Tag: geert van calster

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Winkler v Shamoon. Another High Court look at the ‘wills and succession’ exception.

In Winkler v Shamoon [2016] EWHC 2017 Ch Mr Justice Henry Carr broadly follows Mrs Justice Susan Carr in Sabbagh v Khoury (which I have reviewed earlier) on the interpretation of the ‘wills and succession’ exception in the Brussels I Recast (and the Lugano convention). [The Justices themselves, incidentally, are neither related nor married, I understand]. In so doing, Sir Henry follows Dame Susan’s approach vis-a-vis the exclusions in the Brussels I Recast.

Ms Alexandra Shamoon accepts that she is domiciled in the UK for the purposes of the Brussels Regulation.  However, she applies for an order on essentially the same basis as that set out above, contending, in particular, that the claim relates to succession and therefore falls outside the scope of the Brussels Regulation. Brick Court have summary of the case and hopefully do not mind me borrowing their heads-up of the facts:

the case concerns the estate of the late Israeli businessman, Sami Shamoon.  Mr Shamoon owned and controlled the Yakhin Hakal Group of Israeli companies and was known in his lifetime as one of the wealthiest men in Israel.  The claim was brought by Mr Peretz Winkler, formerly the Chief Financial Officer and manager of Yakhin Hakal, against Mrs Angela Shamoon and Ms Alexandra Shamoon, the widow and daughter respectively of Mr Shamoon and the residuary legatees under his will.  In his claim Mr Winkler alleged that prior to his death Mr Shamoon had orally promised to transfer to him certain shares worth tens of millions of dollars.  On the basis of the alleged promise Mr Winkler claimed declarations against Angela and Alexandra Shamoon as to his entitlement to the shares (which they are due to receive under Mr Shamoon’s will).  Angela and Alexandra challenged the jurisdiction of the English Court to hear the claim on the basis that it was a matter relating to “succession” within article 1(2)(a) of the Brussels Regulation and therefore fell outside its scope (and that England was not the natural or appropriate forum for the dispute).

If the claim does fall within the scope of the Regulation, jurisdiction is quite easily established on the basis of the defendant’s domicile – albeit with contestation of such domicile in the UK by Mr Shamoon’s widow and daughter.

Carr J held that the claim was one relating to succession and therefore fell outside of the Brussels I Recast (at 53 ff). While I may concur in the resulting conclusion, I do not believe the route taken is the right one. Sir Henry follows Mrs Justice Carr’s approach in applying the excluded matters of the Brussels I Recast restrictively. I disagree. Exclusions are not the same as exceptions: Article 24’s exclusive rules of jurisdictions are an exception to the main rule of Article 4; hence they need to be applied restrictively. Article 1(2)’s exclusions on the other hand need to be applied solely within the limits as intended. Lead is also taken from Sabbagh v Koury with respect to the role of the EU’s Succession Regulation. Even if the UK is not party to that Regulation, both justices suggest it may still be relevant in particular in assisting with the Brussels I Recast ‘Succession’ exception. If the approach taken in Winkler v Shamoon is followed it leads to a dovetailing of the two Regulations’ respective scope of application. Not a conclusion I think which is necessarily uncontested.

The High Court concludes (at 72) ‘this claim is excluded from the Brussels Regulation and the Lugano II Regulation as its principal subject matter is “succession” within the meaning of Article 1(2)(a).  In particular, it is a claim whose object is “succession to the estate of a deceased person” which includes “all forms of transfer of assets, rights and obligations by reason of death”. It is a succession claim which concerns “sharing out of the estate”; and it is a claim within the definition of “succession as a whole” in Article 23 of the Succession Regulation, as a claim whose principal subject matter concerns  “the disposable part of the estate, the reserved shares and other restrictions on the disposal of property upon death”: Article 23(h); and an “obligation to …account for gifts, …when determining the shares of the different beneficiaries”: Article 23(i).

Intriguingly, of course, had the UK be bound by the Succession Regulation, and given the dovetailing which the judgment suggest, the next step after rejection of jurisdiction on the basis of the Brussels I Recast, would have been consideration of jurisdiction following the Succesion Regulation. It is ironic therefore to see the Regulation feature as a phantom piece of legislation. Now you see it, now you don’t.

Geert.

(Handbook EU Private international law, Chapter 2, Heading 2.2.2.10).

 

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Consenting to choice of court under the common law. The Privy Council in Vizcaya v Picard.

In Vizcaya v Picard, the Privy Council considered the issue of consent to a choice of court clause in the event no such choice has been made verbatim. It was alleged that choice of court had been made implicitly but clearly by reference to an applicable law agreement in the underlying contract. RPC have a review of the case on their blog and I am grateful to them for bringing it to my attention.

The case is a fall-out of the Bernard Madoff Ponzi scheme, carried out through Mr Madoff’s company Bernard L Madoff Investment Securities LLC (“BLMIS”), a New York corporation. After Madoff’s fraud came to light in 2008, Irving Picard (“the trustee”) was appointed as trustee in BLMIS’s liquidation in the US Bankruptcy Court for the Southern District of New York (“the New York BankruptcyCourt”). The trustee commenced proceedings under the anti-avoidance provisions of the US Bankruptcy Code against investors who had been repaid before the fraud was discovered, including the appellant, Vizcaya Partners Limited (“Vizcaya”), a BVI (British Virgin Islands) company which carried on business as an investment fund, and which invested about US$328m with BLMIS between January 2002 and December 2008, but was repaid US$180m before the fraud was discovered.

The Appeal before the Privy Council concerns primarily the content and scope of the rule in common law that a foreign default judgment is enforceable against a judgment debtor who has made a prior submission to the jurisdiction of the foreign court (as distinct from a submission by appearance in the proceedings).  Brussels I or the Recast was not applicable to the case. In that Regulation (Article 25), the expression of consent with choice of court must take one of thee forms: essentially: written (or oral but confirmed by written agreement); in accordance with lex mercatoria; or in accordance with established business practice simply between the parties.

The question in the case at issue is whether the agreement to submit must be express, or can also be implied or inferred. The Privy Council settled the uncertainty which would seem to have existed for some time in the common law, in favour of an answer in the affirmative. Consent to jurisdiction can be implied. What needs to be shown though is real ‘agreement’, or ‘consent’ (in European private international law with respect to the similar discussion re choice of law (Rome I) I would say the test is one of ‘clearly established’), quod non in casu. Choice of law (here: in favour of New York law) can be a factor but not a solely determinant one. Moreover, choice of court viz one’s business transactions does not imply automatic extension to insolvency proceedings.

Crucial precedent, it would seem. Geert.

European private international law, second ed. 2016, Chapter 2, Heading 2.2.9

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Rome II: A manifestly closer connection overrides common habitual residence. The High Court in Marshall v MIB.

Marshall v MIB [2015] EWHC 3421 (QB) involved a road traffic accident that occurred in France. On 19th August 2012 an uninsured Peugeot motor car registered in France driven by Ms Bivard, a French national, hit Mr Marshall and Mr Pickard, both British nationals, as they were standing behind a Ford Fiesta motor car and its trailer, while it was being attended to by a breakdown recovery truck on the side of a motorway in France. The Ford Fiesta motor car was registered in the UK and insured by Royal & Sun Alliance (“RSA”), and the recovery truck was registered in France and insured by Generali France Assurances (“Generali”). The Peugeot then collided with the trailer shunting it into the Ford Fiesta which in turn was shunted into the vehicle recovery truck. Mr Pickard suffered serious injuries. Mr Marshall died at the scene.

This case raises points about among others (1) the law applicable to an accident involving a number of persons and vehicles; and (2) the application of the French Loi Badinter to the facts of this case, if French law applies: The second main issue is if French law applies, whether the Ford Fiesta motor car and recovery truck are “involved” within the meaning of the Loi Badinter, which it is common ground is the applicable French statute. If those vehicles are “involved” it is common ground that RSA, as insurer of the Ford Fiesta, and Generali, as insurer of the recovery truck, are liable to Mrs Marshall, and that Generali, as insurer of the recovery truck, is liable to Mr Pickard.

Two actions were commenced. The first by Mrs Marshall (Mr Marshall’s widow) against the Motor Insurers’ Bureau (“the MIB”). Mrs Marshall relied on relevant English 2003 Regulations. The 2003 Regulations make the MIB liable in respect of liabilities of compensation bodies in other EEA states for losses caused by uninsured drivers. The relevant compensation body in France responsible for such losses is the Fonds de Garantie (“FdG”). The MIB denied liability, contending that the FdG would not be liable to Mrs Marshall because under the Loi Badinter Mr Pickard and RSA, as driver and insurer of the Ford Fiesta, and Generali, as insurers of the recovery truck, were liable. The second action was brought by Mr Pickard against the Motor Insurers’ Bureau relying on the 2003 Regulations. The MIB deny liability and contend that Generali, as insurers of the recovery truck, are liable to Mr Pickard.

The High Court was asked (1) what law applies per Article 4 Rome II, and (2) whether under the circumstances, Article 4(3) Rome II might have any relevance.

Save for Mrs Marshall’s claim for dependency which if English law applies is under the Fatal Accidents Act 1976 (“FAA 1976”), it is common ground that the direct damage occurred in France for all of the claims, including Mrs Marshall’s claim on behalf of Mr Marshall’s estate. In respect of the FAA 1976 claim, RSA (Mr Marshall’s insurers) submits that the direct damage occurred in the location where Mrs Marshall has suffered her loss of dependency, which is in England and Wales. Dingemans J resolves this issue of ricochet damage with reference to the AG’s Opinion in Lazar: the CJEU’s judgment in same was issued about a month after the High Court’s judgment in Marshall. The Advocate General, having regard to the relevant principles of consistency, foreseeability and certainty, in his opinion considered that “the damage occurs” for the purposes of a claim such as an FAA 1976 claim where the relevant death occurs. The AG noted that different EEA states took different approaches to the characterisation of a dependency claim. For example in both England and Italy it is considered that the damage for a loss of dependency occurs in the country where the dependant is situated, but that this is not a European wide approach. The opinion, Dingemans J notes, shows that the Advocate General was influenced by the need to avoid different Courts in different EEA states adopting different solutions to applicable law in fatal accident cases, which would lead to a diversity of approach in different jurisdictions.

The action between Mrs Marshall and Mr Pickard triggers Article 4(2) of the Rome II Regulation, identifying as applicable law the law of the country were both the ‘person’ claimed to be liable and the ‘person’ sustaining damage, are habitually resident at the time the damage occurs. Dingemans J rightly (at 17) dismisses the suggestion (made in scholarship) that the moment more than two ‘persons’ are involved, Article 4(2) becomes inoperable.

Turning then to Article 4(3), the escape clause of a ‘manifestly closer connection’. Dingemans J entertains the interesting proposition that Article 4(3) has to lead to a law different from the law which would be applicable per Article 4(1) or (2). This in particular would mean that once Article 4(2) is engaged, it cannot be undone by recourse to Article 4(3). Dingemans J insists that Article 4(3) must be employed generally, even if it leads to a resurrection of Article 4(1), and goes on to find French law to be applicable (at 19-20):

In my judgment this case provides an illustration of when French law is provided as the governing law under article 4(1), excluded (for part of the claims) under article 4(2), and then required again under article 4(3).

It is also common ground that article 4(3) imposes a “high hurdle” in the path of a party seeking to displace the law indicated by articles 4(1) or 4(2), and that it is necessary to show that the “centre of gravity” of the case is with the suggested applicable law. In this case there are a number of circumstances which, in my judgment, make it clear that the tort/delict is manifestly more closely connected with France than England and Wales. These are: first that both Mr Marshall and Mr Pickard were hit by the French car driven by Ms Bivard, a national of France, on a French motorway. Any claims made by Mr Marshall and Mr Pickard against Ms Bivard, her insurers (or the FdG as she had no insurers) are governed by the laws of France; secondly the collision by Ms Bivard with Mr Marshall and Mr Pickard was, as a matter of fact and regardless of issues of fault or applicable law, the cause of the accident, the injuries suffered by Mr Marshall and Mr Pickard and the subsequent collisions; and thirdly any claims that Mr Marshall and Mr Pickard have against Generali, as insurers of the vehicle recovery truck, are also governed by the laws of France.

This judgment to my knowledge, with Winrow v Hemphill  is one of few discussing Article 4(3)’s escape clause in such detail. (The add-on being that in Marshall Article 4(3) was found as being able to override Article 4(2). A judgment which, like Winrow, does justice to both the exceptional nature of the provision, and the need to consider all relevant factors.

Geert.

Ps very soon the Supreme Court will hear further argument on the application of the Rome II Regulation in Moreno v MIB.

European private international law, second ed. 2016, Chapter 4, Headings 4.5.1 and 4.5.2

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Anti-suit once again climaxes outside the Brussels I (Recast) context. The High Court in Crescendo Maritime.

As I have reported before, English practice is to continue using anti-suit injunctions outside of the Brussels I Regulation, in particular to support arbitration. Recent application was made in Crescendo Maritime, restraining litigation in China. Teare J confirmed among others (per Toepfer v Cargill) that forum non conveniens (Chine was the natural forum for litigation in ordinary) has little relevance in the context of arbitration clauses.

Kennedys have background to the case (essentially, backdating of a shipbuilding contract to avoid newly introduced international rules on tank coatings). The considered use of anti-suit once again underlines the importance of tools of civil procedure to support global arbitration practices.

Geert.

European private international law, second ed. 2016, Chapter 2, Heading 2.2.2.10

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Winrow v Hemphill: The High Court emphasises exceptional nature of ‘manifestly closer connected’ in Rome II. Clarifies ‘habitual residence’.

Winrow v Hemphill ([2014] EWHC 3164), involved a road traffic accident that occurred in Germany on 16 November 2009. The claimant was a rear seat passenger in a vehicle driven by Mrs Hemphill (‘the first defendant’), which collided head on with a German vehicle. The defendant admitted fault for the collision. As a result of the collision, the claimant sustained personal injury, for which she received some treatment in Germany and further ongoing treatment in England. She and her husband returned to live in England in June 2011, earlier than planned. ‘Second defendant’ was the German insurer of the first defendant.

The following was agreed between the parties:

  • iii) Since the claimant’s husband was due to leave the army in February 2014 after twenty-two years’ service he would have returned to England one and a half to two years before that date to undertake re-settlement training. It was always their intention to return to live in England.
  • ii) At the time of the accident the claimant was living in Germany, having moved there in January 2001 with her husband who was a member of Her Majesty’s Armed Services. Germany was not the preferred posting of the claimant’s husband, it was his second choice. He had four separate three year postings in Germany.
  • i) The claimant was a UK national.
  • iv) Whilst in Germany, the claimant and her family lived on a British Army base where schools provided an English education.
  • v) While in Germany, the claimant was employed on a full-time basis as an Early Years Practitioner by Service Children’s Education, (UK Government Agency).
  • vi) The claimant claimed continuing loss and damage including care and assistance and loss of earnings. She asserted that the majority of her loss has been and will be incurred in England. The claimant alleged continuing pain, suffering and loss of amenity.
  • vii) The first defendant was a UK national and an army wife, with her husband serving with the Army in Germany. She had been in Germany for between eighteen months and two years before the accident. She returned to England soon afterwards.

The High Court was asked (1) what law applies per Article 4 Rome II, and (2) whether under the circumstances, Article 4(3) Rome II might have any relevance.

 

On the habitual residence issue, Rome II corrects the overall lex loci damni rule in cases of joint habitual residence between tortfeasor and victim (which was argued to be the case here). Habitual residence was also argued to play a role in the ‘closer connection’ test (see below).

Rome II, the Regulation of the law applicable to non-contractual obligations, does not define ‘habitual residence’ for individuals acting in their personal capacity. The matter therefore is one of national conflicts law. The habitual residence for a natural person is only defined by ht Regulation when it comes to his acting in the course of his business activity. ‘Habitual residence’ is a concept which is not used in Brussels I, however it is used in the Brussels II bis Regulation on jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matter of parental responsibility, where it is left undefined, and in the Rome III Regulation (an instrument of enhanced co-operation and hence not applicable in all Member States) implementing enhanced cooperation in the area of applicable law to divorce and legal separation, where, too, somewhat oddly given its date of adoption (after Rome I and II) it is left undefined.

The Court of Justice has defined ‘habitual residence’ in Swaddling, Case C-90/97, within the context of social security law (entitlement of benefits subject to a residence requirement) as the place  ‘where the habitual centre of their interests is to be found. In that context, account should be taken in particular of the employed person’s family situation; the reasons which have led him to move; the length and continuity of his residence; the fact (where this is the case) that he is in stable employment; and his intention as it appears from all the circumstances.’

Undoubtedly the context of the adjudication needs to be taken into account, such as in Swaddling, a social security case, in which the seeking of holding of employment is likely to have a much greater relevance for determining habitual residence than in the context of, say, maintenance or parental responsibility (where, for instance, the interest and ‘anchorage’ of the child is likely to be much more relevant). [See also House of Lords M v M, [2007] EWHC 2047 (Fam), a case referred to in Winrow]. Moreover, the Court of Justice itself has warned that its case-law on habitual residence in one area, cannot be directly transposed in the context of any other (Case C-523/07, A).

It is obvious however that the ‘centre of interest’ test which in one way or another finds its way into habitual residence in all relevant EU law, includes a subjective  element: the intention of a person to be anchored in a particular place.  This was argued to be relevant in the case at issue, because both victim and tortfeasor were resident in Germany on account of their husbands’ military posting there.

Slade J in my view justifiably held that having regard to the length of stay in the country, its purpose and the establishing of a life there, habitual residence of the Claimant at the time of her accident was Germany. It is not because she followed her husband who was posted in Germany on Army business, that she was in Germany involuntarily.

 

On the issue of manifestly closer connected per Article 4(3) Rome II, the High Court first of all confirmed the exceptional character of the escape clause, however emphasises, and I have great sympathy for this view, that in reviewing that exceptional possibility, there should be no limitation in principle of factors that can be taken into account: Article 4(3) clearly is an exception to the EU’s mantra of predictability in EU private international law, however one which even the European Commission foresaw and which is inherent to the very nature of the exception. Hence the High Court considered inter alia the joint nationality of the victims (with an interesting discussion on whether United Kingdom nationality may be relevant for the consideration of English law being applicable – there is no such thing as ‘English’ nationality); habitual residence at the time of the accident and subsequently; location of subsequent consequences (the victim now suffering those in England; loss of earning occurring in England), etc.: even what a particular court in a particular Member State may consider to be relevant for the application of 4(3) may be very unpredictable indeed may also be disparate across the EU.

However on balance Slade J held that the balance was in favour of not applying the escape clause, particularly in view of the period of time of habitual residence in Germany, and subsequent continuing residence in that country (ia for follow-up treatment). Final holding therefore was

 

  • Factors weighing against displacement of German law as the applicable law of the tort by reason of Article 4(1) are that the road traffic accident caused by the negligence of the First Defendant took place in Germany. The Claimant sustained her injury in Germany. At the time of the accident both the Claimant and the First Defendant were habitually resident there. The Claimant had lived in Germany for about eight and a half years and remained living there for eighteen months after the accident.
  • Under Article 4(3) the court must be satisfied that the tort is manifestly more closely connected with English law than German law. Article 4(3) places a high hurdle in the path of a party seeking to displace the law indicated by Article 4(1) or 4(2). Taking into account all the circumstances, the relevant factors do not indicate a manifestly closer connection of the tort with England than with Germany. The law indicated by Article 4(1) is not displaced by Article 4(3). The law applicable to the claim in tort is therefore German law.

This judgment to my knowledge is one of few discussing Article 4(3)’s escape clause in such detail. A judgment which does justice to both the exceptional nature of the provision, and the need to consider all relevant factors.

Geert.

 

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