Posts Tagged Choice of court
Ramona Ang v Reliantco: On bitcoins, choice of court, complex financial markets and ‘consumers’. As well as a first vindication of my GDPR jurisdictional prediction.
As noted, I have come up for some air after a few hectic weeks – next case to report on is  EWHC 879 (Comm) Ramona v Reliantco, held 12 April. (A similar case is pending with the CJEU against Reliantco as Case C-500/18).
Defendant (‘Reliantco’) is a company incorporated in Cyprus offering financial products and services through an online trading platform under the ‘UFX’ trade name. Claimant, Ms Ang, is an individual of substantial means who invested in Bitcoin futures, on a leveraged basis, through the UFX platform. She claims, essentially and primarily, that Reliantco wrongfully blocked and terminated her UFX account and should compensate her for the loss of her open Bitcoin positions, or at a minimum should refund her cash value invested. She also makes claims for relief in respect of what she says have been breaches of data protection obligations owed by Reliantco in connection with her UFX account.
The judgment does not concern the merits of Ms Ang’s claims but rather an application by Reliantco challenging jurisdiction. Reliantco contends that Ms Ang is bound by its standard terms and conditions, clause 27.1 of which provides that the courts of Cyprus are to have exclusive jurisdiction over “all disputes and controversies arising out of or in connection with” her customer agreement. Reliantco therefore relies on Article 25 Brussels Ia.
Ms Ang says that clause 27.1 is ineffective to require her to bring her claim in Cyprus, either because she is a consumer within Section 4 of Brussels (Recast) or because clause 27.1 was not incorporated into her UFX customer agreement with Reliantco in such a way as to satisfy the requirements of Article 25. Ms Ang says, in the alternative, that her data protection claims may be brought here notwithstanding Article 25 Brussels Ia even if Article 25 applies to her primary substantive claims.
All in all a nice set of jurisdictional issues and no surprise to have prof Jonathan Harris QC involved as counsel.
At all times material to her claim, Ms Ang was not employed or earning a living in any self-employed trade or profession (unless, which is contentious between the parties and considered below, her activity as a customer of Reliantco via the UFX platform is itself to be so classified). Ms Ang worked in money markets for two months as a trainee, observing US$/DM currency swaps. Other than that, she has no professional currency trading or money market experience (again, that is, unless her use of the UFX platform to invest in Bitcoin futures itself counts as such).
At 9, s little bit of Bitcoin drame enters the scene: Ms Ang’s husband, Craig Wright, is a computer scientist with cybersecurity and blockchain expertise who works as Chief Scientist for nChain Ltd, a blockchain technology company with a corporate vision “to transform how the world conducts all transactions – using the blockchain’s distributed, decentralised ledger that chronologically records transactions in an immutable way“. As a researcher, he publishes prolifically and has developed innovations for which patent protection has been sought. He is the same Craig Wright who has identified himself publicly as being ‘Satoshi Nakamoto’, the online pseudonym associated with the inventor (or a co-inventor) of Bitcoin. Baker J holds that he need not consider whether that claim is true, and on the evidence for this application I would not be in any position to do so.
Was Ms Ang a ‘consumer’? At 52 ff the arguments of Reliantco are summarised; at 55 ff those of Ms Ang.
CJEU precedent discussed by Baker J is C-89/91 Shearson; C-269/95 Benincasa; C-464/01 Gruber; C-498/16 Schrems; and the pending cases C‑208/18 Petruchová [I reviewed the AG’s Opinion (issued a day before the High Court’s judgment) yesterday] and C-500/18 Reliantco Investments and Reliantco Investments Limassol Sucursala Bucureşti.
Baker J concludes at 34 ‘the ECJ/CJEU has not decided whether contracts entered into by a wealthy private individual for the purpose of investing her wealth, or particular types of such contract, are not (or can never be) consumer contracts.’
Reference is then made to English precedent along the very lines of the precedent dismissed by Tanchev AG in Petruchová: including AMT Futures v Marzillier, and at 35 ff Standard Bank London Ltd v Apostolakis both through the English and the Greek courts – with differing results. At 44: ‘the disagreement between the English and Greek decisions in Apostolakis turns upon and is constituted by a difference of view as to whether investing private wealth for gain, if it takes the form of buying and selling foreign currency, is by nature a business activity so that an individual investing their wealth in that way cannot when doing so be a ‘consumer’ under Brussels (Recast). Longmore J thought there was no such proposition of law; the Greek court took the contrary view.’ German case-law is also discussed.
At 63 Baker J comes to the core of his reasoning: ‘In my judgment, the investment by a private individual of her personal surplus wealth (i.e. surplus to her immediate needs), in the hope of generating good returns (whether in the form of income on capital, capital growth, or a mix of the two), is not a business activity, generally speaking. It is a private consumption need, in the sense I believe intended by the ECJ in Benincasa, to invest such wealth with such an aim, i.e. that is an ‘end user’ purpose for a private individual and is not exclusively a business activity. That means, as was also Popplewell J’s conclusion in AMT v Marzillier, that it will be a fact-specific issue in any given case whether a particular individual was indeed contracting as a private individual to satisfy that need, i.e. as a consumer, or was doing so for the purpose of an investment business of hers (existing or planned).’
And at 65 in fine: the ‘question of purpose is the question to be asked, and it must be considered upon all of the evidence available to the court and not by reference to any one part of that evidence in isolation.’
At 68 he concludes ‘the purpose of her contract with Reliantco therefore was outside any business of hers’.
Baker J notes that he was not asked to defer any decision in C‑208/18 Petruchová. I believe it would have been of help to determine the issue before him. Tanchev AG (as noted, in an Opinion not available to Baker J at the time of his drafting his judgment) suggests that ‘to determine whether a person must be regarded as a consumer, reference must be made to the nature and objective of the contract, not to the subjective situation of the person concerned.’
Obiter, he then reviews Article 25, where CJEU authority discussed is ia Colzanni and Cars on the Web. Ms Ang contended that she was not able to access the standard terms web page at the time she opened her account, and therefore clause 27.1 did not comply with Article 25 B1a. At 78 extensive technical detail is discussed and at 80 Baker J finds that the Cars on the Web criterion of accessibility and durability were met; and at 81 that in any case, the current issue is not one of a click-wrap agreement for a signed hard copy of the GTCs with choice of court in it, had also been sent.
Equally obiter, at 83 ff Baker J summarily discussed the GDPR jurisdictional arguments which would have been more relevant had he not accepted jurisdiction under the consumer title. The brief discussion entirely fulfills my summer 2018 prediciton here: Article 79 GDPR will create a lot of issues at the level of jurisdiction.
A very relevant case.
(Handbook of) EU private International Law, 2nd ed. 2016, Chapter 2, Heading 188.8.131.52.
Tanchev AG Opined mid last month in C-208/18 Jana Petruchová v FIBO Group Holdings, essentially on the issue whether Article 17(1) Brussels Ia is to be interpreted as covering an individual who engages in trade on the international currency exchange market through a third party professionally engaged in that trade.
Or, as the AG himself puts it at 3, whether a natural person which engages in trade on the FOREX market must be regarded as a consumer or whether, by reason of the knowledge and expertise required to engage in that trade, of the complex and atypical nature of the contract at issue, and of the risks incurred, that person cannot be considered a consumer, so that he falls outside the scope of the section affording protection referred to above.
Under consideration is inter alia the impact of Rome I and of Directive 2004/39 – the relation in other words between applicable law and jurisdiction, and between substantive law and jurisdiction – see also my review of Pillar Securitisation here.
Ms Petruchová, residing in Ostrava (Czech Republic), and FIBO Group Holdings Ltd (‘FIBO’), a brokerage company established in Limassol (Republic of Cyprus), entered into a contract entitled ‘Terms of Business’ (‘the Framework Agreement’ – with choice of court for Cyprus). The purpose of the Framework Agreement was to enable Ms Petruchová to make transactions on the FOREX market by placing orders for the purchase and sale of the base currency, which FIBO would carry out through its online trading platform.
At 29, the AG suggests in my view correctly (Handbook p.106 2nd full para) that for choice of court under Article 19 B1a to be valid, it must allow the consumer to bring proceedings in courts in addition to those identified by Article 18.
Article 17(1) of the Brussels Ia Regulation applies if three conditions are met: first, a party to a contract is a consumer who is acting in a context which can be regarded as being outside his trade or profession; second, the contract between such a consumer and a professional has actually been concluded; and, third, such a contract falls within one of the categories referred to in Article 17(1)(a) to (c) of that regulation.
The question referred to the Court in the present case relates to the first condition. The AG refers in particular to C-269/95 Benincasa; and C-498/16 Schrems. At 46, referring to these cases: to determine whether a person must be regarded as a consumer, reference must be made to the nature and objective of the contract, not to the subjective situation of the person concerned.
(at 40) ‘The question before the Court of Justice is whether a person who carries out transactions on the FOREX market may be denied the status of a consumer by reason of the knowledge and the expertise required to engage in such trades, the value of the transaction, the fact that the person is actively placing his own orders, the risks incurred on the FOREX market, and the number and frequency of the transactions carried out.’
In essence therefore, do the sophistication of the market and the intensity of the individual’s voluntary engagement with it, impact on their qualification as a consumer? The AG opines they do not, and I am minded to agree given CJEU authority, in my view most correspondingly C-218-12 Emrek – which the AG does not refer to. In that case the CJEU emphasised the objective charachter of the Pammer /Alpenhof criteria, decoupled from the consumer’s actual introduction to the business via word of mouth rather than the website.
The AG also refers to Schrems, where the Court held that the notion of a consumer is ‘distinct from the knowledge and information that the person concerned actually possesses’.
At 48 the AG finds additional support in Directive 93/13/EECon unfair terms in consumer contracts – although as we know e.g. from Pillar Securitisation, such support has now become less substantial.
At 51 the AG also emphasises the predictability of the Brussels regime – a classic interpretative tool which was bound to make an appearance. At 54 he adds that the risks involved in the conclusion of CfDs cannot preclude classification as a consumer. Quite the reverse: because of the risks, consumers need to be protected. At 59 he rejects  EWHC 1085 (Comm) AMT Futures v Marzillier as relevant (national) precedent, although I do not think that either he or the Commission properly presented Popplewell J’s views on the issue. As I noted in my review at the time, ‘I do not think too much should be read in these examples – more so, the insistence that circumstances of the case do have an impact on the qualification as ‘consumer’.
At 69 on the issue of consumers, the AG concludes that ‘in order to determine whether a person who engages in trade on the FOREX market should be regarded as a consumer within the meaning of Article 17(1) of the Brussels Ia Regulation, no account should be taken of that person’s knowledge; of the value of the contract; of the fact that the person actively places his own orders; of the risks incurred; or of the number and frequency of the transactions.’
That leaves the questions
- whether A17(1) BIa should be interpreted in a manner consistent with Article 6 Rome I, given that financial instruments such as CfDs are excluded from the scope of the rules applicable to consumer contracts laid down in Article 6(1) and (2) of the Rome I Regulation). Suggested answer: No: per Kainz, and now also I would suggest, Pillar Securitisation; and
- whether account should be taken of the fact that the person is a retail client within the meaning of Directive 2004/39: for similar reasons: ditto answer.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 184.108.40.206.
In  EWHC 982 (Comm) Pan Ocean v China-Base Group, Hancock J reviews CJEU authority old and new on Article 25 Brussels I Recast at length, starting with Colzani and Segoura and ending with Profit Sim.
The sole but important focus of the discussion is on Article 25 (1)(a)s ‘in writing or evidenced in writing’ (the Article’s other options for the existence of expression of consent were not under discussion: see at 32).
His conclusion, justifiable in my view, is (at 32) that there is no authority (CJEU or otherwise) which would go so far as to say that agreement to an exclusive jurisdiction clause which was implied solely from the conduct of the parties suffices for the purposes of compliance with Article 25.
At 35 ff he considered obiter the issue of anti-suit aimed at Singapore, had he decided that there is a valid clause, in summary rejecting that, too, at 63.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.9, Heading 2.2.9.
A very brief post mainly for archival purposes particularly with a view to comparative conflict of laws. Tozzini Freire review the new Article 25 of Brasil’s civil procedure rules here, with a focus on the ‘international’ element required to trigger the validity of choice of court (compare Vinyls Italia), and the potential application of fraus in same.
Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.7.1. Chapter 3, Heading 220.127.116.11
Ablynx and VUB v Unilever. On Brussels Ia’s protection for choice of court (Article 31(2) and, again, on DNIs and exclusive jurisdiction for patents.
 EWHC 792 (Pat) Ablynx and VUB v Unilver engages similar discussions as Eli Lily v enentech and Chugai v UCB with the additional element of now, under Brussels Ia, the application of Artile 31(2). This Article makes safe the torpedo previously used to gazump choice of court, by giving the courts of the States in whose favour choice of court has been concluded, a first go at discussing the validity and application of the choice of court agreement.
Here: does Article 31(2) mean that the Brussels courts, to whom jurisdiction has been assigned in a licence agreement, get to decide first on the engagement of Article 24(4)’s exclusive jurisdictional rule re the validity of patents?
It is worth quoting Hacon J in full: at 17 ff
’17. Ms Lane (for the defendants, GAVC) submitted that the position is clear: art.31(2) is engaged and therefore these proceedings must be stayed. Art.24 could never make a difference in this court because it cannot override art.31(2). That is because art.31(2) is expressly stated to be without prejudice to art.26 but not art.24. The consequence is that all issues arising in these proceedings must be ceded to the Brussels courts, including the question whether art.24(4) is engaged and if so, what should be done about it. It is not the concern of this court.
18. I disagree. To my mind art.25(4) explains why there is no mention of art.24 in art.31(2). Art.31(2) is necessarily without prejudice to art.24 since an agreement relied on for a stay under art.31(2) can carry no legal force if it purports to exclude the courts having exclusive jurisdiction under art.24. Even on the assumptions I have stated, art.31(2) cannot apply if art.24(4) is engaged. Art.24(4)’s engagement depends on whether these proceedings are ‘concerned with’ the validity of the Patents UK within the meaning of art.24(4). I must resolve this last question before I can decide whether the (assumed) agreement carries legal force and therefore whether art.31(2) is engaged.
19. I also note that art.26 is itself made subject to art.24. This reinforces my view that the recasting of Brussels I has not altered the hierarchy of provisions awarding jurisdiction, with art.24 at the top. Arts.24 and 25 both speak of ‘exclusive jurisdiction’, but that conferred by art.24 is the more exclusive.’
Having held that Article 31(2) is not engaged, the Court still has to assess whether the claim is essentially a decleration of non-infringrement or rather ‘concerns’ the validity of the patents. Defendants argue that the validity of the Patents UK would form only an incidental part of this action, since it is really a dispute about the scope of defendant’s licence.
Here, Hacon J discussed CJEU authority at length (GAT v LUK, BVG, Gasser etc.) and summarises at 53
(1) When a stay is sought under art.31(2), if an argument is raised that the court before which the stay is sought has exclusive jurisdiction under art.24, that court must decide whether the argument is correct.
(2) If the court has exclusive jurisdiction under art.24, art.31(2) is not engaged. There will be no stay.
(3) If the court does not have exclusive jurisdiction under art.24, it must decide whether at least prima facie there is an agreement which satisfies art.25 and which confers exclusive jurisdiction on courts of another Member State. If so, provided the defendant has not entered an appearance in a manner which satisfies art.26, there must be a stay of the proceedings.
EPLaw helpfully summarise the lenghty review of testimony and pleadings as follows: taking into account the usual practice in relation to patent validity proceedings in the UK, and the arguments which are typically run, the Court concluded that there was no real doubt that if the proceedings progress to trial they will be concerned with the validity of the Patents within the meaning of art.24(4). Art.24(4) was therefore engaged.
The case raises again the interesting issue of the degree to which the court may rely on parties’ submissions in particulars of claim when examining jurisdiction, or alternatively need to look beyond these stated arguments into what might and will be argued.
Leave to Appeal has been granted and a further order has already dealt with service issues.
(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 18.104.22.168, Heading 22.214.171.124.