Posts Tagged Curia

Altun: Fraud and social dumping. The CJEU emphasises the double sides of the mutual trust coin.

When I reported on Saugmandsgaard ØE’s Opinion in C-359/16 Altun, I emphasised the issue of mutual trust. I noted that the AG effectively flipped the coin: sincere co-operation requires sincerity on both sides (my words, not the AG’s). The AG had recalled the Halifax case-law of the CJEU: EU law cannot be relied on for abusive or fraudulent ends and that national courts may, case by case, take account — on the basis of objective evidence — of abuse or fraudulent conduct on the part of the persons concerned in order, where appropriate, to deny them the benefit of the provisions of EU law, in the light of the objectives pursued by the provisions of EU law concerned. In November 2017 the CJEU confirmed in C-251/16 Cussens that this principle has direct effect and is directly applicable: it is a general principle of EU law which does not require a national measure transposing it.

In the case at issue, the facts point to non-fulfillment of one of the substantive criteria for the E101 certificate to be issued, namely that only an undertaking which habitually carries on significant activities in the Member State in which it is established may be issued an E101 of that State.

The Court today has confirmed the AG’s view (only the Dutch and French version were available at the time of writing). Mutual trust implies responsibilities on both sides. Upon receiving indications of fraud, the Member State of origin is duty-bound to investigate diligently and either confirm or refute the suspicions. (In the event of continuing divergence, there is an appeals procedure within the relevant secondary law, and if need be the possibility for the host State to pursue infringement proceedings with the home State). Like its AG, the Court emphasises that the fraud must be established in the context of adversarial proceedings with legal guarantees for the persons concerned and in compliance with their fundamental rights, in particular the right to an effective remedy enshrined.

This remains relevant even after the planned changes to the posted workers Directive. In the future system, too, Member States will issue certificates, feed data into the newly created register etc.

Geert.

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Schrems v Facebook. Consumer class actions and social media.

I reported on Bobek AG’s Opinion in Schrems v Facebook when it came out last year. The CJEU held this morning (judgment so far in FR and DE only) and largely confirms the AG’s Opinion.

As I noted at the time, the long and the short of the case is whether the concept of ‘consumer’ under the protected categories of Brussels I (and Recast) is a dynamic or a static one; and what kind of impact assignment has on jurisdiction for protected categories.

On the first issue, Mr Schrems points to his history as a user, first having set up a personal account, subsequently, as he became the poster child for opposition to social media’s alleged infringement of privacy, a Facebook page. Each of those, he suggests, are the object of a separate contract with Facebook. FB suggests they are part of one and the same, initial contractual relationship. This one assumes, would assist FB with its line of argument that Herr Schrems’ initial use may have been covered by the forum consumentis, but that his subsequent professional use gazumps that initial qualification.

The Court suffices at 36 with the simple observation that the qualification as a single or dual contract is up to the national court (see inter alia the Gabriel, Engler and Ilsinger conundrum: Handbook, Chapter 2, Heading 2.2.11.1.a and generally the difficulties for the CJEU to force a harmonised notion of ‘contract’ upon the Member States), yet that nevertheless any such qualification needs to take into account the principles of interpretation of Brussels I’s protected categories: in particular, their restrictive interpretation. Whence it follows, the Court holds, that the interpretation needs to be dynamic, taking into account the subsequent (professional or not) use of the service: at 37-38: ‘il y a notamment lieu de tenir compte, s’agissant de services d’un réseau social numérique ayant vocation à être utilisés pendant une longue durée, de l’évolution ultérieure de l’usage qui est fait de ces services. Cette interprétation implique, notamment, qu’un requérant utilisateur de tels services pourrait invoquer la qualité de consommateur seulement si l’usage essentiellement non professionnel de ces services, pour lequel il a initialement conclu un contrat, n’a pas acquis, par la suite, un caractère essentiellement professionnel.’

The Court does add at 39-40 that acquired or existing knowledge of the sector or indeed the mere involvement in collective representation of the interests of the service’s users, has no impact on the qualification as a ‘consumer’: only professional use of the service does. (The Court in this respect refers to Article 169(1) TFEU’s objective to assist consumers with the representation of their collective interest).

On this point therefore the Court unlike the AG attaches more weight to restrictive interpretation than to predictability. (Bobek AG’s approach to the issue of dynamic /static was expressed more cautiously).

As for the assignment issue, the Court sides squarely with its AG: the assigned claims cannot be pursued in the jurisdiction which is the domicile of the assignee. That in my view de lega lata makes perfect sense.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

 

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Sharia divorce and Rome III. The CJEU in Sahyouni.

I reviewed the AG’s Opinion in Case C-372/16 here. The Court held late December. Like the AG, it held that  Rome III does not cover divorces which are declared without a constitutive decision of a court or other public authority: it squarely uses the Regulation itself to come tho this view, without any assessment of whether the foreign State’s courts in private sharia divorces, has any impact on that conclusion.

With the first question answered in the negative, the other, very interesting issues covered by AG, became without subject. A judgment not with a bang, but with a whimper.

Geert.

 

 

 

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Bot AG in Fansites. No cheers for unified applicable data protection laws.

Apologies for late reporting. Bot AG opined end of October in C‑210/16 Fansites. [The official name of the case is Unabhängiges Landeszentrum für Datenschutz Schleswig-Holstein v Wirtschaftsakademie Schleswig-Holstein GmbH, in the presence of Facebook Ireland Ltd, Vertreter des Bundesinteresses beim Bundesverwaltungsgericht. It’s obvious why one prefers calling it Fansites].

The Advocate-General summarises (para 2-3) the case as involving ‘proceedings between the Wirtschaftsakademie Schleswig-Holstein GmbH, a company governed by private law and specialising in the field of education (‘the Wirtschaftsakademie’), and the Unabhängiges Landeszentrum für Datenschutz Schleswig-Holstein, a regional data-protection authority in Schleswig-Holstein (‘ULD’) concerning the lawfulness of an order issued by the latter against the Wirtschaftsakademie requiring it to deactivate a ‘fan page’ hosted on the website of Facebook Ireland Ltd. The reason for that order was the alleged infringement of the provisions of German law transposing Directive 95/46. Specifically, visitors to the fan page were not warned that their personal data are collected by the social network Facebook (‘Facebook’) by means of cookies that are placed on the visitor’s hard disk, the purpose of that data collection being to compile viewing statistics for the administrator of the fan page and to enable Facebook to publish targeted advertisements.’

The case ought to clarify the extent of the powers of intervention of supervisory authorities such as ULD with regard to the processing of personal data which involves the participation of several parties (at 13). I had flagged earlier that this case is relevant to the jurisdictional and applicable law issues involving datr cookies.

Whatever the outcome of the case, its precedent value will be limited by the imminent entry into force of the new General Data Protection Regulation – GDPR. The GDPR clearly introduces a ‘one-stop principle’ with only one lead authority (in FB’s case, Ireland’s data protection agency) having the authority to act (see also the AG’s observation of same in para 103).

As prof Lorna Woods in excellent analysis observes, the issue comes down to the interpretation of the phrase from Art. 4(1)(a), ‘in the context of the activities of an establishment’. Dan Svantesson has most superb analysis of Article 4(1)(a) here, anyone interested in the issue will find his insight most helpful.

Now, the Advocate-General leans heavily on Weltimmo however I would suggest its precedent value for the Fanpages case is constrained. Weltimmo concerned a company set up in Slovakia but with no relevant activities at all in that Member State. Indeed as the Court itself observed (at 16-18) , the company was effectively male fide (my words, not the CJEU’s) moving its servers and creating fog as to its exact whereabouts. In other words a case of blatant abuse. There is no suggestion of abuse in Fanpages. Moreover according to the CJEU in C-230/14 Weltimmo the phrase ‘in the context of the activities of an establishment’ cannot be interpreted restrictively (AG’s reference in para 87), yet that CJEU holding in Weltimmo cross-refers to Google Spain in which the crucial issue was whether EU data protection laws apply at all. That is very different in Weltimmo and in Fanpages. That EU authorities have jurisdiction and that EU privacy law applies is not at issue.

There is sufficient argument to find in the Directive, even before its transformation into the GDPR, that in cases such as these the same processing operation ought to be governed by the laws of just one Member State. It would be good for the CJEU to recognise that even before the entry into force of the GDPR.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.5.

 

 

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Rulings on costs and their impact on the effet utile of EU civil procedure. The High Court in PABLO STAR re copyright infringement.

In [2017] EWHC 2541 (IPEC) Pablo Star Media v Richard Bowen the issue was one over copyright infringement relating to a photograph of Dylan Thomas. Of interest to this blog is not the copyright issue or the height of damages relating to same – I am not a specialist in that area. (As far as the jurisdictional issues are concerned, there is a slightly muddled reference to the Brussels I Recast and various other Regulations including Regulation 542/2014 which I discussed here).

What did trigger my interest, though, is the ruling on costs.

At 33-34 Hacon J quotes the District Judge’s reasoning for obliging claimant (Pablo Star) to pay part of the defendant’s cost, despite having won the case. In that cost award, the District Judge scolds claimant for having initiated proceedings in Ireland as well as the UK, and for considering (or threatening, as the case may be) litigation in the US. The High Court at 38 and 41 leaves aside the proceedings in Ireland as a factor to consider, and now limits the reasoning for the award on cost to the potential proceedings in the US.

Now, costs determination largely is within the realm of national rules of civil procedure. Sometimes, EU and /or international law has a direct impact on cost determination, such as for instance in the case of Aarhus and environmental litigation; or, importantly for the case at issue, Directive 2004/48 on intellectual property rights enforcement (the enforcement Directive). This Directive provides in Article 14 on legal costs

‘Member States shall ensure that reasonable and proportionate legal costs and other expenses incurred by the successful party shall, as a general rule, be borne by the unsuccessful party, unless equity does not allow this.’

That Directive was applied in CJEU C-57/15 UVP v Telenet, expressly condemning Belgium’s restrictive regime on cost recovery in intellectual property cases. The High Court’s finding on cost may to my mind be at odds with that ruling.

More generally, the District Judge’s reference to claimant’s Irish proceedings contributing to the judge’s finding on cost, without a doubt is an infringement of the effet utile of the EU’s jurisdictional regimes. Claimant has a certain right to sue in Ireland and that possibility must in no way be disciplined.  Hacon J at the High Court, purposely or not, may have insulated himself from criticism at this point, by leaving the Irish proceedings outside the consideration and only referring to the threat of US proceedings as relevant for partially shifting costs to the plaintiff.

Absolute numbers in the case are not high. Yet the principle to my mind deserves right to appeal at the CA and, from there on, potentially to the CJEU.

Geert.

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Mengozzi AG saves ETS in energy policy legal basis opinion.

Others have studied the EU’s legal basis for energy policy much better than I have. Chiefly among them prof Leonie Reins. e.g.  for RECIEL here and in her Phd here. The impact of this discussion is high: since the introduction of an energy Title in the EU Treaties (following Lisbon) whether so designed or not, the prospect of that Title’s requirement on unanimity for measures which ‘have a significant effect on a Member State’s choice between different energy sources’ looms heavily over the EU’s environment policy. The EU’s emissions trading system – ETS is the prime candidate for falling victim to an extensive interpretation of Article 192(2)c TFEU, which harbours the unanimity requirement within the Treaty’s environment Title. [The energy Title, Article 194, has similar challenges].

In C-5/16 Poland v EP and Council Mengozzi AG Opined last week. At issue is Poland’s opposition to a MSR – a market stability reserve for the Union greenhouse gas emission trading scheme, essentially a long-term parking for surplus allowances to enable the ETS to safeguard collapse of prices in the event of excess supply. The resulting increase in the price of allowances was inter alia intended to encourage fuel switching and to discourage investments in coal-fired power stations (hence of course Poland’s interest).

Relevant to future reference is especially the AG’s view at 25, which I include in full: ‘as a derogation, Article 192(2)(c) TFEU is to be interpreted strictly, especially since an efficient modern environment policy cannot ignore energy questions. I share the fears expressed by the defendants and the interveners that the applicant’s proposed interpretation of Article 192(2)(c) TFEU and the conclusions which it draws from that interpretation for the examination of the legal basis of the contested decision would effectively block any legislative initiative by recognising a right of veto for Member States, as the Union would adopt measures inviting them only to rationalise their CO2-consuming activities. Furthermore, such an interpretation would doom the ETS to failure as it would prevent the EU legislature from correcting its structural deficiencies. In addition, although I would point out that the goal of introducing the MSR is not to form the price of allowances but simply to ensure the efficiency of the ETS, in any event, an operator’s choice of a certain energy source or production technology cannot depend on that price alone, which does not in itself define the production costs, which are determined by a variety of factors. Even with the introduction of the MSR, the choice of technology still remains in the hands of operators and is not dictated by the European Union.’

I am not sure to what degree the Court’s judgment will enable us to draw criteria with wider impact than just the current case – but it would certainly be helpful. Mengozzi AG firstly emphasises strict interpretation of the ‘energy mix’ exception. Further, in the paras preceeding the aforecited one, links amendments to existing laws largely to the latter’s legal basis. Supports the Institutions and Spain, France and Sweden (intervening; the position of Germany, also intervening, was not made clear) in their warning against veto power in the energy /climate change context; and finally further dilutes the exception by looking at policies as they work in practice, not just in theory. On this point, the AG looks at the ETS specifically however his view has broader appeal: it would essentially mean that when Member States’ and individuals’ /undertakings’ behaviour is determined by regulatory intervention, some of which clearly based on a legal basis other than Article 192(2)c TFEU, the latter is not determinant in deciding proper legal basis.

This is an important case for the future of EU environment and energy policy.

Geert.

 

 

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Wathelet AG in Dědouch: Interpretation of the exlusive jurisdictional rule for corporate issues in the case of squeeze-out.

This is effectively my second posting today on Article 24(2) Brussels I Recast.

In C-560/16 Dědouch, Wathelet AG Opined last week, on the scope of the exclusive jurisdictional rule of (now) Article 24(2) of Regulation 1215/2012. The issue arose in proceedings between Michael Dědouch et al, a group of minority shareholders on the one hand, and Jihočeská plynárenská a.s. (established in the Czech Republic) and E.ON Czech Holding AG (‘E.ON’) [established in Germany] on  the other, concerning the reasonableness of the sum which, in a procedure for removing minority shareholders (‘squeeze-out’), E.ON was required to pay Mr Dědouch et al following the compulsory transfer of their shares in Jihočeská plynárenská.

Mr Dědouch et al are suing both companies and are asking the Regional Court, České Budějovice, Czech Republic to review the reasonableness of the sum. In those proceedings E.ON raised an objection that the Czech courts lacked jurisdiction. E.ON argue that, in view of the location of its seat /domicile, only the German courts had international jurisdiction per (now) Article 4.

The regional court initially accepted jurisdiction on the basis of (now) Article 8(1): the anchor defendant mechanism (one of the two defendant companies being a Czech company). Eventually the High Court, Prague found that the Czech courts had jurisdiction under (old) Article 5(1)(a) of the Brussels I Regulation: the special jurisdictional rules for contracts.

Wathelet AG suggests the case raises the complex issue of litigation in intra-company disputes. At 21 he writes that the facts highlight a structural problem in the Regulation, namely ‘the absence of a basis of jurisdiction dedicated to the resolution of internal disputes within companies, such as disputes between shareholders or between shareholders and directors or between the company and its directors.’ That is not quite correct: it is not because the Regulation has no tailor-made regime for this type of dispute that is has no jurisdictional basis for it. That a subject-matter is not verbatim included in the Regulation does not mean it is not regulated by it.

The AG then (at 23) considers that the issue under consideration is complicated by the difficulty of applying (now) Articles 7(1) and (2), ‘since the removal of the minority shareholders and the consideration decided by a resolution of the general meeting are neither a contract nor a tort, delict or quasi-delict.’ I am not so sure. Is there no ‘obligation freely assumed’ between minority and other shareholders of the same company? Are they not bound by some kind of ‘contract’ (in the broad, Jakob Handte sense) when becoming shareholders of one and the same company? That (at 24) ‘The principle of a procedure for squeezing out the minority shareholders is that the principal shareholder can start it without their consent‘ I do not find convincing in this respect. Plenty of contractual arrangements do not limit contracting parties’ freedom to act: except, their actions may have contractual consequences. The AG in my view focuses too much on the squeeze out being one-sided. An alternative view may see a wrongful deployment of squeeze-out a breach of an earlier contractual, indeed fiduciary duty between /among shareholders.

Unlike the AG (at 26), neither do I see great obstacle in the difficulty in determination of a specific place of performance of such contractual duties between shareholders in the company law context. They may not fit within the default categories of Article 7(1), however I can see many a national judge not finding it impossible to determine a place of performance.

On the basis of these perceived difficulties the AG dismisses application of Articles 7(1) and (2) and then considers, and rejects, a strict application of Article 24(2). In other words in the AG’s view Article 24(2) is engaged here.

This is a tricky call. Justified reference is made by the AG to C‑372/07 Hassett, in which (then) Article 22(2) was held no to apply to a decision made by the Board of the Health Organisation not to indemnify two of their members in cases of medical negligence: this was found by the CJEU to be an action relating to the way in which a company organ exercises its functions – not covered by Article 24(2). In Dědouch, the action relates to the amount which the General Meeting of the company fixed as the compensation E.ON was required to pay the minority shareholders following the transfer of the shares. Notwithstanding Czech company law being the lex causae in assisting the GM in that decision, I am not convinced this engages Article 24(2) (hence reserving jurisdiction to the Czech courts).

In summary, I believe the Court should reject application of Article 24(2), and instruct the national courts to get on with the determination of jurisdiction per Article 7, or indeed 8.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.5, Heading 2.2.11.1, Heading 2.2.12.1.

 

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