Posts Tagged Tort

A late entry on your timeline. Anas v Facebook leaves plenty of questions on internet jurisdiction.

I discussed this case with my students the day the judgment came out. Copy of the judgment has travelled with me far and wide. Yet I only now find myself getting round to posting on Anas v Facebook, at the courts at Würzburg back in February. Mr Anas came from Syria as a refugee and took a famous selfie with Frau Merkel. The photo later came to haunt him as fake news sites used it in connecting with accusations of terrorism. Mr Anas thereupon sued Facebook, requesting it to act more swiftly to remove the various content reporting on him in this matter. The Würzburg court obliged. I understand that in the meantime Mr Anas has halted further action against FB which I am assuming includes the appeal which FB must have launched.

Now, the interest for this blog lies not in the issue of fake news, but rather the jurisdictional grounds for the ruling. Mr Anas sued Facebook Ireland, not Facebook Inc. The latter, I would suggest, he might have done on the basis of the Brussels I Recast’s provisions on consumer contracts – albeit that the conditions for that title might not be fulfilled if Mr Anas became a FB user in Syria.

The court did not entertain the consumer title. It did uphold its jurisdiction on the basis of Article 7(2) of the Recast, as lex loci damni. (But without consideration of the Shevill limitation). Awkwardly, it then lest my German fails me, goes on to determine its internal jurisdiction on the basis of German civil procedure law. Plaintiff was domiciled in Berlin; not Würzburg. The judgment therefore turns into the proverbial cake and eating it: Article 7(2) does not just lay down jurisdiction for a Member State: it also identifies the very court in that MS that has jurisdiction. It cancels out internal rules of jurisdiction. With Mr Anas’ domicile in Berlin, Wurzburg as locus damni is not immediately obvious.

German speakers, if I am not reading this right please do comment.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.

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A v M (Austria): Copyright infringement, locus delicti commissi in case of breach of obligation to pay.

For your second conflicts reading of the day I thought I should serve something more substantial. In A (an Austrian company) v M (a company located in Luxembourg) the Austrian Supreme Court (Oberster Gerichtshof) had to decide on the determination of the locus delicti commissi in the event of infringement of copyright. M had effectively siphoned off to its website, some of A’s satellite broadcasts. Plenty of CJEU precedent is referred to (Hejduk; Austro Mechana; to name a few).

Thank you very much indeed Klaus Oblin for providing me with copy of the judgment – back in early June. Effectively, at issue was  the infringement of a duty to pay.  Klaus has excellent overview of the issues, of which the following are definitely worth highlighting. The Supreme Court justifiably of course emphasises autonomous interpretation of Article 7(2) Brussels I Recast. Yet autonomous interpretation does not provide all the answers. There are plenty of instances where locus delicti commissi is not easily identified, such as here.

The Oberster Gerichtshof seeks support in the Satellite Directive 93/83, but notes that the Directive includes no procedural clauses, let alone any regarding international jurisdiction (at 2.4.2. It refers to the German Bundesgerichtshof’s decision in Oscar). It then completes the analysis by reference to national law:

Section 42b(1) of the Act on Copyrights and Related Rights to classify breach of copyright as a tort (CJEU Kalfelis would have been a more correct reference) ; and

Section 907a(1) of the Civil Code) to identify the locus of the delicti commissi: because monetary debts in acordance with that section must be discharged at the seat of the creditor, the domestic courts at the Austrian seat of the collecting society have jurisdiction. In coming to its conclusion, the court (at 3.2) refers pro inspiratio to Austro Mechana, not just the CJEU’s judgment but also the ensuing national judgment.

Now, lest I am mistaken, in Austro Mechana the CJEU did not identify the locus delicti commissi: it simply qualified the harm arising from non-payment by Amazon of the remuneration provided for in Austrian law, as one in tort: at 52 of its judgment: it follows that, if the harmful event at issue in the main proceedings occurred or may occur in Austria, which is for the national court to ascertain, the courts of that Member state have jurisdiction to entertain Austro-Mechana’s claim. (emphasis added)

Given its heavy reliance on national law, I would suggest the judgment skates on thin ice. Reference to the CJEU seemingly was not contemplated but surely would have been warranted. Kainz is a case in point where locus delicti commissi was helpfully clarified by Luxembourg, Melzer one for locus damni.

Geert.

(Handbook of) European Private international Law, 2nd ed. 2016, Chapter 2, heading 2.2.11.2.

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E-date Advertising for companies. Libel, internet and centre of interests. Bobek AG in Bolagsupplysningen OÜ.

Bobek AG opined mid July in C-194/16 Bolagsupplysningen OÜ on the application of the Shevill rule, as supplemented by e-Date advertising, to infringements of a company’s personality rights over the internet.  This is one of those Opinions where summaries fall much, much short of the contents of the original document and I should urge readers to consult the Opinion in full.

An Estonian company operating in Sweden was blacklisted for its allegedly questionable business practices on the website of a Swedish employers’ federation. The Advocate General dryly notes ‘(a)s inevitably happens in the era of anonymous internet bravery, universally known for its genteel style, subtle understanding, and moderation, the website attracted a number of hostile comments from its readers. The Estonian company brought an action before the Estonian courts against the Swedish federation. It complained that the published information has negatively affected its honour, reputation and good name. It asked the Estonian courts to order that the Swedish federation rectify the information and remove the comments from its website. It also requested damages for harm allegedly suffered as a result of the information and comments having been published online.

Can the Estonian courts assert jurisdiction to hear this action on the basis of the claimant’s ‘centre of interests’, a special ground of jurisdiction that the Court previously applied to natural persons, but so far not legal persons? If they can, then second, how should the centre of interests of a legal person be determined? Third, if the jurisdiction of the Estonian courts were to be limited to situations in which the damage occurred in Estonia, the referring court wonders whether it can order the Swedish federation to rectify and remove the information at issue.

The Advocate General suggests there are two novelties in the questions referred: a legal person (not a natural one) is primarily asking for rectification and removal of information made accessible on the internet (and only secondarily for damages for the alleged harm to its reputation). This factual setting, the AG suggests, leads to the question of how far the seemingly quite generous rules on international jurisdiction previously established in Shevill with regard to libel by printed media, and then further extended in eDate to the harm caused to the reputation of a natural person by information published on the internet, may be in need of an update. At the real root of course of the generous rules on jurisdiction for tort, lies the Court’s judgment in Bier. Bobek AG joins Szpunar AG in severely questioning the wisdom of the Bier rule in the age of internet publications.

Now, human rights scholars will enjoy the Advocate General’s tour d’horizon on whether and to what extend companies may enjoy human rights. On the whole I believe he is absolutely right in suggesting that there ought to be no difference between legal persons and natural persons when it comes to the very possession of personality rights (such as the right not to be libelled) and that neither is there any ground to distinguish between natural persons and legal persons when it comes to the jurisdictional consequences of upholding these rights.

Then, to the jurisdictional consequences (para 73 onwards): the AG suggests that ‘putting Shevill online’ (the AGs words) essentially means granting the forum to a large number of jurisdictions simultaneously, 28 within the European Union. That is because allegedly false or libelous information on the internet is instantly accessible in all Member States. Bobek AG suggests such multiplicity of fora stemming from the distribution criterion is very difficult to reconcile with the objective of predictability of jurisdictional rules and sound administration of justice enshrined in recital 15 of the Brussels I Recast Regulation, and does not serve the interests of claimant (although the AG concedes that in litigation practice, sending the defendant on a goose chase throughout the EU may be an attractive proposition). Now, in Bier the CJEU upheld jurisdiction for both locus damni and for locus delicti commissi on the grounds that this was attractive from the point of view of evidence and conduct of proceedings: this gives both the ‘special link’ which the special jurisdictional rules require. Whether the Court will be swayed by the argument that in the internet context, neither is of relevance, remains to be seen. It is true that number of clicks, which presumably is the relevant criteria to establish ‘damage’ in the context of Article 7(2), can be established just as well outside the jurisdiction as inside it (Google Analytics being used in a variety of national proceedings). It is also true however that Bier and Shevill are dogma for the Court and it is unlikely that it will simply abandon or even vary them.

Variation is all the more unlikely in the direction of the alternative suggested by the AG: locus delicti commissi relates to whoever is in charge of publishing and altering the content of the online information. So far so good: this is a useful clarification of Shevill in the internet age and one that has as such been so applied by national courts. Harm then would in the AG’s view have to be defined as where the reputation of the claimant was most strongly affected. That is the place of his centre of interests. The AG further suggests (at 104 ff) that in the case of a profit-making legal person, that is, a company, the jurisdiction is likely to correspond to the Member State where it attains the highest turnover. In the case of non-profit organisations, it is likely to be the place where most of its ‘clients’ (in the broadest sense of the word) are located. In both cases, such a Member State is likely to be the one where the damage to reputation and therefore to its professional existence is going to be felt the most. However in all cases, assessments needs to be fact-specific, and moreover, more than one centre of interests could potentially be established (at 116); that latter concession of course is not likely to endear the AG to the Court, given the requirement of predictability.

Answering then the query re injunctions (under the assumption that is an injunction sought by way of final remedy, not an interim measure), the AG employs the possibility of conflicting directions issued by courts with jurisdiction as to the merits of the case, as further argument to support his view on locus damni. This issue could raise interesting discussions on the usefulness of directions to remove internet content from particular websites only.

All in all, there is an awful lot of to the point analysis by the AG in this opinion. However the Court’s repeated reluctance to vary Bier and Shevill, a formidable obstacle.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2.

 

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Kareda v Stefan Benkö: CJEU rules with speed on recourse claim brought between jointly and severally liable debtors.

 

Less than two months after the AG Opined (see my report here), the Court of Justice has already held in C-249/16 Kareda v Stefan Benkö. The judgment follows Opinion to a tee albeit with a slightly more cautious link between Brussels I (jurisdiction) and Rome I /II (applicable law): at 32, with reference to the similarly cautious approach of the Court in Kainz.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9 .

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SCOTUS holding in Bristol-Myers Squibb BMS further restricts personal jurisdiction in State courts.

I have reported before (search tag ‘CSR’ or ‘ATS) on the personal jurisdiction cases in US litigation. The United State Supreme Court this morning held in Bristol-Meyers Squibb, BMS for short. For background see earlier reporting in this post. California was held not to have jurisdiction for claims brought by non-residents. In her dissenting Opinion justice Sotomayor notes the important impact of the ruling, suggesting that a corporation that engages in a nationwide course of conduct cannot now be held accountable in a state court by a group of injured people unless all of those people were injured in the forum State.  Precedent evidently includes Bauman.

Judgment and opinion include many interesting takes on personal jurisdiction and how it should be managed.

Kenneth Argentieri and Yuanyou (Sunny) Yang have an interesting suggestion here, that ‘plaintiffs will continue to develop creative arguments to obtain jurisdiction over defendants in their preferred jurisdictions, for example, by arguing that a corporation’s registration to do business in a state or designation of an agent to accept service in a state constitute consent to the jurisdiction in that state. Circuit and state courts are currently split on this issue, and the United States Supreme Court has not yet ruled on it.’ We are not a the end of the personal jurisdiciton road.

Geert.

 

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Uneasy cohabitation. Kareda v Benkö: special jurisdictional rules (contract or tort) for a recourse claim brought between jointly and severally liable debtors.

Ergo, Brogsitter, Granarolo...There is a long list of cases in which the CJEU is asked to decide whether a relationship between parties is contractual, with special jurisdiction determined by Article 7(1) of the Brussels I Recast Regulation, or one in tort, subject to Article 7(2) of same.

In C-249/16 Saale Kareda v Stefan Benkö Bot AG opined end of April. The Court is asked to rule on whether a recourse claim brought between jointly and severally liable debtors under a credit agreement constitutes a contractual claim. And if it is, the Court will have to examine whether such an agreement may be classified as an agreement for the provision of services, which will, as the case may be, lead it to determine the place of performance of its characteristic obligation.

I still think that what I dubbed the ancestry or pedigree test of Sharpston AG in Ergo, is a most useful litmus test to distinguish between 7(1) and 7(2):  what is the ancestry of the action, without which the parties concerned would not be finding themselves pleading in a court of law?: she uses ‘centre of gravity’ (‘the centre of gravity of the obligation to indemnify is in the contractual obligation’); ‘rooted in’ (‘the recourse action by one insurer against the other…is rooted in the contracts of insurance’); and ‘intimately bound up’ (‘[the action] is intimately bound up with the two insurers’ contractual obligation‘). (at 62 of her Opinion in Ergo). I am not sure though whether the Court itself follows the test.

Before the Austrian courts, Stefan Benkö, an Austrian national, is bringing a recourse claim against Saale Kareda, an Estonian national and his former partner, seeking payment of EUR 17 145.41 plus interest and costs. While they were living together in Austria, the applicant and the defendant bought a house in 2007 and for that purpose took out three loans totalling EUR 300 000 (‘the loan’) from an Austrian bank. They were both borrowers and the referring court states that they were both jointly and severally liable debtors. Ms Kareda broke up with Mr Benkö, moved back to Estonia, and ceased her loan payments. Being sued for the arrear payments by MR Benko, she now claims that the Landesgericht St. Pölten (Regional Court, St. Pölten), the court seised by the applicant, lacked territorial jurisdiction in so far as the loan was made by an Austrian bank and the place of performance for that loan, the bank’s registered office, is not located in the judicial district of that court.

Is it possible to ‘detach’ from the credit agreement the legal relationships arising between jointly and severally liable debtors following the conclusion of that agreement, or does this form an inseparable whole? (at 28) Bot AG suggests it is the latter and I believe he is right. I agree that it would be artificial, for the purposes of the application of the Brussels I Recast. to separate those legal relationships from the agreement which gave rise to them and on which they are based.

I am less convinced by the reference, at 32 and 33, to the need for consistency between Brussels I Recast and Rome I: regular readers of this blog will not be surprised by this. (But I believe I am fighting a losing battle there). The AG refers to Article 16 of Rome I, entitled ‘Multiple liability’, which provides inter alia that, ‘[i]f a creditor has a claim against several debtors who are liable for the same claim, and one of the debtors has already satisfied the claim in whole or in part, the law governing the debtor’s obligation towards the creditor also governs the debtor’s right to claim recourse from the other debtors’.

Having decided that the issue is contractual, the AG suggests the credit agreement is an agreement for the provision of services, and that in the context of a credit agreement, the characteristic obligation leading to jurisdiction is the actual granting of the sum loaned. The other obligation entailed by such an agreement, namely the borrower’s obligation to repay the sum loaned, exists only through the performance of the service by the lender, as repayment is merely its consequence.

The final element to consider is then the actual place of performance of the characteristic obligation. In the AG’s view, only the place where the creditor has its place of business is capable of ensuring that the rules are highly predictable and of satisfying the objectives of proximity and standardisation pursued by the second indent of Article 7(1)(b) of Regulation No 1215/2012.  That place will be known by the parties from the time of the conclusion of the agreement and will also be the place of the court having the closest connection with that agreement. (at 46).

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, Heading 2.2.11.2.9

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AMT v Marzillier: UK Supreme Court sides with relucant Court of Appeal on inducement to breach choice of court agreement.

I reported on AMT V Marzillier at the High Court, failed to flag its overturn in the Court of Appeal (it’s the Easter period: I am in a confessionary mood), and now report swiftly on the Supreme Court confirming the Court of Appeal’s view early April ([2017] UKSC 13).

MMGR is a company incorporated under the laws of Germany and carries on business as a firm of lawyers in Germany. AMTF alleges that MMGR induced its former clients to issue proceedings against it in Germany and to advance causes of action under German law.  AMTF’s clients were referred to it by ‘introducing brokers’; AMTF in turn is referred to as a non-advisory, “execution only”, derivatives broker. AMTF charged its clients commission for its service and paid commission to the introducing brokers. About 70 former clients, who were dissatisfied with the financial results of their transactions, commenced legal proceedings in Germany against both the introducing brokers and AMTF seeking damages under the German law of delict. The claim against the introducing brokers was that they had given bad investment advice or had failed to warn of the risks of the investments. The claim against AMTF was based on a liability which was accessory to that of the brokers: it was alleged that AMTF had encouraged the brokers to behave as they did by paying them commission from the transaction accounts which it operated for its clients and that it owed and had breached a duty in delict (tort) to the clients to prevent any transactions being undertaken contrary to their interests. AMTF challenged the jurisdiction of the German court. Many of the former clients have recovered damages from AMTF by way of settlement.

AMTF argues that the actions in Germany were in breach of the exclusive jurisdiction and applicable law clauses in their contracts with AMTF. It commenced proceedings in the High Court in London against MMGR, based on the tort, in English law, of inducing breach of contract. It seeks both damages and injunctive relief to restrain MMGR from inducing clients to bring further claims in Germany asserting causes of action under German law. AMTF argues that the English courts have jurisdiction over its claim under article 5.3 of the Brussels I Regulation (Article 7(2) in the Brussels I Recast), which gives jurisdiction in tort claims to the courts for the place in which the harmful event occurred or may occur. MMGR challenges the jurisdiction of the English courts to entertain this action.

Popplewell J in the High Court sided with AMTF – I reviewed his judgment in 2014. He decided that the relevant harm which gives rise to jurisdiction under article 5.3 occurred in England as AMTF had in each case been deprived of the benefit of the exclusive jurisdiction clause, which, he held, created a positive obligation on a former client to bring proceedings in England.

Clarke LJ concluded upon Appeal that the English courts did not have jurisdiction as the relevant harm had occurred in Germany. At 57 he wrote ‘I do not reach this conclusion with any great enthusiasm since there is much to be said for the determination of what is in essence an ancillary claim in tort for inducement of breach of contract to be made in the court which the contract breaker agreed should have exclusive jurisdiction in respect of that contract, rather than in the courts of the country where the inducement and breach occurred. But the governing law of the relationship between the former clients and AMTF (which did not have to be that of England & Wales) is not a determining factor in the allocation of jurisdiction under the Regulation.‘ It is not entirely clear what the German courts’ view is on the matter – the unsettled claims were still pending at the time of the Supreme Court’s judgment.

Lord Hodge, after noting the CA’s reluctance, agrees with its conclusion and does so by once again, concisely yet completely, reviewing the CJEU’s case-law on Article 5(3) [7(2)]. For an even more condensed version, see Jake Hardy. At 24: ‘The task for the court is to identify where the relevant harm occurred. That is relatively straightforward in most circumstances, where there is no need for any special rule such as those which the CJEU has developed when it has not been possible readily to identify one place where that harm occurred. It is straightforward in this case.‘ : namely Germany. ‘It is clear that AMTF did not get the benefit of having any dispute with the former clients determined under English law by English courts. But the former clients were under no positive obligation to sue AMTF, which could have no objection if it was not sued.’ (at 25).

Of note is Lord Hoge’s important emphasis (at 29) that the benefits of connecting factors, which justify the ground of jurisdiction, are not in and of themselves connecting factors. Idem for his instruction at 30 that ‘the inconvenience, which the separation of the resolution of the contractual claims against the former clients from the pursuit of the claims against MMGR entails, (does not) carry much weight when one considers the aims of the Judgments Regulation‘: ‘the CJEU has recognised that the scheme of the Judgments Regulation creates the difficulty that one jurisdiction may not be able to deal with all the related points in a dispute (at 32).

Finally reference to the CJEU was refused on the grounds that the issue is acte claire (at 43, with preceding reference to CJEU precedent).

Delightful.

Geert.

(Handbook of) European Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.11.2, 2.2.11.2.7).

 

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