Posts Tagged EEX Verordening
Jurisdiction re prospectus liability. CJEU reiterates Universal Music in Löber v Barclays. Unfortunately fails to identify the exact locus damni and leaves locus delicti commissi unaddressed.
I reviewed Advocate-General Bobek’s Opinion in C-304/17 Löber v Barclays here. The following issues in particular were of note (I simply list them here; see the post for full detail): First, the AG’s view, coinciding with mine, that the CJEU’s finding in CDC that locus damni for a pure economic loss, in the case of a corporation, is the place of its registered office, is at odds with precedent (he made the same remark in flyLAL). Next, on locus delicti commissi, the AG suggests that despite Article 7(2)’s instruction, a single ldc within the Member State in the case at hand cannot be determined. Further, for locus damni, I disagree for reasons explained in the post with the AG’s suggestions.
The Court held on Wednesday. At 26 it immediately cuts short any expectation of clarification on locus delicti commissi: ‘In the present case, the case in the main proceedings concerns the identification of the place where the damage occurred.’
The referring court’s questions were much wider, asking for clarification on ‘jurisdiction’ full stop. Yet the Court must have derived from the file that only locus damni was in dispute. A missed opportunity for as I noted, Bobek AG’s views on that locus delicti commissi are not obvious.
On locus damni then, I may be missing a trick here but the Court simply does not answer the referring court’s question. As the AG notes, Ms Löber in order to acquire the certificates, transferred the corresponding amounts from her current (personal) bank account located in Vienna, to two securities ‘clearing’ accounts in Graz and Salzburg. Payment was then made from those securities accounts for the certificates at issue. The Court refers to Kolassa and to Universal Music, to reiterate that the simple presence of a bank account does not suffice to establish jurisdiction: other factors are required, such as here, at 33,
‘besides the fact that Ms Löber, in connection with that transaction, had dealings only with Austrian banks, it is furthermore apparent from the order for reference that she acquired the certificates on the Austrian secondary market, that the information supplied to her concerning those certificates is that in the prospectus which relates to them as notified to the Österreichische Kontrollbank (Austrian supervisory bank) and that, on the basis of that information, she signed in Austria the contract obliging her to make the investment, which has resulted in a definitive reduction in her assets.’
The Court concludes that ‘taken as a whole, the specific circumstances of the present case contribute to attributing jurisdiction to the Austrian courts.’
That however was not seriously in doubt: the more specific question is which one: Vienna? (which had rejected jurisdiction) Graz and /or Salzburg? Article 7(2) requires identification of a specific court (which the AG had identified in his opinion: I may not follow his argumentation, but it did lead to a specific court): not merely a Member State, and the Oberster Gerichtsthof had specifically enquired about the need for centralisation of the claim in one place.
All in all a disappointing judgment which will not halt further questions on jurisdiction for prospectus liability.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 184.108.40.206.7
Vik v Deutsche Bank. Court of Appeal confirms High Court’s view on Article 24(5) – jurisdiction for enforcement.
The Court of Appeal has now confirmed in  EWCA Civ 2011 Vik v Deutsche Bank that permission for service out of jurisdiction is not required for committal proceedings since the (now) Article 24(5) rule applies regardless of domicile of the parties. See my posting on Dar Al Arkan and the one on Dennis .
Gross LJ in Section IV, which in subsidiary fashion discusses the Brussels issue, confirms applicability to non-EU domicileds however without referring to recital 14, which confirms verbatim that indeed non-EU domicile of the defendants is not relevant for the application of Article 24.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11.
Many of you will have already seen (e.g. via Giesela Ruehl) the German Supreme Court (Bundesgerichtshof – BGH)’s refusal to recognise and enforce a Polish judgment under the Brussels I Regulation (application was made of Brussels I but the Recast on this issue has not materially changed). The BGH argued that enforcement would violate German public policy, notable freedom of speech and freedom of the press as embodied in the German Constitution.
Giesala has the necessary background. Crux of the refusal seemed to be that the Court found that to require ZDF to publish by way of a correction /clarification (a mechanism present in all Western European media laws), a text drafted by someone else as its own opinion would violate ZDF’s fundamental rights.
Refusal of course is rare and in this case, too, one can have misgivings about its application. The case however cannot be decoupled from the extremely strong sentiment for freedom of speech under German law, for obvious reasons, and the recent controversy surrounding the Polish law banning the use of the phrase ‘Polish concentration camps’.
I am very pleased to have been given approval by professor Burkhard Hess to publish the succinct comment on the case which he had sent me when the judgment was issued. I have included it below.
European private international law, second ed. 2016, Chapter 2, 18.104.22.168.1, 22.214.171.124.4
The German Federal Civil Court rejects the recognition of a Polish judgment in a defamation case under the Brussels I Regulation for violation of public policy
Burkhard Hess, Max Planck Institute Luxembourg
In 2013, the German broadcasting company ZDF (a public body) broadcast a film about Konzentrationcamps. In the film, it was (incorrectly) stated that Auschwitz and Majdanek were “Polish extermination camps”. Further to the protests made by the Polish embassy in Berlin, ZDF introduced the necessary changes in the film and issued an official apology. However, a former inmate of the KZ, brought a civil lawsuit in Poland claiming violation of his personality rights. With his claim he sought remedy in the form of the broadcasting company (ZDF) publishing on its Internet home page both a declaration that the history of the Polish people had been falsified in the film and a statement of apology. Ultimately, the Cracow Court of Appeal ordered the publication of the declaration on the company’s home page. While ZDF published the text on its website visibly for one month, it did not post it on its home page.
Consequently, the plaintiff sought the recognition of the Polish judgment in Germany under the Brussels I Regulation. However, the German Federal Court denied the request for recognition on the grounds that it would infringe on German public policy (article 34 No 1 Regulation (EU) 44/2001). In its ruling, the Court referred to the freedom of the press and of speech (article 5 of the Constitution) and to the case-law of the Constitutional Court. The Court stated that the facts had been incorrectly represented in the film. However, it held that, under German law, ordering a declaration of apology qualifies as ordering a declaration of opinion (Meinungsäusserung) and that, according to the fundamental freedom of free speech, nobody can be obliged to make a declaration which does not correspond to his or her own opinion (the right to reply is different as it clearly states that the reply is made by the person entitled to the reply). As a result, the Polish judgment was not recognized.
BGH, 19 July 2018, IX ZB 10/18, The judgment can be downloaded here.
To my knowledge, this is one of the very rare cases where a foreign judgment was refused recognition in Germany under article 34 no 1 of the Brussels I Regulation (now article 45 (1) (a) Brussels Ibis Regulation) because substantive public policy was infringed.
Speaking frankly, I’m not convinced by the decision. Of course, the text which the ZDF, according to the Cracow court, had to make as its own statement represented a so-called expression of opinion. Its imposition is not permissible under German constitutional law: requiring the ZDF-television to making this expression its own would have amounted to an infringement of the freedom of speech as guaranteed by article 5 of the Constitution.
However, it corresponds to well settled principles of the recognition of judgments to substitute the operative part of the foreign judgment by a formula which comes close to it. This (positive) option is totally missing in the formalistic judgment of the Federal Civil Court. In this respect I’m wondering why the BGH did not simply order that the operative part of the Polish judgment as such was declared enforceable. My proposed wording of a declaration of enforceability would be drafted as follows: “According to the judgment of the Appellate Court of Krakow the ZDF is required to publish the following decision:…”
This solution would have solved the problem: No constitutional conflict would have arisen and the political issues would have mitigated. Seen from that perspective, the judgment appears as a missed opportunity.
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  EWHC 1964 (Ch) 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.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 126.96.36.199
Jurisdiction re prospectus liability (misrepresentation) before the CJEU again. Bobek AG in Löber v Barclays.
Even Advocate-General Bobek has not managed to turn jurisdictional issues re prospectus liability into the prosaic type of analysis which many of us have become fond of. His Opinion in C-307/17 Löber v Barclays is a lucid, systematic and pedagogic review of the CJEU’s case-law on (now) Article 7(2)’s jurisdiction for tort in the context of ‘prospectus liability’ aka investment misrepresentation. Starting with the direct /indirect damage distinction; and focusing of course on the determination of pure economic loss.
Ms Helga Löber invested in certificates in the form of bearer bonds issued by Barclays Bank Plc. In order to acquire those certificates, the corresponding amounts were transferred from her current (personal) bank account located in Vienna, Austria to two securities accounts in Graz and Salzburg. Payment was then made from those securities accounts for the certificates at issue.
Note immediately that the jurisdictional discussion is a result of Article 7(2) not just identifying a Member State: it identifies specific courts within that Member State. Here: claimant brought her claim before a court in Vienna, the place of her domicile. This is also where her current bank account is located, from which she made the first transfer in order to make the investment. The first- and second-instance courts in Vienna however decided that they did not have jurisdiction to hear the case. The case is now pending before the Oberster Gerichtshof (Supreme Court, Austria). That court is asking, in essence, which of the bank accounts used, if any, is relevant to determine which court has jurisdiction to hear the claim at issue.
Close reference is made to Kolassa. In my posting on that case at the time, I noted that the many factual references which the Court built in in its decision, gave it dubious precedent value. Bobek AG in Löber necessarily therefore distinguishes many factual situations. The almost sole focus lies on 7(2): unlike in Kolassa, contracts neither consumer contracts are an issue.
Here are a few things of note:
First, in his review of the existing case-law the AG at 38 points out like I did at the time of the judgment, that the CJEU’s finding in CDC that locus damni for a pure economic loss, in the case of a corporation, is the place of its registered office, is at odds with precedent (he made the same remark in flyLAL).
Next, on locus delicti commissi, the AG suggests that despite Article 7(2)’s instruction, a single ldc within the Member State cannot be determined. The relevant point in his view is the moment from which the prospectus can, by operation of law, start influencing the investment behaviour of the relevant group of investors. In the present case, and considering the national segmentation of the capital market regulation at issue, that relevant group is made up of investors on secondary markets in Austria. At 65: once it became possible to offer the certificates on the Austrian secondary market, that possibility was immediately available for the whole territory of Austria. ‘The nature of the tort of misrepresentation at issue does not allow for the identification of a location within the national territory because once the author of the tort is allowed to influence the given national territory, that influence immediately covers the whole territory, irrespective of the actual means used for the publication of a specific prospectus.’ As we know from CDC, the Court does not readily accept that a single ldc cannot be determined.
Further, for locus damni, the AG suggests (at 78) ‘The place where…a legally binding investment obligation is factually assumed… The exact location of such a place is a matter for the national law considered in the light of available factual evidence. It is likely to be the premises of a branch of the bank where the respective investment contract was signed, which may correspond, as in the Kolassa case, to the place where the bank account is held.‘ That in my view first of all is not a warranted outcome. The investor in Löber is not a consumer within the protected categories of the Regulation. Suggesting the place of conclusion of the obligation leaves room for the claimant to manipulate the forum of any future suit in tort. This is exactly what the Court objected to in Universal Music. Moreover, note the reference to ‘the national law’. It is quite unusual to suggest such a role for lex fori in light of the principle of autonomous interpretation. Unless the AG in fact means the ‘lex contractus’, presumably to be determined applying Rome I.
In summary there are quite a few open questions here – not something of course which I would necessarily object to.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 188.8.131.52.7
Kareda v Stefan Benkö: CJEU rules with speed on recourse claim brought between jointly and severally liable debtors.
Less than two months after the AG Opined (see my report here), the Court of Justice has already held in C-249/16 Kareda v Stefan Benkö. The judgment follows Opinion to a tee albeit with a slightly more cautious link between Brussels I (jurisdiction) and Rome I /II (applicable law): at 32, with reference to the similarly cautious approach of the Court in Kainz.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 184.108.40.206, Heading 220.127.116.11.9 .
Uneasy cohabitation. Kareda v Benkö: special jurisdictional rules (contract or tort) for a recourse claim brought between jointly and severally liable debtors.
Ergo, Brogsitter, Granarolo...There is a long list of cases in which the CJEU is asked to decide whether a relationship between parties is contractual, with special jurisdiction determined by Article 7(1) of the Brussels I Recast Regulation, or one in tort, subject to Article 7(2) of same.
In C-249/16 Saale Kareda v Stefan Benkö Bot AG opined end of April. The Court is asked to rule on whether a recourse claim brought between jointly and severally liable debtors under a credit agreement constitutes a contractual claim. And if it is, the Court will have to examine whether such an agreement may be classified as an agreement for the provision of services, which will, as the case may be, lead it to determine the place of performance of its characteristic obligation.
I still think that what I dubbed the ancestry or pedigree test of Sharpston AG in Ergo, is a most useful litmus test to distinguish between 7(1) and 7(2): what is the ancestry of the action, without which the parties concerned would not be finding themselves pleading in a court of law?: she uses ‘centre of gravity’ (‘the centre of gravity of the obligation to indemnify is in the contractual obligation’); ‘rooted in’ (‘the recourse action by one insurer against the other…is rooted in the contracts of insurance’); and ‘intimately bound up’ (‘[the action] is intimately bound up with the two insurers’ contractual obligation‘). (at 62 of her Opinion in Ergo). I am not sure though whether the Court itself follows the test.
Before the Austrian courts, Stefan Benkö, an Austrian national, is bringing a recourse claim against Saale Kareda, an Estonian national and his former partner, seeking payment of EUR 17 145.41 plus interest and costs. While they were living together in Austria, the applicant and the defendant bought a house in 2007 and for that purpose took out three loans totalling EUR 300 000 (‘the loan’) from an Austrian bank. They were both borrowers and the referring court states that they were both jointly and severally liable debtors. Ms Kareda broke up with Mr Benkö, moved back to Estonia, and ceased her loan payments. Being sued for the arrear payments by MR Benko, she now claims that the Landesgericht St. Pölten (Regional Court, St. Pölten), the court seised by the applicant, lacked territorial jurisdiction in so far as the loan was made by an Austrian bank and the place of performance for that loan, the bank’s registered office, is not located in the judicial district of that court.
Is it possible to ‘detach’ from the credit agreement the legal relationships arising between jointly and severally liable debtors following the conclusion of that agreement, or does this form an inseparable whole? (at 28) Bot AG suggests it is the latter and I believe he is right. I agree that it would be artificial, for the purposes of the application of the Brussels I Recast. to separate those legal relationships from the agreement which gave rise to them and on which they are based.
I am less convinced by the reference, at 32 and 33, to the need for consistency between Brussels I Recast and Rome I: regular readers of this blog will not be surprised by this. (But I believe I am fighting a losing battle there). The AG refers to Article 16 of Rome I, entitled ‘Multiple liability’, which provides inter alia that, ‘[i]f a creditor has a claim against several debtors who are liable for the same claim, and one of the debtors has already satisfied the claim in whole or in part, the law governing the debtor’s obligation towards the creditor also governs the debtor’s right to claim recourse from the other debtors’.
Having decided that the issue is contractual, the AG suggests the credit agreement is an agreement for the provision of services, and that in the context of a credit agreement, the characteristic obligation leading to jurisdiction is the actual granting of the sum loaned. The other obligation entailed by such an agreement, namely the borrower’s obligation to repay the sum loaned, exists only through the performance of the service by the lender, as repayment is merely its consequence.
The final element to consider is then the actual place of performance of the characteristic obligation. In the AG’s view, only the place where the creditor has its place of business is capable of ensuring that the rules are highly predictable and of satisfying the objectives of proximity and standardisation pursued by the second indent of Article 7(1)(b) of Regulation No 1215/2012. That place will be known by the parties from the time of the conclusion of the agreement and will also be the place of the court having the closest connection with that agreement. (at 46).
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 18.104.22.168, Heading 22.214.171.124.9