Posts Tagged Recognition
Merinson v Yukos: Dutch settlement following employment contract. Appeal denied. England has full jurisdiction as domicile of the defendant.
In  EWCA Civ 830 the Court of Appeal has dismissed the appeal against Yukos v Merinson which I reviewed here – review which readers may need to appreciate the judgment. Three issues were considered by Gross LJ at the Court of Appeal:
1. Are the Damages Claims and/or the Annulment Claims “matters relating to [an] individual contract of employment” within the meaning of Article 20(1)?>>>Salter DJ’s answer at the High Court was YES. I suggested in my review that that finding should not have been made without considering the lex causae of the employment contract: Rome I in my view should have been engaged here. Both Salter DJ and Gross LJ (at 27 ff) were persuaded however by the highly material nexus between the annulment claims – whether considered together with or separately form the damages claims (Gross LJ distinguished Aspen Underwriting in the process).
2. If so, is the Settlement Agreement “an agreement .. entered into after the dispute has arisen” within the meaning of Article 23(1)?>>>Salter DJ’s answer was negative, on the basis of extensive reference to the Jenard Report and Convention and Regulation scholarship. Gross LJ agrees – I continue to find that conclusion unconvincing.
3. Further, is the English court, in any event, precluded from entertaining the Annulment Claims by Chapter IV of the Recast Judgments Regulation? >>>Here the Court of Appeal made the High Court’s reasoning its own, much more succinctly than its entertaining of the other questions.
Plenty to discuss here for the 3rd ed of the Handbook.
Bitcoin online resolution award refused recognition and enforcement at Amsterdam (ordre public exception of New York Convention).
I tweeted it earlier yet was asked to put a review up on the blog (which also suits my archiving purposes) of ECLI:NL:GHAMS:2019:192 X v Y (I know that does not help much) at the Amsterdam Court of Appeal, 29 January 2019. The case came to me courtesy of Freshields who have review here.
The case illustrates some of the issues involving online alternative dispute resolution, including those manned by artificial intelligence (albeit the latter was not directly at stake here).
Using an online trading platform, X provided three loans to Y, all in bitcoins at an interest rate of 5% per month. To borrow these bitcoins, Y had to agree on the conditions of the online bitcoin-trading platform applicable to the loans. These conditions included the following dispute resolution mechanism clause:
If you fail to pay principal and/or interest on the date on which the loan falls due, you will be considered in default of the Registration Agreement… Should your loan become 90 days past due (“Defaulted”) the loan will be sent to Dhami Law Firm (“Arbitrator”), an independent, international arbitration firm whose awards are recognized internationally under The United Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
I understand that in the event that I want to appear in the arbitration by email to contest the potential issuance of an award in favor of the lenders, I must send a written request to email@example.com and pay a $ 99.00 fee. Such request must be within 7 calendar days from the date of the Notice of Default. The Arbitrator’s decision shall be final and legally binding. In the event that the Arbitrator issues an award in favor of the investor, an investor may enforce that judgment in a court of competent jurisdiction.
The conditions further contained the following arbitration clause:
All claims and disputes arising under or relating to this agreement are to be settled by binding arbitration in the state of California or another location mutually agreeable to the parties. An award of arbitration may be confirmed in a court of competent jurisdiction.
Default ensued, as did ADR, and Y sought enforcement in The Netherlands. The Courts have now refused proprio motu (Y had signalled he had no objection), for the following reasons summarised by Freshfields: First, the court took issue with the circumstance that – in its view – online arbitral proceedings automatically become pending after 90 days. Second, a defendant wishing to defend itself in these arbitral proceedings had been required to write an email within seven days from receiving a notice of default. Third, the arbitral tribunal had failed to inform Y that a dispute was pending against him or of the legal grounds of the action.
At 3.5 is it is clear that the principle of audi alteram partem is the main stumbling block for the Dutch Courts. Ordre public violated. A clear flashpoint for ADR, including of the algorithmic variety.
Yukos v Merinson: A Brussels I jurisdictional bonanza. Particularly the issue of ‘after the issue has arisen’ for protected categories.
I have been posting a series of comments in recent weeks, with more on the way, on cases that caught my attention pre-exam period. They were all candidates for exam questions except much as I would want to, I can only subject my students to that many developments in conflict of laws. Another one in this series of ‘overdue’ postings:  EWHC 335 (Comm) Yukos v Merinson.
From Salter DJ’s summary of the facts: (excuse their length – this is rather necessary to appreciate the decision)
_____________The defendant was employed by the first claimant under a contract of employment governed by Dutch law. Various proceedings were commenced before the Dutch courts by the defendant and entities within the claimant group in relation to the defendant’s employment. The parties reached terms of settlement of those proceedings, which were embodied in a settlement agreement executed by the parties and subject to the exclusive jurisdiction of the Dutch courts. The settlement agreement was in turn approved by the Dutch courts, with the effect that it became a “court settlement” within the meaning of article 2 of Brussels I Recast. Subsequently, upon certain additional facts as to the defendant’s conduct being learnt by the claimants, they brought a claim against the defendant in England, where the defendant was then domiciled, seeking damages for losses allegedly suffered as a result of the defendant’s breach of duties under his employment contract (“the damages claims”) and a declaration that the settlement agreement did not bar the damages claims, alternatively an order that the settlement agreement should be annulled under Dutch law on the grounds of error and/or fraud (“the annulment claims”). The defendant applied for a declaration that the courts of England and Wales had no jurisdiction to try the claims brought and an order that the claim form be set aside, on the grounds that all of the claims fell within the settlement agreement conferring exclusive jurisdiction on the Dutch courts, which therefore had exclusive jurisdiction by operation of Article 25 Brussels I Recast, and (1) in respect of the annulment claims, Article 25 could not be overridden by Articles 20(1) and 22(1) requiring proceedings to be brought in the courts of the state of the defendant’s domicile at the time of issue of the claim form, since those claims were not “matters relating to [an] individual contract of employment” within the meaning of Article 20(1); (2) in respect of all claims, Article 23(1) allowed the rule in Articles 20(1) and 22(1) to be departed from, since the settlement agreement had been entered into after the dispute had arisen; and (3) the settlement agreement being a juridical act of the Dutch courts, the English courts were precluded by Article 52 from reviewing its substance in respect of the annulment claims and, the settlement agreement also being a court settlement, the English courts were required by Articles 58 and 59 to recognise and enforce it unless it was manifestly contrary to public policy._______________
All in all, plenty of issues here, and as Salter DJ was correctly reassured by counsel for the various parties, not any that the CJEU has had the opportunity to rule on. Four issues were considered:
1. Are the Damages Claims and/or the Annulment Claims “matters relating to [an] individual contract of employment” within the meaning of Article 20(1)?>>>Salter DJ’s Answer: 25 ff: YES. His main argument: the Settlement Agreement set out the terms on which Mr Merinson’s contract of employment came to an end. In so doing, it also varied the terms of that contract of employment. The terms of the Settlement Agreement now form part of the contractual terms on which Mr Merinson was employed, and which govern the rights and liabilities arising out of the employment relationship between him and the Yukos Group. In my view this finding should not have been made without considering the lex causae of the employment contract: Rome I in my view should have been engaged here.
2. If so, is the Settlement Agreement “an agreement .. entered into after the dispute has arisen” within the meaning of Article 23(1)?>>>Answer (on the basis of extensive reference to Brussels Convention and Regulation scholarship): a dispute will have “arisen” for the purposes of these Articles only if two conditions are satisfied: (a) the parties must have disagreed upon a specific point; and (b) legal proceedings in relation to that disagreement must be imminent or contemplated. Salter DJ correctly emphasises the protective policy which underlies these provisions, however I am not confident he takes that to the right conclusion. Common view on the protective regime is that when parties have had the privilege of legal advice, they can be assumed to have been properly informed: the position of relative weakness falls away.
3. Further, is the English court, in any event, precluded from entertaining the Annulment Claims by Chapter IV of the Recast Judgments Regulation? >>>The issue of court settlements was specifically considered in the Brussels Convention, and the Jenard Report, given their importance in Dutch and German practice. In C-414/92 Solo Kleinmotoren the CJEU (at 17) held ‘to be classified as a “judgment” within the meaning of the Convention, the act must be that of the court belonging to a Contracting State and ruling on its own authority on points in dispute between the parties.’: considering Dutch expert evidence on the issue, the decision here is that despite the limited authority under Title III Brussels I Recast for other Courts to refuse to recognise a court settlement (ordre public in essence), it is not a ‘judgment’. Salter DJ concludes on this point that normal jurisdictional rules to challenge the settlement apply. At 81 he suggests, provisionally, that ‘it would nevertheless be open to this court in those circumstances to case manage the enforcement application and the set-aside action, so that they are dealt with together, the result of the action determining the enforcement application. Fortunately, I am not required to wrestle with those practical complexities in order to determine the present application, and I make no decision one way or another on any of these matters. There is no application before me to enforce the Dutch Court Settlement, merely an application for a declaration that the court “has no jurisdiction to try the Claimants’ claims”.‘
This insight into the case-management side of things, however, does highlight the fact that the findings on the jurisdiction /enforcement interface appear counterintuitive. Particularly in cases where the English courts would not have jurisdiction viz the settlement, but would be asked to enforce it – which they can only refuse on ordre public grounds, the solution reached would not work out at all in practice.
4. And finally what are the consequences, as regards jurisdiction, of the decisions on the first three of these issues?>>>Held: the English court, as the court of the Member State in which Mr Merinson was domiciled at the date this action was commenced, has jurisdiction in relation to all of the claims made in the present action.
There is much more to be said on each of the arguments – but I must not turn the blog into a second Handbook, I suppose.
Ermgassen v Sixcap Financials: Singapore High Court the first to recognise and enforce under the Hague Choice of Court Convention
 SGHCR 8 Ermgassen v Sixcap Financials to my knowledge is the first recognition and enforcement by any court under the 2005 Choice of Court Convention. Together with the 28 EU Member States (and the EU itself), Singapore, with Mexico, are the 30 States for which the Convention has entered into force.
In his decision for the High Court, Colin Seow AR recognises a High Court ex parte summary judgment, taking the process to the Hague motions: whether the issue is civil and commercial; whether choice of court was concluded in favour of the courts having issued the judgment; and pointing to the UK’s membership of the Convention and to counsel for the plaintiff having been heard at the London High Court hearing: this makes the judgment one on the merits, not just a judgment in absentia (of the defendant: a Singapore-domiciled company). Of note is Seow AR’s flexible approach to the requirement to produce certified copies of the judgment (at 23 ff).
Polish readers: Help required. St Vincent v Bruce Robinson et al: presumably the corporate jurisdictional head of Brussels I Recast.
In  EWHC 1230 (Comm) St Vincent v Bruce Roberston et al Males J set aside a worldwide freezing order in summary judgment but that is not the trigger for this blog post. Rather, consider paras 33 and 34:
- St Vincent (and two associated companies) attempted to stop the sale [of a chunk of assets by commencing proceedings in Cyprus against 19 defendants, including Mr Robinson, Winterbourne Pte and the other defendants to these proceedings and also HHL and HDP. On 5 August 2013 the District Court of Nicosia granted an injunction, purporting to restrain any dealings with HDP’s assets. [GAVC: for the jurisdiction of the Cypriot courts: see 12: The Shares Pledge was governed by the law of Cyprus and provided for the exclusive jurisdiction of the courts of that country]
- Notwithstanding the Cyprus order, on 30 September 2013 the creditors of HDP approved the sale to KFTP. The arrangement was then approved by the District Court of Gliwice on 24 October 2013. The Polish court did not regard the order of the Cyprus court as an impediment to the sale, taking the view that it had exclusive jurisdiction over a Polish company under its supervision and was not required to recognise the Cypriot order in accordance with the provisions of the Brussels Regulation. The court did not rule on any issue whether the proposed sale to KFTP was at market value and was not asked to do so.
I have tried to locate the Polish judgment but have failed to do so (which is where assistance from Polish readers would be appreciated). Presumably however the Polish courts argued that Article 24(2) Brussels I Recast was engaged, and then either per Weber ignored lis alibi pendens (were it to have found the case was still pending in Cyprus), or applied Article 45(1) e ii to ignore the Cypriot findings. In either case, the relevant point is how widely the Polish courts seem to have interpreted Article 24(2).
Come to think of it this would have been good exam material and I have one or two of those coming up (although there is plenty in the ‘exam material’ ledger).
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 126.96.36.199, Heading 2.2.16.