Posts Tagged Curia

National Bank of Kazakhstan v Bank of New York Mellon. Branches’ activities, Article 7(5) Brussels I Recast and engagement of Article 30.

Thank you Ali Malek QC who acts for claimants (and who as I have noted, is a busy and efficient bee in international litigation land) for alerting me to a further episode of Kazakhstan v BNYM. This current jurisdictional challenge is part of a long-running saga relating to the enforcement of a Swedish arbitration award dated 19 December 2013 in favour of the “Stati parties”, the Second to Fifth Defendants, and against the Second Claimant, the Republic of Kazakhstan (“RoK”).

Many of the issues are ex-Brussels I Recast and /or Lugano Convention yet I report on them anyway for they reveal interesting issues on the relationship between foreign courts relevant to attachment (and enforcement generally), and courts with jurisdiction on the merits.

In [2017] EWHC 3512 (Comm) National Bank of Kazakhstan v Bank of New York Mellon (BNYM) which I reviewed here, Popplewell J had dismissed claims essentially designed to establish that BNYM is not obliged or entitled to freeze assets of the National Fund by reason of Belgian and Dutch court attachment orders.

Teare J has now held a few weeks back – helpfully in [2018] EWHC 3282 (Comm) also summarising the many proceedings which the blog has not always reported on. Trigger for this latest instalment of proceedings is claimants having sought to challenge a Belgian conservatory attachment before an “Attachment Judge” of the Belgian court. The Attachment Judge upheld the attachment order in a judgment dated 25 May 2018.

RoK seeks a declaration that the debts or assets held by BNYM(London) and said to be subject to the attachment order are in fact held by BNYM(L) solely for the National Bank of Kazakhstan (“NBK”), the First Claimant. They therefore submit that the attachment order has no subject-matter, because there are no assets to attach. The Claimants contend that this question was referred to this court by the Belgian court.

A provision of Belgian law cited by the Attachment Judge, article 1456(2) of the Belgian Judicial Code, provides as follows: “If the third-party debtor disputes the debt claimed by the creditor, the case is brought before the competent trial judge or, as the case may be, the case is referred to the competent trial judge by the enforcement court.” Further proceedings are now pending in Belgium, in which the Stati parties seek to convert the ‘conservatory’ attachment order into an ‘executory’ attachment order. In those proceedings, the Stati parties have raised a number of arguments in support of their contention that the GCA assets are properly held for RoK (rather than merely NBK). These include Belgian-law arguments relating (inter alia) to piercing of legal personality, sham trusts, and “abuse of law”.

The crucial consideration discussed by Teare J in current proceeding is that the Stati parties submit that there is no “serious issue to be tried” (hence no jurisdiction) as between the Claimants and the Second to Fourth Defendants, (i.a.) because “the declarations sought […] will not affect the Belgian Court’s decision” since that Court “faces a number of Belgian law arguments unrelated to the GCA with regard to the ROK debt question”.

There was a dispute between Belgian law experts as to precisely what had been remitted by the Attachment Judge to the High Court and it is worth repeating each assertion in full: at 28-29

‘The evidence of Mr Brijs (the Stati parties’ Belgian law expert [GAVC fellow Leuven Class of 1993] ) is that “a pure question of English contractual law will not resolve the core dispute” because “a Belgian enforcement court would still have to evaluate – amongst other things – the arguments raised by the Stati parties under Belgian attachment law” such as piercing legal personality, sham trusts, and abuse of law. Further, “the Belgian Enforcement court did not decide the arguments – not because the judge “envisaged” that these arguments should be resolved by an English Court or because the Belgian Enforcement Court found that it could not decide them (when in fact it can) – but solely because the Belgian Enforcement Court considered that it did not need to decide them… It is difficult to conceive why an English court should decide on e.g. matters that concern Belgian public policy, or on the question whether there is a sham trust structure to the prejudice of the creditors and what the sanction/effect thereof is on the Belgian attachment.”

The evidence of Mr Nuyts (the Claimants’ Belgian law expert [GAVC colleague and learned friend extraordinaire ) is that “[t]here is nothing in the Belgian judgment to show that the Belgian Court envisaged the English court deciding only some of the issues, and not the arguments raised by the Stati parties such as piercing of legal personality, sham trust, and abuse of law. These arguments had been raised at length by the Stati parties in written submissions in the Belgian proceedings, and the Belgian Court has distinctly decided not to address any of these arguments, leaving them to be decided by the English Court… The Belgian Judgment holds in general that the “challenge” relating to “the debt of the third party” must be referred to the English court… [and] that it is for the English court to decide in general “whether or not a debt exists from BNYM towards Kazakhstan”.”

It is Mr Nuyts’ evidence that convinced Tear J. At 31 ‘In this case, however [GAVC despite Meester Brijs’ correct statement that there are circumstances in which the enforcement court is competent to decide on the merits], the enforcement court has clearly decided that the English court is the competent court to decide the merits.’ At 35 the relevant passages of the Belgian Court are copied:

“The seized-debtor is entitled to challenge the declaration from the garnishee before the attachment judge. However, this challenge relates to the debt of the third party and must be referred to that trial court in the proceedings on the merits, under article 1456, 2nd para. BJC. The competent trial court is, as stated by Kazakhstan itself, the English court who must apply its own national substantive law. […] Both requests relate to the subject-matter of the attachment, notably whether or not a debt exists from BNYM towards Kazakhstan. Kazakhstan disputes the existence of such debt. The attachment judge cannot and may not settle such dispute, but only the judge on the merits. The judge on the merits is, as already mentioned above, the English court who must apply its own national law.”

That finding on the scope of referral to the English courts, also plays a role in the assessment of abuse: at 46: ‘I do not consider that it is an abuse of process for the Claimants to raise in these proceedings issues not argued before Popplewell J or the Court of Appeal in the earlier English proceedings. First, those proceedings served a different purpose, namely, the determination of BNYM(L)’s contractual entitlement to freeze the GCA assets and in particular the scope of clause 16(i). Second, it appears that the Claimants did in fact seek to raise the wider issue, or something like it, before Popplewell J. but were not permitted to because the Stati parties were not before the court. Third, it would be odd, to say the least, for this court to hold that these proceedings were an abuse of process in circumstances where the issues raised by the proceedings had been referred to it by the Belgian court. It cannot, I think, be in the public interest to frustrate the order of the Belgian court. On the contrary, comity and the public interest point to these proceedings serving a legitimate and proper purpose.’

Finally, a cursory look a the forum conveniens issue is warranted: at 58-61:

  1. Mr Sprange, for the Stati parties, submitted that “England is not a proper forum for a claim against the Second to Fourth Defendants, where that claim seeks (on the Claimants’ case) to conclusively determine issues of the validity of a Belgian executory attachment, which are properly the subject of Belgian attachment law for a Belgian attachment judge to decide”.
  2. Mr Malek, for the Claimants, submitted that the real dispute is not about “the validity of a Belgian executory attachment”, but rather “whether there is an obligation owed by BNYM London to RoK capable of forming the subject-matter of a Belgian attachment.” Further, he submitted that the effect of the Belgian Attachment Judge’s decision was to determine that England was the appropriate forum. Mr Malek relied upon this decision as giving rise to “an estoppel of a particular, autonomous, EU kind”; in the alternative, he submitted that it was a strong factor to be weighed in the analysis of the appropriate forum. Finally, Mr Malek submitted that the only realistic alternative to the jurisdiction of the English court would be the Belgian court, and that “the Belgian court is materially worse placed than this Court because it would be investigating matters by reference to an English-law governed contract, the GCA (so far as issues of Kazakh law, or facts in relation to the relationship between NBK and RoK, are concerned, the Belgian court enjoys no advantage over this Court).”
  3. I am unable to accept Mr. Sprange’s submission. This court will not be asked to determine the validity of the conservatory attachment order made in Belgium. Rather, it will be asked to determine what, if any, assets constitute the subject-matter of that order. The Belgian Attachment Judge plainly considered that a dispute concerning the content of the attachment – which, on its terms, constitutes only such assets (if any) as are held by BNYM(L) for RoK under the GCA – is a question for this court.
  4. The fact that the Belgian court has referred the dispute to this court is a cogent reason, indeed a compelling reason, for concluding that this court is a proper forum for determining the dispute. It would not be in accordance with comity to send the dispute back to Belgium. There is no need to consider Mr. Malek’s further submissions.

I quite like Ali Malek QC’s idea of “an estoppel of a particular, autonomous, EU kind”; linked to considerations of mutual trust, one assumes.

Finally, one of the defendants is based in Gribraltar and against it, (now) Article 8(2) Brussels I Recast applies, re third party proceedings. There is little to none CJEU authority. At 68 ‘I consider that the wording of article [8](2) is wide enough to encompass a situation in which a person is a proper party to a dispute between other parties to which he has a “close connection”, so long as that dispute has not been “instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case” and at 69 ‘This is a case in which “the efficacious conduct of proceedings” demands the presence of Terra Raf in this jurisdiction. I therefore find the requirements of article [8](2) to be satisfied.’

Teare J’s findings on this point also mean he need not consider (now) Article 7(5)’s jurisdiction for activities arising our of branch activity on which as I noted, I also have my doubts.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11, Heading 2.2.14.

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AS Tallinna Vesi: Kokott AG on sludge and end of waste.

Case C-60/18 AS Tallinna Vesi could have been, as Advocate General Kokott noted yesterday, about much more. In particular about the exact scope of the Waste Framework Directive’s exclusion for sewage sludge and the relation between the WFD, the waste water Directive and the sewage sludge Directive. However the referring court at least for the time being sees no issue there (the AG’s comments may trigger the applicant into making it an issue, one imagines) and the AG therefore does not entertain it.

Instead the case focusses on whether waste may no longer be regarded as such only if and after it has been recovered as a product which complies with the general standards laid down as being applicable to it? And on whether, alternatively, a waste holder be permitted to request that the competent authorities decide, on a case-by-case basis and irrespective of whether any product standards are in place, whether waste is no longer to be regarded as such.

Ms Kokott emphasises the wide margin of discretion which the Member States have in implementing the Directive. End of waste criteria at the national level (in the absence of EU criteria) may not always be warranted particularly in the context of sewage sludge which is often hazardous. However precisely that need for ad hoc assessment should be mirrored by the existence of a procedure for waste operators to apply ad hoc for clarification on end of waste status.

Geert.

Handbook of EU Waste law, 2nd ed. 2015, OUP, 1.166 ff and 1.189 ff.

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EDPB guidelines on the territorial reach of the GDPR: Some clear conflicts overlap.

GDPR (General Data Protection Regulation) aficionados will have already seen the draft guidelines published by the EDPB – the European data protection board – on the territorial scope of the Regulation.

Of particular interest to conflicts lawyers is the Heading on the application of the ‘targeting’ criterion of GDPR’s Article 3(2). There are clear overlaps here between Brussels I, Rome I, and the GDPR and indeed the EDPB refers to relevant case-law in the ‘directed at’ criterion in Brussels and Rome.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.3, Heading 2.2.8.2.5.

 

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Dutch Supreme Court refers conflicts relevant questions on posted workers Directive to CJEU.

Update 4 December thank you to his Grace der Graf von Luxemburg for additionally pointing out pending case C-16/18 dealing with workers employed on international trains which also travel through the host Member State.

Thank you MPI’s Veerle Van Den Eeckhout for pointing out a highly relevant reference to the CJEU by the Dutch Supreme Court /Hoge Raad. The link between the posted workers Directive and conflict of laws is clear, as I have also explained here. The most interesting part of the reference for conflicts lawyers, are the questions relating to ‘cabotage’, particularly where a driver carries out work in a country where (s)he is not habitually employed (international trade lawyers will recognise the issue from i.a. NAFTA).

One to keep an eye on.

Geert.

(Handbook of) EU Private International Law, 2nd ed 2016, Chapter 3, Heading 3.2.5.

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Facebook appeal against UK fine puts territoriality of data protection in the spotlight.

I have an ever-updated post on Google’s efforts to pinpoint the exact territorial dimension of the EU’s data protection regime, GDPR etc. Now, Facebook are reportedly (see also here) appealing a fine imposed by the UK’s data protection authority in the wake of the Cambridge Analytica scandal. Facebook’s point at least as reported is that the breach did not impact UK users.

The issue I am sure exposes Facebook in the immediate term to PR challenges. However in the longer term it highlights the need to clarify the proper territorial reach of both data protection laws and their enforcement.

One to look out for.

Geert.

 

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Wahl AG proposes inadmissability in TPS-NOLO (Geobal): Take-back of ‘waste’, relation with REACH.

Another interesting waste-case at the CJEU last week, although unfortunately one in which Wahl AG proposes inadmissibility. In C-399/17 EC v Czech Republic, the question is whether the Czech Republic has infringed the waste shipments Regulation 1013/2006 by refusing to take back a substance known as TPS-NOLO (or Geobal) that had been shipped to Poland without respecting the requisite formalities of the Waste Shipment Regulation.

Approximately 20 000 tonnes of TPS-NOLO (Geobal) and composed of tar acid, a remnant after refining oil (code 05 01 07* of the European waste catalogue), of carbon dust and of calcium oxide. Poland considered the substance to be hazardous waste classified in Annex IV to the Waste Shipment Regulation (‘Waste tarry residues (excluding asphalt cements) arising from refining, distillation and any pyrolitic treatment of organic materials’).  The Czech citizen responsible for the shipment to Poland presented the standards adopted by the company as well as proof that the substance in question was registered under the REACH Regulation and that it was used as fuel.

The case raises interesting issues therefore on the relationship between REACH and Waste, on which I have written briefly inter alia here and, more extensively and with Dr Thomas de Romph, here. At 3 already, Wahl signals that his Opinion will not however lead to findings on the merits of the case: ‘ Finding that there was no infringement in the present case could potentially weaken the effectiveness and enforceability of the Waste Shipment Regulation, whose main and predominant object and component is protection of the environment. However, courts are guided, first and foremost, by procedural principles that ensure a due process in each individual case. Those principles cannot be sacrificed in order to further a greater cause, as noble as it might be.’

The due process issues essentially relate to the European Commission’s handling of the infringement procedure, in which, the AG suggests proprio motu,  it did not formulate a proper statement of claim. Details are in the Opinion and readers are best referred to it.

Now, there is no such thing as double jeopardy when it comes to infringement proceedings hence one can only hope that the Commission services will reinitiate the proceedings (lest of course the CJEU disagree with the AG’s Opinion).

Geert.

Handbook of EU Waste law, 2nd ed. 2015, OUP, i.a.at para 1.201.

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Swedish Match: Snus, precaution and the gateway effect.

A short update on the Court of Justice’s ruling in C-151/17 Swedish Match, in which yesterday it upheld the legality of Directive 2014/40’s ban on ‘snus’ and generally on tobacco products for oral consumption. (Sweden is exempt: Article 15(1) of the 1994 Act of Accession).

The Court reaffirms the bite of the precautionary principle; emphasises the ‘gateway effect’ of snus for the young, including intern alia because consumption of snus can be done very discreetly and hence enforcement of an age ban (a suggested alternative) not effective; and the importance of giving precedence to public health over economic profit.

It also, yet again, shows that measures like these do not fall out of thin air because, as proponents of the precautionary principle would suggest, anti-innovation zealots dream up restrictive measures to kill enterprise. Rather, following extensive scientific advice, the ban is a sensible and proportionate measure to take.

Geert.

EU Environmental Law, with Dr Leonie Reins, 2017, Chapter 2, Heading IV.

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