Tilman v Unilever. A preliminary reference on flag-wrap B2B choice of court under Lugano.

A puzzling title perhaps I agree but let me explain. Thank you Matthias Storme for alerting me to the May 2021 preliminary reference by the Belgian Supreme Court, a reference now known at the CJEU as Case C-358/21 Tilman SA (of Belgium) v Unilever Supply Chain Company AG (of Switserland). Elucidation is asked of Article 23 of the Lugano 2007 Convention, the choice of court provision in the Convention.

The question referred, reads

Are the requirements under Article 23(1)(a) and (2) of [Lugano 2007], satisfied where a clause conferring jurisdiction is contained in general terms and conditions to which a contract concluded in writing refers by providing the hypertext link to a website, access to which allows those general terms and conditions to be viewed, downloaded and printed, without the party against whom that clause is enforced having been asked to accept those general terms and conditions by ticking a box on that website?

Article 23 Lugano 2007 is identical (mutatis mutandis: the only difference being that A23 Lugano refers to ‘States to the Convention’ instead of ‘Member States’) to the former Article 23 of the Brussels I Regulation, Regulation 44/2001.  A23 Lugano 2007 reads in relevant part

    1. If the parties, one or more of whom is domiciled in a State bound by this Convention, have agreed that a court or the courts of a State bound by this Convention are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either: (a) in writing or evidenced in writing; or (b) in a form which accords with practices which the parties have established between themselves; or (c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.
    2. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to ‘writing’.

The case at issue therefore does not question so-called ‘click-wrap’ consent to general terms and conditions – GTCs. These require the contracting partner to tick the relevant box which then ‘wraps up’ the agreement, including choice of court (and law). They were the subject of CJEU El Majdoub v CarsOnTheWeb. In that judgment, the CJEU held that in a B2B context, where the GTCs that have to be ticked can be saved and printed, they can be a ‘durable’ record of consent. (Not: consent itself: that is subject to a separate analysis, under the relevant lex causae, see below).

Rather, the title of this post calls the issue one of ‘flag-wrap’: one of the parties’ (Unilever’s) GTCs  are contained on a website, and their existence is ‘flagged’ in the written main contract. Does that suffice to bind the parties as to the GTC’s choice of court (in favour of the English courts; note the courts were seized pre-Brexit; the UK’s Lugano troubles are not engaged)?

The provisions on forum clauses are drafted in a way ‘not to impede commercial practice, yet at the same time to cancel out the effects of clauses in contracts which might go unread’ (Jenard Report), or otherwise ‘unnoticed’ (CJEU Colzani). The Brussels Convention and now the Regulation show great support for choice of court agreements and aim not to be as overly formalistic as the conditions imposed upon them.

Importantly, valid choice of court does require both a clearly and precisely demonstrated consent to be bound by choice of court and one or another Article 25-sanctioned form of expression of that consent. In Colzani the CJEU held [7]:

the requirements set out in Article [25] governing the validity of clauses conferring jurisdiction must be strictly construed. By making such validity subject to the existence of an ‘agreement’ between the parties, Article [25] imposed upon the court before which the matter is brought the duty of examining, first, whether the clause conferring jurisdiction upon it was in fact the subject of a consensus between the parties, which must be clearly and precisely demonstrated. The purpose of the formal requirements imposed by Article [25] is to ensure that the consensus between the parties is in fact established.

CJEU authority of Colzani and Coreck Maritime impose on the court the duty of examining ‘whether the clause conferring jurisdiction upon it was in fact the subject of a consensus between the parties’ and this had to be ‘clearly and precisely demonstrated’.

In practice, many courts conflate the check for consent with the check for expression of that consent and even the CJEU is not always clear in distinguishing it. In particular, absence of proof of any of the three possible avenues for expression of consent, included in Article 25(1) a, b or c, or then taken as an absence of consent, full stop. In Colzani, the CJEU held

[T]he mere fact that a clause conferring jurisdiction is printed among the general conditions of one of the parties on the reverse of a contract drawn up on the commercial paper of that party does not of itself satisfy the requirements of Article 17, since no guarantee is thereby given that the other party has really consented to the clause waiving the normal rules of jurisdiction. Where a clause conferring jurisdiction is included among the general conditions of sale of one of the parties, printed on the back of a contract, the requirement of a writing under the first paragraph of Article 17 of the Convention is fulfilled only if the contract signed by both parties contains an express reference to those general conditions.

The CJEU here, wrongly, seems to suggest lack of compliance with the expression of consent indicates a lack of that consent full stop.

Importantly, the CJEU in its rulings on what was then Article 23 and its Brussels Convention predecessor keeps utterly silent on national conditions relating to the actual formation or existence of consent. This, as regular readers of the blog will know, is at least for cases covered by Brussels Ia, subject to the lex fori prorogati, with renvoi, an issue which both national courts and the CJEU struggle with.

How then should the CJEU respond to the question (I asked my conflict of laws students at Leuven this question in a first exam on 18 June)?

Firstly, the Court should (and will) remind us of the Jenard /Colzani core instruction: the need to ensure consent is established, without being overly formalistic. Different from the context of the protected categories, there is no ‘weaker category’ to protect here.

Secondly,  there needs to be durability of the record of consent. That seems to be guaranteed here via the technicalities of the Unilever platform (downloadable GTCs) and in line with aforementioned CJEU Al Majdoub (the June students were not given technical details but should still flag durability).

Thirdly, despite the formal A23  requirement most probably being met, the consent requirement to me seems far from certain. In a click and wrap context ― lest there be issues of agency, duress, consumer protection laws etc. (in a context where the consumer title’s conditions are not met) which need to be held under the law applicable to consent ― the box ticking solidifies establishment of consent. In a mere flag and wrap context, that to me seems far less certain. If the reference were to a url where GTCs are properly and collectively displayed (if need be, updated with clear reference to chronology; see housekeeping), consent by an ordinary careful business (the proverbial (business)man on the Clapham omnibus). Yet if such as here, the link communicated in the formal contract refers to a platform where the  GTCs are not the first thing the contracting party sees, rather, where it is expected that that contracting party registers and /or downclicks, search and retrieve etc., that consent to me seems far less certainly established. [Again my students were not given the details on the platform which the reference includes, they did however have to signal the issue of consent).

Finally, under BIa, the lex fori prorogati, incl renvoi, would determine the above considerations of consent. Here, therefore, English law including its conflict of laws rules on choice of court. However seeing as the case is not subject to Brussels Ia, but rather to Lugano, the lex causae for consent will be an issue for the courts seized (here, the Belgian courts) to determine. Under the Belgian rules, this means application of Rome I (Rome I excludes choice of court agreements however Belgium’s private international law Act makes Rome I applicable even to carved-out contractual arrangements).

An interesting reference.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.10.

 

Court Amsterdam on the impact of the lex fori prorogati’s consumer laws for choice of court. A high net value Australian businessman sails away from Dutch jurisdiction.

I am catching up a little on recent case-law and am focussing it seems on the consumer section (see also yesterday’s post). This Court Amsterdam judgment published on 8 September caught my eye for it discusses choice of court, applicable law for the substantive validity of same, and ‘consumers’ in the context of buying yachts (now that I write that, in my exams I often have consumers buying yachts). Thank you Haco van der Houven van Oordt for signalling the case.

A purchase agreement for a yacht worth €5.4 million was signed in Singapore between buyer, an Australian living in Australia, and a Dutch shipyard. Seller’s GTCs mention

‘Article 17 – Settlement of disputes 1. Each agreement between [claimant] and the other party is subject exclusively to the laws of the Netherlands. 2. Any disputes which arise between the other party and [claimant], including disputes relating to the interpretation of these terms and conditions, will be put exclusively before the competent judicial body in Amsterdam.’

Pre-delivery was scheduled for December 2018 in Italy. Buyer changes his mind a week after signature, saying he will not be able to honour the agreed price. Vendor pursues the contractual penalty clause of 25% of the sale price. 

The judge finds the consent to choice of court to have been validly expressed on the basis of A25 BIa, under the classic Colzani formula. References to the GTCs had been properly made in the written contract. A duly diligent contracting party could and should have read these GTCs. Defendant’s argument that the choice of court clause in the GTCs should have been the subject of specific negotiation, is rejected [4.3.3].

As for the substantive validity of choice of court, the Dutch court (unlike eg the Belgian Supreme Court in Happy Flights) does add renvoi to the mix per recital 20 BIa. Dutch private international law (like the BE rules, nota bene) makes Rome I applicable to contracts even for the subject-matter excluded of its scope of application, among which choice of court agreements. Lex voluntatis therefore rules and the court holds that the choice of law for Dutch law for the contract as a whole, extends to choice of law for the forum clause [4.3.7].

The defendant finally alleges invalidity of the choice of court agreement on the basis of the lex fori prorogati’s rules on ‘potestative’ (unreasonably onerous) clauses. On this point, the defence succeeds: [4.3.9]: the defendant has to be qualified as a consumer under Dutch law, despite his high net value and the object of purchase, and the GTCs per article 6.236 n BW should have included a clause giving the consumer the option to opt for the default court with jurisdiction (which one that would be is not clear to me and the judgment does not specify it).

Seeing as the choice of court agreement is held to be invalid, that the defendant is domiciled in Australia, and in the absence of a relevant bilateral agreement between the two countries, Dutch residual rules are applied to assess alternative grounds for jurisdiction. There is no Dutch forum contractus, given delivery in Italy [4.5.1, with reference ia to CJEU Car Trim] and no other jurisdictional grounds have any traction.

Conclusion: no jurisdiction for the Dutch courts. The case is good material for the lex fori prorogati rule and for the realisation that even outside the context of the consumer title of Brussels Ia (defendant not being domiciled in the EU, that title was not triggered), consumer law plays an important role in choice of court.

Geert.

TWR v Panasonic. Obiter consideration of A34 Brussels Ia forum non light. Hamburg court likely to have to take up that baton in some form.

Update 29 October 2021 the decision was upheld upon appeal.

TRW Ltd v Panasonic Industry Europe GmbH & Anor [2021] EWHC 19 (TCC)  adds to the slowly developing case-law on Article 34 Brussels Ia’s forum non conveniens light, on which I have reported at each occasion the Article to my knowledge has been applied (most recently in Ness Global Services).

The defendant Panasonic companies are based in Germany. Panasonic’s Group headquarters are in Japan. TRW is the English subsidiary, based in Solihull, of a German group of companies, ZF Group. The defendants say the parties agreed to German law and exclusive jurisdiction of the Hamburg court over any claim by TRW arising from supply of the resistors. TRW says the parties agreed to English law and jurisdiction.

There are related proceedings in Michigan, with judgment expected in about April 2021.

Kerr J decides at 55 ff here was valid A25 choice of court and hence jurisdiction for the courts at Hamburg, following the usual discussion on whether and if so which choice of court has been agreed in to and fro messages, purchase orders, invoices, references to general terms and conditions and the like. The kind of housekeeping complications which I discuss ia here.

Then follows obiter the Article 34 discussion. Parties agree that if jurisdiction under A25 BIa is established by neither party, TRW was at liberty to sue in England as the place of delivery of the goods, under A7(1) BIa; and that for A34 purposes there is a related lis alibi pendens in Michigan. The discussion turned on whether the word “expedient” in A34(1)(a) bears the meaning “desirable, even if not practicable” or “both practicable and desirable”, given the inconsistent case-law in JSC Commercial Privatbank v. Kolomoisky, SCOR v Barclays, Municipio de Mariana,  Federal Republic of Nigeria v. Royal Dutch Shell plcand of course  EuroEco.

At 94 Kerr J seems to side with Kolomoisky and with not reading EuroEco as a rejection of same, however he does not take definitive sides or does not attempt to reconcile the judgments. At 95 he says he would have not exercised his discretion for a stay, for the reasons earlier listed by counsel for claimants: these were (at 92-93)

Mr Caplan strongly opposed any stay. He submitted that, assuming I have any discretion to grant a stay (contrary to his reserved position), I should not exercise it. The risk of irreconcilable judgments could not be eliminated, he argued. The Michigan case would shortly produce a judgment binding on neither party to the present claim and, probably, applying Michigan law.

There was no scope for issue estoppel or abuse of process because the parties were different and the law could be different. Neither party in this case had opted for Michigan as the chosen forum and Michigan law as the choice of law. If the outcome of the Michigan litigation helped to promote settlement of the present claim, that could happen anyway, without a stay, since this claim is still at an early stage; the first case management conference has yet to take place.

At 98 Kerr J summarises

I would refuse a stay. The first condition in article 34(1)(a) – the expediency condition – may well be met, subject to clarification of the test emerging from the case law. The second condition is met. The third is not. I am far from satisfied that a stay is necessary for the proper administration of justice.

Kerr J concludes at 99

defendants have undertaken to submit to the jurisdiction of the Hamburg court, subject to seeking a stay of proceedings in Hamburg to await the outcome of the Michigan proceedings.

The Hamburg court is likely to see A34 arguments return, lest of course the Michigan proceedings will be concluded, in which case res judicata, recognition, and irreconcilability of judgment might be a core concern.

We have fairly little, if growing (*makes a note to now really really finish that paper*) authority to work with on A34. All bits help.

Geert.

European Private International, 3rd ed. 2021, Heading 2.2.15.3.2, para 2.539 ff

JK Fabrications. Unbolted choice of court in GTCs simply cannot lead to proper forum consent.

JK Fabrications Ltd v Fastfix Ltd & Anor [2020] NIQB 63 is a good illustration of how not to draft choice of court (and governing law, in fact) provisions generally, let alone in general terms and conditions – GTCs. Albeit with a shaky obiter suggestion on identifying a court.

Tobsteel GmbH domiciled in Őhringen, Germany seeks to set aside a third party notice served on it on the ground that the Northern Irish courts have no jurisdiction to determine the third party proceedings brought by Fastfix, domiciled in Ireland.  Fastfix is the defendant in proceedings brought by JK Fabrications, domiciled in Northern Ireland.  In separate proceedings JK Fabrications Limited is sued by SMBJV, an unincorporated joint venture in respect of a major sewerage project in London.  Bolts are the common element in dispute in both cases; the bolts supplied by Tobsteel to Fastfix who in turn supplied these bolts to JK Fabrications.

As justifiably held by Larkin J, the choice of court upon which Tobsteel bases its argument, itself was not properly bolted. The clause at issue is included in a  “General Terms of Supply and Payment for TOBSTEEL GmbH” document which  General Terms of Delivery and Payment document in which clause VIII reads

“VIII. Place of performance, choice of forum, applicable legislation. 

 1.        The place of performance and choice of forum for deliveries and payments (including complaints regarding cheques or bills) and for all disputes arising between us and the purchaser from the purchase contracts concluded between us and him or her shall be Öhringen.  However, we shall be entitled to file a complaint against the purchaser at his or her residence or registered business address.

2.         The legal relationship between us and our customers or between us and third parties shall be governed exclusively by the legislation of the Federal Republic of Germany”

The judgment shows that Tobsteel itself in fact did not initially see clear as to which GTCs applied. In earlier affidavits, two more, and different, versions of GTCs were said to apply.

The first level of discussion was whether there had at all been consent to the GTCs. The judge held there had not been. At 16:

The instrument on which Tobsteel relies as the vehicle of agreement is a combination of the words “Subject to our general terms of business if requested a print can be provided” and Mr Connolly’s [of Fastifx, GAVC] email containing the words “Alex, this is O.K.”. This combination is too fragile to bear that weight.

This was not so much (at 17) because it could not be established that the clause had actually been consulted by Mr Connolly. Larkin J, in line with the Report Jenard:

While it is often a commercially necessary fiction that a party has ‘agreed’ terms that he may not have seen in advance, far less read, based on his signature indicating his consent to be bound by such terms or some other manifestation of acceptance, …

Rather, it has to be clear which version of what is actually referred to: at 17:

..it is observable that in those cases in which this commercially necessary fiction operates, it will be clear what the applicable terms are.

At 19-20:

If Tobsteel wished, as I find it did, to secure agreement on Clause VIII.1 with Fastfix it needed an adequate mechanism or instrument for obtaining that agreement.  In the event, and taking the evidence for Tobsteel at its reasonable height, Tobsteel sought to bind Fastfix in the documents referred to above to Tobsteel’s “general terms of business”.  Clause VIII.1 of June 2014 is not contained in a document entitled “general terms of business” but in a document entitled “General Terms of Supply and Payment for TOBSTEEL GmbH”.  One might properly say, further, that in 2017  Herr Gebert, insofar as he thought specifically about the matter, meant to refer to the June 2004 text, but whether he meant to or not, he did not refer to it so as to permit the creation of an agreement between Tobsteel and Fastfix that Clause VIII.1 should apply.

In none of the cases on Article 25 or its antecedents is there an example of a term incorporating X by reference being held to incorporate Y by reference and thus satisfy the requirements of [A25].

In conclusion, consent had not been clearly and precisely demonstrated. Again, this is a clear emphasis on the need for proper GTC filekeeping.

At 21 ff the judge obiter but in this case in my view wrongly, holds that even if he had found there to have been consent to the clause, it did not meet with the requirements of A25 BIa. As a reminder, the clause reads

 1.        The place of performance and choice of forum for deliveries and payments (including complaints regarding cheques or bills) and for all disputes arising between us and the purchaser from the purchase contracts concluded between us and him or her shall be Öhringen.  However, we shall be entitled to file a complaint against the purchaser at his or her residence or registered business address.

2.         The legal relationship between us and our customers or between us and third parties shall be governed exclusively by the legislation of the Federal Republic of Germany”

The judge argues that the proviso at 1 does not identify a court at all and that the choice of law proviso in 2 cannot come to the rescue (it could conversely, under Rome I) for choice of court and law as recently emphasised in Enka Insaat are to be looked at differently.

I agree 1 is an odd mix of anchoring locus solutionis typically done under A7(1) BIa, with what seems to be a unilateral choice of court pro Tobsteel; and that on that basis it might be vulnerable as choice of court under A25 (but it could be rescued under A7(1). I disagree that the name of a town that has a court (let alone a court; which the judge agrees with) needs to be included for it to be proper choice of court: name any town and local civil procedure rules will tell you the relevant court.

‘(A)n agreement on ‘Derry Recorder’s Court’ would satisfy the requirement of Article 25 that a court be agreed but that an agreement on ‘Derry’ would not.’: I do not think that is correct.

Geert.

EU Private International Law, 3rd ed. Feb 2021, 2.296, 2.315 ff

X v I: The Austrian Supreme Court on due diligence in choice of court under Brussels I Recast.

Thank you Klaus Oblin for flagging OGH 7 Ob 183/17p X SE v I SpA (yet again I am happy to grumble that there is really no need to keep B2B litigation anonymous) at the Austrian Supreme Court. At issue is the application of Article 25 Brussels I Recast: when can consent to choice of court be established.

The facts of the case reflect repeated business practice: offers are made and accepted; a business relationship ensues on the basis of which further offers and orders are made; somewhere along the lines reference is made to general terms and conditions – GTCs which include choice of court. Can defendant be considered to have consented?

The Supreme Court, justifiably, lays the burden of proof with the claimant /plaintiff: if the contract is concluded through different offer and acceptance documents, the offer need only reference the terms and conditions containing the agreement conferring jurisdiction only if the other party: can follow-up on this with reasonable diligence; and actually receives the terms and conditions.

I am happy to refer to Klaus’ excellent overview (which also discussed the absence of established business practice between parties: one of the alternatives for showing choice of court). Yet again, the first and foremost quality required of lawyers (here: in-house counsel) emerges: ensure proper filing and compliance with simple procedure. Here: a clear flag of the GTCs in correspondence, and simple follow-up would have sufficed.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.

Saey Home: The CJEU on choice of court and invoices, and place of performance of concession contracts.

C‑64/17 Saey Home, is yet another illustration of, mercifully for us conflicts lawyers, even fairly sophisticated businesses often fail properly to conclude commercial agreements. Here: what is said to be a semi-exclusive concession agreement, was concluded verbally only.

Saey Home & Garden is a company with its registered office in Kortrijk (Belgium), which specialises in the manufacture and sale, inter alia, of kitchen equipment and utensils bearing the trademark ‘Barbecook’. That company does not have a branch or establishment in Spain. Lusavouga has its registered office in Cacia, Aveiro (Portugal). Its premises are in Portugal. Its network covers Spain, inter alia, where it has no branch or establishment. Parties to the main proceedings concluded a commercial concession agreement concerning the exclusive promotion and distribution (with the exception of one client) in Spain.

First up, has choice of court in favour of the courts at Kortrijk (referred to by its French synonym Courtrai, but then without the ‘r’ in referral documents and by the CJEU) been validly made if this choice was only included in the general terms and conditions included in the invoices? Hoszig (where a jurisdiction clause is stipulated in the general conditions, such a clause is lawful where the text of the contract signed by both parties itself contains an express reference to general conditions which include a jurisdiction clause) and Leventis (the purpose of the requirements as to form imposed by Article 25(1) is to ensure that consensus between the parties is in fact established) are the most recent CJEU precedent referred to. Both of them build on standing CJEU principle: one must not be overly formalistic when assessing the existence of agreement, but one must be certain that such agreement exists. While it is up to the national court to assess this in fact, the Court does indicate it is unlikely to be the case when no written agreement has been made (neither initially nor subsequently confirming an earlier verbal agreement) and all one has are the invoices.

Choice of court being unlikely, next up is the application of Article 7(1) to determine which court has jurisdiction to hear an application for damages relating to the termination of a commercial concession agreement concluded between two companies, each established and operating in a different Member State, for the marketing of goods on the domestic market of a third Member State in which neither of those companies has a branch or establishment.

Referring to Corman-Collins, the Court classifies concession agreements as being service contracts, which per Article 7(1) second indent, leaves to be determined the ‘place in
a Member State where, under the contract, the services were provided or should have been provided;’. Note: the place in a Member State. Not different places. Per Wood Floor Solutions, when there are several places of performance of the obligation characteristic of a contract for the supply of services the ‘place of performance’ must be understood as the place with the closest linking factor, which, as a general rule, will be at the place of the main provision of services. This place of ‘main provision’ follows from the provisions of the contract and, in the absence of such provision, of the actual performance of that contract and, where it cannot be determined on that basis, the place where the agent is domiciled (still per Wood Floor Solutions). This specific determination is left to the referring court.

One imagines different national courts may have treated all of this as acte clair – except perhaps for the peculiarity of Spain being a Member State where neither of the parties has either domicile or branch.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.1.

Planet49: pre-ticked agreement with clauses in terms and conditions.

Update 1 October 2019 the CJEU held today and as expected found such agreements to be invalid. Update 21 March 2019. Szpunar AG opined today and suggests there is no such valid consent. Update 14 November 2018 Hearing took place yesterday – Opinion AG scheduled for 28 February 2019.

A quick flag to those of you following consumer protection and the Directive (2002/58) on privacy and electronic communications. In Case C-673/17 Planet49 the Court of Justice is being asked to clarify to what extent a website which pre-ticks boxes in general terms and conditions (here: to share relevant personal data) is compatible with relevant EU laws.

File of the case here (in Dutch only).

Geert.

 

Delta Lloyd v Witsen (in re Kontiki): On the relevance of tidiness in GTCS.

Thank you Stefanie Roosen for flagging the issue in what after a bit of searching I take it to be Delta Lloyd v Witsen. At issue is not immediately a conflict of laws concern however the case does highlight a discussion often occurring with respect to choice of court and choice of law: when do mere references to general terms and conditions (GTCS) become binding upon parties, all the more so when these refer to industry standards. Here: HISWA standards, the ‘Nederlandsche Vereeniging voor Handel en Industrie op het Gebied van Scheepsbouw en Watersport’ est.1932.  The Netherlands are a seafaring nation: HISWA is big.

During repairs to the yacht Kontiki, the rear cable of the shipyard’s portal crane broke, the Kontiki fell and she suffered severe damage. The shipyard had in the course of negotiation, agreement and confirmation referred to no less than three different HISWA sets. The Rechtbank Noord-Holland held that as a result, none was validly incorporated into the contract (neither incidentally was a mere sign quayside, limiting liability).

As I have reported on this blog before (e.g. here), there is no magic wand when it comes to GTCS: all that is required is due diligence. Neat filing and dito reference. Electronically or otherwise: it is elementary for all things legal.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.3.1.

Wiseley v Amazon: on consumer contracts, click-wrap and putative laws.

Thank you Jeffrey Neuburger for flagging Wiseley v Amazon in the US Federal Court of Appeal (9th circuit). Jeffrey has excellent overview and analysis so I will suffice with identifying a few tags: the issue of click-wrap agreements (when does one agree to GTCs contained in pop-ups and hyperlinks and the like); application of a putable law to a contract (the von Munchausen or ‘bootstrap’ principle); comparative dispute resolution law: how would EU law look at the issues? Have fun.

Geert.

 

Separable, but not that separate. The Irish High Court in C&F Green Energy on settling applicable law as a preliminary issue.

The procedural context of C&F Green Energy v Bakker Magnetic BV is an attempt at making the courts preliminarily decide the isuse of applicable law to the contract between the parties. Gearóid Carey  explains the Irish civil procedure context here. In this posting I just want to flag one or two Rome I/II issues.

Plaintiffs (an Irish company), wind turbine manufacturers, seek declaratory relief and damages arising out of an alleged breach of contract and negligence on the part of the defendant in connection with the supply of magnets to the plaintiffs for use in the turbines. Defendant denies liability and has counterclaimed in respect of unpaid invoices and loss of profit.

The issue sought to be resolved at a preliminary hearing is whether it is Irish or Dutch law which governs the contract and should be applied by the court when the case comes on for full hearing. It was not for the High Court to determine the applicable law issue at this stage but rather to decide whether this crucial issue is to be decided at a preliminary hearing or whether it should be dealt with as one of the issues at the trial. Hedigan J decided it should be the latter. He dismissed i.a. the argument that much time will be saved because the parties will only have to prepare the case on the basis of one applicable law whatever the result of the preliminary issue, as ‘a little overblown’: expert opinion of one or two Dutch lawyers may be sought, however the facts of the case once the applicable law issue is settled, ought not to be overly complicated.

What interests me here is the ease with which, wrongly, the Court (however presumably just paraphrasing counsel at this point) applies the cascade or waterfall of Article 4 Rome I.  Parties’ views on applicable law are summarised in the judgment as follows: (at 5.2-5.3)

‘The defendant argues that the issue is a very discrete question of law relatively easily established. It argues that pursuant to Article 3.1 of the Rome I Regulation, a contract shall be governed by the law chosen by the parties. It argues that the defendant’s general conditions of sale were incorporated into the contract because of their attachment to a series of quotations delivered by email and their inclusion in their order confirmation forms. Thus, Dutch law was chosen by the parties to govern their contract. It argues that if they succeed on this point then little remains to be decided because certain clear time limits will apply and these, they claim, have clearly not been met….

The plaintiffs argue that it is not Article 3 but Article 4(3) of the Rome I Regulation that should apply. This Article provides that it is the law of the country most closely connected to the contract that shall apply. Although Article 4 provides for the applicable law only in the absence of a choice of law, the plaintiff argues that this Article will fall to be considered if they can establish that the orders for the goods were not, in fact, made subject to the condition importing Dutch law. In this regard, they characterised the emails relied upon by the defendant as merely pre-contract correspondence. They will rely upon the evidence of the parties to demonstrate that Dutch law was never accepted as the law of the contract. They will argue that the choice of law should be determined pursuant to Article 4(3) by an examination of all the numerous connections between the contract and Ireland. This, they argue, will involve a consideration of all the evidence of the negotiations that took place between the parties. In relation to their claim in tort, they argue that the general rule under Rome II Article 4(1)(i) should apply i.e. the law of the country where the damage occurred. They argue that Article 4(3) of Rome II further brings into play evidence as to manifest proximity. Both of these, they argue, will involve evidence of the parties.’

Which of these will prevail will now be settled at trial stage. Defendant will have to show that what it refers to as the pre-contractual quotations of its general conditions of sale, seemingly by e-mails and eventually in the confirmation forms, amounts to a choice of law clearly established, per Article 3(1) Rome I.  There is considerable case-law on the mirror issue of choice of Court under Brussels I, also in an e-mail context (see e.g. here) however  to what degree one can simply apply the same principles to choice of law, is not clearly established in case-law.

An interesting point is that the Court (and counsel with it, one presumes) jumps straight to Article 4(3) Rome I should choice of law per Article 3(1 not be clearly established. Article 4(3) however is the escape clause (referred to by Hedigan J as ‘manifest proximity’), which must only apply in exceptional circumstance. The correct next steps following failure to establish clearly established choice of law, are firstly the assumptions made under Article 4(1)  (Article 4(1) (a) would seem most obvious here); should that fail, Article 4(2)’s characteristic performance test; and failing that, Article 4(4)s ‘proper law of the contract’ consideration. Article 4(3) only corrects Article 4(1) or (2)s more mechanical (‘objective’ as it is also called) choice of law determination. The judgment mixes Article 4(3)’s ultimate and exceptional correction, with the proper law of the contract test.

My concerns here should likewise not be overblown. Actual determination of the applicable law was not the court’s task. However now that the issue goes back to trial, correct application of Rome I must be made.

Geert.

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