Posts Tagged Rome I
Committeri v Club Med. The Court of Appeal parades CJEU precedent to distinguish contract from torts.
 EWCA Civ 1889 Committeri v Club Med , appeal against Dingeman J’s findings in  EHWC 1510 (QB) featured in a recent resit exam of mine, slightly later reporting therefore. Dingeman J’s analysis was confirmed by the Court of Appeal.
Mr Committeri lived and worked in London. He was injured when climbing an ice wall in Chamonix in France in 2011. He brought proceedings in England against Club Med and their insurers: they had provided the relevant travel and accommodation pursuant to a ‘team-building’ contract with the appellant’s employers, a Bank. The claim is pleaded by reference to that contract and Article L211-16 of the French Code de Tourisme (which imposes strict (safety) liability upon the providers of tourist accomodation: une obligation de résultat); contrary to English law which foresees in une obligation de moyens).
French law has considered that “proper performance of the contract” in a package holiday setting requires the absolute safety of the consumer, so that (unless the exceptions in the Code apply) when there is an injury on a package holiday the organiser will be liable.
The central issue is the proper characterisation of that claim. If it is a contractual claim then English law applies (the lex contractus agreed between the Bank and Club Med) and it is common ground that it will fail. If it is properly characterised as a non-contractual claim, French law applies and it is agreed that it will succeed.
At 52 Coulson LJ summarises the modus operandi per the European precedents as follows:
‘(a) The mere fact that a contracting party brings a civil liability claim against the other party does not by itself mean that the claim concerns “matters relating to a contract” but it will be sufficient if the conduct complained of may be considered a breach of contract (Brogsitter ) or if the purpose of the claim is to seek damages, the legal basis for which can reasonably be regarded as a breach of the rights and obligations set out in the contract (Brogsitter ).
(b) Only an obligation freely consented to by one person towards another and on which the claimant’s action is based is a ‘matter relating to contract’ (Ergo ).
(c) The classification of an obligation for the purposes of Rome I or Rome II depends on the (contractual or non-contractual) source of that obligation (Amazon, AG’s opinion ). A contractual obligation implies at the very least an actual and existing commitment (Amazon ).’
I would have added what I called Sharpston AG‘s ‘pedigree’ (one of my students seems to have mistakenly noted this down as ‘Paddy Pee’), ‘ancestry’, or ‘centre of gravity’ test in Ergo.
At 53: ‘On an application of all or any of those principles, it is clear that the pleaded strict liability claim can only be characterised as a contractual claim. …That contract is the source of the relevant obligations and imposed the necessary commitments. To put it another way, to use Judge Waksman’s words in AXA ( EWHC 3431 (Comm), the contract was not “a stepping stone to the ultimate liability of [the respondent but] the basis for the obligation actually relied upon…”.
A very useful reminder of the relevant precedents.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 18.104.22.168.
Update 2 October 2018 the Court of Appeal on 26 September 2018 in  EWHC 2499 (Comm) had to hold again on allowing a re-amended claim in the case.
In  EWCA Civ 1581 Tatneft v Bogolyubov the Court of Appeal held that an English court can allow addition of a claim which is time barred by the governing law identified by Rome I or Rome II. At 72 Longmore J notes ‘Under Article 12.1(d) of Rome I and Article 15(h) of Rome II, the applicable foreign law governs limitation of actions.’ However neither Rome I nor Rome II apply to matters of procedure (Article 1(3) in both of the Rome Regulations).
The Court of Appeal clearly takes Article 1(3) at face value by allowing amendment of the claim even if it thence includes a claim time barred under the lex causae: not to do so would endanger the consistent application of English procedural law. Article 12 cq 15 do not sit easily with Article 1(3). That has been clear from the start and it is an issue which needs sorting out. In the absence of such clarification, it is no surprise that the English courts should hold as Longmore J does here.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 3, Chapter 4.
Dana Gas v Deutsche Bank et al. Islamic financing. Interest v usury (riba). Depecage, von Munchausen and overriding mandatory law. Partial unenforceability. All in the face of anti-suit.
In  EWHC 2928 (Comm) Dana Gas v Deutsche Bank et al., Leggatt J treats his readers to a concise insight into islamic finance (particularly in para 10) which he needs to do to inform readers of the essence of the case. The operation essentially involves raising investment (with a view to restructuring), organised by the main agreement (of the ‘Mudarabah’ type), subject to UAE law, and supported by a purchase undertaking of the same date, subject to English law. The set-up therefore evidently is not one of dépeçage per se (this would require one and the same agreement being subject to different laws) however it comes close.
Inevitably following unfavourable market conditions, an anti-suit injunction was sought and obtained in the UAE, followed however by English proceedings which required the aint-suit to be lifted – something which Dana Gas did not succeed in as a result of shareholder opposition. The English proceedings were effectively saved from collapse by the involvement of a third party, BlackRock, who as a non-party to the UAE sharia proceedings, were not bound by the anti-suit injunction. The somewhat complicated result is that the English proceedings really can only limp along.
Dana Gas seek confirmation that the transaction is unlawful and all the relevant contractual obligations are unenforceable as a matter of UAE law. Leggatt J with neither emotion nor hesitation refers essentially to Rome I’s universal application: the Mudarabah agreement is subject to UAE law and he is happy to assume it is invalid under UAE law – hence not enforceable by an English court. See in this respect Article 10(1) Rome I.
That however leaves the viability of the purchase undertaking. (at 46) The fact in and of itself that the contract or its performance would be regarded as invalid or unlawful under the law of some other country than England (for example, a country where one of the parties is domiciled or carries on business) is generally speaking irrelevant (reference is made to Kleinwort, Sons & Co v Ungarische Baumwolle Industrie AG  2 KB 678.
At 48, Dana Gas sets out its case for unenforceability of the purchase agreement under English law. This includes reference to ordre public but also inevitably an attempt to ‘contaminate’ the purchase agreement with the Mudarabah agreement. Leggatt J justifiably turns this around: at 54: it is apparent from the purchase agreement’s terms that the risks against which the Purchase Undertaking is intended to protect the Certificateholders include the risk that the mudarabah and the transaction documents governed by UAE law will turn out to be invalid. That is why they needed to be separated. (In that respect merging the two agreements into one and applying dépeçage might give even stronger force to this argument: however I do not know whether under UAE law such construction would be acceptable).
Further arguments swept aside, the Court turns to ordre public.
Dana Gas nb had employed both ordre public and, earlier Article 9(3) Rome I: overriding mandatory law: a rare treat indeed. Relevant English precedent is Ralli Brothers: Ralli Brothers v Cia Naviera Sota y Aznar  1 KB 614: an English court will not enforce an obligation which requires a party to do something which is unlawful by the law of the country in which the act has to be done. Rome’s Article 9(3) operates in a similar context. However Dana Gas later abandoned that claim for (at 80) those rules of law are only applicable if and in so far as the obligations in question have to be performed in the UAE – quod non.
A switch was then made to ordre public, now with Foster v Driscoll  1 KB 470 as leading precedent. However, here too, it is only if a contract has as its object and intention the performance in a friendly foreign country of an act which is illegal under the law of that country that the contract will be considered (at 82 in fine) contrary to English public policy.
Conclusion: the Purchase Undertaking is valid and enforceable.
Without claiming anything near proper competence in Islamic finance law, it would seem that Dana Gas does not introduce new principles in that area. However in diligently applying conflicts analysis, Leggatt J in my view does practice a great service: he re-emphasises the need for parties clearly to identify locus implementi: the place of performance of an obligation. When obligations are marked out for a seperate lex causae, such clear identification of place of performance will insulate them from collapse.
(Handbook) of Private International Law, 2nd ed. 2016: essentially, almost every section of Chapters 2 and 3.
It does not happen all that often: this is a call for assistance. Following a student’s Q re ‘habitual residence’ in Rome I, I have now noticed something I had not before (I more often than not use the English version of the Regulation in my teaching and practice): Article 6(1) on ‘consumer contracts’ uses the term ‘habitual residence’ ‘gewone verblijfplaats’ (defined, or not, for natural persons, in Article 19) in the introductory para (which identifies applicable law). However in littera a it then uses ‘domicile’ ‘woonplaats’: a term which is not otherwise used in Rome I and which is not defined by it.
A quick scan of other language versions (French, English, German) reveals no such error: they all use the equivalent of ‘habitual residence’ in both instances. Now, evidently the error must be pushed aside given the other language versions however: is any reader of the blog aware of a corrigendum ever published? For if it has, I cannot locate it.
(Handbook of ) European Private International Law, 2nd ed. 2016, Chapter 3, Heading 3.2.5.
Many thanks to Jan von Hein for flagging the ultimate judgment (the link is to a press release) of the Bundesarbeitsgericht in Nikiforidis. I had of course reported earlier my serious misgivings about the CJEU’s judgment in same, upon preliminary review.
The judgment eventually declined to employ the opening left by the CJEU, to take Greek law into account ‘as a matter of fact’. Thank you, but no thank you: there was no suitable point of entry in German law to take account of the Greek austerity laws. Still, as Jan points out, the judgment in Luxembourg undoubtedly will feature as precedent in future cases.