Posts Tagged ius novit curia

GDE v Anglia Autoflow. Governing law for agency agreements under the Rome Convention.

In GDE LLC & Anor v Anglia Autoflow Ltd [2020] EWHC 105 (Comm) (31) the Rome I Regulation does not apply ratione temporis; the Agency Agreement was concluded on about 9 April 2009 which is a few months before the kick-off date of the Regulation (note there is no default rule for agency in Article 4 Rome I in the event of lack of lex voluntatis). Dias DJ therefore turns to the 1980 Rome Convention.

Parties are in dispute as to the governing law of the Agency Agreement by which the claims should be determined. AAL alleges that the governing law is that of Ontario while the Claimants allege that the Agency Agreement is governed by English law. The point is of critical importance because the Claimants concede that, if AAL is correct, their claim is time-barred under Ontario law: although this, as readers know, assumes statutes of limitation are subject to the governing law – which is far from certain: see Jabir v KIK and Spring v MOD.

Parties’ arguments are at 10 and 11 and of course they reverse engineer. In essence (at 20) claimants say that there was an implied choice of English law. Alternatively, if that is not correct, the presumption in Article 4(2) of the Rome Convention, which would otherwise point to Georgia law, falls to be disapplied in favour of English law. The Defendant says that there was no implied choice and that application of Article 4(2) leads to Ontario law. Alternatively, if (which it denies) the presumption in Article 4(2) leads to any other governing law, the presumption is to be disapplied in favour of Ontario.

At 21 ff follows a rather creative (somewhat linked to the discussion of ex officio Rome Convention application in The Alexandros), certainly unexpected (yet clearly counsel will do what counsel must do) argument that essentially puts forward that under the common law approach of foreign law = fact hence must be proven, any discussion of a law as governing law, not suggested by the parties (here: the laws of (the US State of) Georgia) that is not English law (which clearly the English curia does ‘novit’), cannot go ahead. At 22 Dias DJ already signals that ‘once the wheels of the Convention had been put in motion, they could not be stopped short of their ultimate destination. The idea that the process dictated by the Convention should be hijacked halfway, as it were, on the basis of a pleading point was, to my mind, deeply unattractive.’

At 31 she sinks the argument. I think she is right.

Having at length considered the facts relevant to the contract formation, discussion then turns again to the Rome Convention with at 105 ff a debate on the role to be played by factors intervening after contract formation with a view to establishing [implicit, but certain: see at 117 with reference to the various language versions of the Convention and the Regulation essentially confirming the French version] choice of law or closest connection. (Dias J refers to the Court of Appeal in Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Ltd, [2013] EWCA Civ 365[2013] 2 Lloyd’s Rep 98 where, at paragraphs 21-27, it pointed out that the common law approach frequently blurred the distinction between the search for the parties’ inferred intention and the search for the system of law with which the contract had its closest and most real connection).

At 120: the hurdle is high: choice of law implicitly made must have nevertheless been made: ‘The court is not looking for the choice that the parties probably would have made if they had turned their minds to the question.’ at 122: In the present case the evidence established that there was no reference by the parties to the question of governing law at all. Choice of court for England (discussed ia with reference to Rome I and to Brussels Ia Article 25) does not change that. At 160 ff therefore follows the discussion of Article 4 of the Rome Convention, leading to a finding of the laws of Ontario as the lex contractus under Article 4(1). Article 4(5) does not displace it.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.4, Heading 3.2.6.

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(Polish) Ius novit (English) curia. The High Court settles Polish law in Syred v PZU.

Postscript 27 November 2017 for the opposite view in the common law (ius non novit curia) see recently [2015] UKEAT 0130_17_1110 Strickland v Kier.

As readers will be aware, the Rome II Regulation on the law applicable to non-contractual obligations, harmonises Member States’ governing law rules on non-contractual obligations (not entirely accurately known in short as ‘tort’). Article 15 clarifies that the scope of the law applicable is very wide, and indeed includes matters which may otherwise be considered to be procedural (hence subject to lex fori): I explained this mechanism in my posting on WallSyred V PZU again concerns Article 15(c) Rome II:

Article 15. Scope of the law applicable
The law applicable to non-contractual obligations under this Regulation shall govern in particular:
…(c) the existence, the nature and the assessment of damage or the remedy claimed;…

The case concerns contributory negligence and quantum of this claim by Mr Syred for injury loss and damage suffered in consequence of a road traffic accident in Poland on 10 February 2010. He and his then girlfriend Kate Cieslar were rear seat passengers in a Fiat Punto, driven by her brother Mr Michal Cieslar, which was involved in a collision with a BMW, being driven by Mr Waclaw Bednorz. The collision caused Mr Syred to be ejected from the Fiat and in consequence to suffer serious injuries, in particular to his brain. He has no memory of the accident. Judgment on primary liability against the Defendants was entered by consent in the two actions on 25 September 2012 and 1 July 2014. Ms Cieslar’s claim in respect of her injuries has been settled.

There is no dispute between the experts for the defence and the plaintiff that a rear seat passenger who fails to wear a seat belt is at fault and negligent for the purpose of the passenger’s civil claims for compensation under Polish law. The experts also agree that the next question in Polish law is whether such negligence caused the injuries or made them worse. They also agree that Polish law in respect of damages for non-pecuniary loss (i.e. the equivalent of general damages for pain and suffering) provides no fixed scales or guidelines relevant to the case and that the judge should seek to assess a reasonable sum taking into account the injuries suffered by the claimant and all the circumstances of the case. Common practice of the Polish civil courts, it was said, is to calculate the non-pecuniary element on the basis of a 2002 table contained in the Ordinance of the Minister of Labour and Social Policy. The Supreme Court of Poland had criticised this practice in civil courts, as too slavish to a social insurance scheme.

In Wall, the CA held that the word ‘law’ in Article 15 of Rome II should be construed broadly and includes practice, conventions and guidelines; so that the assessment of damages should be on that basis. That, Soole J notes here, leaves the question of what the English Court should do if the evidence shows that the foreign courts continue to follow a particular practice despite criticism from the Supreme Court of that country. It is noticeable that the High Court does not wish to impose a precedent rule where there is none (Poland following civil law tradition). However it would be equally impertinent to ignore the criticism of that Supreme Court, that the 2002 table must not be slavishly followed. Soole J therefore ends up taking guidance from the 2002 table, without slavishly following it.

What remains to be seen (as also noted by Matthew Chapman, who alerted me to the case) is whether the High Court may now serve as inspiration for the Polish court. Precedent outsourcing, as it were.

Geert.

European private international law, second ed. 2016, Chapter 4, Heading 4.8

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Just prove it! CJEU on lex causae and detrimental acts (pauliana) in Nike.

Postscript for an example of where Article 4(2)m, lex fori concursus for rules relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors, applies without correction, see C-594/14 Kornhaas.

In my posting on Lutz I flagged the increasing relevance of Article 13 of the Insolvency Regulation. This Article neutralises the lex concursus in favour of the lex causae governing the act between a person (often a company) benefiting from an act detrimental to all the creditors, and the insolvent company. Classic example is a payment made by the insolvent company to one particular creditor. Evidently this is detrimental to the other creditors, who are confronted with reduced means against which they can exercise their rights. Article 13 reads

Detrimental acts. Article 4(2)(m) shall not apply where the person who benefited from an act detrimental to all the creditors provides proof that: – the said act is subject to the law of a Member State other than that of the State of the opening of proceedings, and – that law does not allow any means of challenging that act in the relevant case.

In the case at issue, C-310/14, Nike (incorporated in The Netherlands) had a franchise agreement with Sportland Oy, a Finnish company. This agreement is governed by Dutch law (through choice of law). Sportland paid for a number of Nike deliveries. Payments went ahead a few months before and after the opening of the insolvency proceedings. Sportland’s liquidator attempts to have the payments annulled, and to have Nike reimburse.

Under Finnish law, para 10 of the Law on recovery of assets provides that the payment of a debt within three months of the prescribed date may be challenged if it is paid with an unusual means of payment, is paid prematurely, or in an amount which, in view of the amount of the debtor’s estate, may be regarded as significant. Under Netherlands law, according to Article 47 of the Law on insolvency (Faillissementswet), the payment of an outstanding debt may be challenged only if it is proven that when the recipient received the payment he was aware that the application for insolvency proceedings had already been lodged or that the payment was agreed between the creditor and the debtor in order to give priority to that creditor to the detriment of the other creditors.

Nike first of all argued, unsuccessfully in the Finnish courts, that the payment was not ‘unusual’. The Finnish courts essentially held that under relevant Finnish law, the payment was unusual among others because the amount paid was quite high in relation to the overall assets of the company. Nike argues in subsidiary order that Dutch law, the lex causae of the franchise agreement, should be applied. Attention then focussed (and the CJEU held on) the burden of proof under Article 13, as well as the exact meaning of ‘that law does not allow any means of challenging that act in the relevant case.

Firstly, the Finnish version of the Regulation seemingly does not include wording identical or similar to ‘in the relevant case‘ (Article 13 in fine). Insisting on a restrictive interpretation of Article 13, which it had also held in Lutz, the CJEU held that all the circumstances of the cases need to be taken into account. The person profiting from the action cannot solely rely ‘in a purely abstract manner, on the unchallengeable character of the act at issue on the basis of a provision of the lex causae‘ (at 21).

Related to this issue the referring court had actually quoted the Virgos Schmit report, which reads in relevant part (at 137) ‘By “any means” it is understood that the act must not be capable of being challenged using either rules on insolvency or general rules of the national law applicable to the act’. This interpretation evidently reduces the comfort zone for the party who benefitted from the act. It widens the search area, so to speak. It was suggested, for instance, that Dutch law in general includes a prohibition of abuse of rights, which is wider than the limited circumstances of the Faillissementswet, referred to above.

The CJEU surprisingly does not quote the report however it does come to a similar conclusion: at 36: the expression ‘does not allow any means of challenging that act …’ applies, in addition to the insolvency rules of the lex causae, to the general provisions and principles of that law, taken as a whole.’

Attention then shifted to the burden of proof: which party is required to plead that the circumstances for application of a provision of the lex causae leading to voidness, voidability or unenforceability of the act, do not exist? The CJEU held on the basis of Article 13’s wording and overall objectives that it is for the defendant in an action relating to the voidness, voidability or unenforceability of an act to provide proof, on the basis of the lex causae, that the act cannot be challenged. Tthe defendant has to prove both the facts from which the conclusion can be drawn that the act is unchallengeable and the absence of any evidence that would militate against that conclusion (at 25).

However, (at 27) ‘although Article 13 of the regulation expressly governs where the burden of proof lies, it does not contain any provisions on more specific procedural aspects. For instance, that article does not set out, inter alia, the ways in which evidence is to be elicited, what evidence is to be admissible before the appropriate national court, or the principles governing that court’s assessment of the probative value of the evidence adduced before it.

‘(T)he issue of determining the criteria for ascertaining whether the applicant has in fact proven that the act can be challenged falls within the procedural autonomy of the relevant Member State, regard being had to the principles of effectiveness and equivalence.’ (at 44)

The Court therefore once again bumps into the limits of autonomous interpretation. How ad hoc, concrete (as opposed to ‘in the abstract’: see the CJEU’s words, above) the defendant has to be in providing proof (and foreign expert testimony with it), may differ greatly in the various Member States. Watch this space for more judicial review of Article 13.

Geert.

Postscript 7 December 2015: Bob Wessels has annotated the case here.

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