Groundhog day, but with Unicorns. Bobek AG in Obala v NLB i.a. on ‘civil and commercial’.

Probably precisely because it would have been obvious, Bobek AG did not refer in the opening lines of his Opinion in C-307/19 Obala v NLB to Groundhog Day, which, following Pula Parking, this case certainly is. He did at 2 summarise why the issue, essentially on the notion of ‘civil and commercial’ under Brussels Ia and the Service Regulation 1393/2007 keeps on coming before the CJEU (this time in no less than 9 long questions):

The crux of the problem appears to be a certain double privatisation carried out by the Croatian legislature at both management and enforcement level. A matter commonly perceived in other Member States to be administrative in nature is entrusted to private entities. The subsequent enforcement of such a claim is also not designed to be a matter for the courts, but rather, at least at first instance, for notaries.

The EC had objected to quite a few questions on the basis that they engaged too much the substance of the case, which the AG disagrees with: at 31 he suggest that inevitably in conflict of laws jurisdictional advice, ‘telescopic analysis of the substance’ is needed.

On the issue of ‘civil and commercial’, Germany and Slovenia submit the origin of the power under which the contract was concluded and which is enforced in this respect that is determinant.  The applicant, the Croatian Government and the Commission take the opposite view: to them, it is not the origin of the power but rather the modalities of its exercise which represent the determinative element for identifying ‘civil and commercial matters’. It is quite extraordinary that we should still not have consensus on this after to many cases, however as I noted in my review of Buak, the divergent emphasis by different chambers of  the Court has not helped.

At 42 ff Bobek summarily revisits the case-law under BIa (he concedes at 53-54 that case-law on other instruments does not add much), concluding at 52 that the CJEU has used both the ‘subject matter’ approach and the ‘legal relationship’ approach, without expressing a preference for either.

At 59 the Advocate-General opts for the ‘legal relationship’ approach, arguing that path ‘most reliably performs the function of the figurative railroad switch point guiding the dispute from one procedural track to another in search of the ‘right’ institutional path in a Member State at the preliminary stage of jurisdiction’. That path is also the one which as I point out in my review of Buak, was followed by the Second (which includes President Lenaerts, the chair of conflict of laws at Leuven prior to my immediate predecessor, Hans van Houtte) and not the First Chamber:

The Second chamber (K. Lenaerts, A. Prechal, Toader, Rosas and Ilešič in Buak, focus on Sapir which was issued by the third Chamber, comprising at the time Toader (Rapporteur), Ilešič, Jarašiūnas, Ó Caoimh,  Fernlund. Toader and Ilešič are the common denominator with judment in BUAK. Sapir has focus also firstly on the legal relationship between the parties to the dispute, but secondly the basis and the detailed rules governing the bringing of the action (not: the to my knowledge never applied Eurocontrol criterion of ‘subject matter’ of the action).

At 66 the AG offers ‘pointers’ within the ‘nature of the legal relationship’ approach which he believes may be of assistance to any public power assessment:

‘(i) start with the legal relationship which characterises the dispute; (ii) assess it against the framework generally applicable to private parties; and (iii) establish whether the dispute arises from a unilateral exercise of public powers outside that normal private ‘reference framework’.’

which applied to the case at issue, he concludes at 87, leads to a finding of there not appearing to be an exercise of public powers.

I conclude my overview of ‘civil and commercial’ at para 2.65 of the third ed of the Handbook (forthcoming February 2021) with

the acte clair doctrine (meaning that national courts need not refer to the CJEU when the interpretation of EU law is sufficiently clear either by virtue of that law itself or following CJEU interpretation in case-law) implies that national courts by now ought to have been given plenty of markers when applying this condition of application of the Brussels I and Recast Regulation. Except of course the acte might not be that clair at all, as the above overview shows.

Bobek AG seems to have a similar end in mind: at 65: there is no unicorn, a truly autonomous interpretation of ‘civil and commercial’.

The Opinion continues with the classic themes of whether notaries are courts, and a firm opinion that leaving your car in a public parking space provokes contractual relations.

Geert.

European Private International Law, 3rd ed. 2021, paras 2.28 ff concluding at 2.65.

The CJEU in Wikingerhof on distinguishing tort from contract between contracting parties. No Valhalla for those seeking further clarification of Brogsitter, let alone De Bloos.

Update 25 November 10:38 AM:  Readers  may want to refer to the discussion posted to Tobias Lutzi’s view on the case, which I will not copy /paste here save for my initial reply: ‘I believe Tobias’ biggest take-away from the judgment is the Court’s emphasis on ‘indispensability’ of contractual interpretation for A(7)1 to be triggered (he will correct me if I am wrong).
As I argue in my review of the judgment, I think that’s a change of emphasis viz Brogsitter and e.g. Apple v eBizcuss rather than a change in nature of the CJEU approach.
However assuming one applies the authority that courts must not dwell too long on merits in assessing jurisdictional gateways, it does follow that A7(1) will only be engaged in those cases where the contract prima facie is overwhelmingly needed to solve the underlying dispute. This still leaves room for manoeuvre for the creative claimant (see also the AG’s points on forum shopping), but not as much as might have been expected prior to this judgment.’

 

The CJEU held yesterday (Tuesday) in C-59/19 Wikingerhof v Booking.com. I reviewed the AG’s Opinion here and the Court follows the AG’s minimalist interpretation. The case was held in Grand Chamber, which might have provoked expectations yet the judgment is not exactly a bang. Neither however can it be described a whimper. As I note in my review of the Opinion, the case in my view could have been held acte clair. The AG did take the opportunity in his Opinion to discuss many issues which the CJEU was bound not to entertain, at least not in as much detail as the AG did.

Let me first signal what I believe might be the biggest take-away of the litigation, if at least the referring court is followed. That is the Bundesgerichtshof’s finding that  there is no durable record of the alleged consent by Wikingerhof of the amended GTCs, including choice of court, effected via amendments on the ‘Extranet’, which is the portal via which the hotel may update its information and retrieve reservations. Booking.com claimed these amounted to a ‘form which accords with practices which the parties have established between themselves’ pursuant to Article 25(1)(b). Parties will still argue on the merits whether the initial consent to the primary GTCs was strong-armed because of booking.com’s dominant position.

With respect to to the jurisdictional issue, the CJEU in a succinct judgment firstly points to the need for restrictive interpretation. It points at 29 to the claimant being the trigger of A7(1) or (2). Without a claimant’s decision to base a claim on the Articles, they simply do not get to be engaged. That is a reference to the forum shopping discussion of the AG. Still, the court hearing the action must assess whether the specific conditions laid down by those provisions are  met.

At 32, with reference to Brogsitter, ‘an action concerns matters relating to a contract within the meaning of [A7(1)(a) BIa] if the interpretation of the contract between the defendant and the applicant appears indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter’.  ‘That is in particular the case of an action based on the terms of a contract or on rules of law which are applicable by reason of that contract’ (reference to Holterman and to Kareda, with the latter itself referring to De Bloos). At 33  ‘By contrast, where the applicant relies, in its application, on rules of liability in tort, delict or quasi-delict, namely breach of an obligation imposed by law, and where it does not appear indispensable to examine the content of the contract concluded with the defendant in order to assess whether the conduct of which the latter is accused is lawful or unlawful, since that obligation applies to the defendant independently of that contract, the cause of the action is a matter relating to tort, delict or quasi-delict’.

At 32 therefore the CJEU would seem to confirm De Bloos’ awkward (given the Regulation’s attention to predictability) support for forum shopping based on claim formulation yet corrected by what is more akin to Sharpston AG’s approach in Ergo and the Court’s approach in Apple v eBizcuss, a judgment not referred in current judgment: namely that the judge will have to consider whether contractual interpretation is strictly necessary (the Court uses ‘indispensable’) to judge the case on the merits. Update 25 November 2020 as Tobias Lutzi notes here, it is the repeated (after its first use in Brogsitter) emphasis on ‘indispensable’ which might be the core clue of the CJEU: it would make the threshold for the 7(1) gateway in cases like these, high. A change in emphasis compared to Brogsitter, rather than one in substance.

Here, Wikingerhof rely on statutory German competition law (at 34-36): therefore the claim is one covered by Article 7(2).

The judgment confirms the now very fine thread between jurisdictional and merits review for the purposes of tort-based litigation between two contracting parties.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9. 3rd ed. 2021 para 2.469.

 

Ryanair v DelayFix. The CJEU dots some i’s on choice of court and unfair terms in consumer contracts; defers to national law on the assignment issue; and keeps schtum on renvoi in Article 25 Brussels Ia.

In C-519/19 Ryanair v DelayFix, the CJEU held yesterday. The case echoes the facts in Happy Flights v Ryanair at the Belgian Supreme Court.

Following inter alia  CJEU Jana Petruchova, the (absence of) impact of substantive European consumer protection rules on the consumer section of European private international law is now fairly settled. The separation between the two sets of laws seems quite clear for the application of the consumer section itself.

However under A25 BIa, EU consumer law might still play a role in those circumstances where the conditions of the consumer Section are not met (dual-use contracts, contracts for transport (such as here) etc.) yet where one of the parties may qualify as a consumer under substantive EU consumer protection law.

A core issue of contention is the consideration of the EU unfair terms in consumer contracts Directive 2019/2161 and its predecessor Directive 93/13 , which was applicable in Ryanair v DelayFix. Via Article 25’s lex fori prorogati rule on substantive validity for choice of court, the Directive plays an important role.

In the case at issue at the CJEU, Passenger Rights, now DelayFix, a company specialised in the recovery of air passengers’ claims under the EU Regulation on air passenger rights, has requested the courts at Warsaw to order Ryanair,  to pay EUR 250 in compensation, a passenger on the relevant flight having assigned DelayFix their claim with respect to that airline.

The CJEU first of all looks at the issue from the limited extent of what is actually materially regulated by A25: the requirement of ‘consent’ (as well as the formal expression of that consent. It holds, not surprisingly, that in principle of course a jurisdiction clause incorporated in a contract may produce effects only in the relations between the parties who have given their agreement to the conclusion of that contract (referring ex multi to Refcomp).  In the case at issue,  a jurisdiction clause incorporated in the contract of carriage between a passenger and that airline cannot, in principle, be enforced by the latter against a collection agency to which the passenger has assigned the claim.

However, at 47, there is a gateway for the choice of court nevertheless to extend to third parties, namely when the third party not privy to the original contract had succeeded to an original contracting party’s rights and obligations, in accordance with national substantive law. At 49, referring to A25(1), that law is the lex fori prorogati. Here: Irish law.

Recital 20 BIa in fact instructs to include the lex fori prorogati’s conflict of laws rules (in other words: an instruction for renvoi) to be part of the referral. In the aforementioned Belgian SC ruling in Happy Flights, renvoi was simply ignored. Here, the CJEU does not mention renvoi, even if it does not expressly exclude it.

The CJEU does point out that Directive 93/13 on unfair terms in consumer contracts of course is part of the Irish lex fori prorogati, as it is of all the Member States. In making that reference it would seem to have answered in the negative the question whether the ‘consent’ provisions of that Directive have not been superseded in the context of the ‘consent’ requirements of Article 25 Brussels Ia, as recently discussed obiter in Weco Projects.

Per previous case-law, the capacity of the parties to the original agreement at issue is relevant for the application of the Directive, not the parties to the dispute.  Further, a jurisdiction clause, incorporated in a contract between a consumer and a seller or supplier, that was not subject to an individual negotiation and which confers exclusive jurisdiction to the courts in whose territory that seller or supplier is based, must be considered as unfair under Article 3(1) of Directive 93/13 if, contrary to requirement of good faith, it causes significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. Reference is made in particular to Joined Cases C‑240/98 to C‑244/98 Océano Grupo (at 58).

It will be up to the national courts seised of a dispute, here: the Polish courts, to draw legal conclusions from the potential unfairness of such a clause (at 61). DelayFix therefore are not quite yet home and dry.

Geert.

European Private International Law, 3rd ed. February 2021, Chapter 2, para 2.240.

The CJEU in Ellmes Property Services. Forum contractus in the case of real estate co-ownership with echoes of De Bloos.

The CJEU held yesterday in C‑433/19 Ellmes Property Services.

On the application of Article 24(1) Brussels Ia rights in rem it confirms Szpunar AG’s Opinion which I discussed here: the erga omnes charachter or not of the rights relied upon needs to be confirmed by the referring court for A24(1) to be engaged.

I suggested the forum contractus analysis was the more exciting one. The Advocate General advised it 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.

The Court held at 39 that the fact that a downstream co-owner was not a party to the co-ownership agreement concluded by the initial co-owners has no effect on there being a contract per A71(a)  BIa, per Ordre des avocats du barreau de Dinant and Kerr

Unlike the AG, however, the CJEU does not hold that the Tessili Dunlop looking over the fence test is required. It comes seemingly uncomplicated to the conclusion of the locus rei sitae as the forum contractus. At 44, yet linking it to the intention of the contractual obligations:

It seems that that obligation is thus intended to ensure the peaceful enjoyment of the property subject to co-ownership by the owner of that property. Subject to verification by the referring court, that obligation relates to the actual use of such property and must be performed in the place in which it is situated.

This may however harbour more uncertainty than first meets the eye. The CJEU here seems to suggest the original contractually designed ‘peaceful enjoyment by the owner’ , which indicates the contractual performance as being one of ‘actual use’ as determining the forum contractus.  A claim relating to a more immaterial use of the property, such as arguably letting the property for financial gain, or indeed an intention to divest the property, would in this perception not necessarily be linked to the locus rei sitae – which brings one back to the discussion entertained by the AG: depending on who brings which claim and how that claim is formulated (an echo from De Bloos, whose usefulness is currently sub judice in Wikingerhof), forum contractus will vary.

Geert.

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

(Third edition forthcoming February 2021).

Sappi Austria: CJEU tries to keep a common sense approach to supporting the circular economy and maintaining the objectives of EU waste law.

Case C‑629/19 Sappi Austria Produktions-GmbH & Co. KG and Wasserverband ‘Region Gratkorn-Gratwein’ v Landeshauptmann von Steiermark in which the CJEU held on Wednesday is in my off the cuff view (I did not research it in the recent case-law) the first case where the CJEU specifically mentions the objectives of the circular economy to support its interpretation of the core definition of ‘waste’ in the Waste Framework Directive 2008/98.

Sappi operate a large industrial paper and pulp production plant in Gratkorn (Austria). On that site is also a sewage treatment plant, operated jointly by Sappi and the Wasserverband, which treats waste water from paper and pulp production as well as municipal waste water. During the treatment of that waste water, which is required by national law, the sewage sludge in question in the main proceedings arises. That sludge is therefore made up of both substances from industrial waste water and substances from municipal waste water. Sewage sludge which is produced in the sewage treatment plant is then incinerated in a boiler of Sappi and in a waste incineration plant operated by the Wasserverband, and the steam reclaimed for the purposes of energy recovery is used in the production of paper and pulp.  hat authority found that, admittedly, the majority of the sewage sludge used for incineration, namely 97%, originated from a paper production process and that this proportion could be regarded as having ‘by-product’ status within the meaning of Paragraph 2(3a) of the AWG 2002. However, that does not apply to the proportion of sewage sludge arising from municipal waste water treatment. That sewage sludge remains waste. Since there is no de minimis limit for the classification of a substance as ‘waste’, the authority assumed that all the sewage sludge incinerated in the industrial plants of Sappi and of the Wasserverband must be classified as ‘waste’.

The CJEU first of all holds that there is no relevant secondary law which provides the kinds of qualitative criteria for sewage sludge to meet with the objectives of the WFD. If there were such laws, and the sludge meets their requirements, it would be exempt form the WFD. It then reminds the referring court, of course, of the extensive authority on the notion of waste (most recently C-624/17 Tronex) yet is happy to provide the national Court with input into the application in casu.

In principle, the sludge is waste, the Court holds: it is a residue from waste water treatment and it is being discarded.

However, the referring judge suggests that the sludge may meet the requirements of A6(1) WFD as being fully ‘recovered’ before it is used in the incineration process. It is there that the CJEU refers to the circular economy: at 68:

it is particularly relevant that the heat generated during the incineration of the sewage sludge is re-used in a paper and pulp production process and that such a process provides a significant benefit to the environment because of the use of recovered material in order to preserve natural resources and to enable the development of a circular economy.

Per C‑60/18 Tallinna Vesi, the recovery of sewage sludge entails certain risks for the environment and human health, particularly linked to the potential presence of hazardous substances. For the sludge at issue here not to be waste, presupposes that the treatment carried out for the purposes of recovery makes it possible to obtain sewage sludge with a high level of protection of the environment and human health, such as required by the WFD, which is, in particular, free from any dangerous substance. For that purpose, it is necessary to ensure that the sewage sludge in question in the main proceedings is harmless (at 66). The CJEU concludes, at 67

It is for the referring court to determine whether the conditions laid down in Article 6(1) of Directive 2008/98 are already met before the sewage sludge is incinerated. It must in particular be determined, as appropriate, on the basis of a scientific and technical analysis, that the sewage sludge meets the statutory limit values for pollutants and that its incineration does not lead to overall adverse environmental or human health impacts.

There are as yet no EU standards for the full recovery of sewage sludge, hence the ball of end of waste status is once again in the Member States’ court.

Geert.

(Handbook of) EU Waste law, 2nd ed. 2015, Oxford, OUP, Chapter 1, 1.149 ff.

Tanchev AG in Esso supports broad application of animal welfare to REACH chemicals registration process.

In Case C‑471/18 P in which Tanchev AG Opined last month, Germany is asking the CJEU to set aside judgment in  T‑283/15 Esso Raffinage ECHA by which the General Court annulled entitled a European Chemical Agency (‘ECHA’)  letter entitled ‘Statement of Non-Compliance following a Dossier Evaluation Decision under  [REACH]’. The letter concerned the outcome of ECHA’s compliance check of Esso Raffinage’s registration dossier for a particular chemical substance. The main thrust of its appeal is that the REACH Regulation does not provide for further examination by ECHA of the conformity of the information submitted with the first compliance check decision, and that this matter falls within the competences of the Member States pursuant to the REACH enforcement provisions. In support of its position, it argues that a registrant must conduct animal testing specified in the Evaluation Decision, and cannot submit adaptations at that stage.

Esso and ECHA find themselves in an unusual alliance with animal rights activists who argue that a registrant must be able to submit adaptations in lieu of performing animal testing specified in a first compliance check decision.

The case mostly concerns the respective competences of Member States and ECHA under Reach, I highlight it here for the AG’s emphasis on the relevance of animal welfare in the Regulation: consideration of animal welfare through the reduction of animal testing is one of the objectives pursued by the REACH Regulation. At 158: ‘Viewed more broadly, as indicated by Esso Raffinage and [NGO], the promotion of animal welfare and alternative methods to animal testing in the REACH Regulation reflects Article 13 TFEU, pursuant to which, in formulating and implementing the European Union’s policies, the European Union and the Member States are to pay full regard to the welfare requirements of animals.’

Animal welfare has come a long way since Michael Rose and I submitted it in CJEU C-1/96 Compassion in World Farming.

Geert.

 

French neonicotinoids measures and administrative compliance under EU law. The CJEU takes a view protective of Member States’ room for manoeuvre.

The ‘transparency’ or ‘notification’ Directive 2015/1535 (the successor to Directive 98/34) featured twice at the CJEU yesterday. In Case C‑711/19 Admiral Sportwetten, the Court held that a national tax rule that provides for taxation of the operation of betting terminals does not constitute a ‘technical regulation’ that needs to be notified under the Directive. In Case C-514/19 Union des industries de la protection des plantes it held more directly than Kokott AG had opined, that France had validly informed the Commission of the need to take measures intended, in particular, to protect bees by banning the use of 3 active substances of the neonicotinoid family which had been authorised for use under the relevant EU procedure. That procedure is regulated by Directive 1107/2009 on plant protection products.

The complication in the case in essence is a result of the dual procedure for national safeguard measures as a result of the existence of both the PPP and the notification Directive. May a communication of a Member State under the Notification Directive, double as notification of emergency measures under the PPP Directive? The CJEU held it can, provided the notification contains a clear presentation of the evidence showing, first, that those active substances are likely to constitute a serious risk to human or animal health or to the environment and, second, that that risk cannot be controlled without the adoption, as a matter of urgency, of the measures taken by the Member State concerned, and where the Commission failed to ask that Member State whether that communication must be treated as the official provision of information under the regulation.

The Court referred to its findings in C-116/16 Fidenato, that a Member State’s power, provided by an EU act, to adopt emergency measures requires compliance with both the substantive conditions and procedural conditions laid down by that act (a requirement, I would add, which conversely also applies to the European Commission), but adds that a notification to the Commission under Article 71(1) of Regulation 1107/2009 requires only that the Member State concerned ‘officially informs’ that institution, without having to do so in a particular manner.

More generally, the Court emphasises the principle of sound administration imposed upon the EC, which explains its insistence on the EC having proactively to ensure the Member State concerned be aware of its obligations under the EU law concerned or indeed adjacent law. A certain parallel here may be made with the rules of civil procedure which require from those soliciting the courts that they approach the court with clean hands.

The Court in essence, I submit, finds that, the consequences for the Member State concerned in failing to meet the requirements for it to be able to make use of a safeguard provision in secondary law being so great, the conditions imposed on them must be met by a strict due diligence on behalf of the European Commission.

Of note is that the judgment does not entail any finding on the substantive legality of the French ban.

Geert.

 

 

Wikingerhof v Booking.com. Saugmandsgaard AG on the qualification in contract or tort of alleged abuse of dominant position between contracting parties. Invites the Court to confirm one of two possible readings of Brogsitter.

Saugmandsgaard AG opined yesterday in C-59/19 Wikingerhof v Booking.com (no English version of the Opinion at the time of writing). At issue is whether allegations of abuse of dominant position create a forum contractus (Article 7(1) Brussels Ia) or a forum delicti (A7(2) BIa).

I published on jurisdiction and applicable law earlier this year and I am as always genuinely humbled with the AG’s (three) references to the handbook.  Wikingerhof submits inter alia that it only ever agreed to Booking.com’s general terms and conditions (‘GTCs’) because Booking.com’s dominant position leaves it no choice. And that it had most certainly not agreed to updates to the GTCs, effected via amendments on the ‘Extranet’, which is the portal via which the hotel may update its information and retrieve reservations.

At 16 of its referral, the Bundesgerichtshof holds acte clair and therefore without reference to the CJEU that there is no durable record of the alleged consent by Wikingerhof of the amended GTCs, including choice of court. Booking.com claimed these amounted to a ‘form which accords with practices which the parties have established between themselves’ pursuant to Article 25(1)(b). This finding echoes the requirements of housekeeping which I signalled yesterday.

In my 2020 paper I point out (p.153) inter alia that in the context of Article 25’s choice of court provisions, the CJEU in C-595/17 Apple v eBizcuss suggested a fairly wide window for actions based on Article 102 TFEU’s prohibition of abuse of dominant position to be covered by the choice of court. At 28 in Apple v eBizcuss: ‘the anti-competitive conduct covered by Article 102 TFEU, namely the abuse of a dominant position, can materialise in contractual  relations that an undertaking in a dominant position establishes and by means of contractual terms’. The AG as I note below distinguished Apple on the facts and applicable rule.

In the request for preliminary ruling of the referring court, CJEU C-548/12 Brogsitter features repeatedly. The Bundesgerichtshof itself is minded to hold for forum delicti, given that (at 24 of its reference)

‘ it is not the interpretation of the contract that is the focus of the legal disputes  between the parties, but rather the question of whether the demand for specific contractual conditions or the invoking of them by a company with an — allegedly — dominant market position is to be regarded as abusive and is therefore in breach of provisions of antitrust law.

In fact on the basis of the request, the court could have held acte clair. It referred anyway which gives the AG the opportunity to write a complete if  to begin with concise précis on the notion of ‘contract’ and ‘tort’ in BIa. At 38, this leads him to conclude inter alia that despite the need strictly to interpret exceptions to the A4 actor sequitur forum rei rule, these exceptions including the special jurisdictional fori contractus ut delicti, must simply be applied with their purpose in mind.

He calls it an application ‘assouplie’, best translated perhaps as ‘accommodating’ (readers may check this against the English version when it comes out) (viz tort, too, the AG uses the term assouplie, at 45, referring eg to CJEU C-133/11 Folien Fisher).

Further, the AG notes that in deciding whether the claim is one in contract, necessarily the claimant’s cause of action has an impact, per CJEU C-274/16 Flightright (at 61 of that judgment, itself refering to C‑249/16 Kareda which in turn refers to 14/76 De Bloos). The impact of claimant’s claim form evidently is a good illustration of the possibility to engineer or at least massage fora and I am pleased the AG openly discusses the ensuing forum shopping implications, at 58 ff. He starts however with signalling at 53 ff that the substantive occurrence of concurrent liability in contract and tort is subject to the laws of the Member States and clearly differs among them, making a short comparative inroad e.g. to English law, German law and Belgian /French law. (Michiel Poesen recently wrote on the topic within the specific context of the employment section).

The AG’s discussion of CJEU authority eventually brings him to Brogsitter. He he firmly supports a minimalist interpretation.  This would mean that only if the contractual context is indispensable for the judge to rule on the legality or not of the parties’ behaviour, is forum contractus engaged. This is similar to his Opinion in Bosworth, to which he refers. He rejects the maximalist interpretation. This approach puts forward that contractual qualification trumps non-contractual (arguably, a left-over of CJEU Kalfelis; but as the AG notes at 81: there is most certainly not such a priority at the applicable law level between Rome I and II) hence the judge regardless of the claimant’s formulation of claim, must qualify the claim as contractual when on the facts a link may exist between the alleged shortcomings of the other party, and the contract.

The maximum interpretation, at 76 ff, would require the judge to engage quite intensively with the merits of the case. That would go against the instructions of the CJEU (applying the Brussels Convention (e.g. C-269/95 Benincasa)), and it would (at 77) undermine a core requirement of the Brussels regime which is legal certainty. That the minimalist approach might lead to multiplication of trials seeing as not all issues would be dealt with by the core forum contractus, is rebuked at 85 by reference to the possibility of the A4 domicile forum (an argument which the CJEU itself used in Bier /Mines de Potasse to support the Mozaik implications of its ruling there) and by highlighting the Regulation’s many instances of support for forum shopping.

The AG then discusses abusive forum shopping following creative claim formulation at 88 ff. This  is disciplined both by the fact that as his comparative review shows, the substantive law of a number of Member States eventually will not allow for dual characterisation and hence reject the claim in substance. Moreover clearly unfounded claims will be disciplined by lex fori mechanisms (such as one imagines, cost orders and the like). This section confuses me a little for I had understood the minimalist approach to lay more emphasis on the judge’s detection of the claim’s DNA (along the lines of Sharpston AG in Ergo) than on the claim’s formulation.

The AG then continues with further specification of the minimalist approach, including at 112 a rejection, correct in my view (for the opposite would deny effet utile to A7(2), of the suggestion to give the A7(1) forum contractus the ancillary power to rule of over delictual (A7(2)) issues closely related to the contractual concerns.

Applying the minimalist test to the case at issue the AG concludes that it entails forum delicti, referring in support to CDC and distinguishing Apple v eBizcuss (which entails choice of court and relies heavily on textual wording of the clause).

It will be interesting to see which of the two possible interpretations of Brogsitter the CJEU will follow and whether it will clarify the forum shopping implications of claim formulation.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9.

 

Supreme Sites Services: Immunity of international organisations and ‘civil and commercial’. CJEU holds with emphasis on the provisional nature of the proceedings and the ordinary contractual nature of the goods supplied.

María Barral Martínez and I reviewed Saugmandsgaard Øe’s Opinion in C-186/19 Supreme Site Services v SHAPE here – see also references to earlier postings in that report. The Court held yesterday. The case involves both Article 1 Brussels Ia, on the issue of ‘civil and commercial’ and the impact on same of claimed immunity; and on the application of Article 24(5)’s exclusive jurisdictional rule for proceedings ‘concerned with the enforcement of judgments’.

The case concerns SHAPE’s appeal to a Dutch Court to lift the attachment aka ‘garnishment’ of a Belgian NATO /SHAPE escrow account by Supreme Services GmbH, a supplier of fuel to NATO troops in Afghanistan. In 2013, Supreme and Allied Joint Force Command Brunssum (JFCB), the Netherlands-based regional headquarters of NATO, set up an escrow bank account in Belgium with the goal of offsetting any contingent liabilities on both sides at the end of Basic Ordering Agreements (BOAs). Supreme Services in 2015 initiated proceedings against SHAPE and JFCB in the Netherlands arguing that the latter parties had not fulfilled their payment obligations towards Supreme. It also attached the account in Belgium.

Maria earlier discussed the oddity that the Dutch Court of Appeal in the meantime has already held on the merits of the case. Shape submitted at the CJEU that this, and the fact that the Belgian courts executed their Dutch counterpart’s lifting of the garnishee order following the Dutch-Belgian 1925 Bilateral Convention, meant the questions had become largely inadmissible. The CJEU disagrees: the case before it has been referred by the Supreme Court, and that court has exclusive power under national law to determine how much it can still interfere in the substance of the case, which is still very much ‘alive’ therefore.

A first issue under discussion was whether the garnishment order, which the Court per C‑261/90 Reichert and Kochler qualifies as ‘provisional, including protective measures’ under (now) Article 35 BIa, concerns ‘civil and commercial matters’. Among others Greece and Shape argue that the nature of the substantive proceedings determines this exercises, while the CJEU, following the view of ia the EC, BEN and NL, insists it is the nature of the rights which the provisional and protective measure seek to safeguard, that must rule that exercise – support is found in 143/78 de Cavel. This finding reinforces the particular nature of ‘provisional, including protective measures’ in the set-up of the Regulation.

On the impact of claimed immunity on the subsequent qualification as ‘civil and commercial’, reference is of course made to the CJEU’s May judgment in C-641/18 Rina which I reviewed here. The Court extends its reasoning there to here despite the fact that as it notes at 61, States’ immunity is automatic and based on par in parem non habet imperium, while for international organisations it is not automatic and has to be conferred by the treaties establishing those organisations. Per Rina the CJEU assesses whether the international organisation acted iure imperii, for which of course it has a range of predecent available. At 66 it emphasises that how the organisation uses the supplied goods (here: to support the military campaign in Afghanistan) does not impact on the nature of the relationship it has with the supplier. The Court ends by instructing the Dutch SC to carry out the necessary factual checks however it suggests that in casu neither the legal relationship between the parties to an action such as that in the main proceedings nor the basis and the detailed rules governing the bringing of that action (here: the ordinary Article 705(1) of the Dutch CPR) can be regarded as showing the exercise of public powers for the purposes of EU law.

On the issue of Article 24(5), the Court takes a restrictive view as it becomes all elements of Article 24: reference here is made to CJEU C-722/17  Reitbauer: only proceedings relating to recourse to force, constraint or distrain on movable or immovable property in order to ensure the effective implementation of judgments and authentic instruments fall within A24(5)’s scope.

I trust public international lawyers will have more to say about the PIL implications of the judgment.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.2.2.

Free movement of capital and sustainable forest management. The CJEU in Huijbrechts.

Disclosure I represented the Flemish Region at the Court of Justice. I wrote this post on 11 December 2018. Given that the interpretation of the judgment has a bearing on the proceedings in the national court, I decided to hold back on posting  until those proceedings would have met their national end – which they still have not. Seeing as I thought the case might be of interest I decided to go ahead now anyway.

In C-679/17 Huijbrechts the European Court of Justice held in a fashion which is fairly typical of free movement of capital cases. The Court treads carefully. Positive harmonisation of tax law is difficult for the EU to achieve for this requires unanimity. Tax measures having a direct impact on free movement of capital, too strict an enforcement of the latter may be read as tax harmonisation via the back door.

The case at issue concerns a measure by the Flemish Region of Belgium to exempt sustainable managed forests from death duties (inheritance tax). The exemption is subject to there being a forest management plan, agreed with the relevant agency, and subject to a 30 year follow-up period (should in the interim the forest no longer be sustainably managed, the heirs pay the tax pro rata the remainder of the 30 year period). The heirs concerned did not enjoy the exemption for the forests are located outside the region and suggest this is an infringement of the free movement of capital.

Defence against suggestions of infringement of Article 63 TFEU’s free movement of capital rule typically follow the following sequence: free movement is not impacted; should this fail: the domestic and foreign situation are not objectively comparable; should this fail, per C‑256/06 Jäger, public interest requires an exemption (subject to a suitability and a proportionality test).

A crucial part of free movement judgments entails having to read the judgment with an eye on the factual circumstances: the Court typically employs a formula that reads something like ‘in circumstances such as those at issue in the national proceedings’ or ‘in circumstances such as those at issue in the national law’.

In Huijbrechts, the Court at 25-26 finds that Flemish and foreign forest are objectively comparable (only) where they are transboundary and concern woods that are part of one unit or landscape (lest my geographic knowledge fails me here, this limits the impact of the judgment to French and Dutch estates; Belgium has a land border with Luxembourg and Germany, too, but Flanders does not). Interestingly, at 22 the Court indicates that in making the like forest comparison (GATT, WTO and generally free movement scholars will know where I am heading here), the regulatory goal of sustainable forest management plays a role. (See the like product /service distinction in the WTO).

For that limited group of forest, the public interest exception imposes constraints: a blanket ban on considering sustainable management outside of Flanders fails the Treaty test, for it does not assist with the protection of the forests. Flanders will for that limited group have to allow the heirs (again: only where the forests are transboundary and concern woods that are part of one unit or landscape) to provide proof of sustainable management; should such proof be delivered, the burden of proof will revert to the Flemish tax authorities: they cannot blankly assume that they cannot get the necessary data from the foreign administration during the 30 year period: they have to request such data (typically: on a 30 year basis) and only should they fail to get them, can they still refuse to exempt.

The Court implicitly recognises the specific (dire) circumstances of forests in Flanders (at 31). It does not accept the heirs’ submission that the myriad of international and European policy documents on forest management somehow amount to positive harmonisation.

Geert.