Flux européens

Zacaroli J this morning held in Gategroup Guarantee Ltd, Re [2021] EWHC 304 (Ch) on whether ‘part 26A’ English restructuring ‘Plans’ (see my review of ia Deep Ocean) are within the scope of the Lugano Convention’s insolvency exception (Lugano rather than Brussels Ia was engaged).

He held they are, leading to neutralisation of an exclusive choice of court agreement in the relevant bonds, and making the courts of England and Wales have jurisdiction despite this choice of court.

Oddly Kaupthing was not referred to. Neither was Enasarco.

The judge relied unconvincingly in my view on the dovetail discussion (most recently discussed by me viz Alpine Bau) under the Brussels IA Recast and the EU Insolvency Regulation (‘EIA’)- neither of course applicable to the UK anymore, as indeed is the case for the Lugano Convention.

All in all this is a case in which the  reasoning has a potentially long term impact. The claim form in this case was issued on 30 December 2020. As such, by reason of Regulation 92(1), (2)(d) and (3) of the Civil Jurisdiction and Judgment (Amendment) (EU Exit) Regulations 2019, the Lugano Convention continues to apply.

The Plan Company was incorporated on 8 December 2020 as a wholly owned subsidiary of gategroup Holding AG (the ‘Parent’, a company incorporated in Switzerland. At [55] , if Lugano applies to applications under Part 26A, then the Plan Company accepts that by reason of A23(1) Lugano and the exclusive jurisdiction clause in favour of the courts of Zurich in the Bonds, this court has no jurisdiction. That acceptance is made notwithstanding that the Deed Poll contains a non-exclusive jurisdiction clause in favour of the courts of England. The Plan Company acknowledges that since the purpose of the Plan is to effect amendments to the terms of the Bonds, the exclusive jurisdiction clause in the Bonds is engaged.

The usual modus operandi of assuming application of Brussels Ia arguendo (see viz schemes of arrangement most recently KCA Deutag and viz Plans Deep Ocean and Virgin) did not fly here for as noted the Plan Company accepts that the exclusive jurisdiction clause in favour of the Zurich courts is a complete bar to this court assuming jurisdiction if the Lugano Convention applies (in the preceding cases the point need not be decided, since jurisdiction under BIa could be established arguendo as in none of them was there adversarial argument on the point).

At 70 Justice Zacaroli introduces effectively an amicus curiae by Kirkland & Ellis, opposing the view that the insolvency exception applies.

At 73 ff a first point is considered: Part 26A Plans have not been notified under the EIA Annex. This refers to the so-called dovetailing between Brussels Ia, Lugano and the EIR. The suggestion is that if a procedure is not listed in Annex A EIR, it is conclusively not an insolvency proceeding and “that is the end of the matter” because the dovetailing principle leads inexorably to the conclusion that it falls within the Recast (‘and thus within the Lugano Convention’  [73]). At 82 the judge incidentally is under the impression that the older, heavier procedure of amendment by (EP and Council) Regulation applies – which it no longer does since the EIR 2015.

I have since long submitted that there is no such dovetail. It is also clear that there cannot be identity of interpretation between the Lugano Convention’s insolvency exception and the Brussels regime given that non-EU Lugano States are not part of the EIR. The judge confirms as much at 81 and at 91 ff  and, in a first approach, revisits the principles of modified universalism and the origin of the insolvency exception in particular in the Jenard report. He holds at 103 that the ratio behind the insolvency exception in the Rapport Jenard is the same as the ratio behind Plans, hence that the exception applies.

In a second (presumably subsidiary) approach, the judge queries whether proceedings under Part 26A comply with the abstract requirements for an ‘insolvency’ procedure under of A1(1) EIR and finds at 133 that they do. I am really not convinced by the relevance of that analysis. He includes at 134 ff an argument that the Dutch ‘WHOA’ (Wet homologatie onderhands akkoord) proceedings are to be included in Annex A. Again I am not convinced that serves much purpose. Member States populate the Annex and a Member State proposal for inclusion is not checked against A1(1) EIR.

Conclusion on the jurisdictional issue at 137: ‘proceedings under Part 26A are within the bankruptcy exclusion in the Lugano Convention. This court accordingly has jurisdiction notwithstanding the exclusive jurisdiction clause in the Bonds.’

A most relevant judgment, on which the issues are not at all clear. Expect appeal lest the restructuring timing has made this nugatory – settling these issues would most certainly be welcome.

Geert.

EU private international law, 3rd ed. 2021, paras 2.73 ff (2.81 ff in particular) and 5.35 ff.

 

Important first instance decision on whether a restructuring plan is an insolvency proceeding for the purposes of the Lugano Convention.
Held that it is, with confusing analysis of the EU Insolvency Regulation.
Held Lugano does not apply, E&W courts have jurisdiction. https://t.co/XqZ0J6IIIH

— Geert Van Calster (@GAVClaw) February 17, 2021

Ryanair / Commission
Aide d'État
Le moratoire sur le paiement de taxes mis en place par la France pour soutenir les compagnies aériennes, titulaires d’une licence française, dans le cadre de la pandémie de Covid-19 est conforme au droit de l’Union

Ryanair / Commission
Aide d'État
Le régime de garanties de prêts mis en place par la Suède pour soutenir les compagnies aériennes titulaires d’une licence d’exploitation suédoise dans le cadre de la pandémie de Covid-19 et destiné à remédier à la perturbation grave de l’économie de cet État membre est conforme au droit de l’Union

In Benkel v East-West German Real Estate Holding & Anor [2021] EWHC 188 (Ch), Morgan J was asked to join a party on the basis of Article 8(1) Brussels Ia’s anchor defendant mechanism, and obliged. Mr Dikautschitsch (domiciled in either Spain or Germany) is to be one of a number of defendants. One of the existing defendants, East-West UK, is domiciled in England and Wales.

Casio Computer Co Ltd v Sayo & Ors [2001] EWCA Civ 661 was the authority mostly relied on, as was, via the link with Article 30, Sarrio SA v Kuwait Investment Authority. Expediency to add the second defendant to the proceedings was found to be present given the possibility of conflicting findings of fact [59]. Morgan J rejected [64] a rather novel argument that given the possibility of the E&W courts’ findings of fact clashing with potential future proceedings elsewhere, he should refrain from exercising his discretion to consolidate.

Geert.

European Private International Law, 3rd ed. 2021, Heading 2.2.13.1.

Katoen Natie Bulk Terminals et General Services Antwerp
Liberté d'établissement
Une loi qui réserve le travail portuaire à des ouvriers reconnus comme tels peut être compatible avec le droit de l’Union si elle vise à garantir la sécurité dans les zones portuaires et la prévention des accidents du travail

I am busy on many fronts and not complaining, yet I am sorry if some posts are therefore a little later than planned. A quick flag of Duffy v Centraal Beheer Achmea [2020] EWHC 3341 (QB) in which Coe J noted parties agreed that interim payments are included in the Rome II exemption of evidence and procedure: at 8:

The claim is brought in the English Court against a Dutch motor insurer and it is agreed that the law of the Netherlands applies to this claim in tort. The claimant, as a result of Dutch law has a direct right of action against the insurer and, following the decision in FBTO v Odenbreit [2007] C 463-06, the jurisdiction of the English Court is not an issue. The law of the Netherlands applies (pursuant to Article 41(1) of the Rome II Regulation on applicable law in tort (Regulation 864/2007)). Dutch law will govern limitation, breach of duty and causation as well as the existence of, the nature of and the assessment of damages to which the claimant might be entitled. Matters of procedure and evidence are nonetheless reserved to the forum court (see Article 15 (c) of the Rome II Regulation and Article 1(3)). This is an application for an interim payment which is a procedural application and thus governed by English law. However, when it comes to any assessment of the damages to which the claimant might be entitled on which to base the interim payment decision, Dutch law has to be applied.

Coe J has little reason to disagree however I imagine she would have entertained the issues more had the distinction between Dutch and English law on the interim payment issue been materially different, hence had counsel made diverging noise. For as I have signalled before, the extent of the evidence and procedure exemption is not clear at all.

Geert.

EU Private International Law. 3rd ed. 2021, Chapter 4, Heading 4.8.

 

Application for interim payment.
Parties agree it is a procedural application under Rome II, governed by English law, lex fori.
To the assessment of damages to which claimant might be entitled on which to base the interim payment decision, Dutch law applies as lex causae. https://t.co/QztZJzSKyy

— Geert Van Calster (@GAVClaw) December 4, 2020

Lyle & Scott Ltd v American Eagle Outfitters, Inc [2021] EWHC 90 (Ch) entertains ia the question whether the governing law for passing-off claims involving an eagle trademark, fall under Article 6 or 8 Rome II. The application is for an earlier order allowing service of jurisdiction, to be set aside.

Parties had agreed a ‘memorandum’ (which may or may not be a ‘contract’ – it is further referred to in the judgment as a ‘contract’) following a disagreement on whether each corporation’s eagle (L&S’s being trademarked in the UK and various EU Member States; AEO’s not being trademarked here, I understand) incorporated in apparel involved infringement of trademark and passing off.

AEO are domiciled in the US  and have no physical presence in the UK (or, one assumes, anywhere in the EU (the litigation was initiated pre-Brexit); their apparel is offered via online sales.

Jurisdiction is decided on the basis of the laws of E&W. Applicable law comes into the discussion for per Lord Mance at 46 in VTB v Nutritek,

“The governing law, which is here English, is in general terms, a positive factor in favour of trial in England, because it is generally preferable, other things being equal, that a case should be tried in the country whose law applies. However, that factor is of particular force if issues of law are likely to be important and if there is evidence of relevant differences in the legal principles or rules applicable to such issues in the two countries in contention as the appropriate forum…”.

Miles J discusses the governing law issue at 64 ff. Claimant argue the claim comes under A8 Rome II: infringement of intellectual property rights, English law, lex loci protectionis. Defendants argue they fall under A4 (by way of A6(2): Act of unfair competition), and that A4(3) is engaged to make the applicable law that of the state of Pennsylvania, because of the ‘contractual’ relationship.

At 72 Miles J agrees with the classification under A6, holding ia that ‘(t)he cause of action protects the goodwill of traders against deceptive conduct; goodwill is not an intellectual property right; and passing off is not the infringement of a right.’ Unlike the judge I do not think Rome II’s recital is of much help here and I suspect more can be made of the comparative law insights (common law and civil law) offered.

The next question is whether the claim falls within A6 (2). In Miles J’s succinctly expressed view it does, at 73: ‘The act of unfair competition alleged (passing off) affects exclusively the interests of a specific competitor (L&S). It follows that Art. 4 applies.’ As I have often noted, I find it very difficult to think of acts of unfair competition do not ultimately also impact the consumers of those involved.

The final hurdle then is whether A4(3) is engaged to displace E&W law as the lex loci damni, which at 75 the judge holds is not the case. Parties have not agreed on a governing law for the ‘contract’, they have conducted previous proceedings on the basis of that law being the laws of Pennsylvania. However even if the lex contractus is probably Penn law, and English law probably the lex causae for the passing off claim, Miles J holds this should not have an impact at the jurisdictional level: particularly seeing as there is no immediate reason to assume E&W courts will have great difficulty in applying Penn law to what on the contractual substance does not seem an overly complicated case.

Application dismissed, service out of jurisdiction stands.

This case once again highlights the level of complication resulting from having inserted different heads of applicable law into Rome II – a phenomenon which as I recently reported, might soon be expanded upon.

Geert.

EU private international law, 3rd ed. 2021, Chapter 4, Heading 4.5.2, 4.6.2, 4.6.4.

FIGC et Consorzio Ge.Se.Av.
Liberté d'établissement
Une fédération sportive nationale, telle que la Fédération italienne de football, peut être soumise aux règles de passation des marchés publics dès lors qu’elle exerce des activités d’intérêt général ayant un caractère autre qu’industriel ou commercial

Fussl Modestraße Mayr
Liberté d'établissement
L’interdiction de diffuser, dans le cadre des programmes de télévision allemands émis au niveau national, de la publicité au seul niveau régional pourrait être contraire au droit de l’Union

Commission / Hongrie (Valeurs limites - PM10)
Environnement et consommateurs
La Hongrie a enfreint les règles du droit de l’Union relatives à la qualité de l’air ambiant

This post has been in my draft folder a long time for First Advocate General Szpunar opined Mid-October in C-469/19 All in One Star Ltd. Still worth a flag, with the CJEU presumably soon issuing judgment. The case concerns the refusal of German authorities to enter a branch of a UK-incorporated company, in the German commercial register.  C-106/16 Polbud is the most recent major case on the issue.

The Opinion follows the (slow) progress of positive harmonisation of EU company law, with Directive 2017/1132 core to the questions. The AG opined that that Directive does not preclude a national provision under which the managing director of the company has to provide an assurance that there is no barrier to his personal appointment under national law in the form of a prohibition, ordered by a court or public authority, on practising his profession or trade. However he suggests the Treaty provisions on free movement oppose the authorities of destination requesting the director provide assurances that a notary, a representative of a comparable legal advisory profession or a consular officer has confirmed such absence of obstacle to him.

The AG was asked by the CJEU not to discuss the other question: whether a Member State may insist upon indication of the amount of share capital or a comparable capital value, for a branch of a limited liability company with registered office in another Member State to be entered in the commercial register. Presumably because the answer is clearly ‘No’ in light of earlier case-law.

Clearly following Brexit (the TCA as far as I am aware has no straight free movement principles for corporations) the issue will be different for UK corporations however it will continue to present itself in light of the intra-EU competition in corporate law.

Geert.

EU Private international law, 3rd ed 2021, Chapter 6.

ICMY: Opinion Szpunar AG in All in One Star Ltd: Inbound free movement of corporations, further extension of Centros and Inspire Art case-law https://t.co/19bHt9w5U5 (no EN text available).
Re refusal to enter a branch of a company registered in the UK in DE commercial register.

— Geert Van Calster (@GAVClaw) October 15, 2020

Consob
Liberté d'établissement
Une personne physique soumise à une enquête administrative pour délit d’initié a le droit de garder le silence lorsque ses réponses pourraient faire ressortir sa responsabilité pour une infraction passible de sanctions administratives présentant un caractère pénal ou sa responsabilité pénale

Trower J confirmed mid-December (judgment was not published until earlier this week) jurisdiction for England and Wales courts over continental corporations using ‘Restructuring Plans’, in an echo of his earlier findings in Virgin Atlantic.  The plan has in the meantime also been sanctioned. Mother holding is a Dutch BV. Plan companies are all UK incorporated. Creditors in part UK based, largely non-UK based. However the presence of a sizeable number of them in E&W is held (36-38) to be sufficient to serve as anchor using A8(1) BIa.

As I flagged in my review of Virgin Atlantic, pre-Brexit and of course even more so post Brexit, jurisdiction for these Plans let alone their recognition and enforcement in the EU, involves additional challenges to Schemes of Arrangements. I have a paper on the issues forthcoming.

Geert.

EU private international law, 3rd ed. 2021, paras 5.35 ff

 

Convening order is now here https://t.co/ADUj1QubUO
(and sanctioning order https://t.co/8BtUzj8KMM)
Brussels Ia jurisdiction re Deep Ocean #restructuring 'Plan' addressed in two paras simply confirming indeed arguendo approach as under Schemes of Arrangement, anchor defendants. https://t.co/Qb4nH1cPQO

— Geert Van Calster (@GAVClaw) January 28, 2021

From 22 to 27 January 2021, the Applicable Law Working Group on the Hague Conference Protocol of 23 November 2007 on the Law Applicable to Maintenance Obligations met via videoconference. The Conclusions & Recommendations summarising the outcomes of the meeting are attached to this post.

Source: https://www.hcch.net/en/news-archive/details/?varevent=783

law-applicable-to-maintenance-obligations-hague-working-groupDownload

ClientEarth / BEI
Environnement et consommateurs
Projet Curtis en Espagne : la BEI doit se prononcer sur la demande de réexamen de ClientEarth

Szpital Kliniczny im. dra J. Babińskiego Samodzielny Publiczny Zakład Opieki Zdrowotnej w Krakowie
SOPO
La pratique d’un employeur consistant à verser un complément de salaire aux seuls travailleurs handicapés ayant remis une attestation de reconnaissance de handicap après une date qu’il a lui-même fixée est susceptible de constituer une discrimination directe ou indirecte fondée sur le handicap

Hessischer Rundfunk
Politique économique
Un État membre de la zone euro peut obliger son administration à accepter des paiements en espèces, mais peut aussi restreindre cette possibilité de paiement pour un motif d’intérêt public

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)

 

Application for a stay under A30 BIa dismissed, with oddly reference ia to the fact that Vodafone could have avoided the risk of irreconcilable judgments had it foregone its choice of court privilege and seized the Spanish courts for its own proceedings. https://t.co/T4XSzTk14J

— Geert Van Calster (@GAVClaw) January 14, 2021

A succinct post on yesterday’s reports that the French courts are now properly engaging with the action brought in France by more than a dozen US-based corporations (and one local, French defendant) on the continuing impact of the use of Agent Orange by the US Army in Vietnam. Thank you Taco van der Valk for pointing me to an earlier interlocutory judgment which identifies defendants.

Claimant is a dual French-Vietnamese citisen. Jurisdiction is based on Article 4 BIa against the one French defendant. Anchor jurisdiction with that defendant in play, reinforces the jurisdiction based on claimant’s French nationality (the infamous, often labelled ‘exorbitant’ jurisdictional rule of Article 14 of the Code Civil; on which see here). Claimant’s domicile in France presumably is an additional reinforcing factor.

Geert.

European Private International Law, 3rd ed. 2021, para 2.139.

Galapagos Bidco SARL v Kebekus & ors [2021] EWHC 68 (Ch) is yet again a fairly extensive first instance judgment merely on the issue of jurisdiction, entertaining Article 8(1) Brussel Ia’s anchor defendant mechanism as well as Article 25 choice of court.

On A8(1), focus of the discussion was the extent of a merits review under A8(1), which I also discuss  in Sabbagh v Khoury and Senior Taxi v Agusta Westland (both referred to here by Zacaroli J at 44 ff.; as was nb PIS v Al Rajaan). The issue was raised in CJEU C-98/06 Freeport but not answered. The judge here uses the notion of ‘sustainable claim’ to ensure absence of abuse of the anchor mechanism, concluding at 132 after fairly serious if arguably not excessive engagement with the merits, that the conditions of A8(1) are fulfilled.

Article 25 choice of court is discussed obiter at 138 ff., leading to some discussion on the timing of the binding character of the clause upon various parties (and a minor side-issue re Brexit).

A case-management stay was also applied for, with the judge justifiably adopting the strict approach at 160 that such a stay must not be used to circumvent the inapplicability of an Article 34 BIa challenge (the A34 route was dropped; in the light of A25 jurisdiction being established, it would be unavailable at any rate): case-management stay in such circumstances is in essence an application for forum non conveniens which is not permitted under BIa.

Geert.

EU Private International Law, 3rd ed. 2021, Heading 2.2.13.1 (in particular 2.496); Heading 2.2.15.3.2.

In yet another very extensive jurisdictional ruling, jurisdiction in E&W accepted on the basis of A8(1) BIa anchor jurisdiction and A25 choice of court against another defendant. https://t.co/ppPZZqtxNy

— Geert Van Calster (@GAVClaw) January 19, 2021