Nickel & Goeldner: Not the procedural context but the legal basis of the action determines the insolvency exception.

It is always useful to have the Court of Justice remind us of (some might say: fine-tune) what it has decided in precedent. This is no different in Nickel & Goeldner– Case C-157/13. (Which also deals with Article 71’s rule on the relation between Brussels I and the Convention for the International Carriage of Goods by Road (CMRT)).

This blog has reported earlier on the difficulties in applying the ‘insolvency exception’. (E.g. in Sabena and Enascarco). In Nickel & Goeldner, the insolvency administrator of Kintra applied to the relevant Lithuaian courts for an order that Nickel & Goeldner Spedition, which has its registered office in Germany, pay its debt in respect of services comprising the international carriage of goods provided by Kintra for Nickel & Goeldner Spedition, inter alia in France and in Germany. According to the insolvency administrator of Kintra, the jurisdiction of the Lithuanian courts was based on Article 14(3) of the Lithuanian Law on the insolvency of undertakings. Nickel & Goeldner Spedition disputed that jurisdiction claiming that the dispute fell within the scope of Article 31 of the CMR and of the Brussels I Regulation.

The Courts instructs how its earlier case-law (Gourdain; Seagon; German Graphics; F-Tex) needs to be applied (at 26-27):

It is apparent from that case-law that it is true that, in its assessment, the Court has taken into account the fact that the various types of actions which it heard were brought in connection with insolvency proceedings. However, it has mainly concerned itself with determining on each occasion whether the action at issue derived from insolvency law or from other rules.

It follows that the decisive criterion adopted by the Court to identify the area within which an action falls is not the procedural context of which that action is part, but the legal basis thereof. According to that approach, it must be determined whether the right or the obligation which respects the basis of the action finds its source in the common rules of civil and commercial law or in the derogating rules specific to insolvency proceedings.

The action at issue is an action for the payment of a debt arising out of the provision of services in implementation of a contract for carriage. That action could have been brought by the creditor itself before its divestment by the opening of insolvency proceedings relating to it and, in that situation, the action would have been governed by the rules concerning jurisdiction applicable in civil and commercial matters.  The fact that, after the opening of insolvency proceedings against a service provider, the action for payment is taken by the insolvency administrator appointed in the course of those proceedings and that the latter acts in the interest of the creditors does not substantially amend the nature of the debt relied on which continues to be subject, in terms of the substance of the matter, to the rules of law which remain unchanged.

Hence, there is no direct link with the insolvency proceedings and the Brussels-I Regulation continues to apply.

(On the application of Article 71, the Court holds that, in a situation where a dispute falls within the scope of both the regulation and the CMR, a Member State may, in accordance with Article 71(1) of the Regulation, apply the rules concerning jurisdiction laid down in Article 31(1) of the CMR.).

Not the procedural context (in particular, whether the liquidator takes the action) but the legal basis of the action determines the insolvency exception. A useful alternative formulation of the Gourdain et al case-law.

Geert.

 

Of Vikings, airlines and trade unions – The High Court in British Airways leaves a treasure trove of questions on ‘civil and commercial’

In  British Airways v Sindicato Espanol de Pilotos de Lineas Aereas – SEPLA, crucial consideration was whether the court had jurisdiction under the Brussels I Regulation to determine the claim brought by BA against SEPLA, a Spanish trade union, for damages and declaratory and injunctive relief alleging that strikes of Spanish airline pilots organised by SEPLA were unlawful under Spanish law in that they were in breach of the Claimants’ right to freedom of establishment and to provide cross border services under Articles 49 and 56 TFEU. The international federation of airline pilots association acted as anchor defendant (being domiciled in the UK at the time the action was introduced (it had since moved to Canada) and the case against both arguably being closely linked within the meaning of Article 6 of the Jurisdiction Regulation).

The High Court accepted the ‘knock-out point’ of defendant: that the matter was not ‘civil and commercial’ and therefore not within the scope of application of the Regulation. Field J argued with reference to the ECJ’s judgment in Viking (or more specifically, the AG’s Opinion in same) that ‘it remains the case that the source of the fundamental freedoms are treaty provisions imposing obligations on states‘, and that ‘a court having to decide whether SEPLA was in breach of Articles 49 and/or 56 TFEU will have to conduct a sensitive balancing exercise in which it weighs SEPLA’s constitutional right to strike and the fundamental right to strike which forms part of the general principles of Community Law against the fundamental freedoms enshrined in Articles 49 and 56. In my judgment, such an exercise will involve a resort to notions of public law rather than to private law.

I am not so sure. Firstly, the horizontal (i.e. between individuals) direct effect of the Treaty Articles concerned is quite established. Moreover, under the Eurocontrol and subsequent case-law formula, the public authority (here: merely a private organisation, a trade union, perhaps carrying out duties of a quasi-public law nature (the right to strike)) involved needs to have acted iure imperii. It is only if the legal relationship (not: the underlying applicable law) between the parties to the action is of a public law nature, giving one of them extraordinary authority which the other lacks, that the Regulation may not apply. There was no indication that the trade union in the specific case acted in some kind of iure imperii matter. This was not acte claire I would have thought, but the High Court evidently thought otherwise.

Geert.

The scope of ‘civil and commercial’ in the Brussels I Regulation (compensation for expropriation under the Nazi regime), and application of joinder to non-EU based defendants: the ECJ in Sapir

The ECJ yesterday issued its ruling in Case C-645/11 Sapir. The issues under consideration were the application of the Brussels I Regulation to proceedings brought by a State (Berlin) against a group of defendants, some of whom were based outside the EU, some inside the EU but not in Germany, and only a limited number in Germany. The request for preliminary review has been made in proceedings between, on the one hand, Land Berlin and, on the other, Ms Sapir, Mr Busse, Ms Birgansky, Mr Rumney, Mr Ben-Zadok, Ms Brown and five other persons, concerning the repayment of an amount overpaid in error following an administrative procedure designed to provide compensation in respect of the loss of real property during persecution under the Nazi regime.

Jurisdiction against the non-German based defendants could only theoretically be established on the basis of Article 6(1) of the Regulation, which allows for plaintiff to identify an anchor defendant in one Member State, and drag other defendants not based there into those proceedings:

‘A person domiciled in a Member State may also be sued:

1.       where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings; (…)

The first issue under consideration was the nature of the proceedings. There was a whiff of ‘public law’ surrounding the procedure, given its core foundation in administrative law procedures and the involvement of a public authority. However the ECJ, and Trstenjak AG with it, considered these not to be material to the nature of the proceedings: the request for repayment of part of the sum was made on the basis of a provision in German law (unjust enrichment) which was generally available and in which neither the public nature of plaintiff nor the substantial grounds on the basis of which compensation was granted, played any role: the basis and the detailed rules governing the bringing of the action were unrelated to the authority acting ius imperii.

The second issue concerned the defendants’ substantial argument against the claim of unjust enrichment: they argued that they are entitled to an amount which exceeds a share of the proceeds of sale as the amount realised through that sale failed to reach the market value of the property and that those additional compensation claims preclude the applicant’s claim of unjust enrichment.  The AG suggested a ‘close connection’ (and thus a possibility to invoke Article 6(1)), as the additional compensation claims lodged fit in perfectly with the identical situation of law and fact in the actions, which the ECJ requires for the application of Article 6(1). Identical legal basis is not required (in particular, one of the defendants, the lawyer representing a large part of the group, was being pursued on the basis of pure tort, rather than unjust enrichment). Only the German laws in question (the Vermögensgesetz and the Investitionsvorranggesetz) can provide the defendants with the legal basis to justify the excess amount they received, which also requires an assessment, for all of the defendants, in relation to the same factual and legal situation.

The third issue concerned the application of Article 6(1) to non-EU residents: this, the Court held, was not the case. Article 6(1) clearly refers expressly to defendants domiciled in the EU. In order to sue a co-defendant before the courts of a Member State on the basis of Article 6(1) , it is necessary that that person should be domiciled in another Member State.

In Case C-51/97 Réunion européenne, the ECJ had similarly (given the need to apply special jurisdictional rules restrictively) held that Article 6(1) cannot be applied to bring an action before the Court of a Member State against a defendant, domiciled in a different Member State, who could only be sued in that Member State by virtue of a joinder with a suit against a party not domiciled in any of the Member States.

The judgment in Sapic is not revolutionary, but useful.

Geert.

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