Posts Tagged common law

Shenzhen CTS v Dajiang International Investment: ‘in limine’ can’t be early enough.

Another posting for the ‘comparative conflicts /dispute resolution’ binder. In order not to be found to have voluntary appeared (‘submitted to jurisdiction’), civil procedure rules worldwide require defendants to flag their opposition to jurisdiction early on in the proceedings. Indeed at the threshold of the litigation: in limine litis.

In EU law, the Court of Justice ruled in Elefanten Schuh that where civil procedure of the Member States requires a defence on the merits at the very earliest opportunity, such defence does not jeopardise objection to jurisdiction made at the same occasion. (Case-law now reflected in the wording of the Brussels I Regulation and its Recast successor).

There is as yet however no CJEU case-law on what level of interaction with the courts leads to submission.

In England, Zumaz Nigeria v First City [2016] EWCA Civ 567 recently held that application for disclosure does not entail submission: for one may need those very documents to contest jurisdiction.

Thank you RPC for now flagging Shenzhen CTS International Logistics Co Ltd v Dajiang International Investment Co Ltd. The court found that by applying to strike out the claim and seeking security for costs (to include the period after the hearing of the stay application), defendant had invoked the jurisdiction of the Hong Kong courts. As always of course the decision was based on factual merit which RPC’s David Smyth and Hannah Fletcher  summarise very well in the posting hyperlinked above.

Beware before you engage with the courts, if you do not wish to be seen as having submitted.

Geert.

(Handbook of) European Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.7.

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Consenting to choice of court under the common law. The Privy Council in Vizcaya v Picard.

In Vizcaya v Picard, the Privy Council considered the issue of consent to a choice of court clause in the event no such choice has been made verbatim. It was alleged that choice of court had been made implicitly but clearly by reference to an applicable law agreement in the underlying contract. RPC have a review of the case on their blog and I am grateful to them for bringing it to my attention.

The case is a fall-out of the Bernard Madoff Ponzi scheme, carried out through Mr Madoff’s company Bernard L Madoff Investment Securities LLC (“BLMIS”), a New York corporation. After Madoff’s fraud came to light in 2008, Irving Picard (“the trustee”) was appointed as trustee in BLMIS’s liquidation in the US Bankruptcy Court for the Southern District of New York (“the New York BankruptcyCourt”). The trustee commenced proceedings under the anti-avoidance provisions of the US Bankruptcy Code against investors who had been repaid before the fraud was discovered, including the appellant, Vizcaya Partners Limited (“Vizcaya”), a BVI (British Virgin Islands) company which carried on business as an investment fund, and which invested about US$328m with BLMIS between January 2002 and December 2008, but was repaid US$180m before the fraud was discovered.

The Appeal before the Privy Council concerns primarily the content and scope of the rule in common law that a foreign default judgment is enforceable against a judgment debtor who has made a prior submission to the jurisdiction of the foreign court (as distinct from a submission by appearance in the proceedings).  Brussels I or the Recast was not applicable to the case. In that Regulation (Article 25), the expression of consent with choice of court must take one of thee forms: essentially: written (or oral but confirmed by written agreement); in accordance with lex mercatoria; or in accordance with established business practice simply between the parties.

The question in the case at issue is whether the agreement to submit must be express, or can also be implied or inferred. The Privy Council settled the uncertainty which would seem to have existed for some time in the common law, in favour of an answer in the affirmative. Consent to jurisdiction can be implied. What needs to be shown though is real ‘agreement’, or ‘consent’ (in European private international law with respect to the similar discussion re choice of law (Rome I) I would say the test is one of ‘clearly established’), quod non in casu. Choice of law (here: in favour of New York law) can be a factor but not a solely determinant one. Moreover, choice of court viz one’s business transactions does not imply automatic extension to insolvency proceedings.

Crucial precedent, it would seem. Geert.

European private international law, second ed. 2016, Chapter 2, Heading 2.2.9

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Happy days!: ‘closest and most real connection’ for identifying lex contractus. Ontario CA in Lilydale v Meyn.

Lilydale v Meyn at the Ontario Court of Appeal (held April 2015 but only reaching me now – thank you to Michael Shafler and colleagues for flagging) is a useful reminder of the common law approach to determining lex contractus in the absence of choice of law. (Here of course an inter-State conflicts issue between Ontario and Alberta). Laskin JA refers in support to english precedent, summarised in quoted passage of Cheshire’s Private International Law:

The court must take into account, for instance, the following matters: the domicil and even the residence of the parties; the national character of a corporation and the place where its principal place of business is situated; the place where the contract is made and the place where it is to be performed; the style in which the contract is drafted, as, for instance, whether the language is appropriate to one system of law, but inappropriate to another; the fact that a certain stipulation is valid under one law but void under another … the economic connexion of the contract with some other transaction … the nature of the subject matter or its situs; the head office of an insurance company, whose activities range over many countries; and, in short, any other fact which serves to localize the contract.

The motion judge’s findings on the relevant criteria were held to be reasonable, as was her overall conclusion that the closest and most real connection to the contract was Ontario.

The case is an interesting reminder of what in the Rome I Regulation is now the final resort, should none of the relevant presumptions in Article 4 apply.

An interesting point in the judgment is the main reason why parties prefer one law over the other: at 3: ‘The issue is important because Alberta and Ontario have different ultimate limitation periods. Even taking into account discoverability, Alberta’s ultimate limitation period is 10 years; Ontario’s is 15 years. The parties agreed that Lilydale’s cause of action arose no later than August 31, 1994. Therefore, as Lilydale did not sue until January 2006, if Alberta law applied, its action was statute-barred; if Ontario law applied, it was not.’

Aren’t statutes of limitation under Canadian conflict of laws, covered by lex fori, as procedural issues, and not, as is seemingly accepted here, lex causae?

Geert.

 

 

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Chinachem: Forum non conveniens, non-exclusive choice of court and concurrent proceedings in Hong Kong and Mainland China.

I reported earlier on the waiver of privilege issues in Chinachem. The Hong Kong High Court has now also ruled on the issue of application of forum non conveniens in the event of concurrent proceedings in Hong Kong and mainland China. In a lengthy judgment (particularly resulting from extensive summary of counsel arguments but also of relevant precedent), Ng J recalls English precedent on forum non conveniens (Spiliada evidently being featured) and the way in which said precedent has been applied in Hong Kong. (Carrie Tai has excellent overview here).

Contract between the parties included choice of court and choice of law as follows: ‘This Agreement shall be governed by the laws of Hong Kong and it shall be construed by the laws of Hong Kong. Both parties agree to submit to the non-exclusive jurisdiction of the courts of Hong Kong.’

Ng J in the end rejects all arguments suggesting a stay in favour of the mainland proceedings. In doing so, she confirmed the tendency of Hong Kong courts (like indeed their English common law counterparts) to only brush aside choice of court in exceptional circumstance. Even if that choice of court is, such as here, non-exclusive. The concurrent proceedings stand.

Geert.

 

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Yukos v Tomskneft: Ireland rejects ‘parochial’ jurisdiction in enforcement of arbitral awards

Postscript 26 April 2016: the PCIA Yukos Arbitral award which I refer to below, was later squashed for lack of jurisdiction – that judgment is currently under appeal.

When should a court being asked to apply the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958)  – the ‘New York Convention‘, look mercifully on forum shopping with a view to the smooth enforcement of such award? That, in essence, was the issue in Yukos v Tomskneft at the Irish High Court. Both Yukos Capital and Tomskneft were originally part of the Yukos group – of PCIA Yukos arbitral award fame. Tomskneft was later transferred to Rosneft. Arbitral proceedings had taken place in Switzerland, Yukos’ attempts at enforcement in Russia failed, as they did in France. Singapore attempts are underway.

The Irish courts involvement at first view looks odd. There are no Tomskneft assets in Ireland, neither corporate domicile of any Tomskneft affiliates. As Kelly J noted, the Irish proceedings effectively would serve as a jack for proceedings in other jurisdictions where Tomskneft does hold assets. Waving a successful enforcement order (even if it were in practice nugatory, given the lack of assets) obtained in a ‘respectable’ jurisdiction, would assist with enforcement proceedings elsewhere.

The New York Convention has a pro-enforcement bias however the Irish (and other, especially common law countries’) arbitration act in enforcement of the Convention, runs alongside the application of Irish civil procedure rules ‘out of the jurisdiction’, being against a foreign defendant: Kelly J (at 59): In implementing the Convention as it did, the legislature did not attempt to dispense with the necessity to obtain leave to serve out of the jurisdiction in a case where the respondent is not normally resident within it.’

US law, too, requires that preliminary to recognising and enforcing a foreign award, in personam jurisdiction must be established. Decision on such remains subject to lex fori. A jurisdiction which all too happily entertains such cases is then said to employ ‘parochial’ or ‘exorbitant’ jurisdictional rules.

In the case at issue, after referencing prior case-law both in Ireland and elsewhere, Kelly J rejected applicant’s request (at 141):  It is a case with no connection with Ireland. There are no assets within this jurisdiction. There is no real likelihood of assets coming into this jurisdiction. This is the fourth attempt on the part of the applicant to enforce this award. There is little to demonstrate any “solid practical benefit” to be gained by the applicant. The desire or entitlement to obtain an award from a “respectable” court has already been exercised in the courts of France and is underway in the courts of Singapore.’

Note therefore that the court is not unsympathetic to the attempt at employing successful (even if hollow) enforcement in one jurisdiction as a lever in the real target jurisdiction (the one with the assets). Except, in the case at issue, similar attempts had already been or still were underway elsewhere.

The case is a very good illustration of the attraction (and uncertainty) of forum shopping, in particular at the enforcement stage. As well as a powerful reminder of the in personam jurisdictional rules of the common law.

Geert.

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