Tag: Court of appeal

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The Brussels Court of Appeal on joinders in the Lugano Convention (in Re Fifa /UEFA arbitration clause).

Thank you Quentin Declève and co-authors for reporting a short while back the Brussels Court of Appeal judgment in RFC Seraing and Doyen Sports v Belgian FA /FIFA /UEFA. (Judgment may be consulted here – I also have a copy). The case in substance concerns FIFA /UEFA’s TPO, Third Party Ownership rules.

Quentin first of all reports on the reasons for the Court to find the arbitration clause between the club and UEFA /FIFA not to be binding. The judgment does not contain copy of the clause (lest I have entirely missed it – but I don’t think so). The clause would not seem to have had a specific lex causae identified: the Court of Appeal uses a mix of Belgian law and New York Convention arguments to rule it invalid.

As we are on the subject of validity of arbitration clauses: please refer to Quentin’s reporting of the Belgian Court’s Supreme Court’s confirmation of validity of NATO’s arbitration clause.

For current blog however I would like to report the findings on the anchor defendant mechanism (19 ff): the Court of Appeal applies Article 6(1) Lugano (UEFA and FIFA are Swiss domiciled), which is the same anchor mechanism as Article 8(1) Brussels I Recast: the anchor defendant being the Belgian Football Association. Freeport and Reisch Montage as well as CDC feature heavily in the Court’s analysis. FIFA and UEFA’s claim is that the Belgian FA is abusively being used as an anchor defendant. The court disagrees: FIFA and the Belgian FA share regulatory powers; the FA is empowered by FIFA statute to impose additional regulations.  The FA’s presence in the proceedings is entirely justified and not artificially constructed.

Geert.

(Handbook of) European Private International Law. 2nd ed. 2016, Chapter 2, Heading 2.2.12, Heading 2.2.12.1.

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Vik v Deutsche Bank. Court of Appeal confirms High Court’s view on Article 24(5) – jurisdiction for enforcement.

I have reported earlier on Deutsche Bank AG v Sebastian Holdings Inc & Alexander Vik [2017] EWHC 459 and Dennis v TAG Group [2017] EWHC 919 (Ch).

The Court of Appeal has now confirmed in [2018] EWCA Civ 2011 Vik v Deutsche Bank that permission for service out of jurisdiction is not required for committal proceedings since the (now) Article 24(5) rule applies regardless of domicile of the parties. See my posting on Dar Al Arkan and the one on Dennis .

Gross LJ in Section IV, which in subsidiary fashion discusses the Brussels issue, confirms applicability to non-EU domicileds however without referring to recital 14, which confirms verbatim that indeed non-EU domicile of the defendants is not relevant for the application of Article 24.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.8.

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The Irish High Court in Albaniabeg v Enel: enforcement of ex-EU judgments.

Reminiscent of the decision in Yukos v Tomskneft, which concerned recognition of an arbitral award in Ireland even though there were no relevant assets to exercise enforcement against, the Irish Court of Appeal earlier this year in [2018] IECA 46 Albaniabeg v Enel upheld [2016] IEHC 139 Albaniabeg Ambient Sh.p.k. -v- Enel S.p.A. & Anor . (See my tweet below at the time – the case got stuck in my blog queue).

Thank you to Julie Murphy-O’Connor, and Gearóid Carey for flagging the case earlier in the year. The High Court had refused to grant plaintiff, Albaniabeg, liberty to serve out of the jurisdiction to seek to enforce a judgment of an Albanian court in Ireland against the two defendants, ENEL S.p.A. and ENEL Power S.p.A. (“ENEL”). The judgment therefore is ex-EU.

Enforcement proceedings were commenced in New York, The Netherlands, Luxembourg, France and Ireland in relation to the Judgment.  [I have not been able to locate outcome in those cases]. Notably no enforcement proceedings were brought in Italy. Presumably plaintiff’s motif is to obtain enforcement in one Member State, to ease the enforcement paths in other Member States (including Italy).

McDermott J at the High Court refused the application on the basis that the defendants had no assets within the jurisdiction and were not likely to have such assets in the near future. As the judge concluded that the plaintiff did not stand to gain any practical benefits if enforcement proceedings were to be commenced within this jurisdiction, he refused to grant them leave to serve such proceedings out of the jurisdiction on the defendants.

Hogan J at the Court of Appeal upheld. At 59 he notes ‘I should state in passing that it was not suggested that if an Irish court were to grant an order providing for the recognition or enforcement under own rules of private international law of the Albanian judgment, this then would be a “judgment” for the purposes of Article 2(a) of the Brussels Regulation (recast) which could then be enforced in other Member States under the simplified enforcement procedure provided for by Chapter III of that Regulation. As this point was not argued before us, it is not necessary to express any view on it.‘

In my Handbook I suggest such order is not a ‘judgment’ within the meaning of the Brussels I Recast Regulation.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.16.1.1.

 

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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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Court of Appeal suggests in Dal Al Arkan that Choudhary reading of Article 22(5) Brussels I was per incuriam. (Exclusive jurisidiction for enforcement).

Postscript 24 November 2017 Dal Al Arkan was confirmed in Deutsche Bank AG v Sebastian Holdings Inc & Alexander Vik [2017] EWHC 459 and in Dennis v TAG Group [2017] EWHC 919 (Ch).  Permission for service out of jurisdiction is not required since the (now) Article 24(5) rule applies regardless of domicile of the parties.

In Dar Al Arkan, the Court of Appeal has suggested that the Court’s reading of Article 22(5) of the Brussels I-Regulation in Choudhary was  per incuriam (meaning, in short, without reference to relevant statutory law and case-law and hence not subject to the rule of precedent).

Article 22(5 provides for ‘exclusive jurisdiction’ ‘regardless of domicile’, ‘in proceedings concerned with the enforcement of judgments’, established for the ‘courts of the Member State in which the judgment has been or is to be enforced’.  The key word for this exclusive jurisdictional ground is ‘enforcement’. ‘Proceedings concerned with the enforcement of judgments’ means ‘those proceedings which can arise from recourse to force, constraint or distraint on movable or immovable property in order to ensure the effective implementation of judgments and authentic instruments‘ (Raport Jenard).

Difficulties arising out of such proceedings come within the exclusive jurisdiction of the courts for the place of enforcement, as was already the case in a number of bilateral Treaties concluded between a number of the original States, and also in the internal private international law of those States.

The Jenard report does not quote a specific reason for the reasoning behind this exclusivity, however one assumes that such proceedings are so intimately linked to the use of judicial authority and indeed force, that any complications in their enforcement ought to be looked at exclusively by the courts of the very State whose judicial authorities are asked to carry out the enforcement. In the words of the Court of Justice: ‘the essential purpose of the exclusive jurisdiction of the courts of the place in which the judgment has been or is to be enforced is that it is only for the courts of the Member State on whose territory enforcement is sought to apply the rules concerning the action on that territory of the authorities responsible for enforcement.’ [Case C-261/90 Reichert v Dresdner Bank, [1992] ECR 2149, para 26.).

Neither Convention, Regulation or Report Jenard clarify specifically for Article 22(5) whether the Article applies against non-EU domiciled defendants. In Choudhary, the Court of Appeal had held that it does not. However it had refrained from citing any relevant statutory or (ECJ) case-law authority. In Dar Al Arkan, the Court suggests that this renders judgment in Choudhary per incuriam in line of ECJ and scholarly authority. This is the right approach: the raison d’etre for Article 22(5) is a specific and narrowly construed one, as it is for all other parts of Article 22, in particular per the extract from Reichert, above. (A convincing case for Gleichlauf between court and applicable law).

For instance, the Article 22(5) ground for jurisdiction must not thwart jurisdiction of other courts who would have jurisdiction had the case not been brought as part of an enforcement difficulty. Therore, by way of example, the court which has jurisdiction on the basis of Article 22(5), cannot hear the defence against enforcement which is based on a request for compensation with a different mutual debt (Case 220/84, AS-Autoteile Service). Neither does Article 22(5) trump the enforcement Title of the Regulation.

Within those narrow confines, there is no reason not to extend the jurisdictional rule to defendants domiciled outside of the EU. Their non-dom status is immaterial to the proceedings. (Note that the issue on the ‘reflexive’ nature of 22(5) is not resolved by this judgment. Neither by the Brussels I recast, which does clarify (recital 14) that indeed non-EU domicile of the defendants is not relevant for the application of Article 24 of the new Brussels I-Regulation).

Geert.

 

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Ça alors! French evidence, the evidence Regulation and UK courts: The High Court in National Grid

In National Grid Electricity Transmission, the UK High Court correctly confirmed the Evidence Regulation as being subsidiary only.

The European Commission had found 20 companies to have been engaged in an extensive and sophisticated cartel regarding the supply of GIS, Gas Insulated Switchgear, which controls energy flow in electricity grids, and is therefore used as a major component in power substations. National Grid alleges that it suffered substantial losses by reason of overcharges resulting from the illegal cartel. Current judgment is an interim judgment on the issue of disclosure.  Estimating the cartel overcharge is very dependent on expert economic evidence.

Alstom and Areva are both French-domiciled defendants. They argue that providing disclosure will put them, as French companies, in breach of a prohibition under French law which attracts criminal penalties, and therefore should not be ordered. This prohibition is referred to in the High Court judgment as the ‘French Blocking Statute‘, of 1968, as amended, most notably in 1980. The prohibition is mostly meant to assist French companies in resisting excessive disclosure requests originating in the United States. Applicants had made a request under the EU’s Evidence Regulation and had served that request to the French Ministry of Justice.

The Ministry eventually refused, mostly for technical legal reasons (the request made had identified the defendants as the ones having to produce the evidence, rather than the court having to order them to do so). Alstrom and Areva subsequently argued that the only route for them to be safe from prosecution under the French law, was for the UK court to seek the assistance of a French Court under the EU Evidence Regulation.

Roth J first considered (with French expert help) the likelihood of the companies involved being prosecuted under the Act. On that point, he concluded ‘I find it virtually inconceivable that where jurisdiction over a company is exercised pursuant to an EU regulation to make it a defendant to proceedings in another EU Member State, for damages alleged to result from an established and serious violation of a fundamental provision of EU law, which proceedings serve an objective of EU policy, the public authorities of one EU Member State would in the exercise of their discretion institute criminal proceedings against that company for complying with the procedural rules of the courts of the Member State where the proceedings are brought.’

He subsequently discussed the evidence Regulation. This Regulation is of a subsidiary nature, as I have flagged once or twice before. It does not rule out national procedural rules as an alternative. Roth J correctly holds that the Regulation would not assist in this case (whether or nor it applies to disclosure proceedings between litigious parties at all is a different matter), inter alia because of the delays and because of the potential for the French courts eventually not to meet the request, thus leading to further uncertainty. He held therefore that the French Defendants should be subject to an order for disclosure in the same way as all the other defendants.

Appeal on 22 October 2013 did not lead to the findings being overturned. The French companies now face the proverbial rock and hard stone: comply with the English order but face the possibility, however remote, of prosecution under French law. Or be safe from prosecution under French law but face contempt in the UK courts.

Geert.

postscript: The Supreme Court refused permission to appeal in December 2013.

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Choice of court and choice of law on the web – Due diligence required. Brussels Court of Appeal in A v P.

The Brussels Court of Appeal held in A v P on 25 March 2013, on a choice of court agreement included on the internet. Its judgment should be a reminder of the need to take care of the design and formulation of choice of court clauses in standard terms and conditions via the internet. The judgment can be consulted via this issue of  Tijdschrift@IPR.be (p.37 ff).

The CA first of all correctly holds that the alleged non-existence of a contract does not affect its duty to review whether the choice of court agreement which is part of the contract, might be valid.

Company P has its registered seat in Poland. Company A in Belgium. P had sent A a quote for delivery of a substantial amount of solar panels. The judgment does not specify how the offer was sent however it was subsequently countersigned by A. Subsequent e-mails specified that the panels had to be delivered in Poland. The quote contained a reference to a weblink which contained P’s standard terms and conditions. No further written or verbal reference had been made by the parties to a choice of court agreement. P’s standard terms and conditions contained choice of court in favour of the courts at Brussels.

The Court of Appeal referred to Colzani in which the ECJ held that ‘IN THE CASE OF A CLAUSE CONFERRING JURISDICTION , WHICH IS INCLUDED AMONG THE GENERAL CONDITIONS OF SALE OF ONE OF THE PARTIES , PRINTED ON THE BACK OF THE CONTRACT , THE REQUIREMENT OF A WRITING UNDER THE FIRST PARAGRAPH OF ARTICLE 17 OF THE CONVENTION OF 27 SEPTEMBER 1968 IS ONLY FULFILLED IF THE CONTRACT SIGNED BY THE TWO PARTIES INCLUDES AN EXPRESS REFERENCE TO THOSE GENERAL CONDITIONS .‘ [apologies for the capital letters: this is how ECJ judgments used to be reported].

The Court of Appeal noted that the standard terms and conditions were not included in the quote: rather, only a reference to a website was made.  The Court does entertain (but rejects) the possibility of the link being a ‘communication by electronic means’ within the meaning of article 23(2) of the jurisdiction Regulation.

I disagree with the guillotine application of Colzani’s reference to the inclusion of choice of court in the signed document. Surely Colzani can be applied mutatis mutandis to exclusively electronically available STCs. What’s more relevant in my view is the Convention’s (and now the Regulation’s) emphasis simply on making sure that parties have actually agreed to the clause: see Colzani at para 7: ‘BY MAKING SUCH VALIDITY SUBJECT TO THE EXISTENCE OF AN ‘ AGREEMENT ‘ BETWEEN THE PARTIES , ARTICLE 17 IMPOSES ON THE COURT BEFORE WHICH THE MATTER IS BROUGHT THE DUTY OF EXAMINING , FIRST , WHETHER THE CLAUSE CONFERRING JURISDICTION UPON IT WAS IN FACT THE SUBJECT OF A CONSENSUS BETWEEN THE PARTIES , WHICH MUST BE CLEARLY AND PRECISELY DEMONSTRATED .‘

A simple reference to standard terms and conditions in the paper contract signed by the parties, offers no more or less certainty that the party who agrees to the other’s conditions, has actually even read them (indeed as we all know, many never read the small print until it comes to litigation or complaint). What matters more, is that it can be reasonably assumed that they had at least the opportunity to do so.  That is no less the case in the event of STCs included on the web.

However, in such case, the party whose STCs are included on the web, needs to ensure that the other party can be reasonably assumed to have consulted them, in the version applicable to the contract at issue. In my view this requires the STCs to be properly displayed on the website, and, in the event of changes in versions, for them to be numbered accordingly (and for that number or date to have been referred to in the undersigned quote, or contract, or electronic order). On this, I do agree with the Court of Appeal: the Court pointed out that the weblinked STCs had not been recorded in durable fashion (see Article 23 of the Jurisdiction Regulation).

Geert.

 

 

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‘Establishment’ within the meaning of the Insolvency Regulation: the Court of Appeal in Olympic Airlines

[Update 5 May 2015: the Supreme Court confirmed the Court of Appeal’s findings on 29 April 2015 and declined to refer to the ECJ, (justifiably in my view) citing acte clair].

Under the EU’s Insolvency Regulation, core of the procedure takes place in the Member State with ‘COMI’: the centre of main interests of the company concerned.

‘Secondary’ and ‘territorial’ proceedings may only be opened if the debtor possesses an establishment within the territory of that other Member State, and only vis-a-vis the debtor’s assets in that State. Article 2(h) of the Regulation defines ‘establishment’ as ‘any place of operations where the debtor carries out a non-transitory economic activity with human means and goods’,  which the Court of Justice in Interedil has specified in less philosophical terms as  ‘a structure with a minimum level of organisation and a degree of stability for the purpose of pursuing an economic activity‘, basically a combination of pursuit of an economic activity and the presence of human resources. Per Interedil, this has to be determined in the same way as the location of the centre of main interests, namely on the basis of objective factors which are ascertainable by third parties.

In Olympic Airways, the Court of Appeal combined Interedil and ECJ guidance with respect to COMI, as well as extensive reference to the Virgos Schmit Report, to hold that the Regulation’s definition of “establishment” a meaning which requires more to its “economic activity” than the mere process of winding-up. In the words of Sir Bernard Rix (at 33) ‘The definition is clearly intended to lay down a rule that the mere presence of an office or branch, a “place” at which the debtor is located, is not sufficient. It has to be a place “of operations”: human and physical resources have to be involved in those operations; and there has to be “economic activity” involving those resources. ‘ He later emphasises that this economic activity needs to be ‘external’, ie market oriented.

Of note is also the temporal element: per Office Metro, the possibility to open up secondary proceedings requires there to be such establishment at the time of the request for opening of such proceeding.

Geert.

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Boomerang torpedo or futile resistance?  West Tankers Inc v Allianz SPA & Anor [2012] EWCA Civ 27. English courts continue digging West Tankers

Aficionados of arbitration law will be aware of the long-running West Tankers saga. It pitches the English courts’ urge to uphold commercial arbitration, against the European Court of Justice’s zeal in upholding a pure (and in the case of the arbitration exception, far-fetched) lis alibi pendens rule. The battlefield at issue is the Brussels I Regulation on jurisdiction in civil and commercial matters. The Court of Justice ruled in February 2009 [Case C-185/07] that the English courts were out of their league in issuing an anti-suit injunction, prohibiting Allianz and Generali from pursuing the case in the Italian courts (on the basis of Article 5(3)’s special jurisdictional rule for tort) and obliging them to take the case to arbitration in London. Thus two cases continued: one, an arbitration proceeding, in London, with West Tankers and Erg (the initial counterparty) participating, but not Allianz and Generali (the insurers, subrograted into Erg’s rights). The other, for the Italian courts in ordinary, the current fate of which is less clear.

It would seem that West Tankers is now attempting to turn the Italian torpedo (launching proceedings in an Italian court to delay them) into a boomerang, by having the English courts enforce the arbitral award rendered in the meantime: West Tankers Inc v Allianz SPA & Anor [2012] EWCA Civ 27.

While this intention is not as such formulated, one assumes that this manoeuvre in part at least is meant to ensure that any judgment eventually rendered in Italy, will not be enforceable in England (or indeed elsewhere in the EU) as the High Court’s enforcement might qualify as a ‘prior’ judgment between the same parties, per Article 34 of the Regulation. One gets the feeling that West Tankers will once again end up in Luxembourg… I have an article on all the above forthcoming and will put it on SSRN once finalised.

Geert.

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