Posts Tagged Standing

The Trafigura litigation continues: Dutch court accepts jurisdiction but denies standing to victims’ association.

I have in the past reported fleetingly about the Trafigura litigation, in which the company is and has been pursued in various jurisdictions for the environmental and public health damage resulting from the dumping in Abidjan, Ivory Coast’s capita, of toxic waste originating from the Probo Koala. I discuss the corporate social responsibility implications of conflict of laws ia here.

The case has led ia to the so-called ‘Leigh Day settlement’ in the United Kingdom (representing 30.000 victims) and to a 2007 ‘Protocole d’Accord’ between Trafigura and Ivory coast.

Current judgment was issued on 30 November and involves Stichting Union des Victimes de Déchets Toxiques D`Abidjan et Banlieues, a foundation set up in accordance with Dutch law, claiming to represent victims not yet represented in the Leigh Day settlement.

The Dutch court first of all swiftly rejects any impact of the choice of court clause included in the 2007 protocol. This discussion could have been quite interesting, however the Court suffices with a reference to the narrow formulation of the clause. It refers to any and all issues arising out of the validity, application and interpretation of the agreement. The agreement being a contractual arrangement and the suit here being based on liability in tort, in an action started by victims not party to the agreement, the court at Amsterdam suffices with the remark that current case is evidently not covered by the clause.

This leaves aside the discussion on the merits with respect to that choice of court. The 2007 protocol was signed by Ivory Coast ‘for and on behalf of all victims of the toxic wastes’. Whether the State can legitimately bind all those victims, particularly since presumably not all of them are Ivory Coast nationals, requires a lex causae to settle. Were this to follow the Brussels I Recast rule (the case looks to have been introduced after January 2015), this would imply a discussion on the inclusion of choice of court ex-EU. Over and above that discussion, the Court at Amsterdam would then have to discuss whether perhaps ordre public protests against allowing a State to represent all victims in cases such as these.

Having dismissed (again, all too briefly) choice of court, the court subsequently upholds jurisdiction on the basis of Article 4 Brussels I Recast: the Dutch domicile of Trafigura Beheer BV.

In the remainder of the assessment of jurisdiction and standing, the Court applies Dutch law (de Stichting has been set up under Dutch law) and finds ultimately that the personal, business interests of its creator are not sufficiently split from the interests of the victims which the foundation purports to represent. The court adds that the Stichting would not seem properly to manage its documentation etc., leaving doubt as to whether it is properly equipped to attain its objective.

The suit is therefore dismissed on standing.

An interesting judgment to kick-start all sorts of issues of relevance to corporate social responsibility.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.9.2, Chapter 8, Heading 8.3.

 

 

 

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Who am I? USSC to rule on a trust’s citisenship in AMERICOLD LOGISTICS.

Update May 2016 the USSC held in March 2016. It held ‘ For purposes of diversity jurisdiction, Americold’s citizenship is based on the citizenship of its members, which include its shareholders.’. I confess I do not know what that means – no doubt others do.

One night this week I was teaching a taster class to final year secondary school students (17-18yr olds). I decided I should make it challenging enough. This, I surmised, would help all those present. Either they would now run a mile from Law School, never to look back (thus taking away all doubt). Or their curiosity would be tickled enough for them to want to learn more (thus for them, too, taking away all doubt). I settled on CSR and conflicts: the Shell Nigeria case, with links to Kiobel (and Adam Smith, David Ricardo; special purpose vehicles; and the impending merger between Leuven’s AB Inbev and SAB Miller. All very exciting stuff!, in an allocated tome slot of 30 minutes). I hope readers will agree that conflict of laws does just the trick referred to above: scare off the doubters; pull in the doubters.

Anyways, that class was at the back of my mind as I was reading up on Americold Logistics. I am not a US trained or US qualified lawyer hence this posting may not be howler-proof however I understand that one particular avenue to gain access to US federal courts (as opposed to State courts; and over and above the issue being an issue based on federal law), is so-called ‘diversity jurisdiction’. This means the federal courts can hear a case if the citisenship of the parties involved is diverse: i.e. of at least two different US States or one of them being foreign. I also understand that to determine corporate citisenship, reference is made to the principal place of business (not therefore generally co-inciding with place of incorporation).

But how about trusts? What identity does a trust have with a view to diversity jurisdiction? In Americold Logistics, the Tenth Circuit sua sponte queried whether there was full diversity of citizenship among the parties. In particular, the judges challenged whether the citizenship of Americold Realty Trust, a business trust, should be determined by reference to its trustees’ citizenship, or instead by reference to some broader set of factors. This issue has deeply split courts across the country. Joining the minority of courts, the Tenth Circuit held the jurisdictional inquiry extends, at a minimum, to the citizenship of a trust’s beneficiaries in addition to its trustees’ citizenship. In this case, doing so destroyed diversity of citizenship among the parties. The issue is disputed, following relevant (seemingly inconclusive) precedent, summarised by SCOTUS here.  The USCC has now granted certiorari.

This judgment will be of quite some relevance to US legal (trust) practice. I think readers will agree that it was wise not to pick it, and the wider issue of trust identity, for lawyers in spe.

Geert.

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Metamorphosis: Can an investment loose such qualification because of its negative externalities? The Philip Morris v Uruguay arbitration

Update 9 July 2016: the panel sided with Uruguay on the merits, in a move which must boost those rejecting criticism that international trade law, including BITs, MITs and TTIP, deny States’ regulatory autonomy.

A very interesting debate in the PMI v Uruguay arbitration on plain packaging. The decision on jurisdiction (which was taken in July this year) rejected the notion that an ‘investment’ under a BIT looses such qualification as a result of, in effect, its negative externalities. Uruguay had argued that PMI’s interests in Uruguay do not constitute a protected investment since not only do they fail to make any contribution to the Country’s development, but they actively prevent and interfere with such development, due to the health impact of tobacco consumption.

The Panel, having to establish its subject-matter jurisdiction, gave the notion ‘investment’ a broad meaning, in the absence of express language to the contrary in the BIT concerned. With reference to ICSID precedent, the tribunal declined to make ex-post economic /financial  evaluations determine its jurisdiction – all the more so since such business, economic, financial… ex post evaluation is subject to tit for tat data and figures.

The case will therefore continue on the merits.  Interesting material.

Geert.

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EU Seal product ban upheld by the ECJ – (unsubstantiated) Inuit and traders’ arguments fall on deaf ears

Postscript: the ECJ equally dismissed, on 3 October 2013, the Inuit’s action against the basic Regulation: see case C-583/11P.

Postscript 2, 19 March 2015: Kokott AG suggests the appeal against the judgment in the posting below, be equally dismissed.

 

The European Court of Justice has dismissed an application by Inuit community group, Inuit Tapiriit Kanatami (ITK), and the Fur Institute of Canada, for the Commission’s Implementing legislation of the EU’s ‘Seal Pups Regulation‘ [seal products Regulation somehow has not made it into mainstream language] to be held illegal. The Regulation effectively bans all seal products from being placed on the EU market, with limited exceptions, and it does so on the basis of animal welfare considerations:

Article 3 - Conditions for placing on the market
1. The placing on the market of seal products shall be allowed only where the seal products result from hunts traditionally conducted by Inuit and other indigenous communities and contribute to their subsistence. These conditions shall apply at the time or point of import for imported products.
2. By way of derogation from paragraph 1:
(a) the import of seal products shall also be allowed where it is of an occasional nature and consists exclusively of goods for the personal use of travellers or their families. The nature and quantity of such goods shall not be such as to indicate that they are being imported for commercial reasons;
(b) the placing on the market of seal products shall also be allowed where the seal products result from by-products of hunting that is regulated by national law and conducted for the sole purpose of the sustainable management of marine resources. Such placing on the market shall be allowed only on a non-profit basis. The nature and quantity of the seal products shall not be such as to indicate that they are being placed on the market for commercial reasons.
The application of this paragraph shall not undermine the achievement of the objective of this Regulation. (...)'

Further detail for the application of the exceptions was provided by the Commission in follow-up regulation . It is the follow-up (implementing) Regulation which was the subject of current action. The applicants in this case argued as follows:

1. The basic Regulation lacks legal basis (i.e. Heads of power), for it was adopted on the basis of the Internal Market article of the EU Treaties, while in fact it was animal welfare considerations which led to the initiative. The Court disagreed: Member States had differing regulations in place with respect to seal products, or were planning them. This threatened a clear EU view on the matter and hence disruption of that internal market, whence justifying Article 114 TFEU (at the time: Article 95 EC). Watertight conclusion under EU law – even if paradoxically in order to safeguard the Internal Market, the EU effectively resorted to scrapping that very market.

2. Failing argument 1, the Regulation at any rate is disproportionate and incompatible with the principle of subsidiarity. The latter was dismissed on similar grounds as the review of the legal basis, referred to above. The former seems to have not been helped by the vagueness of the claims of applicants. In particular, they had put forward the view that the Inuit exemption is dead letter, for the communities concerned have to rely on commercial outlets to market their products, not having any such outlets themselves. The Court rejected this argument as too vague and unsubstantiated. It also rejected labelling (testifying to the killing having been done ‘humanely’) as an alternative, for the feasibility of such an option was examined and rejected in the run-up to the legislation.

3. Human rights. Right to property arguments were rejected by the Court, for viz the Inuit, they could still trade in the products concerned and the Court had already established that the ‘dead letter’ argument was unsubstantiated. Viz the applicants which are commercial operations, the Court referred to its earlier case-law the guarantees accorded by the right to property cannot be extended to protect mere commercial interests or opportunities, the uncertainties of which are part of the very essence of economic activity.

4. Ultra vires. The arguments that the Commission implementing Regulation exceeded what the Commission was entitled to regulate, in particular, that its enforcement measures were such as to make trade in Inuit seal products effectively impossible, even if it was instructed to lay down rules leading to a viable Inuit trade, were swiftly rejected by the Court. Again, it referred to a complete lack of data in the file substantiating the claim that all such trade would effectively be impossible.

The actions at the ECJ cannot of course be seen completely detached from the ongoing litigation against the EU over at the World Trade Organisation, on which Robert Howse has posted near-complete records of the hearings which this week finished in Geneva: that Panel report is one to look forward to (although judging by the sounds coming out of Geneva, the Panel would not exactly seem on top of things).

Geert.

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Exam questions, anyone? Plain packaging regulations and domestic regulatory autonomy

Postscript January 2016 Reportedly the Permanent Court of Arbitration under UNCITRAL rules, has declined jurisdiction. The award is to be made public here once it has been cleared of confidential data.

Postscript June 2015: I have many other posts on the issue however I thought I”d here that in June 2015, Ukraine suspended its complaint against Australia. Simon Lester collates why. And end of May 2015, Norway Norway TBT plain packaing notification its plain packaging plans to the WTO TBT Committee, with extensive pre-emption of legal arguments against it.

Postscript 22 10 2013:  on the BIT front, see the interesting defence by the European Commission of BITs in October 2013 here. Reference is made ia to the ongoing Philip Morris and Vatenfall (Nuclear energy) issues.

Faculty everywhere have been handed a treasure trove of exam questions, courtesy of ‘plain packaging’ (students please look away now).  A variety of States are in the process of introducing ‘plain packaging’ requirements on tobacco products. Although they of course vary in detail, they generally require tobacco manufacturers to strip packaging of all tailored corporate content, resorting instead to prescribed generic packaging. The ‘plain’ packaging required is generally limited to brand name in standardised fashion (font size and lettering, colour…), joined by a number of health warnings (including, sometimes, images), excise duties requirements and ingredients listings.

Plain packaging ticks all the boxes of a classic ‘domestic regulatory autonomy’ dispute. It pitches the freedom of a sovereign State to pursue ‘regulatory’ interests (environment, public health, consumer protection, stability of the economy etc.) against the free trade commitments which the same State has voluntarily committed to. These trade commitments take the form of multilateral (such as the WTO, the EU’s Internal Market, or NAFTA) or bilateral (such as bilateral free trade agreements and customs unions) agreements. They most often do not, but sometimes do include procedural rights for private parties (as opposed to simply the States which have concluded the agreement) to launch legal proceedings should free trade (arguably) have been infringed. Such standing for private parties is the case in many BITs, i.e. Bilateral Investment Treaties, as well as for instance (subject to a number of whistles and bells), NAFTA.

Free trade agreements are not generally oblivious to the continuing desire of participating States to regulate the interests referred to above. Consequently they include room for ‘domestic regulatory autonomy’ to continue after the conclusion of the agreement, subject of course to checks and balances.

This fragile balance between free trade and regulatory autonomy is exactly what the current debate on plain packaging is all about. The issue is being fought on many fronts: At the World Trade Organisation, Ukraine have filed a complaint in March 2012 against Australia’s plain packaging laws on the basis of the TRIPS (intellectual property) and TBT (technical barriers to trade; product regulations) Agreements. Ukraine’s complaint is supported by a number of WTO Members with tobacco manufacturing interests.

Australia’s position is eagerly anticipated by other jurisdictions thinking of doing something similar.See e.g. here and here.

At a constitutional level, issues include free (commercial) speech (see here for the related issue of graphic warnings), expropriation (of the trademark), non-discrimination (why no plain packaging on alcohol, for instance).

At a level of BITs, the issue has rejuvinated the ‘regulatory takings’ debate (do new regulatory requriements of host States amount to a ‘regulatory taking’ (as compared to a straightforward expropriation) that may be incompatible with investment protection requirements. The Uruguay-Switserland (see here and enter search term ‘ICSID Case No. ARB/10/7’) and Australia-Hong Kong BITs are among those affected. One imagines that the necessity of the measure will be hotly contested, as the actual health impact of the measure is not entirely certain. See the (controversial) ruling of the European Free Trade Association’s Court on the related issue of display bans here and the excellent analysis of prof Alemanno.

One will have gathered: all of this is excellent material for those of us teaching Trade and regulatory law. Geert.

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