Posts Tagged Litigation
In Hong Ziyun v Chan Kwan Ming  HKCFI 2125, Chan J at the end of August summed up the Hong Kong approach (as it is that of the common law) to consolidation of jurisdiction at 31: ‘the approach of the courts should be to favor resolution of all disputes associated with a transaction in one jurisdiction.’ That is the so-called one stop shop or one stop principle (whether or not hyphenated).
As Herbert Smith Freehills note, in a host of related loan documents only one of the documents contained an express jurisdiction clause (in favour of the court of Xiamen in Mainland China). The defendants applied for and obtained a stay of proceedings in Hong Kong in favour of Mainland China. HSF summarise the reasoning (the judgment itself is not too long and logically structured) helpfully as follows:
- When there is no express jurisdiction clause, the applicable law is that which has the “closest and most real connection” with the transaction.
- Most of the defendants’ business was in Mainland China. They also spent most of their time in Mainland China. On the evidence presented, the court was unable to place significant reliance on the permanent “residence” of any of the defendants in Hong Kong as showing any real or closest connection with Hong Kong.
- The location of the debt, currency, and place of performance of the loans as well as the execution of and governing law clause in the SA all had a strong connection with Mainland China.
Update 27 May 2020 for the French view on the nature of Bitcoin, see the decision of the courts at Nanterre of February 2020.
Update 21 January 2020 for the cryptoassets issue, see AA v Persons Unknown & Ors, Re Bitcoin  EWHC 3556.
Happy 2020 reading, all!
At the back of my mind I have a number of interesting examples of the English Courts and English law’s awareness of the relevance of courts and substantive law in regulatory competition. I post them here together by way of illustration.
Sir Vos’ speech on how English law on cryptoassets should develop so as to boost the
confidence of would-be parties to ‘smart’ legal contracts; a further analysis of same by the ‘UK jurisdiction taskforce’, and Outer Temple’s reaction to ditto.
Also however RPC’s review of Davey v Money  EWHC 997 (Ch), in which Snowden J declined to cap a litigation funder’s liability for adverse costs at the amount of funding provided: essentially adding a potential risk to be considered by third-party litigation funders and illustrating that attractive as England may be as a forum for litigation, the sector is not a free for all.
Finally, the English courts are not of course alone in the realisation of the issues: witness this 2017 report by the French Supreme Court: ‘”Le juge et la mondialisation”.
Update 21 March 2019 the proposal has now been torpedoed by one of the parties formerly serving in Belgium’s government – the BIBC will not be created for the time being.
Update 12 December 2018. The most recent proposal, the one actually adopted in Committee, is here. Note i.a. (Article 20) that the Committee has thankfully (see below) not followed the silly rules on languages. Whether the proposal will lead to law, remains to be seen: as we speak, the Belgian Government has turned into a minority government and not much is certain to go ahead before the next elections (May 2019).
I have reported twice before on the BIBC – once viz the initial version and a second time with my short report for the Parliamentary Hearing. I have now had a minute to review the Council of State’s comments on the amended version – among others with a view to preparing for next week’s conference on hybrid courts in Doha. Note that the Council of State here acts in its advisory function: essentially its opinions aim to improve draft statute so as to avoid future litigation.
What is clear from these recent comments is that the Council does not at all embrace the regulatory competition incentives which lie at the heart of the proposal, in particular in its view on how a matter may be made ‘international’ so as to justify engagement of the BIBC. Its view (let alone the Justice Council’s fear for forum shopping?!: encouraging such shopping being the very raison d’etre of the Act) contradicts the CJEU’s flexible stance on the issue as apparent eg in Vinyls Italia. As I noted in my comments before the Committee, it is a rather odd indeed parochial requirement to insist on parties having used English in their correspondence, before they can validly engage the BIBC. Even the suggested amendment that the use of languages other than Belgium’s three official ones (French, Dutch, German) should suffice, is not convincing to the Council. One hopes the drafters will ignore the Council’s hesitation at this point.
The Council does not of course engage in the political discussions surrounding the proposal: in particular, whether in a country in which the court system arguably does not operate to satisfaction, the creation of an international commercial court may compound, rather than remedy issues.
Update 24 May 2019 Prediction below has been realised: the case has been declared inadmissible on standing grounds which no doubt will be appealed. All the classics feature: Plaumann; Inuit; Jégo-Quéré; Stichting Greenpeace; with them the issues concerning the implementation by the EU of the Aarhus Convention, an issue which at the moment is subject to an extensive study by Milieu.
One can say many things about climate change litigation by individuals. (See my earlier piece on the Dutch Urgenda case). Many argue that the separation of powers suggest that governments, not judges, should be making climate policy. Or that international environmental law lacks the type of direct effect potentially required for it to be validly invoked by citisens. Others point to the duty of care of Governments; to binding – even if fluffy – climate change obligations taken on since at least the 1990s, and to the utter lack of progress following more than 25 years of international climate change law.
It is therefore no surprise to see that this type of litigation has now also reached the European Court of Justice: the text of the application is here, see also brief legal (by Olivia Featherstone) and Guardian background.
Like cases before it, colleagues shy of preparation materials for an international environmental law course, with comparative EU law thrown in, can use the case to hinge an entire course on.
As Olivia reports, the legal principles involved are the following:
The claimants state that EU emissions leading to climate change are contrary to:
- The principle of equality (Articles 20 and 21, EU Charter)
- The principle of sustainable development (Article 3 TEU, Article 11 TFEU)
- Article 37 EU Charter
- Article 3 UNFCCC
- The no harm principle in international law
- Article 191 ff TFEU (the EU’s environmental policy
One to watch – albeit that standing /locus standi requirements before the CJEU are likely to be a big hurdle: my 2003 paper on same is still relevant (albeit one has to make allowance for Treaty changes since Lisbon).
EU Environmental Law, with Leonie Reins, Edward Elgar, 1st ed. 2017, part I Chapter 2 in particular.
Update 6 August 2018 the report of the hearing in Dutch and French is here.
I was at the Belgian Parliament yesterday for a hearing on the BIBC, following publication of the Government’s draft bill. For those of you who read Dutch, my notes are attached. We were limited to two pages of comments – the note is succinct.
An important change vis-a-vis the initial version (on which I commented here) is that the Court will now be subject to Belgian private international law (including primacy of EU instruments) for choice of law, rather than being able to pick the most appropriate law (arbitration panel style). That brings the court firmly within Brussels I. Also note my view and references on the Court being able to refer to the CJEU for preliminary review.
Update 9 Mach 2018 for the rules of procedure of the International Commercial
Chambers of the Amsterdam District Court (Netherlands Commercial Court) and the
Amsterdam Court of Appeal (Netherlands Commercial Court of Appeal) (The NCC Rules) see here.
I was asked yesterday (interview in Dutch) for my thoughts on the Belgian Government’s plans for a Brussels International Business Court. Here goes, in bullet-points format, a slightly extended and more technical version of those preliminary thoughts:
- Three and more’s a crowd. The Belgian move of course is not the first and neither will it be the last. Even pre-Brexit, Member States (and even individual cities within Member States; see Michiel Poesen recently on Frankfort) were vying for the title of preferred place for litigation.
- Brexit evidently may be a game-changer. I have flagged repeatedly that post-Brexit and assuming there will be no deal which would roll-over the UK’s engagement with EU civil procedure law, UK courts will become a lot less attractive. This is due to the more cumbersome recognition and enforcement regime that will be the result of decoupling from Brussels I. The same incidentally does not apply to arbitration. Pre and post Brexit, deal or not, free movement of arbitral awards is subject to the New York Convention.
- Attractiveness as a centre of litigation and legal services is part of regulatory competition. Being known as a place of legal know-how and expedited litigation brings prestige as well as attractive billable hours to the law firms of one’s country.
- Crucially, in an attempt to prise litigation away from London in particular, the use of English in proceedings is always the eye-catcher for the media. However in reality the language of proceedings is to my experience not the defining issue in client’s forum shopping strategies. Know-how of the bench; speed of proceedings; transparency of case-law; and of course ease of recognition and enforcement, are much more so. The Belgian proposal acknowledges as much by touting in particular the ‘collegiality’ and ‘expertise’ of the pool of (domestic and foreign) commercial law experts that will populate the court.
- Unwittingly perhaps but without a doubt, the proposal in flagging the benefits of the BIBC, also highlights the well-known disadvantages of the Belgian courts in ordinary: tardiness of proceedings (the ‘Belgian’ torpedo) in particular. However also very much so, intransparency (as I have repeatedly signalled: access to Belgian case law continues to be highly problematic) and lack of collegiality among the bench: being a judge is a lonely professional existence in Belgium. Professional secrecy rules, practicalities (lack of proper office space), and the aforementioned reporting issues work against Belgian jurisprudence presenting itself as coherent.
- At a technical level, the proposal emphasises repeatedly that the BIBC will be a court. Not an arbitral tribunal. The difference lies particularly in the easy or enforcement. The draft Bill loudly talks the talk in this respect. But does it walk the walk? What a ‘court’ means within the context of EU civil procedure law is of course the prerogative of that EU law: not of the Member States. (I refer to recent blog posts on same). Extensive reference to UNCITRAL’s Model Law on international commercial arbitration is a strange prop to use in the draft, if the idea is to take one’s attention away from arbitration. The BIBC will only take cases in the event of prorogation (choice of court or submission). The pool of judges will mostly be taken from part-timers, not benchers. Most importantly, in my mind: Article 43 of the draft instructs the BIBC, with respect to choice of law, to respect parties’ choice of governing law, and, in the absence of such law, ‘to apply the law determined by the conflict of laws rules which it considers applicable’. This is a copy /paste from Article 28(2) of the Model Law. In footnote the Act suggests that by omitting the third para of said Law (‘The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so’), the Bill emphasises the nature of the BIBC as court. It does not. Courts are simply subject to Rome I and II when it comes to applicable law. They do not just ‘consider a law applicable’.
Much to chew on. My analysis is based on a draft Bill which a little bird sent me. This is probably not the final say on the BIBC. (On an aside: @BIBC is already taken. I can think of one or two Twitter Handles which the BE government may want to snap up before someone else does).
Update 31 August 2018 the merits of the case were subsequently held in August 2018,  EWHC 2264 (Pat).
End of exam season (sadly not yet of marking marathon). In the next few weeks I shall be posting on judgments issued a little or longer while ago, which I was pondering to use in exams. (I did for some of them).
In  EWHC 1216 (Pat) Chugai Pharmaceutical v UCB the issue at stake was to what degree a suit seeking to establish absence of liability under a patent license, in reality provokes argument on the validity of the patent. Carr J has excellent review of precedent, much of which has passed in one way or another on this blog. Please do refer to judgment for proper reading.
Claimant (“Chugai”) seeks a declaration against the Defendants (collectively “UCB”) that it is not obliged to continue to pay royalties under a patent licence (“the Licence”) granted by the First Defendant (“UCB Pharma”). UCB Pharma is a Belgian company with an English branch which entered into the Licence with Chugai in respect of a portfolio of patents. Chugai claims that its products, which are, in part, manufactured and sold in the USA, fall outside the scope of the claims of the Patent concerned. Accordingly, Chugai seeks a declaration that it owes no royalties for the manufacture and sale of these drugs manufactured after a certain date.
UCB alleges that, although framed as a claim for a declaration relating to a contract, a part of these proceedings, in substance, concerns not only the scope but also the validity of the Patent. UCB submits that the validity of a US patent is non-justiciable, since the English court has no power to determine the validity of a foreign patent. Accordingly, it submits that those parts of Chugai’s pleading which are said to raise issues of invalidity fall outside the subject matter jurisdiction of the English court.
European private international law as readers will know lays greats emphasis on exclusive jurisdiction in the case of validity of patents. The CJEU’s holding in C-4/03 Gat v Luk that nullity actions against a national part of a certain European patent can only be conducted in the jurisdiction for which that patent was registered, regardless of whether the nullity argument is raised in the suit or by way of defence, is now included verbatim in Article 24(4) Brussels I Recast. The EU’s take is rooted in the idea that the grant of a national patent is “an exercise of national sovereignty” (Jenard Report on the Brussels Convention (OJ 1979 C59, pp 1, 36)). The rule therefore engages the Act of State doctrine, and suggests that comity requires the courts of States other than the State of issue, to keep their hands off the case.
Particularly in cases where defendant is accused of having infringed a patent, this rule gives it a great possibility to stall proceedings. Where the action is ‘passive’, with plaintiff aiming to establish no infringement, the argument that the suit really involves validity of patent is less easily made.
The possibility of ‘torpedo’ abuse, coupled with less deference to the jurisdictional consequences of the Act of State doctrine [particularly its contested extension to intellectual property rights], means the English courts in particular are becoming less impressed with the exclusivity. (Albeit Carr J on balance decides per curiam (at 73-74) that direct challenges to the validity of foreign patents should not be justiciable in the English courts). Where the EU Regulation applies, they do not have much choice. Carr J refers to  EWHC 1722 (Pat) Anan where claimant sought to carve out issues of validity by seeking a declaration that the defendant’s acts infringed a German patent “if the German designation is invalid (which is to be determined by the German courts)“. EU law meant this attempt could not be honoured. Carr J however suggests that EU rules have no direct application in the present case because the Patent at stake is a United States patent. That is spot on, on the facts of the case: choice of court having been made in favour of the English courts, the case does not fall under the amended lis alibi pendens rule of the Brussels I Recast. In Article 33 juncto recital 24, reflexive effect is suggested for the Regulation’s exclusive jurisdictional rules, leaving a Member State court in a position (not: under an obligation) to give way to pending litigation in third countries, if its own jurisdiction is based on a non-exlusive jurisdictional rule (Articles 4, 7, 8 or 9) and not within the context of the protected categories.
Allow me to lean on 20 Essex Street’s conclusion in their review of the case: Carr J held that the case before him was not a direct challenge to validity. He accepted Chugai’s submissions that its claim was contractual. Disputed parts of the patent were incidental to the essential nature of its claim, which was a claim for determination of its royalty obligations. In his view, this claim fell within the exclusive jurisdiction clause, in favour of the English courts, which parties had agreed.
Essential reading for IP litigators.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 188.8.131.52.