Posts Tagged Rome II
ED&F Man Capital Markets v Come Harvest Holding et al. First application of the UKSC Vedanta ruling and applicable law issues under Rome II Articles 4 and 10.
In  EWHC 1661 (Comm) ED&F Man Capital Markets v Come Harvest Holding et al claimant, MCM, entered into a Master Commodities Sale and Purchase Agreements with two Hong Kong companies, Come Harvest and Mega Wealth. The Master Agreements contained English exclusive jurisdiction agreements. Subsequent agreements were then entered into for the sale and purchase of nickel. The dispute between the parties turned on whether payments had been made by MCM to Come Harvest and Mega Wealth based on forged warehouse receipts. Those receipts had been issued by a warehouse operator, Access World, to the initial order, in most cases, of a Singaporean company, Straits.
In May 2017, MCM commenced pre-action disclosure proceedings in Singapore against Straits and in December 2017 it commenced English proceedings against Come Harvest and Mega Wealth. In September 2018 MCM sought to join Straits to the English proceedings and obtained an order granting permission to serve Straits out of the jurisdiction in Singapore. Straits challenged the jurisdiction of the English court.
There is sometimes an advantage to not immediately follow-up a Tweet with a blog post: the two preceding paras are the summary of the factual and procedural background by Herbert Smith.
Of particular note is the discussion at 43 ff on the impact of the UKSC’s Vedanta ruling: particularly, the ‘multiplicity’ issue which in my review of Vedanta, I discuss at 5. At 45:
Straits contended that MCM should not be able to rely as a “trump card” on the multiplicity point and the risk of irreconcilable judgments so as to create a single forum for all claims against all parties in England, in circumstances where that outcome was the result of choices which MCM had made along the way. Straits claims that MCM exercised a choice at the outset to commence the OS 533 action against Straits in Singapore and thereby intended that any substantive proceedings would be brought there too. Straits says that MCM should be held to this choice which it says exerted and continues to exert a “gravitational pull” towards Singapore. Straits also says that MCM could have attempted to engineer a single composite forum for all claims against all parties in Singapore by requesting that Come Harvest and Mega Wealth did not insist on their rights under the English court exclusive jurisdiction clauses in the Master Agreements or by commencing proceedings against those parties in Singapore in breach of the exclusive jurisdiction clauses and then contending that strong reasons existed as to why no anti-suit injunction should be imposed against the continuation of those proceedings.
At 46 Teledano DJ dismisses the suggestion.
In Vedanta, and leaving aside the substantial justice issue, the claimants had a straightforward choice between Zambia and England for all claims against all parties. The dispute was overwhelmingly Zambian in focus and nature. Yet the claimants chose to pursue their claims in England. In the present case, MCM has never had a straightforward choice of this kind that would have enabled it to sue all parties in Singapore (or some other jurisdiction apart from England). MCM has at all material times been bound by the exclusive jurisdiction clauses in the Master Agreements to sue Come Harvest and Mega Wealth in England. There is no evidence to suggest that, had either of these parties been approached, they would have been willing to give up their rights under those exclusive jurisdiction clauses. Nor do I accept that the concept of choice as referred to by the Supreme Court can be stretched so as to require a party to act in breach of contractual promises as to jurisdiction and then to fall on the mercy of the Court so as to avoid the grant of an anti-suit injunction. MCM is entitled to say that it had no choice but to sue Come Harvest and Mega Wealth in England. Having done so, there is real force in the submission made by MCM that England is the proper place for all claims against all parties because it is the only jurisdiction where a single composite forum can be achieved.
Turning then at 59 ff to applicable law, the issue is particularly how to define ‘direct damage’ (Article 4 Rome II) in the case of unlawful means conspiracy. Straits contends that the direct damage occurred where MCM was unable to obtain the metal it had purchased. That would be at the warehouses in Singapore, Malaysia and South Korea. By contrast, MCM contends that the direct damage occurred in England. This was the place from which MCM paid out funds to purchase the metal and it is also the place in which MCM received the Receipts that it alleges were forged. Teledano DJ at 62:
The key to ascertaining where the direct damage occurred in the present case is to keep in mind that, under the Master Agreements, MCM was only required to make payment upon receipt of the Receipts. MCM suffered direct damage when it made payment upon receipt of what are alleged to have been forged Receipts. Both the payment out, and the obtaining of the Receipts, occurred in England. If the Receipts were forged, the warehouse operators will not have been required to hand over metal from the warehouses upon presentation of the Receipts. However, it seems to me that this is a consequence of the damage that on MCM’s case it had already suffered rather than the direct damage itself.
English law, therefore, applies, as it does (at 70 ff) to the knowing receipt and equitable proprietary claims (see discussion re Article 4 cq 10 (unjust enrichment) Rome II, at 70 ff).
(Handbook of) European private international law, second ed. 2016, Chapter 8, Headings 22.214.171.124., 8.3.2; Chapter 4, Heading 4.4.
Arica Victims v Boliden Mineral (Sweden). Lex causae and export of toxic waste. Relevant for the business and human rights /CSR debate.
I reported earlier on the decision at first instance in Arica Victims v Boliden Mineral. The Court of Appeal has now reversed the finding of Chilean law as lex causae, opting instead for Swedish law. Lindahl has good review here and I rely on it quite heavily for I do no speak Swedish.
Boliden Mineral exported toxic waste to Chile in the ’80s, prior to either Basel or EU or OECD restraints (or indeed bans) kicking in. A first issue for consideration was determination of lex causae. Rome II does not apply ratione temporis (it only applies to tortious events occurring after its date of entry into force) – residual Swedish private international law applies. My understanding at first instance was that the applicable law rule referred to lex loci damni, Chile. The Court of Appeal has gone for lex loci delicti commissi: whether this was by use of an exception or whether the court at first instance had simply misunderstood Swedish PIL, I do not know.
Having opted for lex loci delicti commissi, the Court of Appeal then considered where this was. Readers of the blog will know that this is relevant for CSR /business and human /environmental rights discussions. Lindahl’s Linda Hallberg and Tor Pöpke summarise the court’s approach:
In order to determine which country’s law applied to the case, the court examined a sequence of events that had influenced, to varying degrees, what had led to the alleged damage. According to the court, the decisive factor in the choice of law were acts and omissions that could be attributed to the Swedish mining company, as the case concerned this company’s liability for damages.
Instead of determining the principal location of the causative events using quantitative criteria, the court considered it to be where the qualitatively important elements had their centre of gravity. Further, in contrast with the district court’s conclusion, it held that the Swedish mining company’s alleged negligence had its centre in Sweden and therefore Swedish tort law should be applied in this case (the law of the place in which a delict is committed).
Unlike more ‘modern’ CSR cases the fact do not concern mother /daughter company relations yet the considerations of locus delicti commissi are nonetheless interesting.
The Court of first instance had employed Chilean’s longer statute of limitation. The Court of Appeal tried to stretch Sweden’s shorter one of 10 years (the case concerns a potentially tortious act which occurred more than 30 years ago): any subsequent damage that had been caused by the mining company’s failure to act during the period after the toxic waste had been shipped to Chile would advance the starting point for the limitation period. However this was at the latest 1999 and the 2013 action therefore had been taken too late.
On 25 June last the Supreme Court rejected further consideration, the Court of Appeal’s finding therefore stands.
(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 4, Heading 4.6.3, Chapter 8.
Gray v Hurley  EWHC 1636 (QB). Engages big chunks of Brussels Ia and eventually relies on Lindner to uphold Article 4 jurisdiction.
Thank you Jan Jakob Bornheim for flagging Gray v Hurley  EWHC 1636 (QB), in which as he puts it, ‘there is a lot going on’. Judgment is best referred to for facts of the case. On 25 March 2019 Mr Hurley commenced proceedings against Ms Gray in New Zealand. On 26 March 2019 Ms Gray issued the claim form in the present action and obtained an order for alternative service.
Of interest to the blog is first of all the matrimonial exception of Brussels Ia, nota bene recently applied by the CJEU in C-361/18 Weil. Article 1(2)(a) Brussels Ia (Lavender J using the English judges’ shorthand ‘Judgments Regulation’) provides that it does not apply to matters relating to: “…rights in property arising out of a matrimonial relationship or out of a relationship deemed by the law applicable to such relationship to have comparable effects to marriage.”
There is no EU-wide harmonisation of the conflict of law rules for matrimonial property. The UK is not party to the enhanced co-operation rules in the area and Lavender J did not consider any role these rules might play in same. Rome I and Rome II have a similar exception as Brussels Ia and at 111 Lavender J takes inspiration from Recital 10 Rome II which states that this exception “should be interpreted in accordance with the law of the Member State in which the court is seised.” Discussion ensues whether this is a reference to the substantive law of the court seized (Ms Gray’s position; English law does not deem their relationship to have comparable effects to marriage) or the private international law rules of same (Mr Hurley’s position; with in his view residual English private international law pointing to the laws of New Zealand, which does deem their relationship to have comparable effects to marriage). Lavender J does not say so expresses verbis but seems to side with the exclusion of renvoi: at 115: ‘I do not consider that the relationship between Ms Gray and Mr Hurley was a relationship deemed by the law applicable to such relationship to have comparable effects to marriage.’ Brussels Ia’s matrimonial exception therefore is not engaged.
Next, the application of the exclusive jurisdictional rule of Article 24(1) is considered. Ms Gray’s claim here essentially aims to establish her full ownership of the ‘San Martino’ property in Italy. Webb v Webb is considered, as are Weber v Weber and Komu v Komu (readers of the blog are aware that A24(1) cases often involve feuds between family members). Lavender J concludes that Ms Gray’s claim essentially is like Webb Sr’s in Webb v Webb: Ms Gray is not seeking an order for the sale of San Martino (and it does not appear that the right of pre-emption would be triggered by a judgment in her favour, as it would be by an order for sale). Nor is she seeking to give effect to her existing interest in San Martino. Rather, she claims that Mr Hurley holds his interest in San Martino on trust for her.
Application of Article 25 choice of court is summarily dismissed at 131 ff: there was choice of court and law (pro: Italy) in the preliminary sales and purchase agreement between the seller and Ms Gray. However, this clearly does not extend to the current dispute.
Next comes the application of Article 4’s domicile rule. Was Mr Hurley domiciled in England on 26 March 2019, when the court was seized? Article 62(1) Brussels Ia refers to the internal law. Application is made by Lavender J of inter alia  EWHC 160 (Ch), Shulman v Kolomoisky which I also included here; he also considers the implications of CJEU C-327/10 Lindner, and eventually decides that Mr Hurley was not domiciled in England, however that Lindner should be read as extending to the defendant’s last known domicile in a case where the Court: (1) is unable to identify the defendant’s place of domicile; and (2) has no firm evidence to support the conclusion that the defendant is in fact domiciled outside the European Union. This is a very relevant and interesting reading of Lindner, extending the reach of Brussels Ia as had been kickstarted by Owusu, with due deference to potential New Zealand jurisdiction (New Zealand domicile not having been established).
Final conclusion, therefore, is that Ms Hurley may rely on Article 4 Brussels Ia. Quite what impact this has on the New Zealand proceedings is not discussed.
Interesting judgment on many counts.
(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2 practically in its entirety.
Court confirms: tortious suit brought by liquidator (‘Peeters /Gatzen’) is covered by Brussels I Recast.
I am hoping to catch-up with my blog backlog this week, watch this space. I’ll kick off with the Court of Justice last week confirming in C–535/17 NK v BNP Paribias Fortis that the Peeters /Gatzen suit is covered by Brussels I Recast. Citing similar reasons as Bobek AG (whose Opinion I reviewed here), the Court at 34 concludes that the ‘action is based on the ordinary rules of civil and commercial law and not on the derogating rules specific to insolvency proceedings.’
This reply cancelled out the need for consideration of many of the issues which the AG did discuss – those will have to wait for later cases.
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.4.1, Heading 5.7.
DES v Clarins. The law applicable to ending commercial agency: Granarolo (and Rome I’s /Rome Convention’s overriding mandatory law rules) applied by Paris Court of Appeal.
In RG 16/05579 DES v Clarins (I have a copy on file for those finding it difficult to get access) the Paris Court of Appeal on 19 September 2018 effectively applied the CJEU’s Granarolo judgment on jurisdiction, to issues of applicable law. Yet it leaves many questions unanswered and does not carry out a neat and tidy analysis at all.
Companies belonging to the Clarins group (of France and Luxemburg) were sued for breach of their business relationship with a French company that distributed Clarins cosmetics in Algeria through local companies there, and for the alleged sudden halt in negotiations to try and resuscitate their contractual relationship.
The Court of appeal first of all (p.16-17 of the PDF version of the judgment) summarily rejects objections to the anchoring of non-France based defendants onto Clarins, with domicile in département 92 – Hauts de Seine: claimants request damages from all defendants, on the basis of the same facts and the same legal basis. So as to avoid conflicting judgments the Court sees no reason at all not to join the cases.
In terms of applicable law, the Court refers to Granarolo to qualify the relationship as contractual (reference is made to a tacit contract), yet then skips the application of the cascade rules of the Rome Convention (which applied ratione temporis rather than Rome I) to simply jump straight to the qualification as the relevant French rules as lois de police. As Christophe points out, there are plentry of the Convention’s default categories which could have applied to the case. Skipping the cascade to go straight to the exception is not the right way to go about conflict of laws.
The Court similarly cuts plenty a corner by summarily qualifying the sudden stop to negotiations to resuscitate a previous contractual relationship as non-contractual and applying French law as lex loci damni per Rome II (p.18), particularly as Rome II has a specific rule for culpa in contrahendo.
I am assuming an appeal with the Supreme Court is underway.
(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 126.96.36.199, Heading 188.8.131.52.9; Chapter 3, Heading 3.2.8, Heading 184.108.40.206).
Vis (non) attractiva concursus. Bobek AG suggests tortious suit brought by liquidator (‘Peeters /Gatzen’) is covered by Brussels I Recast.
I earlier posted a guest blog on the qualification of the Dutch Peeters /Gatzen suit, a damages claim based on tort, brought by a liquidator against a third party having acted wrongfully towards the creditors. Bobek AG opined two weeks back in C-535/17 NK (insolvency practitioner for a baillif practice) v BNP Paribas Fortis.
His Opinion is of relevance not just for the consideration of jurisdiction, but perhaps even more so (for less litigated so far) for the analysis of applicable law.
Roel Verheyden has commented on the Opinion in Dutch here, and Sandrine Piet had earlier contextualised the issues (also in Dutch) here. She clarifies that the suit was introduced by the Dutch Supreme Court in 1983, allowing the insolvency practitioner (as EU insolvency law now calls them) to claim in tort against third parties whose actions have diminished the collective rights of the creditors, even if the insolvency person or company at issue was not entitled to such suit. The Advocate General himself, in his trademark lucid style, summarises the suit excellently.
Importantly, the Peeters /Gatzen is not a classic pauliana (avoidance) suit: Bobek AG at 16: ‘The power of the liquidator to bring a Peeters-Gatzen action is not limited to cases where the third party belongs to the circle of persons who, based on a Paulian (bankruptcy) claim .. would be liable for involvement in allegedly detrimental acts. The liquidator’s competence relates more generally to the damage caused to the general body of creditors by the wrongful act of a third party involved in causing that damage. The third party need not have caused the damage or have profited from it: it is sufficient that that third party could have prevented the damage but cooperated instead.’
In the case at issue, the third party is BNP Paribas Fortis, who had allowed the sole director of the company to withdraw large amounts of cash from the company’s account.
Firstly, on the jurisdictional issue, Nickel /Goeldner and Nortel had intervened after the interim judgments of the Dutch courts, creating doubt in their minds as to the correct delineation between the Insolvency and Brussels I Recast Regulation. The Advocate-General’s approach in my view is the correct one, and I refer to his Opinion for the solid arguments he deploys. In essence, the DNA of the suit are the ordinary rules of civil law (re: tort). That it be introduced by the insolvency practitioner (here, the liquidator) and that it is the case-law on liquidation proceedings which has granted that right to the liquidator, is not materially relevant. Note that the AG correctly adds in footnote 40 that even if the suit is not subject to the Insolvency Regulation, that Regulation does not disappear from the litigation. In particular, given that liquidation proceedings are underway, the lex concursus determines the ius agendi of the liquidator to bring the suit in tort, in another Member State (Belgium, on the basis of Article 7(2) or 4 Brussels I Recast).
Now, for applicable law, the AG first of all completes the analysis on the basis of the Insolvency Regulation, in the unlikely event the CJEU were not to follow him on the jurisdictional issue. Here (para 85 ff) the referring court wishes to know whether, if the Peeters-Gatzen action is covered by the Insolvency Regulation, such a claim would be governed, pursuant to Article 4(1) of that Regulation, by the law of the Member State where the insolvency proceedings were opened as regards both the power of the liquidator to bring that claim and the substantive law applicable to that claim. This question seeks to determine whether it is possible to follow the approach of the second-instance court in the main proceedings, and separate the law governing the powers of the liquidator (ius agendi) from the law applicable to the merits of the claim. The powers of the liquidator would then be governed by the lex fori concursus (Dutch law, per Article 4(2)(c) Insolvency Regulation). That article states that ‘the law of the State of the opening of proceedings … shall determine in particular … the respective powers of the debtor and the liquidator’. However, the merits of the claim would then be governed by the law applicable by virtue of the general (non-insolvency) conflict of law rules. In the present case that would lead to application of residual Dutch conflict of law rules, because the Rome II Regulation does not apply ratione temporis as the AG further explains. These rules lead to Belgian law being the lex causae.
Within the assumption of the Insolvency Regulation determining jurisdiction (for see footnote 40 as reported above, re ius agendi) the AG emphasises the Regulation’s goal of Gleichlauf: at 89: If the Peeters-Gatzen action were covered by the Insolvency Regulation, all its elements would be governed exclusively by the conflict of law rules of that regulation.
(Current) Article 16’s exception such as in Nike and Lutz does not come into play for as Bobek AG notes at 94, ‘It is difficult to see how the Peeters-Gatzen action at issue in the main proceedings could be qualified as a rule ‘relating to the voidness, voidability or unenforceability of legal acts detrimental to all the creditors’, in the sense of Article 4(2)(m) [old, GAVC] of the Insolvency Regulation. The purpose of such an action is not a declaration of the voidness, voidability or unenforceability of an act of the third party, but the recovery of damages based on the wrongful behaviour of that third party towards the creditors. Therefore, as Article 4(2)(m) [old, GAVC] of the regulation would not apply in the main proceedings, the exception in Article 13 [old, GAVC] could not apply either.’
The AG finally discusses the referring court’s question whether if the Peeters-Gatzen action is exclusively subject to the lex fori concursus, it would be possible to take into account, whether directly or at least by analogy, and on the basis of Article 17 Rome II read in conjunction with Article 13 (now 16) of the Insolvency Regulation, the security regulations and codes of conduct applicable at the place of the alleged wrongful act (that is to say, in Belgium), such as financial rules of conduct for banks. Article 17 Rome II reads ‘In assessing the conduct of the person claimed to be liable, account shall be taken, as a matter of fact and in so far as is appropriate, of the rules of safety and conduct which were in force at the place and time of the event giving rise to the liability.‘
I have argued before that Article 17 Rome II does not have the rather extensive impact which some attribute to it. The AG, after signalling that the Article is yet to be applied by the CJEU, notes that Rome II does not apply here ratione temporis. He then concludes with an aside (it is not articulated as a proper argument – which is just as well for it is circular I suppose): at 104: ‘the more pertinent question is… whether it is really necessary to have recourse to a cumbersome legal construction, in this case the application of rules by analogy, outside of their material and temporal scope, in order to reach a solution (the application of Belgian law) which solves a problem (the applicability of Netherlands law by virtue of the Insolvency Regulation) that should not have been created in the first place (since the Peeters-Gatzen claim at hand should fall within the scope of the Brussels I Regulation). In any event, I am of the view, also in this regard, that these questions by the referring court rather confirm that there is no close connection between that action and the insolvency proceedings.’
(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.4.1, Heading 5.7.