Posts Tagged Recognition and enforcement
Liberato: violation of lis alibi pendens rules does not justify refusal of enforcement on grounds of ordre public.
I reviewed Bot AG’s Opinion in C-386/17 Liberato here. The Court confirmed last week. Whether lis alibi pendens applies, entails applying jurisdictional rules (in essence an assessment as to whether parties are the same etc.). Except in the very rare cases of (now) Article 45 1(e) Brussels I Recast, infringement of jurisdictional rules does not feature among the reasons for refusal of recognition. Alleged infringement of the lis alibi pendens rule does not therefore qualify as ordre public.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 188.8.131.52.3, 184.108.40.206.4.
SAS Institute v World Programming. Ordre Public, res judicata, fraus and (European) statute conspire against enforcement.
SAS Institute Inc v World Programming Limited  EWHC 3452 (Comm) is a rare example of refusal by an English court of enforcement of a US judgment. 20 Essex Street have excellent analysis here and I am happy generally to refer.
The outcome of English Proceedings was that WPL defeated SAS’ claims regarding software licence and copyright infringements, with an important role played by the European software Directive as applied by the CJEU in Case C-406/10 upon preliminary reference in the very case.
Meanwhile SAS had commenced concurrent proceedings in the US. WPL initially objected to the US Proceedings on forum non conveniens and other jurisdictional grounds. These objections were later withdrawn and WPL submitted to the jurisdiction of the US District Court and participated in the process before it. Judgment was awarded against it. SAS curtailed its claim of enforcement to as to increase chances of success: it only seeks to enforce the US Judgment in England insofar as it is for compensatory damages based on WPL’s fraud (an issue which was litigated in the US but not in the UK); it does not seek to enforce the breach of contract claim or that part of the US Judgment which awarded multiple damages.
At 35-36 Cockerill J summarises the law: ‘There are three strands of potential preclusion: cause of action estoppel (not live here) issue estoppel and Henderson v Henderson abuse of process. As Lord Sumption observed in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd  UKSC 46,  AC 160 at p.180H at :
“…the policy underlying all of the…[res judicata] principles…” is “…the more general procedural rule against abusive proceedings…”.
The different doctrines therefore have different requirements, but they shoot at the same target – that of ensuring that nobody should be vexed twice in respect of one and the same cause: “nemo debet bis vexari pro una et eadem causa“: as it was put by Lord Diplock in Vervaeke v Smith  AC 145 at p.160A-B, G. A more modern version was given by Lord Bingham in Johnson v Gore Wood  2 AC 1 at p.31A-B in the context of the Henderson doctrine:
“Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole.” ‘
Issue estoppel per Dicey (referred to by Cockerill J) at paragraph 14-156 means that a “foreign judgment will not be recognised if it is inconsistent with a previous decision of a competent English court in proceedings between the same parties“. Akin therefore in residual English private international law (EU law is not engaged, the judgment having been issued ex-EU) to Brussels I Recast’s Article 45(1)c ‘s rule.
The fundamental point is that issue estoppel bars relitigation not of all issues, but only of issues determined as an essential part of the cause of action (at 40). The Henderson principle is concerned with protecting the integrity of the cause of action and issue estoppel defences and preventing them from being deliberately or inadvertently circumvented by a party which did not advance an argument in England which would otherwise have created such an estoppel (at 47).
This is the core of the abuse investigation and this formulated one can see why it is a difficult test to apply.
At 55: ‘There are two issues: was the Fraud claim “parasitic” on the breach of contract claim and the related question of whether the Fraud claim was a separate, distinct and independent cause of action. Both of these really go to the question of whether there is sufficient identity of issue.’ At 73 Cockerill J concludes that there was such abuse: ‘Ultimately, I have come to the conclusion that the existence of the terms of the contract was a fundamental building block for the Fraud Claim and that without it that claim – as it was formulated in the US – could not have been run. The essence of the case in the US Proceedings related to alleged fraudulent representations concerning its “present intention to comply with those terms”. It was fundamental to the claim that WPL “had no intention of abiding by those terms“. It was inherent in that case that those terms did exist; and yet the courts of this country had already held that those terms did not exist.’
Obiter, at 156 ff, Cockerill J adds that enforcement would also have been refused for reasons of the public policy embodied in the Software Directive. Authority in the arbitration context was referred to to pro inspiratio, including CJEU authority C-168/05 Mostaza Claro and C-126/97 Eco Swiss (at 163). At 179: ‘The fundamental problem for SAS is that the Directive plainly envisages the rendering null and void of provisions such as those on which SAS wants to rely, indeed that is explicitly the policy enunciated in the case-law and yet SAS’s fraud case is dependent upon those terms’ existence. The effect of the Directive is, as I have indicated above, to make SAS’s fraud claim (as formulated) impossible to express. It is therefore unrealistic to analyse the matter as the Directive “authorising frauds“.’ And at 184: ‘It is clear that the Software Directive gives expression to two important public policy objectives of preventing the monopolisation of ideas and promoting competition and consumer welfare.’
A very lengthy judgment which merits full reading.
Kraft Foods v Bega Cheese  FCA 549 was signalled to me by Michael Mitchell back in early May – now seems a good opportunity briefly to report on it. The Federal Court of Australia issued an anti-arbitration injunction to restrain a multinational food conglomerate from pursuing arbitration in New York. Kraft had pursued litigation in Australia which not only sought to restrain the respondent from certain radio and television advertising, but also sought final relief including damages.
Parties had agreed to mediate and arbitrate under the dispute resolution provisions of a Master Agreement for licensing of IP. Bega had acquired certain rights from Mondelez (a company in the Kraft group), including certain trademark rights that Kraft had licensed to Mondelez pursuant to the Master Agreement.
Of interest to the blog is the myriad number of issues that led the Court to issue the injunction, among others the fact that what was sought included interim relief, the position of which when it comes to enforcement is not entirely clear in the New York Convention. Throw intellectual property, mediation as well as arbitration, common law doctrine principles such as the Aldi rule in the mix, and the jurisdictional soup becomes quite attractive as well as complex. Precisely why intellectual property is hotly debated in the Hague Judgments project and likely to be excluded from it.
That latter brings me to the second part of the blog title: the HCCH have issued a Revised Draft Explanatory Report, and a document on the possible exclusion of anti-trust matters from the Convention as reflected in Article 2(1)(p) of the 2018 draft Convention. Both signal the continuing difficulty of the roll-out of the Hague Process, as well as continued intent to let the train roll into its end destination; although one wonders how many wagons will have been left behind en route.
(Handbook of) EU Private International Law, 2nd ed. 2016. Chapter 2.
Bot AG in Liberato: violation of lis alibi pendens rules does not justify refusal of enforcement on grounds of ordre public.
Advocate-General Bot opined on 6 September in C-386/17 Liberato. (Not as yet available in English). The case is slightly complicated by the application of not just former Regulation 44/2001 (Brussels I) but indeed a jurisdictional rule in it (5(2)) on maintenance obligations, which even in Brussels I had been scrapped following the introduction of the Brussels IIa Regulation.
The Opinion is perhaps slightly more lengthy than warranted. Given both the Brussels I and now the Brussels I Recast specific provisions on refusal of recognition and enforcement, it is no surprise that the AG should advise that a wong application by a court of a Member State (here: Romania) of the lis alibi pendens rules, does not justify refusal of recognition by other courts in the EU: the lis alibi pendens rules do not feature in the very limited list of possible reasons for refusal (which at the jurisdictional level lists only the protected categories, and the exclusive jurisdictional rules of Article 24), and it was already clear that misapplication of jurisdictional rules do not qualify for the ordre public exception.
It would not hurt having the CJEU confirm same.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11.3, 18.104.22.168.4.
Reminiscent of the decision in Yukos v Tomskneft, which concerned recognition of an arbitral award in Ireland even though there were no relevant assets to exercise enforcement against, the Irish Court of Appeal earlier this year in  IECA 46 Albaniabeg v Enel upheld  IEHC 139 Albaniabeg Ambient Sh.p.k. -v- Enel S.p.A. & Anor . (See my tweet below at the time – the case got stuck in my blog queue).
Thank you to Julie Murphy-O’Connor, and Gearóid Carey for flagging the case earlier in the year. The High Court had refused to grant plaintiff, Albaniabeg, liberty to serve out of the jurisdiction to seek to enforce a judgment of an Albanian court in Ireland against the two defendants, ENEL S.p.A. and ENEL Power S.p.A. (“ENEL”). The judgment therefore is ex-EU.
Enforcement proceedings were commenced in New York, The Netherlands, Luxembourg, France and Ireland in relation to the Judgment. [I have not been able to locate outcome in those cases]. Notably no enforcement proceedings were brought in Italy. Presumably plaintiff’s motif is to obtain enforcement in one Member State, to ease the enforcement paths in other Member States (including Italy).
McDermott J at the High Court refused the application on the basis that the defendants had no assets within the jurisdiction and were not likely to have such assets in the near future. As the judge concluded that the plaintiff did not stand to gain any practical benefits if enforcement proceedings were to be commenced within this jurisdiction, he refused to grant them leave to serve such proceedings out of the jurisdiction on the defendants.
Hogan J at the Court of Appeal upheld. At 59 he notes ‘I should state in passing that it was not suggested that if an Irish court were to grant an order providing for the recognition or enforcement under own rules of private international law of the Albanian judgment, this then would be a “judgment” for the purposes of Article 2(a) of the Brussels Regulation (recast) which could then be enforced in other Member States under the simplified enforcement procedure provided for by Chapter III of that Regulation. As this point was not argued before us, it is not necessary to express any view on it.‘
In my Handbook I suggest such order is not a ‘judgment’ within the meaning of the Brussels I Recast Regulation.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 22.214.171.124.1.
Belgian constitutional court’s ruling on vulture funds fails properly to answer arguments on the basis of EU law.
I have reported earlier on the action of MNL Capital against the 2015 Belgian Vulture Fund Act (my EN translation here), on which I have a paper here. I then reported on a related action (where MNL were joined by Yukos).
At the end of May the Belgian Constitutional Court, ruling 61/2018, rejected an MNL challenge to the Act, which was based inter alia on an alleged infringement of the Brussels I Recast Regulation: at A.23.2: MNL argued that Belgium cannot across the board reject vulture funds activities (I agree) based on an absolute ordre public argument against them: MNL suggested this entails a one-sided reading of ordre public in favour of foreign entities refusing to honour their debt.
Due in large part to the peculiarities of constitutional review in Belgium, the Court at B.15.4 looked at the argument purely from a non-discrimination point of view: creditors who have obtained a foreign judgment against a State are no better or worse off than those having obtained such ruling from a Belgian court.
In essence therefore the arguments on the basis of EU law are left entirely unanswered.
(Handbook of) EU Private International Law, Chapter 2, Heading 2.2.16, Heading 126.96.36.199.4.