Posts Tagged Scope of application

Anti-suit and arbitration. Court of Appeal overturns in Enka v OOO “Insurance Company Chubb” et al.

The Court of Appeal in [2020] EWCA Civ 574 Enka Insaat Ve Sanayi AS v OOO “Insurance Company Chubb” & Ors has overturned Baker J in [2019] EWHC 3568 (Comm) Enka Insaat ve Sanayi v OOO “Insurance Company Chubb” et al. which I reviewed here.

The case is mostly about the proper law of the arbitration agreement (Flaux J using the shorthand the ‘AA law’) aka the lex arbitri. Given that this is excluded from Rome I, residual rules apply which of course under English common law has Sulamerica as its main authority. In this case Enka contends that the AA law is English law, and Chubb Russia that it is Russian law. It is common ground that the lex contractus is Russian law, but the route to that conclusion is also in issue.

The dispute in this case raises the question of the relative weight to be given to the curial law (that is, the law of the seat, GAVC) of the arbitration agreement and the main contract law, where they differ, in determining the AA law. At 69:  ‘It is a question on which it would be idle to pretend that the English authorities speak with one voice. It would appear that there are also differences of approach between other jurisdictions in international arbitration generally’.

At 109 Flaux J concludes that parties have impliedly chosen that the proper law of the arbitration agreement should coincide with the curial law and be English law, and further, at 119 that ‘there has been no delay by Enka in this case which provides any good reason for not granting injunctive relief. I would treat this as a classic case, like The Angelic Grace, in which the court should grant an injunction to restrain the further conduct of proceedings brought in breach of an English law arbitration agreement.’

Anti-suit therefore granted.

For those interested in choice of law in arbitration, the judgment is required reading.  None of the Rome I (let alone Brussels Ia) issues discussed at the High Court are further discussed here, hence for the purposes of this blog I shall leave the analysis here.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.1. 

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Anti-suit and arbitration. Enka Insaat ve Sanayi v OOO “Insurance Company Chubb” et al.

[2019] EWHC 3568 (Comm) Enka Insaat ve Sanayi v OOO “Insurance Company Chubb” et al. is the very swift follow-up to [2019] EWHC 2729 (Comm) which I review here. I flag the case mostly for:

  • at 8, Baker J siding with Males J (and myself) per Nori Holding, that West Tankers is still good authority following Brussels Ia despite Wathelet AG’s suggestions in Gazprom;
  • the brief reference at 9, as to whether under Rome I injunctive relief for threat of contractual breach is covered by lex fori or lex contractus. Baker J concludes that issue simply by reminding us that Rome I does not apply to arbitration agreements;
  • At 47 ff the discussion of choice of law in spite of no express clause having been included to that effect. Specifically, with reference to Sulamerica, whether choice of seat may imply choice of law.

Anti-suit was denied.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.1. 

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Sabbagh v Khoury. The jurisdictional gift that keeps on giving. In today’s instalment: the possibility for qualified acknowledgment of service (prorogation) following claimant’s alleged concessions, and amended claim.

Sabbagh v Khoury [2019] EWHC 3004 (Comm) evidently builds upon the High Court and Court of Appeal previous judgments. Pro memoria: claimant established jurisdiction against all the defendants she wished to sue in relation to each element of her claim. Following judgment by the Court of Appeal and the refusal of permission to appeal further by the Supreme Court, the defendants had to decide whether to acknowledge service and accept the jurisdiction of the English Courts or to refuse to acknowledge service.

That jurisdiction should be debated at all was the result of claimant wanting to amend her claim, and having earlier been partially granted such permission. At 13: each defendant decided to acknowledge service and accept the jurisdiction of the English Courts but in each case they purported to qualify the terms on which they acknowledged service, hinging particularly on CPR Part 14: Admissions, and suggesting that a “concession” made on claimant’s behalf that certain Share Sale Agreements relied on by the defendants were “existent, valid and effective“, should have an impact on jurisdiction.

It is interesting to see the qualifications verbatim: at 13: ‘Thus in its letter of 26 March 2018, CMS Cameron McKenna Nabarro Olswang LLP on behalf of the Sabbagh defendants qualified their Acknowledgement of Service as being “… confined to the existing claims set out in the Claim Form, to the limited extent that the Court of Appeal accepted the English court’s jurisdiction over such claims, but subject to the numerous concessions your client has made including but not limited to her explicit abandonment of any claim to be presently entitled to or for delivery up of shares …”. Jones Day, the solicitors then acting for the first defendant similarly qualified his Acknowledgement of Service – see their letter of 26 March 2018. Baker McKenzie qualified the other Khoury defendants’ Acknowledgement of Service as being “… only in respect of the two claims as set out in the Claimant’s Claim Form … and is subject to the numerous concessions the Claimant has made to date …” and added that: “We understand that the Claimant intends to seek to amend her Particulars of Claim and our clients’ position as to whether any such amendment(s), if allowed, impact on the jurisdiction of the court over our clients as regards any claims other than those to which this Acknowledgement of Service is filed is fully reserved, including as to jurisdiction and/or the arbitrability of any such amended claims”. In the circumstances, it is probable that the amendment Baker McKenzie had in mind was one substantially in terms of the draft re-amended Particulars of Claim that had been placed before the Court of Appeal.’

At 21 ff Pelling J discusses the relationship between the amended claim, the earlier findings on jurisdiction, and the ‘concession’, leading at length eventually to hold that there was no impact of the concession on the extent of jurisdiction,

As Pelling J notes at 1 in fine: ‘Even allowing for the value at risk in this litigation all this is obviously disproportionate.’ One assumes the role of various counsel in the alleged concessions made earlier, must have had an impact on the energy with which the issue was advocated.

The case will now proceed to trial, lest there be any other jurisdictional challenges.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.12.1

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The CJEU in Weil: assessment of the scope of application of Brussels Ia at the A53 certificate stage; and a narrow reading of the matrimonial exception.

The CJEU this morning held (without AG Opinion) in C-361/18 Ágnes Weil v Géza Gulácsi.

Overall context is that Brussels Ia does not apply to ‘the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession’.

Ms Weil and Mr Gulácsi were unregistered partners. Mr Gulácsi was ordered by Hungarian court order to pay Ms Weil approximately EUR 2 060, together with interest for late payment, by virtue of the settlement of rights in property arising out of their de facto (unregistered) non-martial partnership. Ms Weil later applied to the same court to have it issue the Article 53 certificate which would facilitate her enforcement in the UK (where Mr Gulácsi lives and has a regular income). Questions raised, were

‘(1)      Is Article 53 of Regulation … No 1215/2012 to be interpreted as meaning that, if requested by one of the parties, the court of the Member State that delivered the decision must issue the certificate relating to the decision automatically, without examining if [the case] falls within the scope of Regulation … No 1215/2012?

(2)      If the answer to the first question is in the negative, is Article 1(2)(a) of Regulation … No 1215/2012 to be interpreted as meaning that a repayment action between members of an unregistered non-marital [de facto] partnership falls within the scope of the rights in property arising out of a relationship deemed … to have comparable (legal) effects to marriage?’

The  Court answers the first question in the negative: at the recognition and enforcement stage, things must go very swift indeed. The mutual trust required of courts must be backed up by proper consideration of the Regulation by the courts of the Member State of initial adjudication: at 33:

‘the need to ensure the swift enforcement of judgments, while preserving the legal certainty on which the mutual trust in the administration of justice in the European Union is based, justifies, in particular in a situation such as that of the main proceedings — where the court which gave the judgment to be enforced did not adjudicate, when giving that judgment, on whether [Brussels I and Ia] was applicable — that the court hearing the application for the certificate ascertains, at that stage, whether the dispute falls within that regulation.’

It adds at 35 that

the enforcement procedure, under Regulation No 44/2001, precludes, like enforcement under Regulation No 1215/2012, any subsequent review on the part of a court of the Member State addressed of whether the action giving rise to the judgment for which enforcement is sought falls within the scope of Regulation No 44/2001, the grounds for challenging the declaration that a judgment is enforceable being exhaustively laid down by that regulation.

This I find interesting for unless I missed it, there has not yet been a CJEU decision holding this much and as I discuss on pp 191-192 of the Handbook, there is scholarly discussion on same.

With respect to the matrimonial property exception, the CJEU after of course emphasising the need for a restrictive interpretation of the exceptions, acknowledges that Brussels Ia has extended this but only to relationships deemed comparable to marriage (at 44). Unregistered partnerships do not qualify.

Geert.

(Handbook of) EU Private international law, 2nd ed. 2016, Chapter 2, Heading 2.1.2, Heading 2.2.16.1.2 .

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Non multa, sed multum. Sovereign debt litigation in Kuhn leads to surprising final (?) curtain in Vienna.

In C-308/17 Leo Kuhn the CJEU held that Brussels Ia was not engaged for the matter is acta iure imperii. I suggested in my review of the judgment that in solely emphasising context, the Court casts the net too wide. I also emphasised that Greece’s sovereign immunity defense, lonely an argument as it may be, is a strong argument (I referred to the German approach to same): non multa sed multum.

Thank you Stephan Walter for alerting us to, and analysing the final judgment in Vienna: Greece enjoys immunity; and even if it had not (this is how I understand Stephan’s analysis – I trust he will correct me should I be wrong), the court would have declined jurisdiction given that the ‘assets held in Austria’ head of jurisdiction, was not mentioned in the particulars of claim.

Stephan clearly is not happy with the judgment: the Supreme Court not only reverses its earlier stance on immunity; it also could be argued it should be estopped as it were (my words, not Stephan’s) from disciplining a claimant’s absence of reference to residual private international law rules, given that hitherto the Supreme Court had never strayed from steering the course of Brussels Ia applying.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Heading 2, Heading 2.2, Heading 2.2.9.

 

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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.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 5, Heading 5.4.1, Heading 5.7.

 

 

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Sovereign debt litigation in Kuhn: ‘Civil and commercial’ viz bearers of Greek bonds. CJEU holds litigation falls outside of Brussels I Recast. Pays lip-service only to Fahnenbrock.

Update 22 November 2018 see yesterday’s comments by prof Mankowski here. He is right to point out that defence mechanisms available to Greece, are effeitvely limited to sovereign immunity. However that defence is of course a strong one, as I pointed out here, given that even the German courts have acepted it.

I had earlier reviewed Bot AG’s Opinion in C-308/17 Leo Kuhn, in which the Court held on Thursday. The case concerns the retrofit introduction of CACs – Collective Action Clauses, in Greek bonds, allowing the amendment to the initial borrowing terms by decisions adopted by a qualified majority, of the remaining capital owed and applying also to the minority.

Along the lines suggested by the AG, the Court finds the litigation not to relate to civil and commercial matters (likely also leading to a finding on the basis of national law, of sovereign immunity).

Extensive reference is made of course to Fahnenbrock , among others. Yet the Court pays lip service only to Fahnenbrock: in that judgment, it launched the ‘direct and immediate’ formula: in that case it found it was the bondholders’ vote, which led directly and immediately to changes to the financial conditions of the securities in question, not the public authorities’ actions essentially dictating it: therefore that litigation was held not to be actum iure imperii, and it was found to be subject to the service of documents Regulation.

In Kuhn, Brussels I Recast is engaged and here the Court would seem to be inclined to follow (also) Bot AG’s Opinion in Fahenbrock (where he was not so followed): there, Bot AG had opined that the Greek State’s intervention in the contracts was direct and not at a distance from the contract. His focus was more on the circumstances of the case than on the legal nitty-gritty. There are certainly many similarities between Fahnenbrock and Kuhn: in the latter, the crammed-down haircut was formally the result of a majority decision of bondholders to accept the restructuring offer made by the Greek State. Not unlike Fahnenbrock were as noted it was also a bondholders’ vote which was the formal trigger.

In Kuhn, the Court emphasises the context, like Bot to no avail had done in Fahnenbrock: after a succinct tour d’horizon of the debt crisis leading to the CACs, the Court concludes ‘It follows that, having regard to the exceptional character of the conditions and the circumstances surrounding the adoption of Law 4050/2012, according to which the initial borrowing terms of the sovereign bonds at issue in the main proceedings were unilaterally and retroactively amended by the introduction of a CAC, and to the public interest objective that it pursues, the origin of the dispute in the main proceeding stems from the manifestation of public authority and results from the acts of the Greek State in the exercise of that public authority, in such a way that that dispute does not fall within ‘civil and commercial matters’ within the meaning of Article 1(1) of Regulation No 1215/2012.’

I suggested at the time that ‘direct and immediate effect’ is not a criterion which is easy to handle. Yet in solely emphasising context, the Court now casts the net too wide in my view, and at the very least leads to more speculation (pun intended) in the litigation context of sovereign debt.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Heading 2, Heading 2.2, Heading 2.2.9.

 

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