Posts Tagged article 7(1)

Dinant Bar v maître JN. CJEU confirms Bar membership fees are in principle neither civil and commercial nor contractual.

The CJEU on Thursday last week largely confirmed Saugmansdgaard ØE’s Opinion which I reviewed here, in C-421/18 Dinant Bar v maître JN, however with different emphasis than the AG. The Court insists that in accordance with Belgian law, registration with the bar association constitutes a legal obligation to which practising as a professional lawyer is subject, and that individuals wishing to practise that profession must be a member of a bar association and must comply with decisions taken by that association, notably as regards the payment of fees.

Disputes concerning those fees then are not civil and commercial and therefore not covered by Brussels I a, unless,

‘in so far as those fees constitute consideration for services freely consented to, including insurance services, which that bar association may have negotiated with a third party with a view to obtaining more advantageous terms for its lawyer members, the obligation to pay those fees would be of a contractual nature and, therefore, an action initiated with a view to ensuring that that obligation is performed would come within the scope of Article 7(1)(a) of Regulation No 1215/2012. It is for the referring court to ascertain whether that is the case in the dispute in the main proceedings’.

The AG had emphasised the factual circumstances of the case, in which the Bar had lowered the fees for maître JN to the very insurance premium only. In most cases of course Bar fees disputes probably will be about more than that and the Court’s approach may lead to split (non)applicability of Brussels Ia, in which payments for services freely consented to will have to be distinguished from those due in return for public service obligations. (Bar councils may wish to split these sums in their yearly invoice).

Geert.

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

 

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Air transport. The CJEU in Adriano Guaitoli v Easyjet. The not always clear delineation between the jurisdictional rules of the Brussels and Montreal regimes.

C-213/18 Adriano Guaitoli et al v Easyjet concerns the clearly complex relationship between the Brussels Ia jurisdictional regime, the 1999 Montreal Convention for the Unification of Certain Rules for International Carriage by Air, and the EU’s flight compensation Regulation 261/2004.

Montreal Article 33 determines which court has jurisdiction to hear an action for damages against an air carrier falling within the scope of that instrument. The reference has been made in the context of a cross-border dispute between an airline and a number of passengers, in relation to sums claimed by those passengers both by way of standardised compensation under Regulation 261/2004 and by way of individualised compensation for damage caused to them by the cancellation of an outward and a return flight, both operated by that airline.

Saugmandsgaard ØE had advised that the two instruments should be applied distributively, according to the nature of the relevant head of claim. The Court has followed: the court of a Member State hearing an action seeking to obtain both compliance with the flat-rate and standardised rights provided for in Regulation No 261/2004, and compensation for further damage falling within the scope of the Montreal Convention, must assess its jurisdiction, on the first head of claim, in the light of Article 7(1) BIa and, on the second head of claim, having regard to Article 33 Montreal.

This is also the result of Articles 67 and Article 71(1) BIa which allow the application of rules of jurisdiction relating to specific matters which are contained respectively in Union acts or in conventions to which the Member States are parties. Since air transport is such a specific matter, the rules of jurisdiction provided for by the Montreal Convention must be applicable within the regulatory framework laid down by it.

Note that per Article 17(3) BIa the consumer section ‘shall not apply to a contract of transport other than a contract which, for an inclusive price, provides for a combination of travel and accommodation’ (see also C‑464/18 Ryanair). The rule of special jurisdiction for the supply of services, A7(1)(b) BIa, designates as the court having jurisdiction to deal with a claim for compensation based on air transport contract of persons, at the applicant’s choice, that court which has territorial jurisdiction over the place of departure or place of arrival of the aircraft, as those places are agreed in that transport contract; see also C-88/17 Zurich Insurance.

The Court further held that Article 33 Montreal, like A7BIa, leads to the direct appointment of the territorially competent court within a Montreal State: it does not just just identify a State with jurisdiction as such.

The combined application of these rules inevitable means that unless claimants are happy to sue in Mozaik fashion, consolidation of the case will most likely take place in the domicile of the airline. In the Venn diagram of options, that is in most cases the only likely overlap.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2, Heading 2.2.11.1.

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Saugmandsgaard ØE in Libuše Králová v Primera Air Scandinavia: the Feniks ‘contractual relation’ train thunders on, yet restraint is shown on the consumer section, even for package travel.

In C-215/18 Libuše Králová v Primera Air Scandinavia, Saugmandsgaard ØE AG now unsurprisingly (following the CJEU predecent of Feniks and Flightright), advised that in a package of services acquired from a travel agent, where there is no direct agreement with the airline carrying out the flight part of the package, there is a ‘contract’ between the individual and the airline within the meaning of Article 7(1) BIa.

At 37 the AG emphasises the element of predictability on the part of the airline, who should not be surprised to be sued by the individual whom they agree with the travel agency to transport, both in the place of take-off and landing, per Zurich Insurance.

However unlike the Commission, the AG supports a less extensive interpretation of the consumer section. Package travel as defined in Directive 90/314, unlike simple tickets for transport only, are covered by the protective provisions of Article 17 ff BIa. Yet the AG proposes to extend that regime only to the direct relationship between the travel agent and the consumer, not the airline who merely carries out the transport side of the arrangement. At 48 ff the AG sets out his reasons for the limitation: the emphasis in the consumer section on the very consumer and professional party who concluded the contract (48-49); the distinction with Maletic since in the case at issue claimant is after the airline company only, not an in solidum finding against the agency and the airline (5-52); and of course the need for strict interpretation.

Note of course the different balance struck by the AG as opposed to e.g. the High Court in Bonnie Lackey.

Geert.

(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

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Dinant Bar v maître JN. Bar membership fees. Saugmansdgaard ØE on whether they are at all ‘civil and commercial’ and if so, whether they are ‘contractual’.

In C-421/18 Saugmansdgaard ØE opined (Opinion a yet available in a handful of languages only, not including English) on the issue of ‘civil and commercial’ (last reviewed by the Court in Buak) and ‘contract’ (within Article 7(1) Brussels Ia.

At issue was the relationship between a France-domiciled practising lawyer, registered with the Dinant (Belgium) Bar, and that Bar. Maître JN, now a very occasional practitioner it seems, had been refusing to pay his Bar Membership fees even after the Bar council had reduced them to the level of insurance premiums paid by it to the insurance company running the collective professional insurance scheme.

The referring court at Namur had not in fact asked the CJEU about the interpretation of ‘civil and commercial’. It was the EC’s comments which triggered Saugmansdgaard ØE’s review of that issue (albeit he insists the final call is up to the referring court). He refers to the public interest duties carried out by the Bar Council (in particular, ensuring the public’s trust in the proper representation before the judicial authorities), and the authority entrusted to the Council by Belgian’s code of civil procedure (particularly at 34). At 35 ff he then considers whether in its collection of the Bar fees set by and due to it by the registered lawyers, the Council acts in the exercise of that authority, and decides it does not: the fees are determined by the general council of the Bar and in the main represent the professional insurance fees.  That is all the more made clear by the fact that in the case of maître JN the Bar had reduced the fees to the exact amount paid to the insurance company.

The dispute therefore he advices is about pennies, not power.

Turning to the issue of ‘contract’ reference is made ia to the recent CJEU decision in Kerr. Particularly at 81 ff the Advocate General emphasises the specificities of the case: the solicitor in question had effectively retired yet chose to continue to pay Bar membership fees. In contrast to for instance Austro-Mecana and more in line with Kerr (and in contrast also one could argue with fully practising lawyers) the voluntary character of the relationship is core.

Geert.

 

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LIC Telecommunications et al v VTB Capital et al. High Court suggests autonomous EU approach to asymmetric choice of court. Also discusses contract and tort distinction, and abuse of process.

In [2019] EWHC 1747 (Comm) LIC Telecommunications et al v VTB Capital et al Moulder J suggests an unorthodox interpretations of Article 25 of the Brussels Ia Regulation. (Note also her very critical view at 22 of one of the experts, whom she found having confused his role as expert with a role as advocate). Much of the lengthy judgment is devoted to intricate discussions of Luxembourgish corporate law (hence the need for expert evidence) and the jurisdictional issues are, somewhat illogically, discussed towards the end of the judgment, at 245 ff.

Maze, one of the defendants, acts as a manager of V2 pursuant to a directorship agreement dated 26 May 2015 (the “Directorship Agreement”). It relies on the effect of clause 19 of the Directorship Agreement and submitted that claims against it are subject to the exclusive jurisdiction of the courts of Luxembourg pursuant to Article 25 Brussels Ia. Clause 19 provides: 

“for the benefit of the Manager, the Shareholder and the Company hereby irrevocably, specially and expressly agree that the courts of Luxembourg city have jurisdiction to settle any disputes in connection with this Agreement and accordingly submits to the jurisdiction of the courts of Luxembourg city. Nothing in this clause limits however the rights of the Manager to bring proceedings against the Company in connection with this Agreement in any other court of competent jurisdiction or concurrently in more than one jurisdiction.”

The clause is asymmetric aka hybrid aka unilateral. (See e.g. my discussion of Rothschild etc.). These clauses as I have noted elsewhere highlight the clear insufficiency of Brussels Ia’s new lex fori prorogati (including renvoi) rule for choice of court. Which court has been prorogated, hence also lex fori prorogati, is not clear when the clause is asymmetric.

Moulder J discusses [2017] EWHC 161 (Comm) Commerzbank v Liquimar Tankers as precedent: I reviewed it here and signalled at the time that it would not be the last we would hear of the issue. In that case Cranston J held ‘There is nothing in Article 25 that a valid jurisdiction agreement has to exclude any courts, in particular non EU Courts. Article 17, penultimate paragraph, of the Brussels Convention recognised asymmetric jurisdiction clauses. To my mind it would need a strong indication that Brussels 1 Recast somehow renders what is a regular feature of financial documentation in the EU ineffective.‘ I was never taken by that conclusion viz the Brussels Convention: its Article 17 reference to a party having ‘benefit’ from choice of court does not relate entirely to the same discussion on asymmetric clauses (Peralla v Codere [2016] EWHC 1182 (Comm) which I discussed here illustrates that difference).

At any rate I disagree with Moulder J’s statement at 254 that

It is now common ground that it is a question of autonomous EU law and not a question of national law. (It was I believe accepted that the proviso “unless the agreement is null and void as to its substantive validity” refers to issues such as capacity, fraud and mistake, not whether particular kinds of “choice of court” agreements are permitted under the Regulation).

Asymmetric clauses are the first example often given when highlighting the limited cover of Article 25 Brussels I a (and the need for certainty on the lex causae for choice of court). There is no autonomous interpretation there at all. I do agree however with the conclusion at 261: that Luxembourg courts, applying EU law, would not uphold such clauses was not made out on the evidence. Luxembourgish courts at least when they apply Luxembourgish law, generally uphold the validity of asymmetric choice of court.

At 263 ff then follows discussion of Article 7(1) and 7(2). Much of the authority discussed has been reviewed on this blog. (Including Bosworth (Arcadia) which in the meantime has been held by the CJEU but without the contract /tort element – the CJEU found against a contract of employment). Moulder J holds that Article 7(2) is engaged, not 7(1), and on the former discusses locus delicti commissi with reference to JSC BTA Bank v Khrapunov. At 295: it is not sufficient that there are meetings in England to implement the conspiracy, it is the making of the agreement in England which is to be regarded as the harmful event.  Claimants have not supplied a plausible evidential basis that the agreement was made in England. Their evidence is consistent with a case that the conspiracy was implemented in England but that is not sufficient.

As for locus damni, at 298: Even though the share purchase agreement was under English law, it is the loss of the shares in the Luxembourg company which is the pleaded damage not the agreement to sell or the auction. The Vivacom group consists of Bulgarian telecommunications companies which were held by InterV through Viva Luxembourg Bulgaria EOOD (paragraph 3 of the Agreed List of Agreed Issues). Locus damni is Bulgaria, perhaps Luxembourg. But not England.

Finally, abuse of process considerations are linked to English procedural law (whether claims should have been brought sooner).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9, Heading 2.2.11.1, Heading 2.2.11.2 .

 

 

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Reitbauer: contract, pauliana and exclusive jurisdictional rules. CJEU simply applies Feniks, its forum contractus view remains unconvincing.

Update 18 July 2019 for an alternative view, see Michael McParland QC here. Michael’s point of view is that of the construction sector, and avoiding ‘debt dodging’. Ours (mine, below, and Michiel Poesen’s here) is the excessive stretch of the notion of contract.
Tanchev AG’s focus on fraus arguable reconciles both – but the Court did not follow.

I reviewed Tanchev AG’s Opinion in C‑722/17 Reitbauer here. Readers best refer to it to get insight into the complex factual matrix. The CJEU held on Wednesday last week- no English version of the judgment is as yet available.

In essence applicants are attempting to anchor their pauliana unto A24(5)’s enforcement jurisdiction. Failing that, the anchor might be A24(1)’s locus rei sitae exclusive jurisdictional rule.

The Court like the AG rejects jurisdiction on the basis of Article 24(5). They are right: A25(5) must not resurrect merits claims on much wider issues (claim for compensation of applicants’ debt, objections concerning the non-existence of a claim underlying a judicially ordered auction, and concerning the invalidity of the creation of the pledge for that claim under a loan agreement).

Court and AG are also right in rejecting Article 24(1) jurisdiction. The issues at stake are far removed from the reasons which justify exclusive jurisdiction. (The Court refers to Komu, Schmidt, Weber).

Then, surprisingly (for it was not part of the questions asked; the AG entertained it but that is what AGs do) the Court completes the analysis proprio motu with consideration of Article 7(1)’s forum contractus rule, with respect to claimants’ argument that the acknowledgement of debt by Isabel, cannot be used against them. Tanchev AG as I noted essentially suggested a limitation of Feniks to cases of fraus – arguably present here. At 59-60 the Court simply notes that all creditors were ‘contractually’ linked to Isabel C, and then applies Feniks to come to a finding of contractual relation between claimants and Mr Casamassima: without any reference to the fraus element (I had indeed suspected the Court would not so quickly vary its own case-law).

The AG did not discuss the place of performance of the contract (between Reitbauer et al and Mr Casamassima – this was exactly one of the sticky points signalled by Bobek AG in Feniks). The CJEU however does, and at 61 simply identifies that as the place where the underlying contract, between Isabel C and the building contractors, had to be performed: that is, the place of the renovation works in Austria.

That an Article 7(1) forum was answered at all, is surprising. That the place of performance of that contract is straightforwardly assimilated with the underlying contractual arrangement, is not necessarily convincing. That Feniks would not so soon be varied (if at all), was to be expected.

Forum contractus is surely stretching to forum abundantum.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1

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Judgment in Kerr v Postnov(a): a surprisingly swift conclusion on Article 24 and ‘services’ in Brussels Ia /Rome I.

My review of Kokott AG’s Opinion C-25/18 Brian Andrew Kerr v Pavlo Postnov and Natalia Postnova (Kerr v Postnov(a)) discussed, as did the AG, the application of Brussels I Recast’s Articles 24(1) and (2) exclusive jurisdictional rules, cq the application of Article 7(1) jurisdictional rules on contracts, and applicable law consequences of same. The Court ruled on 8 May.

Coming to the first issue: Article 24(1)  – this is not properly answered by the Court.

I signalled the potential for engineering even in Article 24 cases: particularly here, the prospect of adding an enforcement claim to an otherwise contractual action. At 37-38 the Court deals most succinctly with this issue: ‘in so far as the action which gave rise to the dispute in the main proceedings does not fall within the scope of any of those actions, but is based on the rights of the association of property owners to payment of contributions relating to the maintenance of the communal areas of a building, that action must not be regarded as relating to a contract for a right in rem in immovable property, within the meaning of Article 4(1)(c) of Regulation No 593/2008.’: ‘in so far as’ – ‘dans la mesure où’: the Court would seem to dodge the issues here which the AG did discuss, in particular vis-a-vis the enforcement accessory: that discussion I feel is not over.

Note also the straight parallel which the Court makes between lex contractus under Rome I and Article 24. 

The discussion of Article 24(2) does lead to a clear conclusion: the forum societatis is not engaged. However on Rome I the Court does not follow the AG, with specific reference to the Lagarde report (at 33-34). Unlike its AG if finds that Rome I’s lex societatis exception is not engaged.

As for Article 7(1) forum contractus: at 27 usual authority going back to Handte assists the Court in its conclusion that ‘even if membership of an association of property owners is prescribed by law, the fact remains that the detailed arrangements for management of the communal areas of the building concerned are, as the case may be, governed by contract and the association is joined through voluntary acquisition of an apartment together with ownership shares of the communal areas of the property, so that an obligation of the co-owners towards the association of owners, such as that at issue in the main proceedings, must be regarded as a legal obligation freely consented to’ (at 27). At 28: ‘the fact that that obligation results exclusively from that act of purchase or derives from that act in conjunction with a decision adopted by the general assembly of the association of the owners of property in that building has no effect on the application of Article 7(1)(a)’.

At 39-40 the Court then swiftly comes to the conclusion of ‘services’ under Article 4(1)(c) Rome I, without much ado at all. The AG had opined that the non-uniform nature of the contributions leads to non-application of the service rule of Article 7(1)b BruIa and therefore a resurrection of the classic Tessili formula: the CJEU itself went for the acte clair route.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6, 2.2.11.1

 

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