Posts Tagged Conflict of laws
When I reported the first salvos in Goldhar v Haaretz I flagged that the follow-up to the case would provide for good comparative conflicts materials. I have summarised the facts in that original article. The Ontario Court of Appeal in majority dismissed Haaretz’ appeal in 2016, 2016 ONCA 515. In Haaretz.com v. Goldhar, 2018 SCC 28, the Canadian Supreme Court has now held in majority for a stay on forum non conveniens grounds. Both the lead opinion, the supporting opinions and the dissents include interesting arguments on forum non conveniens. Many of these, as Stephen Pitel notes, include analysis of the relevance of obstacles in enforcement proceedings.
If ever I were to get round to compiling that published reader on comparative conflicts, this case would certainly feature.
Have a good start to the working-week (lest it started yesterday in which case: bonne continuation).
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 18.104.22.168.
Appreciation of the title of this piece of course depends on how one as an individual likes Bauhaus, or not. A November 2017 European Parliament Study on looted works of art and cultural goods is something of a treasure trove for public and private international lawyers alike. The study looks at substantive law on the issue in the Member States (not the cup of tea for this blog) but kicks off with good overview of the challenges of sovereign immunity; applicable law (particularly with respect to choice of law; with inspiration being sought in the Belgian Private International Law Act, Article 90 (lex furti as a principle – the place from which the object was removed, but with corrections), and the issue of the application of foreign public international law by the courts.
Parliament is quite active on this issue. In May 2016 it had already published a study with more focus on the specific issue of art looted in times of conflict, and alternatives to court litigation but nevertheless with a short forray into conflict of laws (and reference to one or two interesting national cases).
Together the two studies are a good exercise for the conflicts mind.
In  EWHC 2932 (Fam) Radseresht v Radsheresht-Spain Cohen J is asked to recognise a divorce (and ensuing financial arrangements) granted under Dubai law.
I will not discuss the merits of the case (Justice Cohen does so proficiently, not just to my lay eye but I am assuming also the expert eye; he decides there was an intention to continue to stay married). Rather, the case is an interesting example to show those having to get used to conflict of laws. The High Court has no hesitation to apply Dubai law with all its in and outs (part of the judgment queries whether there were continued sexual relationships between the (ex?) spouses), in a court in London.
Of note is also that the High Court suggests that but for the very late raising of the issue, it could have queried whether the courts at Dubai had jurisdiction in the first place, habitual residence of the parties not having been at the UAE (the suggestion seems to have been made by counsel of the husband that the relevant criterion would have been nationality anyway).
Dana Gas v Deutsche Bank et al. Islamic financing. Interest v usury (riba). Depecage, von Munchausen and overriding mandatory law. Partial unenforceability. All in the face of anti-suit.
In  EWHC 2928 (Comm) Dana Gas v Deutsche Bank et al., Leggatt J treats his readers to a concise insight into islamic finance (particularly in para 10) which he needs to do to inform readers of the essence of the case. The operation essentially involves raising investment (with a view to restructuring), organised by the main agreement (of the ‘Mudarabah’ type), subject to UAE law, and supported by a purchase undertaking of the same date, subject to English law. The set-up therefore evidently is not one of dépeçage per se (this would require one and the same agreement being subject to different laws) however it comes close.
Inevitably following unfavourable market conditions, an anti-suit injunction was sought and obtained in the UAE, followed however by English proceedings which required the aint-suit to be lifted – something which Dana Gas did not succeed in as a result of shareholder opposition. The English proceedings were effectively saved from collapse by the involvement of a third party, BlackRock, who as a non-party to the UAE sharia proceedings, were not bound by the anti-suit injunction. The somewhat complicated result is that the English proceedings really can only limp along.
Dana Gas seek confirmation that the transaction is unlawful and all the relevant contractual obligations are unenforceable as a matter of UAE law. Leggatt J with neither emotion nor hesitation refers essentially to Rome I’s universal application: the Mudarabah agreement is subject to UAE law and he is happy to assume it is invalid under UAE law – hence not enforceable by an English court. See in this respect Article 10(1) Rome I.
That however leaves the viability of the purchase undertaking. (at 46) The fact in and of itself that the contract or its performance would be regarded as invalid or unlawful under the law of some other country than England (for example, a country where one of the parties is domiciled or carries on business) is generally speaking irrelevant (reference is made to Kleinwort, Sons & Co v Ungarische Baumwolle Industrie AG  2 KB 678.
At 48, Dana Gas sets out its case for unenforceability of the purchase agreement under English law. This includes reference to ordre public but also inevitably an attempt to ‘contaminate’ the purchase agreement with the Mudarabah agreement. Leggatt J justifiably turns this around: at 54: it is apparent from the purchase agreement’s terms that the risks against which the Purchase Undertaking is intended to protect the Certificateholders include the risk that the mudarabah and the transaction documents governed by UAE law will turn out to be invalid. That is why they needed to be separated. (In that respect merging the two agreements into one and applying dépeçage might give even stronger force to this argument: however I do not know whether under UAE law such construction would be acceptable).
Further arguments swept aside, the Court turns to ordre public.
Dana Gas nb had employed both ordre public and, earlier Article 9(3) Rome I: overriding mandatory law: a rare treat indeed. Relevant English precedent is Ralli Brothers: Ralli Brothers v Cia Naviera Sota y Aznar  1 KB 614: an English court will not enforce an obligation which requires a party to do something which is unlawful by the law of the country in which the act has to be done. Rome’s Article 9(3) operates in a similar context. However Dana Gas later abandoned that claim for (at 80) those rules of law are only applicable if and in so far as the obligations in question have to be performed in the UAE – quod non.
A switch was then made to ordre public, now with Foster v Driscoll  1 KB 470 as leading precedent. However, here too, it is only if a contract has as its object and intention the performance in a friendly foreign country of an act which is illegal under the law of that country that the contract will be considered (at 82 in fine) contrary to English public policy.
Conclusion: the Purchase Undertaking is valid and enforceable.
Without claiming anything near proper competence in Islamic finance law, it would seem that Dana Gas does not introduce new principles in that area. However in diligently applying conflicts analysis, Leggatt J in my view does practice a great service: he re-emphasises the need for parties clearly to identify locus implementi: the place of performance of an obligation. When obligations are marked out for a seperate lex causae, such clear identification of place of performance will insulate them from collapse.
(Handbook) of Private International Law, 2nd ed. 2016: essentially, almost every section of Chapters 2 and 3.
Status updated: can a ‘relationship’ be a ‘contract’? CJEU says it’s complicated in Granarolo, and complements the Handte formula.
Update 4 October 2017 for the eventual judgment by the Cour de Cassastion see here: contractual relation upheld.
In C-196/15 Granarolo, extensive reference is made to Brogsitter, in which the CJEU held that the fact that one contracting party brings a civil liability claim against the other is not sufficient to consider that the claim concerns ‘matters relating to a contract’ within the meaning of Article 7(1) Brussels I Recast. That is the case only where the conduct complained of may be considered a breach of contract, which may be established by taking into account the purpose of the contract, which will in principle be the case only where the interpretation of the contract which links the defendant to the applicant is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter.
Kokott AG Opined that there was no such contractual relationship in the case at hand: see my review of the Opinion. The Court held last week and was less categorical. It suggests a contractual relationship between the parties (which did not have a framework agreement in place: rather a long series of one-off contracts) should not be excluded: the long-standing business relationship which existed between the parties is characterised by the existence of obligations tacitly agreed between them, so that a relationship existed between them that can be classified as contractual (at 25).
What follows can be considered a CJEU addition to the rather byzantine double negative C-26/91 Handte formula: ‘matters relating to a contract is not to be understood as covering a situation in which there is no obligation freely assumed by one party towards another’. In Granarolo at 26 the Court notes
The existence of a tacit relationship of that kind cannot, however, be presumed and must, therefore, be demonstrated. Furthermore, that demonstration must be based on a body of consistent evidence, which may include in particular the existence of a long-standing business relationship, the good faith between the parties, the regularity of the transactions and their development over time expressed in terms of quantity and value, any agreements as to prices charged and/or discounts granted, and the correspondence exchanged.
These criteria obviously are quite specific to the question at hand yet it is the first time the Court, carefully, ventures to give indications of some kind of a European ius commune on the existence of ‘a contract’.
Whether any such contract then is a contract for the sale of goods or one for services, is not a call the Court wishes to make. It lists the various criteria it has hitherto deployed, with extensive reference in particular to C-9/12 Corman-Collins, and leaves the decision up to the national court.
Make a mental note of Granarolo. It may turn out to have been quite pivotal. Geert.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 22.214.171.124, Heading 126.96.36.199.9
For the facts of the case, and the reasoning of the AG in C-559/14 Meroni, I refer to my earlier posting. At the end of May (I am indeed still hoovering up the queue) the Court held very much alongside Kokott AG’s Opinion, I shall therefore not repeat its reasoning here. The CJEU does insist that if third parties rights are directly affected with the intensity as in the case at issue, that third person must be entitled to assert his rights before the court of origin (which English courts provide for), lest one runs the risk of the injunction being refused recognition under ordre public. As I had feared, the Court does not address the AG’s concern whether Mareva orders actually constitute a ‘judgment’ for the purposes of the Regulation.
Post Brexit, this considerable attraction of English courts in interlocutory proceedings might become a lot less real. (Like many of us, I am working on a short review of Brexit consequences for European private international law).
(Handbook of) European private international law, second ed. 2016, Chapter 2, 188.8.131.52.1, 184.108.40.206.4