Motacus Constructions v Castelli. Choice of court, English lois de police and interim measures under the Hague process, post Brexit.

Motacus Constructions Ltd v Paolo Castelli SpA [2021] EWHC 356 (TCC)  to my knowledge is the first case post-Brexit that shows how a jurisdictional discussion that might have been settled swiftly under Brussels Ia, leads to a lot more chewing over under 2005 Hague Convention (on choice of court) principles. It may not be ‘important‘ in terms of its impact on authority (this is a first instance judgment; and it may be overly enthusiastic in engaging with the issues) yet it nevertheless is a good illustration of what was left behind.

The Private International Law (Implementation of Agreements) Act 2020 has given the 2005 Convention force of law in the UK.

The ‘Governing Law & Dispute Resolution’ clause (clause 19) of a contract between contractor and subcontractor re a London hotel provided ‘This Agreement shall be governed by and construed in accordance with the laws of Italy’ and for all disputes to ‘submitted to the exclusive jurisdiction of the Courts of Paris, France’. A payment issue ensued and the contractor started classic English construction sector adjudication proceedings despite the aforementioned clause: the Housing Grants, Construction and Regeneration Act 1996 is overriding mandatory law /loi de police /loi d’application immédiate in England and Wales [3]. To address cash flow problems in the construction industry, and the shortcomings of the traditional litigation process in serving the needs of the construction industry, Parliament decided there should be a short-form process of adjudication producing binding, and readily enforceable, decisions [25].

The UK has not made a reservation under Hague 2005 viz contracts in the construction sector  [18] (compare the EU’s reservation viz insurance contracts).

Sub-contractor actively took part, yet declined to make the necessary payment which the adjudicator’s decision had instructed. Adjudication enforcement proceedings were started on 12 January 2021. Sub-contractor challenged the enforcement proceedings, arguing the proceedings could only be commenced in Paris under the choice of court.

Claimant’s case is that the High Court should accept jurisdiction and enforce the adjudicator’s decision, notwithstanding the exclusive jurisdiction clause, in light of the provisions in either A6(c) or A7 Hague 2005. It submits that it would be manifestly contrary to the public policy enshrined in the 1996 Act, or alternatively it would be manifestly unjust, to refuse to enforce an otherwise enforceable adjudicator’s decision in reliance on clause 19 of the contract. In any event, it is argued, the enforcement of an adjudicator’s decision is the enforcement of an interim measure of protection. It falls outside the scope of Hague 2005 and so the defendant cannot rely on its provisions.

A6(c) Hague 2005 provides that a court of a contracting state (in this case the UK) other than that of the chosen court (in this case Paris, France), “… shall suspend or dismiss proceedings to which an exclusive choice of court agreement applies unless – (c) giving effect to the agreement would lead to a manifest injustice or would be manifestly contrary to the public policy of the State of the court seised. 

A7 provides that: “Interim measures of protection are not governed by [the Hague] Convention. [That] Convention neither requires nor precludes the grant, refusal or termination of interim measures of protection by a court of a Contracting State and does not affect whether or not a party may request or a court should grant, refuse or terminate such measures.”

Spiliada, Fiona Trust, The Eleftharia etc. are all discussed in what looks like a bonfire of the CJEU authorities. The impact of Italian law as lex contractus, for the construction of the choice of court clause (under BIa this would have to be French law) is also signalled, but not entertained for this is an application for summary judgment in which, in the absence of proof of Italian law, its contents are presumed to be the same as English law [51].

Hodge J at 54 declines the suggestion of A6(c) ordre public. ‘Manifest’ requires a high burden of proof, no reservation has been made and there is no good reason why the parties should not be held to the bargain that they freely made when they incorporated clause 19 into their construction contract.

At 56 ff however claimant’s arguments on interim measures having been carved out, does lead to success: it is held that an application for summary judgment to enforce an adjudicator’s decision is an interim measure of protection within A7 Hague 2005. ‘The concept extends to any decision that is not a final and conclusive decision on the substantive merits of the case…The function of the adjudicator’s decision is to protect the position of the successful party on an interim basis pending the final resolution of the parties’ dispute through the normal court processes (or by arbitration).’ [57] The summary judgment application before the High Court has that same DNA: ‘What is before this court is not the underlying dispute between these parties but whether an interim procedure and remedy have been followed and granted.’

Interesting. Geert.

Weco Projects ASP v Zea Marine Carier GmbH: provisional measures, court-appointed surveyor’s powers in the light of arbitration.

Genova’s court ruling in Weco Projects ASP v Zea MArine Carier GmbH is remarkably similar to the Belo Horizonte (Cefetra et al v Ms ‘IDA’ Oetker Schiffahrtsgesellschaft MbH & Co KG et al) ruling at the Court of Rotterdam, which I reviewed here. Transport is of a yacht is the issue, sinking the event, and London arbitration the agreed dispute resolution. What powers do the courts in ordinary still have to order interim measures?

The court could have discussed the arbitration /Brussels Ia interface, as well as Article 35’s provisional measures. Instead, it mentions neither and relies entirely on an Italian Supreme Court precedent as Maurizio Dardani and Luca di Marco review excellently here (many thanks to Maurizio for forwarding me the case). An exciting, and missed opportunity to bring these issues into focus.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.15.

 

 

 

Ergo, and Haras des Coudrettes. Provisional measures under Brussels I Recast and Lugano before the French Supreme Court.

Thank you Nicolas Contis and Leonardo Pinto for reporting  judgments by the French Supreme Court (Cour de Cassation) 16-19-731 Ergo Versicherung v Volker and 16-27.913, Haras des Coudrettes v X, both held on 14 March 2018.

The judgments concern the interpretation of Article 35 Brussels I Recast c.q. Article 31 of the Lugano Convention (the second case concerned a defendant domiciled in Switzerland) on provisional measures.

Please refer to Nicolas and Leonardo for a summary of the facts the judicial proceedings in the case. In neither cases do the French courts have subject-matter jurisdiction: in Ergo, the German courts do by virtue of choice of court; in Haras des Coudrettes, the Swiss courts do by virtue of Article 5(3) Lugano (locus delicti commissi being there; and direct damage also having occurred there hence leaving only indirect, financial damage with the French owner of the horse at issue, even if the exact nature and size of those direct injuries could only be later established in France).

In Ergo, the Supreme Court held that ‘la juridiction française (est) compétente pour ordonner, avant tout procès, une mesure d’expertise devant être exécutée en France et destinée à conserver ou établir la preuve de faits dont pourrait dépendre la solution du litige. Appointing an expert to assess any damages caused to a solar plant, and to explore liabilities for such damage, falls within Article 35 Brussels I Recast. I would agree with such a wide reading as I have discussed before in my review of the Belo Horizonte case. The Supreme Court does not consider relevant to the outcome claimants’ argument, that under Article 2 Brussels I Recast, provisional measures only enjoy free movement under the Regulation when ordered by a court with subject-matter jurisdiction. Indeed in view of the Supreme Court the Court of Appeal need not even consider whether it has such jurisdiction. Given that the form Annexed to the Regulation includes a box requiring exactly that, this may seem odd. One assumes the Court held so given that the forensic measures ordered, can be rolled out entirely in France: no need for any travel at all.

In Haras des Coudrettes, the Supreme Court annulled because the Court of Appeal had established subject-matter jurisdiction for the Swiss courts, and had subsequently not entertained the possibility of provisional measures, even though the object at issue (the mare: ‘la jument’) is in France: ‘Qu’en statuant ainsi, alors qu’elle relevait que la mesure sollicitée avait pour objet notamment d’examiner la jument située en France, la cour d’appel, qui n’a pas tiré les conséquences légales de ses propres constatations, a violé les textes susvisés.

and  ‘une mesure d’expertise destinée à conserver ou établir la preuve de faits dont pourrait dépendre la solution du litige, ordonnée en référé avant tout procès sur le fondement du second de ces textes, constitue une mesure provisoire au sens du premier, qui peut être demandée même si, en vertu de cette Convention, une juridiction d’un autre Etat lié par celle-ci est compétente pour connaître du fond’:

expert findings which aim at maintaining or establishing facts upon which the eventual solution of the litigation may depend, fall within the scope of provisional measures and may be ordered even before any entertainment of subject-matter jurisdiction. Again, the fact that for the effective roll-out of the provisional measures no other State need be engaged, must have relevance in this assessment.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.15.

 

 

 

Belo Horizonte: Court at Rotterdam (using English as language of the oral procedure): Access to seized documents is no provisional measure under Brussels I Recast.

Arnold van Steenderen and Milan Simić have complete and concise review here of judgment of the Rotterdam court of December 2017 in re the Belo Horizonte (officially Cefetra et al v Ms ‘IDA’ Oetker Schiffahrtsgesellschaft MbH & Co KG et al). The case is a follow-up to 2015 proceedings. In these the Rotterdam court had first sanctioned seizure, and then rejected further action for claimant had not formally requested access to the documents.

Arnold and Milan summarise the facts very very helpfully – I am much obliged for the judgment is in Dutch (although as the judgment shows, the proceedings were actually conducted in English: a nice example of the use of regulatory competition in civil procedure) and their efforts have saved me a lot of translation time:

The decisions of the Rotterdam Court are a result of the carriage under bill of lading of soya beans on behalf of Cefetra B.V. (Netherlands based) on board of the “Belo Horizonte” from Argentina to the United Kingdom. Cefetra supplies raw materials to the feed, food, and fuel industries. Cefetra Ltd. (UK based) was the holder of the b/l’s and English law applied to the b/l’s. The vessel is owned by MS ‘IDA’ Oetker and is time chartered by Rudolf A Oetker (both German based, together addressed as Oetker). MS ‘IDA’ Oetker is the carrier under the b/l’s. London arbitration is agreed upon for any dispute rising from the contract of carriage and the b/l’s.

Following engine failure, ‘(d)uring the voyage, experts commissioned by both Cefetra and Oetker visited the “Belo Horizonte” to preliminary assess the condition of the vessel and its engines. Further investigation was conducted upon arrival in England. Oetker, however, only granted permission for inspection of the engine room and refused to disclose the documents on board. Crew interviews were not allowed as well. Subsequently, Cefetra obtained leave to attachment for the purpose of preserving evidence in the Netherlands on 27 October 2015. The leave was effected by the bailiff on 28 October 2015 on board of the “Belo Horizonte”. Several documents were seized and handed over to a sequestrator. Cefetra initiated proceedings’ to gain access to the seized documents.

The dispute in the main is arbitrable in London.

Oetker disputes jurisdiction of the court at Rotterdam on the basis of defendants’ domicile in Germany. Cefetra argue in favour of jurisdiction on the basis of Article 7(1), alternatively 7(2) or indeed Article 35 Brussels I Recast:

  • 7(1) forum contractus: for, it is argued, the main agreement between the two parties implies an obligation to provide any relevant evidence; the place of performance for that ‘obligation in question’ lies in The Netherlands since that is where the sequestrator holds them.
  • 7(2) forum delicti: Oetker’s obstruction of truth finding is a tort which is located (locus delicti commissi) at Rotterdam since that is where Oetker opposes disclosure.
  • 35 provisional, including protective measures.

The Court does not at all entertain Cefetra’s arguments on the basis of 7(1) or 7(2). Wrongly so: plenty of not at all obvious contracts or torts could qualify as same under these provisions. To not address them at all does not make them simply go away.

The court first of all (5.7 in fine) rejects relevance of the arbitration exclusion on the basis of C-391/95 Van Uden Deco-Line. It then sticks to a very restrictive approach to Article 35, with the classic provisionary (not covered by Article 35) v provisional (covered) nature of measures, as also discussed in C-104/03 St. Paul Dairy/Unibel (to which the Court refers). In the words of the court: seizure of evidence is provisional; actual access, copy or extract is not (5.8): the court suggests this is not provisional since it allows the party to gauge the evidentiary position of the party and hence is irreversible.

I disagree -and I have at least a shelf in my library to support the discussion.

Ireversibility in fact (once the evidence seen, the party can never wipe it from its memory, so to speak) does not equate ireversibility in law. The court takes a very limited view of Article 35 and I do not believe it is the right one.

There are not that many national judgments covering Article 35 quite so expressly. This is one to treasure.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.15.