Posts Tagged Regulation 1215/2012

Kuhn: ‘Civil and commercial’ viz bearers of Greek bonds. Bot AG applies Fahnenbrock’s ‘direct and immediate effect’ and distinguishes Kolassa.

Advocate-General Bot opined on 4 July 2018 in the case of C-308/17 Leo Kuhn, domiciled at Vienna, who had purchased through an Austrian bank, Greek sovereign bonds. Pursuant to a forced exchanged /haircut carried out by Greece in March 2012, the bonds were replaced with new bonds with a lower nominal value. Mr Kuhn sued to have the initial borrowing terms enforced.

The Advocate-General is of course aware of the similarities with Fahnenbrock – in which he himself had also opined but was not followed by the Court. He first of all points out the similarities between the service Regulation and the Brussels I Recast (both e.g. limiting their scope of application to ‘civil and commercial’ matters), however also flags the specific recitals (in particular: recital 12) suggesting that in the context of the services Regulation the analysis needs to be done swiftly hence only cases which prima facie fall outside the scope of application (including where they manifestly (see the dictum of Fahnenbrock and para 50 of the AG’s Opinion in Kuhn) are not covered by that Regulation.

Coming next to the consideration of the application of ‘civil and commercial’, the facts of this case reflect very much the hybrid nature of much of sovereign debt litigation. In my view yes, the haircut took place within the wider institutional nature of Greece’s debt negotiations with the EU. Yet the ‘collective action clause’ (CAC) which was not part of the original terms and conditions (there was no CAC in the original lex causae, Greek law, but there is one in the newly applicable lex causae, English law: at 63 of the Opinion), was negotiated with the institutional holders of the bond and crammed down the minority holders like Mr Kuhn (at 66). The AG suggest that this does not impact on the qualification of the changes being ‘immediate and direct’, this being the formula employed by the Court in Fahnenbrock.

I am not so sure of the latter but it will be up to the CJEU to decide.

The Advocate General note bene subsequently ‘completes the analysis’ in case the CJEU disagrees with this view, and finds that if the issue is civil and commercial, it can be litigated under Article 7(1)’s rule on special jurisdiction for contractual obligations (the AG at para 88 ff distinguishes the case from C-375/13 Kolassa (in which the CJEU saw no contractual bond between the issuer of the bonds and the acquirer on the secondary market), the obligation at issue, he suggests, having to be performed in Greece. As for the latter element, the Advocate General does refer for the determination of the place of performance to the initially applicable law: Greek law, leaving the later lex causae, English law, undiscussed.

Whether the Court will follow the AG remains of course to be seen.

Geert.

 

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Forum non conveniens, lis alibi pendens ex-EU following Brussels I Recast. High Court adopts limiting approach in UCP v Nectrus.

In [2018] EWHC 380 (Comm) UCP Plc v Nectrus Limited Cockerill J takes the same conclusion on the new lis alibi pendens rule ex-EU in the Brussels I Recast, which I had suggested in the Handbook (p.182). A court in a Member State seized of an action other than those based on Articles 4, 7, 8 or 9 cannot refuse jurisdiction in favour of a court based ex-EU.

From Herbert Smith’s summary of the case: Nectrus, a Cypriot company, commenced proceedings in the Isle of Man seeking payment of sums withheld by UCP, an Isle of Man company, on the sale of a company, Candor. UCP then commenced proceedings in England claiming that Nectrus was in breach of an Investment Management Agreement (IMA), the loss being the amount by which the sale consideration of Candor had been reduced, hence the amount withheld on its sale.

The IMA contained a non-exclusive jurisdiction agreement in favour of the English courts. UCP disputed the jurisdiction of the Manx court, but in the event the proceedings continued, indicated they would raise the cause of action relied on in the English proceedings by way of equitable set off. Nectrus disputed their right to do so.

Nectrus disputed the jurisdiction of the English court on the basis that the Manx courts were the most appropriate forum to determine the dispute and were first in time.

Other than for the articles listed above, the CJEU’s findings in Owusu continue to apply. That includes English jurisdiction on the basis of non-exclusive choice of court, covered by Article 25 of the Recast Regulation. Justice Cockerill is entirely correct in unhesitatingly (at 39) rejecting forum non conveniens.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.4 (International impact of the Brussels I Recast Regulation), Heading 2.2.14.5.2.

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Fly lal: Locus delicti commissi for anticompetitive agreements. And application of Article 7(5)’s extension to branch domicile.

Bobek AG opined about a little while ago in C-27/17 flyLAL. (Readers may also find my recent posting on NBK useful, re Article 7(5)).

AB flyLAL — Lithuanian Airlines (‘flyLAL’) operated flights from Vilnius airport in Lithuania until it was put into liquidation. According to flyLAL, its demise was caused by predatory (that is, below cost) pricing by the Latvian airline Air Baltic Corporation A/S (‘Air Baltic’). That predatory pricing was, it is alleged, part of an anticompetitive strategy agreed between Air Baltic and the operator of Starptautiskā lidosta Rīga (Riga international airport in Latvia, ‘Riga Airport’). Thus, Riga Airport and Air Baltic agreed to drastically reduce the prices paid by Air Baltic for services at Riga airport. The savings were then used by Air Baltic to finance the predatory pricing that drove flyLAL out of the market in Vilnius, Lithuania.

Can Air Baltic and Riga Airport for damages before the courts in Vilnius? The national court and parties refer to three alleged infringements of competition law: (i) abuse of dominance consisting in the system of reductions implemented by Riga Airport; (ii) an anticompetitive agreement between Riga Airport and Air Baltic; and (iii) abuse of dominance in the form of predatory pricing by Air Baltic. Those infringements, it is argued, were interrelated, forming part of a strategy to oust flyLAL from the market in Vilnius and move passengers to Riga airport to the benefit of both Riga Airport and Air Baltic.

There is a lot in the Opinion – among others because as the AG points out, the referring court’s description of the alleged infringement of competition law is not entirely clear. Bobek therefore sets out a set of variables. The Court itself is bound not to distinguish among quite so many. Of note are the AG’s suggestions

  • that locus damni here is not place of financial loss, rather the place within the markets affected by the competition law infringement where the claimant alleges loss of sales.That suggestion in my view is helpful for neither the Regulation’s aim of predictability, nor the protection of those damaged by infringement of competition law (the latter not however a stated aim of the Regulation). Put differently: damage located in a Mozaik fashion assists the tortfeasor. The Advocate General reaches this conclusion after a thorough revisit of the initial Bier judgment (and Capotorti AG’s Opinion in same), ditto Marinari and Dumez France. Yet the continuing need to conceptualise the Court’s Bier rule illustrates again in my view the mistake made in that original judgment, to introduce a forum damni despite the utter lack of textual support for same.
  • for locus delicti commissi with full jurisdiction, the AG distinguishes between Article 101 TFEU (as regards the alleged anticompetitive agreement between Air Baltic and Riga Airport, the place of the event giving rise to the harm (that is, the loss of sales by flyLAL), is the place of the conclusion of the agreement) and 102 TFEU (alleged predatory pricing by Air Baltic, the place of the event giving rise to the harm is the place where the predatory prices were offered and applied).  With respect to Article 101 TFEU, Bobek AG suggests this is identical to the Court’s judgment in CDC . I am not too sure but I am biased. As I noted above, in my view the Court should steer clear of an application of Article 7(2) which allows those infringing competition law to forum shop by manipulating the place of decision-making. In CDC the Court held that ‘the identification, in the jurisdiction of the court seised of the matter, of a specific event during which either that cartel was definitively concluded or one agreement in particular was made which was the sole causal event giving rise to the loss allegedly inflicted on a buyer’ cannot be ruled out. That implies that in other cases the identification of such singular event can be ruled out and that many places may be consider locus delicti commissi.  
  • finally with respect to (now) Article 7(5), the activities of a branch. The AG does not specify what must be meant by a ‘branch’ – for the national court has already concluded there is such branch. The Advocate General here is perhaps unusually deferential to the factual finding. Whether there is a sufficient nexus between the activities of the branch and the dispute, in the case of tort-based claims requires the branch participate in at least some of the actions constituting the tort (at 137). Offering the fixed prices or otherwise having been instrumental in concluding contracts for services at those prices suffices. In such cases, the branch has again participated in the commission of an act that constitutes a necessary precondition for the abuse (at 142).

A lengthy opinion. And it all started with the fairly straightforward facts of Bier…

Geert.

(Handbook of) EU private international law), 2nd ed. 2016, Chapter 2, Heading 2.2.11.2

 

 

 

 

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National Bank of Kazakhstan v Bank of New York Mellon. Branches’ activities, Article 7(5) Brussels I Recast and engagement of Article 30.

In [2017] EWHC 3512 (Comm)  National Bank of Kazakhstan v Bank of New York Mellon, Article 7(5) makes a rarish appearance, as does (less rarely) Article 30. Popplewell J summarises the main facts as follows.

‘The Second Claimant is the Republic of Kazakhstan (“ROK”). The First Claimant is the National Bank of Kazakhstan (“NBK”). The Defendant is a bank incorporated in Belgium with a branch in, amongst other places, London. Through its London branch it provides banking and custody services to NBK in respect of the National Fund of Kazakhstan (“the National Fund”), pursuant to a Global Custody Agreement dated 24th December 2001, (“the GCA”). The National Fund has been the target of proceedings brought by Mr. Anatolie Stati and others, (“the Stati Parties”), who are seeking to enforce a Swedish arbitration award against ROK for a sum, including interest and costs, in excess of US$ 500 million. The Stati Parties obtained attachment orders from the Dutch court and the Belgian court, which were served on the Defendant (“BNYM”). BNYM, after taking legal advice, decided to freeze all the assets comprising the National Fund, which it holds under the GCA, on the basis that it was bound to comply with the Belgian and Dutch orders, breach of which would expose it to the risk of civil liability for the amount of the Stati Parties’ claims and criminal liability in Belgium and the Netherlands.’

Effectively therefore the London Branch of a Belgian domiciled bank, has frozen claimant’s assets which it holds in London (although the exact situs is disputed), on the basis that it wishes to prevent exposure to BE and NL criminal proceedings.

Parties arguments on jurisdiction are included at 41 and 42 of the judgment. Core to the Brussels I Recast jurisdictional discussions is Article 7(5) which provides

“A person domiciled in a Member State may be sued in another Member State: […]

(5) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place where the branch, agency or other establishment is situated;’

Beyond Case 33/78 Somafer, to which the High Court refers, there is little CJEU precedent – C‑27/17 flyLAL is currently underway. Popplewell J at 53 refers to Lord Phillips’ paraphrasing of Somafer in [2003] EWCA Civ 147  as a requirement of ‘sufficient nexus’ between the dispute and the branch as to render it natural to describe the dispute as one which has arisen out of the activities of the branch.

At 54 he holds there is such nexus in the case at issue, particularly given the management of the frozen assets by the London branch, and the very action by that branch to freeze them. This is quite a wide interpretation of Article 7(5) and not one which I believe is necessarily supported by the exceptional nature of Article 7.

As to whether the English and Belgian proceedings are ‘related’, providing an opportunity for the English proceedings to be halted under Article 30 of the Recast (lis alibi pendens), the High Court refers at 57 ff to C-406/95 The Tatry to hold that there is no risk of conflicting decisions in this case: the argument specifically being that even if the issues addressed are the same, they are addressed in the respective (English, Dutch, Belgian) proceedings under different applicable laws (in each case the lex fori on sovereign immunity). I do not find that very convincing. The risk of irreconcilable outcome is the issue; not irreconcilability or not of reasoning. In the same para 60 in fine in fact Popplewell J advances what I think is a stronger argument: that the issue whether the National Fund was used or intended to be used for commercial purposes, requires to be determined or addressed in the English proceedings, with the result that there is no risk of conflict.

Article 30 not being engaged for that reason, obiter then follows an interesting discussion on whether there can be lis alibi pendens if the court originally seized had no jurisdiction under the Regulation: here: because the Belgian and Dutch proceedings are arbitration proceedings.

Does Article 30 apply to Regulation claims where there was a related action in a Member State in which the related action did not itself come within the Regulation? Referring to the new Article 34 lis alibi pendens rule for proceedings pending ex-EU, ex absurdum, would there not be an odd lacuna if Article 34 required a stay where there were related non-Regulation foreign proceedings in a third party State and the position were not to be the same for equivalent foreign proceedings in a Member State? I do not believe there would be such lacuna: the Article 34 rule applies to concurrent proceedings which are in fact in-Regulation, except international comity requires the EU to cede to foreign proceedings with a strong (typically exclusive) jurisdictional call. For intra-EU proceedings, the comity argument holds no sway – mutual trust does.

Like Poplewell J however I reserve final judgment on that issue for another occasion.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.11, Heading 2.2.14.

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Kaifer Aislimientos: the limits of Brussels I’s rules on choice of court.

[2017] EWHC 2598 (Comm) Kaifer Aislimientos, is a good illustration of the limits of Article 25 juncto recital 20’s lex fori prorogati rule.

Claimant argues that the Court has jurisdiction pursuant to Article 25 Brussels I Recast because the relevant contract contains an English exclusive jurisdiction clause and further contends that the relevant contract was concluded by AMS Mexico and/or AMS on behalf of AT1 and Ezion as undisclosed principals and that, as undisclosed principals, the contract – together with the jurisdiction agreement – was binding on AT1 and Ezion.

That is the only part of the judgment to feature the Brussels Regulation at all. Peter MacDonald Eggers DJ could have referred to CJEU precedent pro inspiratio, including Refcomp for instance. He could certainly also have referred to recital 20, and equally failed to do so.

In substance he applies the Brussels I Recast rule by applying lex fori prorogati (here: English law) to all but the formation of consent questions relevant to the validity of choice of court (here: under what circumstance undisclosed principals are subject to choice of court).

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.4.

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Belo Horizonte: Court at Rotterdam (using English as language of the oral procedure): Access to seized documents is no provisional measure under Brussels I Recast.

Arnold van Steenderen and Milan Simić have complete and concise review here of judgment of the Rotterdam court of December 2017 in re the Belo Horizonte (officially Cefetra et al v Ms ‘IDA’ Oetker Schiffahrtsgesellschaft MbH & Co KG et al). The case is a follow-up to 2015 proceedings. In these the Rotterdam court had first sanctioned seizure, and then rejected further action for claimant had not formally requested access to the documents.

Arnold and Milan summarise the facts very very helpfully – I am much obliged for the judgment is in Dutch (although as the judgment shows, the proceedings were actually conducted in English: a nice example of the use of regulatory competition in civil procedure) and their efforts have saved me a lot of translation time:

The decisions of the Rotterdam Court are a result of the carriage under bill of lading of soya beans on behalf of Cefetra B.V. (Netherlands based) on board of the “Belo Horizonte” from Argentina to the United Kingdom. Cefetra supplies raw materials to the feed, food, and fuel industries. Cefetra Ltd. (UK based) was the holder of the b/l’s and English law applied to the b/l’s. The vessel is owned by MS ‘IDA’ Oetker and is time chartered by Rudolf A Oetker (both German based, together addressed as Oetker). MS ‘IDA’ Oetker is the carrier under the b/l’s. London arbitration is agreed upon for any dispute rising from the contract of carriage and the b/l’s.

Following engine failure, ‘(d)uring the voyage, experts commissioned by both Cefetra and Oetker visited the “Belo Horizonte” to preliminary assess the condition of the vessel and its engines. Further investigation was conducted upon arrival in England. Oetker, however, only granted permission for inspection of the engine room and refused to disclose the documents on board. Crew interviews were not allowed as well. Subsequently, Cefetra obtained leave to attachment for the purpose of preserving evidence in the Netherlands on 27 October 2015. The leave was effected by the bailiff on 28 October 2015 on board of the “Belo Horizonte”. Several documents were seized and handed over to a sequestrator. Cefetra initiated proceedings’ to gain access to the seized documents.

The dispute in the main is arbitrable in London.

Oetker disputes jurisdiction of the court at Rotterdam on the basis of defendants’ domicile in Germany. Cefetra argue in favour of jurisdiction on the basis of Article 7(1), alternatively 7(2) or indeed Article 35 Brussels I Recast:

  • 7(1) forum contractus: for, it is argued, the main agreement between the two parties implies an obligation to provide any relevant evidence; the place of performance for that ‘obligation in question’ lies in The Netherlands since that is where the sequestrator holds them.
  • 7(2) forum delicti: Oetker’s obstruction of truth finding is a tort which is located (locus delicti commissi) at Rotterdam since that is where Oetker opposes disclosure.
  • 35 provisional, including protective measures.

The Court does not at all entertain Cefetra’s arguments on the basis of 7(1) or 7(2). Wrongly so: plenty of not at all obvious contracts or torts could qualify as same under these provisions. To not address them at all does not make them simply go away.

The court first of all (5.7 in fine) rejects relevance of the arbitration exclusion on the basis of C-391/95 Van Uden Deco-Line. It then sticks to a very restrictive approach to Article 35, with the classic provisionary (not covered by Article 35) v provisional (covered) nature of measures, as also discussed in C-104/03 St. Paul Dairy/Unibel (to which the Court refers). In the words of the court: seizure of evidence is provisional; actual access, copy or extract is not (5.8): the court suggests this is not provisional since it allows the party to gauge the evidentiary position of the party and hence is irreversible.

I disagree -and I have at least a shelf in my library to support the discussion.

Ireversibility in fact (once the evidence seen, the party can never wipe it from its memory, so to speak) does not equate ireversibility in law. The court takes a very limited view of Article 35 and I do not believe it is the right one.

There are not that many national judgments covering Article 35 quite so expressly. This is one to treasure.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.15.

 

 

 

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