Tag: Regulation 1215/2012

Posted on

Maersk. The CJEU on the scope of ‘substantive validity’ in Article 25 Brussels Ia (enforceability of choice of court in bills of lading against third party holders of the bill).

The CJEU held last week in Joined Cases C‑345/22 and C‑347/22 Maersk A/S v Allianz Seguros y Reaseguros SA and Case C‑346/22 Mapfre España Compañía de Seguros y Reaseguros SA v MACS Maritime Carrier Shipping GmbH & Co.

The case concerns enforceability of choice of court (in the cases at issue: pro a court in England) included in bills of lading against third party holders of the bills. Each case was brought prior to Brexit Implementation day and as a result of the UK-EU Withdrawal Agreement (A127(3)) fully subject to Brussels Ia. Mukkarum Ahmed had earlier signalled Collins AG’s Opinion in which his scholarship was justifiably cited.

Relevant Spanish law is not amongst those national laws which accept with relative ease that choice of court and law has binding effect on third party acquirers of the bill, seeing as it provides:

In Section XI( of the preamble to Ley 14/2014 de Navegación Marítima (Shipping Law 14/2014) of 24 July 2014 (BOE No 180 of 25 July 2014, p. 59193; ‘the LNM’) it states:

‘… [Chapter I of Title IX] contains the special rules of jurisdiction and competence and, proceeding on the basis of the preferential application in this matter of the rules in international agreements and the law of the European Union, seeks to prevent the abuses identified, by declaring void clauses which provide for submission to a foreign jurisdiction or to arbitration abroad, contained in contracts for the use of a ship or in ancillary shipping contracts, if those clauses have not been individually and separately negotiated. …’

 Under Article 251 of the LNM, headed ‘Effectiveness of transfer’:

‘Delivery of a bill of lading shall have the same effects as delivery of the goods represented by the bill, without prejudice to the criminal and civil actions open to a person who has been unlawfully dispossessed of those goods. The acquirer of the bill of lading shall acquire all the transferor’s rights and actions over the goods, with the exception of agreements on jurisdiction and arbitration, which shall require the consent of the acquirer in accordance with Chapter I of Title IX.’

The first paragraph of Article 468 of the LNM, entitled ‘Clauses on jurisdiction and arbitration’, which appears in Chapter I of Title IX of that law, provides:

‘Without prejudice to the provisions of the international agreements applicable in Spain and to the rules of EU law, clauses which provide for submission to a foreign jurisdiction or to arbitration abroad, contained in contracts for the use of a ship or in ancillary shipping contracts, shall be void and deemed not to exist if those clauses have not been individually and separately negotiated.

Relevant authority is of course CJEU C‑387/98 Coreck Maritime) where the Court held that a jurisdiction clause incorporated in a bill of lading may be relied on against a third party to that contract if that clause has been adjudged valid between the carrier and the shipper and provided that, by virtue of the relevant national law, the third party, on acquiring the bill of lading, succeeded to the shipper’s rights and obligations.

CJEU DelayFix as Collins AG put it (45) “appears to adopt the same approach when, citing paragraph 65 of the judgment in CDC Hydrogen Peroxide, which in turn refers to paragraph 30 of the judgment in Coreck, it refers to ‘national substantive law’”.

The CJEU in the cases at issue firstly [48] holds

.. although it is clear from [A25(1) BIa] that the substantive validity of a jurisdiction clause is to be assessed in the light of the law of the Member State of the court or courts designated by that clause, the fact remains that the enforceability of such a clause against a third party to the contract, such as a third-party holder of the bill of lading, is concerned not with the substantive validity of that clause, as the Advocate General observed in points 54 to 56 of his Opinion, but with its effects, the assessment of which necessarily comes after the assessment of its substantive validity, that latter assessment having to be carried out by reference to the relationship between the original parties to the contract.

[50] with reference to Case 71/83 Tilly Russ and C‑543/10 Refcomp (itself borrowing from Correck Maritime, see above), the Court also reminds us

a jurisdiction clause incorporated in a bill of lading may be relied on against a third party to the contract if that clause has been adjudged valid between the shipper and the carrier and provided that, by virtue of the relevant national law, the third party, on acquiring the bill of lading, succeeded to the shipper’s rights and obligations. In such a case, there is no need for the court seised of the matter to ascertain whether that third party agreed to that clause [emphasis added]

In other words in such case the important step of establishing factual consent, ordinarily always required for choice of court under A25, is no longer needed.

Further, [56], does A25 BIa preclude the Spanish legislation at issue “under which a third party to a contract for the carriage of goods concluded between a carrier and a shipper, who acquires the bill of lading evidencing that contract and thereby becomes a third-party holder of that bill of lading, is subrogated to all of the shipper’s rights and obligations, with the exception of those arising under a jurisdiction clause incorporated in the bill of lading, where that clause is enforceable against that third party only if the third party has negotiated it individually and separately”?

Here, the CJEU [58] repeats that if “third-party holders of bills of lading  [are]…subrogated [under the relevant applicable law] to all of the rights and obligations of the shippers concerned…there is no need to ascertain whether each of those third parties actually accepted those clauses.”

[59] The relevant Spanish law in essence has the effect that the acquirer of the bill of lading acquires all of the transferor’s rights and actions over the goods, with the exception of jurisdiction clauses, which under that Spanish law require the actual consent of the acquirer. The result of the Spanish law is that those clauses are to be void and deemed not to exist if they have not been individually and separately negotiated. This, the CJEU holds [60] circumvents A25 as interpreted in Coreck Maritime, Tilly Russ, Refcomp etc. and cannot be so allowed. The national court is instructed as a result of the primacy of EU law to interpret the Spanish law as much as possible in line with the Regulation (reference [63] ex multi to CJEU Bezirkshauptmannschaft Hartberg-Fürstenfeld) and if no such interpretation other than one contra legem is possible, [65] to disapply the national rule seeing as A25 BIa as a provision in a Regulation (cf. a Directive) is directly applicable.

In conclusion:

1.      Article 25(1) [BIa]

must be interpreted as meaning that the enforceability of a jurisdiction clause against the third-party holder of the bill of lading containing that clause is not governed by the law of the Member State of the court or courts designated by that clause. That clause is enforceable against that third party if, on acquiring that bill of lading, it is subrogated to all of the rights and obligations of one of the original parties to the contract, which must be assessed in accordance with national substantive law as established by applying the rules of private international law of the Member State of the court seised of the dispute.

2.      Article 25(1) [BIa]

must be interpreted as precluding national legislation under which a third party to a contract for the carriage of goods concluded between a carrier and a shipper, who acquires the bill of lading evidencing that contract and thereby becomes a third-party holder of that bill of lading, is subrogated to all of the shipper’s rights and obligations, with the exception of those arising under a jurisdiction clause incorporated in the bill of lading, where that clause is enforceable against that third party only if the third party has negotiated it individually and separately.

An important judgment for the transport sector specifically and for the meaning of ‘substantive validity’ in A25 BIa.

Geert.

EU private international law, 4th ed. 2024, 2.373 ff.

Posted on

B&C v Atlas Flexibles. Court Amsterdam holds deposition of fact witnesses with a view to assessing viability of set-aside action, is not caught by either the New York Convention or A35 Brussels Ia.

A quick note on the first instance court in Amsterdam in B&C v Atlas Flexibles e.a. ECLI:NL:RBAMS:2023:4982. Relevant parties are bound by an SPA (share purchase agreement) with binding arbitration clause (pointing to Germany). B&C are pondering the viability of a pauliana (set-aside). To assist them with the viability decision they would like to depose a Netherlands-domiciled director of one of the corporations involved.

[4.3] the court holds that under the New York Convention (Article 2) the recognition of an arbitration agreement only extends to the subject-matter capable of settlement by arbitration. There is no indication that the arbitral panel could be asked to order deposition of a fact witness in The Netherlands hence it is held that the NY Convention is not engaged.

As for Brussels Ia, [4.4] the court holds that A35 is not engaged, either: fact witnesses depositions, it holds, are not a ‘provisional or protective measure’, merely a preparatory one with a view to pondering future litigation.

Geert.

EU Private International Law, 4th ed. 2024, 2.576 ff.

.

Posted on

Beverage City v Advance Magazine. The CJEU adopts flexible approach to anchor defendant mechanism in Trademark cases.

I have been absolutely swamped in recent months and as a result, the blog has suffered. In coming up for some air, I decided to first tackle some of the oldest drafts in my blog queue. First up is CJEU C-832/21 Beverage City & Lifestyle GmbH et al v Advance Magazine Publishers Inc held let’s say a little while ago (September 2023; did I flag I have been busy?) which in essence clarifies CJEU Nintendo.

The EU Trademark Regulation 2017/1001 has lex specialis conflict of laws provisions viz Brussels Ia. However it does not specify an anchor mechanism and therefore [26] Article 8(1) Brussels Ia  applies in full.

I discussed Richard de la Tour AG’s Opinion here. As I summarised when I tweeted the judgment, the CJEU has essentially followed the AG’s suggestion of a flexible interpretation of the A8(1) conditions:

with respect to the the A8(1) (compare CJEU The Tatry) condition relating to the existence of the “same situation of law”, this [31] “appears to be satisfied” (final check is for the national court) where the claim concerns the protection of claimant’s exclusive right over EU trade marks, which is based on EU trademark law identical to all EU Member States. [29] Any difference in the legal bases under national law of claims relating to that protection is irrelevant to the assessment of the risk of conflicting decisions.

further, with respect to the condition of “same situation of fact”,  [37]

“the existence of a connection between the claims concerned relates primarily to the relationship between all the acts of infringement committed rather than to the organisational or capital connections between the companies concerned. Similarly, in order to establish the existence of the same situation of fact, particular attention should also be paid to the nature of the contractual relationship between the customer and the supplier.”

[38] Anchor defendant Beverage City & Lifestyle was connected to Beverage City Polska by an agreement for the exclusive distribution of the energy drink ‘Diamant Vogue’ in Germany.

“That exclusive contractual relationship between those two companies may make it more foreseeable that the acts of infringement of which they are accused may be regarded as concerning the same situation of fact, capable of resulting in a single court having jurisdiction to rule on the claims brought against all of the actors who committed those acts.”

The CJEU throughout the judgment emphasises the sound administration of justice objective supporting the joinder mechanism.

Geert.

EU Private International Law, 4th ed. 2023, 2.505 ff, 2.518.

Posted on

MOL v Mercedez-Benz. Locus damni in the truck cartel follow-on claim. Emiliou AG tries to make sense of complicated authority, finally to reject role for competition law’s ‘economic unit’ in assigning jurisdiction.

In competition law there is a strong presumption of attributability of daughter’s action to the mother corporation as I discussed ia in my post on CJEU C-508/11 P ENI (references to further case-law there). In general in competition law there is a strong emphasis on the concept of an ‘economic unit’ which readly looks beyond the legal fiction of separate corporate personality.

In C‑425/22 MOL Magyar Olaj- és Gázipari Nyrt. v Mercedes-Benz Group AG (let’s shorten that to ‘MOL v Mercedez-Benz) Emiliou AG opined that for the purposes of Article 7(2) Brussels Ia jurisdiction a parent company cannot rely on the competition law concept of an economic unit in order to establish the jurisdiction of the courts where it has its registered seat to hear and determine its claim for damages for the harm suffered by its subsidiaries.

(14) Applicant is a company established in Hungary. It has a controlling interest in companies belonging to the MOL group. It is either the majority shareholder or holds another form of exclusive controlling power over a number of companies, such as MOLTRANS, established in Hungary; INA, established in Croatia; Panta and Nelsa, established in Italy; ROTH, established in Austria; and SLOVNAFT, established in Slovakia. During the infringement period identified by the relevant Commision Decision (the Trucks Cartel)

The AG of course refers to Bier, Dumez France (direct damage in one person rules out an extra A7(2) forum for the third party (mother corporation) victim of indirect damage), and other core cases on A7(2) which this blog frequently refers to and /or has discussed:

C‑352/13 CDC: A7(2) locus delicti commissi for cartels is the court of the place where the cartel was definitively formed, confirmed in flyLAL and criticised by me inter alia here;

C‑352/13 CDC (holding ia that A7(2) locus damni for infringement of cartel is the victim’s registered seat); that solution too as the AG notes (44) was met by criticism both by Bobek AG in his Opinion in flyLAL and by scholarship;

C-30/20 Volvo: more emphasis Emiliou AG suggests on the link between the market affected by the anticompetitive conduct and the place where the claimants allege to have suffered harm; in my post on the case I point out the CJEU’s fuzziness on the issue;

He also distinguishes CJEU Tibor Trans‘ distinct view on (in)direct damage as follows (36-37) – footnotes omitted:

36. It is true, as the applicant notes, that in the judgment in Tibor-Trans (which related to the same collusive behaviour as that established in the Commission Decision at issue in the present case), the Court distinguished that case from the scenario in Dumez. The particularity of the facts in Tibor-Trans was that the applicant in that case, an end user of the trucks, did not purchase any trucks from the defendant directly, but did so through a dealership. However, that did not prevent the Court from finding that the applicant’s claim in that case concerned direct damage, because that damage was found to be the immediate consequence of an infringement of Article 101 TFEU, given that the overcharge resulting from the collusive agreement was passed on to that applicant by the dealers.

37. Such passing-on may occur within a supply chain where the alleged victim acquires the goods (or services) which have been subject to a cartel. That, however, is not claimed to have occurred in the case in the main proceedings. Instead, the applicant appears to present the initial harm suffered by its subsidiaries as its own.

(52) The AG points out that the distinguishing feature here is that the applicant’s registered seat is situated outside the affected market. (57) Applicant seeks to extend the application of the registered seat connecting factor to establish jurisdiction in relation to its claim in which it seeks compensation for harm suffered solely by other members of its economic unit.

Emiliou AG does not believe the competition law concept can simply be extended for jurisdictional services, referring also to Szpunar AG’s Opinion in C‑632/22 (service of documents) on which see prof Matthias Weller here. For his extensive arguments based on A7(2)’s requirement of proximity, predictability of forum, Gleichlauf (less convincing imo), and that BIa’s jurisdictional rules guarantee efficient enforcement (particularly in A4 domicile jurisdiction), see the Opinion.

His final conclusion is that (98)

the term ‘the place where the harmful event occurred’, within the meaning of Article 7(2) of Regulation No 1215/2012, does not cover the registered office of the parent company that brings an action for damages for the harm caused solely to that parent company’s subsidiaries by the anticompetitive conduct of a third party, and where it is claimed that that parent company and those subsidiaries form part of the same economic unit.

As my colleague Joeri Vananroye summarises the Opinion:

“In corporate law terms: yes to outsider veil piercing, no to insider reverse veil piercing. Outsiders may disregard legal structure and go for economic reality; but not those who set up that structure. See also: rules on derivate damages.”

Blame Bier /Mines de Potasse d’Alsace for this complex set of rules and distinguishing.

Geert.

EU private international law, 4th ed. 2024, 2.438 ff.

 

Posted on

Rechtbank Den Haag on forum contractus in a loan agreement between family: classic looking over the fence.

I am currently trying to have the Leuven conflict of laws students appreciate Article 7(1) Brussels Ia’s looking over the fence aka conflicts method. On Thursday we shall be reviewing CJEU Tessili v Dunlop and I wonder how many of the students will have seen this post (I am guessing perhaps 2 or 3 out of the 540 in class) for it might help them appreciate the exercise.

For contracts not caught by one of the passe-partout contracts listed in Article 7(1)b, per inter alia Jaaskinen AG (as he then was) in Cormans Collins, the CJEU Tessili v Dunlop formula still applies:  in the 4th ed of the Handbook 4.424 I put it like this

“For each specific obligation (later, as noted, subject to the Shenavai ‘principal obligation’ correction) the court(s) seised would establish ‘place of performance’ and hence jurisdiction on the basis of its own, residual private international law rules for applicable law. It applies its choice of law rules to determine which law governs the contract, and then uses that law to specify the place of performance, ultimately ruling whether it itself has or does not have jurisdiction, or has jurisdiction over only part of the claims. This is referred to as the ‘conflicts (of laws)’ method for deciding jurisdiction, also known as ‘looking over the fence’, seeing as the court looks over the fence between jurisdiction and applicable law in order to decide jurisdiction on the basis of applicable law. Per Tessili v Dunlop (para 13):

[the national court] must determine in accordance with its own rules of conflict of laws what is the law applicable to the legal relationship in question and define in accordance with that law the place of performance of the contractual obligation in question.

Prior to the 1980 Rome Convention, later the Rome I Regulation (see chapter three on applicable law for contracts), there was no harmonisation on deciding applicable law for contracts. This meant that, depending on which court is seised, the result of the looking over the fence exercise could and did have very different outcomes. (Even the Rome I Regulation, however (even more so under the Rome Convention), has gaps in its harmonising approach to the applicable law identification exercise, as I discuss in chapter three.)”

In current case, the agreement is one for the loan of a sum of money between a father and a son, albeit for an interest rate of 5% pa. Repayment of amounts due is now being pursued by a sibling, following the death of the father.

While loan agreements in the professional context arguably are services within A7(1)(b), in a family or friendship context arguably they are not. The Dutch court in current case [2.8] without expressing the family context issue follows Butcher J in Winslet & Ors v Gisel [2021] EWHC 1308 (Comm). As in Winslet, the court here then invited the parties (in an interlocutory judgment) to clarify their position on the conflicts method.

A first stop is Article 3 Rome I because the pursuing sibling argues [2.10] implicit choice of law was made for Dutch law.

The judge further points parties to Article 4(2) (the agreement not being covered by any of the default categories of Article 4(1) Rome I) Rome I’s

Where the contract is not covered by paragraph 1 or where the elements of the contract would be covered by more than one of points (a) to (h) of paragraph 1, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence.

and holds [2.11] that the characteristic performance in a loan agreement is carried out by the party loaning the sums. Defendant then argues that the father’s habitual residence at the time of the loan was in Sweden, making Swedish law the lex causae and leading to that law having to determine the place of performance for the purposes of A7(1). Claimant argues the father had already moved to The Netherlands.

In the later judgment once the further arguments of parties received, the judge refuses to entertain the question of implicit choice of law, seeing as the validity of a crucial document is uncertain, but does hold that the father was habitually resident in The Netherlands. Under Dutch law, the retained lex contractus, the payment of a sum of money owed to another, needs to be carried out at the creditor’s domicile at the time the payment is due. Claimant’s domicile (like the defendant’s) being in Sweden, that is where the forum solutionis is located.

Fun with conflicts….

Geert.

EU Private International Law, 4th ed. 2024, 2.424.

Posted on

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.

Posted on

Emiliou AG in BSH Hausgeräte v Electrolux. A solid narrow reading of CJEU GAT v LUK (patent infringement) and a most optimistic, contra legem reading of reflexivity.

Update 05 03 2024 see meanwhile concurring views by Lydia Lundstedt here.

Emiliou AG opined the day before yesterday in C‑339/22 BSH Hausgeräte GmbH v Electrolux AB. I flagged the case and discussed its context here.

The case in essence concerns two issues: the extent of the exclusive jurisdiction of the Article 24(4) court in infringement (as opposed to direct invalidity actions); and the question whether A24 works reflexively: ie whether the surrender of jurisdiction should also be applied in cases where the A24(4) court is not in an EU Member State.

The AG’s extensive contextualisation has the merit of summarising established authority on Article 24(4). This allows the AG for instance to reflect on the oddity of GAT v Luk. Despite the ‘object of the proceedings’ often being infringement of intellectual property rights, the CJEU held in that case that the moment the validity of the patent (or other relevant intellectual property rights) is at issue, exclusive jurisdiction of the A24(4) court is triggered. The CJEU rather unsuccessfully attempted to justify the distinction with its approach on the remainder of A24 eg in CJEU BVG.

The AG justifiably signals his disapproval with the fall-out of the GAT v Luk authority, seeing ia that (54)

the judgment in GAT makes the consolidation of infringement claims concerning the different ‘parts’ of a European patent before those courts an unattractive option. It encourages patent holders to start separate proceedings in the various States of registration of those ‘parts’ instead, since, at least, it is certain that the courts of those States are competent to rule on both the infringement and validity of ‘their part’ (as explained in points 26, 28 and 29 above). This creates, in turn, a risk that different courts take contradictory views on the same infringement dispute.

Also note (59) the strong rebuke of the GAT v LUK line in terms of the very nature of private international law

…such considerations do not reveal why, with respect to proceedings concerned with the registration or validity of patents, those courts should have jurisdiction to the exclusion of all others. In particular, the patent law of the State of registration is not so unique that only the courts of that State would have the ability to comprehend it. While it may be harder for them to do so, the courts of another Member State are perfectly capable of applying such a foreign law. To imply the contrary would be tantamount to questioning the very foundations of the Brussels regime (and the entire field of private international law). …

Ia (64) the AG however points out that unfortunately any call for the CJEU to reverse is futile seeing as Brussels Ia has codified it.

The extent of the exclusive jurisdiction of the Article 24(4) court in infringement proceedings.

Ia (37) the remaining unclarity therefore lies in the GAT v Luk consequences. National practice varies. Some courts practice a stay of the infringement proceedings until the A24(4) court holds on validity, and then insist on a return to the ‘infringement’ court: the “narrow reading” of GAT v LUK. Others carry out a complete referral of the case, including infringement, to the A24(4) court: the “broad” reading”.

In both of these scenarios the stay or referral decision is precarious (73) for there is no procedure under EU law for such referral or mutually respected temporary stay: there is no guarantee the court referred to will act as the first seized court might prefer.

The AG is in favour of the narrow reading: (69) this fits with the exceptional nature of A24; (71) it serves predictability (an echo of A24(2) in BVG): in the broad reading the reach of the jurisdiction of the court seized would depend on the invalidity  raised or not raised as a defence; (73) the possibility under national civil procedure rules to raise an invalidity defence even for the first time upon appeal would lead to a constant threat of torpedoing and once the proceedings stayed, the court first seized loses all grip on the claim and (74) by the time the case returns at all, claimant’s case in infringement proceedings started afresh may meet with statutes of limitation.

(77) ff bifurcation or as the AG calls it the ‘split’ in the proceedings is far from ideal, as (78) is the general implication of GAT v LUK that it forms an exception to the principle that points of defence ought not to impact on jurisdiction, or the reliance on national CPR, the delays etc. Yet the AG calls this route even if ‘less than ideal’, the ‘lesser of two evils’.

He then offers practical guidelines, seeking to give these a foundation in (88) the TRIPS Agreement, the finding in CJEU C‑365/88 Hagen that national CPR must not impact the effet utile of EU law, the TRIPS Agreement, Directive 2004/48, on the patent holder side the right to an effective remedy and, on the alleged infringer’s side, the rights of defence, both protected under Article 47 of the Charter.

(92) the AG suggests in particular that courts should only consider granting a stay where that challenge has a genuine prospect of success (taking into account the presumption of validity following the patent office’s assessment).

In general I have much sympathy for the AG’s narrow reading of GAT v LUK (and one would have hoped the review of Brussels Ia might trigger a proposal to solidify it in the Regulation). I am also genuinely curious to see how far the CJEU will go in picking up some of the guidelines.

The reflexivity issue.

The CJEU 3 judge chamber in IRNova f FLIR was very brief on this question and answered it promptly in the negative. The AG (97) agrees the answer is obvious in the sense that BIa cannot instruct third States courts to hear specific cases.

Unlike the AG however in my view the answer to the question that ‘in essence’ (98) is implied (whether A24(4) deprives Member State courts of the power to adjudicate the validity of third-State patents in the same way that those courts are deprived with respect to patents registered in other Member States) is, rebus sic stantibus, also obvious. Namely that unless the conditions of Articles 33-34 (the forum non conveniens “light” regime) are fulfilled, Article 4 domicile jurisdiction simply stands. Or as the Commission puts it (113), the Courts are “bound” to exercise A4 jurisdiction save in a narrow set of circumstances (i.e. the A33-34 set).

The AG (108) refers to IRNova to suggest A24-25 BIa cannot apply, as such, to dispute having connections of the kind envisioned therein with third States.

The AG posits ia that (117) BIa was not designed to take into account circumstances such as these and that the CJEU therefore should fill the gap. First of all I believe this is incorrect. A4 BIa arguably is a well documented express policy choice to accept EU courts jurisdiction in principle even over matters prima facie strongly linked with territory etc out off the EU. Further, that only A33-34 (and then only in the recital of the Regulation) entertain the possibility to take into account exclusive non-EU courts jurisdiction is a very strong a contrario statutory argument against CJEU freewheeling. The suggestion (118) borrowed from Briggs and Mills that “nothing in the wording of those provisions or in the related recitals indicates that they are meant to regulate exhaustively the possibility for Member State courts to decline jurisdiction in favour of the courts of third States”, echoes Ferrexpo and  imho is simply wrong, and neither Coreck Maritime (121) nor Mahamdia (122) have displaced Owusu.

The AG’s link (128) to public international law and the general appeal of the Moçambique rule are interesting but really just too remote in my view from Brussels Ia’s travaux and statutory provisions and the AG does not I believe properly present A33-34’s travaux or intention (139) ff.

The “implicit derogation from the mandatory effect of Article 4(1)” BIa which the AG posits (147) ff for both A24 and A25 (choice of court) jurisdiction, even construed as a “narrow discretion” (159) ff, is a most optimistic view on inviting the CJEU to rewrite Brussels Ia.

In conclusion, while the CJEU is likely to follow the AG on the narrow reading of A24(4), I would wager it will succinctly reject the arguably contra legem reflexive effect construction. But then as I have said before, I am not a betting man.

Geert.

EU Private International Law, 4th ed. 2024, 2.217 ff.

Posted on

CJEU does not follow its AG in Inkreal: Confirms wide, subjective scope of international element for choice of court.

As I had half hoped, half predicted, the CJEU today held differently than its AG had opined in C‑566/22 Inkreal aka Inkreal s. r.  v Dúha reality s. r. o..: 

an agreement conferring jurisdiction by which the parties to a contract who are established in the same Member State agree on the jurisdiction of the courts of another Member State to settle disputes arising out of that contract is covered under Article 25 Brussels Ia, even if that contract has no other connection with that other Member State.

The Court cites in support:

[15] ff: statutory wording: [17]: “the wording of [A25(1)] does not preclude an agreement conferring jurisdiction, by which the parties to a contract who are established in the same Member State agree on the jurisdiction of the courts of another Member State to settle disputes arising out of that contract, from being covered under that provision, even if that contract has no other connection with that other Member State.”

[18] ff: context: ‘civil matters having cross-border implications’ (recital 3) and ‘cross-border litigation’ (recital 26) are mentioned yet the ‘international element’ required is not defined. As the CJEU had already held in C-280/20, ZN v Generalno konsulstvo na Republika Bulgaria v grad Valensia, Kralstvo Ispania [the Bulgarian consulate], an equivalent concept must be used as in the order for payments Regulation. That defines the equivalent concept of ‘cross-border litigation’ as ‘one in which at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court seised’. In current case [23] the parties to that dispute are established in a Member State other than the Member State of the court which was seised on the basis of the agreement conferring jurisdiction at issue. Moreover, [24] a question relating to the determination of international jurisdiction clearly arises in the case, more specifically whether the courts having jurisdiction to settle this dispute are those of the Czech Republic, or those of the Slovak Republic as the Member State in which the two parties are established.

Further, [26], the interpretation of A25 must also be carried out in the light of the objectives of respecting the autonomy of the parties and enhancing the effectiveness of exclusive choice-of-court agreements, as referred to in recitals 15, 19 and 22 BIa.

Moreover, [27] ff, both predictability and legal certainty, core BIa objectives, are served by the inclusion of choice of court such as in the case at issue. [29] jurisdiction can readily be considered and [30] the possibility of concurrent proceedings is minimised. [31] should choice of court in these circumstances not be valid, BIa is likely not to apply and the application of residual national PIL is likely to lead to conflicting decisions. [32] ff for courts to have to consider additional elements capable of demonstrating the cross-border impact of the dispute concerned, would create uncertainty rather than remedy it.

[35] application of BIa here also demonstrates mutual trust and increased access to justice.

Finally [36] a parallel with the Hague Choice of Court Convention clearly was not sought, quite the contrary, BIa expressly not including a similar provision illistrates its diverging intention.

An excellent judgment echoing many of my earlier expressed sentiments on the issue and arguments.

Geert.

EU Private International Law, 4th ed. 2024, 2.30.

 

Posted on

Bourlakova v Bourlakov. Limitation periods and the Rome II procedural carve-out; the UK-EU Withdrawal Agreement and amended Brussels Ia claims; abuse of the anchor defendant mechanism; and a deferred A33-34 stay application.

This is possibly the longest title of any of my posts and rightly so for the issues in current judment are extensive. Bourlakova & Ors v Bourlakov & Ors (Rev1) [2023] EWHC 2233 (Ch) is a follow-up to Bourlakova v Bourlakov [2022] EWHC 1269 (Ch) which I discuss here; in the meantime Mr Bourlakov has passed away, leaving the other defendants.

Claimants ask for permission to amend their PoC (Particulars of Claim) including the proposed joinder of an additional claimant. Some of the Defendants have themselves made three related applications, namely (a) to adjourn the hearing of the Claimants’ amendment applications (b) for permission to rely on further evidence and (c) for a stay under A33 or 34 Brussels Ia of such amended claims for which the Claimants may be given permission.

The case first of all raises an interesting discussion on applicable limitation periods (attached to Panama law as the lex causae under Rome II) as compared to carved-out procedural issues under Rome II (and English residual conflicts law), subject to English law as lex fori. It then discusses a number of jurisdictional issues.

First, on the limitation periods, discussed by Smith J [56] ff against the background of the Panamian Penal Code (‘PC’). Of note is that defendants only have to raise a reasonably arguable limitation defence in relation to these new damages claims (hence the discussion need not contain the Alfa and Omega of the issues) and it is worthwhile to see the competing arguments in full [64] ff (footnotes omitted):

Panamanian law admits of a civil claim in damages for those guilty of a criminal offence. The specific offences relied upon by the Claimants are those identified in Articles 220, 243 and/ or 253 PC. Although the route by which this is achieved is contentious, it is common ground that Panamanian law governs the question of any available limitation defence to claims brought under these articles. It is also common ground that the damages claims could be brought in Panama in different ways, namely

(i) within criminal proceedings;

(ii) before the civil courts without awaiting the outcome of any criminal trial; or

(iii) before the civil courts after the criminal court has issued its final liability ruling.

[Defendants] say that if, as here, a claim for civil damages arising from alleged criminal acts under Articles 128 and 129 PC is filed without a criminal conviction having first been obtained or in the absence of criminal proceedings, this would have to be submitted as an extra-contractual or tortious claim under Article 1644 of the Civil Code (CC) which provides that:-

“Whoever by act or omission causes damage to another, through fault or negligence, is bound to repair the damage caused. If the act or omission is attributable to two or more persons, each of them shall be jointly and severally liable for the damage caused.“

[Defendants] also say that the relevant limitation period for such a claim is one year by operation of Article 1706 CC which provides:-

“The civil action to claim indemnification for slander or insult or to demand civil responsibility for the obligations resulting from guilt or negligence to which Article 1644 refers, shall prescribe in the term of one (1) year, counted from the moment in which the victim knew.

If criminal or administrative action is timely initiated for the facts foreseen in the previous paragraph, the prescription of the civil action shall be counted from the moment when the criminal judgment or the administrative resolution became firm, as the case may be.

For the recognition of the civil claim, in no case is the intervention of the criminal jurisdiction essential.”

The Claimants disagree with this analysis. They say that a claim for civil damages for an alleged criminal act may be brought directly under Articles 128 and 129 PC (without regard to Article 1644 CC) by operation of Article 977 CC which provides that :-

“Civil obligations arising from crimes or offences shall be governed by the provisions of the Penal Code.”

The Claimants say that the applicable limitation period for a claim under Articles 128 and 129 PC is seven years by operation of Article 1701 CC which provides that:-

“Actions in personam for which there is no special limitation period shall prescribe in seven years.”

This is where the Rome II procedural carve-out becomes relevant, and I will limit the discussion here to the Rome element: [71]

Before which court in Panama any claim could be asserted is a matter of procedure (whether considered under Rome II or the common law). According to Dicey, Morris & Collins on the Conflict of Laws (16th ed., at [4-074]), this includes the question whether a civil action can be brought in respect of alleged criminal acts before criminal proceedings have been taken. Since the English court is only concerned with the relevant foreign law as it applies to matters of substance, the Claimants are entitled to rely on the limitation period which remains available under Article 116 PC even if criminal proceedings have not begun and may not yet eventuate.

[72 [Defendants] say that there is a world of difference between the English court ignoring as a bar to recovery a procedural requirement for criminal proceedings prior to the commencement of a civil action (a proposition from which they do not demur) and the broader proposition (from which they do) that, where multiple potential routes for bringing civil damages claims are available locally, it matters not which particular procedural route the claimant has, in fact, adopted. The Claimants have brought a claim where there has been no criminal conviction as they were entitled to do so under Panamanian law. Having done so, the limitation period is one year. No question of having or failing to comply with local procedural requirements arises.

[73]

I understand the logic of the Claimants’ position that, being a matter of procedure, it is irrelevant which particular course the Claimants may, in fact, have pursued in this case. However, it seems to me that the distinction between the position indicated in Dicey, where the need for a criminal conviction is a bar to the commencement of a civil action, and the position here, where multiple routes are potentially available, may, in fact, be more meaningful than the Claimants suggest. I am therefore unable to say, without more direct authority on the point at least, that the [defendants’] limitation defence falls short of the reasonably arguable threshold on this account.

yet on the point of the actual damages sought, and other elements of the claim, the defence does fall short and the eventual conclusion is that the limitation defence fails. The judgment is a bit dense to read on the factual elements of the various claims however its overall emphasis on procedure v lex causae is really quite relevant.

The judgement subsequently discusses the jurisdictional issues with given the amendment of the claims, a shift from the alternative Monegask forum before Trower J, to [107]Panama or Florida now the suggested alternative fora to England.

[108] The jurisdictional issues arising on these amendment applications are whether:-

(i) despite the UK’s withdrawal from the EU, the Brussels Recast (including Article 8(1)) applies to the proposed new claims against the Kazakovs and Mr Anufriev;

(ii) in relation to the Claimants’ proposed new claims subject to the common law regime, England, Panama or Florida is clearly and distinctly the appropriate forum;

(iii) the Claimants’ proposed new claims against the ‘anchor defendant’, Leo Holding, are artificial and abusive such that the amendment applications fail for lack of jurisdiction, whether through their inability to invoke Article 8(1) of the Brussels Recast or the relevant jurisdictional gateway at common law;

(iv) Gatiabe is a ‘necessary or proper’ party with respect to the proposed new claims concerning the ownership of that company; and

(v) if the EU jurisdictional regime does apply to the Kazakovs, whether a stay should be granted under Articles 33 and 34 of the Brussels Recast of any new claims the Claimants might be permitted to advance.

(i) Application of Brussels Ia at all following the UK-EU Withdrawal Agreement: “legal proceedings instituted before the end of the transition period”

Article 67.1(a) WA provides that “in respect of legal proceedings instituted before the end of the transition period and in respect of proceedings or actions related to such legal proceedings pursuant to Articles 29, 30 and 31 of [the Brussels Recast]”, the provisions of the Brussels Recast shall continue to apply. Are permitted amendments caught by ‘proceedings instituted’? [116-117] the judge, referring to Simon v Taché, that Article 67 WA preserves the applicability of Brussels Recast to “proceedings” and not to particular claims or, here, unamended claims in proceedings.

(ii) and (iii) Abuse of the anchor defendant mechanism

The judge [128] sees no reason under BIa to conclude that claimants’ claims against Leo Holding are artificial, abusive or do not reflect a genuine intention to sue the ‘anchor defendant’, and repeats that [134] conclusion under the obiter English gateway.

(iv) a lengthy and largely obiter forum non conveniens discussion ends [212] with both Florida and Panama being rejected  as a more appropriate forum, and (v) [213] the A33-34 stay was not discussed at hearing but, it seems, may be revived at a later stage (which would be highly relevant) and therefore [223] has been deferred.

Quite the judgment.

Geert.

Posted on

CJEU confirms strict reading of Article 24(1) Brussels Ia’s tenancies gateway in Roompot Services.

In Case C-497/22 EM v Roompot Service BV, the CJEU has confirmed its strict reading of Article 24 Brussels Ia’s ‘tenancies of immovable properties’ provision, confirming Richard de la Tour AG’s convincing Opinion [ia his reasoning (35) ff].

Proceedings are between EM, domiciled in Germany, and Roompot Service BV, which has its registered office in the Netherlands and operates a holiday park there, comprising tourist accommodation.

[15] Per CJEU Rösler (241/83), Hacker (C‑280/90) and Dansommer (C‑8/98), contracts involving the letting of holiday accommodation abroad generally fall within the exclusive jurisdiction of the courts of the Member State in which the immovable property concerned is situated. An exception can be made to that principle only when the contract concerned is a contract of a complex nature, that is to say, a contract providing for the performance of a range of services in consideration for the lump sum paid by the customer.

[16] the additional services in the present case were the offer, on the internet page of the defendant in the main proceedings, of a variety of bungalows with different facilities, the booking of the bungalow chosen for the customer, reception of the customer at the destination and the handing over of the keys, the provision of bed linen and the carrying out of cleaning at the end of the stay – the question therefore is whether this qualifies the contract as being one of a ‘complex nature’, or [17] whether these are merely minor ancillary services, which arguably do not cancel out A24.

After recalling the restricted nature of A24 in general, the Court [27] repeats what it said most recently in Obala re the ratio legis for A24(1) exclusive jurisdiction:

as regards tenancies of immovable property in particular, it is clear from that case-law that that exclusive jurisdiction is justified by the complexity of the relationship of landlord and tenant, which comprises a series of rights and obligations in addition to that relating to rent. That relationship is governed by special legislative provisions, some of a mandatory nature, of the State in which the immovable property which is the subject of the lease is situated, for example, provisions determining who is responsible for maintaining the property and paying land taxes, provisions governing the duties of the occupier of the property as against the neighbours, and provisions controlling or restricting the landlord’s right to retake possession of the property on expiry of the lease

[29]  core consideration is whether the subject matter of that dispute relates directly to the rights and obligations arising from that tenancy (reference to CJEU Sharewood by analogy).

Two main lines of enquiry have to be pursued:

Firstly, the nature of the services at issue: 

[34] the categorisation of a contract relating to the performance of a range of services, in addition to the short-term letting of holiday accommodation, requires (reference to Richard de la Tour AG (28)) an assessment of the contractual relationship in question as a whole and in its context. [39] Where additional services are offered in return for a lump sum on the same terms as those offered to customers of a hotel complex, A24(1) is not engaged. By contrast, any additional service that is ancillary in nature to such a letting would not necessarily modify the categorisation of the contract concerned to that of tenancy, but would have to be examined in the context of that contract.

[40] neither cleaning at the end of the stay nor providing bed linen are sufficiently weighty services liable to distinguish, on their own, a tenancy from a complex holiday organisation contract. Although it is true that cleaning usually is the responsibility of the tenant at the end of a lease, it cannot be ruled out that, due to the particular nature of seasonal lettings of holiday homes, the lessor may take on that task, without that modifying the nature of the contract as a tenancy of immovable property. The same holds true for providing bed linen and handing over keys.

[41] On the other hand, information and advice, booking and reception services forming part of the offer proposed by a tourism professional, together with the letting, in return for a lump sum, constitute services which are generally provided as part of a complex holiday organisation contract.

Further, the capacity in which the travel organiser concerned intervenes in the contractual relationship at issue in the main proceedings.

[43] Per CJEU Hacker etc, the fact that the travel organiser is not the owner of the accommodation, but is subrogated in the owner’s rights, is not such on its own as to modify a possible categorisation of the contract concerned as a tenancy of immovable property. On the other hand if that travel organiser intervenes as a tourism professional and proposes, in the context of an organised stay, additional services in consideration of which the offer is accepted, that fact may be an indication of the complex nature of that contract.

In conclusion [44], while the national court will have to confirm, the circumstances suggest A24(1) is not engaged.

The judgment is a useful reminder of the A24(1) lines of enquiry.

Geert.

EU private international law, 4th ed. 2024, 2.182 ff.