Tag: ordre public

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Project Lietzenburger. Following the Court of Appeal’s hint in AGPS Bondco, an extensive discussion of move of COMI and ordre public recognition of an English restructuring Plan.

Project Lietzenburger Strabe Holdco, Re [2024] EWHC 468 (Ch) would seem to heed my prediction when I reviewed AGPS BondCo (“Strategic Value Capital Solutions Master Fund LP & Ors v AGPS BondCo PLC (Re AGPS BondCo PLC) [2024] EWCA Civ 24) here: that the English jurisdictional basis for schemes of arrangement and restructuring plans for corporations without English anchor prior to the restructuring, is less certain than court practice suggested.

Prior to AGPS Bondco and as I report in many posts which readers can find using the ‘scheme of arrangement’, in the event of a non-E&W incorporated debtor whose debt was being restructured, the classic technique is to insert a newly incorporated English company as a substitute obligor or co-obligor of debt owed by a foreign company in order to engage the jurisdiction of the English court. That technique in itself has not changed, but the court’s fairly ready acceptance of jurisdiction arguendo is now coming under some pressure.

As I reported in the past, the arguendo technique’s smooth riding through the courts first if all was assisted by the general absence of challenge by creditors. Even those not entirely convinced of the economic soundness of the restructuring at issue would eventually give up opposition when push came to shove. Further, pre-Brexit the assumption that a scheme or a plan would be readily recognised across the EU as a ‘judgment’ under Brussels Ia, despite question marks over the soundness of that ia viz the definition of ‘judgment’ and the application of BIa’s ‘insolvency’ exception, similarly lubricated passage through the courts. Post Brexit and absent UK Lugano membership, things have not necessarily changed from the content point of view; however they have certainly changed from the perception point of view.

In the case at issue, Richards J refers to AGPS Bondco and discusses COMI shift of the Plan corporation at length [69] ff.

The plan company having its COMI in E&W is one of the jurisdictional routes available. The Insolvency (Amendment) (EU Exit) Regulations 2019 are the main port of call, and Re Swissport Holding International SARL [2020] EWHC 3556 (Ch) (unreported), which I flagged  in my discussion of Barings v Galapagos here is the lead judgment referred to on the principles of COMI. One of the issues in Barings is the question of ‘permanency’ of COMI move, an urgent issue in Barings but perhaps less immediately concerning in current case (the judge does briefly address it [85]).

The judge having decided that COMI was indeed located in E&W then [86] ff discussed whether this move of COMI might have been in breach of Luxembourg law. The structure of this analysis is not entirely clear. Whether COMI moved in breach of applicable lex societatis is not in itself I would suggest relevant to the COMI move itself and indeed this is not how the judge seems to approach it. One assumes his analysis on this point is part of his consideration of whether the courts at Luxembourg would recognise the Plan, alongside [103] ff where the potential of exclusive Luxembourg jurisdiction is considered. Consideration including by the experts is made of CJEU C-723/20 Galapagos BidCo Sarl, with the judge eventually by a slender margin deciding that the view is to be preferred that Lux courts would not consider themselves to have such jurisdiction.

On recognition proper (again I am not quite sure of the structure here). [112] ff consider the Re DTEK Energy BV test, with consideration in particular of the COMI move as fraude à la loi /fraus (additionally in the form of fraude au jugement) and on balance the judge holds that it is unlikely that the LUX courts would object on ordre public grounds (ia given EU law’s acceptance of COMI move for restructuring purposes.

The same ordre public test under German law with an important Brexit consequence [125]: “Both experts agree that an English judgment sanctioning the Plan would be recognised in Germany only if the Plan Company’s COMI is in England at the time of any order sanctioning the Plan. Without that, the German courts would not accept that the English courts have jurisdiction for the purposes of s343 of the InsO.” I am not an expert on German law but it seems prima facie implicit in that opinion that a Plan would have to be considered an insolvency and indeed [125] ff follows that discussion. Here the judgment takes an interesting turn with [130] the presence of cross-class cram-down in an English Plan leading to pro inspiratio an Annex A EU Insolvency Regulation notified German procedure, StaRUG, in implementation of EU Directive 2019/1023 on Preventive Restructurings (the “Restructuring Directive”), the Plan being considered one in insolvency.

Consider the competing reasons:

Professor Thole’s reasons for concluding that the Plan would be recognised and given effect to in Germany can be summarised as follows:

i) The Plan is similar in nature to a StaRUG. StaRUGs fall within the list of “insolvency proceedings” set out in Annex A.

ii) Proceedings set out in Annex A are “insolvency proceedings” for the purposes of the InsO. In official commentaries on German domestic legislation, the German legislature has stated that, in deciding whether non-EU proceedings constitute “insolvency proceedings”, it is helpful to consider their similarities with proceedings listed in Annex A.

iii) Since the Plan is similar to a StaRUG, which falls within Annex A, a German court would likely conclude that an order sanctioning the Plan would be an order in “insolvency proceedings” for the purposes of the InsO.

iv) That conclusion is not altered by the accepted fact that the Plan does not deal with all the Plan Company’s creditors (such as professional advisers). The requirement for “collective proceedings” is present by virtue of the fact that the Plan deals with the rights of the Plan Company’s financial creditors. That conclusion is supported by a comparison with StaRUGs which likewise do not need to deal with the claims of all creditors.

v) Accordingly, the Plan would be enforced and recognised under the terms of the InsO.

      1. Professor Skauradszun’s reasons for reaching a contrary conclusion can be summarised as follows:

i) German legal literature categorises plans under Part 26A as “preventive restructuring frameworks” which are the province of the StaRUG Act rather than the InsO. Accordingly, a German court would consider that the question whether the Plan should be recognised and enforced in Germany should be answered by reference to the StaRUG Act, rather than by reference to the InsO.

ii) The StaRUG Act does not provide for preventive restructuring frameworks of a non-EU member state to be recognised or enforced in Germany. There is, therefore a “gap” in German domestic legislation which means that non-EU “preventive restructuring frameworks” are inherently incapable of being recognised in Germany. Since Germany has a civil law tradition, the courts would not seek to fill that gap by adopting a strained interpretation of the concept of “insolvency proceedings” so as to enable the Plan to be recognised under the InsO. Rather, a German court would look to the legislature to fill the gap if it saw fit.

iii) The Plan falls outside the definition of “insolvency proceedings” in the InsO applying orthodox principles of interpretation which are not affected by any wish to fill a perceived gap in the legislation. That is because the Plan lacks the requisite element of “collectivity” to satisfy the definition.

iv) The fact that the Plan is similar to procedures (such as a StaRUG) listed in Annex A is not relevant. While German legislation does indeed take into account similarities with EU insolvency proceedings, the InsO only requires a comparison to be made with proceedings listed in the EU Insolvency Regulation prior to it being recast in 2015. The German court would not apply an “always speaking” doctrine of statutory interpretation to “update” those references to include Annex A of the Insolvency Regulation Recast.

 These are interesting positions and in the end the judge sides by a very narrow margin with the former. 

Further consideration of the plan then lead to the judge suggesting a number of amendments but for the purposes of the blog, the findings on jurisdiction and recognition are as extensive as they are exciting.

Geert.

EU Private International Law, 4th ed. 2024, 5.35 ff.

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Matthews v MACIF. A rare and extensive discussion on refusal of recognition under Brussels I and plenty of grounds leading to refusal of recognition of a French judgment issued in absentia.

Thank you very much confrère Lucian Ilie for sharing copy of the hitherto unreported Thomas Hilton Matthews v Mutuelle Assurance des Commercants et Industriels de France [2023] EWHC 2175 (KB) – Matthews v MACIF for short.

Maître Ilie successfully secured a High Court judgment (Ritchie J sitting on appeal) overturning registration with a view to enforcement under Brussels I (old: Regulation 44/2001) of a Paris Court of Appeal 2 April 2013 judgment, as his chambers report here.

The summons for the Court of Appeal proceedings (as Justice Ritchie’s judgment sets out in detail) had not reached Mr Matthews due to his return to England and the subsequent judgment, reducing an earlier pay-out (which had already been transferred to Mr Matthews) by insurance company MACIF for his injuries etc following collision with a car whilst cycling, was issued in his absence. MACIF unsuccessfully attempted to serve the Court of Appeal judgment on Mr Matthews at his previous location in France, and for 9 years no contact with the Matthews’ in England was made. (From the witness statements Ritchie J accepted that the fact that a copy of the judgment was left with Mrs Matthews’ father in France was not mentioned to the couple, let alone received). MACIF in June 2022 then obtained an Annex V Brussels I certificate of the judgment (which only mentioned that the amount to be paid out to Mr Matthews was now ‘less favourable’, without mentioning numbers) and waited another 9 months before seeking ex parte (judged by Ritchie J [34] to be ‘not right or fair’ in the circumstances) registration of the judgment in England, in language [34] not reflecting any of the background to the case and unlike the Annex V certificate, mentioning an exact amount. The application was granted.

Upon appeal the questions agreed [9] by parties were summarised by the judge as follows [10]

(1) Service: Was the Appellant sufficiently served with notice of (1.1) the start of the appeal and (1.2) the Paris Judgment, such that he could defend the appeal from the Tribunal Judgment and/or appeal the Paris Judgment?

(2) The EC Regulation: Is the Order made by the Master one which he was entitled to make in the light of the assertions that:

(2.1) it does not match the wording of the Annex V certificate summarising the Paris Judgment, the words of which made the Respondent the judgment debtor, not the Appellant and did not order any sum to be paid by the Appellant to the Respondent;

(2.2) the Appellant has recently appealed against the Paris Judgment so is it currently enforceable? The Appellant asserts that the Paris Judgment is a default judgment and not enforceable due to non-service;

(2.3) the Appellant asserts that the Respondent does not have an interest in the Paris Judgment as a creditor and that the Appellant was not ordered to pay anything;

(2.3) (sic) for public policy reasons due to the behaviour of MACIF it should not have been registered.

On the issue of service Ritchie J refers to first instance English judgments which however are backed up by continental scholarship and some indications in CJEU authority: the procedural rules of the lex fori are an indication of valid service but not decisive, and taking into account other points of departure listed [43], he holds that service was not valid, hence triggering Article 34 Brussels I, now Article 45 Brussels Ia (not materially different for the case at issue): lack of service in the Member State of origin shall (not just may) lead to refusal of recognition.

Obiter, the judge also refuses recognition on four more grounds

on form: the presentation of the foreign judgment was obiter held [49] to have amounted to re-writing;

seeing as the Paris Court of Appeal judgment is no longer enforceable in France pending the Mathews’ now launched appeal, it cannot be enforceable in the UK either [50];

[51] MACIF is not a judgment creditor under the Paris judgment: that judgment reduces the amount which Mr Matthews is to receive however it does not directly at least hold title for MACIF to receive payment from Mr Matthews;

[52] the delay in seeking enforcement causing substantial prejudice to Mr Matthews, the unfaithful transcription of the Annex V certificate, the insufficient efforts to locate Mr Matthews; the registration proceedings in E&W which really should have been conducted inter partes  also would have led to a refusal on ordre public grounds.

A rare and extensive Article 34 BI/45 BIa discussion and for that alone, of much note.

Geert.

EU Private International Law, 4th ed. 2024, 2.600 ff.

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Boughajdim v Hayoukane. A classic qualification exercise on formal and essential (substantive) validity of marriage.

Boughajdim v Hayoukane [2022] EWHC 2673 (Fam) is a good case to illustrate qualification as an essential part of the private international law exercise. I had the case as one of the many open windows on my desktop. Despite my tardiness in reporting, I still do so, seeing as it is exam season and students are likely to start grapling with the course materials.

Core question is whether the Petitioner’s (the wife) divorce petition should be allowed to proceed in E&W, based on a marriage that has been recognised by the Moroccans court and registered in Morocco pursuant to legislation designed to provide retrospective recognition of marriage in that jurisdiction. The retrospective element is the result of the (alleged) spouses, of which the husband has dual Moroccan-UK citisenship, becoming aware that the absence of a marriage certificate was precluding an application for British Citizenship for one of their children.

The wife argues that the lex loci celebrationis in this case is Morocco, that the formal validity of the marriage falls to be determined by reference to the local form under Moroccan law and that this court is dealing with a valid foreign marriage, acknowledged as such by a foreign court and affirmed following failed proceedings by the husband for perjury and on appeal. By contrast, the husband contends that a proper analysis of the lex loci celebrationis means that the formal validity of the marriage falls to be determined by reference to the domestic Marriage Acts. In this context, he submits that the Moroccan marriage cannot be recognised as valid in E&W either as to form or as to capacity, the husband submitting in respect of the latter that the law governing questions of capacity is, in any event, the law of the husband’s domicile, under which law the husband did not validly consent to the marriage. Finally, the husband argues, in any event, that in the context of the special character of marriage there are cogent reasons for refusing to recognise the Moroccan marriage on the ground of public policy.

There is a convoluted procedural background to the case which this post does not engage with, for it is not relevant to the outcome of current judgment. (This also includes nb a number of res judicata elements, held [98], arising out of concurrent Moroccan proceedings.  Clearly, whether or nor there was a valid marriage at all is of relevance for all sorts of reasons, including financial ones.

[85] English law [like much of the world, GAVC] distinguishes between the form of the marriage (formal validity), which is governed by the lex loci celebrationis and the questions of capacity to marry to marry (essential validity, aka material or substantive validity). It is well settled that in English PIL the question of the capacity to marry is determined by the law of the party’s antenuptial domicile (Dicey Rule 75; note the contrast with continental Europe which tends to opt for lex patriae). Note however that what part of the validity question is a formal one and what part a substantive one, is not unequivocally clear. In E&W, there is no authority that conclusively answers the question of which system of law will govern the question of consent to marriage, i.e. whether consent is a matter of form governed by the lex loci celebrationis or a matter of capacity governed by the law of domicile.[86]

MacDonald J holds [90]

that the lex loci celebrationis in this case is the Kingdom of Morocco. I am further satisfied, on the facts as I have decided them, that the parties complied with the local form in the lex loci celebrationis sufficient for the court to be satisfied that it is dealing with a valid marriage having regard to the principle of locus regit actum. Further, I am satisfied that the husband has not demonstrated to the satisfaction of the court in this case that grounds exist for refusing to recognise the Moroccan marriage on the basis of public policy. In the circumstances, I am satisfied that the wife’s petition can proceed.

A difficultly is [100] that neither party contends for a marriage ceremony, or any other celebratory event, on an ascertainable date or at an ascertainable place giving rise to a marriage. The wife relies on the operation of a retrospective statute in a foreign jurisdiction as having constituted a valid marriage. There was no ‘marriage ceremony or other similar celebration’: then wat is the locus celebrationis? [105] The existence of a course of conduct by which some but not all of the legal steps necessary to conclude a marriage in a jurisdiction in which a ceremony is not required might, depending on the facts of the case, also assist in identifying whether there is a lex loci celebrationis and its location in a case concerning the operation of retrospective marriage legislation. Here, the judge decides that in 2000, on the balance of probabilities, the husband proposed marriage to the wife in Morocco, that there was an engagement party held, that there was a dowry agreed and paid and that the wife and husband considered themselves to be engaged and were to be married.

[114] ff the judge holds Moroccan formal procedure (including an element of service) following the retrospective Act, was properly complied with.

[139] ff and much more briefly, consent by both parties is established.

Finally [148] the ordre public exception looks at the consequences in England and Wales of recognising the decision of a foreign court that a marriage subsists as the result of retrospective legislation in respect of a British Citizen domiciled in E&W. [149] The Judge holds that the marriage to which the husband now objects arose by operation of law as the result of legal proceedings in respect of which, as the court has found, he was aware, in which he was represented, in which he had the opportunity to make representations and in which he did make, albeit cursory, representations objecting to the relief sought by the wife.

In conclusion, an earlier pronounced stay on the divorce petition was lifted.

A good case to illustrate qualification and its consequences.

Geert.

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Bravo v Amerisur Resources (Putumayo Group Litigation). Claimants survive time-bar challenge despite questionable finding on Rome II’s evidence and procedure carve-out.

Update 03 10 2023 the claim has now settled.

In Bravo & Ors v Amerisur Resources Ltd (Re The Amerisur plc Putumayo Group Litigation) [2023] EWHC 122 (KB) claimants, who live in remote rural communities in the Putumayo region of Colombia, seek damages from the defendant pursuant to the Colombian Civil Code, and in reliance on Colombia Decree 321/1999, in respect of environmental pollution caused by a spill (or spills) of crude oil on 11 June 2015. The claimants’ two causes of action are pleaded under the headings (i) guardianship of a dangerous activity and (ii) negligence. It is common ground between the parties that the oil spillage was the result of deliberate acts by terrorist organisation, FARC.

Steyn J yesterday held on preliminary issues, including statute of limitation. Defendant contends that the two year limitation period provided by relevant Colombian law re Colombian group actions (‘Law 472’), applies to the claim. Parties agree that in substance, Colombian law is lex causae per A4 and A7 Rome II.

Claimants rely on two points of English law and one of Colombian law. First, they contend that the relevant Article of Law 472 is a procedural provision within the meaning of A1(3) Rome II, and therefore it falls outside the scope of Rome II. I believe they are right but the judge did not. Secondly, they refute the defendant’s contention that this action should be treated as a group action under Law 472. Thirdly, even if they are wrong on both those points, they submit that application of the time limit of Law 472 would be inconsistent with English public policy, and so the court should refuse to apply it pursuant to A26 Rome II.

All but one links to case-law in this post refer to my discussion of same on the blog, with pieces of course further linking to the judgment. Apologies for the pat on my own back but it is nice to see that all but one (Vilca, where parties essentially agreed on the Rome II issue) of the cases referred to in the judgment all feature on the blog.

For claimants, Alexander Layton KC referred to Wall v Mutuelle de Poitiers Assurances and Actavis UK Ltd & ors v Eli Lilly and Co (where the issues were discussed obiter). Defendants rely on Vilca v Xstrata Ltd [2018] EWHC 27 (QB), KMG International NV v Chen [2019] EWHC 2389 (Comm), Pandya v Intersalonika General Insurance Co SA [2020] EWHC 273 (QB), [2020] ILPr 44 and Johnson v Berentzen [2021] EWHC 1042 (QB).

My reception of the High Court’s conclusions in KMG, Pandya, and Johnson was not enthusiastic, and in my review of Pandya in particular I also suggest that the same scholarship relied on in this case, did not actually lend support to the  defendant’s arguments, and I stand by that, too.

Hence Steyn J’s conclusion [102] that Article 15 Rome II

contains a list of matters which are ‘in particular’ to fall under the designated law, irrespective of whether they would be classified as matters of substance or procedure

and [106]

that the provisions of article 15 of Rome II should be construed widely

in my view is wrong. (Note the linguistic analysis in [110] will be of interest to readers interested in authentic interpretation of multi-lingual statutes).

[109] The key question then is which Colombian limitation period applies to these English proceedings, which brings the judge to discuss [115] ff ia Iraqi Civilians v Ministry of Defence (No.2). Here the judge, after discussing Colombian law evidence, holds [137]

that this action has not been brought under Law 472, and it does not fall to be treated as if it had been brought as a Colombian group action. Therefore, this action is not time-barred pursuant to article 47 of Law 472.

Hence claimants lost the argument on Rome II’s procedural exception but won the argument on application of Colombian law.

[139] ff whether the limitation rule should be disapplied pursuant to A26 Rome II is discussed obiter and summarily, with reference of course to Begum v Maran which I discuss here. The judge holds A26’s high threshold would not be met.

Both parties have reason to appeal, and one wonders on which parts of Rome II, permission to appeal will be sought.

Geert.

EU Private International Law, 3rd ed. 2021, ia para 4.80.

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Suppipat v Siam Bank. Unsatisfactory discussion of legal advice privilege and lex fori.

Suppipat & Ors v Siam Commercial Bank Public Company Ltd & Ors [2022] EWHC 381 (Comm) repeats (and indeed refers to) the inadequate discussion of applicable law and privilege in PJSC Tatneft v Bogolyubov which I discuss here.

The application is for an order prohibiting respondents from using or deploying in these proceedings certain documents covered by legal professional privilege and/or containing confidential information, copies of which the respondents obtained pursuant to subpoenas in Thailand.

It is not in dispute apparently [26] and in any event Pelling J would have concluded that whether a document is capable of being privileged is a question to be determined as a matter of English conflicts law by the lex fori, which in this case is English law. That follows not undisputedly from the Rome Regulation which applies to the proceedings as either acquired or retained EU law (it is not clear when the claim form was issued).

The next question that arises is whether the Documents should be treated as privileged in this litigation notwithstanding that they have been obtained by the respondents lawfully by operation of an order of a court of competent jurisdiction in Thailand. This question is discussed as one of an alleged breach of an obligation of confidence (the subpoena in Thailand does not mean that the documents have entered the public domain) and the law that should apply to that obligation which both parties suggest must be discussed under Rome II. Thai law according to the defendants ([38-39] an unjust enrichment /restitution claim under Article 10; alternatively locus damni under the general rule of Article 4 with Thailand as the locus damni, it being the place of disclosure) , however claimants maintain that the issue is to be resolved applying English law for essentially all the reasons set out in the authorities deciding that English law applies to the question whether a particular document is privileged or not.

 

 

Pelling J [40] ff agrees with the claimants and holds that even if Rome II were to apply, both A16 Rome II’s overriding mandatory law rule and A26’s ordre public rule would trump Thai law given the robust nature of legal advice privilege in English law. That statement leads to an incorrect application of both Articles (for starters, A26 requires case-specific, not generic application).

The Rome II discussion cuts many corners and is certainly appealable. The judge’s views put the horse before the cart. Neither Article 16 nor Article 26 are meant to blow a proper Rome II analysis out off the water. Nor as I flagged, does the judgment do justice to the proper application of A16 and 26.

Geert.

EU Private International Law, 3rd ed. 2021, para 4.81.

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No horsing around. Den Bosch court of appeal on the non-recognition of US punitive damages.

Many thanks Haco van der Houven van Oordt for flagging an (anonymised) judgment by the Den Bosch Court of Appeal, in which it refused to recognise the punitive damages element of a US (Tennessee) judgment. Damages had been awarded after a horse trainer based in The Netherlands, who had been tasked to look after and train the horse of the US based claimant, had subsequently been tasked to sell the horse and in doing so hid part of the sale price from the owner. Half a million dollar was awarded, of which exactly half in punitive damages.

The judge follows the Gazprom criteria for recognition and enforcement in The Netherlands and only objected to the punitive damages element. A bid by claimants (heirs of the meanwhile deceased owner) to argue recoverability of a chunk of the punitive damages slice, arguing that it was compensation for lawyers’ fees in the US proceedings, failed: the Dutch held that costs compensation are not ordinarily part of the punitive element of the damages and that transcripts of the US judgment and proceedings certainly did not reveal any trace of that argument.

Not an extraordinary judgment. But an instructional one.

Geert.

 

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J v H Limited. Pikamae AG emphasises the ‘safety valve’ of disciplining fellow European judges’ incorrect decisions on the scope of application of EU private international law.

I am hoping to tackle some of the pre-Christmas queue this week, kicking off with the Opinion (no English version available) of Pikamae AG in C-568/20 J v H Limited. The case concerns the enforcement of a 2019 decision of the England & Wales High Court [I believe that judgment is Arab Jordan Investment Bank Plc & Anor v Sharbain [2019] EWHC 860 (Comm). The dates do not quite correspond (6 days of) but the amounts and line of argument do].

Clearly the UK were still a Member State at the time. The English decision was based, in turn, on two Jordanian judgments of 2013. It had rejected, on the basis of the English common law (judgments issued outside the EU are not subject to EU recognition and enforcement rules), the arguments against enforcement in the UK. The judge subsequently issued an Article 53 Brussels Ia certificate.

The issue is not whether a judgment merely confirming a non-EU judgment, may be covered by Article 53 Brussels Ia. CJEU Owens Bank has already held they cannot (see Handbook, 3rd ed. 2021, 2.573). The issue is rather whether, exequatur having been abandoned in Brussels Ia, arguments as to whether the judgment in the State of origin be at all covered by Brussels Ia, may be raised by way of an Article 45 objection to recognition and enforcement.

CJEU Diageo Brands, among others, has confirmed the narrow window for refusal of recognition on the basis of ordre public. The AG suggests wrong decisions on the scope of application of BIa, leading to incorrect A53 certificates, may fall within that category. Far from upsetting the principle of mutual trust, he suggests it is a necessary ‘safety valve’, a “soupape de sécurité » (40) which assist with said mutual trust. The AG qualifies the opinion by suggesting the issuing of an A53 certificate for a judgment that merely enforces an ex-EU judgment, is a grave error in the scope of application of the Regulation.

Should the CJEU confirm, discussion of course will ensue as to what are clear errors in the scope of application, or indeed in the very interpretation of Brussels Ia.

Geert.

EU Private International Law, 3rd ed 2021, Heading 2.2.17.1.

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Brussels IA arbitration exception claxon. Recognition of Spanish Prestige judgment in England & Wales. Res judicata issues concerning arbitration referred to the CJEU. Ordre public exceptions re Human Rights not upheld.

[pre-script: the case at the CJEU is known under number C-700/20]. Update 4 March 2022 Butcher J’s judgment referred to below eventually was given a neutral citation number, The London Steam-Ship Owners’ Mutual Insurance Association Ltd v The Kingdom of Spain [2020] EWHC 1920.

The London Steam-Ship Mutual Insurance Association Ltd v The Kingdom of Spain (M/T PRESTIGE) [2021] EWHC 1247 (Comm) has been in my blog in-tray for a little while: I had thought of using it for exam purposes but have now decided against that.

The case is the appeal against Cook J’s registration of the Spanish judgment in the Prestige disaster.  I have reported thrice before on the wider litigation – please use tag ‘Prestige’ in the search box.

References in the judgment are to Brussels I (44/2001), not its successor, Brussels Ia (1215/2012) however the  relevant provisions have not materially changed. Application is for recognition and enforcement of the Spanish Judgment to be refused,  and the Registration Order to be set aside for one or both of two main reasons, namely: (1) that the Spanish Judgment is irreconcilable with a 2013 Hamblen J order, upheld on Appeal,  enforcing the  relevant Spanish award (A34(3) BI), and (2) that recognition would entail a manifest breach of English public policy in respect of (a) the rule of res judicata and/or (b) human and fundamental rights (A34(1) BI).

Butcher J referred the first issue to the CJEU on 18 December 2020 – just before the Brexit deadline. I have not been able to obtain a copy of that judgment – the judge merely refers to it in current one. The CJEU reference, now known as Case C-700/20, is quite exciting for anyone interested in the relationship between arbitration and the Brussels regime. Questions referred, are

1) Given the nature of the issues which the national court is required to determine in deciding whether to enter judgment in the terms of an award under Section 66 of the Arbitration Act 1996, is a judgment granted pursuant to that provision capable of constituting a relevant ‘judgment’ of the Member State in which recognition is sought for the purposes of Article 34(3) of EC Regulation No 44/2001?

(2) Given that a judgment entered in the terms of an award, such as a judgment under Section 66 of the Arbitration Act 1996, is a judgment falling outside the material scope of Regulation No 44/2001 by reason of the Article 1(2)(d) arbitration exception, is such a judgment capable of constituting a relevant ‘judgment’ of the Member State in which recognition is sought for the purposes of Article 34(3) of the Regulation?

(3) On the hypothesis that Article 34(3) of Regulation No 44/2001 does not apply, if recognition and enforcement of a judgment of another Member State would be contrary to domestic public policy on the grounds that it would violate the principle of res judicata by reason of a prior domestic arbitration award or a prior judgment entered in the terms of the award granted by the court of the Member State in which recognition is sought, is it permissible to rely on Article 34(1) of Regulation No 44/2001 as a ground of refusing recognition or enforcement or do Articles 34(3) and (4) of the Regulation provide the exhaustive grounds by which res judicata and/or irreconcilability can prevent recognition and enforcement of a Regulation judgment?

These are exciting questions both on the arbitration exception and on the res judicata refusal for recognition and enforcement. They bring into focus the aftermath of CJEU West Tankers in which the status of the High Court confirmation of the English award was also an issue.

The Club’s argument that recognition would be contrary to English public policy because the Spanish Judgment involved a breach of human and fundamental rights was not referred to the CJEU. Discussion  here involves ia CJEU Diageo. Suggested breaches, are A 14(5) ICCPR; breach of fundamental rights in the Master being convicted on the basis of new factual findings made by the Supreme Court; inequality of arms; and; A1P1.

There is little point in rehashing the analysis made by Butcher J: conclusion at any rate is that all grounds fail.

That CJEU case is one to look out for!

Geert.

EU Private International Law, 3rd ed 2021, 2.84 ff, 2.590 ff.

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KCA Deutag throws contractual commitment not to oppose into the scheme of arrangement jurisdictional mix.

KCA Deutag UK Finance PLC, Re (In the Matter of the Companies Act 2006) [2020] EWHC 2977 (Ch) is in most part a classic scheme of arrangement sanctioning hearing, with the scheme proposed by a UK-incorporated company with COMI undisputedly there, too. See a range of posts on the blog for the classic jurisdictional analysis.

What is slightly out of the ordinary is the contractual commitment by the creditors not to oppose the scheme in foreign jurisdictions.  Snowden J, at 33:

In this case, two things give me that comfort. The first is that there was an overwhelming vote by Scheme Creditors in favour, and a very large number of such creditors entered into a lock-up agreement which bound them contractually to support the Scheme and not to do anything to undermine it. It is very difficult to see how such creditors who contractually agreed to support the Scheme and/or who voted in favour could possibly be allowed to take action contrary to the Scheme in any foreign jurisdiction, and the number and financial interests of those who did not vote in favour is comparatively very small indeed. That alone is sufficient to demonstrate to me that the Scheme is likely to have a substantial international effect and that I would not be acting in vain if I were to sanction it.

I would intuitively have felt quite the opposite, although detail is lacking (e.g. was the commitment given as a blank cheque before the details of the scheme were known): such contractual commitment even if valid under (presumably; no details are given) English law as the lex contractus of the commitment, could serve to undermine international effectiveness. For I would not be surprised if creative counsel on the continent could find a range of laws of lois de police or ordre public character, to try and object to contractual commitment to sign away the right to oppose.

Geert.

(Handbook of) EU Private International Law, 2nd edition 2016, Chapter 2, Chapter 5. Third edition forthcoming February 2021.

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The French Supreme Court confirms English law denial of adopted’s right to confirm simultaneous descent from adopted parents and biological father.

A quick note for archival purposes on the French Supreme Court judgment earlier this month in which it upheld the lower courts’ decision (which had been reversed upon appeal) that European Convention rights do not trump the impossibility under English law, which is the law under which the claimant had been adopted, for the adopted to confirm descent from both the adopted parents and the biological father.

It is important to keep in mind the specific circumstances of the case in which the Supreme Court let the stability of family relations prevail over ECHR rights. The adoption went back to 1966 (the UK birth to 1958). The true identity of the father seemingly had always been known to the applicant. The mother (1963) and the suspected biological father (2011)  have passed away, the real issue would seem to be inheritance related.

Geert.