Commerzbank. Sanchez-Bordona AG on the timing of the ‘international’ element required to trigger consumer protection in private international law (here: Lugano).

Sanchez-Bordona AG Opined last week in C-296/20 Commerzbank AG v E.O, a case on the consumer section of the Lugano Convention however in essence on the international element required to trigger consumer protection in private international law. The distinguishing feature of this case lies in the fact that, at the time when the contract was concluded, both parties were domiciled in the same State (Germany), whereas, when recovery was sought through the courts, the customer was domiciled in Switzerland.

The international nature of the situation therefore came about subsequently rather than being present at the outset.

The Advocate General is absolutely right to point to the objective of the consumer section of Lugano, and indeed Brussels Ia, to protect the consumer as the economically weaker party; and in C-98/20 mBank, the Court held that the consumer’s domicile needs to be determined at the time of the instigation of the suit, not the conclusion of the contract (or a later date in the proceedings) even in those circumstances where the consumer failed to inform the professional party of the change of domicile.

The AG however also insists on the predictability of forum both as claimant and as defendant, for the economic operator.

His provisional conclusion therefore (73-74), following analysis of the travaux, is that the international element needs to be present at the outset. However then comes the oddity of A17(3) Lugano, which mirrors A19(3) Brussels Ia:

‘The provisions of this Section may be departed from only by an agreement [conferring jurisdiction]:… 3. which is entered into by the consumer and the other party to the contract, both of whom are at the time of conclusion of the contract domiciled or habitually resident in the same State bound by this Convention, and which confers jurisdiction on the courts of that State, provided that such an agreement is not contrary to the law of that State.’

[With respect to the last element of this Article, it is indeed by no means certain that national law allows for such agreement and the AG (87) notes same].

The Jenard Report viz the Brussels 1968 Convention explains that that rule was included for reasons of equity to benefit a seller or lender domiciled in the same State as the buyer or borrower in the case where the latter establish themselves abroad after the contract has been concluded. The AG opines that the purely domestic setting of A17(3) must not be extended to the remainder of the consumer section, instead keeping it confined to the particular circumstances of that subsection.

In subsidiary fashion, the AG proposes that if the CJEU does not follow him on the generally required international element at the outset, it limit the extensive  application of the consumer section to cases where the economic operator pursues in the State of the consumer’s new domicile a trade or profession such as that which gave rise to the conclusion of the contract.

Interesting.

Geert.

EU Private International Law, 3rd ed. 2021, 2.222 ff.

Brussels IA arbitration exception claxon. Recognition of Spanish Prestige judgment in England & Wales. Res judicata issues concerning arbitration referred to the CJEU. Ordre public exceptions re Human Rights not upheld.

The London Steam-Ship Mutual Insurance Association Ltd v The Kingdom of Spain (M/T PRESTIGE) [2021] EWHC 1247 (Comm) has been in my blog in-tray for a little while: I had thought of using it for exam purposes but have now decided against that.

The case is the appeal against Cook J’s registration of the Spanish judgment in the Prestige disaster.  I have reported thrice before on the wider litigation – please use tag ‘Prestige’ in the search box.

References in the judgment are to Brussels I (44/2001), not its successor, Brussels Ia (1215/2012) however the  relevant provisions have not materially changed. Application is for recognition and enforcement of the Spanish Judgment to be refused,  and the Registration Order to be set aside for one or both of two main reasons, namely: (1) that the Spanish Judgment is irreconcilable with a 2013 Hamblen J order, upheld on Appeal,  enforcing the  relevant Spanish award (A34(3) BI), and (2) that recognition would entail a manifest breach of English public policy in respect of (a) the rule of res judicata and/or (b) human and fundamental rights (A34(1) BI).

Butcher J referred the first issue to the CJEU on 18 December 2020 – just before the Brexit deadline. I have not been able to obtain a copy of that judgment – the judge merely refers to it in current one. The CJEU reference, now known as Case C-700/20, is quite exciting for anyone interested in the relationship between arbitration and the Brussels regime. Questions referred, are

1) Given the nature of the issues which the national court is required to determine in deciding whether to enter judgment in the terms of an award under Section 66 of the Arbitration Act 1996, is a judgment granted pursuant to that provision capable of constituting a relevant ‘judgment’ of the Member State in which recognition is sought for the purposes of Article 34(3) of EC Regulation No 44/2001?

(2) Given that a judgment entered in the terms of an award, such as a judgment under Section 66 of the Arbitration Act 1996, is a judgment falling outside the material scope of Regulation No 44/2001 by reason of the Article 1(2)(d) arbitration exception, is such a judgment capable of constituting a relevant ‘judgment’ of the Member State in which recognition is sought for the purposes of Article 34(3) of the Regulation?

(3) On the hypothesis that Article 34(3) of Regulation No 44/2001 does not apply, if recognition and enforcement of a judgment of another Member State would be contrary to domestic public policy on the grounds that it would violate the principle of res judicata by reason of a prior domestic arbitration award or a prior judgment entered in the terms of the award granted by the court of the Member State in which recognition is sought, is it permissible to rely on Article 34(1) of Regulation No 44/2001 as a ground of refusing recognition or enforcement or do Articles 34(3) and (4) of the Regulation provide the exhaustive grounds by which res judicata and/or irreconcilability can prevent recognition and enforcement of a Regulation judgment?

These are exciting questions both on the arbitration exception and on the res judicata refusal for recognition and enforcement. They bring into focus the aftermath of CJEU West Tankers in which the status of the High Court confirmation of the English award was also an issue.

The Club’s argument that recognition would be contrary to English public policy because the Spanish Judgment involved a breach of human and fundamental rights was not referred to the CJEU. Discussion  here involves ia CJEU Diageo. Suggested breaches, are A 14(5) ICCPR; breach of fundamental rights in the Master being convicted on the basis of new factual findings made by the Supreme Court; inequality of arms; and; A1P1.

There is little point in rehashing the analysis made by Butcher J: conclusion at any rate is that all grounds fail.

That CJEU case is one to look out for!

Geert.

EU Private International Law, 3rd ed 2021, 2.84 ff, 2.590 ff.

 

Semtech v Lacuna. When do proceedings alleging copyright violation ‘relate to’ contract of employment.

Semtech Corporation & Ors v Lacuna Space Ltd & Ors [2021] EWHC 1143 (Pat) at its core concerns an alleged breach of copyright between competitors, with former employees of one acting as a trojan horse in the conspiracy. Purvis DJ held [52 ff] with little difficulty (and with reference ia to Bosworth) that the claim however ‘relates to’ the contract of employment of the two main alleged culprits: ‘ the issues of the scope of their authority and the question of vitiation will be at the centre of their defence, and will have to be considered by reference to the contracts of employment which set out their duties and obligations with regard to Semtech. Thus, the employment contracts are not merely context and opportunity, they provide the entire legal framework for resolving Sornin and Sforza’s defence.’ The case against the two therefore needs to be brought in the employees’ domicile, France, and not in E&W.

Directing the judge away from what seems a prima facie applicable gateway in Brussels Ia is something creative counsel may of course attempt. In the case at issue, the employment DNA was all over the place rather than merely incidental. At 73-74 the judge adds that the protected categories section must of course be considered in isolation to give it its full effect: that the litigation will now splinter against various defendants cannot be rescued by an A8(1) anchor mechanism ‘sound administration of justice’ argument, nor any type of forum conveniens analysis.

Geert.

EU Private International Law, 3rd ed. 2021, 2.278 ff.

The Prestige recognition tussle – ctd. On arbitration and state immunity.

A short update on the Prestige litigation. I reported earlier on the disclosure order in the recognition leg of the case. In that review I also listed the issues to be decided and the preliminary assessment under Title III Brussels Ia. That appeal is to be heard in December 2020 (see also 21 ff of current judgment). In The London Steam-Ship Owners’ Mutual Insurance Association Ltd v Spain (M/T “PRESTIGE”) [2020] EWHC 1582 (Comm) Henshaw J on 18 June held on yet another set of issues, related to arbitration and State Immunity.

He concluded after lengthy analysis to which it is best to refer in full, that Spain does not have immunity in respect of these proceedings; that the permission to serve the arbitration obligation our of jurisdiction, granted earlier to the Club should stand; and that the court should appoint an arbitrator.

I am pondering whether to add a State immunity chapter to the 3rd ed. of the Handbook – if I do, this case will certainly feature.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2, Heading 2.2.16.

From the archives: the professor Arnaud Nuyts study on residual jurisdiction. [update July 2020] The Heidelberg Report on Brussels I.

Update 18 07 2020 I understand the Heidelberg report on the application of regulation Brussels I likewise is not always easy to find. Here it is on my server, and here on CourtESA servers. I am trying to find copy of the country reports. The report has been published by Beck, which is handy to have if you have the means. Seeing as the Report is public per being financed by the EC, I trust Heidelberg will have no objection to the link here.

This is a short post for archival purposes: I have been looking in vain in the past few weeks for a copy of prof Nuyts’ 2007 study for the European Commission on ‘residual jurisdiction’ (Review of the Member States’ Rules concerning the “Residual Jurisdiction” of their courts in Civil and Commercial Matters pursuant to the Brussels I and II Regulations). It was no longer on the EC’s studies page and the url which many of us have been using in the past no longer works. So here it is. Courtesy of the European Commission and of prof Nuyts.

Enjoy. It has lost nothing of its topical nature.

Geert.

 

The CJEU in Reliantco on’consumers’ and complex financial markets. And again on contracts and tort.

C-500/18 AU v Reliantco was held by the CJEU on 2 April, in the early fog of the current pandemic. Reliantco is a company incorporated in Cyprus offering financial products and services through an online trading platform under the ‘UFX’ trade name – readers will recognise this from [2019] EWHC 879 (Comm) Ang v Reliantco. Claimant AU is an individual. The litigation concerns limit orders speculating on a fall in the price of petrol, placed by AU on an online platform owned by the defendants in the main proceedings, following which AU lost the entire sum being held in the frozen trading account, that is, 1 919 720 US dollars (USD) (around EUR 1 804 345).

Choice of court and law was made pro Cyprus.

The case brings to the fore the more or less dense relationship between secondary EU consumer law such as in particular the unfair terms Directive 93/13 and, here, Directive 2004/39 on markets in financial instruments (particularly viz the notion of ‘retail client’ and ‘consumer’).

First up is the consumer title under Brussels Ia: Must A17(1) BIa be interpreted as meaning that a natural person who under a contract concluded with a financial company, carries out financial transactions through that company may be classified as a ‘consumer’ in particular whether it is appropriate, for the purposes of that classification, to take into consideration factors such as the fact that that person carried out a high volume of transactions within a relatively short period or that he or she invested significant sums in those transactions, or that that person is a ‘retail client’ within the meaning of A4(1) point 12 Directive 2004/39?

The Court had the benefit of course of C-208/18 Petruchová – which Baker J did not have in Ang v ReliantcoIt is probably for that reason that the case went ahead without an Opinion of the AG. In Petruchová the Court had already held that factors such as

  • the value of transactions carried out under contracts such as CFDs,
  • the extent of the risks of financial loss associated with the conclusion of such contracts,
  • any knowledge or expertise that person has in the field of financial instruments or his or her active conduct in the context of such transactions
  • the fact that a person is classified as a ‘retail client’ within the meaning of Directive 2004/39 is, as such, in principle irrelevant for the purposes of classifying him or her as a ‘consumer’ within the meaning of BIa,

are, as such, in principle irrelevant to determine the qualification as a ‘consumer’. In Reliantco it now adds at 54 that ‘(t)he same is true of a situation in which the consumer carried out a high volume of transactions within a relatively short period or invested significant sums in those transactions.’

Next however comes the peculiarity that although AU claim jurisdiction for the Romanian courts against Reliantco Investments per the consumer title (which requires a ‘contract’ to be concluded), it bases its action on non-contractual liability, with applicable law to be determined by Rome II. (The action against the Cypriot subsidiary, with whom no contract has been concluded, must be one in tort. The Court does not go into analysis of the jurisdictional basis against that subsidiary, whose branch or independent basis or domicile is not entirely clear; anyone ready to clarify, please do).

At 68 the CJEU holds that the culpa in contrahendo action is indissociably linked to the contract concluded between the consumer and the seller or supplier, and at 71 that this conclusion is reinforced by A12(1) Rome II which makes the putative lex contractus, the lex causae for culpa in contrahendo. At 72 it emphasises the need for consistency between Rome II and Brussels IA in that both the law applicable to a non-contractual obligation arising out of dealings prior to the conclusion of a contract and the court having jurisdiction to hear an action concerning such an obligation, are determined by taking into consideration the proposed contract the conclusion of which is envisaged.

Interesting.

Geert.

(Handbook of) EU private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

 

 

The Prestige recognition tussle puts the spotlights on (now) Article 45 Brussels Ia, and on the relation between competing arbitral awards and judgments in ordinary.

Spain v The London Steam-Ship Owners’ Mutual Insurance Association Ltd [2020] EWHC 142 (Comm) reports on the CMR (case management conference) re what promises to be interesting litigation. A Spanish judgment concerning liability for the pollution damage caused when the vessel PRESTIGE broke in two off the coast of Spain in 2002, needs to be enforced in the UK. Brussels I’s (Regulation 44/2001) contestation of recognition is involved: particularly Articles 34(1) and (3).

At 2 Teare J summarises the story so far:

The parties have been in dispute about liability for many years. Criminal proceedings were brought against the master of PRESTIGE in Spain in 2002 and, after the conclusion of the investigative stage of the proceedings, civil proceedings were brought against the master, the Owners of PRESTIGE and the Club, as liability insurer of the Owners, in 2010. (I am told that in addition to Spain there are some 264 other claimants.) In 2012 the Club commenced arbitration proceedings in London against Spain and in February 2013 obtained an award from the sole arbitrator Mr. Alistair Schaff QC which declared that, as a result of the “pay to be paid” clause in the policy the Club had no liability to Spain. In this court Spain challenged the jurisdiction of the arbitrator but the court (Hamblen J. as he then was) held in 2013 that the arbitrator had jurisdiction. Later that year the court in La Coruna dismissed the civil claim against the master, Owners and Club but convicted the master of the crime of disobeying orders by the Spanish authorities to accept a tow of the vessel. In 2015 the English Court of Appeal upheld the decision of Hamblen J. In 2016 the Spanish Supreme Court reversed the decision of the court in La Coruna and held that the master had been seriously negligent and that the Owners and Club were liable for the damage caused. In execution proceedings in Spain, the court in La Coruna declared the Spanish State entitled to enforce a claim up to approximately €2.355 billion against the defendants in the Spanish proceedings and declared the master, Owners and the Club liable in respect of the claims, although subject (in the case of the Club) to a global limit of liability in the sum of approximately €855 million.’

Thus the Club has an arbitration award in its favour but Spain has a judgment of the Spanish Supreme Court in its favour. Spain obtained an order from Master Cook pursuant to which the Spanish judgment was registered so that it could be enforced here against the Club. The Club seeks to appeal from that order. One of the grounds on which it seeks to appeal is that the Spanish judgment is irreconcilable with the judgment of Hamblen J. and the Court of Appeal (A34(3) BI). Another ground is that recognition of England is contrary to the public policy of England (A34(1)).

This particular CMS concerns disclosure requirements: the Club’s seeking of disclosure from Spain is resisted by the latter on grounds that is clashes with BI’s intention of swift recognition.

One of the issues on which disclosure is sought, is Spain’s position under the insurance title of BI: “Are the English Judgments not qualifying judgments within article 34(3) because the English Judgments conflict with Section 3 of Chapter II of the Brussels 1 Regulation ? In particular …(b) Is the respondent [Spain] entitled to rely on the exclusive rules for jurisdiction in Section 3 of Chapter II. In particular: (i) Is the respondent [Spain] a qualifying party that is entitled to the protective rules in Section 3 ?” Reference is made to Aspen Underwiting: the Club states that it is necessary for Spain to show that it is a member of the class protected by Section 3, which (per Aspen Underwriting, GAVC] excludes “professionals in the insurance sector or entities regularly involved in the commercial or otherwise professional settlement of insurance related claims who voluntarily assumed the realisation of the claim as part of its commercial or otherwise professional activity”. Aspen Underwriting in the meantime (Teare J’s judgment was issued in January; it has been in the blog queue) has been varied by the Supreme Court.

It will therefore be necessary, submitted counsel for the Club, for Spain to disclose documents which show “the class of business” conducted by it. If it is a member of the relevant class it can rely on section 3. If it is not, it cannot.

The second class of document of which disclosure is sought is very different and relates to the public policy defence. Did the Spanish Courts refuse to allow the master to participate in an underwater investigation of the strength of the vessel’s hull and refuse to disclose the results of the investigation (so that there was a breach of the master’s right to equality of arms and to be able to prepare a defence) or were the results disclosed to the master in sufficient time to allow him to prepare his defence. The Club therefore seeks disclosure of the documents relating to that question held by Spain. Here Teare J at 21 assumes that Spain’s evidence can be expected to support its case and to rely upon the documents which show when the results were disclosed to the master and in what terms. If the evidence does not deal with this issue then Spain will be unable to advance its factual case. ‘I therefore consider it very likely that no disclosure under this head will be required. In the unlikely event that it is required a focused application can be made after Spain has provided its evidence.’

The Order eventually imposes a timetable for exchange of evidence (including expert reports) and later settlement of disclosure issues should they arise. Hearing in principle in December 2020.

This could turn out to be a most relevant case.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1, Heading 2.2.11.2, Heading 2.2.16.

Cyberinsults over patents, unfair competition and jurisdiction. The Paris Court of Appeal in Manitou v JCB.

In Manitou v J.C. Bamford Excavators, (defendant is better known as ‘JCB’ which in England is an eponym for ‘digger’ or excavator) the Paris Court of Appeal held that French Courts have jurisdiction in an interesting tale of patent insults. JCB (England incorporated) had obtained a French injunction against Manitou (domiciled at France) obliging it to halt production of one of its products possibly in violation of a JCB patent. On the eve of an important trade fair taking place in France, JCB boasted about the injunction in a Twitter, Linked-in and website post. Manitou argue the post was insulting and an act of unfair competition.

Manitou claim jurisdiction on the basis of A7(2) BIa, special jurisdiction for tort, per CJEU C-618/15 Concurrences /Samsumg /Amazon, which I reviewed here. It refers to all sites on which the news was posted being accessible in France (Pinckney would have been strong authority here); to the post discussing a French judgment which is only aimed at and enforceable in France; and that its publication was timed to coincide with the aforementioned French fair. JCB on the other hand argue mere accessibility does not suffice and that the sites did not target readers in France.

The Court refers both to Shevill and to Concurrences; decides that the very fact that the site was published in English does not insulate it from French jurisdiction (seeing also that plenty of potential clients looking to buy from Manitou at the time would have been in France for the fair); and that the publication clearly would have affected the brand’s reputation in France and also its sales there. Jurisdiction therefore established.

Geert.

(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2

Petrobas securities class action. Applicable law update: Dutch court holds under Rome II on lex causae in tort for purely economic loss. Place of listing wins the day (and leads to Mozaik).

Thank you Matthias Lehmann for flagging and reviewing the Rotterdam Court’s judgment late in January on applicable law in the Petrobas case. I had earlier reviewed the jurisdictional issues, particularly the application of Brussels Ia’s Article 33-34.

The case relates to a Brazilian criminal investigation into alleged bribery schemes within Petrobras, which took place between 2004 and 2014. The court first, and of less interest for the blog, deals with a representation issue, holding that Portuguese speakers cannot be represented in the class, for the Portuguese version of the relevant dispute settlement provisions, unlike the English translation, was not faulty.

Turning then to applicable law at 5.39 ff. Events occurring on or after 12 January 2009 are subject to the Rome II Regulation. For those before that date, Dutch residual PIL applies which the Court held make Brazilian law lex causae as lex loci delicti commissi: for that is where the alleged fraud, bribery and witholding of information happened.

For the events which are covered by Rome II, the court does not wait for the CJEU finding in VEB v BP and squarely takes inspiration from the CJEU case-law on purely financial damage and jurisdiction: Kronhofer, Kolassa, Universal Music. The court notes that the CJEU in these cases emphasised a more than passing or incidental contact with a State (such as: merely the presence of a bank account) as being required to establish jurisdiction as locus damni. At 5.47 it rejects the place of the investor’s account as relevant (for this may change rapidly and frequently over time and may also be easily manipulated) and it identifies the place of the market where the financial instruments are listed and traded as being such a place with a particular connection to the case: it is the place where the value of the instruments is impacted and manifests itself. It is also a place that meets with the requirements of predictability and legal certainty: neither buyer nor seller will be surprised that that location should provide lex causae.

Conclusion therefore is one of Mozaik: Brasil, Argentina, Germany, Luxembourg are lex causae as indeed may be other places where Petrobas financial instruments are listed. (At 5.49: Article 4(2)’s joint domicile exception may make Dutch law the lex causae depending on who sues whom).

Geert.

(Handbook of) EU private international law, 2nd ed.2016, Chapter 4, Heading 4.4.

 

 

 

 

Gray v Hurley. Court of Appeal refers to Luxembourg on anti-suit to support EU jurisdiction against ex-EU action.

Update 2 October 2020 the case is know at the CJEU as C-946/19 MG v HH, the questions referred are also here, and Marta Isidro now reports that the request has been retracted following settlement.

Update 6 July 2020  for a case-note by Mukarrum Ahmed see here.

Update a few hours after posting. For the New Zealand perspective see Jan Jakob Bornheim’s thread here.

I reviewed the High Court’s decision (refusal of anti-suit) in Gray v Hurley here. The Court of Appeal [2019] EWCA Civ 2222 has now referred to Luxembourg.

As I noted at the time, the High Court discussed the matrimonial exception of Brussels Ia, as well as the exclusive jurisdictional rule of Article 24(1), and (briefly) Article 25’s choice of court. The appeal however only concerns the application of Article 4’s domicile rule. Was Mr Hurley domiciled in England on 26 March 2019, when the court was seized?  Article 62(1) Brussels Ia refers to the internal law. Lavender J decided that Mr Hurley was not domiciled in England, however that Lindner should be read as extending to the defendant’s last known domicile in a case where the Court: (1) is unable to identify the defendant’s place of domicile; and (2) has no firm evidence to support the conclusion that the defendant is in fact domiciled outside the European Union. I suggested at the time that this is a very relevant and interesting reading of Lindner, extending the reach of Brussels Ia as had been kickstarted by Owusu, with due deference to potential New Zealand jurisdiction (New Zealand domicile not having been established).

Note also that Mr Hurley had initially also relied on A34 BI1 however later abandoned this line. Article 34 is however cross-referenced in the discussion on Article 4’s domicile rule.

The Court of Appeal has concluded that the meaning of Article 4(1) and its applicability in this case is not acte clair and has referred to Luxembourg. The focus of the discussion was not whether or not Ms Gray was domiciled in England (see however my doubts as to the extension of Linder in the case at issue). Rather, the focus is on anti-suit and Article 4: Ms Gray submits that Article 4(1) provides her with a right not to be sued outside England, where she is domiciled, and that the court is obliged to give effect to this right by the grant of an anti-suit injunction to restrain proceedings in a third State.

As the Court of Appeal notes, the consequences of her arguments are that an EU-domiciled tortfeasor who was being sued only in a third State could require the court of his domicile to grant an anti-suit injunction – in contrast to the ‘flexible mechanism’ under Articles 33 and 34 in cases where the same or related proceedings exist in both jurisdictions. By the same token, if there are proceedings in a Member State, the defendant could seek an anti-suit injunction to prevent the claimant from taking or continuing unrelated proceedings in a third State. And, as appears from the present case, it is said that it makes no difference that the claimant’s case is not one that the courts of the Member State could themselves entertain, meaning that the ‘right’ said to be conferred on the claimant by Article 4(1) would have no content.

Yet again therefore interesting issues on the use of anti-suit to support EU (rather than: a particular Member State) jurisdiction. The Court of Appeal is minded not to side with Ms Gray, for comity reasons (anti-suit being a serious meddle in other States’ jurisdictional assessment) and because the use of anti-suit here would not serve the Regulation’s objectives of sound and harmonious administration of justice. At 52 it suggests the MS Gray line of reasoning would have profound consequence which would be expected to be explicit in the Regulation and not to be arrived at sub silentio – but refers to the CJEU for certainty.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2 practically in its entirety.