Posts Tagged Forum shopping

An update from the social dumping flightdeck. Saugmandsgaard ØE advises against Ryanair and Crewlink on ‘place where the employee habitually carries out his work’.

Saugmandsgaard ØE this morning Opined in Joined Cases C‑168/16 and C‑169/16, Nogueira et al and Osacar v Ryanair. Reference in the case was made by the Court of Appeal at Mons /Bergen in the Ryanair case I reported on in first instance. The weakest part of that judgment, I noted, was that it looked to the employer’s organisation as the most relevant criterion when deciding upon place of habitual employment. That clearly went against the favor laboris inherent in Article 19 of the Brussels I Recast Regulation.

The Advocate General at 100 in particular agrees with that view. Regular readers will know that I do not tend to paraphrase for the sake of it hence reference is best made to the AG’s Opinion as a whole. In summary:  Saugmandsgaard ØE recalls that CJEU case-law on the matter essentially requires the courts to either identify the ‘place where’ the employee principally carries out his obligations vis-à-vis his employer, or the ‘place from which’ he principally carries out those obligations. The workers at issue were employed as cabin crew on aircraft operated by Ryanair. Those employees performed their work in more than one Member State, namely in Belgium, where the airport of departure (Charleroi) was situated, the Member State of the airport of arrival and any other Member States crossed during the flight.  The AG suggests (at 92) that it is not possible, in such circumstances, to identify a ‘place where’ those employees principally carried out their obligations vis-à-vis their employers, for it is difficult to attach greater weight to the tasks carried out by those employees in the airport of departure, on board the aircraft or in the airport of arrival.

A ‘place from which’ those employees principally carried out their obligations vis-à-vis their employers, however, can be identified.  The referring court had listed a number of factual considerations among which the AG suggests the following as being highly relevant: (97 ff)

First, appellants started and ended their working day at Charleroi Airport. To the AG’s mind, that fact is of overriding importance, which he suggests is confirmed by the Court’s consistent case-law in particular Koelzch and Voogsgeerd.

Second, appellants received the instructions relating to their tasks and organised their work at Charleroi Airport, by consulting their employers’ intranet. (It is on this point that the AG rejects any relevance of the location of organisation of the work schedule by the employer).

Third, the aircraft operated by Ryanair, and on board which appellants worked as cabin staff, were based at Charleroi. Here the AG refers to CJEU case-law that, in the international transport sector, the place where the work tools are located constitutes a relevant indicium for the purposes of determining the place from which the worker principally fulfils his obligations vis-à-vis his employer.

Fourth, appellants were contractually required to live less than one hour from Charleroi Airport. It is noteworthy that this indication refers not to the worker’s actual place of residence but rather to the place of work near which he lives, namely Charleroi Airport in the main proceedings (at 103).

Fifth, the referring court noted that Ryanair and Crewlink jointly had a ‘crew room’ at Charleroi Airport. The existence of an office made available by the employer is another factor the relevance of which has been emphasised in the Court’s case-law. That this is not formally a ‘branch’ of either company, is irrelevant.

Finally, appellants were required to attend Charleroi Airport if they were unfit for work and in the event of disciplinary problems.

The AG points out that on the basis of the criteria, the Court at Mons formally will have to complete the analysis, however he concludes (at 107) that on the basis of the findings of fact communicated by that court in its request for a preliminary ruling, those six indicia unequivocally designate the courts of the place where Charleroi Airport is situated.

A few other issues are worth mentioning. Firstly (at 108) whether the worker is directly employed by Ryanair (Case C‑169/16) or assigned to Ryanair by Crewlink (Case C‑168/16) is irrelevant for the purposes of identifying the place where the work is habitually carried out, within the meaning of Article 19(2)(a) of Regulation No 44/2001. That place, the AG suggests, is independent of the legal link between the worker and the person who benefits from the work done.

Further, the AG suggests that the concept of ‘home base’ has  relevance to the analysis, albeit indirect. ‘Home base’ is a term used in relevant EU civil aviation law. At 109 ff: ‘place where the employee habitually carries out his work’, used in Article 19(2) of Regulation No 44/2001, should not have to depend on a concept in an act of Union law which belongs to a quite different area, namely that of the harmonisation of rules in the civil aviation sector.’ At 116: the relevance of the home base, for the purposes of identifying the place where the contract of employment is habitually carried out, is only indirect. Indeed, it should be taken into account only in so far as it supports the indicia mentioned above as relevant for the purposes of identifying that place.’ (Which it certainly did in casu).

Further and convincingly, the AG emphatically suggests that the nationality of the aircraft is entirely irrelevant for the discussion (118 ff).

Finally, at 73 ff the AG suggests that there ought to be parallel interpretation of the findings on jurisdiction, and the rules on applicable law, among others in the Rome I Regulation. Those rules were not included in the referring court’s request for preliminary ruling.

We have to await the Court’s judgment, of course. However all in al this is a convincing Opinion which, as specifically flagged by the AG (at 101), is instrumental in addressing forum shopping by employers and consequently will be extremely helpful in addressing social dumping in the EU.

Geert.

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

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Sinocore International Co Ltd v RBRG Trading: The commercial court on fraus, ordre public and arbitration.

Fraus omnia corrumpit (fraud corrupts all; alternatively formulated as ex turpi causa non oritur actio) is not easily applied in conflict of laws. See an earlier post here.  In Sinocore International Co Ltd v RBRG Trading , the Commercial Court granted permission for the enforcement of a foreign arbitral award despite allegations that the transaction in question had been “tainted” by fraud: this is how the case is summarised by Mayer Brown and I am happy broadly to refer to their overview and analysis.

The Commercial Court’s relaxed attitude is another sign of strong support of the English courts for the New York Convention and its narrow application of ordre public.

An interesting case for comparative conflicts /arbitration classes.

Geert.

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Disciplining forum shopping not a relevant consideration under Brussels IIa. CJEU in Child & Family Agency v J.D.

I reported earlier on the AG’s Opinion in C‑428/15, Child and Family Agency. The Court held late October. It first of all confirms earlier case-law relating to the interpretation of the notion ‘civil matters’, with reference to the need for autonomous interpretation. ‘Civil matters’ may include adoption of child protection measures, including cases where those measures are considered, under the domestic law of a Member State, to be governed by public law (at 32).

More fundamentally, the question of forum non conveniens. Article 15(1) of Regulation No 2201/2003 provides that the courts of a Member State having jurisdiction as to the substance of a case may request the transfer of that case, or a specific part thereof, to a court of another Member State with which the child has a particular connection, if they consider that that court is better placed to hear the case, and where the transfer is in the best interests of the child. Article 15(3) lists exhaustively the factors that can be taken into account in this respect.

Not surprisingly of course the CJEU puts the interests of the child at the core of its analysis. The criterion of proximity (leading to the principal jurisdiction for the courts of the habitual residence of the child) can only be set aside if there are facts-specific considerations that to do so is in the better interest of the child.

Article 15(3) being an exhaustive list, the Court is not willing to consider any other consideration: the impact of the referral on the free movement rights of others, in particular the parents, can not be of any relevance, lest such impact in turn has an impact on the free movement of the child itself. Moreover, the concern of the Irish court that referred, namely that a transfer of children from the UK to Ireland (following the parent’s exercise of her freedom of movement), thus amending their habitual residence, may be an abusive form of forum shopping, cannot be a relevant consideration.

Geert.

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Trusts (Stiftung) and estate planning. You cannot have your cake, and eat it.

One cannot have one’s cake and eat it. Meaning once the cake has been eaten, it is gone and you no longer have it. (Apologies but this saying is so often misunderstood I thought I should clarify).

Anyways, the Flemish tax administration had something along these lines in mind when it recently ruled in a case involving a Liechtenstein Stiftung. Many thanks to De Broeck & Van Laere for bringing the ruling to my attention. The Inland Revenue generally employ quite a lot of deference towards trusts and Stiftungs of all kind. In the case at hand however it requalified the transfer of means from the Stiftung to the heirs of the deceased, as being of a contractual nature. That is because the deceased, upon creation of the Stiftung, had issued such precise instructions in the Stiftung’s by-laws, that the hands of the trustees (or equivalent thereof) had been tied.  This essentially takes away a crucial part of the Stiftung’s nature, and no longer shields the assets from the (Flemish) taxman. The cake has been eaten.

Geert.

 

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Universal Music: The CJEU distinguishes Kolassa but just won’t give up on Bier.

As I had feared /as was to be expected, the CJEU did not follow Szpunar AG’s lead in formally letting go of Case 21/76 Bier‘s Erfolgort /Handlungsort distinction, even if it did accept the AG’s rejection in the case at issue, of the mere presence of a bank account triggering jurisdiction for tort under (now) Article 7(2) Brussels I Recast.

Kolassa upheld jurisdiction in favour of the courts for the place of domicile of the applicant by virtue of where the damage occurred, if that damage materialises directly in the applicant’s bank account held with a bank established within the area of jurisdiction of those courts. In Universal Music the CJEU distinguished Kolassa: for in the latter case there where ‘circumstances contributing to attributing jurisdiction to those courts.’ In general, the Court held in Universal Music, ‘purely financial damage which occurs directly in the applicant’s bank account cannot, in itself, be qualified as a ‘relevant connecting factor’‘ (at 38) . ‘ It is only where the other circumstances specific to the case also contribute to attributing jurisdiction to the courts for the place where a purely financial damage occurred, that such damage could, justifiably, entitle the applicant to bring the proceedings before the courts for that place.‘ (at 39).

The Court at 38 flags a rather interesting and relevant argument for dismissing pure presence of  a bank account as a determining connecting factor (a student of mine, Tony Claes, had made the same argument earlier this ac. year): a company such as Universal Music may have had the choice of several bank accounts from which to pay the settlement amount, so that the place where that account is situated does not necessarily constitute a reliable connecting factor. What the Court is essentially saying is that in such circumstance the applicant can manipulate jurisdiction and hence shop for a forum: which is not part of the jurisdictional rule for tort.

Crucially of course we are left having to ponder what exactly ‘other circumstances’ than location of bank account may imply.

Geert.

(Handbook of) European private international law, second ed. 2016, Chapter 2, Headings 2.2.11.2, 2.2.11.2.7

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The Pfizer /Allergan collapse: An end to Celtic Cash and a source of inspiration for EU rules on outgoing corporate mobility?

I shall keep this post short for otherwise it risks developing into a book. In a week which also saw the Panama papers blow a hole in the use of tax havens for individuals, the collapse of the Pfizer Allergan merger may be the beginning of the end for the Irish (and similar) corporate tax Nirvana. The US treasury’s new rules on outgoing corporate mobility mean re-incorporation in Ireland has become an awful lot less attractive.

I realise there are caveats and one may be comparing cheese and chalk. Also, tax lawyers no doubt will have to chew over this, yet: may this not also be the moment for the EC to reconsider similar issues in EU law, kicked off some time back by the Daily Mail case?

Geert.

(Handbook of) European Private International Law 2nd ed 2016 Chapter 7.

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Schemes of arrangement: No scheming, and no hastily arranging, please. The High Court adjourns hearing in Indah Kiat.

I have reported before on various schemes of arrangement which the English Courts gave the go-ahead even when they concerned non-English companies (I should flag that in two of those, Apcoa and Van Gansewinkel, I acted as expert). Thank you Arie van Hoe for bringing Indah Kiat to my attention some weeks ago.

Indah Kiat is a Dutch BV seeking an order convening a single meeting of its scheme creditors to consider and if thought fit approve a scheme of arrangement pursuant to Part 26 of the Companies Act 2006. The application is strenuously opposed by one of the Scheme Creditors, APP Investment Opportunity LLC (“APPIO”), which contests the jurisdiction of the court to entertain or sanction the Scheme. Such opposition is different from the other schemes which I mention in my previous postings.

In the first instance, APPIO simply seeks an adjournment of the Scheme Company’s application on the grounds that inadequate notice has been given to Scheme Creditors. However, it also raises a significant number of other issues concerning the adequacy of the evidence and disclosure by the Scheme Company, together with questions concerning the procedure and scope of the court’s jurisdiction to sanction creditor schemes for foreign companies in relation to debts governed by foreign law.

The Scheme Company is a special purpose vehicle which was incorporated for financing purposes in the Netherlands. It sought the COMI way to enable English courts to obtain jurisdiction over the scheme. English jurisdiction, required to carry out the Scheme, usually rests on either one of two legs: COMI, or making English law the governing law of the underlying credit agreements (if necessary by changing that governing law en route).

The COMI route to jurisdiction in many ways defies the proverbial impossibility of having one’s cake and eating it. For the establishment of a company’s centre of main interests, the courts and practice tend to refer to the EU’s Insolvency Regulation. Yet that schemes of arrangement do not fall under the Insolvency Regulation is a crucial part of the forum shopping involved in attracting restructuring advice to the English legal market. This is especially so for the aforementioned second route to jurisdiction (a change in governing law). however it is also true for the first form. Snowden J refers to that at para 85-86 of his judgment.

Indah Kiat has effected its change of COMI (rebutting the presumption of COMI being at its registered seat) by notifying its creditors via a number of clearing houses for the Notes concerned. APPIO contest that this notification sufficed for change in COMI. There are not enough relevant facts in the judgment to consider this objection thoroughly, however APPIO’s misgivings would not seem entirely implausible.

Snowden J notes that whilst protesting the jurisdiction, in the first instance APPIO simply seeks an adjournment of the convening hearing on the grounds that inadequate notice has been given of it to Scheme Creditors. It contends that given the complex nature of the Scheme and the factual background, there is no justification for an urgent hearing of the application. The Court agreed and the convening hearing (different from the sanction hearing, which follows later) was adjourned until 3 March. Snowden J further gave extensive argument obiter as to why the Scheme’s information was insufficient in the form as it stood at the hearing.

He then revisits (82 ff) the jurisdictional issue, which I have already signalled above: what role exactly COMI should play, how the Brussels I recast intervenes, what the impact is of likely recognition of the sanction (if any) in Indonesia, The Netherlands, and the US; and what if any role the relevant US judgments in the case should play: there will be plenty of points for discussion at the convening and sanction hearing. (I mentioned above that the convening hearing was scheduled around 3 March; I have not heard from the case since however if anyone has, please do let me know).

I do not think Indah Kiat has made the jurisdictional hurdle higher for Schemes of Arrangement involving foreign companies. Rather, the fierce opposition of an important creditor has brought jurisdictional issues into sharper perspective than had been the case before.

Geert.

(Handbook of) EU Private International Law, Chapter 5, Heading 5.4.2).

 

 

 

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