Tag: residual jurisdiction

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ROI Land Investments. The CJEU on letters of comfort and their leading to a qualification as employment cq consumer contract for jurisdictional purposes, and on more generous national rules for the protected categories.

In an interesting judgment, the CJEU yesterday held (no English edition yet) in C-604/20 ROI Land Investments Ltd v FD on protected categories suing a defendant not formally associated with the claimant by a clear contract of employment. That the defendant is not domiciled in the EU is in fact of less relevance to the issues.  I had somehow missed Richard de la Tour AG’s Opinion on same (it happens to the best of us).

Claimant in the main proceedings is FD, domiciled in Germany. Defendant is not his current employer and is not domiciled in a Member State. Yet by virtue of a letter of comfort it is directly liable to the employee for claims arising from an individual contract of employment with a third party. The gist of the case is whether an employee can sue this legal person under the employment title if the contract of employment with the third party would not have come into being in the absence of the letter of comfort.

The slightly complex three part construction, transferring relationships of employment, essentially is one of tax optimisation via Switserland. FD used to be employed by ROI Investment, a Canadian corporation, before his contract was transferred to R Swiss, a Swiss SPV created for the very purpose of the operation. ROI Investment via a letter of comfort effectively guaranteed the outstanding wages due to FD. FD’s contract with Swiss was ended, a German court held this to have been done illegally and ordered Swiss to pay a substantial sum whereupon Swiss went into insolvency. FD now wishes to sue the Canadian ’employer’.

CJEU Bosworth is the most recent case which extensively discusses the existence of ’employment’, referring to CJEU Shenavai and Holterman. In ROI Land the CJEU [34] instructs the national court in particular to assess whether there is a relationship of subordination between individual and corporation, even if subordination is actually only one of the Shenavai /Holterman criteria.

Erik Sinander has already noted here (his post came in as I was writing up mine) that this is a different emphasis from the AG: he had suggested a third party who was directly benefitting from the work performed by the employee (“un intérêt direct à la bonne exécution dudit contrat”) should be considered an employer. That to my mind is way too large a criterion and the CJEU is right to stick to the earlier ones.

[35] the CJEU suggests relevant circumstances in the case most probably confirming the relationship of subordination hence of employment: the activities which FD carried out for his two respective employers stayed the same, and the construction via the  SPV would not have been entered into by FD had it not been for his original employer’s guarantee.

The forum laboris in the case at issue is then I assume (it is not discussed quite so clearly in the judgment) determined by the place of habitual performance of the activities for the third party, the formal (now insolvent) employer, not the activities carried out for the issuer of the letter of comfort: for there are (no longer) such activities.

[37] ff the Court entirely correctly holds that more protective national rules cannot trump Brussels Ia’s jurisdictional provisions for the  protected categories: both clear statutory language and statutory purpose support that  conclusion.

[52] ff the CJEU entertains the subsidiary issue raised in the national proceedings as to whether the contract may be considered a consumer contract. It holds that the concept of ‘a purpose outside (a natural person’s) trade or profession’ does not just apply to a natural person in a self-employed capacity but may also apply to an employee. [56] seeing as FD would not have signed the new employment agreement without the letter of comfort, the employment agreement cannot be considered to be outside FD’s profession. Therefore it cannot qualify as a consumer contract.

Geert.

 

 

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From the archives: the professor Arnaud Nuyts study on residual jurisdiction. [update July 2020] The Heidelberg Report on Brussels I.

Update 18 07 2020 I understand the Heidelberg report on the application of regulation Brussels I likewise is not always easy to find. Here it is on my server, and here on CourtESA servers. I am trying to find copy of the country reports. The report has been published by Beck, which is handy to have if you have the means. Seeing as the Report is public per being financed by the EC, I trust Heidelberg will have no objection to the link here.

This is a short post for archival purposes: I have been looking in vain in the past few weeks for a copy of prof Nuyts’ 2007 study for the European Commission on ‘residual jurisdiction’ (Review of the Member States’ Rules concerning the “Residual Jurisdiction” of their courts in Civil and Commercial Matters pursuant to the Brussels I and II Regulations). It was no longer on the EC’s studies page and the url which many of us have been using in the past no longer works. So here it is. Courtesy of the European Commission and of prof Nuyts.

Enjoy. It has lost nothing of its topical nature.

Geert.

 

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Jong v HSBC. Unilateral jurisdiction clauses, anchor defendants viz parties ex-EU and evading Owusu.

Postscript 30 October 2015: the Court of Appeal confirmed (rejecting appeal) on 22 October 2015.

Often, progress is assisted by assimilation hence I shall not repeat the excellent review of [2014] EWHC 4165 (Ch) Jong v HSBC by Andy McGregor and Daniel Hemming. (It will be posted here soon, I imagine). Nor indeed will I simply regurgitate how Purle J eloquently dealt with the various jurisdictional issues in the case. Let me instead highlight the main issues:

Plaintiff, Ms Jong, has a contractual dispute with HSBC Monaco SA concerning the proper execution of foreign exchange orders. That the law of Monaco applies does not seem under dispute. HSBC Monaco’s standard terms and conditions, which may or may not apply, contain inter alia a classic unilateral jurisdiction clause: “Any litigation between the client and the bank shall be submitted to the exclusive jurisdiction of the competent Monaco courts at the offices of the bank location where the account is open. Nevertheless the bank reserves the right to take action at the place of the client’s residence or in any other court which would have been competent in the absence of the preceding election of jurisdiction“.

The bank so far has not exercised the clause. (No proceedings are as yet pending in Monaco). Monaco evidently is not covered by the Brussels I Regulation (nor indeed by the Lugano Convention).

Co-defendants are the HSBC Holding and HSBC Private Bank. Ms Jong did have contact with these over the alleged level of service.  Perhaps unusually, Ms Jong (or rather, her lawyers) decided to issue proceedings against HSBC Monaco first. The English co-defendants were only added later, quite clearly in an effort to support the exercise of jurisdiction over HSBC Monaco.

The Brussels I-Regulation’s rules on anchor defendants (Article 6; now Article 8 in the recast. Note that the recast does not apply to the case at issue) do not apply to non-EU defendants: whether or not these can be drawn into the procedural bath with the EU defendants, depends therefore on residual national conflicts law. Purle J takes parties and readers through the relevant case-law and holds that while there may be objections to Monaco as a jurisdiction, none of them carries enough weight to override the exclusive choice of court clause.

Of particular note is that Purle J considers (at 26), again with reference to precedent, whether the case against the English defendants may potentially be stayed in favour of having them joined to proceedings in Monaco. (In that precedent, it was suggested that the clear rejection of forum non conveniens in Owusu, may not stand in the way of a stay on ‘sensible case management’ grounds, rather than forum non conveniens grounds). Purle J justifiably hesitates (‘the court must be careful not to evade the impact of Owusu v Jackson through the back door’), before dismissing the suggestion given that no case is as yet pending in Monaco. It is noteworthy that the latter would, incidentally, be a condition for the (strictly choreographed) lis alibi pendens rule of the Brussels I recast to apply (Article 33). I would certainly argue that Owusu and the ECJ’s reasoning behind it, would exclude such recourse to a de facto forum non conveniens rule.

Geert.