Posts Tagged lex fori

Spring v MOD and Evangelisches Krankenhaus Bielefeld. Joinder (based on Article 8(1) Bru I Recast) ultimately fails given limitation period in the lex causae.

[2017] EWHC 3012 (QB) Spring v MDO and Evengelisches Krankenhaus Bielefeld is unreported as far as I can tell (and I have checked repeatedly). Thank you Max Archer for flagging the case and for sending me copy of judgment a few months back. (I am still chipping away at that queue).

In 1997, Claimant was stationed in Germany with the British Army. The Claimant very seriously fractured his right leg and ankle whilst off duty in Germany (the off duty element evidently having an impact – on duty injuries arguably might not have been ‘civil and commercial’). He was then treated at the Second Defendant’s hospital under an established arrangement for the treatment of UK service personnel between the First (the Ministry of Defence) and Second Defendants (the German hospital). Various complications later led to amputation.

The Brussels I Recast Regulation applies for claimant did not introduce the claim against the second defendant until after its entry into force: 18 years in fact after the surgery. This was the result of medical reports not suggesting until after July 2015 that the German hospital’s treatment has been substandard. Rome II ratione temporis does not apply given the timing of the events (alleged wrongful treatment leading to damage).

Yoxall M held that Article 8(1)’s conditions for anchoring /joinder were fulfilled, because of the risk of irreconcilable judgments (at 35). Even if the claim against the First Defendant is a claim based on employer’s liability whereas the claim against the Hospital is based on clinical negligence. Should the proceedings be separate there is a risk of the English and German courts reaching irreconcilable judgments on causation of loss. At 35: ‘It would be expedient for the claims to be heard together – so that all the factual evidence and expert evidence is heard by one court. In this way the real risk of irreconcilable judgments can be avoided.’

With reference to precedent, Master Yoxall emphasised that ‘in considering Article 8(1) and irreconcilable judgments a broad common sense approach is justified rather than an over-sophisticated analysis’ (at 36).

Yoxal M is entirely correct when he states at 37 that Article 8(1) does not include a requirement that the action brought against the different defendants have identical legal bases. For decisions to be regarded as contradictory the divergence must arise in the context of the same situation of law and fact (reference is made to C-98/06 Freeport).

Next however the court considers as a preliminary issue, the limitation period applying between claimant and the German defendant and holds that the Hospital have an arguable case that the claim is statute barred in German law (German expert evidence on the issue being divided). The latter is the lex causae for the material dispute (on  the basis of English residual private international law), extending to limitation periods per Section 1(3) of the Foreign Limitations Period Act 1984 (nota bene partially as a result of the 1980 input by the Law Commission, and not entirely in line with traditional (or indeed US) interpretations of same). This ultmately sinks the joinder.

As a way forward for plaintiff, the Court suggests [2005] EWCA Civ 1436 Masri. In this case the Court of Appeal essentially held that joinder on the basis of Article 8(1) may proceed even if litigation against the England-based defendants are not the same proceedings, but rather take place in separate action. Masri has not been backed up as far as I know, by European precedent: Clarke MR held it on the basis of the spirit of C-189/87 Kalfelis, not its letter. Moreover, how the German limitation periods would then apply is not an obvious issue, either.

An interesting case and I am pleased Max signalled it.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.12.1.

 

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Arica Victims v Boliden Mineral. Lex causae and export of toxic waste.

‘Reading’ Arica Victims v Boliden Mineral (I have a copy of the case, but not yet a link to ECLI or other database; however there’s a good uncommented summary of the judgment here] leaves me frustrated simply for my lack of understanding of Swedish. Luckily Matilda Hellstorm at Lindahl has good review here (including a hyperlink to her earlier posting which alerted me to the case in 2017).

Boliden Mineral exported toxic waste to Chile in the ’80s, prior to either Basel or EU or OECD restraints (or indeed bans) kicking in. A first issue for consideration was determination of lex causae. Rome II does not apply ratione temporis (it only applies to tortious events occurring after its date of entry into force) – residual Swedish private international law applies, which determined lex causae as lex loci damni. The Court found this to include statute of limitation. This would have been 10 years under Swedish law, and a more generous (in Matilda’s report undefined) period under Chilean law. Statute of limitation therefore following lex causae – not lex fori.

Despite this being good for claimants, the case nevertheless failed. The Swedish court found against liability (for the reasons listed in Matilda’s report). (With a small exception seemingly relating to negligence in seeing waste being uncovered). Proof of causality seems to have been the biggest factor in not finding liability.

Leave to appeal has been applied for.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 8.

 

 

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Platinum Partners: Comity no bar to allowing US discovery in Bankruptcy cases.

In Platinum Partners, Chapman J held that foreign discovery laws should be considered for comity concerns, yet they are not determinative of whether discovery should be permitted under United States law.

Foreign Representatives sought access to documents from US audit firms concerning investment funds that were debtors in Cayman Islands liquidation proceedings recognized under Chapter 15 as foreign main proceedings. Jacob Frumkin has excellent insight and I am happy to refer.

Section 1521(a) of the Bankruptcy Code provides that, upon recognition of a foreign main proceeding, a bankruptcy court may, “at the request of a foreign representative, grant any appropriate relief” … “where necessary to effectuate the purpose of [chapter 15] and to protect the assets of the debtor or the interests of the creditors.”  The first main argument of the auditors was that Cayman law does not permit the discovery of audit work papers or materials that are not a debtor’s property and, if the Court were to grant the motion, its interests and the interests of comity would not be protected.

The Court dismissed this argument, noting that

“it is well-established that comity does not require that the relief available in the United States be identical to the relief sought in the foreign bankruptcy proceeding; it is sufficient if the result is comparable and that the foreign laws are not repugnant to our laws and policies.” and that

“requiring this Court to ensure compliance with foreign law prior to granting relief sought pursuant to chapter 15 would require the Court to engage in a full-blown analysis of foreign law each and every time a foreign representative seeks additional relief in the United States, which may result in differing interpretations of U.S. law depending on where the foreign main proceeding was pending.”

Comity considerations surface in the most technical of corners.

Geert.

 

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National Bank of Kazakhstan v Bank of New York Mellon. Branches’ activities, Article 7(5) Brussels I Recast and engagement of Article 30.

In [2017] EWHC 3512 (Comm)  National Bank of Kazakhstan v Bank of New York Mellon, Article 7(5) makes a rarish appearance, as does (less rarely) Article 30. Popplewell J summarises the main facts as follows.

‘The Second Claimant is the Republic of Kazakhstan (“ROK”). The First Claimant is the National Bank of Kazakhstan (“NBK”). The Defendant is a bank incorporated in Belgium with a branch in, amongst other places, London. Through its London branch it provides banking and custody services to NBK in respect of the National Fund of Kazakhstan (“the National Fund”), pursuant to a Global Custody Agreement dated 24th December 2001, (“the GCA”). The National Fund has been the target of proceedings brought by Mr. Anatolie Stati and others, (“the Stati Parties”), who are seeking to enforce a Swedish arbitration award against ROK for a sum, including interest and costs, in excess of US$ 500 million. The Stati Parties obtained attachment orders from the Dutch court and the Belgian court, which were served on the Defendant (“BNYM”). BNYM, after taking legal advice, decided to freeze all the assets comprising the National Fund, which it holds under the GCA, on the basis that it was bound to comply with the Belgian and Dutch orders, breach of which would expose it to the risk of civil liability for the amount of the Stati Parties’ claims and criminal liability in Belgium and the Netherlands.’

Effectively therefore the London Branch of a Belgian domiciled bank, has frozen claimant’s assets which it holds in London (although the exact situs is disputed), on the basis that it wishes to prevent exposure to BE and NL criminal proceedings.

Parties arguments on jurisdiction are included at 41 and 42 of the judgment. Core to the Brussels I Recast jurisdictional discussions is Article 7(5) which provides

“A person domiciled in a Member State may be sued in another Member State: […]

(5) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place where the branch, agency or other establishment is situated;’

Beyond Case 33/78 Somafer, to which the High Court refers, there is little CJEU precedent – C‑27/17 flyLAL is currently underway. Popplewell J at 53 refers to Lord Phillips’ paraphrasing of Somafer in [2003] EWCA Civ 147  as a requirement of ‘sufficient nexus’ between the dispute and the branch as to render it natural to describe the dispute as one which has arisen out of the activities of the branch.

At 54 he holds there is such nexus in the case at issue, particularly given the management of the frozen assets by the London branch, and the very action by that branch to freeze them. This is quite a wide interpretation of Article 7(5) and not one which I believe is necessarily supported by the exceptional nature of Article 7.

As to whether the English and Belgian proceedings are ‘related’, providing an opportunity for the English proceedings to be halted under Article 30 of the Recast (lis alibi pendens), the High Court refers at 57 ff to C-406/95 The Tatry to hold that there is no risk of conflicting decisions in this case: the argument specifically being that even if the issues addressed are the same, they are addressed in the respective (English, Dutch, Belgian) proceedings under different applicable laws (in each case the lex fori on sovereign immunity). I do not find that very convincing. The risk of irreconcilable outcome is the issue; not irreconcilability or not of reasoning. In the same para 60 in fine in fact Popplewell J advances what I think is a stronger argument: that the issue whether the National Fund was used or intended to be used for commercial purposes, requires to be determined or addressed in the English proceedings, with the result that there is no risk of conflict.

Article 30 not being engaged for that reason, obiter then follows an interesting discussion on whether there can be lis alibi pendens if the court originally seized had no jurisdiction under the Regulation: here: because the Belgian and Dutch proceedings are arbitration proceedings.

Does Article 30 apply to Regulation claims where there was a related action in a Member State in which the related action did not itself come within the Regulation? Referring to the new Article 34 lis alibi pendens rule for proceedings pending ex-EU, ex absurdum, would there not be an odd lacuna if Article 34 required a stay where there were related non-Regulation foreign proceedings in a third party State and the position were not to be the same for equivalent foreign proceedings in a Member State? I do not believe there would be such lacuna: the Article 34 rule applies to concurrent proceedings which are in fact in-Regulation, except international comity requires the EU to cede to foreign proceedings with a strong (typically exclusive) jurisdictional call. For intra-EU proceedings, the comity argument holds no sway – mutual trust does.

Like Poplewell J however I reserve final judgment on that issue for another occasion.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11, Heading 2.2.14.

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On the qualification of limitation periods in Rome I and II. PJSC Taftnet v Bogolyubov.

In [2017] 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.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 3, Chapter 4.

 

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The RBS rights issue litigation: A missed opportunity for choice of law re privilege to go up to the UKSC.

Update 6 January 2018. Thank you Gordon Nardell QC for signalling that the CA has given leave to appeal in [2017] EWHC 1017 (QB) Serious Fraud Office (SFO) v Eurasian Natural Resources Corporation Ltd. The issues there are  summarised by Gordon’s learned friend Christopher Newman here. Appeal in SFO v ENR will give an opportunity to the Court of Appeal to address many of the same privilege issues – although not perhaps lex causae.

Welcome to this end of 2018.

Thank you Kate Wilford for flagging [2016] EWHC 3161 (Ch) The RBS Rights issue litigation. The litigation concerns a rights issue of shares in the Royal Bank of Scotland (“RBS”) which was taken up in 2008. By the various actions, shareholders in RBS seek to invoke statutory remedies against RBS under the Financial Services and Markets Act 2000 (“FSMA”) whereby to recover substantial investment losses incurred further to the collapse of RBS shares. The prospectus for the Rights Issue was argued not be to accurate or complete.

The case at issue was held December 2016 but has only now come to my attention. Of note to this blog is one of the three issues that were sub judice: whether RBS is entitled to rely on the federal law of the USA as the law applicable to the particular issue, and if so, whether under that law the claim of privilege is maintainable: Hildyard J referred to this as “the Applicable Law Point”. It is discussed under 129 ff.

As Kate notes, the issue was concerned with the availability of legal advice privilege over records of interviews conducted by US lawyers in a fact-gathering investigation. RBS contended that the English court should have applied US privilege rules, which would have afforded the interview records a much broader degree of protection against disclosure.

I reviewed privilege and applicable law in my post on  People of State of New York v. PriceWaterhouseCoopersalbeit that in that case the toss-up was between different States’ law, not federal law. Hildyard J discusses the English 1859 authority Lawrence v Campbell: lex fori applies. Particular attention is paid to the in my view rather convincing arguments of Adam Johnson (who has since taken silk) as to why this 1859 authority should no longer hold, see 145-147.  Yet his arguments were all rejected, fairly summarily. RBS’ lawyers proposed an alternative rule (at 137): “Save where to do so would be contrary to English public policy, the English court should apply the law of the jurisdiction with which the engagement or instructions, pursuant to which the documents came into existence or the communications arose, are most closely connected.”

Rome I or II did not feature at all in the analysis – wrongly I believe for there could have been some useful clues there and at any rate the applicable law rules of the Regulations certainly apply to the litigation at issue and should have been considered.

Now, there seems to have been consensus that the case was Supreme Court material – however RBS did not pursue the point. We’ll have to wait therefore until another suitable case comes along which I imagine should not be too long in the making.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 1.

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Exxon Mobil: On the law applicable to privileged communications.

Comparative conflict of laws is often a useful source for exam (essay) questions. I used People of State of New York v. PriceWaterhouseCoopers, LLP, No. 3685N (N.Y. App. Div. May 23, 2017) to ask my students to surmise how an EU-base court would judge the issue raised.

Keith Goldberg over at LAw360 has the following great summary:

A New York appellate court [.. ] upheld a decision to force ExxonMobil’s outside auditor PricewaterhouseCoopers LLP to comply with New York Attorney General Eric Schneiderman’s demand for documents in his probe of whether the oil giant lied to investors about the climate change risks to its business.
The Appellate Division backed state Supreme Court Judge Barry Ostrager’s Nov. 26 order that PwC turn over documents related to its audit of Exxon subpoenaed by Schneiderman, saying the judge correctly held that New York law, not the law of Texas, where Exxon is headquartered, applies to questions of evidentiary privilege and that the Empire State doesn’t recognize accountant-client privilege.

Mr Ostrager’s decision is here – it has more choice of law considerations than the appelate court’s order. Eversheds have excellent analysis here of the overall issue of considering applicable law for privilege under the first and second restatement of the law. In the case at issue, ExxonMobil as well as the documents disclosure of which is sought (such as projected carbon costs and their application to Exxon’s capital allocation decisions, as well as documents provided to Exxon by PwC concerning the auditor’s role in compiling Exxon’s submissions about greenhouse gas emissions for the Carbon Disclosure Project, a nonprofit that collects information on greenhouse gas emissions) are based at Texas. But the trial is underway in New York.

Now, to the essay Q: how would an EU-based court hold on the issue? (For the purpose of last week’s exam I had a Belgian court rule on the issue, with the oil company based at Belgium, and the accountant at England, with the agreement between company and accountants subject to English law.

I am marking these exams later this week and hope to read some or all of the following: reference to overall principle that procedure is subject to lex fori; that statement being of little use in a system (like the EU) that thrives on predictability: for what is procedure to one, is substantive law to another; arguments existing both pro this being procedure (closely tied up with evidence, clear links with public policy) as well as substantive (privilege despite its public nature also protecting private, including commercial interest; parties wishing to manage the issue of sensitive information and forum); need for autonomous interpretation and tendency within the EU to define the ‘scope of the law applicable’ (eg both in Rome I and II);  no trace in said Regulations of privilege being included in the scope of law applicable.

As always, I am hoping for students to surprise me. Undoubtedly they will.

Geert.

 

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