Posts Tagged ECJ

Feniks: CJEU holds, in my view incorrectly, that Actio Pauliana falls under forum contractus.

I called Bobek AG’s Opinion in C-337/17 ‘solid’ – by which I also implied: convincing.  Is the actio pauliana by a Polish company against a Spanish company, which had bought immovable property from the former’s contracting party, one relating to ‘contract’ within the meaning of Article 7(1) Brussels I Recast?

Bobek AG Opined it is not. The CJEU today held it is. I disagree.

Firstly, the second chamber, at 29 ff, repeats the inaccurate references in Valach and Tunkers, that (at 30) ‘actions which fall outside the scope of [the Insolvency Regulation] fall within the scope of [Brussels I Recast].’ This oft repeated quote suggest dovetailing between the two Regulations, a view which is patently incorrect: readers can use the tag ‘dovetail’ or ‘arrangement’ (for ‘scheme of arrangement’) for my view on same; see e.g. Agrokor.

Having held (this was not seriously in doubt) that Brussels I Recast is engaged, the Court then takes a much wider view of the Handte formula than advocated by Bobek AG. The Court at 37 refers to Granarolo, merely in fact to emphasise the requirement of strict interpretation of the jurisdictional rules which vary Article 4’s actor sequitur forum rei’s rule. At 43 follows the core of its reasoning: ‘By [the pauliana] the creditor seeks a declaration that the transfer of assets by the debtor to a third party has caused detriment to the creditor’s rights deriving from the binding nature of the contract and which correspond with the obligations freely consented to by the debtor. The cause of this action therefore lies essentially in the breach of these obligations towards the creditor to which the debtor agreed.’

The Court does not refer to Ergo, let alone to Sharpston AG’s ‘centre of gravity’ test in same, however it would seem that this may have influenced it. Yet in my view this is way too extensive a stretch of the Handte or Sharpston AG’s Ergo formula. Litigation in the pauliana pitches the creditor against the third party. It would take really quite specific circumstances for Handte to be met in the relation between these two. That a contractual relation features somewhere in the factual matrix is almost always true.

For a comparative benchmark, reference can be made to Refcomp where the Court took a very limiting view on subrogration of choice of court.

The Court’s formulation at 45 is entirely circular: were the creditor not able to sue in the forum contractus, ‘the creditor would be forced to bring proceedings before the court of the place where the defendant is domiciled, that forum, as prescribed by Article 4(1) of Regulation No 1215/2012, possibly having no link to the place of performance of the obligations of the debtor with regard to his creditor.’ Indeed: because the pauliana does not mordicus have to links to that place; it is not because it might not, that a forum contractus has to be conjured up to secure these links.

The Court then quite forcefully and seemingly without much hesitation identifies a specific forum contractus (unlike the AG who had suggested that that very difficulty supports his view that there simply is no forum contractus to speak of): at 46: ‘the action brought by the creditor aims to preserve its interests in the performance of the obligations derived from the contract concerning construction works, it follows that ‘the place of performance of the obligation in question’ is, according to Article 7(1)(b) of this regulation, the place where, under the contract, the construction services were provided, namely Poland.’

The initial contractual obligation between creditor and debtor therefore creates crucial jurisdictional consequences vis-a-vis third parties whose appearance in the factual matrix presents itself only very downstream. That, I would suggest, does not at all serve the predictability which the Chamber (rightly) emphasises at the very outset of its judgment as being the driving principle behind its interpretation.

I am not convinced by this judgment. (And yes, I am being polite).

Geert.

 

 

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Fremoluc: CJEU adopts a lenient (from MS standpoint) view on ‘purely internal’ measures. (External element easy to engineer, though).

In C-343/17 Fremoluc the CJEU held last week. It features as counsel no less than 4 fellow faculty at Leuven Law: 5 if one counts prof Elke Cloots whom we foolishly let escape to elsewhere – and who was the most vociferous (and, it would seem, persuasive) at the hearing, I understand. Had we had either one of my two collegae proximi who serve as judges on the CJEU assigned to the case, there would have been more residents of Collegium Falconis at Kircherg on the day of the hearing then there have recently been at Faculty meetings. But I digress.

The case essentially concerns services of general economic interests (SGEIs), as applied to the social housing sector: what kind of measures may a Member State roll-out to support the provision of such housing, in light of the free movement of not just persons but also services and capital. By extension, the case-law is also relevant to property rights restrictions across the EU.

In the case at issue applicant had seen a purchase of land torpedoed by the right of pre-emption of a relevant agency, relating to building land situated in areas earmarked for house renovation and house-building in 26 municipalities in its operating area. Fremoluc suggested the condition in the underlying decree that ‘as regards the provision of homes or land in a social housing project…, absolute priority must be given, at any stage of the project, to prospective tenants, leaseholders or buyers who have strong social, economic or socio-cultural ties with the operating area in question’, constitute an illegal condition under EU law. Consequently, it argued, the right of pre-emptive purchase itself was illegal.

The CJEU however, with reference to relevant case-law (please refer to the text of the judgment for same), held that the case was inadmissible, for it is purely internal: at 28-29: ‘it is not sufficient for the referring court to state that it is not inconceivable that nationals established in other Member States were or are interested in making use of Union provisions on fundamental freedoms to carry out activities in the territory of the Member State which enacted the national legislation in question and, consequently, that that legislation, applicable without distinction to nationals and to nationals of other Member States, is capable of producing effects which are not confined to that Member State.’ ‘The request for a preliminary ruling must clearly set out specific factors, that is, not hypothetical considerations but specific evidence, such as complaints or applications brought by operators situated in other Member States or involving nationals of those Member States, on the basis of which the required connecting link may be positively established. More particularly, the referring court may not merely submit to the Court evidence suggesting that such a link cannot be ruled out or which, considered in the abstract, could constitute evidence to that effect, and must, on the contrary, provide objective and consistent evidence enabling the Court to ascertain whether such a link exists.’

Such evidence of course in practice is easily engineered. A similar case therefore is bound to return to Luxembourg at some point soon.

Geert.

 

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Wahl AG in Workplace Relations Commission: Member States procedural autonomy in light of primacy of EU law.

Wahl AG’s Opinion in C-378/17 Workplace Relations Commission provides a great tutorial on the principles of primacy, and Member States’ duty to ensure equivalence and effectiveness in the implementation of EU law.

At issue is the compatibility with the principle of the primacy of EU law of a rule dividing jurisdiction in specific cases between the High Court and a statutory body, the Workplace Relations Commission (‘the WRC’). The latter has no jurisdiction and has to yield to the High Court, when the case requires disapplication of a provision of national (primary or secondary) legislation.

Wahl advises that the rule does not infringe the primacy of EU law, and in doing so runs us through the principles of primacy and its implications on national procedural autonomy.

Note the Advocate-General’s remark (at 87) that ‘It is increasingly common that the resolution of conflicts arising from day-to-day life, such as consumer disputes and conflicts in the workplace, are ‘out-sourced’ from courts to specialised bodies with (limited) powers to mediate and/or adjudicate expediently such disputes (FN omitted). It is equally commonplace that, as is the case of adjudication officers at the WRC, persons resolving conflicts in such bodies do not necessarily have a legal qualification. Arguably, such bodies are better placed than courts to provide low-cost, speedy and effective solutions to conflicts of that kind.

At 89: ‘jurisdiction in a specific field of EU law may be divided between different bodies, provided that the rights in question are adequately protected’: an important precondition of course is that the national system guarantees that cases where national or EU legislation needs to be disapplied where they would clash with citisens’ rights, are properly adjudicated by the courts who are empowered to set aside the law: and not just swept under the carpet under the guise of the assessment being ‘factual’ only.

Geert.

 

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Bot AG in Liberato: violation of lis alibi pendens rules does not justify refusal of enforcement on grounds of ordre public.

Advocate-General Bot opined on 6 September in C-386/17 Liberato. (Not as yet available in English). The case is slightly complicated by the application of not just former Regulation 44/2001 (Brussels I) but indeed a jurisdictional rule in it (5(2)) on maintenance obligations, which even in Brussels I had been scrapped following the introduction of the Brussels IIa Regulation.

The Opinion is perhaps slightly more lengthy than warranted. Given both the Brussels I and now the Brussels I Recast specific provisions on refusal of recognition and enforcement, it is no surprise that the AG should advise that a wong application by a court of a Member State (here: Romania) of the lis alibi pendens rules, does not justify refusal of recognition by other courts in the EU: the lis alibi pendens rules do not feature in the very limited list of possible reasons for refusal (which at the jurisdictional level lists only the protected categories, and the exclusive jurisdictional rules of Article 24), and it was already clear that misapplication of jurisdictional rules do not qualify for the ordre public exception.

It would not hurt having the CJEU confirm same.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.16.1.3, 2.2.16.1.4.

 

 

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Climate change litigation reaches the CJEU’s desk.

One can say many things about climate change litigation by individuals. (See my earlier piece on the Dutch Urgenda case). Many argue that the separation of powers suggest that governments, not judges, should be making climate policy. Or that international environmental law lacks the type of direct effect potentially required for it to be validly invoked by citisens. Others point to the duty of care of Governments; to binding – even if fluffy – climate change obligations taken on since at least the 1990s, and to the utter lack of progress following more than 25 years of international climate change law.

It is therefore no surprise to see that this type of litigation has now also reached the European Court of Justice: the text of the application is here, see also brief legal (by Olivia Featherstone) and Guardian background.

Like cases before it, colleagues shy of preparation materials for an international environmental law course, with comparative EU law thrown in, can use the case to hinge an entire course on.

As Olivia reports, the legal principles involved are the following:

The claimants state that EU emissions leading to climate change are contrary to:

  • The principle of equality (Articles 20 and 21, EU Charter)
  • The principle of sustainable development (Article 3 TEU, Article 11 TFEU)
  • Article 37 EU Charter
  • Article 3 UNFCCC
  • The no harm principle in international law
  • Article 191 ff TFEU (the EU’s environmental policy

One to watch.

Geert.

EU Environmental Law, with Leonie Reins, Edward Elgar, 1st ed. 2017, part I Chapter 2 in particular.

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Anchor defendants in follow-up competition law cases. The High Court in Vattenfall et al v Prysmian et al.

Thank you Brick Court and Stewarts, among other, for flagging Vattenfall et al v Prysmian et al in which the High Court dismissed a call for summary judgment on the grounds of lack of jurisdiction.

A classic case of follow-up damages litigation in competition law, here in the high voltage power cables cartel, fines for which were confirmed by the CJEU early July. Core to the case is the application of Article 8(1)’s anchor defendants mechanism. Only two of the defendants are UK incorporated companies – UK subsidiaries of companies that have been found by the European Commission to have infringed EU competition law.

Authority cited includes of course CDC, Roche Nederland and Painer, and Cooper Tyre (sale of the cartelised products can amount to implementation of the cartel). Vattenfall confirms that for the English courts, ‘knowingly implementing’ the cartel has a low threshold.

At 89 ff the Court refers to the pending case of (what I now know to be) C-724/17 Skanska Industrial Solutions e.a.: Finnish Courts are considering the application for cartel damages against parent companies on acquiring cartelist subsidiaries, had dissolved them. Relevance for Vattenfall lies with the issue of knowledge: the Finnish courts wonder what Article 101 TFEU has to say on the degree of knowledge of the cartelist activities, relevant for the liability of the parent company. An application of fraus, or abuse in other words. Elleray DJ however, did not consider the outcome of that reference to be relevant for the case at hand, in its current stage of procedure.

Geert.

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

 

 

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