Posts Tagged Procedure
Comparative conflict of laws is often a useful source for exam (essay) questions. I used People of State of New York v. PriceWaterhouseCoopers, LLP, No. 3685N (N.Y. App. Div. May 23, 2017) to ask my students to surmise how an EU-base court would judge the issue raised.
Keith Goldberg over at LAw360 has the following great summary:
A New York appellate court [.. ] upheld a decision to force ExxonMobil’s outside auditor PricewaterhouseCoopers LLP to comply with New York Attorney General Eric Schneiderman’s demand for documents in his probe of whether the oil giant lied to investors about the climate change risks to its business.
The Appellate Division backed state Supreme Court Judge Barry Ostrager’s Nov. 26 order that PwC turn over documents related to its audit of Exxon subpoenaed by Schneiderman, saying the judge correctly held that New York law, not the law of Texas, where Exxon is headquartered, applies to questions of evidentiary privilege and that the Empire State doesn’t recognize accountant-client privilege.
Mr Ostrager’s decision is here – it has more choice of law considerations than the appelate court’s order. Eversheds have excellent analysis here of the overall issue of considering applicable law for privilege under the first and second restatement of the law. In the case at issue, ExxonMobil as well as the documents disclosure of which is sought (such as projected carbon costs and their application to Exxon’s capital allocation decisions, as well as documents provided to Exxon by PwC concerning the auditor’s role in compiling Exxon’s submissions about greenhouse gas emissions for the Carbon Disclosure Project, a nonprofit that collects information on greenhouse gas emissions) are based at Texas. But the trial is underway in New York.
Now, to the essay Q: how would an EU-based court hold on the issue? (For the purpose of last week’s exam I had a Belgian court rule on the issue, with the oil company based at Belgium, and the accountant at England, with the agreement between company and accountants subject to English law.
I am marking these exams later this week and hope to read some or all of the following: reference to overall principle that procedure is subject to lex fori; that statement being of little use in a system (like the EU) that thrives on predictability: for what is procedure to one, is substantive law to another; arguments existing both pro this being procedure (closely tied up with evidence, clear links with public policy) as well as substantive (privilege despite its public nature also protecting private, including commercial interest; parties wishing to manage the issue of sensitive information and forum); need for autonomous interpretation and tendency within the EU to define the ‘scope of the law applicable’ (eg both in Rome I and II); no trace in said Regulations of privilege being included in the scope of law applicable.
As always, I am hoping for students to surprise me. Undoubtedly they will.
Golden Endurance v RMA,  EWHC 2110 (Comm), illustrates the attraction of having a unified approach to submission (to jurisdiction), otherwise known as voluntary appearance. In current case, the judgment that needs to be recognised is ex-EU (Moroccan) hence the Brussels I Recast does not apply: English law does. This is in fact exactly why The Hague is working hard at its ‘Judgments’ Convention – not an easy project in my view. As helpfully summarised by Sam Goodman, the court held that a Moroccan judgment would not be recognised in England because the claimant had not submitted to the jurisdiction of the Moroccan court. Although the claimant had appeared in the Moroccan proceedings, it had done so in order to ask the court to stay the Moroccan proceedings in favour of arbitration and had only engaged with the merits as it was obliged to do so under Moroccan law.
Of note is that Phillips J points out that under the relevant English statutory rules, the question arises as to when defending a case on its merits, at the same time as contesting jurisdiction, submission applies: a scenario for which the Brussels I Recast provides specifically in Article 26. An English court does not for this exercise rely on civil procedure rules in the country of origin of the judgment: this surely makes sense for otherwise it would encourage forum shopping by unscrupulous claimants. Instead, whether one has submitted is ‘a question of mixed law and fact’ (at 46) which in this case was decided in favour of the claimant in the English court, ‘the claimant, having requested the dismissal of the claim in Morocco in favour of arbitration proceedings and having done so continually and as its primary response, did not voluntarily appear in the Moroccan courts’ (at 47).(The remainder of the judgment relates to transport law: the ‘Hague Rules’).
(Handbook of) EU private international law, Chapter 2, Heading 2.2.7.
The UKSC in MOD v Iraqi Civilians: Immunity of coalition forces is procedural. Civilians’ claim in tort is time-barred.
Ministry of Defence [MOD] v Iraqi civilians highlights a classic in private international law (statutes of limitation), with an interesting link to State immunity. Procedural issues are considered to be part of the lex fori. Meaning, a court always applies its own procedural rules. For the discussions in the Rome II context, see an earlier posting. However what is less settled is whether statutes of limitation fall under procedure or substantial law. If the former, then they follow the lex fori. If the latter, then they follow lex causae: the law applicable to the substantive matter at issue.
Limitation, which deprives the litigant of a forensic remedy but does not extinguish his right, was traditionally classified by the English courts as procedural. The result was that until the position was altered by statute in 1984, the English courts disregarded foreign limitation law and applied the English statutes of limitation irrespective of the lex causae. This was widely regarded as unsatisfactory, mainly because of the rather technical character of the distinction on which it was based between barring the remedy and extinguishing the right.
The Foreign Limitation Periods Act 1984 changed the position and provided for the English courts, with limited exceptions, to apply the limitation rules of the lex causae.
Now, in MOD v Iraqi Civilians, on appeal from  EWCA Civ 1241, the civilians claim to have suffered unlawful detention and/or physical maltreatment at the hands of British armed forces in Iraq between 2003 and 2009, for which the MOD is liable in tort. It is agreed between the parties that any liability of the Ministry in tort is governed by Iraqi law. Under article 232 of the Civil Code of Iraq, the standard limitation period applicable to claims of this kind in Iraqi law is three years from the day on which the claimant became aware of the injury and of the person who caused it. The action sub judice was begun more than three years after most of the claimants must have been aware of these matters.
However, Coalition Provisional Authority Order 17, which had and still has the force of law in Iraq, made it impossible for claimants to sue the British government in Iraq. Section 2(1) of the Order provides that coalition forces in Iraq (including British forces) are “immune from Iraqi legal process.” Claimants argue that Order 17 needs to be seen as an ‘impediment’ within the meaning of article 435 of the Iraqi Civil Code, which is one of a number of provisions suspending the running of time in particular cases. It provides:
” Article 435 – (1) The time limit barring the hearing of the case is suspended by a lawful excuse such as where the plaintiff is a minor or interdicted and has no guardian or is absent in a remote foreign country, or where the case is between spouses or ascendants and descendants, or if there is another impediment rendering it impossible for the plaintiff to claim his right.
(2) The period which lapses while the excuse still exists (lasts) shall not be taken into account (for the running of the time limitation).”
Lord Sumption leading, held (at 11) that Order 17 is not a rule of limitation, but a particular form of state immunity, which serves as a limitation on the jurisdiction of the courts. It is therefore necessarily procedural and local in nature. It is not legally relevant, given the claimants have brought proceedings in England, what impediments might have prevented similar proceedings in Iraq [at 13]. Claimants could have always and did eventually sue in the UK. Claimants’ submission, if accepted, would mean that there was no limitation period at all affecting the present proceedings in England, by reason of a consideration (CPA Order 17) which had no relevance to English proceedings because it has no application outside Iraq and has never impeded resort to the English court (at 16).
The Appeal was dismissed. In the wider context of immunity, it is important precedent. Claimants faced with immunity obstacles to litigation in a jurisdiction, must not hesitate to start proceedings elsewhere, where no such obstacles exist. In proceedings before the English courts, any delay in doing so is subject to the ordinary limitation periods of the lex causae.
As readers will be aware, the Rome II Regulation on the law applicable to non-contractual obligations, harmonises Member States’ governing law rules on non-contractual obligations (not entirely accurately known in short as ‘tort’). Article 15 clarifies that the scope of the law applicable is very wide, and indeed includes matters which may otherwise be considered to be procedural (hence subject to lex fori): I explained this mechanism in my posting on Wall. Syred V PZU again concerns Article 15(c) Rome II:
Article 15. Scope of the law applicable
The law applicable to non-contractual obligations under this Regulation shall govern in particular:
…(c) the existence, the nature and the assessment of damage or the remedy claimed;…
The case concerns contributory negligence and quantum of this claim by Mr Syred for injury loss and damage suffered in consequence of a road traffic accident in Poland on 10 February 2010. He and his then girlfriend Kate Cieslar were rear seat passengers in a Fiat Punto, driven by her brother Mr Michal Cieslar, which was involved in a collision with a BMW, being driven by Mr Waclaw Bednorz. The collision caused Mr Syred to be ejected from the Fiat and in consequence to suffer serious injuries, in particular to his brain. He has no memory of the accident. Judgment on primary liability against the Defendants was entered by consent in the two actions on 25 September 2012 and 1 July 2014. Ms Cieslar’s claim in respect of her injuries has been settled.
There is no dispute between the experts for the defence and the plaintiff that a rear seat passenger who fails to wear a seat belt is at fault and negligent for the purpose of the passenger’s civil claims for compensation under Polish law. The experts also agree that the next question in Polish law is whether such negligence caused the injuries or made them worse. They also agree that Polish law in respect of damages for non-pecuniary loss (i.e. the equivalent of general damages for pain and suffering) provides no fixed scales or guidelines relevant to the case and that the judge should seek to assess a reasonable sum taking into account the injuries suffered by the claimant and all the circumstances of the case. Common practice of the Polish civil courts, it was said, is to calculate the non-pecuniary element on the basis of a 2002 table contained in the Ordinance of the Minister of Labour and Social Policy. The Supreme Court of Poland had criticised this practice in civil courts, as too slavish to a social insurance scheme.
In Wall, the CA held that the word ‘law’ in Article 15 of Rome II should be construed broadly and includes practice, conventions and guidelines; so that the assessment of damages should be on that basis. That, Soole J notes here, leaves the question of what the English Court should do if the evidence shows that the foreign courts continue to follow a particular practice despite criticism from the Supreme Court of that country. It is noticeable that the High Court does not wish to impose a precedent rule where there is none (Poland following civil law tradition). However it would be equally impertinent to ignore the criticism of that Supreme Court, that the 2002 table must not be slavishly followed. Soole J therefore ends up taking guidance from the 2002 table, without slavishly following it.
What remains to be seen (as also noted by Matthew Chapman, who alerted me to the case) is whether the High Court may now serve as inspiration for the Polish court. Precedent outsourcing, as it were.
European private international law, second ed. 2016, Chapter 4, Heading 4.8
Happy days!: ‘closest and most real connection’ for identifying lex contractus. Ontario CA in Lilydale v Meyn.
Lilydale v Meyn at the Ontario Court of Appeal (held April 2015 but only reaching me now – thank you to Michael Shafler and colleagues for flagging) is a useful reminder of the common law approach to determining lex contractus in the absence of choice of law. (Here of course an inter-State conflicts issue between Ontario and Alberta). Laskin JA refers in support to english precedent, summarised in quoted passage of Cheshire’s Private International Law:
The court must take into account, for instance, the following matters: the domicil and even the residence of the parties; the national character of a corporation and the place where its principal place of business is situated; the place where the contract is made and the place where it is to be performed; the style in which the contract is drafted, as, for instance, whether the language is appropriate to one system of law, but inappropriate to another; the fact that a certain stipulation is valid under one law but void under another … the economic connexion of the contract with some other transaction … the nature of the subject matter or its situs; the head office of an insurance company, whose activities range over many countries; and, in short, any other fact which serves to localize the contract.
The motion judge’s findings on the relevant criteria were held to be reasonable, as was her overall conclusion that the closest and most real connection to the contract was Ontario.
The case is an interesting reminder of what in the Rome I Regulation is now the final resort, should none of the relevant presumptions in Article 4 apply.
An interesting point in the judgment is the main reason why parties prefer one law over the other: at 3: ‘The issue is important because Alberta and Ontario have different ultimate limitation periods. Even taking into account discoverability, Alberta’s ultimate limitation period is 10 years; Ontario’s is 15 years. The parties agreed that Lilydale’s cause of action arose no later than August 31, 1994. Therefore, as Lilydale did not sue until January 2006, if Alberta law applied, its action was statute-barred; if Ontario law applied, it was not.’
Aren’t statutes of limitation under Canadian conflict of laws, covered by lex fori, as procedural issues, and not, as is seemingly accepted here, lex causae?
Postscript for an example of where Article 4(2)m, lex fori concursus for rules relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors, applies without correction, see C-594/14 Kornhaas.
This post has been some time in the making, notwithstanding my promise to have it up soon. Let’s just say I got distracted. The wide interest in Lutz, Case C-557/13, illustrates the increasing relevance of the actio pauliana in protecting creditors from their debtor’s insolvency. The core underlying issue for Lutz is that, in the absence of considerable capital in companies (arguably a direct result indeed of the regulatory competition in Member States’ corporate law following the ECJ’s case-law on freedom of establishment), civil law mechanisms have become more relevant than classic recourse to companies’ liability. If one relies on more classic modes of securitisation, one may want to have more predictability in what law will apply to those securitised agreements. That is where the Insolvency Regulation comes in, in providing for a mechanism which allows parties to indeed give parties the freedom to choose applicable law for the relevant agreements. Article 4(2)m of the Insolvency Regulation (in the new Regulation this is Article 7(m) – unchanged) makes the lex concursus applicable in principle: lex concursus applies to ‘(m) the rules relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors.’ However Article 13 (16 new – unchanged) insulates a set of agreements from the pauliana: ‘Article 4(2)(m) shall not apply where the person who benefited from an act detrimental to all the creditors provides proof that: – the said act is subject to the law of a Member State other than that of the State of the opening of proceedings, and – that law does not allow any means of challenging that act in the relevant case.’ The crucial consideration in Lutz was whether the absence of means of challenge in the lex causae, relates to substantive law only, or also to procedural law. Randi summarise the time-line and relevant distinction in German and Austrian law as follows:
- “17 Mar 2008-Austrian court issues an enforceable payment order in favour of Mr Lutz against the debtor company
- 18 April 2008-debtor files application for German insolvency proceedings
- 20 May 2008-attachment of three Austrian bank accounts of the company
- 4 August 2008-German insolvency proceedings opened (as main proceedings) in respect of the company
- 17 Mar 2009-Austrian bank pays monies to Mr Lutz
Under German law, any enforcement of security over the debtor’s assets during the month preceding the lodging of the application to open proceedings is legally invalid once proceedings are opened. Under Austrian law, an action to set aside a transaction must be brought within one year after the opening of proceedings, failing which it becomes time-barred. By contrast, the limitation period under German law is three years. Although the attachment order was granted before the application to open main proceedings was filed, the actual attachment itself took place after that filing and the subsequent payment of monies by the bank took place after main proceedings were opened in Germany. Mr Lutz argued that art 13 applied and that the payment could no longer be challenged by the German liquidator under Austrian law as the one-year limitation period had expired.” (Randi also have good review of the questions in Lutz relating to rights in rem and Article 5, triggered in the case at issue by the attachments of bank accounts). Essentially, the Court expresses sympathy for the cover of procedural limits to fighting detrimental acts to be determined by the lex causae. (It dismissed any relevance of Article 12(1)d of Rome I Regulation, which provides that prescription and limitation of actions are governed by ‘the law applicable to a contract’: for the Insolvency Regulation is most definitely lex specialis). However leaving the matter up to the lex causae would cause differentiated application of the Insolvency Regulation across the Member States. Consequently the ECJ opts for autonomous interpretation, ruling (at 49) that Article 13 of Regulation No 1346/2000 must be interpreted as meaning that the defence which it establishes also applies to limitation periods or other time-bars relating to actions to set aside transactions under the lex causae.’ The ECJ’s judgment essentially confirms the EFTA Court’s views on the similar proviso in Directive 2001/24 on the winding-up of credit institutions (Lbi hf v Merrill Lynch). A pity the ECJ did not refer to that finding. Geert.
Granted, only Monday mornings arguably may excuse such lame pun in a blog’s posting. However the slightly lousy title should not take away from the relevance of Celtic Salmon v Aller Acqua in which the Irish High Court partially refused recognition of a Danish judgment.
Hogan J summarised the issue as follows: Where a defendant in foreign proceedings governed by the Brussels Regulation (Council Regulation No. 44/2001 EC) fails to advance and maintain a counter-claim for damages for (sic) in those proceedings, is that party then barred by the doctrine of res judicata or by the provisions of the Brussels Regulation itself from re-litigating that counterclaim for damages for breach of contract and negligence in existing proceedings in this jurisdiction where it sues as plaintiff?
Celtic Salmon used Aller Ireland, the Irish subsidiary, as anchor defendant. The mother company, Aller Denmark, was duly joined to the proceedings. Vets, commissioned by Celtic Atlantic, had established a deficiency in the feed supplied by Aller Denmark. The dispute between the parties then started with a letter sent by Celtic Atlantic in July, 2008 claiming damages for the (allegedly) defective fish feed. Aller Denmark responded by denying liability, but also claimed for unpaid invoices in respect of the fish feed. In November 2008, aller Denmark fired the first shot in litigation, suing in Denmark. There were two separate claims. First, Aller Denmark claimed in respect of certain unpaid invoices for the fish feed (“claim 1”). (It also reserved its position to make further claims in this regard. The claim taken forward only related to a fraction of the feed actually supplied). Second, it sought an order that “Celtic be ordered to admit that the delivered feed on which Aller Acqua’s claim is based is in conformity with the contract.” (“claim 2”).
Celtic’s Irish solicitors, according to the judgment, advised that it would be unwise to bring a counter-claim in the Danish proceedings, because to do so “would preclude us from bringing proceedings in Ireland for damages for breach of contract.” In May 2009, Irish proceedings were brought by Celtic. These amounted to a claim for damages for negligence and breach of contract by reason of the allegedly defective nature of the fish feed.
The Danish courts accepted jurisdiction on the basis of Article 5 based upon (whether this had been agreed was disputed between parties) delivery (incoterm) ex works /ex factory. This is the point were procedural difficulties started (hence the relevance of lexi fori). The reports earlier commissioned by Celtic, turned out not to be admissible (or at the very least would be regarded with suspicion) by the Danish courts given that under Danish civil procedure, the court appoints its own experts. However at the time this would have been carried forward, both fish and fish feed were no longer. Celtic Atlantic elected not to pursue the counterclaim in respect of the defective feed, and reserved the right to do so at a later date (without specific reference to Danish or Irish courts).
The Danish court eventually sided with Aller in respect of two claims: claim 1 for debt in respect of the two unpaid invoices in the sum €58,655 plus interest. Claim 2” that “Celtic [Atlantic] be ordered to admit that the delivered feed on which Aller [Denmark]’s claim is based is in conformity with the contract. There was subsequently discussion among Danish experts in the Irish courts, whether the Danish judgment was in default of appearance, given the absence of defence against at least part of it.
The question now sub judice was the fate of the Irish proceedings, Hogan J justifiably concluded that Article 27 JR (the lis alibi pendens rule) no longer had any relevance, given that the Danish proceedings had come to an end. Rather, whether Celtic’s claims in the Irish courts were the same as those entertained in Denmark (and hence continuing them in Ireland, per se abusive, ia given comity) and /or whether Aller could waive the Danish judgment in defence of the Irish claims. The latter would imply recognition of the Danish judgment.
[The High court carries out a review of the Danish court’s jurisdiction under Article 5(1) and 3, with reference as for the latter inter alia to Folien Fischer however in doing so I would argue it surpassed its brief: other than for exclusive jurisdictional rules, under the current Brussels I regime, there is no room for other courts to second-guess the application of the Regulation by other courts].
Article 34(1) of the Brussels Regulation provides that “A judgment shall not be recognised: 1. If such recognition is manifestly contrary to public policy in the Member State in which recognition is sought…..” Hogan J emphasises procedural rights per Krombach, and the Charter, and concludes that by reason of the manner in which the Danish Administration of Justice Act operated in this case, the effective procedural rights of Celtic Atlantic were violated so far as claim 2 is concerned. He insisted that (only) on ‘the special and particular facts of this case, the existence and operation of the Danish law operated (…) as an “insuperable” procedural obstacle which barred the effective prosecution of its claim.’ (at 124).
A considerate judgment and one which, if only because of its rarity and the insight it offers into procedural and tactical considerations in entertaining, or not, counterclaims, stands out in national case-law on the Brussels I- Regulation.