Tag: Fraus

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Poland v LC CORP BV. A second refusal for ISDS Achmea /Komstroy anti-suit, following Spain v Blasket Renewable Investments LLC and adding to the ECT fog.

In Poland v LC Corp BV, the Amsterdam first instance court mid-March refused Poland’s application for an anti-suit injunction, which would have prohibited LC Corp from seeking UNCITRAL arbitration under the now defunct Poland-Netherlands BIT, with London as curial seat.

The case echoes that of Kingdom of Spain v Blasket Renewable Investments LLC, in which the Amsterdam Court had earlier declined to hear an anti-suit injunction petition by Spain to prevent renewable investors from enforcing arbitral awards in the US: see Josep Galvez’s summary here. That case however in the meantime has encountered quite the opposite reaction from a US judge, who held end of March that Spain enjoys sovereign immunity in the case and that as a result of the CJEU’s Komstroy’s authority, neither Spain nor the defendant had power to sign up to arbitration, hence dismissing the petition to confirm an arbitral award rendered pursuant to the Energy Charter Treaty.  In turn, that decision is in contrast with earlier orders in 9REN v the Kingdom of Spain and NextEra v the Kingdom of Spain as Curtis summarise here. The Court of Appeal will now hear those issues.

The case, as Geraldo Vidigal reminded me, is also reminiscent of the interlocutory decision in ECLI:NL:RBAMS:2022:5772, also involving Poland yet in that case with an anonymised Dutch corporate defendant. In that judgment the arbitration procedure was suggested as the currently only available way for the corporation to have its day in ‘court’, seeing as in the view of the judge, the Polish rule of law crisis  questions the impartiality of the Polish courts, and the EU’s alternative Investment Court is not yet operational. Johannes Hendrik Fahner discusses that case here.

In current case, the court first of all holds that Brussels Ia’s arbitration exception is not engaged, for the case’s core, it suggests, is whether the pursuit of an arbitration proceeding despite CJEU Achmea, constitutes abuse of process. The case, it holds (4.3) does not have the questions  put to the arbitral tribunal as its object, hence the arbitration exception is not in play.
4.5 the Court re applicable law holds parties have made choice of law for Dutch law under Article 14 Rome II, obiter suggesting that finding locus damni under Rome II Article 4(1)’s general rule is not self-evident: would the damage of an abusive pursuit of arbitration proceedings, be located in The Netherlands? It is not entirely clear to me why the Court discusses applicable law (other than Dutch courts having to do so proprio motu.
4.12 the court refers to the tribunal’s Kompetenz Kompetenz. The curial seat being located outside the EU, in London, is a crucial element in the court’s reasoning, despite CJEU Achmea: it is not prima facie clear that the tribunal will refuse to hear the case. Given the overall fog re the consequences of the CJEU case-law on extra-EU arbitration, the issues are not clearly without foundation hence cannot constitute abuse.

 

With recent Australian developments (blogpost imminent), even more proverbial ECT s**** is hitting the fan. IMHO this conundrum is not going to be solved by ever more procedural forum shopping with conflicting outcomes.

Geert.

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Soriano v Forensic News. Court of Appeal confirms high bar to disciplining discovery forum shopping.

Soriano v Forensic News LLC & Ors [2023] EWCA Civ 223 deals with the discipline an English court should hand out to defendants trying to use foreign proceedings and their discovery rules, to assist them in the defence of a claim (here a libel claim) in England and Wales. (Defendants’ attempt at dismissing jurisdiction had earlier failed).

In a joint and fairly succinct opinion, Voss MR, Carr LJ and Warby LJ dismiss the contention that the defendants should be served with an anti-suit injunction (also refused at first instance by Murray J a mere 20 days back; this was a most swift appeal) to restrain them from continuing US proceedings. These had been initiated in the District Court for the Southern District of New York (the DCSDNY) on 6 December 2022. Defendants seek an order there requiring HSBC USA to produce two very broad categories of banking documents relating to Mr Soriano’s companies. Defendants here, claimants in the US, rely in 28 USC §1782 (a so-called 1782 application) allowing a US court to provide assistance to an applicant in gathering evidence in support of legal proceedings in a foreign court. It provides that: “[t]he district court … may order [a person] to … produce a document or other thing for use in a proceeding in a foreign … tribunal”, and “[t]he order may be made … upon the application of any interested person”.

The Court of Appeal relied like the judge on the grounds per South Carolina Insurance Co v. Assurantie Maatschappij “De Zeven Provincien” NV [1987] 1 AC 24 to find that defendants were not guilty  of “conduct which [was] oppressive or vexatious or which [interfered] with the due process of the court” in seeking the US order.

In essence, the Court supports the lawful exercise of evidence gathering and does not easily decide that use of foreign proceeding for same be considered oppressive.

Geert.

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Maceió victims v Braskem. Rotterdam court refuses application for Article 34 lis pendens stay.

Update 17 01 2023 my article on Articles 33-34 has now been published: Lis Pendens and third states: the origin, DNA and early case-law on Articles 33 and 34 of the Brussels Ia Regulation and its “forum non conveniens-light” rules, The link in the title should give free access to the first 50 takers, and I assume link to the review for those that come after.

The (first instance) court at Rotterdam has upheld anchor jurisdiction and refused an application for an Article 34 Brussels Ia stay. The case concerns victims of earthquakes in the Brasilian Maceió region, which they argue are caused by the mining activities of Braskem. The judgment is only available in Dutch.

The Dutch anchor defendants are intra-group suppliers of ia specialty chemicals, and finance. The main target of the claim of course is the Brasilian mother holding. Whether the latter can be brought into the proceedings is not subject to Brussels Ia but rather to Dutch residual rules. However just as in e.g. Shell, the Dutch rules are applied with CJEU authority on Article 8(1) Brussels Ia firmly in mind. In much more succinct terms than the English courts in similar proceedings, the Dutch courts [6.16] finds the cases so ‘closely related’ that it is expedient to hear the cases together. It emphasises that while the respective roles and liabilities of the various undertakings concerned is likely to be very different, there is a bundle of legal and factual questions that runs jointly throughout the various claims. [6.18] it emphasises that the decision to base the European headquarters of the group, and the finance activities at Rotterdam, implies that the concern reasonably could have foreseen it would be sued here.

Equally succinctly [6.19 ff] the Court rejects the argument that the use of the Dutch corporations as anchor defendants is an abuse of process. Such abuse must be narrowly construed and  it is far from obvious that the claim against the anchors is entirely without merit.

Seemingly defendants tried to argue forum non conveniens however [6.23] the court points out such construction does not exist in The Netherlands and obiter it adds (like the Court of Appeal in Municipio) that practical complications in either hearing of the case or enforcement of any judgment are not a reason to dismiss jurisdiction.

Request for a stay in the procedures viz the Brasilian corporations [6.26] is rejected on (Dutch CPR) lis pendens rules for the parties in the proceedings are not the same. Article 34 is dealt with in two paras (quite a contrast with the E&W courts). The pending procedures vis-a-vis Article 34 are not, it seems, Brasilian Civil Public Actions – CPAS (these were at issue in Municipio de Mariana (of some interest is that the law firm behind the claims is the same in both cases)). Rather, pending liquidation proceedings are considered as the relevant assessment points. [6.28] obiter the court finds that the cases are most probably not related. It grounds  its decision however on a stay not being in the interest of the sound administration of justice. The court holds that the Brasilian proceedings are not likely to be concluded within a reasonable time. Defendants’ commitment at hearing to speed up the process in Brasil, are met with disbelief by the court given the defendants’ attitude in the Brasilian procedures hitherto.

[6.32] permission to appeal the interim judgment on jurisdiction is denied. This means that, like in Airbus, discussion on the private international law issues is likely only to resurface at the stage of appealing the judgment on the merits, too.

An important judgment: other than Petrobas, there are to my knowledge no continental judgments discussing Article 34 in this intensity (there are E&W judgments, as readers of the blog will know).

Geert.

See also ‘Dude, where’s my EU court? On the application of Articles 33-34 Brussels Ia’s forum non conveniens- light rules’, Journal of Private International Law, forthcoming 2022.

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Nagel v PDC. Permission for service out withdrawn on forum non and disclosure issues.

W Nagel (a firm) v Pluczenik& Ors [2022] EWHC 1714 (Comm) concerns litigation in the diamond sector. It is an appeal against permission for service out which triggers various jurisdictional considerations, including forum non, as well as disclosure and ‘clean hands’ concerns.

The judgment is a good illustration of claim and counterclaim serving jurisdictional purposes.

Defendants are a Belgium-domiciled diamond manufacturer (PDC) and its equally Belgium-based managing director Mr Pluczenik . Claimant Nagel is a UK based diamond broker. Nagel is defendant in Belgian proceedings brought in May 2015 by defendants in the E&W proceedings, who used a Belgian-based anchor defendant to sue the English claimant in Belgium (A8(1) Brussels Ia); Nagel are also defendant in a September 2015 Belgian claim brought by the same claimants and since consolidated by the Belgian courts. Nagel itself issued a claim against PDC in the English High Court in March 2015, did not serve it, but sent a letter before action which indicated that it intended to bring proceedings in England.

In June 2015, as direct reaction to the Belgian Claim, Nagel amended the English Claim to seek negative declaratory relief to the effect that it was not liable in respect of a number of contractual duties.

In July 2017 Popplewell J found for Nagel, including in respect of the negative declaratory relief: W Nagel (A Firm) v Pluczenik Diamond Company NV [2017] EWHC 1750 (Comm). His judgment was confirmed by the Court of Appeal: [2018] EWCA Civ 2640, payments were made and the E&W proceedings ended.

Come forward third defendant in the current E&W proceedings, Ms Shine, who was the CEO of a subsidiary of De Beers – De Beers Trading Company. She has never worked for either of the Claimant or the First or Second Defendants, but she gave a statement to the Belgian court in 2017, supporting PDC. Her statement was provoked it seems by the outcome of the E&W proceedings which did not match her recollection. Nagel originally objected to jurisdiction solely on the ground of lis pendens (A29-30 BIa).

In July 2020 (one can see that in this case the speed of Belgian proceedings is nothing like in the case I reported yesterday) the Belgian claimants put forward their arguments on jurisdiction based on Antwerp being forum contractus per A7(1) BIA (they argued centre of gravity or characteristic performance was in Antwerp) [20].

In an interim, February 2021 interim judgment the Belgian court held it had jurisdiction on the basis of A7 forum contractus. It considered the lis pendens issue noting that it could no longer apply now that the English Claim was concluded. It then concluded that it had jurisdiction to determine the dispute. The Court noted that “the defendants apparently do not (or no longer) dispute” that the services were performed in Antwerp. 

Nagel then dropped the jurisdictional arguments and at hearings 7 May 2021 onwards went for res judicata, arguing …the English judgment has the status of res judicata with regard to the present proceedings, so that the court on the basis of Article 23 and 25 Judicial Code [the Belgian CPR, GAVC] is currently prohibited from again deciding on the claim…” [30]. End of May 2021 Nagel then commenced the present claim in the Commercial Court. The claim alleges that the Belgian Claim constitutes a tortious abuse of process and forms part of an unlawful means conspiracy between the Defendants. Ms Shine is the Third Defendant. It is said that the provision of the Shine Statement and its (lack of) merits justify an inference that she was involved in the abuse of process and the conspiracy [31].

In September 2021 Moulder J gave permission for service out (required post Brexit) on the basis that the claim met limb (a) of the tort gateway viz “damage was sustained, or will be sustained, within the jurisdiction” (Nagel trades from England, paid sums to Belgian lawyers from a bank account in England and has consequently suffered loss here; she also UKSC Brownlie for the damage gateway). She refused permission on two other gateways – necessary and proper party and tort committed within the jurisdiction. It is alleged by defendants that Moulder J was not given any indication of the Belgian interim judgment.

The Belgian Claim is now scheduled for trial in January 2023.

[64] Cockerill J holds that the Belgian findings on jurisdiction and the existence of a judgment which dealt in terms with jurisdiction should on any view have been put before Moulder J and [65] that this breach of duty of disclosure was deliberate. She also holds [70] that the picture sketched of the Belgian proceedings being ‘in limbo’ was plainly wrong: they were definitely active, and that it had been wrongfully suggested that the Belgian judge was not going to deal with the res judicata issue. On that basis, she would have set aside permission for service out [75] however this point turns out to be obiter for the reason for reversal of the order is that E&W are not the appropriate forum [76] ff. Relevant factors being that (i) the jurisdiction of the Belgian Courts appears to have been established by PDC and accepted by Nagel (at least on a prima facie basis), (ii) the Belgian claim is progressing and (iii) there is scope for determination of a res judicata issue (which replicates the issues sought to be brought here) and (iv) a determination of the res judicata issue is (and was) likely to be determined relatively soon.

Moreover, Belgium clearly is an appropriate forum [79] the Belgian Claim is one brought by a Belgian company (PDC), arising out of services provided in Belgium (as the Belgian Court has held), alleging fraud on the Belgian Court. (The serious issue to be tried discussion leads to an analysis of Article 4 Rome II as retained EU law).

A good illustration as I mentioned of claim, counterclaim, and of course the clean hands principle.

Geert.

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Skat v Solo Capital Partners. When faced with Dicey rule 3, I’ll see your tax claim and raise it to a fraud one.

Update 17 April 2023 there is an echo of the issues in SKAT in the judgment in The Bangkok of Commerce Public Company Ltd, The Official Receiver of v Saxena & Ors [2023] EWHC 521 (Comm): Moulder J holding that a Thai judgment is enforceable in E&W despite the Thai Advocate-General holding that the order, as matter of Thai law, is criminal in nature: English courts generally do not enforce a foreign penal order: Dicey Rule 20. Claimant’s case is that the exclusionary rule is engaged where the claim amounts to an attempt by a foreign state to exercise its sovereign authority in England but that this case is a claim to enforce in substance a claim for damages which in England might have been brought in a civil case. The judge holds ia ([67]) that whether the exclusionary rule is engaged in a question for the English court to determine and that the English court is not bound by the characterisation applied by the foreign jurisdiction.

Update 24 03 2023 Appeal by the Sanjay Shah Defendants will be heard by the UKSC in July 2023. Against other defendants, meanwhile, a trial of preliminary issues defined to determine foundational aspects of SKAT’s allegations that the tax refund claims it says it should not have paid were not valid claims under Danish tax law, was held in March 2023:  Skatteforvaltningen v Solo Capital Partners LLP [2023] EWHC 590 (Comm).

I reviewed the first instance judgment in Skat v Solo Capital Partners here and concluded that it endangered the effet utile of Brussels Ia (and Lugano). Justice Baker had concluded that all SKAT’s claims were inadmissible as a consequence of Dicey Rule 3. The Court of Appeal has now largely reversed, [Skatteforvaltningen v Solo Capital Partners Llp [2022] EWCA Civ 234] thereby resurrecting a £1,4 billion claim.

SKAT (Danish customs and excise) seeks the return of amounts it says it was wrongly induced to pay out as tax refunds. SKAT is not seeking to recover due and unpaid dividend tax or indeed any tax, because the foundation of its argument is that in the case of the alleged fraud defendants there was no liability to pay tax, no shares, no dividends, no tax and no withholding tax. There was never a taxpayer/tax authority relationship between the Solo etc Applicants or the alleged fraud defendants and SKAT. The mere fact that the alleged fraud is committed in the context of taxation or against a foreign tax authority is insufficient to bring the matter within the rule [SKAT’s counsel arguments, [30]-[31]). To allow the defendants to escape their liability, not in a tax fraud but in a general conspiracy, would also run counter the fraus omnia corrumpit principle [ditto, 62], a point which Flaux C agrees with obiter [146] in a case of a major international fraud..

Flaux C is much less verbose than the submissions before him. Yet again a jurisdictional point was allowed to be litigated to great length – albeit one may appreciate counsel and clients’ energy on those issues given the value of the claim.

[127] the basis of the claim is fraudulent misrepresentation. It is not a claim to unpaid tax or a claim to recover tax at all. It is a claim to recover monies which had been abstracted from SKAT’s general funds by fraud [128]. Even though SKAT may be an emanation of the Danish state, the Dicey revenue rule does not apply [128], neither does the wider sovereign powers rule within Dicey Rule 3:

‘In bringing a claim to recover the monies of which it was defrauded, SKAT is not doing an act of a sovereign character or enforcing a sovereign right, nor is it seeking to vindicate a sovereign power. Rather it is making a claim as the victim of fraud for the restitution of monies of which it has been defrauded, in the same way as if it were a private citizen.’ [129]

This latter reasoning falls short I find of proper criteria to guide its future application, although more is said at [130]: the claim to recover the money is at the core of the Chancellor’s reasoning here and that claim is a straightforward money claim, and [133] ‘the claims are ones which could just as well be brought by a private citizen’. That is the kind of argument which echoes CJEU authority on civil and commercial and to my mind the Court of Appeal could have helped us all by pointing out more specifically to what degree Dicey Rule 3 be informed by CJEU authority on ‘civil and commercial’, regardless of Brexit.

That there would be a detailed examination of the Danish tax regime and possible criticism of it and of SKAT’s systems and control, does not somehow convert the claim into one to enforce that tax regime. Recognition of foreign revenue laws is permissible under Dicey Rule 3 [138].

The position of one of the defendants, ED&F Man, is different in the sense that there is no allegation that they were implicated in a fraud. Although it is alleged that misrepresentations were made by them, the misrepresentations are said to have been negligent.

SKAT has to accept that as against those defendants the claim is inadmissible by virtue of Dicey Rule 3 unless it can satisfy the Court: (i) that the claim is a “civil and commercial matter” not a “revenue matter” for the purposes of Article 1(1) of the Brussels Recast Regulation; and (ii) that the operation of Dicey Rule 3 is precluded because, contrary to the judge’s analysis, it would impair the effectiveness of the Brussels Recast Regulation.

Contrary to the conclusion the judge reached the Court of Appeal finds that the claim against ED&F Man is a “revenue matter” falling outside the Brussels Recast Regulation. Here the Court of Appeals applies parity of reasoning with its assessment of the other claims: [150]:

Whilst the test for the application of Dicey Rule 3 may not be identical to that for determining what is a “revenue etc matter” for Article 1(1) of the Brussels Recast Regulation, it can be seen that its application leads to the same answer. If Dicey Rule 3 applies (as SKAT has to accept it does in relation to the claim against ED&F Man) then by the same reasoning, the basis for the claim by SKAT against those defendants is either a right which arises from an exercise of public powers or a legal relationship characterised by an exercise of public powers, from which it necessarily follows that the claim is a revenue matter outside the Brussels Recast Regulation.

Unfortunately therefore the effet utile argument (that application of Dicey rule 3 impairs the effectiveness of BIa /Lugano, as I had argued in my earlier post) is not discussed [153].

The title of this piece of course hints at the relevance of claim formulation. It is also exaggerated: SKAT cannot conjure up fraud elements out of nowhere to reinvent a tax claim as one in mere tortious and fraudulent misrepresentation. However it is clear that in cases that are somewhat murky, claim formulation will be crucial to navigate Dicey Rule 3.

Geert.

EU Private International Law, 3rd ed. 2021, para 2.28 ff.

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Jamieson v Wurttemburgische Versicherung. On being seized for lis alibi pendens purposes, and on whether the protected categories regimes ought to gazump torpedo actions.

Jamieson v Wurttemburgische Versicherung AG & Anor [2021] EWHC 178 (QB) has been in my draft folder for a while – Master Davison refused an application for a stay on the basis of A29 Brussels I’a’s lis alibi pendens rule, holding that the issue of which court was being seized first, was properly sub judice in the German courts, as is the issue whether litigation subject to the protected categories, should rule out a stay in cases where the weaker party is being disadvantaged.

James Beeton has the background to the case here. Claimant was injured in a road traffic accident in Munich. He was working as a commodities broker for the second defendant. He was attending the Oktoberfest with clients, whom he was entertaining. He was walking from the beer hall to his hotel. He crossed a busy highway and was struck by a taxi, sustaining very severe injuries. The precise circumstances of the collision are in dispute. The taxi was insured by the first defendant, against whom the claimant has a direct right of action.

I tell students and pupils alike that too strong a hint of judicial action in pre-litigation action may trigger a torpedo suit in a court not preferred by client. That is exactly what happened in this case. In pre-action correspondence the insurers for the taxi were asked to confirm that they would not issue proceedings in another jurisdiction – to which they never replied other than by issuing proceedings in Germany for a negative declaration, i.e. a declaration that they were not liable for the accident. Those proceedings had been issued on 18 July 2017. Claimants then issued protectively in England on 10 May 2018. The to and fro in the German proceedings revealed that the correct address for the English claimant was not properly given to the German courts until after the English courts had been seized. 

Hence two substantive issues are before the German courts: when were they properly seized (a discussion in which the English courts could formally interfere using A29(2) BIa); and if they were seized first, is A29 subordinate to the protected categories’ regime: for if the German torpedo goes ahead, claimant in the English proceedings will be bereft of his right to sue in England.

The suggestion for the second issue is that either in Brussels Ia, a rule needs to be found to this effect (I do not think it is there); or in an abuse of EU law (per ia Lord Briggs in Vedanta) argument (CJEU authority on and enthusiasm for same is lukewarm at best).  Despite Master Davison clear disapproval of the insurer’s actions at what seems to be an ethical level, he rules out a stay on the basis of comity and of course CJEU C-159/02 Turner v Grovit: the English High Court must not remove a claim from the jurisdiction of the German courts on the basis of abuse of EU law before those courts.

A most interesting case on which we may yet see referral to the CJEU – by the German courts perhaps.

Geert.

EU Private International Law, 3rd ed 2021, Heading 2.2.9.4, 2.2.15.1.

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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.

 

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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.

 

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SAS Institute v World Programming. A complicated enforcement saga continues.

Update 15 June 2020 as Gilles Cuniberti notes, enforcement jurisdiction (see towards the end of this post) ought to have involved some discussion of A24(5) Brussels Ia.

I reported earlier on complex enforcement issues concerning SAS Institute v World Programming. In [2020] EWCA Civ 599 SAS Institute Inc v World Programming Ltd Flaux J gives an overview of the various proceedings at 4:

The dispute between the parties has a long history. It includes an action brought by SAS against WPL in this country in which SAS’s claims were dismissed; a decision by WPL, following an unsuccessful challenge on forum non conveniens grounds, to submit to the jurisdiction of the North Carolina court and to fight the action there on the merits; a judgment in favour of SAS from the North Carolina court for some US $79 million; an attempt by SAS to enforce the North Carolina judgment in this jurisdiction which failed on the grounds that enforcement here would be (a) an abuse of process, (b) contrary to public policy and (c) prohibited by section 5 of the Protection of Trading Interests Act 1980 (“the PTIA”); and a judgment from the English court in favour of WPL for over US $5.4 million, which SAS has chosen to ignore.’

A good case to use therefore at the start of a conflicts course to show students the spaghetti bowl of litigation that may occur in civil litigation. There are in essence

  • English liability proceedings, decided in the end following referral to the CJEU (Case C-406/10);
  • North Carolina liability proceedings, in which WPL submitted to jurisdiction after an earlier win on forum non grounds was reversed on appeal and the NC courts came to the same conclusions as the English ones despite a finding they were not (clearly) under an obligation to apply EU law;
  • next, an SAS enforcement attempt in England which failed (with permission to appeal refused): my earlier post reviews it;
  • next, enforcement proceedings of the NC judgment in California. That CAL procedure includes an assignment order and WPL sought an anti-suit injunction to restrain SAS from seeking assignment orders as regards “customers, licensees, bank accounts, financial information, receivables and dealings in England”: it was not given the injunction for there was at the time no CAL assignment order pending which could be covered by anti-suit.
  • Currently, it seems, there is, and it is an anti-suit against these new assignment orders which is the object of the current proceedings.

At 59 ff follows a discussion of the situs of a debt; at 64 ff the same for jurisdiction re enforcement judgments, holding at 72

Applying these internationally recognised principles to the present case, the North Carolina and California courts have personal jurisdiction over WPL but do not have subject matter jurisdiction over debts owed to WPL which are situated in England. That is so notwithstanding that the losses for which the North Carolina court has given judgment were incurred by SAS in the United States. Nevertheless the effect of the proposed Assignment Order would be to require WPL to assign debts situated in England to SAS which would at least purport to discharge its customers from any obligation owed to WPL, while the effect of the proposed Turnover Order would be to require WPL to give instructions to its banks in England which would discharge the debts situated in England currently owed by the banks to WPL. In substance, therefore, the proposed orders are exorbitant in that they affect property situated in this country over which the California court does not have subject matter jurisdiction, thereby infringing the sovereignty of the United Kingdom.

Update 15 June 2020 as Gilles Cuniberti notes, enforcement jurisdiction ought to have involved some discussion of A24(5) Brussels Ia.

Which is later confirmed at 83. Consequently the earlier order is overturned: at 89: ‘it follows also that the judge’s conclusion that the Assignment and Turnover Orders were not “markedly exorbitant” was based upon a mistaken premise.’

The anti-suit and anti-enforcement applications are dealt with in particular with reference to comity, and largely granted with some collateral notices of intention by SAS not to seek a particular kind of enforcement.

Someone somewhere must have made partner on this litigation.

Geert.

 

 

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Disciplining forum and process shopping. Mostyn J in I and L.

A quick note on [2020] EWHC 893 (Fam) I and L (children), in which Mostyn J berates and effectively disciplines a father’s abuse forum and process shopping.

At 11:

‘I pause at this point to reflect on the actions taken by the father. Not only did he act in bad faith, as I have explained, but he also was guilty not only of blatant forum shopping but also of process shopping. If the father had genuinely developed misgivings about the wisdom and merits of the parenting agreement signed by him on 5 August 2019 then the appropriate place to raise those misgivings was the court in South Africa [the habitual residence of the children, GAVC]. Instead, by a ruse de guerre he lured the mother and children to this jurisdiction where he immediately started proceedings in the forum which he considered to be most favourable to him. By striking pre-emptively he also selected the process which he considered most favourable to him. Had he merely retained the children on 3 January 2020 and awaited the mother to take steps in response she would, unquestionably, have raised a case under the 1980 Hague Convention on the Civil Aspects of Child Abduction. In such a process the welfare of the children, while being an important consideration, would not have been the paramount consideration. Instead, the court would have started with the position that the children should be returned to the place of their habitual residence unless the father could demonstrate a defence.’

In the end he held that under the Children Act, in which the welfare of the children is the paramount criterion, a return to their habitual residence (to be effected as fast as possible following the end of Covid-19 lock-down) is in their best interest, thus torpedoing the abuse. Clearly like in QD, the English courts do not appreciate cloak and dagger manipulation of forum or process.

Geert.

 

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