Some pondering on EU reception of Celsius’ GTC choice of court and -law.

When prof Bookman asked my input on Celsius’ choice of court and governing law’s clause in its GTCs, I was otherwise engaged. Subsequently I waited with an answer for I used the issue for an exam question. – so here is my primer.

Celsius are one of the leading crypto currencies exchanges (future readers may not be familiar: crypto currencies were an early 21st century Ponzi scheme).

The question I put to the students, was:  A fellow academic and practitioner from the US asks you how clause 33 of the standard Celsius contract, copied below, would be received in the EU. Celsius are one of the world’s leading crypto currencies exchanges.

How do you respond to this question? Argue with reference inter alia to relevant CJEU case-law.

Students had two pages to answer. I did not specify Celsius’ domicile. This is what I expect to be included in the reply. Both for jurisdiction and for there is a clear distinction between the B2B and B2C scenario.

Re: B2C: For the contract to be a true ‘consumer’ contract within the meaning of Brussels Ia, Celsius would have had to target their activities at the consumer’s Member State etc.: CJEU Peil and Reliantco are good pointers, as are Ramona Ang and Khalifeh v Blom Bank. Whether Celsius are domiciled in the EU is of no consequence for the consumer section to be engaged. At the jurisdictional level, the choice of court clause would have no consequence (A19 BIa), and the consumer would be able to sue Celsius either in the consumer’s EU domicile, or in Celsius’ EU domicile if it has one. Celsius would only be able to sue in the consumer’s domicile. Articles 33-34 BIa lis pendens rules would not be engaged.

At the applicable law level, the choice for New York law would stand, however mandatory law of the consumer’s habitual residence (which would include transposition of EU consumer law) would trump any conflicting provisions (A6(1) and (2) Rome I).

Re: B2B or indeed a B2C contract which does not trigger the consumer section, the picture would be quite different. Here, whether Celsius as contracting partner has a domicile in the EU, does matter.

If there is such domicile, then at the level of jurisdictionthe EU based party is likely to seize the A4 domicile court, potentially also seeking out a forum contractus if the currency services were to be provided elsewhere than in the place of Celsius’ domicile. That is where Celsius, had it seized an ex-EU court first, then might seek application of A33-34. For this it may come to regret having included hybrid choice of court: recital 24(2)’s reference to the ex-EU court having exclusive jurisdiction arguably does not apply to hybrid choice of court.

Were Celsius to sue the other party in an EU court first (taking ‘any applicable jurisdiction’ at its face value and understanding it as including EU courts), the other party is likely to raise the invalidity of the hybrid choice of court. This is where BIa knickers will get into their proverbial twist: for recital 20’s lex fori prorogati’s instruction as lex casae for the validity of the clause, only refers to ‘a court or courts of a Member State’. Celsius could of course chose to ignore choice of court (implicitly accepting its invalidity) and seize the A4 court of the EU counterparty.

At the level of applicable law, choice for New York law will in any case stand in this scenario, with however A3(4) Rome I’s rule for ‘purely EU’ contracts kicking in, and potentially Article 9 Rome I’s lois de police.

If there is no EU Celsius domicile, Celsius is unlikely to sue in the EU (for it risks having an EU court apply EU banking, finance etc law as mandatory law) however if it does, it would either do so on the basis of A4 domicile jurisdiction, or invoking, as above, the ‘any applicable jurisdiction’ instruction in the hybrid choice of court. Only A9 Rome I could then marginally upset choice of NY law.

Finally, assuming Celsius were to sue the consumer outside the EU, and were to seek enforcement of the judgment in an EU Member State, this would engage the Member States’ residual rules on recognition and enforcement.

Quite a set of variables in the end, and I would be much happy to hear others’ thoughts.

Marking me will look out for core B2B /B2C and domicile considerations.

Geert.

 

 

Suez Water NY v Dupont, Chemours: PFAS /PFOAs forever chemicals jurisdiction, a good primer on general, specific jurisdiction in the States.

I tweeted on the case at the time I think and now bumped into it as per ‘too many open browser windows -syndrom’ ;-): Liman J’s January’s judgment in Suez Water New York v Dupont, Chemours et al serves as a good primer (Legally Blonde a strong second) to explain general (where the defendant is ‘at home’) and specific (based on the defendant’s contacts with the State) personal (as opposed to subject-matter) jurisdiction.

In the US (with slight variations in federal and State approaches), general personal jurisdiction over the defendant arises either because of its continuous and systematic business affiliations with the state (indisputably established in case of domicile in the State) or, in the case of foreign corporations (incl in the business and human rights context) where its activities make it ‘essentially at home’ in the State (Daimler v Bauman). Specific personal jurisdiction, aka ‘long arm’ jurisdiction, exercised against those ‘not at home’ in the State, requires contact with the State, typically through the (attempted) sale or supply of goods or services, the commitment of a wrongful act (tort) or Moçambique-type matters such as transactions involving real estate in the State.

In the case at issue, the judge concludes that claimant, who is seeking to recover the water remediation costs of PFAS, ‘forever chemicals’ pollution,  has made the requisite prima facie showing of personal jurisdiction over the original manufacturers (ia of ‘Teflon’ non-sticky pans) albeit just barely, accepting a prima facie link between those defendants’ marketing activities  in New York and the contamination. However the judge does not prima facie accept jurisdiction over the successor corporations, holding that under New York law, successor jurisdiction is appropriate only where a predecessor and successor remain one and the same after some corporate-restructuring event. If this trend continues, it would be a vindication for escaping environmental liabilities by the use of special purpose vehicles, including corporate restructuring.

The case in the end faltered on the basis of vagueness in the claim however I understand this can be remedied (and may have been done so on the meantime). Other courts will have different approaches and unfortunately the length of the judgment (which also discusses eg public nuisance claims) illustrates  the industry will battle liability to the end. Another sad, sad case-study for the late lessons from early warnings collection.

Geert.

Guistra v Twitter. The BC Supreme Court on suing Twitter for libel in Canada, and rejecting forum non with enforcement elephants in the room.

A post I started writing on 14 December 2021 so it’s about time I’ld finish it. In  Guistra v Twitter 2021 BCCA 466 (the case echoes Haaretz in Ontario) the Supreme Court of British Columbia with  Grauer J delivering the unanimous opinion, upheld jurisdiction for the BC courts on the basis of the claim pointing to a tort having been committed in BC, BC therefore being locus delicti commissi. The Court held that damage in the jurisdiction, locus damni, needs then not separately be argued.

Mr. Giustra, a British Columbia resident, alleges that Twitter published tweets that defamed him in British Columbia, as well as elsewhere.  Twitter asserts nota bene that, in law, it cannot properly be considered a “publisher” of tweets that were authored and posted on its platform by its users. That issue is deferred for the merits of the claim: at the jurisdiction level, the pleading is what is important: compare with the situation under Brussels Ia.

A forum non conveniens challenge in favour of the courts at California was rejected, where reference was made ia to Google v Equustek. There is an elephant in the room here, so identified, namely that a claim in California is doomed to fail on free speech grounds, and that an eventual Canadian judgment is doomed to be unenforceable at least in the US.

A good judgment for comparative purposes.

Geert.

Royal Carribean v Browitt. On agency, consumer consent and choice of court Down Under.

Royal Caribbean Cruises Ltd v Browitt [2021] FCA 653 is a great addition to the comparative conflicts binder, particularly from the angle of ‘consent’ in business to consumer contracts. It also engages a classic tripartite relation between the consumer, signing a contract with a travel agent, whose GTCS in turn incorporate the GTCS of the carrier.

The case follows on from the December 2019 volcanic eruption at Whakaari.  (Mrs Browitt), for herself and as representative of the deceased estates of her late husband Paul and late daughter Krystal, and Stephanie (Ms Browitt), a daughter who survived the eruption with horrific injuries, are suing Royal Caribbean Cruises Ltd (RCCL), a Liberian registered company headquartered and operating in Miami, Florida, in the courts at Miami. There are applicable law and procedural advantages (incl discovery and trial (both on culpability and level of damages) by jury).

RCL Cruises Ltd (RCL) and RCCL apply for anti-suit in the FCA arguing that the Browitts were passengers on the Ovation of the Seas pursuant to a contract of carriage between the Browitts and RCL as the disponent owner and operator of the vessel. They seek a declaration that it was a term of the contract, signed at Flight Centre in Victoria, Australia, that any disputes between the parties would be subject to the exclusive jurisdiction of the courts of New South Wales.

The list of issues to be determined is long but I repeat it here anyways for they highlight the complexity of issues following a routine purchase of a cruise:

(1)    Was Flight Centre the agent of Mrs Browitt, RCL or both?

(2)    Were the RCL AU terms, including the exclusive jurisdiction clause, incorporated into the contract of carriage by: (a)    reference in the Flight Centre terms and conditions signed by Mrs Browitt on 14 February 2019? (b)    the text of a Royal Caribbean brochure? (c)    links on the RCL AU website? (d)    links in emails? (e)    links in the electronic guestbook?

(3)    As to the construction of the RCL AU terms: (a)    is RCL entitled to invoke the exclusive jurisdiction clause to restrain the Florida proceedings? (b)    is RCCL entitled to rely on the exclusive jurisdiction clause? (c)    did the purchase of insurance exclude the operation of the terms (cl 1)? (The respondents later dropped reliance on the purchase of insurance as excluding the operation of the exclusive jurisdiction clause, so this issue fell away.) (d)    does the contract of carriage apply to shore excursions (cl 25)? If not, does the exclusive jurisdiction clause nonetheless operate to restrain the Florida proceedings? (e)    does the exclusive jurisdiction clause permit a proceeding to be brought in the Federal Court of Australia sitting in New South Wales, and if not, what consequence follows from the commencement of this proceeding (cl 1, cl 37/38)? (f)    does the exclusive jurisdiction clause cover the Florida proceeding?

(4)    Is RCCL entitled to relief on the basis of the RCL AU terms?

(5)    Is the Florida proceeding vexatious and oppressive such that RCL and RCCL are entitled to an anti-suit injunction?

The judge held that although the Browitts were bound by the RCL AU terms, the Florida proceeding is not in breach of the exclusive jurisdiction agreement in those terms because RCCL is not a party to the agreement and RCCL does not enjoy the benefit of it. Also, there is no basis for the alternative case that the Florida proceeding is in any event vexatious and oppressive such as to justify an order restraining Mrs Browitt and Ms Browitt from pursuing it.

Terms and conditions were available on relevant websites and brochures, shown to and browsed by Mrs Browitt but not for the purposes of terms and conditions. Rather, as one would expect, for details of the journey, vessels etc. Unlike a quote, the eventual invoice included as part of the document three pages of booking terms and conditions. Some of those were highlighted in the copy made available to Mrs Browitt  Mrs Browitt could have read the GTCS but there was no inidcation she had or had been specifically pointed to them. Nothing in either version of the invoice, i.e., that which was printed for and signed by Mrs Browitt and that which was emailed by the agency, identifies which of RCCL and RCL was offering the cruise or operating the vessel.

The judgment, which I would invite readers to consult, eventually boils down to limitations of ‘agency’, privity of contract, and clear determination of contractual clauses. It does not decide for the Browitts on the basis of a particular concern for the weaker party in a classic B2C transaction, rather on the need for parties clearly to think through their spaghetti bowl of overlapping arrangements and GTCs when hoping to rely on them in court.

Geert.

Roark v Bridgestone, Shandong et al. Contract fine-print and regulatory compliance determines minimum contacts in Washington.

A short post for comparative conflicts purposes. Readers might be aware of the minimum contacts rule in US jurisdictional analysis.  Rice J excellently summarises the issues in his order denying a strike-out application (‘motion to dismiss’) on the basis of lack of jurisdiction.

‘Under the Due Process Clause, a court may exercise personal jurisdiction over a defendant only where “the defendant ha[s] certain minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” [Picot v. Weston, 9th Cir. 2015) (quoting Int’l Shoe Co. v. Wash., [1945])….

Personal jurisdiction over a non-resident defendant may take two forms:
general jurisdiction or specific jurisdiction. General jurisdiction requires connections with the forum “so continuous and systematic as to render the foreign corporation essentially at home in the forum State (Ranza). Specific jurisdiction, by contrast, may only be exercised “when a case aris[es] out of or relate[s] to the defendant’s contacts with the forum.”

Shandong essentially argue that they are kept at arm’s length from US jurisdiction because they are not the one importing the tires into the US: a separate corporation imported, a third distributed. The judge however (in the process dismissing Shandong’s assertion that the goods were shipped FOB – Free on Board), found that Shandong delivered tires into the stream of commerce, was involved, in consequence of its contractual duties, in shipping the tires to Washington ports, and has taken steps for creating tires compliant with state and federal law to arrive in Washington pursuant to the supply agreement.  This echoes the EU jargon of ‘directing activities at’ the state of Washington.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.460, para 4.48 ff.

Servier Laboratories. The UK Supreme Court on the narrow window for res judicata authority of CJEU decisions.

Rather like I note in my report on Highbury Poultry Farm,  Secretary of State for Health & Ors v Servier Laboratories Ltd & Ors [2020] UKSC is another example of why the UK Supreme Court and counsel to it will be missed post Brexit.

The case in essence queries whether a CJEU annulment (in General Court: Case T-691/14, currently subject to appeal with the CJEU) of a finding by the European Commission that companies breached Article 101 and 102 TFEU’s ban on anti-competitive practices, is binding in national proceedings that determine issues of causation, remoteness and mitigation of loss. The answer, in short: no, it does not.

The case essentially revolves around the difficulty of applying common law concepts of authority and precedent to the CJEU’s more civil law approach to court decisions. For those with an interest in comparative litigation therefore, it is a case of note.

The essence in the national proceedings is whether Claimants [who argue that Servier’s breaches of EU and UK competition law led to a delay in generic Perindopril entering the UK market, resulting in higher prices of Perindopril and financial loss to the NHS) failed to mitigate the loss they claim to have suffered as a result of Servier’s (the manufacturer of the drug) infringement of the competition rules. The Court of Appeal’s judgment is best read for the facts.

In T-691/14 Servier SAS v European Commission, the General Court of the EU had annulled only part of the European Commission’s decision by which it was found that the Appellants had infringed Article 102 TFEU. In the present proceedings, Servier seek to rely on a number of factual findings made by the
GCEU in the course of its judgment and argue that the English courts are bound by those findings. The High Court and the Court of Appeal have held that the propositions on which the Appellants seek to rely are not res judicata.

Core CJEU authority discussed is Joined Cases C-442/03P and C-471/03P P&O European Ferries (Vizcaya) SA and Diputación Foral de Vizcaya v Commission.

Lord Lloyd-Jones reaches the crux of his reasoning, on the basis of CJEU authority, at 39:

The principle of absolute res judicata gives dispositive effect to the judgment itself. It is the usual practice of EU courts to express the outcome of the action in a brief final paragraph of the judgment referred to as the operative part. While this will have binding effect, it will be necessary to look within the judgment beyond the operative part in order to ascertain its basis, referred to as the ratio decidendi. (EU law has no system of stare decisis or binding precedent comparable to that in common law jurisdictions and this EU concept of ratio decidendi is, once again, distinct from the concept bearing the same name in the common law.) It will be essential to look beyond the operative part in this way in order to identify the reason for the decision and in order that the institution whose act has been annulled should know what steps it must take to remedy the situation. In a case where the principle of absolute res judicata applies, it will extend to findings that are the necessary support for the operative part of the annulling judgment.

The GC’s findings were based on a limited ground only, relating to too narrow a market definition under A102 TFEU. As presently constituted, the claim in the national proceedings is a claim for breach of statutory duty founded on alleged infringements of article 101 TFEU. No question arises in the proceedings before the national court as to the relevant product market for the purposes of A102 or the applicability of A102.

The national proceedings therefore concern causation, remoteness and mitigation of loss in the arena of article 101 TFEU. The narrow res judicata window, it was held, clearly does not apply to them and that is acte clair which needs no referral to Luxembourg.

Geert.

 

 

Hebei Huaneng v Deming Shi_B. New Zealand High Court on the notion of ‘courts’ in recognising ‘judgments’ internationally.

Thank you Jan Jakob Bornheim for alerting me to Hebei Huaneng v Deming Shi_B [2020] NZHC 2992, which dismissed the defendant’s application for summary judgment and discusses the notion of a ‘court’ , required to recognise its ‘judgments’ internationally. Readers will recognise the discussion ia from the CJEU case-law in judgments such as Pula Parking.

Hebei Huaneng had obtained judgment against Mr Shi at the Higher People’s Court of Hebei Province. The amount remained unsatisfied. Hebei Huaneng then found out that Mr Shi has assets in New Zealand – an inner-city apartment in Auckland and shares in a New Zealand company.  Mr Shi objects to New Zealand hearing this case on the basis that China does not have true courts and that Hebei Huaneng should first enforce its securities in China.

At 78-79 Bell J holds briefly that questions of real and substantial connection with New Zealand and appropriate forum are not much in issue. The two main arguments raised at this stage lie elsewhere.

Given the lack of treaty on the issue between NZ and PRC, he summarises the NZ common law on recognition at 16:  the common law regards a judgment of a foreign court as creating an obligation enforceable under New Zealand law if the judgment is given by a court, the judgment is final and conclusive, the judgment is for a definite sum, the parties are the same or privies, and the court had jurisdiction under New Zealand’s jurisdiction recognition rules. No merits review will be undertaken however refusal of enforcing a ‘money judgment’ is possible if obtained in breach of New Zealand standards of natural justice, enforcing the judgment would be contrary to public policy,
the judgment was obtained by fraud, the judgment was for a revenue debt, or the judgment involves the enforcement of a foreign penal law. Lack of reciprocal recognition by the other State is no objection.

On the issue of the notion of court, he notes at 29 that complaints that a foreign legal system is so defective that its courts cannot be trusted to do substantial justice may arise in two contexts: in forum non cases, where the analysis is prospective seeing as the case may not even be pending abroad; and in recognition cases, where the analysis is retrospective. At 28 Bell J already points out that style of writing etc. particularly also given the civil law background of China must not confuse. At 35 he notes to core issues viz the concept of court: (a) whether the bodies carrying out judicial functions are distinct from those with legislative and administrative function; and (b) whether the bodies carrying out judicial functions are subject to improper interference. Then follows lengthy-ish consideration of expert evidence to conclude at 60 that the good arguable case of the Chinese courts being independent, is satisfied.

The question of the ‘property security first’ principle’ which would mean satisfaction would first have to be sought against the Chinese secured assets, is discussed mostly in the context of Chinese law, against the backdrop of the common law principle of a party’s freedom to chose asset enforcement. The lex causae for that discussion I imagine will be further discussed at the merits stage.

A good case for the comparative conflicts binder.

Geert.

 

RCT Holdings v LT Game. Supreme Court of Queensland sees no reason to frustrate choice of court pro Macau even in times of Covid19..

Update 3 December 2020 see Sarah McKibbin meanwhile for further background here.

Thank you Angus Macinnis for flagging RCD Holdings Ltd & Anor v LT Game International (Australia) Ltd [2020] QSC 318 in which  Davis J upheld choice of court in favour of the courts at Macau and held against a stay. The judgment is a good one for comparative purposes.

Claimants, ePayment Solutions Pty Ltd (EPS) and RCD Holdings Ltd (RCD), in their contract with the defendant, LT Game International (Australia) Ltd (LT) (a BVI domiciled company), agreed that any dispute between them would be litigated in Macau. However, when a dispute did arise they commenced proceedings in Queensland. LT entered a conditional appearance and now applies to strike out the claim, or alternatively, to have it stayed as being commenced in this court contrary to the contract.

Article 10 of the contract carries the title Governing law but actually is a choice of court clause – an oddity one sees more often than one might expect in B2B contracts: ‘Any dispute or issue arising hereunder, including any alleged breach by any party, shall be heard, determined and resolved by an action commenced in Macau. The English language will be used in all documents.”

Comparative insight includes the issue of whether A10 us a non-exclusive (an agreement not to object when proceedings are brought in the court designated) or exclusive (an agreement only to bring proceedings in the court designated) choice of court. Davis J settled for exclusive which would also seem to have been the position of both parties, despite some ambiguity at the start of proceedings.

Lex contractus is disputed, and at 27 Davis J settles for Macanese law, based upon factual construct of the contractual intention of the parties. Clearly that choice of court was made for Macau was an important factor – as it is in Rome I for consideration of so-called ‘implied’ choice of law in the event of choice of court made.

A stay on the basis of Covid19 impracticability (ia because of alleged difficulties for witness testimony) is dismissed, ia (at 34) because it is uncertain whether current travel restrictions will still be in place when the case in Macau might be heard. Davis j does suggest that a renewed application for a stay must not be ruled out in light of Covid19 developments, however will be seen against abuse of process: in other words claimants had best not do so lightly.

Geert.

Lange v Lange. The Trans-Tasman Proceedings Act 2010’s equivalent of CJEU’s Webb v Webb, Schmidt v Schmidt etc.

Update 15 October 2020 many thanks Jack Wass for providing link to judgment, here.

As I seem to be in a comparative mood today, thank you Jan Jakob Bornheim for flagging [2020] NZHC 2560 Lange v Lange. The case is further discussed by Jack Wass here – at the time of writing I only have Jack’s review to go on for the actual decision appears to be as yet unpublished.

TTPA 2010 follows the model of the more recent Hague Judgments Convention: recognition and enforcement of a judgment may be refused if it infringes jurisdictional rules detailed in the Act. For the case at issue, s 61(2)(c) of the TTPA is engaged. It requires the court to set aside registration of a judgment if it was “given in a proceeding the subject matter of which was immovable property” located outside Australia.

The determining concern is whether the New Zealand property was “in issue” (the words which Jack uses and which presumably Gault J employed; the Act itself uses ‘proceeding subject matter of which is’; compare with Brussels Ia’s ‘proceedings which have as their object’) in the proceedings. Gault J, citing authority, finds that a judgment setting aside a fraudulent disposition is not rendered unenforceable simply because the debt concerned the sale of New Zealand land. (A further appeal to ordre public was refused; for that to be successful, the result of recognition must, Jack notes, “shock the conscience” of the ordinary New Zealander” (Reeves v OneWorld Challenge LLC [2006] 2 NZLR 184 (CA) at [67].

Obvious comparative pointers with EU conflicts law are Webb v Webb, Weber v Weber, Schmidt v Schmidt, Komu v Komu etc.: readers will know that Article 24(1) Brussels Ia typically involves feuding family members.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6 . Third edition forthcoming February 2021.

Travelport. This one’s for comparative lawyers: Covid19, Pandemics and Material Adverse Effect, the LVMH /Tiffany acquisition and English cq Delaware law.

A short note for the benefit of comparative contract lawyers who may find some interesting material when looking into the failed LVMH /Tiffany acquisition. That acquisition agreement (see SEC filing here)  is subject to the laws of Delaware other than claims against the financiers which are subject to the laws of New York (s.10.5). As readers might be aware, LVMH would seem to argue not that the Pandemic is a Material Adverse Effect which invalidates the merger. Rather, that Tiffany’s handling of its business in the pandemic is a MAE.

Of interesting comparative note therefore is Travelport Ltd & Ors v WEX Inc [2020] EWHC 2670 (Comm) where Cockerill J preliminarily discusses  the proper construction of, and burden of proof in relation to, the MAE definition contained in a Share Purchase Agreement (SPA) dated 24 January 2020. The substantive issues will be dealt with before her at a later stage.

Geert.

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