Posts Tagged Lex causae
In  EWCA Civ 1581 Taftnet v Bogolyubov the Court of Appeal held that an English court can allow addition of a claim which is time barred by the governing law identified by Rome I or Rome II. At 72 Longmore J notes ‘Under Article 12.1(d) of Rome I and Article 15(h) of Rome II, the applicable foreign law governs limitation of actions.’ However neither Rome I nor Rome II apply to matters of procedure (Article 1(3) in both of the Rome Regulations).
The Court of Appeal clearly takes Article 1(3) at face value by allowing amendment of the claim even if it thence includes a claim time barred under the lex causae: not to do so would endanger the consistent application of English procedural law. Article 12 cq 15 do not sit easily with Article 1(3). That has been clear from the start and it is an issue which needs sorting out. In the absence of such clarification, it is no surprise that the English courts should hold as Longmore J does here.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 3, Chapter 4.
Kaynes v BP PLC. A good Canadian illustration of forum non conveniens to shareholder pursuit of non-disclosure.
With many conflict of laws classes fresh underway, it is good to be reminded of the classics. Forum non conveniens was at issue in Kaynes v BP, at the Court of Appeal for Ontario. There is a pending class action in the U.S. District Court, Southern District of Texas. The class in that proceeding includes current plaintiff and other Canadian investors who purchased BP securities on the NYSE.
The judgment has ample and concise background, please refer to it for same. The Court of appeal has now lifted a stay, previously put in place on forum non conveniens ground, in light of changed circumstance. The U.S. District Court judge ruled that as the moving party and his proposed Canadian class were members of the class represented by the lead plaintiffs, he was not entitled to now assert a separate class action based upon a claim that the lead plaintiffs had not pursued. Second, the U.S. District Court judge ruled that the moving party’s claim was time-barred under the Ontario Securities Act. Plaintiff and other members of his proposed class are free to pursue individual claims in the U.S. District Court (not already represented in the class action) based on Ontario securities law, subject to any defences BP may advance, including a limitations defence. (Note that the US court therefore holds limitations to be part of the lex causae, not lex fori).
Since the US court do not claim exclusive jurisdiction over the litigation, and given that if a case were to go ahead in the US, it would be subject to Ontario law, the stay was lifted.
The case is a good illustration that forum non conveniens is live and evolving, not static.
The UKSC in MOD v Iraqi Civilians: Immunity of coalition forces is procedural. Civilians’ claim in tort is time-barred.
Ministry of Defence [MOD] v Iraqi civilians highlights a classic in private international law (statutes of limitation), with an interesting link to State immunity. Procedural issues are considered to be part of the lex fori. Meaning, a court always applies its own procedural rules. For the discussions in the Rome II context, see an earlier posting. However what is less settled is whether statutes of limitation fall under procedure or substantial law. If the former, then they follow the lex fori. If the latter, then they follow lex causae: the law applicable to the substantive matter at issue.
Limitation, which deprives the litigant of a forensic remedy but does not extinguish his right, was traditionally classified by the English courts as procedural. The result was that until the position was altered by statute in 1984, the English courts disregarded foreign limitation law and applied the English statutes of limitation irrespective of the lex causae. This was widely regarded as unsatisfactory, mainly because of the rather technical character of the distinction on which it was based between barring the remedy and extinguishing the right.
The Foreign Limitation Periods Act 1984 changed the position and provided for the English courts, with limited exceptions, to apply the limitation rules of the lex causae.
Now, in MOD v Iraqi Civilians, on appeal from  EWCA Civ 1241, the civilians claim to have suffered unlawful detention and/or physical maltreatment at the hands of British armed forces in Iraq between 2003 and 2009, for which the MOD is liable in tort. It is agreed between the parties that any liability of the Ministry in tort is governed by Iraqi law. Under article 232 of the Civil Code of Iraq, the standard limitation period applicable to claims of this kind in Iraqi law is three years from the day on which the claimant became aware of the injury and of the person who caused it. The action sub judice was begun more than three years after most of the claimants must have been aware of these matters.
However, Coalition Provisional Authority Order 17, which had and still has the force of law in Iraq, made it impossible for claimants to sue the British government in Iraq. Section 2(1) of the Order provides that coalition forces in Iraq (including British forces) are “immune from Iraqi legal process.” Claimants argue that Order 17 needs to be seen as an ‘impediment’ within the meaning of article 435 of the Iraqi Civil Code, which is one of a number of provisions suspending the running of time in particular cases. It provides:
” Article 435 – (1) The time limit barring the hearing of the case is suspended by a lawful excuse such as where the plaintiff is a minor or interdicted and has no guardian or is absent in a remote foreign country, or where the case is between spouses or ascendants and descendants, or if there is another impediment rendering it impossible for the plaintiff to claim his right.
(2) The period which lapses while the excuse still exists (lasts) shall not be taken into account (for the running of the time limitation).”
Lord Sumption leading, held (at 11) that Order 17 is not a rule of limitation, but a particular form of state immunity, which serves as a limitation on the jurisdiction of the courts. It is therefore necessarily procedural and local in nature. It is not legally relevant, given the claimants have brought proceedings in England, what impediments might have prevented similar proceedings in Iraq [at 13]. Claimants could have always and did eventually sue in the UK. Claimants’ submission, if accepted, would mean that there was no limitation period at all affecting the present proceedings in England, by reason of a consideration (CPA Order 17) which had no relevance to English proceedings because it has no application outside Iraq and has never impeded resort to the English court (at 16).
The Appeal was dismissed. In the wider context of immunity, it is important precedent. Claimants faced with immunity obstacles to litigation in a jurisdiction, must not hesitate to start proceedings elsewhere, where no such obstacles exist. In proceedings before the English courts, any delay in doing so is subject to the ordinary limitation periods of the lex causae.
RPC and Sarah Shaul it seems, like me, are hoovering up database backlog – once again thank you to their excellent blog for alerting me to Banque Cantonale de Genève v Polevent. Other than the direct impact for the interpretation of Rome II‘s Article 10, and its relation with Article 4’s general rule, an important lesson from the case to me seems to be, yet again, the relevance of the articulation of claims, for the determination of jurisdiction.
Facts are as follows (at 2 ff). Claimant (“BCGE”) is a bank in Geneva. On 24 March 2104 a man calling himself Mr. Dumas telephoned BCGE and asked to speak to Yvan Nicolet of the accounting department. He was not in the office and so the call was taken by Jacqueline Konrad-Bertherin. Mr. Dumas asked her to send a confidential message to what he said was the private mail address of Eric Bourgeaux, the deputy CEO of BCGE. She did so and received a reply from someone claiming to be Mr. Bourgeaux instructing her to pay Euro 6,870,058 from BCGE to the Natwest Bank in London in favour of Polevent Limited. She did so. She believed she had been instructed to do so by Mr. Bourgeaux; but she had not been. The fraud was discovered and repayment was requested later that day.
Shortly before the fraud Natwest had been advised of a freezing order against Polevent in favour of an Italian company Enoi SpA (“Enoi”). The funds were therefore frozen in Polevent’s account with Natwest. BCGE has claimed damages from Polevent for deceit. BCGE accepts that that claim is governed by the law of Geneva. It has also advanced a claim against Polevent in restitution on the basis that the sum was paid by mistake. It claims that since Polevent must have realised that the sum was paid by mistake the conscience of Polevent was affected such that a constructive trust arises thereby providing BCGE with a proprietary claim in respect of the frozen funds. BCGE says that this proprietary claim is governed by English law.
Enoi is another creditor of Polevent. Enoi maintains that BCGE’s claim for restitution, in common with the claim is in deceit, is governed by the law of Geneva which does not recognise a proprietary claim. The resulting dispute is therefore between two creditors of Polevent. That company is in liquidation and has taken no part in this dispute.
The only preliminary issue which the High Court was asked to adjudicate on is worth repeating in full:
“On the basis of the facts as pleaded in the Amended Particulars of Claim and on the basis that the claim set out at paragraph 13 of the Amended particulars of Claim is governed by the law of Geneva, are the claims set out at paragraph 15 of the Amended particulars of Claim governed by English law or by the law of Geneva ? ”
One can appreciate why two different claims were formulated here.
For the claim in damages for deceit, BCGE accept Geneva law applies. The claim for restitution on the basis of unjust enrichment, however, is covered in its view by Article 10(3) Rome II: the law of the place in which the unjust enrichment took place, this being England, hence allowing for the existence of a constructive trust and priority in the pecking order following Polevent’s insolvency.
Enoi argue that the claim in restitution, like the claim in damages, is covered by the law of Geneva: at 9:
The submission of counsel for Enoi is that the law governing the claim in restitution is the law of Geneva by reason of Article 4(1) of Rome II. The claim arises out of the tort/delict of fraud and so the governing law is that of the place in which the damage occurred, namely, Geneva. Alternatively, the governing law is the law of Geneva pursuant to Article 10(1) on the grounds that the unjust enrichment concerns a relationship arising out of a tort/delict such that the governing law is that which governs that relationship, namely, the law of Geneva. In the further alternative the governing law is the law of Geneva pursuant to Article 10(4) on the grounds that the obligation arising out of the unjust enrichment is manifestly more closely connected with Geneva.
Both parties of course reverse engineer their governing law arguments: being aware of the attraction of one State’s laws over the other, counsel brief is to convince the court that the matter is characterised so that it leads to the warranted applicable law.
Enoi suggest that BCGE in reality have one claim only: one in fraud, a tort, it argues, from which the claim in unjust enrichment follows in a dependent fashion. Teare J disagrees (at 13). A claim in restitution need not be fault-based. It is a separate claim, to which Article 10’s regime applies (in the end leading to a finding of English law).
The judgment is in fact quite short. Its crucial implication to me would seem to be that BCGE has won the day by formulating two separate heads of action. Teare J acknowledges that his view may be an ‘unduly English law’ view, in other words, that he read the formulation of two claims at face value, as being two separate claims, because English law recognises non-fault based unjust enrichment. Regardless of the fact that other States, including European States, do so too, the obvious question is whether the EU’s qualification would be the same. The concept of unjust enrichment, like the concept of tort, necessarily needs to be an ‘autonomous’ one. Yet without much guidance in the preparatory works of Rome II on this concept, who can blame national law for filling in the blanks?
(Handbook EU Private International Law, 2nd ed 2016, Chapter 4, Heading 4.7).
Postscript 27 November 2017 for the opposite view in the common law (ius non novit curia) see recently  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 Wall. Syred 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.
European private international law, second ed. 2016, Chapter 4, Heading 4.8
Happy days!: ‘closest and most real connection’ for identifying lex contractus. Ontario CA in Lilydale v Meyn.
Lilydale v Meyn at the Ontario Court of Appeal (held April 2015 but only reaching me now – thank you to Michael Shafler and colleagues for flagging) is a useful reminder of the common law approach to determining lex contractus in the absence of choice of law. (Here of course an inter-State conflicts issue between Ontario and Alberta). Laskin JA refers in support to english precedent, summarised in quoted passage of Cheshire’s Private International Law:
The court must take into account, for instance, the following matters: the domicil and even the residence of the parties; the national character of a corporation and the place where its principal place of business is situated; the place where the contract is made and the place where it is to be performed; the style in which the contract is drafted, as, for instance, whether the language is appropriate to one system of law, but inappropriate to another; the fact that a certain stipulation is valid under one law but void under another … the economic connexion of the contract with some other transaction … the nature of the subject matter or its situs; the head office of an insurance company, whose activities range over many countries; and, in short, any other fact which serves to localize the contract.
The motion judge’s findings on the relevant criteria were held to be reasonable, as was her overall conclusion that the closest and most real connection to the contract was Ontario.
The case is an interesting reminder of what in the Rome I Regulation is now the final resort, should none of the relevant presumptions in Article 4 apply.
An interesting point in the judgment is the main reason why parties prefer one law over the other: at 3: ‘The issue is important because Alberta and Ontario have different ultimate limitation periods. Even taking into account discoverability, Alberta’s ultimate limitation period is 10 years; Ontario’s is 15 years. The parties agreed that Lilydale’s cause of action arose no later than August 31, 1994. Therefore, as Lilydale did not sue until January 2006, if Alberta law applied, its action was statute-barred; if Ontario law applied, it was not.’
Aren’t statutes of limitation under Canadian conflict of laws, covered by lex fori, as procedural issues, and not, as is seemingly accepted here, lex causae?