy an interim garnishee order targeting the escrow account in Belgium. The latter proceedings -currently before the Dutch Supreme Court- triggered a reference for a preliminary ruling (case C-186/19 « Supreme Site Services»)  as already commented in an earlier post, related to the Brussels I bis Regulation.

In the judgment on the merits, the Appellate Court addressed the Brussels I bis Regulation as well, albeit briefly. The Appellate Court asked parties whether the reference to the CJEU impacts the proceedings on the merits. Both parties were of the opinion that it was not the case. Moreover, the Court itself considered that since Shape and JFCB only invoked in their defence immunity of jurisdiction the parties had tacitly accepted the Dutch court’s jurisdiction.

In regards to the question of immunity of jurisdiction, the Dutch Appellate Court granted immunity of jurisdiction to Shape and JFCB on the basis of customary international law. It found it was inconclusive that immunity of jurisdiction in respect of Shape and JFCB flows from the provisions of the Protocol on the Status of International Military Headquarters Set up Pursuant to the North Atlantic Treaty (Paris Protocol 1952), or the Agreement on the Status of the North Atlantic Treaty Organisation (Ottawa’s Agreement).

On the role of article 6 ECHR, contrary to what the District Court ruled on the judgment under appeal, the Court of Appeal held that Supreme had a reasonable dispute settlement mechanism available to it to submit its claims. Article 6.1 ECHR therefore would not be breached.  It argued that the judge must perform a case by case analysis in order to determine whether the international organisation offers reasonable alternative means to protect the rights enshrined under article 6.1 ECHR, and if needed set aside the immunity of jurisdiction of the international organisation. The Court concluded that the Release of Funds Working Group, which was agreed by the parties to settle any possible contractual differences, can be considered, under Dutch law, as a reasonable dispute settlement mechanism and therefore, the Court has no jurisdiction.

At the public hearing in C-186/19 held in Luxembourg on 12 December, the CJEU could not hide its surprise when told by the parties that the Dutch Appellate Court had granted immunity of jurisdiction to Shape and JCFB. The judges and AG wondered whether a reply to the preliminary reference would still be of any use. One should take into account that the main point at the hearing was whether the “civil or commercial” nature of the proceedings for interim measures should be assessed in the light of the proceedings on the merits (to which interim measures are ancillary, or whether the analysis should solely address the interim relief measures themselves.

Maria.

 

 

 

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Supreme v Shape: Lifting attachments (‘garnishments’) on assets of international organisations in another state. Dutch Supreme Court refers to CJEU re exclusive jurisdiction, and the impact of claimed immunity.

Many thanks Sofja Goldstein for alerting me a while back to the Hoge Raad’s decision to refer to the CJEU and what is now known to be Case C-186/19. The case concerns SHAPE’s appeal to a Dutch Court to lift the attachment aka ‘garnishment’ of a Belgian NATO /SHAPE escrow account by Supreme Services GmbH, a supplier of fuel to NATO troops in Afghanistan. As Sofja reports, in 2013, Supreme and Allied Joint Force Command Brunssum (JFCB), the Netherlands-based regional headquarters of NATO, set up an escrow bank account in Belgium with the goal of offsetting any contingent liabilities on both sides at the end of Basic Ordering Agreements (BOAs). Supreme Services in 2015 initiated proceedings against SHAPE and JFCB in the Netherlands arguing that the latter parties had not fulfilled their payment obligations towards Supreme. It also attached the account in Belgium.

SHAPE and JFCB from their side seized the Dutch courts for interim relief, seeking (i) to lift the attachment, and (ii) to prohibit Supreme from attaching the escrow account in the future.

The Supreme Court acknowledges the Dutch Courts’ principle jurisdiction at the early stages of the procedure on the basis of Article 35’s rule concerning provisional measures, yet at this further stage of the proceedings now feels duty-bound firstly under Article 27 of Brussels Ia to consider whether Article 24 paragraph 5 applies (Belgium being the place of enforcement of any attachment should it be upheld); further and principally, whether the Brussels I a Regulation applies at all given that SHAPE and NATO invoke their immunity (it is in my view unlikely that the invocation or not of an immunity defence may determine the triggering or not of Brussels Ia), this immunity interestingly being the result of a Treaty not between The Netherlands and NATO but rather resulting from the headquarter agreement between NATO and Belgium.

An interesting example of public /private international law overlap.

Geert.

 

 

 

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Be careful what you ask for! Barclays v ENPAM: the High Court again employs Article 27/28 to neutralise Italian torpedo.

Barclays v ENPAM has been travelling in my briefcase for some time – apologies. Reminiscent of the Supreme Court’s decision in the Alexandros, and the High Court in Nomura , Blair J in October 2015 employed national courts’ room under Article 27/28 of the Brussels I Regulation (the lis alibi pendens and related actions rules) to refuse a stay of English proceedings in favour of proceedings in (of course) Italy. Litigation like this will be somewhat less likely now that the Brussels I Recast applies. As readers will be aware, the current version of the Regulation has means to protect choice of court agreements against unwilling partners (see however below).

Claimant, Barclays Bank PLC, is an English bank. The defendant, Ente Nazionale di Previdenza ed Assistenza dei Medici e Degli Odontoiatri (“ENPAM”) is an Italian pension fund. A dispute has arisen between them as to a transaction entered into by way of a Conditional Asset Exchange Letter from ENPAM to Barclays dated 21 September 2007 by which ENPAM exchanged fund assets for securities which were in the form of credit-linked notes called the “Ferras CDO securities”. ENPAM’s claim is that it incurred a major loss in the transaction, and that it is entitled in law to look to Barclays to make that loss good.

On 18 May 2015, Barclays issued a summary judgment application on the basis that there is no defence to its claim that the Milan proceedings fall within contractual provisions giving exclusive jurisdiction to the English courts. ENPAM began proceedings against Barclays and others in Milan on 23 June 2014. Barclays says that this was in breach of provisions in the contractual documentation giving exclusive jurisdiction to the English courts. It issued the proceedings reviewed here seeking a declaration to that effect and other relief on 15 September 2014. On 20 April 2015, ENPAM applied pursuant to Article 27 or Article 28 of the Brussels I Regulation for an order that the English court should not exercise its jurisdiction in these proceedings on the basis that Milan court was first seised.

The High Court refused. Reference is best made to the judgment itself, for it is very well drafted. Read together with e.g. the aforementioned Alexandros and Nomura judgments, it gives one a complete view of the approach of the English courts viz lis pendens under the Regulation. (E.g. Blair J has excellent overview of the principles of Article 27 (Article 29 in the Recast) under para 68).

Discussion of what exactly Barclays could recover from the English cq Italian proceedings, was an important consideration of whether these two proceedings were each other’s mirror image. (see e.g. para 82 ff). This is quite an important consideration for litigators. Statements of claims are an important input in the lis pendens analysis. Be careful therefore what you ask for. Restraint in the statement of claims might well serve you very well when opposed with recalcitrant opposing parties, wishing to torpedo your proceedings. (Let’s face it: the likelihood of such opposition is quite high in a litigious context).

Finally, it is often assumed that precedent value of the case discussed here and other cases with it, has diminished drastically following the Brussels I Recast. It instructs all courts not named in a choice of court agreement, to step back from jurisdiction in favour of the court named (Article 31(2)). Yet what is and what is not caught by a choice of court agreement (starting with the issue of non-contractual liability between the parties) depends very much on its wording and interpretation. Article 31(2) is not the be all and end all of litigation between contracting parties.

Geert.

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On ‘civil and commercial’, lis alibi pendens and torpedoing one’s own action: the CJEU in Aertssen.

C-523/14 Aertssen is not a corner piece of the Brussels I jigsaw. Rather, a necessary if unexciting piece of the puzzle’s main body. Aertssen NV, of Belgium, had a gripe with VSB Machineverhuur BV and others, of the Netherlands. Aertssen alleged fraud in VSB’s dealings with the company. It employed a well-known feature of Belgian (and French, among others) civil procedure, which is to file complaint with the investigating magistrate. This launches a criminal investigation, to which civil proceedings are attached.

Aertssen’s subsequent action of attachment of VSB’s accounts in The Netherlands, risked being stalled by the Dutch courts’ insistence that the group launch new legal action in The Netherlands. Aertssen obliged pro forma with this initiation of new proceedings, subsequently to aim to torpedo them. Aertssen would rather the Belgian courts continue with their own, criminal investigation and that action in The Netherlands, other than action in attachment, be put on hold, at least until the Belgian proceedings be finalised.

In essence therefore, the case before the CJEU needs to determine whether the Aertssen action in Belgium is of a ‘civil and commercial’ nature, and if it is, whether the actions in Belgium and The Netherlands meet the requirements of the lis alibi pendens rule of Article 27 (old) of the Brussels I-Regulation. The CJEU replied in the affirmative to both.

Precedent for the ‘civil and commercial’ issue, other than the usual suspects, was available per Sonntag, Case C-172/91, where the Court held that civil matters within the meaning of the first sentence of the first paragraph of Article 1 of the Brussels Convention, cover an action for compensation for damage brought before a criminal court. In Aertssen, The CJEU used the term ‘private law relationship’ to describe the legal relationship between the parties concerned. Even though, other than in Sonntag where the criminal proceedings were launched by the State prosecutor, Aertssen itself had triggered the criminal investigation, its ultimate aim is to obtain monetary compensation.

The subsequent question was whether per Article 27, lis pendens exists. Reference is best made to the judgment itself for the application of the The Tatry criteria (Case C-406/92): the two cases pending need to involve the same parties, pursuing the same cause of action (the facts and the rule of law relied on) and with the same object (meaning the end the action has in view). The CJEU held among others that the question whether the parties are the same cannot depend on the position of one or other of the parties in the two proceedings.

The remainder of the judgment deals with the meaning of the term ‘court first seized’ in Article 30 of the Regulation, and the relevance of national rules of civil procedure in same.

It is not often that a party aims to torpedo its own proceedings and the procedural intricacies of the case are rather complex. However the CJEU keeps a level head, with in the end transparent results.

Geert.

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The Alexandros resurfaces – Greek proceedings may turn out to be an expensive torpedo!

Update 19 September 2019  the relevant Greek Court of Appeal has refused to recognise the judgments awarding damages, on account of ordre public. Appeal with the Supreme Court and CJEU reference seem likely.

I have reported before on the lis alibi pendens issue in the Alexandros litigation. (The left-over claims as identified in my previous post were, I understand, dropped, and hence the need for ECJ referral subsided – Hill Dickinson have a good summary of the various proceedings here). The Court of Appeal on the 18th of July held on the now (following the Supreme Court’s intervention) remaining issue of declarations, damages and indemnities in respect of the owners’ proceedings in Greece seeking damages from the insurers, despite proceedings for sums due under the relevant insurance policies having been settled in England pursuant to a choice of forum clause. (Apologies for this all being a bit dense – reading my previous post helps). (Greek courts in fact rejected the claims in April).

The left-over issue essentially boils down to the question whether despite the ECJ’s prohibition of anti-suit injunctions for subject-matter falling within the Brussel I-Regulation, Member States courts are free to award damages to the party suing elsewhere in the EU in spite of a choice of court agreement between parties. The Court of Appeal held that they are. It justifiably, in my view, distinguished Turner v Grovit . In Turner v Grovit, the ECJ is concerned with mutual trust and allowing (and indeed trusting) the courts in the other Member States to make their own, proper application of the Regulation. Turner and Grovit does not uphold jurisdiction for the other court: it upholds the opportunity for that other court properly to apply the Regulation, which may or may not lead it to uphold jurisdiction.

The judgment of the Court of Appeal re-enforces the attraction of English courts as a destination of choice: parties wishing to torpedo (a prospect less likely in the Brussels I-bis Regulation) may or may not succeed in convincing alternative courts of their jurisdiction. English courts since Turner cannot issue anti-suit. However they may still hold party liable for having breached the choice of court agreement.

Geert.

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Lis alibi pendens rule does NOT apply (to the court seized second having such jurisdiction) in the event of exclusive jurisdictional rules – The ECJ in Weber v Weber

In C-438/12 Weber v Weber the ECJ gave helpful clarification of the non-application of the strict lis alibi pendens rules of the Jurisdiction Regulation in the event of infringement of the Regulation’s exclusive jurisdictional rules. This to my knowledge at least had not yet been clearly established by the Court.

Ms I. Weber (I’) and Ms M. Weber (‘M’), are co-owners to the extent of 6/10 and 4/10 of a property in Munich.  On the basis of a notarised act of 20 December 1971, a right in rem of pre‑emption over the four-tenths share belonging to M was entered in the Land Register in favour of I. By a notorial contract of 28 October 2009, M sold her four-tenths share to Z. GbR, a company incorporated under German law, of which one of the directors is her son, Mr Calmetta, a lawyer established in Milan. According to one of the clauses in that contract, M, as the seller, reserved a right of withdrawal valid until 28 March 2010 and subject to certain conditions.

Being informed by the notary who had drawn up the contract in Munich, I exercised her right of pre-emption by letter of 18 December 2009. On 25 February 2010, by a contract concluded before that notary, I and M once more expressly recognised the effective exercise of the right of pre-emption by I and agreed that the property should be transferred to her for the same price as that agreed in the contract for sale signed between M and Z. GbR. However, the two parties asked the notary not to carry out the procedures for the registration of the transfer of property in the Land Register until M had made a written declaration before the same notary that she had not exercised her right of withdrawal or that she had waived that right arising from the contract concluded with Z. GbR within the period laid down, which expired on 28 March 2010. On 2 March, I paid the agreed purchase price of EUR 4 million.

By letter of 15 March 2010, M declared that she had exercised her right of withdrawal from the contract of 28 October 2009. By an application of 29 March 2010, Z. GbR brought an action against I and M, before the District Court, Milan, seeking a declaration that the exercise of the right of pre-emption by I was ineffective and invalid, and that the contract concluded between M and that company was valid.

On 15 July 2010, I brought proceedings against M before the Landgericht München, seeking an order that M register the transfer of ownership of the four-tenths share with the Land Register.

The Court of Justice first of all had to decide whether an action seeking a declaration that a right in rem in immovable property has not been validly exercised, falls within the category of proceedings which have as their object right in rem in immovable property, within the meaning of Article 22(1) of Regulation No 44/2001. It held that it did, with the required amount of deference to national law: a right of pre-emption, such as that provided for by Paragraph 1094 of the BGB, which attaches to immovable property and which is registered with the Land Register, produces its effects not only with respect to the debtor, but guarantees the right of the holder of that right to transfer the property also vis-à-vis third parties, so that, if a contract for sale is concluded between a third party and the owner of the property burdened, the proper exercise of that right of pre-emption has the consequence that the sale is without effect with respect to the holder of that right, and the sale is deemed to be concluded between the holder of that right and the owner of the property on the same conditions as those agreed between the latter and the third party.

The next core question was whether Article 27’s lis alibi pendens rule applies in the event of the court second seized having exclusive jurisdiction. Here, the ECJ distinguished Gasser, in which it declined freedom for the court second seized to assume priority on the basis of a choice of court agreement. (A particular use of torpedoeing which is now addressed by the Brussels I-bis Regulation). It refers in particular to the positive obligation included in Article 35 of the Jurisdiction Regulation for courts not to recognise earlier judgments which were held in contravention of Article 22’s exclusive jurisdictional rules. Article 23’s choice of court agreements, by contrast, does not feature in Article 35.

The ECJ’s reference to Article 35  in my view means that the Court’s reasoning extends to all jurisdictional rules included in that article, including the protected categories of consumers and insureds (not, strangely, employees. This will change however following the Brussels I recast). There is lingering doubt however over the impact of the judgment on the application of Article 22(4)’s rule on intellectual property. In Weber (at 56) the Court holds that ‘ In those circumstances, the court second seised is no longer entitled to stay its proceedings or to decline jurisdiction, and it must give a ruling on the substance of the action before it in order to comply with the rule on exclusive jurisdiction.‘ In the application of Article 22(4), this continues to raise the question whether ‘the substance of the action before it’ only concerns the validity of the intellectual property, or also the underlying issue of infringement of such property.

Weber v Weber is a crucial further step in clarifying the lis alibi pendens rule. Sadly, family tussles do often advance the state of the law.

Geert.

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Cartier v Ziegler: No positive action required by court first seized to trigger lis alibi pendens.

In Cartier v Ziegler, Case C-1/13, the Court of Justice held that the application of Article 27’s Lis Albi pendens rule (Brussels I Regulation) does not require a formal decision by the national court first seized (or exhaustion of national remedies against such acceptance of jurisdiction). In a multi-party case involving insurance companies, forwarders and transporters (sub-sub contracted) of a shipment of Cartier goods, the UK High Court was undeniably first seized vis-a-vis at least some of the parties involved in the litigation in France, however the question was how Article 27’s lis alibi pendens rule needs to be applied.

Under Article 27(1) of Regulation 44/2001, where there are parallel proceedings before the courts of different Member States, the court second seised must stay its proceedings of its own motion until the jurisdiction of the court first seised is established. Furthermore, Article 27(2) provides that, where the jurisdiction of the court first seised is established, any court other than the court first seised must decline jurisdiction in favour of that court.

The French Cour de Cassation asked essentially whether Article 27(2) of the Brussels I-Regulation must be interpreted as meaning that it is sufficient, for the jurisdiction of the court first seised to be established within the meaning of that provision, that no party has contested its jurisdiction or whether it is necessary that that court has impliedly or expressly assumed jurisdiction by a judgment which has become final.

The referring court referred to scholarship suggesting that the jurisdiction of the court first seised may be established only by a judgment from that court explicitly rejecting its lack of jurisdiction or by the exhaustion of the remedies that are available against its decision to assume jurisdiction.

The ECJ held ‘Article 27(2) of Council Regulation (EC) No 44/2001 (…)  must be interpreted as meaning that, except in the situation where the court second seised has exclusive jurisdiction by virtue of that regulation, the jurisdiction of the court first seised must be regarded as being established, within the meaning of that provision, if that court has not declined jurisdiction of its own motion and none of the parties has contested its jurisdiction prior to or up to the time at which a position is adopted which is regarded in national procedural law as being the first defence on the substance submitted before that court.’

The Court’s finding does of course require the court seized later (or the lawyers appearing before it) to be au fait with the procedural law of the alternative court (such as in France, the possibility to raise objection against jurisdiction verbally only).

The ECJ’s overall consideration here lies with obliging but also enabling the court seized second, not to linger indefinitely with the application of Article 27.

Geert.

 

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