Posts Tagged Forum shopping
Forum shopping and personal insolvency. The High Court (briefly) in Wilson and Maloney (in re McNamara). Is this the last UK reference to the CJEU?
 EWHC 98 (Ch) Wilson and Maloney (bankruptcy trustees of Michael McNamara), concerns mostly Article 49 TFEU (freedom of establishment) and Article 24(1) of the Citizens’ Rights Directive 2004/38 (equal treatment). (At 114) the critical question is whether the exclusion of pension rights on bankruptcy is something that can impact on the right of establishment, or is otherwise within the scope of Art 49 TFEU.
The substantive case at issue concerns the inclusion or not of in investment in a certain pension scheme, into the bankruptcy. My interest in the judgment lies in the succinct reference to forum shopping under insolvency regimes.
Mr McNamara was made bankrupt on 2 November 2012 on his own petition, presented that day. Prior to his bankruptcy Mr McNamara had been a high profile property developer operating primarily, if not exclusively, in the Republic of Ireland. But he and his wife had moved to London in July 2011, and the Court accepted that he had moved his centre of main interests (or COMI) from Ireland to England by the date of presentation of the petition.
Nugee J decided to refer to the CJEU for preliminary review (this having happened on 23 January, clearly one of the last if not the last UK reference to go up to the CJEU). Whether COMI was moved for forum shopping purposes is not likely to feature in the eventual judgment – for there does not seem to be any suggestion that the move of COMI to England had not been properly established.
Update 21 January 2020 for the cryptoassets issue, see AA v Persons Unknown & Ors, Re Bitcoin  EWHC 3556.
Happy 2020 reading, all!
At the back of my mind I have a number of interesting examples of the English Courts and English law’s awareness of the relevance of courts and substantive law in regulatory competition. I post them here together by way of illustration.
Sir Vos’ speech on how English law on cryptoassets should develop so as to boost the
confidence of would-be parties to ‘smart’ legal contracts; a further analysis of same by the ‘UK jurisdiction taskforce’, and Outer Temple’s reaction to ditto.
Also however RPC’s review of Davey v Money  EWHC 997 (Ch), in which Snowden J declined to cap a litigation funder’s liability for adverse costs at the amount of funding provided: essentially adding a potential risk to be considered by third-party litigation funders and illustrating that attractive as England may be as a forum for litigation, the sector is not a free for all.
Finally, the English courts are not of course alone in the realisation of the issues: witness this 2017 report by the French Supreme Court: ‘”Le juge et la mondialisation”.
Canadian recognition of Syncreon Group English Scheme of Arrangement underscores new markets for restructuring tourism.
An essentially Dutch group employs English restructuring law and has the resulting restructuring recognised in Canada. Need one say more to show that regulatory competition is alive and well and that the UK, England in particular need not fear a halt to restructuring forum shopping post Brexit.
Blakes first alerted me to the case, the Initial recognition order 2019 ONSC 5774 is here (I have not yet managed to locate the final order). Insolvency trustee PWC have a most informative document portal here. See also the Jones Day summary of the arrangements here. The main issue of contention was the so-called third party release in favour of Syncreon Canada which could have bumped into ordre public hurdles in Ontario as these clearly have an impact on the security of underlying debt. The way in which the proceeding are conducted (fair, transparent, with due consideration of minority holders etc.) clearly have an impact on this exercise.
(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 2, Chapter 5.
In  EWHC 2776 (Fam) Ali v Rodrigues, claimant appreciated that the date of petition to divorce and date of and English respectively Scottish decrees are highly important to the husband’s immigration status. One way in which a former EEA family member can retain right of residence is if the marriage exceeded 3 years.
The husband was in Pakistan from 10th January 2016 to 18th February 2016. A certificate of entitlement to a divorce was issued on 21st March 2016 and decrees nisi and absolute were pronounced in the Romford (England) Family Court on, respectively, 12th April and 27th May 2016. That was the English decree. On 14th December 2016, the Home Office notified the husband that it was revoking his residence card on the basis that he was no longer a family member of an EEA national. The wife remarried in 2016, following the English decree and has sponsored her second husband’s application for leave to remain. The husband petitioned for divorce in Scotland on 27th September 2016, three years and five months after the date of the marriage and at least two years and three months from the date of the separation. On 6th November 2017, the Edinburgh Sherriff Court and Justice of the Peace Court pronounced the decree absolute, which is the Scottish decree.
If the English decree stands, the marriage will have lasted less than 3 years. If the Scottish decree stands, 3 years will have been exceeded. The husband essentially argues that the English decree is tainted by irregularity of service upon him. Lieven J held that the English decree should stand, on the basis that when it comes to failures related to service, it is appropriate to look at the nature of what went wrong and where the prejudice, if any, lies (at 36 ff). The wife took reasonable steps; and there are indications that the husband was trying to avoid service.
Given irregularities in service the English decree is voidable, but not void in the discretionary opinion of the court: the consequences of setting aside the English decree would more severe than that of the Scottish decree’s invalidity. If the English decree does not stand, the wife’s second marriage would have been made at a time when the first marriage persisted. That would be a very serious impact on her, her second husband and the child.
Sadik v Sadik. Domicile, libel tourism and the absence of party autonomy in the Defamation Act 2013.
Update 7 November 2019 for a second What’sApp defamation case under the common law see 5 November Tallha Abdulrazaq v Nibras Hassan  EWHC 2930 (QB) – where jurisdiction was not an issue.
In  EWHC 2717 (QB) Sadik v Sadik, the claim is one in libel. Claimant is a businessman and philanthropist who lives in Dubai and spends 30 to 35 days in London each year. Claimant and Defendant are brother and sister in law. Defendant has a house in Kuwait with her husband. Until at least 19 September 2017 she lived in London, whilst also maintaining a house in Kuwait.
Defendant is prepared to accept for the purposes of this application that the relevant date for determining domicile is the date proceedings were commenced, ie 26 September 2017: see inter alia JSC BTA Bank v Mukhtar Ablyazov. (Upheld on Appeal). Should no domicile in the UK (or another EU /Lugano State) be upheld, forum non conveniens kicks in.
The UK Defamation Act 2013 (the DA 2013) was entered precisely to address libel tourism in the UK. It reads in relevant part (Section 9)
“Action against a person not domiciled in the UK or a Member State etc
(1) This section applies to an action for defamation against a person who is not domiciled
(a) in the United Kingdom; (b) in another Member State; or (c) in a state which is for the time being a contracting party to the Lugano Convention.
(2) A court does not have jurisdiction to hear and determine an action to which this section applies unless the court is satisfied that, of all the places in which the statement complained of has been published, England and Wales is clearly the most appropriate place in which to bring an action in respect of the statement.
(3) The references in subsection (2) to the statement complained of include references to any statement which conveys the same, or substantially the same, imputation as the statement complained of.
(4) For the purposes of this section –(a) a person is domiciled in the United Kingdom or in another Member State if the person is domiciled there for the purposes of the Brussels Regulation; (b) a person is domiciled in a state which is a contracting party to the Lugano Convention if the person is domiciled in the state for the purposes of that Convention.”
Defendant says that the Claimant cannot possibly satisfy the test in s 9(2). That is because Claimant in her view does not complain of any publication within this jurisdiction. She submits that s 9 implicitly requires the words complained of to have been published in England and Wales: ‘of all the places in which the statement complained of has been published…’. In effect, she says that s 9 means that this court does not have jurisdiction to hear a claim against a defendant not domiciled in the jurisdiction (or within a Brussels/Lugano state) for a claim in respect of solely foreign publication. In the alternative, if is necessary for the court to compare jurisdictions to determine which is the most appropriate forum for trial Defendant submits that the burden is on the Claimant to demonstrate that England and Wales is clearly the most appropriate forum, and there is no realistic prospect of him being able to discharge that burden. She points in particular to the fact that both of the parties are based in the Middle East, as are all of the publishees of the What’sApp Messages concerned, save for one, who is based in the United States.
Claimant submits that Defendant has submitted to the jurisdiction and so can no longer dispute the Court’s jurisdiction under s 9 of the DA 2013, or otherwise. Further or alternatively, he submits that provision is of no assistance because she was domiciled within the jurisdiction at the relevant time.
At 55 Knowles J holds that failure by a defamation defendant to follow the procedure in Part 11 of the civil procedure rules, for contesting jurisdiction under s 9 does not mean that her right to make a jurisdictional challenge under that section has been waived. ‘Section 9(2) is in mandatory form. Where the defendant is not domiciled within one of the specified jurisdictions then s 9(2) provides (emphasis added), ‘A court does not have jurisdiction to hear and determine an action to which this section applies unless …’. In my judgment jurisdiction under s 9 cannot be conferred by waiver, submission or consent. It is concerned with the subject matter of the suit and not with personal jurisdiction over the defendant.’ In the DA 2013 Parliament in other words inserted mandatory rules on jurisdiction which are not within the remit of party autonomy.
At 60 ff then follows the analysis of ‘domicile’ for natural persons under English law (following Article 62 Brussels Ia’s deference to national law), leading to a conclusion of domicile in the UK at the relevant time.
The remainder of the case discusses grounds for summary dismissal on the grounds of substantive English libel law.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.10
New Look: Application of the good old rules for schemes of arrangements, with some doubt over the substantial effects test.
In  EWHC 960 (Ch) New Look Secured Issuer and New Look Ltd, Smith J at H applies the standing rules on jurisdiction over the scheme and other companies which I also signalled in Algeco and Apcoa (with further reference in the latter post). Against the scheme companies jurisdiction is straightforward: they are England incorporated. Against the scheme creditors, English courts apply the jurisdictional test viz the Brussels I Recast (‘a’) Regulation arguendo: if it were to apply (which the English Courts have taken no definitive stance on), would an English court have jurisdiction? Yes, it is held: under Article 8 (anchor defendants). (Often Article 25 is used as argument, too).
At 48 Smith J signals the ‘intensity’ issue: ‘In some cases it has been suggested that it may not be enough to identify a single creditor domiciled in the United Kingdom, and that the court should consider whether the number and size of creditors in the UK are sufficiently large: see Re Van Gansewinkel Groep,  EWHC 2151 (Ch) at ); Global Garden Products at ; Re Noble Group Ltd  EWHC 3092 (Ch) at  to .’ Smith J is minded towards the first, more liberal approach: at 49. He refers to the liberal anchoring approach in competition cases, both stand-alone (think Media Saturn) and follow-on (think Posten /Bring v Volvo, with relevant links there).
At 51 he also discusses the ‘substantial effects’ test and classifies it under ‘jurisdiction’:
‘As well as showing a sufficient jurisdictional connection with England, it is also necessary to show that the Schemes, if approved, will be likely to have a substantial effect in any foreign jurisdictions involved in or engaged by the Schemes. This is because the court will generally not make any order which has no substantial effect and, before the court will sanction a scheme, it will need to be satisfied that the scheme will achieve its purpose: Sompo Japan Insurance Inc v Transfercom Ltd,  EWHC 146 (Ch); Re Rodenstock GmbH,  EWHC 1104 (Ch) at -; Re Magyar Telecom BV,  EWHC 3800 (Ch) at .’
This is not quite kosher I believe. If, even arguendo, jurisdiction is established under Brussels Ia, then no ‘substantial effects’ test must apply at the jurisdictional stage. Certainly not vis-a-vis the scheme companies. Against the scheme creditors, one may perhaps classify it is a means to test the ‘abuse’ prohibition in Article 8(1)’s anchor mechanism.
A useful reminder of the principles. And some doubt re the substantial effects test.
(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 5.
Pillar Securitisation v Hildur Arnadottir. Material EU consumer law does not dictate jurisdictional rules.
The CJEU held last week in C-694/17 Pillar Securitisation (v Hildur Arnadottir), on the Lugano Convention’s protected category of consumers. I have review of Szpunar AG’s Opinion here. The issues that are being interpreted are materially very similar as in Brussels I Recast hence both evidently have an impact on the Brussels I Recast Regulation, too (see in that respect also C‑467/16 Schlömp).
At stake in Pillar Securitisation is the meaning of ‘outside his trade or profession’ in the consumer title. The CJEU at 22 rephrases the case as meaning ‘in essence, whether Article 15 of the Lugano II Convention must be interpreted as meaning that, for the purposes of ascertaining whether a credit agreement is a credit agreement concluded by a ‘consumer’ within the meaning of Article 15, it must be determined whether the agreement falls within the scope of Directive 2008/48 in the sense that the total cost of credit in question does not exceed the ceiling set out in Article 2(2)(c) of that directive and whether it is relevant, in that regard, that the national law transposing that directive does not provide for a higher ceiling.’
The CJEU notes that Pillar Securitisation claims that Ms Arnadottir acted for professional purposes and is not covered by the definition of a ‘consumer’. However, the referring court has not referred any question to the Court on the purpose of the credit agreement concluded. On the contrary, as is clear from the wording of the question that it did refer, the referring court asks its question to the Court on the assumption that the contract at issue was concluded for a purpose that can be regarded as being outside Ms Arnadottir’s profession. In addition, in any event, the order for reference does not contain sufficient information in order for the Court to be capable, where relevant, of providing useful indications in that regard (not much help therefore to assist with the interpretation of issues such as in Ang v Reliantco, on which I shall be reporting next).
As I wrote in my review of the AG’s Opinion: the issue is how far does material EU law impact on its private international law rules. I referred in my review to the need to interpret Vapenik restrictively, and to Kainz in which the CJEU itself expressed caution viz the consistent interpretation between jurisdictional and other EU rules, including on applicable law and on substantive law.
I am pleased to note the Court itself makes the same observation, and emphatically so: at 35: ‘the need to ensure consistency between different instruments of EU law cannot, in any event, lead to the provisions of a regulation on jurisdiction being interpreted in a manner that is unconnected to the scheme and objectives pursued by that regulation.’ Subsequently establishing the very diffeent purposes of both sets of law, the CJEU rejects impact on one over the other (and also remarks that Pillar Securitisation’s reference to the Pocar report needs to be taken in context: prof Pocar referred to Directive 2008/48 by way of example only).
Conclusion: for the purposes of ascertaining whether a credit agreement is a credit agreement concluded by a ‘consumer’ within the meaning of Article 15, it must not be determined whether the agreement falls within the scope of Directive 2008/48 in the sense that the total cost of credit in question does not exceed the ceiling set out in Article 2(2)(c) of that directive, and it is irrelevant, in that regard, that the national law transposing that directive does not provide for a higher ceiling.
A good judgment.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11.