Posts Tagged Rule of law

Almazeedi v Penner. Independence of the judiciary in international commercial courts.

[2018] UKPC 3 Almazeedi v Penner at the Privy Council was recently brought to my attention by Christopher Grout. The case concerns a challenge to the independence of a judge sitting in the Financial Services Division of the Grand Court of the Cayman Islands.

Judge in the present case was Cresswell J, former judge of the High Court of England and Wales from 1991 to 2007. Following his retirement from that position, he became in 2009 an additional judge of the Financial Services Division of the Grand Court, sitting ad hoc from time to time as required. The Division consisted of the Chief Justice and two other full-time judges, together with three additional judges sitting part-time, one of whom was Cresswell J. From a time late in 2011, he also became a Supplementary Judge of the Civil and Commercial Court, Qatar Financial Centre (although he was not in the end instructed or renumerated there).

Cresswell J was the judge assigned with the conduct of a winding-up petition and associated applications and thereafter with the winding-up of BTU Power Company (“BTU”). The entire economic interest in BTU was held by its preference shareholders who were in the main Qatari interests with strong state connections, and to a minor extent Dubai Islamic Bank. The present case involves a challenge to all aspects of Cresswell J’s activity. The challenge is made having regard to Cresswell J’s position as a judge in Qatar and to the involvement in the proceedings before him of these Qatari interests and of Qatari personalities representing or interested in them.

No suggestion of actual bias at any time in either court was ever made. The question relates rather to whether the fair-minded and informed observer would discount the risk of unconscious bias. The Privy Council held such observer would not so discount: at 34: ‘with some reluctance, [we have] come to the conclusion that the Court of Appeal was right to regard it as inappropriate for the judge to sit without disclosure of his position in Qatar as regards the period after 26 June 2013 and that this represented a flaw in his apparent independence’.

Note the dissenting opinion by Lord Sumption at 36 ff, who notes ‘Sir Peter Cresswell is not alleged to have done anything which could raise doubts about his independence. The case against him rests entirely on the notion that he might be influenced, possibly unconsciously, by the hypothetical possibility of action being taken against him in Qatar as a result of any decision in the Cayman Islands which was contrary to the Qatari Government’s interests. Hypothetical possibilities may of course found a case of apparent bias, but since there are few limits to the possibilities that can be hypothetically envisaged, there must be some substance to them.’

‘The notional fair-minded and informed observer whose presumed reaction is the benchmark for apparent bias, has only to be satisfied that there is a real risk of bias. But where he reaches this conclusion, he does so with care, after ensuring that he has informed himself of all the relevant facts. He is not satisfied with a look-sniff impression. He is not credulous or naïve. But neither is he hyper-suspicious or apt to envisage the worst possible outcome.’

I believe Lord Sumption’s approach is the better one. Yet it was not carried hence in international commercial courts the standards have become very exacting indeed.

Geert.

 

 

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Publish and rule. The Belgian Supreme Court on scholarship and the judiciary.

Thank you Jelle Flo for alerting us to the succinct Belgian Supreme Court ruling of 21 November 2018. A judge had published a scholarly piece on an issue of law, in tempore non suspecto, expressing a point of view which the Advocate General at the Court (here effectively acting as an amicus curiae) in a later specific case, agrees with.

The judiciary does publish regularly-ish. As do solicitors and barristers. For those of us who teach as well as practice, this at most leads to interesting times when opposing counsel or the bench points out a scholarly piece seemingly expressing a different point of view than our submissions; ordinarily, things are distinguishable…

For the judiciary, the Supreme Court sees no issue as long as the piece meets with scientific standards: ‘Le fait qu’un juge ait adopté un point de vue sur une question juridique dans une publication scientifique n’implique pas qu’il ne dispose plus de l’impartialité requise pour connaître d’un litige abordant ce sujet, pourvu qu’il ait développé sa pensée dans le respect des règles de la science du droit.’

The Court does not express guidance on what such standard might be – peer review perhaps comes to mind.

Geert.

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Glaxo v Sandoz. Collateral use of evidence. Discovery (‘disclosure’) shopping at the High Court.

Glaxo Welcome v Sandoz et al  [2018] EWHC 3229 (Ch),  puts the spotlight on an important part of international forum shopping, namely discovery /disclosure, in particular collateral use of document obtained in one jurisdiction, in litigation in another. What is fundamentally at stake is that the launch of proceedings in a discovery friendly jurisdiction, may be simply employed as a jack for obtaining evidence to be used in a discovery-heavy jurisdiction.

Claimants apply for an order permitting the second claimant to use certain documents disclosed by some of the defendants (“the Sandoz Defendants”) in the claim in the English courts, in a claim in Belgium between the second claimant and Sandoz NV (“Sandoz Belgium”). The two claims are part of global litigation between members of the GlaxoSmithKline and Sandoz groups of companies. In Europe there are claims in several jurisdictions including England and Wales, The Republic of Ireland, Germany, The Netherlands and Belgium. The disclosure exercise between the claimants and the Sandoz Defendants has been very substantial. It involved the Sandoz Defendants reviewing 406,300 documents using 50 legally qualified reviewers. This led to the subsequent disclosure of slightly in excess of 75,000 documents to the claimants.

As Marsh CM notes at 11, ‘There is a marked contrast in the manner in which litigation is conducted in England and Wales on the one hand and Belgium (and most other Civil law countries) on the other hand. In England and Wales, the ability to obtain disclosure that is adverse to the other party’s claim is an important feature of litigation. However, the evidence provided in connection with the application shows that disclosure is only available in a very limited form in Belgium. One of the issues to be determined is whether disclosure obtained in this jurisdiction should be made available to a party that is engaged in litigation in a jurisdiction where disclosure, if not unknown, is very limited in scope.’

He is of course spot on: obtaining relevant documentation from the other party is not easily done in Belgium (and elsewhere) and often needs to be deduced from final filings of submissions or indeed at the hearing stage.

Relevant authority is discussed at 22 ff., and is really quite relevant: the discussion shows among others great consideration of rule of law concerns, mutual trust between EU Member States and Council of Europe parties, and the relevance of applicable law in the assessment (at 22(5): ‘The Belgian Claim proceeds under harmonised EU law as set out in the Trade Mark Directive. It follows that the English court is in a better position to consider initial relevance of the documents to the issues in the Belgian Claim than would be the case were the claim to be one brought under domestic Belgian law’).’

Final conclusion is in favour of collateral use of a substantial amount of documents. It is worth copying Marsh CM’s reasons in full: at 60:

(1)    The parties to this claim, and associated companies, are engaged in litigation on a very wide scale in many jurisdictions. They are part of very substantial businesses with equal resources. There is no suggestion that the application is oppressive.

(2)    Although the legal basis for this claim and the Belgian Claim are markedly different, there are similarities between some of the issues that are engaged.

(3)    The claimants have been able to satisfy the court that the majority of the documents they seek to use are likely to be relevant to the Belgian Claim. The interests of justice would therefore militate in favour of the claimants having an opportunity to obtain advice about their use in the Belgian Claim.

(4)    Use of the documents to enable the second claimant to consider whether, having obtained advice, a claim against additional parties should be pursued is, to my mind, more compelling than use of documents in connection with the Belgian Claim. There are no risks of adversely affecting the existing proceedings. The court should be slow to stand in the way of a party who wishes to obtain advice about pursuing a lawful course of action.

(5)    There is now an agreed procedure for the orderly progress of the appeal in Brussels with the second claimant filing an additional brief followed by Sandoz Belgium. The disruption, if any, by the introduction of additional documents has been minimised.

(6)    The number of documents the claimants seek to use is relatively small. Those that may be used in the Belgian Claim are not disproportionate in volume to what is at stake in those proceedings. There is no real danger that the Belgian Claim will be overwhelmed with additional documents even if all of them are deployed and Sandoz Belgium considers it is necessary to file additional documents to counter documents having been ‘cherry picked’ by the claimants.

(7)    The difference of approach between litigation in England and Belgium is a factor, but one of limited weight. There is no suggestion that the use of documents obtained in disclosure is an abuse of this court’s process. The risk of the Belgian Court’s process being subverted by the introduction of disclosure documents is marginal, particularly bearing in mind the involvement of the Belgian lawyers and the procedure that has been agreed.

(8)    I accept Mr Hickman’s submission in relation to the documents exhibited to Morris 7. The documents that are exhibited were extensively discussed in the witness statement which was read by the Deputy Judge. Although the claimants do not make an application for a declaration that they are permitted to use those documents as of right, the documents have been legitimately deployed for the purposes of an application heard in open court (subject only to the pro tem confidentiality order).

(9)    It is not open to the Sandoz Defendants to say, and they have not submitted, that if the order permitting use of the documents is made, their position in the Belgian Claim is prejudiced, in the sense that the likelihood of them successfully prosecuting the claim and/or defending the counterclaim is reduced. The interests of justice require that material which is likely to be relevant should be permitted for proper purposes. A reduction in their prospects of success is an immaterial consideration in their favour and, if anything, it weighs in the balance in favour of the claimant.

 

Geert.

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Chevron /Ecuador: Ontario Court of Appeal emphasises third parties in piercing the corporate veil issues.

In Chevron Corp v Yaiguaje, the Canadian Supreme Court as I reported at the time confirmed the country’s flexible approach to the jurisdictional stage of recognition and enforcement actions. Following that ruling both parties files for summary judgment, evidently advocating a different outcome.

The Ontario Court of Appeal have now held in 2018 ONCA 472 Yaiguaje v. Chevron Corporation that there are stringent requirements for piercing the corporate veil (i.e. by execution on Chevron Canada’s shares and assets to satisfy the Ecuadorian judgment) and that these are not met in casu.

Of particular note is Hourigan JA’s argument at 61 that ‘the appellants’ proposed interpretation of the [Canadian Corporation’s] Act would also have a significant policy impact on how corporations carry on business in Canada. Corporations have stakeholders. Creditors, shareholders, and employees, among others, rely on the corporate separateness doctrine that is long-established in our jurisprudence and that is a deliberate policy choice made in the [Act]. Those stakeholders have a reasonable expectation that when they do business with a Canadian corporation, they need only consider the liabilities of that corporation and not the liabilities of some related corporation.’ (emphasis added by me, GAVC)

Blake, Cassels and Graydon have further review here. Note that the issue is one of a specific technical nature: it only relates to veil piercing once the recognition and enforcement of a foreign ruling is sought.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 8.

 

 

 

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Chevron /Ecuador: Canadian Supreme Court confirms flexible gatekeeping for recognition and enforcement.

In Chevron Corp v Yaiguaje, the Canadian Supreme Court confirmed the country’s flexible approach to the jurisdictional stage of recognition and enforcement actions. I have reported on the case’s overall background before. More detail on the case is provided here by Border Ladner Gervais, as do McMillan (adding a critical note) here, and I am happy to refer – suffice to say on this blog that an accommodating approach to the very willingness of courts to entertain a recognition and enforcement action is not as such unusual to my knowledge. It is very much a case of comity to at least not blankly refuse to hear the case for enforcing a judgment issued by a foreign court.

Much more challenging will be the merits of the case, for one imagines the usual arguments against will certainly exercise the Canadian courts.

Finally, even if Chevron assets in Canada were not to suffice to meet the considerable award (in particular if the courts further down the line were to keep the mother company out of the action), any success in Canadian courts, however small, no doubt will serve applicants’ case for recognition in other jurisdictions.

Geert.

 

 

 

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USSC denial of certiorari in Chevron /Ecuador brings the case no closer to solution

Postscript 18 March 2014: the US distict Court of New York confirmed an earlier temporary injunction early March 2014 against enforcement in the US. /////

The United States Supreme Court has denied Chevron certiorari in the enforcement leg of the Ecuadorian ruling against the company. The official log may be found here. The Second Circuit Court of Appeal had earlier removed an initial injunction, barring enforcement of the underlying Ecuadorian ruling which granted inhabitants of the affected Amazon area damages of 18 billion USD.

The ruling goes back to Chevron’s acquisition of Texaco, and the pollution caused by Texaco operations in the area affected, in the 1980s and 90s. Many of the corporate social responsibility issues linked to private international law (on which I have work in progress together with Charlotte Luks here and where the USSC heard oral arguments in Kiobel here) are not in fact relevant to this case. Rather, the case throws light on the difficulties which may arise  in trying to enforce a judgment of a third country in a jurisdiction such as the United States. Chevron essentially argue that rule of law principles have been violated in the Ecuadorian rulings on the liability, consequently barring enforcement in the US. Denial of certiorari is quite routine (the USSC being able to cherry pick its cases) and typically signals that the Court sees no new points of law to be settled in the case. Denial has no impact on the merits of the underlying case and reasons for denial of certiorari are never given.  This latest development therefore is exactly that: the latest, however by no means the last.

FYI rule of law considerations, in particular rights of the defense, are one of the very few grounds which may lead an EU court to reject enforcement of a judgment of another EU court, under the Brussels I Regulation.

Geert.

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