Posts Tagged Curia

The CJEU’s locus damni determination in Volkswagen dismisses a US style minimum contacts rule. Like the passat, it risks picking up suits and landing them almost anywhere.

Update 10 July 2020 a few hours after posting: I revisited the pending, distinct reference by the Austrian Supreme Court (see Rouzbeh Moradi’s flag here) on type approval issues (which the High Court has actually dealt with as acte clair in [2020] EWHC 783 (QB), referred to here). I was hoping there might be scope in those questions for the CJEU to fill in the blanks signalled below. I fear there is not.

I earlier reviewed Sánchez-Bordona AG’ opinion in C‑343/19 Verein für Konsumenteninformation v Volkswagen. I noted then that despite attempts at seeing system in the Opinion, the ever unclearer distinction between direct and indirect aka ‘ricochet’ damage under Article 7(2) Brussels Ia is a Valhalla for reverse engineering.

The AG did not suggest a wild west of connecting factors for indirect damage (please refer to my full post for overview), instead suggesting a Universal Music style requirement of extra factors (over and above the location of damage) to establish jurisdiction. In particular he put forward a minimum contacts rule such as in US conflict of laws: at 75: ‘the defendant’s intention to sell its vehicles in the Member State whose jurisdiction is in issue (and, as far as possible, in certain districts within that State).’

The CJEU’s judgment yesterday was received as giving ‘consumers’ the right to sue Volkswagen in their state of domicile. This however is not quite correct. Firstly, the parties at issue are not ‘consumers’ at least within the meaning of European conflicts law: the suit is one in tort, not contract, let alone one that concerns a consumer contract. Further, the AG was clear and the CJEU arguably held along the same lines, that it is only if the car was purchased by a downstream (third party) buyer and the Volkswagen Dieselgate story broke after that purchase, that the damage may be considered to only then have come into existence, thus creating jurisdiction. See the CJEU at 29 ff:

29. That said, in the main proceedings, it is apparent from the documents before the Court, subject to the assessment of the facts which it is for the referring court to make, that the damage alleged by the VKI takes the form of a loss in value of the vehicles in question stemming from the difference between the price paid by the purchaser for such a vehicle and its actual value owing to the installation of software that manipulates data relating to exhaust gas emissions.

30      Consequently, while those vehicles became defective as soon as that software had been installed, the view must be taken that the damage asserted occurred only when those vehicles were purchased, as they were acquired for a price higher than their actual value.

31      Such damage, which did not exist before the purchase of the vehicle by the final purchaser who considers himself adversely affected, constitutes initial damage within the meaning of the case-law recalled in paragraph 26 of the present judgment, and not an indirect consequence of the harm initially suffered by other persons within the meaning of the case-law cited in paragraph 27 of the present judgment.

That ‘case-law cited’ is the classic lines of cases on locus damni per A7(2) BIa, with Trans Tibor as its latest expression.

The CJEU does not qualify the damage as purely financial: at 33, citing the EC’s court opinion: ‘the fact that the claim for damages is expressed in euros does not mean that the damage is purely financial.’: the car, a tangible asset, actually suffers a defect, over and above the impact on its value as an asset. That is a statement which cuts many a corner and which has relevance beyond the EU regime for all ‘money judgments’ (think of e.g. the Hague Judgments Convention). Update 10 July 2020 after initial posting: thank you Gordon Nardell QC for pointing out that the CJEU view here is at odds with the English conflicts rules (and with many other, I reckon) on characterisation of loss as pecuniary.

Predictability, which is firmly part of the Brussels Ia Regulation’s DNA, the Court holds, is secured seeing as a car manufacturer which ‘engages in unlawful tampering with vehicles sold in other Member States may reasonably expect to be sued in the courts of those States (at 36).

Finally, the Court throws consistency with Rome II in the mix, by holding at 39

Lastly, that interpretation satisfies the requirement of consistency laid down in recital 7 of the Rome II Regulation, in so far as, in accordance with Article 6(1) thereof, the place where the damage occurs in a case involving an act of unfair competition is the place where ‘competitive relations or the collective interests of consumers are, or are likely to be, affected’. An act, such as that at issue in the main proceedings, which, by being likely to affect the collective interests of consumers as a group, constitutes an act of unfair competition (judgment of 28 July 2016, Verein für Konsumenteninformation, C‑191/15, EU:C:2016:612, paragraph 42), may affect those interests in any Member State within the territory of which the defective product is purchased by consumers. Thus, under the Rome II Regulation, the place where the damage occurs is the place in which such a product is purchased (see, by analogy, judgment of 29 July 2019, Tibor-Trans, C‑451/18, EU:C:2019:635, paragraph 35).

The extent to which A6 Rome II applies to acts of unfair competition being litigated by ‘consumers’ (in the non-technical sense of the word), is however not quite clear and in my view certainly not settled by this para in the Court’s judgment.

Finally, on locus delicti commissi as I noted at the time, the AG had not in my view given a complete analysis. The CJEU is silent on it.

Not many will feel much sympathy for Volkswagen facing cluster litigation across the EU given its intention to cheat. However the rejection of a minimum contacts approach under A7(2) will have implications reaching small corporations, too. The Volkswagen ruling has many loose ends and will need distinguishing, with intention to defraud the consumer arguably a relevant criterion for distinction given the Court’s finding in para 36.

It is to be feared that many national judges will fail to see the need for distinguishing, adding to the ever expanding ripple effect of locus damni following the Court’s epic Bier judgment.

Geert.

Ps reference to the Passat in the title is of course to the VW Passat, named after the Germanic name for one of the Trade winds.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.7

 

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Szpunar AG in Ellmes Property Services. Again, on rights in rem and, more challenging, on forum contractus and the spirit of CJEU De Bloos.

Acte clair is in the eyes of the beholder, I assume. However a confident judge would have sufficient CJEU authority to help them hold on the A24(1) BIa issues in C‑433/19 Ellmes Property Services in which Szpunar AG opined last week. (No EN version available at the time of publication of this post).

Do actions brought by a co-owner seeking to prohibit another co-owner from carrying out changes to his property subject to co-ownership, in particular to its designated use, arbitrarily and without the consent of the other co-owners, concern the assertion of a right in rem? In the negative, is the forum contractus per A7(1)(a) Brussels Ia the location of the property? The less clear issue in my view is the forum contractus element.

The location is Zell am Zee, contested use is, not surprisingly, tourist accomodation. Applicant in the national proceedings is an individual who lives in the apartment building. Defendant is a UK corporation who uses it for short-term lets despite the residential designation assigned to the building as a whole in the co-ownership agreement.

From CJEU authority including C-438/12 Weber v Weber it should be clear that other than the hardcore cases of ownership of real estate, the erga omnes v in personam character of rights in real estate depends on national law. The Advocate General in this respect points out that for the rights of co-owners in the case at issue to be rights in rem, Austrian law would have to be enable them to exercise these rights not just vis-a-vis the other co-owners, but also vis-a-vis third parties such as tenants. Whether this is the case in Austrian law has not been sufficiently explained in the reference, it seems.

For the impact of entry in the land register (where third parties can consult the co-ownership agreement), Szpunar AG reviews and contrasts C‑417/15 Schmidt v Schmidt, and C-630/17 Milivojević v Raiffeisenbank. Mere registration does not always entail erga omnes impact.

The Advocate General reminds us of the overall interpretation of Article 24, including the need for restrictive interpretation, and flags (with reference inter alia to the Handbook, p.73, for which I am, as always, sincerely humbled) that it is not just, or not even so much sound administration of justice which underlies A24. At least partially, Member States’ strategic interests are served by the issues listed in the Article.

Ellmes Property Services does not seem to raise additional issues such as we saw in C-25/18 Kerr. The Austrian courts could have dealt with this on their own, and seeing as the referring judge did not provide the kind of detail for the CJEU to judge, the AG’s suggestion is to leave it up to them to verify the erga omnes character.

That leaves (whether it will be needed depends on what the eventual insight will be on the erga omnes element), the forum contractus under A7(1). Parties differ as to the qualification of the contractual duty: is it a positive one (do!) or a negative one (must not!). The AG opts for the latter, with reference to CJEU 14/76 De Bloos: A7(1) refers to the contractual obligation forming the basis of the legal proceedings. I find the precedent value of De Bloos problematic in light of the many changes that have been made to Article 7 since, and in light of the engineering possibilities it hands to parties.

The AG advises that forum contractus will have to be determined by the Italian judge following the conflicts method per CJEU 12/76 Tessili v Dunlop, with little help from European harmonisation seeing i.a. as the initial co-ownership agreement dates back to 1978.

I am curious to see how far the Court will go in entertaining the issues at stake.

Geert.

(Handbook of) EU Private International Law, Chapter 2, Heading 2.2.6.1 (cited by the AG) and Heading 2.2.11.1.

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Precaution and standard of proof. The General Court in Agrochem-Maks.

In T‑574/18 Agrochem-Maks the General Court at the end of May upheld the Commission Regulation not extending market authorisation for the active substance oxasulfuron, a pesticide. The EC Regulation noted that EFSA, the European Food Safety Authority, had identified a large number of data gaps resulting in the inability to finalise the risk assessment in several areas and that ‘in particular, the available information on oxasulfuron and its metabolites did not allow finalising the assessment of the overall consumer exposure, the groundwater exposure, the risk to aquatic organisms, earthworms, soil macro and microorganisms and non-target terrestrial plants’. Since  ‘it has not been established with respect to one or more representative uses of at least one plant protection product that the approval criteria provided for in Article 4 of Regulation … No 1107/2009 [on plant protection products; see here, GAVC] [were] satisfied’, authorisation was not renewed.

The case at issue is brought by a small Croatian, family-owned company. That is a change from the classic pattern in this kind of cases, with large bio-agricultural industry routinely taking cases to the CJEU in laser-shoot fashion, hoping they might hit the target once or twice.

The General Court extensively outlines the procedure foreseen in the relevant EU laws, thereby identifying the core issue in near all of these cases held under the precautionary principle: the EU courts do not carry out a merits review; rather, they assess whether holes have emerged in the preparation of a decision, which could mean that the Institutions could not reasonably have come to the decision they came to.

That is no different here: at 62: ‘the EU Courts must verify that the relevant procedural rules have been complied with, that the facts admitted by the Commission have been accurately stated and that there has been no manifest error of appraisal or misuse of powers’. At 65, per CJEU T-13/99 Pfizer: ‘a scientific risk assessment carried out as thoroughly as possible on the basis of scientific advice founded on the principles of excellence, transparency and independence is an important procedural guarantee whose purpose is to ensure the scientific objectivity of the measures adopted and preclude any arbitrary measures.’

Specifically for current Regulation: at 66: ‘the burden of proving that the conditions for approval or renewal under Article 4 of Regulation No 1107/2009 are met lies, in principle, with the notifier.’ At 67 per CJEU T-584/13 BASF Agro: ‘it is the person seeking approval who must prove that the conditions of such approval are met in order to obtain it, and not the Commission which must prove that the conditions of approval are not met in order to be able to refuse it’.

The General Court then at length considers the procedure followed, including the reasons for the identified gaps, and then assesses the application of the precautionary principle to same: at 109 ff with reference to the 2000 Communication on the Precautionary Principle, COM(2000)1. Crucially, at 121, as noted ‘(u)nder Regulation 1107/2009 when the applicant words its renewal application, it bears the burden of proving the efficacy and safety of the substance in question.’ ‘Since it did not discharge that burden, the approval of the active substance could not be renewed.’

The case highlights once again the crucial nature of administrative compliance with the rulebooks under EU regulatory law. Many of us will have sat through presentations by EFSA or EC officials outlining the rules in excruciating and yes, not very sexy detail. Yet to follow procedure to a tee is crucial to ensure defence against corporations taking issue with the findings at the CJEU.

The case also emphasises the importance of burden of proof, as specified in the secondary law at issue and, preferably, the ‘no data, no market’ rule in EU regulatory law.

There might of course still be an appeal with the Court.

Geert.

EU environmental law (with Leonie Reins), Edward Elgar, 2018, p.28 ff.

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State aid and collective waste recycling bodies. Pitruzzella AG in Société Eco TLC.

Must Article 107 TFEU be interpreted as meaning that a system whereby a private, non-profit eco-body, approved by the public authorities, receives contributions from those who place on the market a particular category of product and who enter into a contract with it to that effect, in return for a service consisting in the organisation on their behalf of the treatment of the waste from those products, and redistributes to operators responsible for the sorting and recovery of that waste, subsidies the amount of which is set out in the approval, in the light of environmental and social targets, is to be regarded as State aid within the meaning of that provision?

That is the question as phrased in C‑556/19 Société Eco TLC and on which Pitruzzella AG Opined on 28 May. TLC stands for Textiles, Lignes de maisons, and chaussures (textiles, household linen and shoes). Producers or as the case may be first importers pay a fee to the collective body in lieu of their personal commitments under extended producers responsibility per Waste Framework Directive 2008/98.

The AG of course revisits the definition of ‘State Aid’ under CJEU C-379/98 Preussen Elektra, on which more here and here. Preussen Elektra remains controversial for it would seem to give Member States quite a bit of room for manoeuvre to reach the same result as direct State Aid more or less simply by inserting a private operator who receivs funds directly from private operators however in line with direct State instructions on level and modalities of payment.  The AG opines that in the case at issue there is no State Aid however he directs further factual lines of enquiry (ia re the State control over payments by the collective body to recyclers.

Geert.

Handbook of EU Waste law, 2nd ed. 2015 OUP, para 4.116 ff.

 

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The CJEU in Reliantco on’consumers’ and complex financial markets. And again on contracts and tort.

C-500/18 AU v Reliantco was held by the CJEU on 2 April, in the early fog of the current pandemic. Reliantco is a company incorporated in Cyprus offering financial products and services through an online trading platform under the ‘UFX’ trade name – readers will recognise this from [2019] EWHC 879 (Comm) Ang v Reliantco. Claimant AU is an individual. The litigation concerns limit orders speculating on a fall in the price of petrol, placed by AU on an online platform owned by the defendants in the main proceedings, following which AU lost the entire sum being held in the frozen trading account, that is, 1 919 720 US dollars (USD) (around EUR 1 804 345).

Choice of court and law was made pro Cyprus.

The case brings to the fore the more or less dense relationship between secondary EU consumer law such as in particular the unfair terms Directive 93/13 and, here, Directive 2004/39 on markets in financial instruments (particularly viz the notion of ‘retail client’ and ‘consumer’).

First up is the consumer title under Brussels Ia: Must A17(1) BIa be interpreted as meaning that a natural person who under a contract concluded with a financial company, carries out financial transactions through that company may be classified as a ‘consumer’ in particular whether it is appropriate, for the purposes of that classification, to take into consideration factors such as the fact that that person carried out a high volume of transactions within a relatively short period or that he or she invested significant sums in those transactions, or that that person is a ‘retail client’ within the meaning of A4(1) point 12 Directive 2004/39?

The Court had the benefit of course of C-208/18 Petruchová – which Baker J did not have in Ang v ReliantcoIt is probably for that reason that the case went ahead without an Opinion of the AG. In Petruchová the Court had already held that factors such as

  • the value of transactions carried out under contracts such as CFDs,
  • the extent of the risks of financial loss associated with the conclusion of such contracts,
  • any knowledge or expertise that person has in the field of financial instruments or his or her active conduct in the context of such transactions
  • the fact that a person is classified as a ‘retail client’ within the meaning of Directive 2004/39 is, as such, in principle irrelevant for the purposes of classifying him or her as a ‘consumer’ within the meaning of BIa,

are, as such, in principle irrelevant to determine the qualification as a ‘consumer’. In Reliantco it now adds at 54 that ‘(t)he same is true of a situation in which the consumer carried out a high volume of transactions within a relatively short period or invested significant sums in those transactions.’

Next however comes the peculiarity that although AU claim jurisdiction for the Romanian courts against Reliantco Investments per the consumer title (which requires a ‘contract’ to be concluded), it bases its action on non-contractual liability, with applicable law to be determined by Rome II. (The action against the Cypriot subsidiary, with whom no contract has been concluded, must be one in tort. The Court does not go into analysis of the jurisdictional basis against that subsidiary, whose branch or independent basis or domicile is not entirely clear; anyone ready to clarify, please do).

At 68 the CJEU holds that the culpa in contrahendo action is indissociably linked to the contract concluded between the consumer and the seller or supplier, and at 71 that this conclusion is reinforced by A12(1) Rome II which makes the putative lex contractus, the lex causae for culpa in contrahendo. At 72 it emphasises the need for consistency between Rome II and Brussels IA in that both the law applicable to a non-contractual obligation arising out of dealings prior to the conclusion of a contract and the court having jurisdiction to hear an action concerning such an obligation, are determined by taking into consideration the proposed contract the conclusion of which is envisaged.

Interesting.

Geert.

(Handbook of) EU private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

 

 

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SAS Institute v World Programming. A complicated enforcement saga continues.

Update 15 June 2020 as Gilles Cuniberti notes, enforcement jurisdiction (see towards the end of this post) ought to have involved some discussion of A24(5) Brussels Ia.

I reported earlier on complex enforcement issues concerning SAS Institute v World Programming. In [2020] EWCA Civ 599 SAS Institute Inc v World Programming Ltd Flaux J gives an overview of the various proceedings at 4:

The dispute between the parties has a long history. It includes an action brought by SAS against WPL in this country in which SAS’s claims were dismissed; a decision by WPL, following an unsuccessful challenge on forum non conveniens grounds, to submit to the jurisdiction of the North Carolina court and to fight the action there on the merits; a judgment in favour of SAS from the North Carolina court for some US $79 million; an attempt by SAS to enforce the North Carolina judgment in this jurisdiction which failed on the grounds that enforcement here would be (a) an abuse of process, (b) contrary to public policy and (c) prohibited by section 5 of the Protection of Trading Interests Act 1980 (“the PTIA”); and a judgment from the English court in favour of WPL for over US $5.4 million, which SAS has chosen to ignore.’

A good case to use therefore at the start of a conflicts course to show students the spaghetti bowl of litigation that may occur in civil litigation. There are in essence

  • English liability proceedings, decided in the end following referral to the CJEU (Case C-406/10);
  • North Carolina liability proceedings, in which WPL submitted to jurisdiction after an earlier win on forum non grounds was reversed on appeal and the NC courts came to the same conclusions as the English ones despite a finding they were not (clearly) under an obligation to apply EU law;
  • next, an SAS enforcement attempt in England which failed (with permission to appeal refused): my earlier post reviews it;
  • next, enforcement proceedings of the NC judgment in California. That CAL procedure includes an assignment order and WPL sought an anti-suit injunction to restrain SAS from seeking assignment orders as regards “customers, licensees, bank accounts, financial information, receivables and dealings in England”: it was not given the injunction for there was at the time no CAL assignment order pending which could be covered by anti-suit.
  • Currently, it seems, there is, and it is an anti-suit against these new assignment orders which is the object of the current proceedings.

At 59 ff follows a discussion of the situs of a debt; at 64 ff the same for jurisdiction re enforcement judgments, holding at 72

Applying these internationally recognised principles to the present case, the North Carolina and California courts have personal jurisdiction over WPL but do not have subject matter jurisdiction over debts owed to WPL which are situated in England. That is so notwithstanding that the losses for which the North Carolina court has given judgment were incurred by SAS in the United States. Nevertheless the effect of the proposed Assignment Order would be to require WPL to assign debts situated in England to SAS which would at least purport to discharge its customers from any obligation owed to WPL, while the effect of the proposed Turnover Order would be to require WPL to give instructions to its banks in England which would discharge the debts situated in England currently owed by the banks to WPL. In substance, therefore, the proposed orders are exorbitant in that they affect property situated in this country over which the California court does not have subject matter jurisdiction, thereby infringing the sovereignty of the United Kingdom.

Update 15 June 2020 as Gilles Cuniberti notes, enforcement jurisdiction ought to have involved some discussion of A24(5) Brussels Ia.

Which is later confirmed at 83. Consequently the earlier order is overturned: at 89: ‘it follows also that the judge’s conclusion that the Assignment and Turnover Orders were not “markedly exorbitant” was based upon a mistaken premise.’

The anti-suit and anti-enforcement applications are dealt with in particular with reference to comity, and largely granted with some collateral notices of intention by SAS not to seek a particular kind of enforcement.

Someone somewhere must have made partner on this litigation.

Geert.

 

 

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A reminder: Austrian courts apply CJEU Eva Glawischnig-Piesczek v Facebook ruling. Limits removal to national territory only but does not rule out worldwide removal on principle.

I had already reported in March on the first application of the CJEU C-18/18 Eva Glawischnig-Piesczek v Facebook ruling in an update to my post on the latter. I thought I’ld add a separate post on the ruling for it, well, deserves it: the court held that orders based on Austrian copyright are limited to Austria (given copyright’s territorial limitations), but if they are based on personal rights, the claimant has to specify the requested territorial reach (so potentially global).

IPKat have further analysis here. As one or two of us discussed at the time of the CJEU ruling: the infringement of personality rights angle is an important one.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2, Heading 2.2.8.2.5.

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Szpunar AG in Novo Banco: COMI (in insolvency) for natural persons, not self-employed, with assets in former Member State of habitual residence.

I sincerely continue to be humbled when cited by Advocates-General at the CJEU. Even more so therefore when it happens twice (see also Movic) in one week. In his Opinion in C-253/19 Szpunar AG refers to the Handbook’s analysis of C-341/04 Eurofood. The reference to that judgment is part of his assessment of ‘centre of main interests’ in the context of natural persons not exercising an independent business or professional activity, who benefit from free movement. The CJEU has not ruled on the issue before.

The AG points out that the European Insolvency Regulation (EIR) 1346/2000 (‘EIR 2000’), unlike its successor, Regulation 2015/848 (‘EIR 2015’), did not have time limitations under which the presumptions of COMI apply (see here for my paper on the main changes introduced by EIR 2015). However the EIR 2000 did have such presumption without the time limits, for companies and legal persons, and it generally, like the current EIR, requires courts to check whether COMI for natural persons or otherwise is located on their territory. This requires the court to check against the criteria for rebuttal of any presumptions of COMI. That test runs along the criteria that have repeadtedly featured on the blog (cue search string ‘COMI’): COMI designates the place where the debtor conducts the administration of its interests on a regular basis and is therefore ascertainable by third parties.

‘Habitual residence’ is not defined by the EIR 2015 and I concur with the AG that references to its application in family European PIL are of limited value. At 45: priority should be given not to factors relating to a debtor’s social or family situation but to those relating to a debtor’s financial position. In the case of natural persons not engaged in a self-employed activity, the line separating their financial situation and their family situation is blurred (at 46). The Virgos Schmitt report already discussed the application of of the insolvency regime to natural persons and advised that COMI as applied to natural persons ought to focus on the economic interests.

At 49 the AG suggests that ‘habitual residence’ no longer reflects a natural person’s COMI if does not fulfil its role as the place where a debtor’s economic decisions are taken, as the place where the majority of its revenue is earned and spent, or as the place where the major part of its assets is located. That entails quite a broad scope for rebuttal of course. The AG refines this in the remainder of the Opinion. He refers to national case-law on the issue, and to the importance of free movement rights. He also suggests an important limitation: namely that in his view, the mere presence of a natural person’s  one immovable asset (the ‘family home’, GAVC) in another Member State than that of habitual residence, in and of itself does not suffice to rebut COMI.

As in all other scenarios of rebuttal, the ascertainability in particular by (potential) creditors is key. That is a factual consideration which the national courts are in prime position to make.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.6.1.

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Enforcement of unfair trading practices and ‘civil and commercial’. Szpunar AG extensively in Movic (re ticket touts).

Advocate-General Szpunar in his Opinion in C-73/19 Belgische Staat v Movic BV et al refers in footnote to the comment made by Yours Truly (much humbled) on p.38 of the Handbook, that the seminal Eurocontrol and Steenbergen judgments on the concept of ‘civil and commercial’ in the Brussels regime, each posit dual criteria for the concept but only ever have one of their two legs applied. The Opinion in general testifies to the complex picture that emerges in case-law on the issue.

The issue is a knock-out point under Brussels Ia and the majority of EU private international law instruments. If the case is not civil and commercial, European PIL does not apply and residual national law takes over. Despite or perhaps because of this core relevance, the debate on the concept is far from settled. I reported on it as recently as a few weeks back (Øe AG in C-189/19 Supreme Site; and a little before that C-421/18 Dinant Bar v maître JN,) and I expressed a need for serious chewing over following different strands of focus among the CJEU’s chambers (my post on C-579/17 Buak).

The case at issue concerns enforcement of Belgium’s unfair trading act, not as in C‑167/00 Henkel by a consumer group but rather by the public authorities of the Member State.

Movic BV of The Netherlands and the others defendants practices ticket touting: resale of tickets for leisure events. Belgium in recent years has been cracking down on the phenomenon and in conflict terms, has expressed an eagerness to qualify big chunks of e-commerce laws as lois de police. One assumes this explains the reluctance of the defendants to be hauled in front of a Belgian judge.

At 12: what the Belgian authorities are seeking, is

first, findings of infringement in respect of conduct constituting, inter alia, unfair commercial practices, secondly, an order for the cessation of such infringement, thirdly, an order for publicity measures to be taken at the expense of the defendants; fourthly, the imposition of a penalty payment in a fixed sum, due in respect of each and every infringement which may be found to have taken place after service of the judgment, and fifthly, permission for the fact of such infringement to be certified simply by means of a report drawn up by a sworn official of one of the authorities in question.

At 16: arguments against the issue being of a civil and commercial nature, are

first, unlike any other person, the Belgian authorities are not required to demonstrate that they have an interest of their own in bringing proceedings of the kind illustrated by the main proceedings, secondly, their powers of investigation are not available to legal persons governed by private law, and thirdly, they also have enforcement powers which are not available to such persons.

As for the issue of lack of requirement of showing interest:

The first authority signalled is C‑551/15 Pula Parking: acting in the public interest does not equate acting in the exercise of State authority. Per the same case and per Fahnenbrock, and Kuhn, neither, the AG points out, does origin of authority in Statute, equate acta iure imperii. The fact that a power was introduced by a law is not, in itself, decisive in order to conclude that the State acted in the exercise of State authority (at 32). Neither does it follow from C-271/00 Baten that that the mere fact of exercising a power which the legislature has specifically conferred on a public authority automatically involves the exercise of public powers (at 34).

The AG then more specifically discusses the issue of lack of requirement to show interest to establish standing. Here there are plenty of similarities with the consumer organisations at issue in Henkel (37 ff). The exemption does not mean that the entity enjoys a prerogative under which it has powers altering the civil or commercial nature of its legal relationship with the private law entities, or the subject matter of the proceedings in which a cessation action is brought.  Similarly, it has no such powers as regards the procedural framework within which the proceedings arising out of those relationships are heard, which is identical whatever the status of the parties to the proceedings may be.

Further, with respect to the powers of investigation:  here the AG reads C‑49/12 Sunico as meaning that to exclude proceedings from the scope of ‘civil and commercial matters’, (at 53)

it is not sufficient to identify national provisions which, in abstracto, authorise a public authority to gather evidence through the use of its public powers and to use such evidence in legal proceedings. Equally, it is not sufficient to find that that evidence has in fact been used in the proceedings. In order to exclude the proceedings from the scope of that expression, it must also be determined, in concreto, whether, by virtue of having used that evidence, the public authority is not in the same position as a person governed by private law in analogous proceedings.

(In the case at issue there are no such indications). This reading of Sunico makes the exemption exercise very much a factual one – which is not in itself unusual in the context of the case-law on ‘civil and commercial’. One hopes the Court itself will give clear guidance on how Sunico must be read.

The AG also zooms in on the request for penalty payments. Here, the core reference is C‑406/09 Realchemie. At 72 (after having analysed the issue): a procedure in which such payment is sought, falls within the scope of ‘civil and commercial matters’ where,

‘first, the purpose of the penalty payment is to ensure the effectiveness of the judicial decision given in the proceedings, which fall within the scope of that expression, and secondly, the penalty payment is a normal measure of civil procedure which is also available to private individuals, or which is imposed without exercising special powers that go beyond those arising from the rules of general law applicable to relationships between private individuals.’

(With both these boxes ticked in casu). This I believe is most sound.

Within the same context, the last argument refers to the need or not to instruct a bailiff to certify the existence (and frequency) of continued infringement: the relevant Belgian authorities can suffice with an oath by a civil servant. This is in fact not a point signalled by the referring court however the Belgian Government at hearing seemingly sought insurance cover as it were, effectively seeking sanction of its use of a civil servant statement in lieu of what ordinary parties would have to do, which is to instruct a bailiff. This, the AG suggest (at 75), does amount to exercise of public authority, but only then for that part of the claim (the penalty payment( against the Dutch defendants): weapons which an ordinary person could not avail themselves of (I would refer to C-271/00 Steenbergen here).

 

All in all the case illustrates the relatively narrow room for abstract pondering of the issue of ‘civil and commercial’. The Opinion is highly factual, and admirably on point viz the extensive CJEU authority. The need for highly factual considerations sits uneasily with the Regulation’s expressed DNA of predictability. However this squares with the CJEU case-law on same. And it bodes interestingly when we will start applying the corresponding Hague Judgments Convention provisions…

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Heading 2, Heading 2.2.

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Jurisdiction for trademark infringement and passing off. Easygroup v Easyfly and ATR Aircraft

In [2020] EWHC 40 (Ch) Easygroup v Easyfly and ATR Aircraft the issue is the jurisdiction of the English court to hear claims of trade mark infringement, passing off and conspiracy against a Colombian domestic airline, its founder and chief executive, and a French aircraft manufacturer. As always the blog’s interest is not in the substantive issues concerning trademark and passing off, they do however make for interesting reading.

Nugee J considers the jurisdictional issues at 26 ff with respect to the first two defendants and with respect to the French defendant, in para 127 ff. Here the relationship between the EU Trade Mark Regulation 2017/1001 and Brussels Ia comes to the fore. (I continue to find my colleague Marie-Christine Janssens’ 2010 paper most informative on the issues; see also the link to Tobias Lutzi’s analysis of AMS Neve in my report of same). The relevant provisions of the Regulation (previously included in Regulation 207/2009, applied ia in CJEU AMS Neve), read

Article 125. International jurisdiction
1. Subject to the provisions of this Regulation as well as to any provisions of Regulation (EU) No 1215/2012 applicable by virtue of Article 122, proceedings in respect of the actions and claims referred to in Article 124 shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.
2. If the defendant is neither domiciled nor has an establishment in any of the Member States, such proceedings shall be brought in the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.

3. If neither the defendant nor the plaintiff is so domiciled or has such an establishment, such proceedings shall be brought in the courts of the Member State where the Office has its seat.

4. Notwithstanding the provisions of paragraphs 1, 2 and 3:

(a) Article 25 of Regulation (EU) No 1215/2012 shall apply if the parties agree that a different EU trade mark court shall have jurisdiction;

(b) Article 26 of Regulation (EU) No 1215/2012 shall apply if the defendant enters an appearance before a different EU trade mark court.

5. Proceedings in respect of the actions and claims referred to in Article 124, with the exception of actions for a declaration of non-infringement of an EU trade mark, may also be brought in the courts of the Member State in which the act of infringement has been committed or threatened, or in which an act referred to in Article 11(2) has been committed.

 

Article 126. Extent of jurisdiction
1. An EU trade mark court whose jurisdiction is based on Article 125(1) to (4) shall have jurisdiction in respect of:

(a) acts of infringement committed or threatened within the territory of any of the Member States;

(b) acts referred to in Article 11(2) committed within the territory of any of the Member States.

2. An EU trade mark court whose jurisdiction is based on Article 125(5) shall have jurisdiction only in respect of acts committed or threatened within the territory of the Member State in which that court is situated.

 

The first two defendants are not based in the EU. Here, Article 125(2) grants jurisdiction to the UK courts.

Controversially, at 36 Nugee J applies a forum non conveniens test. It is disputed whether this is at all possible in the Trademark Regulation. He decides England clearly is the appropriate forum: ‘there is no other court that can try the UK trade mark claims, and for the reasons just given [French and  Spanish courts might have partial jurisdiction, GAVC] no other court that can grant pan-EU relief in respect of the EU trade mark claims.’

At 37 ff Nugee J then also still considers with reference ia to CJEU Pammer and the discussions on ‘accessibility’ (see also ia Football Dataco) whether there is a ‘serious issue to be tried’ and answers in the affirmative. Here I am assuming this must be seen as part of case-management rather than a jurisdictional test (viz Article 8(1) BIa’s anchor defendant mechanism, a ‘serious issue to be tried’ test is said to be part of the ‘related cases’ analysis; see related discussions ia in Privatbank), unless he reformulates the application of Article 126 as a ‘serious issue to be tried’ test – the structure of the judgment is leaving me confused.

Eventually however the previous Order made by the High Court, granting permission to serve out of jurisdiction, is set aside by Nugee J on grounds of lack of full and frank disclosure at the service hearing – an issue less exciting for this blog however dramatic nevertheless.

The French defendant (who issued a relevant press release (only 11 copies of which were distributed at the Farnborough airshow; this was found to be de minimis; not as such a mechanism available under the EUTMR I don’t think; but it might be under case management) and was also responsible for organising (ia by having the logo painted) the offending branding in France), at the jurisdictional level is dealt with in para 127 ff., first with respect to the trademark claim.

‘By art. 125(1) the default position is that the proceedings shall be brought in the courts of the Member State where the defendant is domiciled: in ATR’s case this is France. Neither art. 125(2) nor art. 125(3) applies to ATR because each only applies if the defendant is neither domiciled nor has an establishment in a Member State. Art. 125(4) does not apply as it is not suggested that ATR has either (a) agreed that the English court should have jurisdiction, or (b) entered an appearance before the English court. That leaves art. 125(5) under which proceedings may also be brought in the courts of the Member State in which the act of infringement has been committed or threatened. In the present case that would also be France (and possibly Spain). It follows that none of the provisions of art. 125 confer jurisdiction on the English court to hear actions based on acts of infringement said to have been carried out by ATR in France and Spain.’

Counsel for EasyGroup accepted ia per AMS Neve that the Trademark Regulation is lex specialis vis-à-vis Brussels Ia but that nevertheless the general spirit of BIa should blow over Regulation 2017/1001. They refer at 130 to the ‘general desirability of avoiding duplicative proceedings and the risk of inconsistent judgments (as exemplified by arts 29 and 30 of Brussels I Recast),’ and argue that ‘it followed that once the English court had jurisdiction over the Defendants for the acts taking place in France (as it undoubtedly did under art. 125(2)), then it must also have jurisdiction over anyone else alleged to be jointly liable for the same acts of infringement.’

This therefore is a makeshift joinder mechanism which Nugee J was not impressed with. He pointed to the possibility under A125(5) to sue the other defendants and the French defendants in one jurisdiction, namely France. An A7(2) BIa action is not possible: A122(2)(a) EUTMR expressly provides that in proceedings based on A124, A7(2) BIa does not apply.

Finally, a claim in conspiracy against the French defendant is not covered by the EUTMR and instead by A7(2) BIa, discussed at 142 ff with reference to (Lugano) authority [2018] UKSC 19, which I discussed here. Locus delicti commissi, Nugee J finds, is not in England: no conspiratorial agreement between ATR and the Defendants in relation to the branding of the aircraft took place in England. At 145: ‘the Heads of Agreement, and Sale and Purchase Agreement, were each signed in France and Colombia, and there is nothing that can be pointed to as constituting the making of any agreement in England.’

As for locus damni, at 148 Nugee J holds this not to have been or potentially be in England:

‘The foundation of easyGroup’s claims in relation to the branding of the aircraft is that once painted they were flown on test flights, and en route to Colombia, in full view of the public. But the public which might have viewed the planes were the public in France and Spain, not the public in the UK. That might amount to a dilution in the brand in the eyes of the French and Spanish public, but it is difficult to see how it could affect the brand in the eyes of the UK public, or otherwise cause easyGroup to sustain loss in the UK. Mr Bloch said that if such a plane crashed, the news would not stop at the Channel and it might adversely affect easyGroup’s reputation in the UK, but no such damage has in fact occurred, and it seems to me far too speculative to say that it may occur. As already referred to, Mr Bloch also relied on easyGroup having suffered damage on the user principle (paragraph 82 above), but it seems to me that damages awarded on this basis would be damages for the loss of an opportunity to exploit easyGroup’s marks by licensing them to be used in France and Spain, and that for the purposes of the first limb of art. 7(2) such damage would therefore be suffered in France and Spain as that is where the relevant exploitation of the asset would otherwise take place.’

This last element (place where the relevant exploitation of the asset would otherwise take place) is interesting to me in Universal Music (purely economic loss) terms and not without discussion, I imagine.

Conclusions, at 152:

(1) There is a serious issue to be tried in relation to each of the claims now sought to be brought by easyGroup against the non-EU defendants.

(2) There was however a failure to make full, frank and fair disclosure at the service out of jurisdiction hearing, and in the circumstances that Order should be set aside.

(3) The question of amending to bring claims against the French defendant. But if it had, Nugee J would have held that there was no jurisdiction for the English court to hear the claims based on the acts in France (or Spain), whether based on trade mark infringement or conspiracy. There is jurisdiction to hear the claims based on the issue of the Press Release in the UK, but Nugee J would have refused permission to amend to bring such claims on the basis that they were de minimis.

A most interesting and thought provoking judgment.

Geert.

 

 

 

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