Gategroup: A seminal and questionable judgment on gatekeeping viz restructuring ‘Plans’ under the Lugano Convention, Insolvency Regulation.

Update 7 May 2021 in follow-up judgment [[2021] EWHC 775 (Ch)], the judge calls the case one of ‘good forum shopping’ per Codere, points to expert evidence on Swiss Law (by professor Rodrigo Rodriguez, seemingly supporting the suggestion Lugano’s insolvency exception applies [24]; Rodrigo did point to an issue with third party effect, which led to an amendment of the Plan) and Luxembourg law (by Philippe Hoss), both essentially confirming enforceability in Switserland and Luxembourg.

Zacaroli J this morning held in Gategroup Guarantee Ltd, Re [2021] EWHC 304 (Ch) on whether ‘part 26A’ English restructuring ‘Plans’ (see my review of ia Deep Ocean) are within the scope of the Lugano Convention’s insolvency exception (Lugano rather than Brussels Ia was engaged).

He held they are (hence: excluded from Lugano), leading to neutralisation of an exclusive choice of court agreement in the relevant bonds, and making the courts of England and Wales have jurisdiction despite this choice of court.

Oddly Kaupthing was not referred to. Neither was Enasarco.

The judge relied unconvincingly in my view on the dovetail discussion (most recently discussed by me viz Alpine Bau) under the Brussels IA Recast and the EU Insolvency Regulation (‘EIA’)- neither of course applicable to the UK anymore, as indeed is the case for the Lugano Convention.

All in all this is a case in which the  reasoning has a potentially long term impact. The claim form in this case was issued on 30 December 2020. As such, by reason of Regulation 92(1), (2)(d) and (3) of the Civil Jurisdiction and Judgment (Amendment) (EU Exit) Regulations 2019, the Lugano Convention continues to apply.

The Plan Company was incorporated on 8 December 2020 as a wholly owned subsidiary of gategroup Holding AG (the ‘Parent’, a company incorporated in Switzerland. At [55] , if Lugano applies to applications under Part 26A, then the Plan Company accepts that by reason of A23(1) Lugano and the exclusive jurisdiction clause in favour of the courts of Zurich in the Bonds, this court has no jurisdiction. That acceptance is made notwithstanding that the Deed Poll contains a non-exclusive jurisdiction clause in favour of the courts of England. The Plan Company acknowledges that since the purpose of the Plan is to effect amendments to the terms of the Bonds, the exclusive jurisdiction clause in the Bonds is engaged.

The usual modus operandi of assuming application of Brussels Ia arguendo (see viz schemes of arrangement most recently KCA Deutag and viz Plans Deep Ocean and Virgin) did not fly here for as noted the Plan Company accepts that the exclusive jurisdiction clause in favour of the Zurich courts is a complete bar to this court assuming jurisdiction if the Lugano Convention applies (in the preceding cases the point need not be decided, since jurisdiction under BIa could be established arguendo as in none of them was there adversarial argument on the point).

At 70 Justice Zacaroli introduces effectively an amicus curiae by Kirkland & Ellis, opposing the view that the insolvency exception applies.

At 73 ff a first point is considered: Part 26A Plans have not been notified under the EIA Annex. This refers to the so-called dovetailing between Brussels Ia, Lugano and the EIR. The suggestion is that if a procedure is not listed in Annex A EIR, it is conclusively not an insolvency proceeding and “that is the end of the matter” because the dovetailing principle leads inexorably to the conclusion that it falls within the Recast (‘and thus within the Lugano Convention’  [73]). At 82 the judge incidentally is under the impression that the older, heavier procedure of amendment by (EP and Council) Regulation applies – which it no longer does since the EIR 2015.

I have since long submitted that there is no such dovetail. It is also clear that there cannot be identity of interpretation between the Lugano Convention’s insolvency exception and the Brussels regime given that non-EU Lugano States are not part of the EIR. The judge confirms as much at 81 and at 91 ff  and, in a first approach, revisits the principles of modified universalism and the origin of the insolvency exception in particular in the Jenard report. He holds at 103 that the ratio behind the insolvency exception in the Rapport Jenard is the same as the ratio behind Plans, hence that the exception applies.

In a second (presumably subsidiary) approach, the judge queries whether proceedings under Part 26A comply with the abstract requirements for an ‘insolvency’ procedure under of A1(1) EIR and finds at 133 that they do. I am really not convinced by the relevance of that analysis. He includes at 134 ff an argument that the Dutch ‘WHOA’ (Wet homologatie onderhands akkoord) proceedings are to be included in Annex A. Again I am not convinced that serves much purpose. Member States populate the Annex and a Member State proposal for inclusion is not checked against A1(1) EIR.

Conclusion on the jurisdictional issue at 137: ‘proceedings under Part 26A are within the bankruptcy exclusion in the Lugano Convention. This court accordingly has jurisdiction notwithstanding the exclusive jurisdiction clause in the Bonds.’

A most relevant judgment, on which the issues are not at all clear. Expect appeal lest the restructuring timing has made this nugatory – settling these issues would most certainly be welcome.

Geert.

EU private international law, 3rd ed. 2021, paras 2.73 ff (2.81 ff in particular) and 5.35 ff.

PIS v Al Rajaan. An intensive Brussels Ia and Lugano choice of court (by incorporation) and anchor defendant discussion.

The Public Institution for Social Security v Al Rajaan & Ors [2020] EWHC 2979 (Comm) engages in lengthy discussion anchor jurisdiction (A6) and choice of court (A23) under the Lugano Convention which of course, albeit with some important mutatis mutandis, echoes Brussels I and Brussels Ia.

Henshaw J summarises the key issues at 74:

i)                    whether the exclusive jurisdiction clauses (‘EJCs’) relied on were agreed between the parties and incorporated into their respective contracts, applying;

a)                  the formal validity requirements set out in Lugano Convention Article 23/Recast Brussels Regulation Article 25, and

b)                 if relevant, the laws governing the contracts i.e. Swiss or Luxembourg law;

ii)                  if so, whether the EJCs satisfy the requirements for material validity under Lugano Convention Article 23/Recast Brussels Regulation Article 25;

iii)                if so, how the EJCs are to be interpreted under their respective governing laws;

iv)                whether, and if so to what extent, the EJCs apply to claims against the applicants;

v)                  if and to the extent that the EJCs apply to only some claims against particular applicants, or apply to some but not all of the applicants, whether this court has jurisdiction over the remainder of the claims pursuant to Lugano Convention Article 6(1)/Recast Brussels Regulation Article 8(1); and

vi)                whether the court should decline jurisdiction over the claims against Pictet Asia and Pictet Bahamas (seeing as they are neither EU or Lugano States domiciled) on forum non conveniens grounds.

 

The judgment is lengthy. These are my highlights:

  • At 107 following review of CJEU authority including Refcomp and Hoszig, the finding that the issue of validity of choice of court by incorporation are to be addressed solely by reference to the requirements of what is now A25 BIa and the corresponding provision in Lugano Convention Article 23. This requires real consent which is discussed with reference ia to Profit Investment Sim at 109 ff.
  • At 127 ff Henshaw J discusses the issue obiter under Swiss cq Luxembourg law as putative leges contracti for choice of court. At 142 the judge concludes that under Swiss law, as under EU law, it is sufficient, in order to incorporate a jurisdiction agreement into the parties’ contract, that the parties have made a written agreement which incorporates by reference general terms including a jurisdiction clause. Ditto with less discussion under Luxembourg law, at 148.
  • At 187 ff: the issue of material validity under EU law. This discussion kicks off with a review of what one of the parties calls the ‘proximity requirement’: per C-214/89 Powell Duffryn (CDC, too, is discussed), the fact that choice of court (only) extends to a ‘particular legal relationship’ (reference here is also made to Etihad, at the time of the judgment this had not yet benefitted from the Court of Appeal‘s judgment). At 201 ff Justice Henshaw takes a broad view:

In principle I would agree that if a jurisdiction clause is not clear, then it may be restrictively construed, consistently with the policy expressed in the relevant EU case law of promoting certainty and avoiding parties being taken by surprise.  On the other hand, I see no reason why parties cannot make a jurisdiction clause in deliberately wide-ranging terms which covers many, or indeed all, of their present and future contractual relationships.  I do not read the Opinion of the Advocate General in Refcomp as indicating the contrary.  Refcomp was essentially concerned with whether a jurisdiction clause could be relied on against a sub-purchaser of goods, and it is notable that the CoJ referred in its judgment to “the principle of freedom of choice on which Article 23(1) is based” (§ 40).  Nor do I read Powell Duffryn as restricting the parties’ ability to choose the scope of the particular legal relationships to which a jurisdiction clause is to apply.

  • Whether the claims at issue meet the ‘proximity’ requirements is then discussed at length, under EU law and again, obiter, under Swiss and Luxembourg law, largely leading to a conclusion of lack of jurisdiction in England and Wales for many of the claims.
  • Anchor jurisdiction is discussed for some of the claims at 403 ff, leading to a classic discussion of the (CJEU Kalfelis introduced) close connection requirement, and at 418 support for the fragile Court of Appeal finding in Privatbank, that that the word “expedient” in the context of the lis alibi pendens provision in Lugano Convention Article 28 must mean “desirable” as opposed to merely practicable or possible. At 427 the issue of fragmentation of proceedings is discussed: what should the court do where a claimant is required to sue a defendant in an overseas jurisdiction under A23 Lugano in relation to some claims, but seeks to pursue in this jurisdiction (a) connected claims against the same defendant, or (b) connected claims against another defendant, in reliance on A6? Henshaw J concludes the E&W courts should not entertain the accessory claims.
  • Forum non is discussed at 480 ff, with the final conclusion being that E&W does not have jurisdiction for any of the claims.

I fully expect there is scope for appeal.

Those criticising the intensity of jurisdiction squabbles will find ammunition in this 497 para judgment.

Geert.

EU Private International Law, 3rd ed. 2021, big chunks of Chapter 2.

 

Seven swans a-swimming. The Hard Brexit for judicial co-operation in civil matters.

Update 13 April 2021 see Matthias Lehmann’s reporting on yesterday’s rollercoaster news re the EC’s position viz the UK’s accession to Lugano.

Update 10 February 2021 see Steve Peers’ reporting on the UK’s formal confirmation of non-extension of the Brussels Convention and Rome 1980 Convention.

Update 5 January 2020 This CMS summary usefully points out that there is embryonic judicial co-operation on intellectual property rights (see p155 ff of the agreement, Section 2: Civil and administrative enforcement).

31 December 2020, the Seventh day of Christmas, delivered a hard Brexit in the area of judicial co-operation in civil matters – the core subject area of this blog. The moment the draft  Trade and Cooperation Agreement between the EU and the UK broke, a few of us poured over the text to find any deal on the issue – in vain. Peter Bert has reporting and analysis here and here; Ralf Michaels summarised here (he also links to our Twitter reactions, which readers might find of use) and Marta Requejo Isidro links further to official documents here.

The UK’s application to join Lugano is still out there (the EU have an effective veto), however as things stand it seems unlikely the EU will agree.

Andrew Dickinson summarises the many things on the UK’s to do list here. As was clear to many of us, Sylvester 2020 was never going to be an end to, rather the start of interesting times in the sector.

Geert.

EU Private International Law, 3rd ed. 2021, 1.36 ff.

Stephenson Harwood v MPV (and Kagan). On interpleader (‘stakeholder’) actions and when engagement with the merits of the case leads to submission under Lugano.

In Stephenson Harwood LLP v Medien Patentverwaltung AG & Ors [2020] EWHC 1889 (Ch), proceedings were triggered by funding arrangements and alleged success fee entitlements following patent infringement proceedings. MPV is Swiss-based.

The action is an ‘interpleader’ one, now called a ‘stakeholder’ action: as Lenon DJ at 34 described, it is a ‘means by which a court (at the request of claimant, who typically holds property on behalf of one of the parties, GAVC) compels competing claimants to the subject matter of the application to put forward their claims and have them adjudicated on, thereby enabling the stakeholder to drop out of the picture.’

In the English residual private international law, stakeholder actions ground jurisdiction on the basis of the defendant’s property being present there. This is the kind of assets- based jurisdiction which the EC, but not the other Institutions, had wanted to introduce in Brussels Ia. As a result of the Brussels Convention’s Article 3 (materially the same as Article 3 Lugano), these actions became part of residual rules which could no longer be invoked against EU /Lugano States based defendants.  In the Schlosser report on the UK’s accession to the Brussels Convention, to which the judge refers at 40, it was said

“Interpleader actions (England and Wales) … are no longer permissible in the United Kingdom in respect of persons domiciled in another Member State of the Community, in so far as the international jurisdiction of the English or Scottish courts does not result from other provisions of the 1968 Convention. This applies for example, to actions brought by an auctioneer to establish whether ownership of an article sent to him for disposal belongs to his customer or a third party claiming the article.”

An alternative jurisdictional gateway therefore needs to be found. The discussion turned to submission (aka voluntary appearance) and CJEU C-150/80 Elefanten Schuh GmbH v Pierre Jacqmain. In particular, MPV completed the acknowledgment of service form indicating that it intended to contest Stephenson Harwood’s claim, did not tick the box saying that it intended to dispute jurisdiction and set out its own claim for payment of the Monies which it intended to pursue in the stakeholder application and stating its intention to exchange evidence. It then served and filed two witness statements in support of that claim addressing the merits and rebutting Mr Kagan’s claim. As the judge notes at 49,

MPV’s case that it has not submitted to the jurisdiction depends on the Court accepting the premise that it is open to MPV to distinguish for jurisdictional purpose between Stephenson Harwood’s claim (in relation to which MPV has raised no jurisdictional dispute) and Mr Kagan’s claim made as part of the stakeholder proceedings (in relation to which MPV does dispute jurisdiction). It is on this basis that MPV simultaneously asks the Court to order payment of the Monies to itself, as a disposal of the stakeholder application, while disputing the jurisdiction of the Court to determine Mr Kagan’s claim to the Monies.

However Lenon DJ holds that appearance was entered, as Mr Kagan’s claim is part and parcel of the stakeholder application and cannot be separately rejected at the level of jurisdiction. The level of engagement with the claim amounts to voluntary appearance viz both parties. At 53 obiter discussion of other gateways is pondered but not further entertained for lack of proper discussion by the parties.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 1, Heading 1.3.1,

Unilateral aka asymmetric jurisdiction and the Hungarian Supreme Court.

Many thanks, Dr Richard Schmidt for signalling and reviewing  the recent Hungarian Supreme Court judgment (in Hungarian) discussing unilateral aka asymmetric aka hybrid choice of court. I do not have Hungarian and happily rely on Richard’s analysis and review.

As Richard reports, the contract was governed by the law of Liechtenstein and provided that any legal disputes would be brought before the court of Vaduz (Liech). However, the claimants had the option of seeking the performance of the contract before the courts of the defendant’s domicile. The defendant failed to pay the service charges and the claimants sued him in Hungary.

Upon appeal it seems the lower courts had held that choice of court ex-EU is not covered by Brussels Ia (compare CJEU Gothaer) and stayed the case in favour of the court at Vaduz. The Supreme Court however in principle would see to have upheld the choice of court provision as exercised by the claimant even if it decided the case ultimately on a finding of submission.

As I said I do not read Hungarian, text search however does not suggest that the SC looked at the issue at all viz Brussels Ia. Which is odd.

Richard justifiably refers to the approaches of both the English (see e.g. here) and the French Courts (contrast Rotschild with Apple). Thankfully there is now also the volume edited by Mary Keyes, looking comparatively at the issue (Michiel Poesen and I contributed the Belgian chapter).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9, Heading 2.2.11.1, Heading 2.2.11.2 .

 

 

Islandsbanki v Stanford. The finer mechanics of Lugano Convention recognition at work.

In Islandsbanki & Ors v Stanford [2020] EWCA Civ 480, upon appeal from Fancourt J in [2019] EWHC 1818 (Ch), Asplin LJ discussed whether purported execution of a foreign judgment registered in the High Court pursuant to the Lugano Convention, can be execution issued in respect of the judgment debt (for the purposes of section 268(1)(b) of the Insolvency Act 1986), if the execution occurred before the period for appealing the registration of the judgment has expired and, if not, whether the defect can be cured.

An unpaid Icelandic judgment debt from 2013 which together with interest, is now in excess of £1.5 million sterling equivalent. The judgment was given against Mr Stanford in the Reykjanes District Court in Iceland on 26 June 2013. A certificate was issued by the Icelandic court on 16 October 2013, pursuant to Articles 54 – 58 Lugano. IB applied to register the Icelandic judgment in England and Wales on 16 March 2016. A registration order was sealed on 23 March 2016 (the “Registration Order”).

Some of the issues in the Appeal (and before Fancourt J) concern purely English procedural rules however their effect is of course to facilitate, or obstruct, recognition and enforcement under the Lugano Convention. The confusion to a great degree results from the UK, despite Lugano’s direct effect, having implemented the Convention in the CPR rules anyway (at 24). The submission made by appellant (the Bank) before the Court is essentially that a narrow interpretation of the English CPR rules which would not allow remedying an error in the procedure, would run counter Lugano’s objective of facilitating recognition and enforcement (reference is made to the Pocar report and the recitals of Lugano itself).

Asplin LJ at 38 points to the language of Lugano itself: ‘during the time specified for an appeal pursuant to Article 43(5) against the declaration of enforceability and until any such appeal has been determined, no (emphasis in the original) measures of enforcement may be taken other than protective measures against the property of the party against whom enforcement is sought. The ordinary and natural meaning of those provisions is quite clear.’ She also at 37 points to the Convention’s objectives not being restricted to ease of enforcement: ‘the underlying policy of Articles 43(5) and 47(3) is that a fair and proportionate balance must be struck between the interests of the party which applies for a registration order having obtained a judgment in a foreign jurisdiction to which the Convention applies, and the defendant/debtor whose rights of appeal are prescribed by law and should not be undermined by allowing irreversible measures of enforcement.’

Conclusion, at 40: ‘It is for that reason that CPR 74.6(3) provides that a registration order must contain reference to the period in which an appeal against registration can be lodged and that no measures of enforcement can be taken before the end of that period and the reason why that prohibition was repeated in the Registration Order itself at paragraph 2. Accordingly, any attempt to remedy the premature issue and execution under the Writ of Control by means of an exercise of the discretion under CPR r3.10(b) or the use of CPR r3.1(2)(m) or 3.1(7) (or the inherent jurisdiction of the court, for that matter) would fundamentally undermine Article 47(3) and section 4A(3) in a way which is impermissible.’

at 62 ‘The defect in the execution in this case, if it can be called a defect, was fundamental….It was not a mere technicality or a formal defect which might be rectified pursuant to what is now Rule 12.64 of the Insolvency Rules 2016. It went to the heart of the execution process’.

Appeal dismissed following an interesting and clear application of both Lugano’s provisions and its spirit.

Geert.

 

PrivatBank v Kolomoisky and Boholiubov. The Court of Appeal reverses the High Court ia on abuse of the anchor mechanism. Further consideration, too, of the reflexive effect of Article 28’s lis alibi pendens, and of Article 34.

Update 18 May 2020 early April the Supreme Court ruled that it would not hear the case – which therefore stands as (complicated) authority.

The Court of Appeal in [2019] EWCA Civ 1708 has reversed [2018] EWHC 3308 (Ch) PrivatBank v Kolomoisky and Boholiubov et al which I reviewed here. When I tweeted the outcome on the day of release I said it would take a little while for a post to appear, which indeed it has. Do please refer to my earlier post for otherwise the comments below will be gobbledygook.

As a reminder: the High Court had set aside a worldwide freezing order (‘WFO’) granted earlier at the request of Ukraine’s PrivatBank, against Ihor Kolomoisky and Hennadiy Boholiubov – its two former main shareholders.

Fancourt J’s judgment implied in essence first of all, the Lugano Convention’s anchor defendant mechanism, concluding that any artificial fulfilment (or apparent fulfilment) of the express requirements of Article 6.1 is impermissible, and this includes a case where the sole object of the claim against the anchor defendant is to remove the foreign defendant from the jurisdiction of domicile. Bringing a hopeless claim is one example of such abuse, but the abuse may be otherwise established by clear evidence. In principle, the fact that there is a good arguable case against the anchor defendant should not prevent a co-defendant from establishing abuse on some other ground, including that the “sole object” of the claim is to provide jurisdiction against a foreign domiciled co-defendant.

The English Defendants serving as anchor, were not considered legitimate targets in their own right and hence the ‘sole object’ objection was met. 

The Court of Appeal in majority (Lord Newey at 270 ff dissenting) disagreed and puts particular emphasis on the non-acceptance by Parliament and Council at the time of adoption of Brussels I, of an EC proposal verbatim to include a sole object test like was done in Article (then) 6(2) (it also refers to drafters and rapporteur Jenard making a bit of a muddle of the stand-alone nature, or not, of the sole object test). Following extensive consideration of authority it decides there is no stand-alone sole object test in (now) Article 8(1) Brussels I (or rather, its Lugano equivalent) but rather that this test is implied in the Article’s condition of connectivity: at 110: ‘we accept Lord Pannick’s analysis that, as shown by the references to Kalfelis and Réunion,..that the vice in using article 6(1) to remove a foreign defendant from the courts of the state of his domicile was met by a close connection condition.’

Obiter it held at 112 ff that even if the sole object test does exist, it was not met in casu, holding at 147 that the ability to obtain disclosure from the English Defendants provided a real reason for bringing these proceedings against them.

Fancourt J had also added obiter that had he accepted jurisdiction against the Switzerland-based defendants on the basis of the anchor mechanism, he would have granted a stay in those proceedings, applying the lis alibi pendens rule of Lugano reflexively, despite the absence of an Article 34 mechanism in Lugano. The Court of Appeal clearly had to discuss this given that it did accept jurisdiction against the Switserland-based defendants, and held that the High Court was right in deciding in principle for reflexive application, at 178: ‘This approach does not subvert the Convention but, on the contrary, is in line with its purposes, to achieve certainty in relation to jurisdiction and to avoid the risk of inconsistent judgments.’

That is a finding which stretches the mutual trust principle far beyond Brussels /Lugano parties and in my view is far from clear.

However, having accepted lis alibi pendens reflexively in principle, the Court of Appeal nevertheless held it should not do so in casu, at 200 as I also discuss below: ‘the fact that consolidation was not possible was an important factor militating against the grant of a stay, when it came to the exercise of discretion as to whether to do so’.

Finally, stay against the English defendants was granted by the High Court on the basis of A34 BIa, for reasons discussed in my earlier post. On this too, the Court of Appeal disagreed.

Firstly, on the issue of ‘related’ actions: At 183: ‘The Bank argues that the actions are not “related” in the sense that it is expedient to hear and determine them together, because consolidation of the Bank’s claim with Mr Kolomoisky’s claim in the defamation proceedings would not be possible. It is submitted that unless the two actions can be consolidated and actually heard together, it is not “expedient” to hear and determine them together. In other words, the Bank submits that expediency in this context means practicability.’ The Court of Appeal disagreed: At 191: ‘The word “expedient” is more akin to “desirable”, as Rix J put it, that the actions “should” be heard together, than to “practicable” or “possible”, that the actions “can” be heard together. We also consider that there is force in Ms Tolaney’s point that, if what had been intended was that actions would only be “related” if they could be consolidated in one jurisdiction, then the Convention would have made express reference to the requirement of consolidation, as was the case in article 30(2) of the Recast Brussels Regulation.’

Further, on the finding of ‘sound administration of justice’: at 211: ‘the unavailability in the Ukrainian court of consolidation of the Bank’s current claim with Mr Kolomoisky’s defamation claim remains a compelling reason for refusing to grant a stay. In particular, the fact that the Bank’s claim would have to be brought before the Ukrainian commercial court rather than before the Pechersky District Court in which the defamation proceedings are being heard means that if a stay were granted, the risk of inconsistent findings in these different courts would remain. Furthermore, we accept Lord Pannick’s overall submission that, standing back in this case, it would be entirely inappropriate to stay an English fraud claim in favour of Ukrainian defamation claims, in circumstances where the fraud claim involves what the judge found was fraud and money laundering on an “epic scale” ‘

Finally, at 213, ‘that the English claim against Mr Kolomoisky and Mr Bogolyubov and the English Defendants should be allowed to proceed, it inevitably follows that the BVI Defendants are necessary or proper parties to that claim and that the judge was wrong to conclude that the proceedings against the BVI Defendants should be set aside or stayed.’

One or two issues in this appeal deserve to go up to the CJEU. I have further analysis in a forthcoming paper on A34.

Geert.

(Handbook of) European Private International Law – 2nd ed. 2016, Chapter 2, Heading 2.2.14.5

 

 

BVC v EWF. The High Court on personality rights, internet and centre of interests in echoes of Bolagsupplysningen and e-Date. Suggests court with full jurisdiction is required for orders restraining further publication.

In BVC v EWF [2019] EWHC 2506 (QB) claimant applied for summary judgment in a claim for misuse of private information and harassment. The privacy claim arises from internet publication, on a website created by the defendant, of his account of his relationship with claimant. The harassment claim arises from a series of email communications from the defendant to claimant over a period of some two years, and from publication of the website itself.

An ex parte injunction had been granted earlier. The Defendant was restrained from contacting or harassing claimant, from publishing the website or any of its contents to the world at large, and from publishing any of the information set out in a confidential schedule, or any information which was liable to or might identify the claimant as a party to the proceedings or as the subject of the confidential information

In current proceedings defendant (a UK national) submits he is domiciled in Switserland. This triggers the Lugano Convention.

Parkes J clearly had to consider Article 5(3) Lugano’s special jurisdictional rule for tort (the BIa equivalent of course is now Article 7(2), hence also applying e-Date and BolagsupplysningenSteyn DJ had earlier rejected defendant’s arguments. At 33: ‘She held, in short, that the Claimant had a good arguable case that this jurisdiction was the state in which he had the centre of his interests, and that in any event a real and substantial tort (namely misuse of private information) had been committed within the jurisdiction. She also ordered that the steps already taken to bring the Claim Form and orders of 27 June and 4 July 2018 to the Defendant’s attention (namely, service by email) constituted good service on him, notwithstanding that he claimed he was domiciled in Switzerland at the date of receipt of the documents, not (as had been believed) in this jurisdiction.’

Defendant (praised nb by Parkes J for his ‘brief but enlightening written submissions’) however continues to challenge the jurisdiction, jumping at the chance to bring it up again when claimant referred to his centre of interests in his PoC (Particulars of Claim), and employing the distinction which the CPR makes between challenges to existence and exercise of jurisdiction (notwithstanding authority (see at 39) that despite the distinction claims viz the two need to be brought concurrently).

He essentially (at 43) posits the court reconsider

‘whether Article 7(2) RJR is ‘to be interpreted as meaning that a natural person who alleges that his personality rights have been infringed by the publication of information concerning him on the internet may have his centre of interests in a Member of State where he is not habitually resident, where he has no ongoing professional connections or employment, no home, no income and no immediate family’. In his letter to the court of 18 June 2019, the Defendant puts it this way: ‘… with no permission to appeal the judgment of Karen Steyn QC, if the court continues to accept the Claimant’s centre of interests is in England and Wales despite very clear evidence to the contrary then it is necessary to refer the question of interpretation to the ECJ pursuant to Article 267 of the TFEU’.

At 44 Parkes J dismisses the suggestion of preliminary review to Luxembourg. That route is ‘not designed to provide a route of appeal against judicial evaluation of evidence of fact.’ In conclusion, re-opening of the discussion on jurisdiction is rejected, referring finally to Lord Green in Kaefer:”it would not be right to adjourn the jurisdiction dispute to the full trial on the merits since this would defeat the purpose of jurisdiction being determined early and definitively to create legal certainty and to avoid the risk that the parties devote time and cost to preparing and fighting the merits only to be told that the court lacked jurisdiction“.

Arguments on submission to the jurisdiction where not entertained: whether service of a defence, and the making of an application to strike out qualify as ‘submission’ becomes otiose when that jurisdiction has already been unsuccessfully challenged.

Then follows extensive discussion of the factual substance of the matter, which is less relevant for the purposes of this blog. Hence fast forward to 150 ff where the issue of jurisdiction to issue an injunction prohibiting re-publication of the material is discussed (in case: re-offering of the website on WordPress or elsewhere). At 158 ff this leads to a re-discussion of Bolagsupplysningen where the Court held that where a claimant seeks an injunction to rectify or remove damaging material from the internet, he can only do so only in a State with full jurisdiction. Parkes J at 160 suggests this is only in the state where the defendant is domiciled (the general rule, as stated by Art 2(1) Lugano and Art 4(1) RJR), or (by virtue of the special jurisdiction: Art 5(3) Lugano and Art 7(2) RJR) in the state where he has his centre of interests, and not before the courts of each member state in which the information is accessible.

I believe Parkes J on that point omits locus delicti commissi. At the time of my review of Bolagsupplysningen I suggested the judgment was bound to create a need for further clarification: Shevill and e-Date confirm full jurisdiction for the courts of the domicile of the defendant, and of the locus delicti commissi, and of the centre of interests of the complainant. These evidently do not necessarily coincide. With more than one court having such full jurisdiction positive conflicts might arise.

Of more importance here is that Parkes J (obiter) at 163 suggests that the requirement of full jurisdiction, also applies to orders restraining any further publication and not just as the Grand Chamber held limited by the facts in Bolagsupplysningen, to orders for rectification and removal. In doing so he follows the in my view correct suggestion made by Dr Tobias Lutzi (‘Shevill is dead, long live Shevill!’, L.Q.R. 2018, 134 (Apr), 208-213) viz divisible cq indivisible remedies – update 28 September 2019 although the issue is not free of discussion. Graham Smith for instance suggests the potential for geo-blocking as a valid argument to grant jurisdiction for restraining further publication on an Article 7(2) locus damni basis.

Note also the cross-reference to Saïd v L’Express on the limitation of Bolagsupplysningen to injunctive relief: for damages, the full mosaic implications remain.

Conclusion: Claimant is entitled to summary judgment for a final injunction to restrain further misuse of his private information

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.

 

Pillar Securitisation v Hildur Arnadottir. Material EU consumer law does not dictate jurisdictional rules.

The CJEU held last week in C-694/17 Pillar Securitisation (v Hildur Arnadottir), on the Lugano Convention’s protected category of consumers. I have review of Szpunar AG’s Opinion here. The issues that are being interpreted are materially very similar as in Brussels I Recast hence both evidently have an impact on the Brussels I Recast Regulation, too (see in that respect also C‑467/16 Schlömp).

At stake in Pillar Securitisation is the meaning of ‘outside his trade or profession’ in the consumer title. The CJEU at 22 rephrases the case as meaning ‘in essence, whether Article 15 of the Lugano II Convention must be interpreted as meaning that, for the purposes of ascertaining whether a credit agreement is a credit agreement concluded by a ‘consumer’ within the meaning of Article 15, it must be determined whether the agreement falls within the scope of Directive 2008/48 in the sense that the total cost of credit in question does not exceed the ceiling set out in Article 2(2)(c) of that directive and whether it is relevant, in that regard, that the national law transposing that directive does not provide for a higher ceiling.’

The CJEU notes that Pillar Securitisation claims that Ms Arnadottir acted for professional purposes and is not covered by the definition of a ‘consumer’. However, the referring court has not referred any question to the Court on the purpose of the credit agreement concluded. On the contrary, as is clear from the wording of the question that it did refer, the referring court asks its question to the Court on the assumption that the contract at issue was concluded for a purpose that can be regarded as being outside Ms Arnadottir’s profession. In addition, in any event, the order for reference does not contain sufficient information in order for the Court to be capable, where relevant, of providing useful indications in that regard (not much help therefore to assist with the interpretation of issues such as in Ang v Reliantco, on which I shall be reporting next).

As I wrote in my review of the AG’s Opinion: the issue is how far does material EU law impact on its private international law rules. I referred in my review to the need to interpret Vapenik restrictively, and to Kainz in which the CJEU itself expressed caution viz the consistent interpretation between jurisdictional and other EU rules, including on applicable law and on substantive law.

I am pleased to note the Court itself makes the same observation, and emphatically so: at 35: ‘the need to ensure consistency between different instruments of EU law cannot, in any event, lead to the provisions of a regulation on jurisdiction being interpreted in a manner that is unconnected to the scheme and objectives pursued by that regulation.’ Subsequently establishing the very diffeent purposes of both sets of law, the CJEU rejects impact on one over the other (and also remarks that Pillar Securitisation’s reference to the Pocar report needs to be taken in context: prof Pocar referred to Directive 2008/48 by way of example only).

Conclusion: for the purposes of ascertaining whether a credit agreement is a credit agreement concluded by a ‘consumer’ within the meaning of Article 15, it must not be determined whether the agreement falls within the scope of Directive 2008/48 in the sense that the total cost of credit in question does not exceed the ceiling set out in Article 2(2)(c) of that directive, and it is irrelevant, in that regard, that the national law transposing that directive does not provide for a higher ceiling.

A good judgment.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.8.2.

French Supreme Court on cover by Lugano of legal fees in criminal proceedings – and the proper limits of the ordre public test.

Thank you Hélène Péroz (by now a firmly established reliable source for French PIL case-law) for alerting me to French Supreme Court Case no. 17-28.555, judgment issued late January.

The criminal courts at Geneva have condemned claimant, domiciled at France, to pay a criminal fine of 3,600.00 Swiss Francs, a well as 36,000.00 Swiss Francs towards defendant’s legal fees. The latter were incurred given that defendant in current legal proceedings had entered a civil claim in the Swiss criminal proceedings: a claim which the Geneva judge ordered to be settled through the Swiss courts in civil cases.

Upon fighting the request for exequatur, claimant first of all argues that the French courts’ acceptance of exequatur via the Lugano Convention is outside the scope of that Convention. The matter, he argues, is not civil or commercial seeing as the civil claim was not even entertained.

This of course brings one to the discussion on the scope of application of Lugano (and Brussels Ia) and the perennial difficulty of focusing on nature of the claim v nature of the underlying facts and exercised powers. Now, for civil claims brought before criminal courts there is not so much doubt per se, seeing inter alia that Article 7(3) Brussels Ia (Article 5(4) Lugano 2007) has a specific head of jurisdiction for such civil claims. Claimant’s point of argument here evidently is that this should not cover this particular claim seeing as the legal representation at issue turned out to be without purpose. Not being privy to the discussions that took place at the Geneva court, I evidently do not know the extent of discussion having taken place there (there is no trace of it in the Supreme Court judgment) however one assumes that the Geneva proceedings in theory could have dealt with the civil side of the litigation yet for a factual or legal reason eventually did not. Over and above the intensity of discussions being difficult to employ as a decisive criterion, one can also appreciate the difficulty in separating the civil from the criminal side of the argument made by defendant’s lawyers.

Of perhaps more general interest is the Supreme Court’s rebuke of the lower courts’ treatment of ordre public. Exequatur was granted because, the lower courts had held, the judge in the substantial proceedings has the sovereign right to establish costs under the relevant national procedure. This, it was suggested by these lower courts, shields it from ordre public scrutiny – a clear misunderstanding of the ordre public test. Part of the ordre public considerations had also been that the relative slide in the strength of the Swiss Franc v the Euro, and the generally higher costs of living in Switzerland, put the cost award in perspective. Moreover the judges found that there was insufficient information on the length of the proceedings in Switserland, and the complexity of the arguments. That, however, is exactly the kind of data which the judge in an exequatur assessment ough to gauge.

Geert.

(Handbook of) European Private International Law, 2n ed. 2016, Chapter 2, Heading 2.2.2.2.

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