Posts Tagged Locus delicti commissi
When I reported the first salvos in Goldhar v Haaretz I flagged that the follow-up to the case would provide for good comparative conflicts materials. I have summarised the facts in that original article. The Ontario Court of Appeal in majority dismissed Haaretz’ appeal in 2016, 2016 ONCA 515. In Haaretz.com v. Goldhar, 2018 SCC 28, the Canadian Supreme Court has now held in majority for a stay on forum non conveniens grounds. Both the lead opinion, the supporting opinions and the dissents include interesting arguments on forum non conveniens. Many of these, as Stephen Pitel notes, include analysis of the relevance of obstacles in enforcement proceedings.
If ever I were to get round to compiling that published reader on comparative conflicts, this case would certainly feature.
Have a good start to the working-week (lest it started yesterday in which case: bonne continuation).
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 22.214.171.124.
Jurisdiction re prospectus liability (misrepresentation) before the CJEU again. Bobek AG in Löber v Barclays.
Even Advocate-General Bobek has not managed to turn jurisdictional issues re prospectus liability into the prosaic type of analysis which many of us have become fond of. His Opinion in C-307/17 Löber v Barclays is a lucid, systematic and pedagogic review of the CJEU’s case-law on (now) Article 7(2)’s jurisdiction for tort in the context of ‘prospectus liability’ aka investment misrepresentation. Starting with the direct /indirect damage distinction; and focusing of course on the determination of pure economic loss.
Ms Helga Löber invested in certificates in the form of bearer bonds issued by Barclays Bank Plc. In order to acquire those certificates, the corresponding amounts were transferred from her current (personal) bank account located in Vienna, Austria to two securities accounts in Graz and Salzburg. Payment was then made from those securities accounts for the certificates at issue.
Note immediately that the jurisdictional discussion is a result of Article 7(2) not just identifying a Member State: it identifies specific courts within that Member State. Here: claimant brought her claim before a court in Vienna, the place of her domicile. This is also where her current bank account is located, from which she made the first transfer in order to make the investment. The first- and second-instance courts in Vienna however decided that they did not have jurisdiction to hear the case. The case is now pending before the Oberster Gerichtshof (Supreme Court, Austria). That court is asking, in essence, which of the bank accounts used, if any, is relevant to determine which court has jurisdiction to hear the claim at issue.
Close reference is made to Kolassa. In my posting on that case at the time, I noted that the many factual references which the Court built in in its decision, gave it dubious precedent value. Bobek AG in Löber necessarily therefore distinguishes many factual situations. The almost sole focus lies on 7(2): unlike in Kolassa, contracts neither consumer contracts are an issue.
Here are a few things of note:
First, in his review of the existing case-law the AG at 38 points out like I did at the time of the judgment, that the CJEU’s finding in CDC that locus damni for a pure economic loss, in the case of a corporation, is the place of its registered office, is at odds with precedent (he made the same remark in flyLAL).
Next, on locus delicti commissi, the AG suggests that despite Article 7(2)’s instruction, a single ldc within the Member State cannot be determined. The relevant point in his view is the moment from which the prospectus can, by operation of law, start influencing the investment behaviour of the relevant group of investors. In the present case, and considering the national segmentation of the capital market regulation at issue, that relevant group is made up of investors on secondary markets in Austria. At 65: once it became possible to offer the certificates on the Austrian secondary market, that possibility was immediately available for the whole territory of Austria. ‘The nature of the tort of misrepresentation at issue does not allow for the identification of a location within the national territory because once the author of the tort is allowed to influence the given national territory, that influence immediately covers the whole territory, irrespective of the actual means used for the publication of a specific prospectus.’ As we know from CDC, the Court does not readily accept that a single ldc cannot be determined.
Further, for locus damni, the AG suggests (at 78) ‘The place where…a legally binding investment obligation is factually assumed… The exact location of such a place is a matter for the national law considered in the light of available factual evidence. It is likely to be the premises of a branch of the bank where the respective investment contract was signed, which may correspond, as in the Kolassa case, to the place where the bank account is held.‘ That in my view first of all is not a warranted outcome. The investor in Löber is not a consumer within the protected categories of the Regulation. Suggesting the place of conclusion of the obligation leaves room for the claimant to manipulate the forum of any future suit in tort. This is exactly what the Court objected to in Universal Music. Moreover, note the reference to ‘the national law’. It is quite unusual to suggest such a role for lex fori in light of the principle of autonomous interpretation. Unless the AG in fact means the ‘lex contractus’, presumably to be determined applying Rome I.
In summary there are quite a few open questions here – not something of course which I would necessarily object to.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 126.96.36.199.7
JSC BTA Bank v Khrapunov. UK Supreme Court confirms the conspiracy itself, not its implementation, as locus delicti commissi under Lugano. Does not entertain locus damni.
The UK Supreme Court held in  UKSC 19 JSC BTA Bank v Khrapunov late March. Defendant is based in Switzerland, hence triggering the Lugano Convention. Addleshaw Goddard have the history of the case and I am happy to refer for those facts. Suffice to say that at the core is a claim in tort of conspiracy, alleging that Mr Khrapunov and his father in-law Mr Ablyazov conspired to injure the Bank by preventing it from enforcing its judgments against Mr Ablyazov’s assets.
First let’s have a look at was not discussed at the SC: domicile and locus damni. As for the former, domicile once held but now fleed from was correctly rejected by Teare J as establishing domicile under Lugano (or indeed Brussels). The argument that jurisdiction should, nevertheless, be taken still to be domiciled in England because defendant was in breach of an obligation under the worldwide freezing order prohibiting him from leaving the jurisdiction, was likewise rejected. An interesting proposition though.
Now, for the location of the locus damni. At 29 the SC refers to the Bank’s argument at the High Court and Court of Appeal stage. The Bank’s argument was that the damage occurred in England. This was based on the contention that its worldwide freezing order and its judgments against Mr Ablyazov were located here and had been reduced in value by the alleged conduct in relation to assets in other jurisdictions. The High Court and Court of Appeal considered that the element of damage proximate to the harmful event was the Bank’s inability or reduced ability to execute against those assets in the places where they were located. Another fine example of the difficult implications of Bier and not one which the CJEU has hitherto had the occasion to review. (But current case will not reach it).
As for locus delicti commissi, the Bank submit that the event giving rise to the damage was the conspiracy itself, which was hatched in England. At the High Court Teare J rejected this submission, because he considered that the cause of the damage was not the conspiracy but its implementation: a suggestion I like in the context of competition law, as readers of the blog will be aware. Teare J was not followed by the Court of Appeal though, which identified the place where the conspiratorial agreement was made as the place of the event which gives rise to and is at the origin of the damage.
The SC refers to CJEU authority to conclude with CDC and at 41 it reiterates the CA’s core reasoning: ‘As Sales LJ explained (at para 76), in entering into the agreement Mr Khrapunov would have encouraged and procured the commission of unlawful acts by agreeing to help Mr Ablyazov to carry the scheme into effect. Thereafter, Mr Khrapunov’s alleged dealing with assets the subject of the freezing and receivership orders would have been undertaken pursuant to and in implementation of that agreement, whether or not he was acting on instructions from Mr Ablyazov.’
The Supreme Court concludes that the making of the agreement in England should be regarded as the harmful event which set the tort in motion.
The judgment keeps open many issues, however. For starters, to have a sole birthplace of conspiratorial agreement is handy in the case at issue however it is likely not often to be so clearly the case (as Dan and Tom point out, particularly not in a digital context). Moreover, for those instances where Mr Khrapunov were not to be acting on instructions from Mr Ablyazov, questions of ultra vires so to speak and hence of a separate tort would arise.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 188.8.131.52
Fly lal: Locus delicti commissi for anticompetitive agreements. And application of Article 7(5)’s extension to branch domicile.
AB flyLAL — Lithuanian Airlines (‘flyLAL’) operated flights from Vilnius airport in Lithuania until it was put into liquidation. According to flyLAL, its demise was caused by predatory (that is, below cost) pricing by the Latvian airline Air Baltic Corporation A/S (‘Air Baltic’). That predatory pricing was, it is alleged, part of an anticompetitive strategy agreed between Air Baltic and the operator of Starptautiskā lidosta Rīga (Riga international airport in Latvia, ‘Riga Airport’). Thus, Riga Airport and Air Baltic agreed to drastically reduce the prices paid by Air Baltic for services at Riga airport. The savings were then used by Air Baltic to finance the predatory pricing that drove flyLAL out of the market in Vilnius, Lithuania.
Can Air Baltic and Riga Airport for damages before the courts in Vilnius? The national court and parties refer to three alleged infringements of competition law: (i) abuse of dominance consisting in the system of reductions implemented by Riga Airport; (ii) an anticompetitive agreement between Riga Airport and Air Baltic; and (iii) abuse of dominance in the form of predatory pricing by Air Baltic. Those infringements, it is argued, were interrelated, forming part of a strategy to oust flyLAL from the market in Vilnius and move passengers to Riga airport to the benefit of both Riga Airport and Air Baltic.
There is a lot in the Opinion – among others because as the AG points out, the referring court’s description of the alleged infringement of competition law is not entirely clear. Bobek therefore sets out a set of variables. The Court itself is bound not to distinguish among quite so many. Of note are the AG’s suggestions
- that locus damni here is not place of financial loss, rather the place within the markets affected by the competition law infringement where the claimant alleges loss of sales.That suggestion in my view is helpful for neither the Regulation’s aim of predictability, nor the protection of those damaged by infringement of competition law (the latter not however a stated aim of the Regulation). Put differently: damage located in a Mozaik fashion assists the tortfeasor. The Advocate General reaches this conclusion after a thorough revisit of the initial Bier judgment (and Capotorti AG’s Opinion in same), ditto Marinari and Dumez France. Yet the continuing need to conceptualise the Court’s Bier rule illustrates again in my view the mistake made in that original judgment, to introduce a forum damni despite the utter lack of textual support for same.
- for locus delicti commissi with full jurisdiction, the AG distinguishes between Article 101 TFEU (as regards the alleged anticompetitive agreement between Air Baltic and Riga Airport, the place of the event giving rise to the harm (that is, the loss of sales by flyLAL), is the place of the conclusion of the agreement) and 102 TFEU (alleged predatory pricing by Air Baltic, the place of the event giving rise to the harm is the place where the predatory prices were offered and applied). With respect to Article 101 TFEU, Bobek AG suggests this is identical to the Court’s judgment in CDC . I am not too sure but I am biased. As I noted above, in my view the Court should steer clear of an application of Article 7(2) which allows those infringing competition law to forum shop by manipulating the place of decision-making. In CDC the Court held that ‘the identification, in the jurisdiction of the court seised of the matter, of a specific event during which either that cartel was definitively concluded or one agreement in particular was made which was the sole causal event giving rise to the loss allegedly inflicted on a buyer’ cannot be ruled out. That implies that in other cases the identification of such singular event can be ruled out and that many places may be consider locus delicti commissi.
- finally with respect to (now) Article 7(5), the activities of a branch. The AG does not specify what must be meant by a ‘branch’ – for the national court has already concluded there is such branch. The Advocate General here is perhaps unusually deferential to the factual finding. Whether there is a sufficient nexus between the activities of the branch and the dispute, in the case of tort-based claims requires the branch participate in at least some of the actions constituting the tort (at 137). Offering the fixed prices or otherwise having been instrumental in concluding contracts for services at those prices suffices. In such cases, the branch has again participated in the commission of an act that constitutes a necessary precondition for the abuse (at 142).
A lengthy opinion. And it all started with the fairly straightforward facts of Bier…
(Handbook of) EU private international law), 2nd ed. 2016, Chapter 2, Heading 184.108.40.206
Thank you Andreas Christofides for flagging Aristou v Tesco Personal Finance, a case which engaged Article 7(2) and, I presume, Article 7(1) Brussels I Recast: forum delicti cq forum contractus. I tried to obtain copy of judgment but failed. It might not have helped me much anyway for I assume it was drafted in Greek.
For the facts of the case please refer to the link above. From Andreas’ description of the case I am assuming the Cypriot court firstly must have decided there was a contract between claimant and the UK bank, per Handte; that this was a service contract; and that per 7(1)b second indent, that service was provided in the UK. And that for the application of Article 7(2) both locus delicti commissi and locus damni were also the UK. (The court may in doing so have referred to Universal Music: not just location of the bank account in the UK but other factors, too).
Any Greek readers, in possession of the judgment: please correct if need be.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11.7; Heading 18.104.22.168.b.
Heavily loaded. Applicable law in follow-up competition cases: watch the Dutch Supreme court in Air Cargo.
Update March 2018. Quentin’s blog has a link to the SC decision refusing to take the case, considering it was academic given that an appeal against the decision of the European Commission is still pending before the EU courts. It has therefore not irreversibly been decided whether the eleven air carriers had violated European competition law. Most probably the case will be back, one imagines.
Quentin Declève alerted me to the Air Cargo damages compensation case currently making its way through the Dutch courts. (I have previously reported on jurisdictional issues re such cases; searching the tag ‘damages’ should help the reader).
I have difficulty locating the actual judgment addressing the issue in this post: namely applicable law in follow-up competition cases. I have however located one or two previous judgments addressing the damages claims assignment issue in same. This web of litigation seems to be particularly knotty and any help by Dutch or other readers would be appreciated.
At issue is whether Rome II applies to the facts ratione temporis; if it does, how Article 6 should be applied, in particular: locus delicti commissi, locus damni and ‘affected markets”; and if it does not, how the previous Dutch residual connecting factor ought to apply.
A case of great relevance to competition law and fair trading cases.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 4, Heading 4.6.2.