BNP Paribas: The impact of earlier jurisdictional findings on res judicata /issue estoppel.

Update 20 October 2020 for additional analysis see here.

I reported earlier on the jurisdictional issues in BNP Paribas SA v Trattamento Rifiuti Metropolitani SPA [2020] EWHC 2436 (Comm) . In current judgment the issue of interest to the blog is the possibility of res judicata /issue estoppel on  the substance of the claim as a result of arguments made in the jurisdictional challenge.

The issue is an important one given the English (potentially other States’) courts’ inclusion of a ‘serious issue to be tried’ test in which the judge has to decide to ‘much the better of the argument’ standard at the jurisdictional gateway level. While aimed at determining jurisdiction, this inevitably engages with some discussion on the merits.

Cockerill J is justifiably cautious in accepting much estoppel, given the clear separation between jurisdictional and substantial discussions. I do feel she might have pointed out the relevance of the case being heard under Brussels Ia rules as opposed to residual English rules. Under the former, a certain amount of merits engagement may be required for some jurisdictional gateways as discussed repeatedly on the blog (and in the jurisdictional rulings there was clearly a lot of engagement with the facts, to establish Article 25 consent for choice of court). But there can certainly not be a ‘serious issue to be tried’ condition for the substance of the case, in the jurisdictional gateways of BIa (summary dismissal proceedings are an entirely different matter).

Geert.

 

BNP Paribas v TeamBank: the CJEU on third-party effects of an assignment of a claim in the case of multiple assignments.

Update 16 08 2021 for the eventual German court decision, see Matthias Lehmann here.

In C-548/18 BNP Paribas v TeamBank, the CJEU held on the issue whether the Rome I Regulation can be interpreted as determining the applicable law with regard to the third-party effects of an assignment of a claim in the case of multiple assignments, for the purpose of determining the holder of that claim.

The factual matrix is very recognisable: a debtor gets into debt with multiple creditors, and assigns each of them the attachable share of current and future claims to wages and salary, including in particular claims to pension benefits. One of the creditors, first to have been assigned, is a German bank (TeamBank). The employer was not told of the assignment. The second creditor is a Luxembourg bank that does inform the employer as they are bound to under Luxembourg law.

The Amtsgericht Saarbrücken (Germany) opens insolvency proceedings against the debtor. The appointed trustee in insolvency received, from the debtor’s employer in Luxembourg, a share of her salary, in the amount of EUR 13 901.64, and deposited that amount with the District Court. The trustee was uncertain as to the identity of the creditor of the said amount, each of the two parties to the main proceedings asserting preferential rights relating, in the case of TeamBank, to a claim of EUR 71 091.54 and, in the case of BNP, EUR 31 942.95. TeamBank and BNP brought, respectively, an action and a counterclaim before the Landgericht Saarbrücken, requesting the lifting of the lodgement in respect of the entire amount of EUR 13 901.64. That court upheld TeamBank’s action and dismissed BNP’s counterclaim.

Jurisdiction is not at issue, Article 26 Bru Ia applies.

Can Article 14 Rome I Regulation (see text below) be interpreted as determining the applicable law with regard to the third-party effects of an assignment of a claim in the case of multiple assignments, for the purpose of determining the holder of that claim? Or should its silence on same be interpreted as having been intentional (excluding such cover, leaving it to residual national conflicts rules).

The CJEU first of all observes that the wording of Article 14 of the Rome I Regulation does not refer to the third-party effects of an assignment of a claim.

Further, at 32, it reviews the context in which Article 14 Rome I is set. It refers to recital 38 which states that ‘matters prior to’ an assignment of a claim, such as a prior assignment of the same claim in the context of multiple assignments, despite the fact that they may represent a ‘property aspect’ of the assignment of the claim, do not fall within the concept of a ‘relationship’ between the assignor and the assignee within the meaning of Article 14(1) of that regulation. That recital specifies that the term ‘relationship’ should be strictly limited to those aspects which are directly relevant to the assignment in question.

(Note that recitals are qualified merely as context, therefore. Readers are aware that I often take issue with material conflict of laws rules being included in recitals of EU Regulations).

At 33, the CJEU further refers to the legislative history: the EC had proposed a rule re third-party effect however that rule did not make it into the final text, indeed the Commission per Article 27(2) Rome I was required to submit ‘a report on the question of the effectiveness of an assignment or subrogation of a claim against third parties’ and, if appropriate, ‘a proposal to amend the [Rome I Regulation] and an assessment of the impact of the provisions to be introduced’. That proposal materialised in 2018.

In conclusion, under EU law as it currently stands, the absence of rules of conflict expressly governing the third-party effects of assignments of claims is a choice of the EU legislature. Residual rules take over.

Geert.

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

Article 14

Voluntary assignment and contractual subrogation

1.   The relationship between assignor and assignee under a voluntary assignment or contractual subrogation of a claim against another person (the debtor) shall be governed by the law that applies to the contract between the assignor and assignee under this Regulation.

2.   The law governing the assigned or subrogated claim shall determine its assignability, the relationship between the assignee and the debtor, the conditions under which the assignment or subrogation can be invoked against the debtor and whether the debtor’s obligations have been discharged.

3.   The concept of assignment in this Article includes outright transfers of claims, transfers of claims by way of security and pledges or other security rights over claims.