ID v LU. A voluntarily appearing defendant cannot serve as anchor for another under the English residual rules (as indeed under BIa).

In ID v LU & Anor [2021] EWHC 1851 (Comm) Pelling J discusses a challenge to jurisdiction in which each of the parties are Ukrainian nationals. Brussels Ia applies but is only engaged viz one of the defendants. Claimant and second defendant are both domiciled and resident in Ukraine. The first defendant is a Ukrainian national who is and was at all material times domiciled in an otherwise unidentified EU Member State.

Claimant alleges that the second defendant approached him requesting that he move his corporate banking business to the second defendant, a Bank. Following discussions, the claimant agreed to do so and considerable funds  were placed with The Bank. The claimant’s case is that he agreed to do so only after the second defendant agreed that he would undertake personal responsibility for all monies that the companies placed with The Bank. The claimant alleges that it was expressly agreed by the claimant and second defendant that this oral agreement was governed by English law.

There was more tro and fro however I focus here on the jurisdictional challenge. With reference to Article 4 BIa and the most recent authority of Vedanta, the judge holds that in principle the defendant with EU domicile has a right to refuse to be sued other than in his place of domicile. However that defendant acknowledged service, indicating an intention to defend the claim but not to contest jurisdiction. This leads the judge to conclude, after some discussion, that there is A26 BIa submission (aka voluntary appearance).

Next follows an important discussion on the circumstances in which a defendant who voluntarily submits, may serve as an anchor defendant under the English residual rules.  It would certainly not be possible under Brussels Ia. The relevant rule in the practice directions (this is ‘Gateway 3’) reads

“3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where –… 3) A claim is made against a person (‘the defendant’) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and  – a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim.

Second defendant argues claimant is not entitled to rely on Gateway 3 because the first defendant is not a defendant who is to be treated as being a person on whom the claim form has been or will be served because the court has jurisdiction over the first defendant only because he has voluntarily submitted to the jurisdiction of the English Court. The overall nature of the discussions on this issue essentially discuss the need to avoid abuse. Of note in this respect is the judge finding [41] that there is ‘no evidence that suggests that there was any agreement reached between the claimant and the first defendant by which the first defendant agreed to submit to the jurisdiction of the court prior to the issue of the Claim Form in these proceedings or for that matter afterwards.’

Nevertheless the judge holds that the current authorities in particular the Court of Appeal in the Benarty [1983] 1 Lloyds Rep 361, continue to not permit a claimant to rely on an anchor defendant who has voluntarily submitted to the jurisdiction when he could not otherwise have been served in accordance with the CPR. Obiter he holds that while there is a real issue to be tried against the second defendant, the contract gateway for jurisdiction (which would require English law to be the lex contractus) is not engaged. No clearly demonstrated will exists for English law to be lex voluntatis per Rome I [76] and [80]

There is no plausible evidential basis to submit that that the governing law identified by either Article 4(2), 4(3), or 4(4) [of Rome 1] would be English law. The Tripartite Agreement was, if made: (a) agreed between three Ukrainians who reside (or resided) in Ukraine and/or [The EU Member State]; (b) agreed in, variously, [The EU Member State], Ukraine, and France; (c) premised on a further agreement said to have been agreed in Ukraine, between two Ukrainians, in respect of deposits made by Ukrainians into a Ukrainian bank; (d) to be performed outside England. No party has provided any evidence of any connection between themselves, or the Tripartite Agreement, and England”

Neither does the tort gateway help [83]:

There is no evidence that at any stage any of the contact that took place leading to what the claimant contends to be the inducement of a breach by the first defendant of the Tripartite Agreement took place otherwise than in either Ukraine or The EU Member State.

At [86] ff England is, equally obiter, held to be forum non conveniens.

Lack of jurisdiction against the second defendant is confirmed. One imagines there might be ground of appeal given the change to the practice directions’ formulation after the Benarty and the need to clear up this principled issue.

Geert.

TOT and TOP v Vodafone. An awkward emphasis on the potential for submission in deciding a stay for related cases.

In Top Optimized Technologies SL (A Company Incorporated Under the Laws of Spain) & Anor v Vodafone Group Services Ltd & Ors [2021] EWHC 46 (Pat) Smith J is asked to stay proceedings on the basis of Article 30 Brussels Ia’s related actions rule.

Three sets of proceedings are pending: one in Madrid; two in the UK. Parties, even some of them are of similar corporate blood, are not the same. Hence an Article 29 lis alibi pendens application is not possible. Arguments advanced at 39 ff in favour of a stay, are in the main, the same facts and matters being traversed (with an immediate indication of Smith J that the applicable law being different counts against, there being a ‘danger in overstating the overlap’); the danger of relitigating earlier proceedings elsewhere, and of consequential double recovery.

Smith J at 40 ff is in favour of what he calls the ‘wide approach’ to A30 (unlike a more narrow approach under A29 and incidentally under A45), to which I can subscribe. At 45 he sums up his reasons for declining the stay which of course are largely discretionary. However, among them is one oddity: at 45(4):

Moreover, this is a case where Vodafone has avoided – entirely properly – the jurisdiction of the Spanish courts by invoking the exclusive jurisdiction clauses in favour of England and Wales. Vodafone could have submitted to the jurisdiction of the Spanish courts under Article 26, but instead elected to invoke Article 25. As a result, proceedings involving all relevant parties (Vodafone and Huawei) and so eliminating any risk of irreconcilable judgments have not been possible. No criticism can be made of Vodafone in this: but, conversely, it seems to me perverse now to prevent the progression of the Second UK Proceedings in circumstances where the fragmentation of the originally constituted Madrid Proceedings against Huawei and Vodafone has occurred at Vodafone’s insistence. (emphasis in the original)

This echoes the findings of Lord Briggs in Vedanta, that the potential for submission carries a lot of weight in ultimate jurisdictional decisions. I am not convinced Brussels Ia supports this.

Geert.

European Private International Law, 3rd ed. 2021, Heading 2.2.15.2 (para 2.521 ff)

 

Stephenson Harwood v MPV (and Kagan). On interpleader (‘stakeholder’) actions and when engagement with the merits of the case leads to submission under Lugano.

In Stephenson Harwood LLP v Medien Patentverwaltung AG & Ors [2020] EWHC 1889 (Ch), proceedings were triggered by funding arrangements and alleged success fee entitlements following patent infringement proceedings. MPV is Swiss-based.

The action is an ‘interpleader’ one, now called a ‘stakeholder’ action: as Lenon DJ at 34 described, it is a ‘means by which a court (at the request of claimant, who typically holds property on behalf of one of the parties, GAVC) compels competing claimants to the subject matter of the application to put forward their claims and have them adjudicated on, thereby enabling the stakeholder to drop out of the picture.’

In the English residual private international law, stakeholder actions ground jurisdiction on the basis of the defendant’s property being present there. This is the kind of assets- based jurisdiction which the EC, but not the other Institutions, had wanted to introduce in Brussels Ia. As a result of the Brussels Convention’s Article 3 (materially the same as Article 3 Lugano), these actions became part of residual rules which could no longer be invoked against EU /Lugano States based defendants.  In the Schlosser report on the UK’s accession to the Brussels Convention, to which the judge refers at 40, it was said

“Interpleader actions (England and Wales) … are no longer permissible in the United Kingdom in respect of persons domiciled in another Member State of the Community, in so far as the international jurisdiction of the English or Scottish courts does not result from other provisions of the 1968 Convention. This applies for example, to actions brought by an auctioneer to establish whether ownership of an article sent to him for disposal belongs to his customer or a third party claiming the article.”

An alternative jurisdictional gateway therefore needs to be found. The discussion turned to submission (aka voluntary appearance) and CJEU C-150/80 Elefanten Schuh GmbH v Pierre Jacqmain. In particular, MPV completed the acknowledgment of service form indicating that it intended to contest Stephenson Harwood’s claim, did not tick the box saying that it intended to dispute jurisdiction and set out its own claim for payment of the Monies which it intended to pursue in the stakeholder application and stating its intention to exchange evidence. It then served and filed two witness statements in support of that claim addressing the merits and rebutting Mr Kagan’s claim. As the judge notes at 49,

MPV’s case that it has not submitted to the jurisdiction depends on the Court accepting the premise that it is open to MPV to distinguish for jurisdictional purpose between Stephenson Harwood’s claim (in relation to which MPV has raised no jurisdictional dispute) and Mr Kagan’s claim made as part of the stakeholder proceedings (in relation to which MPV does dispute jurisdiction). It is on this basis that MPV simultaneously asks the Court to order payment of the Monies to itself, as a disposal of the stakeholder application, while disputing the jurisdiction of the Court to determine Mr Kagan’s claim to the Monies.

However Lenon DJ holds that appearance was entered, as Mr Kagan’s claim is part and parcel of the stakeholder application and cannot be separately rejected at the level of jurisdiction. The level of engagement with the claim amounts to voluntary appearance viz both parties. At 53 obiter discussion of other gateways is pondered but not further entertained for lack of proper discussion by the parties.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 1, Heading 1.3.1,

Back to the 80s. Arthur Scargill, submission (voluntary appearance) under Brussels Ia and applicable law for statutes of limitation.

In [2019] EWHC 1359 (Comm) National Union of Mineworkers v Organisation Internationale de l’energie et des mines defendant is French-domiciled and represented by its chair, Arthur Scargill. That’s right, many of us whether Brits or not will remember him from the 1970s and 1980 mine strikes. (Unlike what some think, he did not though feature in the Tracey Ullman cover of Madness’ ‘my girl’: that was Neil Kinnock.

Of more immediate relevance for the blog is the discussion at 19 ff on jurisdiction and applicable law.

Defendant is an international body to which a number of trade unions are affiliated. Those unions operate in different countries but all represent workers engaged in the fields of mining and/or energy supply. The name the Defendant uses in English is the International Energy and Mineworkers’ Organisation (“the IEMO”) and it is the successor to the International Mineworkers’ Organisation (“the IMO”) following a merger in 1994.

The proceedings relate to the parties’ respective rights in relation to sums recovered by the Defendant from Mr. Roger Windsor in August 2012 after prolonged legal proceedings in the French Republic and in England. Those proceedings were undertaken in the name of the Defendant but funded in part by the Claimant. There is a shortfall between the sums recovered and the amounts of the principal debt and the legal costs of the proceedings. The parties are in dispute as to the distribution of the sums recovered from Mr. Windsor; as to which should bear any shortfall between the sums recovered and the costs incurred in the proceedings; and as to the amounts which each has paid by way of costs in those proceedings.

The underlying indebtedness which resulted in recovery being made against Mr. Windsor derived from a loan of £29,500 which the Claimant made to him in 1984. He was then the Claimant’s Chief Executive Officer and the loan was made by way of assistance with house purchase following the relocation of the Claimant’s headquarters from London to Sheffield in 1983. There was a repayment of that loan in November 1984 but it is common ground that to the extent that there was such a repayment it came from funds which had been lent to Mr. Windsor. In 1986 the right to recover payment from Mr. Windsor (either of the original loan or of the subsequent loan) was assigned to the IMO.

Claimant argues the courts of England and Wales have jurisdiction by reason of Articles 7(1) and 25(1)(b) Brussels Ia (by virtue of an agreement made in 1990), and that in any event defendant is to be treated as having accepted that the court has jurisdiction to try this matter (an Article 26 ‘prorogation’, ‘submission’ or ‘voluntary appearance’ in other words).

Eyre J at 24 agrees that submission has taken place: CPR rules (Pt11) provide the details the procedure to be followed by a defendant contesting jurisdiction. Defendant did make an application to the court within 14 days of filing the acknowledgement of service, as requested by CPR 11. However, it expressly accepted that the application was to be regarded as relating to the questions of limitation and of the effect of the Release Agreement. In its application it made extensive reference to Brussels Ia but did so in that context. In particular that material was put forward in support of the contention that the claim was statute-barred either by reference to the Limitation Act 1980 or by reference to the French limitation provisions. There was in other words no wider or more fundamental challenge to the court’s jurisdiction and the realisation probably in hindsight that jurisdiction may not be that straightforward, cannot impact on that original application.

Had there not been submission, interesting discussions could have ensued I suspect on the place of performance of the agreement (unless clear choice of court had been made), England as a forum contractus, and I for one shall be using the case in my classes as a good illustration of the ‘conflicts method’ (looking over the fence)

Attention then turns to the issue of applicable law for the time-barred argument: at 26: ‘Defendant also argued that the proceedings were to be regarded as subject to French law and in particular the French limitation provisions which impose a time limit of three years for claims. The Defendant made reference to the Civil Jurisdiction and Judgments Act 1982 and the Foreign Limitation Periods Act 1984. The contention was that French law was applicable because the judgments against Mr. Windsor were obtained in France and then registered in England and Wales. That argument was misconceived. Such an argument might have relevance if the issue were one of the enforcement of the judgments against Mr. Windsor though I make no finding on that question. The current proceedings are not concerned with the enforcement of the judgments against Mr. Windsor but with the distribution of the sums which have been received by the Defendant as a result of the litigation against Mr. Windsor. It follows that the provisions to which the Defendant made reference can have no relevance to the current proceedings. The Defendant made passing reference to the fact that it is domiciled in France but this was not the principal basis of the contention that French law was applicable and without more it would not cause the parties’ dealings to be governed by French law. In those circumstances the parties’ rights and liabilities are to be determined by reference to the law of England and Wales and any questions of limitation are governed by the Limitation Act 1980.

I am not privy to the submissions on applicable law, but I am assuming that there must have been some discussion of the impact of the 1980 Rome Convention. Not the Rome I Regulation which would not have applied ratione temporis. That Regulation like Rome II has not altogether straightforward provisions (as I have noted on other occasions) on procedure being covered by the lex contractus. Whether Eyre J classifies the limitation issue as being covered by English law per lex fori or alternatively as lex causae (lex contractus of the 1990 agreement) is not clear.

Back in the 80s I would have never dreamed of bumping into Mr Scargill again in the context of an interesting conflict of laws issue.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 1, Heading 1.3.1, Chapter 2, Heading 2.2.7.

 

 

 

 

Lloyds v Syria: State immunity and submission to (US) jurisdiction.

Once in a while I post on State Immunity, one of my favourites sub-themes in same being waiver of immunity, whether by contractual provision or following submission. [2018] EWHC 385 (Comm) certain underwriters at Lloyds et al v Syrian Arabic Republic et al is a good illustration of the latter. How does one serve a state which is evidently in times of political unrest? And has that State submitted to jurisdiction hence waived immunity?

Claimants’ claim in the United States District Court arose from the 1985 hijacking of EgyptAir flight 648 and the loss to which that gave rise.  Adam Johnson and colleagues at Herbert Smith alerted me to the case and their review is excellent. Henshaw J held the former issue (service) very practically: DHL evidence of documents having been delivered to the relevant ministry suffices, even if acceptance of the documents is refused.

Assessment of submission was relevant for there is no Treaty between the US and the UK on recognition and enforcement – hence common law applies. In the absence of any Convention or other instrument for mutual recognition of judgments, a foreign judgment in personam can be recognised only if it was delivered by a court which had jurisdiction according to English private international law.  That means that the defendant must either have (i) been present in the foreign jurisdiction when proceedings were commenced, (ii) claimed or counterclaimed in those proceedings, (iii) previously agreed to submit to the jurisdiction, or (iv) voluntarily have submitted himself to the overseas court’s jurisdiction (see Rubin and another v Eurofinance SA [2013] 1 AC 236 § 7).

In the present case (i)-(iii) do not apply, so Claimants must show that the Defendants submitted to the US court’s jurisdiction. Which Henshaw J held they had. Of particular note for this blog is that he (at 59) rejects much authority for CJEU precedent, particularly C-150/80 Elefanten Schuh, held under the Brussels Convention. Even if Elefanten Schuh were to apply, Henshaw J does not believe it would have led to a different outcome. At 66 follows an extensive list of arguments leading to a conclusion of submission, with particular emphasis on Notices of Appeal, each of which included a merit-based objection to the judgment appealed from but contained no assertion that the US courts lacked jurisdiction by reason of, or that the claims were barred by, sovereign immunity.  The simple fact is that Syria at no stage made any such challenge, save very late in the process.

The judgment therefore is interesting firstly for its discussion of CJEU weight in residual conflict of laws; secondly for the Court’s view on submission and sovereign immunity – in my view very much the right one.

Geert.

 

Dennis v Tag Group: Speak up, counsel! when contesting injunctions. (And article 24’s jurisdictional rules apply regardless of the domicile of parties).

I reported on submission to jurisdiction in the English legal context in re Golden Endurance, and on the issue of the application of (now) Brussel I Recast’s Article 24’s exclusive jurisdictional rules in Dal Al Arkan. In Dennis v TAG Group [2017] EWHC 919 (Ch) the High Court first of all revisits the issue of submission to jurisdiction in the context of injunction proceedings, and also held that permission for service out of jurisdiction is not required since the (now) Article 24 rules apply regardless of domicile of the parties. Clyde & Co have summary of the facts here.

Mr Dennis was the CEO of the England and Wales incorporated McLaren Technology Group Ltd. He claims he has suffered unfair prejudice as a result of suggested Board resolutions to be passed (and now passed) and relies on purported breaches of the Companies Act 2006, articles of association, shareholder agreement and service agreement to support his petition: this arguably engages Article 24(2) of the Brussels I Recast.

Application for injunctive relief sought to restrain Respondents from placing Plaintiff on garden leave and delegating the authority of the board to an interim committee. At issue first is whether Respondents’ engagement with the injunctive proceedings amounted to submission of jurisdiction. Briggs CR held that it so did: language in isolated correspondence reserving rights as to jurisdiction amounts to nothing if parties keep schtum about it when it really matters: at the injunctive hearings and forms relating to same.

Briggs held that even in the alternative, had there not been submission, Article 24 (I assume what is meant is Article 24(2) given the subject of the claim) applies regardless of the domicile of the parties hence submission is irrelevant (and indeed permission for service out of jurisdiction not required  – one assumed to the (insurance) relief of Respindents’ counsel. On that point Dal Arkan had already been confirmed Deutsche Bank AG v Sebastian Holdings Inc & Alexander Vik [2017] EWHC 459 .

A good and attractively concise ruling.

Geert.

(Handbook of) EU private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.6.

 

Shenzhen CTS v Dajiang International Investment: ‘in limine’ can’t be early enough.

Another posting for the ‘comparative conflicts /dispute resolution’ binder. In order not to be found to have voluntary appeared (‘submitted to jurisdiction’), civil procedure rules worldwide require defendants to flag their opposition to jurisdiction early on in the proceedings. Indeed at the threshold of the litigation: in limine litis.

In EU law, the Court of Justice ruled in Elefanten Schuh that where civil procedure of the Member States requires a defence on the merits at the very earliest opportunity, such defence does not jeopardise objection to jurisdiction made at the same occasion. (Case-law now reflected in the wording of the Brussels I Regulation and its Recast successor).

There is as yet however no CJEU case-law on what level of interaction with the courts leads to submission.

In England, Zumaz Nigeria v First City [2016] EWCA Civ 567 recently held that application for disclosure does not entail submission: for one may need those very documents to contest jurisdiction.

Thank you RPC for now flagging Shenzhen CTS International Logistics Co Ltd v Dajiang International Investment Co Ltd. The court found that by applying to strike out the claim and seeking security for costs (to include the period after the hearing of the stay application), defendant had invoked the jurisdiction of the Hong Kong courts. As always of course the decision was based on factual merit which RPC’s David Smyth and Hannah Fletcher  summarise very well in the posting hyperlinked above.

Beware before you engage with the courts, if you do not wish to be seen as having submitted.

Geert.

(Handbook of) European Private international law, 2nd ed. 2016, Chapter 2, Heading 2.2.7.

Place of performance of a contract: Court of Appeal in JEB v Binstock.

In JEB Recoveries v Binstock, [2016] EWCA Civ 1008, the Court of Appeal (on appeal from the High Court, 2015] EWHC 1063 (Ch)) exhaustively reviewed relevant EU precedent for the determination of the ‘place of performance’ of a contract under Article 5(1) (now 7(1)) of the Brussels I (Recast) Regulation. Kitchin LJ first of all refuses to deal with the alleged submission to jurisdiction by Mr Binstock. The argument was made that,  by making and pursuing an application for security for costs, Mr Binstock had submitted to the jurisdiction. The issue was however not raised before the High Court and therefore not sub judice at the Court of Appeal.

Mr Binstock (of casino fame) argued that the contracts at issue were not performed in England, for he himself was domiciled in Spain and the claimant in the case at issue (for most of the relevant contracts, jurisdiction was dismissed at hand) had arguably carried out his contractual arrangements largely from Paris.

Relevant CJEU precedent was C-19/09 Wood Floor Solutions the findings of which Lord Justice Kitchin helpfully summarised as follows:

  1. ‘…First, the place of performance must be understood as the place with the closest linking factor between the contract and the court having jurisdiction and, as a general rule, this will be at the place of the main provision of the services.
  2. Secondly, the place of the main provision of the services must be deduced, so far as possible, from the provisions of the contract itself.
  3. Thirdly, if the provisions of the contract do not enable the place of the main provision of the services to be determined, either because they provide for several places where services are to be provided or because they do not expressly provide for any specific place where services are to be provided, but services have already been provided, it is appropriate, in the alternative, to take account of the place where activities in performance of the contract have for the most part been carried out, provided that the provision of services in that place is not contrary to the parties’ intentions as appears from the contract.
  4. Fourthly, if the place of the main provision of the services cannot be determined on the basis of the terms of the contract or its performance, then it must be identified by another means which respects the objectives of predictability and proximity, and this will be the place where the party providing the services is domiciled.’

Based upon the place where the services have for the most part been carried out, the Court of Appeal held that JEB has no good arguable case that the place of the main provision of Mr Wilson’s services was England.

A neat application of Article 7(1) and an improved re-phrasing of the CJEU’s own rules.

Geert.

(Handbook of) EU Private International Law, Chapter 2 Heading 2.2.11.1.,

Golden Endurance: Submission to jurisdiction as a matter of mixed law and fact.

Golden Endurance v RMA, [2016] EWHC 2110 (Comm), illustrates the attraction of having a unified approach to submission (to jurisdiction), otherwise known as voluntary appearance. In current case, the judgment that needs to be recognised is ex-EU (Moroccan) hence the Brussels I Recast does not apply: English law does. This is in fact exactly why The Hague is working hard at its ‘Judgments’ Convention – not an easy project in my view. As helpfully summarised by Sam Goodman, the court held that a Moroccan judgment would not be recognised in England because the claimant had not submitted to the jurisdiction of the Moroccan court. Although the claimant had appeared in the Moroccan proceedings, it had done so in order to ask the court to stay the Moroccan proceedings in favour of arbitration and had only engaged with the merits as it was obliged to do so under Moroccan law.

Of note is that Phillips J points out that under the relevant English statutory rules, the question arises as to when defending a case on its merits, at the same time as contesting jurisdiction, submission applies: a scenario for which the Brussels I Recast provides specifically in Article 26. An English court does not for this exercise rely on civil procedure rules in the country of origin of the judgment: this surely makes sense for otherwise it would encourage forum shopping by unscrupulous claimants. Instead, whether one has submitted is ‘a question of mixed law and fact’ (at 46) which in this case was decided in favour of the claimant in the English court, ‘the claimant, having requested the dismissal of the claim in Morocco in favour of arbitration proceedings and having done so continually and as its primary response, did not voluntarily appear in the Moroccan courts’ (at 47).(The remainder of the judgment relates to transport law: the ‘Hague Rules’).

Geert.

(Handbook of) EU private international law, Chapter 2, Heading 2.2.7.

 

 

The Scottish Government submission to Brexit at the SC, and the EU’s conflict agenda.

For those with an interest in UK constitutional law and its impact on the EU, these evidently are interesting days. I just wanted briefly to flag that the Scottish Government’s submission to the Supreme Court’s Article 50 case contains a short section on the EU’s civil justice agenda. At 48, the submission points out the impact withdrawal will have on the civil justice relations between Scotland, the remainder of the UK, and the EU.

There are plenty of papers out there on the impact of Brexit on conflict of laws. Without the correct arrangements, the UK is bound to lose a lot of its attraction in international dispute settlement. With the falling pound, Christmas shopping in London is particularly attractive to those outside the UK. Forum shopping a lot less so.

Geert.

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