Posts Tagged Regulation 1215/2012
LIC Telecommunications et al v VTB Capital et al. High Court suggests autonomous EU approach to asymmetric choice of court. Also discusses contract and tort distinction, and abuse of process.
In  EWHC 1747 (Comm) LIC Telecommunications et al v VTB Capital et al Moulder J suggests an unorthodox interpretations of Article 25 of the Brussels Ia Regulation. (Note also her very critical view at 22 of one of the experts, whom she found having confused his role as expert with a role as advocate). Much of the lengthy judgment is devoted to intricate discussions of Luxembourgish corporate law (hence the need for expert evidence) and the jurisdictional issues are, somewhat illogically, discussed towards the end of the judgment, at 245 ff.
Maze, one of the defendants, acts as a manager of V2 pursuant to a directorship agreement dated 26 May 2015 (the “Directorship Agreement”). It relies on the effect of clause 19 of the Directorship Agreement and submitted that claims against it are subject to the exclusive jurisdiction of the courts of Luxembourg pursuant to Article 25 Brussels Ia. Clause 19 provides:
“for the benefit of the Manager, the Shareholder and the Company hereby irrevocably, specially and expressly agree that the courts of Luxembourg city have jurisdiction to settle any disputes in connection with this Agreement and accordingly submits to the jurisdiction of the courts of Luxembourg city. Nothing in this clause limits however the rights of the Manager to bring proceedings against the Company in connection with this Agreement in any other court of competent jurisdiction or concurrently in more than one jurisdiction.”
The clause is asymmetric aka hybrid aka unilateral. (See e.g. my discussion of Rothschild etc.). These clauses as I have noted elsewhere highlight the clear insufficiency of Brussels Ia’s new lex fori prorogati (including renvoi) rule for choice of court. Which court has been prorogated, hence also lex fori prorogati, is not clear when the clause is asymmetric.
Moulder J discusses  EWHC 161 (Comm) Commerzbank v Liquimar Tankers as precedent: I reviewed it here and signalled at the time that it would not be the last we would hear of the issue. In that case Cranston J held ‘There is nothing in Article 25 that a valid jurisdiction agreement has to exclude any courts, in particular non EU Courts. Article 17, penultimate paragraph, of the Brussels Convention recognised asymmetric jurisdiction clauses. To my mind it would need a strong indication that Brussels 1 Recast somehow renders what is a regular feature of financial documentation in the EU ineffective.‘ I was never taken by that conclusion viz the Brussels Convention: its Article 17 reference to a party having ‘benefit’ from choice of court does not relate entirely to the same discussion on asymmetric clauses (Peralla v Codere  EWHC 1182 (Comm) which I discussed here illustrates that difference).
At any rate I disagree with Moulder J’s statement at 254 that
It is now common ground that it is a question of autonomous EU law and not a question of national law. (It was I believe accepted that the proviso “unless the agreement is null and void as to its substantive validity” refers to issues such as capacity, fraud and mistake, not whether particular kinds of “choice of court” agreements are permitted under the Regulation).
Asymmetric clauses are the first example often given when highlighting the limited cover of Article 25 Brussels I a (and the need for certainty on the lex causae for choice of court). There is no autonomous interpretation there at all. I do agree however with the conclusion at 261: that Luxembourg courts, applying EU law, would not uphold such clauses was not made out on the evidence. Luxembourgish courts at least when they apply Luxembourgish law, generally uphold the validity of asymmetric choice of court.
At 263 ff then follows discussion of Article 7(1) and 7(2). Much of the authority discussed has been reviewed on this blog. (Including Bosworth (Arcadia) which in the meantime has been held by the CJEU but without the contract /tort element – the CJEU found against a contract of employment). Moulder J holds that Article 7(2) is engaged, not 7(1), and on the former discusses locus delicti commissi with reference to JSC BTA Bank v Khrapunov. At 295: it is not sufficient that there are meetings in England to implement the conspiracy, it is the making of the agreement in England which is to be regarded as the harmful event. Claimants have not supplied a plausible evidential basis that the agreement was made in England. Their evidence is consistent with a case that the conspiracy was implemented in England but that is not sufficient.
As for locus damni, at 298: Even though the share purchase agreement was under English law, it is the loss of the shares in the Luxembourg company which is the pleaded damage not the agreement to sell or the auction. The Vivacom group consists of Bulgarian telecommunications companies which were held by InterV through Viva Luxembourg Bulgaria EOOD (paragraph 3 of the Agreed List of Agreed Issues). Locus damni is Bulgaria, perhaps Luxembourg. But not England.
Finally, abuse of process considerations are linked to English procedural law (whether claims should have been brought sooner).
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9, Heading 188.8.131.52, Heading 184.108.40.206 .
Reitbauer: contract, pauliana and exclusive jurisdictional rules. CJEU simply applies Feniks, its forum contractus view remains unconvincing.
Update 18 July 2019 for an alternative view, see Michael McParland QC here. Michael’s point of view is that of the construction sector, and avoiding ‘debt dodging’. Ours (mine, below, and Michiel Poesen’s here) is the excessive stretch of the notion of contract.
Tanchev AG’s focus on fraus arguable reconciles both – but the Court did not follow.
I reviewed Tanchev AG’s Opinion in C‑722/17 Reitbauer here. Readers best refer to it to get insight into the complex factual matrix. The CJEU held on Wednesday last week- no English version of the judgment is as yet available.
In essence applicants are attempting to anchor their pauliana unto A24(5)’s enforcement jurisdiction. Failing that, the anchor might be A24(1)’s locus rei sitae exclusive jurisdictional rule.
The Court like the AG rejects jurisdiction on the basis of Article 24(5). They are right: A25(5) must not resurrect merits claims on much wider issues (claim for compensation of applicants’ debt, objections concerning the non-existence of a claim underlying a judicially ordered auction, and concerning the invalidity of the creation of the pledge for that claim under a loan agreement).
Court and AG are also right in rejecting Article 24(1) jurisdiction. The issues at stake are far removed from the reasons which justify exclusive jurisdiction. (The Court refers to Komu, Schmidt, Weber).
Then, surprisingly (for it was not part of the questions asked; the AG entertained it but that is what AGs do) the Court completes the analysis proprio motu with consideration of Article 7(1)’s forum contractus rule, with respect to claimants’ argument that the acknowledgement of debt by Isabel, cannot be used against them. Tanchev AG as I noted essentially suggested a limitation of Feniks to cases of fraus – arguably present here. At 59-60 the Court simply notes that all creditors were ‘contractually’ linked to Isabel C, and then applies Feniks to come to a finding of contractual relation between claimants and Mr Casamassima: without any reference to the fraus element (I had indeed suspected the Court would not so quickly vary its own case-law).
The AG did not discuss the place of performance of the contract (between Reitbauer et al and Mr Casamassima – this was exactly one of the sticky points signalled by Bobek AG in Feniks). The CJEU however does, and at 61 simply identifies that as the place where the underlying contract, between Isabel C and the building contractors, had to be performed: that is, the place of the renovation works in Austria.
That an Article 7(1) forum was answered at all, is surprising. That the place of performance of that contract is straightforwardly assimilated with the underlying contractual arrangement, is not necessarily convincing. That Feniks would not so soon be varied (if at all), was to be expected.
Forum contractus is surely stretching to forum abundantum.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 220.127.116.11
Percival v Moto Novu. Your tutorial on enforcement of judgments under Brussels Ia, courtesy of Justice Murray.
In  EWHC 1391 (QB) Percival v Moto Novu LLC Murray J considers the ins and outs of Article 38 Brussels Ia.
The dispute arose out of an aborted property transaction in Italy. Mr Teruzzi and Ms Puthod are husband and wife. La Fattoria was a “pass-through” company incorporated under Italian law and owned by Mr Teruzzi and Ms Puthod through which the property at the centre of the dispute was temporarily owned. It has since been dissolved.
By an Assignment of Rights of Judgment dated 28 March 2011 (but signed by the parties on 29 June 2011) and governed by the laws of the Commonwealth of Massachusetts (“the 2011 Assignment”), Mr Teruzzi assigned to the respondent, Motu Novu LLC (“Motu Novu”), a Delaware limited liability company, all of his right, title and interest in the Tribunal Judgment and the CA Milan Judgment. There is a dispute between the parties as to whether the 2011 Assignment was also effective to transfer the right, title and interest of Ms Puthod and La Fattoria in those judgments or, if not, whether that fact is relevant to the effectiveness of the registration.
At 8: Title III (the recognition and enforcement Title) involves two stages: i) under Article 39 of the Regulation, a first stage involving only the applicant, who must be an “interested party” and who applies ex parte to the relevant “court or competent authority” listed in Annex II to the Regulation to obtain an order for registration of the foreign judgment in order to permit enforcement locally; and ii) under Article 43 of the Regulation, a second stage, inter partes, during which the respondent (the judgment debtor) has the opportunity to raise certain limited objections by lodging an “appeal” (under English CPR rules this would be an application to set aside the order).
Under Article 44 of the Regulation, the order made on appeal under Article 43 is subject to a single further appeal on a point of law.
At 11: The ex parte stage of the registration process is governed by Articles 38 to 42 of the Regulation. The inter partes stage is governed by Articles 43 to 47. The remainder of section 2 of chapter III of the Regulation, Articles 48 to 52, deals with miscellaneous points that do not arise in this case, other than in relation to Article 48 (undue delay).
The process is further described in detail in the judgment. This is most helpful. Unless one has done one of these oneself, in all Member States the actual procedure is often shrouded in various levels of fog.
Of longer term authority interest is the discussion of the mistake made at an earlier stage, to register all 3 Italian judgments even though under Italian law only one of them was actually enforceable. At 44 Murray J in my view justifiably excuses this error: there is nothing ‘in the Regulation, or otherwise, (that) limits an applicant’s registration of a foreign judgment to the proportion to which he is entitled. I have seen no authority for that proposition.’
What is also of note is the concept of ‘interested party’. At 45:
The term “interested party” is not defined in the Regulation, but a person who is the assignee of a named judgment creditor, even where there are other named judgment creditors, is clearly an interested party. It seems to me fundamentally incompatible with the deliberately limited and mechanical nature of the registration process under chapter III of the Regulation that the registering court or competent authority should be required to enquire into the nature and extent of an applicant’s interest in a judgment, beyond what is necessary to establish prima facie that the applicant is an interested party.
I believe this is right. That the proceedings leading to the Italian Judgment were served on the Original Claimants on 17 January 2011, pre-dating the 2011 Assignment by over two months has therefore become irrelevant (at 48).
Intricate detail of Title III is not often litigated. This judgment is noteworthy.
(Handbook of) EU private international law 2nd ed. 2016, Chapter 2, Heading 2.2.16.
Back to the 80s. Arthur Scargill, submission (voluntary appearance) under Brussels Ia and applicable law for statutes of limitation.
In  EWHC 1359 (Comm) National Union of Mineworkers v Organisation Internationale de l’energie et des mines defendant is French-domiciled and represented by its chair, Arthur Scargill. That’s right, many of us whether Brits or not will remember him from the 1970s and 1980 mine strikes. (Unlike what some think, he did not though feature in the Tracey Ullman cover of Madness’ ‘my girl’: that was Neil Kinnock.
Of more immediate relevance for the blog is the discussion at 19 ff on jurisdiction and applicable law.
Defendant is an international body to which a number of trade unions are affiliated. Those unions operate in different countries but all represent workers engaged in the fields of mining and/or energy supply. The name the Defendant uses in English is the International Energy and Mineworkers’ Organisation (“the IEMO”) and it is the successor to the International Mineworkers’ Organisation (“the IMO”) following a merger in 1994.
The proceedings relate to the parties’ respective rights in relation to sums recovered by the Defendant from Mr. Roger Windsor in August 2012 after prolonged legal proceedings in the French Republic and in England. Those proceedings were undertaken in the name of the Defendant but funded in part by the Claimant. There is a shortfall between the sums recovered and the amounts of the principal debt and the legal costs of the proceedings. The parties are in dispute as to the distribution of the sums recovered from Mr. Windsor; as to which should bear any shortfall between the sums recovered and the costs incurred in the proceedings; and as to the amounts which each has paid by way of costs in those proceedings.
The underlying indebtedness which resulted in recovery being made against Mr. Windsor derived from a loan of £29,500 which the Claimant made to him in 1984. He was then the Claimant’s Chief Executive Officer and the loan was made by way of assistance with house purchase following the relocation of the Claimant’s headquarters from London to Sheffield in 1983. There was a repayment of that loan in November 1984 but it is common ground that to the extent that there was such a repayment it came from funds which had been lent to Mr. Windsor. In 1986 the right to recover payment from Mr. Windsor (either of the original loan or of the subsequent loan) was assigned to the IMO.
Claimant argues the courts of England and Wales have jurisdiction by reason of Articles 7(1) and 25(1)(b) Brussels Ia (by virtue of an agreement made in 1990), and that in any event defendant is to be treated as having accepted that the court has jurisdiction to try this matter (an Article 26 ‘prorogation’, ‘submission’ or ‘voluntary appearance’ in other words).
Eyre J at 24 agrees that submission has taken place: CPR rules (Pt11) provide the details the procedure to be followed by a defendant contesting jurisdiction. Defendant did make an application to the court within 14 days of filing the acknowledgement of service, as requested by CPR 11. However, it expressly accepted that the application was to be regarded as relating to the questions of limitation and of the effect of the Release Agreement. In its application it made extensive reference to Brussels Ia but did so in that context. In particular that material was put forward in support of the contention that the claim was statute-barred either by reference to the Limitation Act 1980 or by reference to the French limitation provisions. There was in other words no wider or more fundamental challenge to the court’s jurisdiction and the realisation probably in hindsight that jurisdiction may not be that straightforward, cannot impact on that original application.
Had there not been submission, interesting discussions could have ensued I suspect on the place of performance of the agreement (unless clear choice of court had been made), England as a forum contractus, and I for one shall be using the case in my classes as a good illustration of the ‘conflicts method’ (looking over the fence)
Attention then turns to the issue of applicable law for the time-barred argument: at 26: ‘Defendant also argued that the proceedings were to be regarded as subject to French law and in particular the French limitation provisions which impose a time limit of three years for claims. The Defendant made reference to the Civil Jurisdiction and Judgments Act 1982 and the Foreign Limitation Periods Act 1984. The contention was that French law was applicable because the judgments against Mr. Windsor were obtained in France and then registered in England and Wales. That argument was misconceived. Such an argument might have relevance if the issue were one of the enforcement of the judgments against Mr. Windsor though I make no finding on that question. The current proceedings are not concerned with the enforcement of the judgments against Mr. Windsor but with the distribution of the sums which have been received by the Defendant as a result of the litigation against Mr. Windsor. It follows that the provisions to which the Defendant made reference can have no relevance to the current proceedings. The Defendant made passing reference to the fact that it is domiciled in France but this was not the principal basis of the contention that French law was applicable and without more it would not cause the parties’ dealings to be governed by French law. In those circumstances the parties’ rights and liabilities are to be determined by reference to the law of England and Wales and any questions of limitation are governed by the Limitation Act 1980.‘
I am not privy to the submissions on applicable law, but I am assuming that there must have been some discussion of the impact of the 1980 Rome Convention. Not the Rome I Regulation which would not have applied ratione temporis. That Regulation like Rome II has not altogether straightforward provisions (as I have noted on other occasions) on procedure being covered by the lex contractus. Whether Eyre J classifies the limitation issue as being covered by English law per lex fori or alternatively as lex causae (lex contractus of the 1990 agreement) is not clear.
Back in the 80s I would have never dreamed of bumping into Mr Scargill again in the context of an interesting conflict of laws issue.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 1, Heading 1.3.1, Chapter 2, Heading 2.2.7.
Bonnie Lackey v Mallorca Mega Resorts. High Court throws a wide net for jurisdictional privileges of consumers.
I have waited a little while to discuss (I had tweeted it earlier)  EWHC 1028 (QB) Bonnie Lackey v Mallorca Mega Resorts. It is a good case for an exam essay question and that is what I used it for this morning (albeit in simplified form, focusing on the consumer title).
Defendant is domiciled in Spain, and is hereafter referred to as ‘the Hotel’. Claimant was one of a group of friends who went on holiday to Magaluf in Mallorca, Spain. The booking was made in May 2017 by Ms Donna Bond, who was one of the party and a friend of Bonnie Lackey. The Agency’s Booking Conditions stated
‘references to “you” and “your” include the first named person on the booking and all persons on whose behalf a booking is made …’.
Section A, applicable to all bookings stated:
“By making a booking, you agree on behalf of all persons detailed on the booking that you have read these terms and conditions and agree to be bound by them”.
In my exam question I have left the agency out of the factual matrix. Its presence is immaterial for the case for the agency acts, well, as an agent: contract is between clients and the hotel direct.
The group were staying at the site owned and operated by the Hotel. It is agreed between parties that the Agency’s and Hotel’s marketing meets with the Pammer Alpenhof criteria, in other words that they direct their activity at England. Claimant, Ms Lackey, who is domiciled in England, was seriously injured in the ‘wave’ pool and is now tetraplegic. Damages application is for £9 million given the high cost of care for the now 41 year old claimant.
A first discussion concerned the insurance section (not part of the exam essay)(15 ff). Generali (of Spain) were the hotel’s insurers and had already accepted jurisdiction for the English courts. Their liability though was capped at an absolute max of 0.45 Million Euros – far off the claim. Claimant’s hope was that Article 13(3) Brussels Ia as Clyde point out, might be used for a claim anchored unto Generali. Here, the High Court followed the authority of Hoteles Pinero Canarias SL v Keefe  EWCA Civ 598, see references to EU law there. That case went up to the Supreme Court and thence to the CJEU where it was taken off the roll following settlement. In any event, following Keefe, Davison M in Bonnie Lackey held that jurisdiction was conferred on the English courts by Articles 11 and 13 BIa, (contained in Section 3) which permit a claim here against the insurer and the joinder of the hotel to that claim. Master Davison rejected suggestions for the need of a CJEU reference among others because he also upheld jurisdiction under the consumer title. The essential question here was whether there is a need for complete identity between the consumer referred to in Article 17(1) and the consumer referred to in Article 18(1) BIa.
Davison M suggests there need not, referring in particular to the Regulation’s aims to protect the weaker party, and to rule out as much as possible the risk of irreconcilable judgments.
Defendant’s reference to Schrems was considered immaterial. At 39: ‘Plainly, the consumer bringing the claim must be a beneficiary of the consumer contract or at least within its ambit. That does not mean that she personally must have concluded it. To borrow again from the judgment of Gloster LJ in Keefe, there would be no linguistic or purposive justification for such a restrictive interpretation.’ I am not sure I agree, not at any rate without proper discussion of ‘within its ambit’. The CJEU’s case-law on the protected categories does evidently aim to protect weaker categories and interpretation of same must serve that purpose. However the CJEU at the same time also emphasises the fact that these sections are an exception to the general rule and therefore must not be applied too widely, either.
Master Davison cuts short too extensive a discussion of the ‘ambit’ issue, by referring to the General Terms and Conditions – GTCS: the consumer who booked, accepted these GTCS ‘on behalf of all persons detailed in the booking’. At 40: ‘The hotel deployed no evidence of any kind to displace the effect of these terms, (which, I would add, are standard terms to be expected in a contract of this kind). A person who contracts through an agent has still “concluded” a contact. Thus, all argument about the need for complete identity between the consumer referred to in Article 17.1 and the consumer referred to in Article 18.1 is redundant. In each case it was the claimant, Ms Lackey.’ Whether counsel should have made more noise about this issue I do not know, however I would have expected discussion here of the general respect the Regulation has for privity of contract (which I discuss repeatedly on the blog).
I do not think this case will settle the matter. Its outcome evidently is positive (particularly considering that for Ms Lackey it will really not be straightforward to attend trial in Spain). However its legal reasoning cuts a few corners.
I would expect my students to discuss the need for effective protection of consumers ‘v’ the exceptional character of the section; and privity of contract which the CJEU flags on several occasions. Each with proper case-law references.
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.
Bobek AG Opined early May (excuse posting delay) in Case C-347/18 Salvoni v Fiermonte. The referring court enquires whether the court of origin tasked with issuing the Article 53 Certificate (issued with a view to enabling swift recognition and enforcement) may, of its own motion, seek to ascertain whether the judgment whose enforcement is sought was issued in breach of the rules on jurisdiction over consumer contracts, so that it may, where appropriate, inform the consumer of any such breach and enable her to consider the possibility of opposing enforcement of the judgment in the Member State addressed.
A related issue therefore to the CJEU judgment in Weil last week.
Mr Alessandro Salvoni, a lawyer based in Milan, asked the Tribunale di Milano (District Court, Milan) to issue Ms Anna Maria Fiermonte (who resides in Hamburg) with a payment order for an amount owed to him as consideration for the professional services rendered by him in connection with legal proceedings concerning a will. Payment order was granted, no challenge was made by Ms Fiermonte (at 24 the AG emphasises that evidently, the court needs to check whether proper service was made). Mr Salvoni then requested the same court to issue the Article 53 Certificate with respect to that order. However this time the same court (with the AG at 22 one can assume that composition was different) proprio motu (and belatedly: see at 15) classified the relationship as B2C under the relevant provisions of Brussels Ia. Ms Fiermonte should have been sued in Hamburg.
Bobek AG courteously calls the court’s initiative ingenious and well-intended (at 29) but has no choice but to conclude that the Regulation simply has no tool for the Court somehow to mitigate let alone correct its earlier mistake. In a gesture effectively of public service (at 34; this rescues something useful from the otherwise fairly futile exercise; I doubt the CJEU will do something similar), the AG then rephrases the question into a more general one, which is detached from the specific course of action apparently contemplated by the national court: Is a national court, when issuing the Article 53 Certificate, entitled (or even obliged), under EU law, to ascertain whether the judicial decision that is to be certified was issued in breach of the rules on jurisdiction over consumer contracts?
At 44 ff the AG delightfully side-steps the chicken and hen issue of the C-54/96 Dorsch criteria (is an A53 court a ‘court’ entitled to preliminary review under Article 267 TFEU) and eventually concludes that there is no room for the A53 Court to assess the application of the consumer title. At 54: ‘
The interpretation of [A53] proposed by the referring court cannot easily be reconciled with the above considerations [speed; simplicity: GAVC]. In particular, that interpretation would in effect back-pedal on one of the main features of the new system introduced by Regulation No 1215/2012. Indeed, the checks that were previously made in the Member State addressed when issuing the exequatur would not be eliminated, but merely shifted to the certification stage carried out in the Member State of origin. That reading of the provision would thus run against the logic and spirit of Regulation No 1215/2012.’
At 81 and 82 the likely outcome of course is pointed at by the AG: Article 45(1)(e)(i) and Article 46 BIa grant consumers a special ground of refusal of recognition and enforcement in cases where the judgment in question conflicts with the jurisdictional rules for the protected categories. This ground has now been handed Ms Fiermonte on a plate – leaving the Milan courts with red cheeks.
(Handbook of) European private international law, 2nd ed. 2016, Chapter 2, Heading 18.104.22.168, Heading 2.2.16.