On Tuesday, April 9, 2024, the Hamburg Max Planck Institute will host its 43rd monthly virtual workshop Current Research in Private International Law at 11:00-12:30 (CEST). Bettina Heiderhoff (Universität Münster) will speak, in German, about
Interfaces between Migration Law and International Family LawThe presentation will be followed by an open discussion. All are welcome. More information and sign-up here.
If you want to be invited to these events in the future, please write to veranstaltungen@mpipriv.de.
Originally posted on the NGPIL Website
“The winner of the 2024 NGPIL (Nigeria Group of Private International Law) Conflict of Law’s Essay Prize is Peace George, a recent LLB graduate with admission to the Nigerian Law School. Her essay is entitled “Domicile, Nationality and Habitual Residence: What Option for Nigeria” and was awarded 150,000 NGN [Naira] as the winning essay. The essay was of excellent standard and demonstrated a deep understanding of the principles at hand, analysing them to a high standard…”
The Permanent Bureau of the HCCH is pleased to announce that the webinar “HCCH 2005 Choice of Court Convention: Fostering Access to Justice for Cross-Border Commerce in the Asia Pacific Region” will be held this Friday, 22 March, from 16:00 to 17:30 p.m. (Hong Kong time).
The webinar will feature the following topics and speakers:
For more information, please consult the webinar’s programme.
The Conclusions & Decisions of the Council on General Affairs and Policy (basically, the governing body – CGAP) of the Hague Conference on Private International Law (HCCH) were published this week. Click here.
What is remarkable is that this year’s Conclusions & Decisions, as well as other Preliminary Documents, were also published in Spanish. It is the first time in the history of this governing body that documents are translated into Spanish and signals its commitment and the looming deadline when Spanish will become an official language of the HCCH (i.e. 1 July 2024). Many congratulations to the HCCH team, it has been a long road.
A few takeaways from the Conclusions & Decisions are the following:
There has been a revitalization of the commercial and financial law area with work being undertaken regarding Digital Assets and Tokens, Central Bank Digital Currencies (CBDC), Digital Economy, Digital Tokens, Restructuring and Insolvency and Voluntary Carbon Markets. In particular, the Council mandated “the establishment of an Experts’ Group to study the applicable law and jurisdiction issues raised by the cross-border use and transfers of CBDCs” (Conclusion & Decision No 10).
A few Working Groups will continue to meet in the coming year, namely Financial Aspects of Intercountry Adoption, Surrogacy and Jurisdiction.
A new Working Group has been established with respect to the 1996 Child Protection Convention (Conclusion & Decision No 26): “CGAP mandated the establishment of a WG on the operation of Article 33 of the 1996 Child Protection Convention, first, to develop a Model Form and, subsequently, a Guide on the application of Article 33. The WG will report on its progress to CGAP 2025.” This is a significant development, in particular regarding the streamlining of how to handle kafalas. See also the work of FAMIMOVE. Another Working Group will deal with the 1996 Country Profile.
With regard to post-Convention work, a few meetings will take place:
A more intriguing Conclusion is the following regarding Trusts (Conclusion & Decision No 55):
CGAP noted the PB’s work in relation to the 1985 Trusts Convention, and mandated the PB, in partnership with relevant subject-matter experts, and subject to available resources, to continue to study the interpretation of analogous institutions for the purpose of Article 2 of the 1985 Trusts Convention, with a focus on:
a. clarifying the divergences in interpretation between the English and French versions of the Article; and
b. exploring whether analogous institutions would include foundations and endowments, institutions and developments relating to the waqf in the Islamic legal tradition, and decentralised autonomous organisations (DAOs) and other similar structures.
Finally, it is worth mentioning the developments regarding iSupport. The Council noted “the first official exchange of data using iSupport between Germany and Sweden, and their continued use of iSupport” (Conclusion & Decision No 38).
Project Lietzenburger Strabe Holdco, Re [2024] EWHC 468 (Ch) would seem to heed my prediction when I reviewed AGPS BondCo (“Strategic Value Capital Solutions Master Fund LP & Ors v AGPS BondCo PLC (Re AGPS BondCo PLC) [2024] EWCA Civ 24) here: that the English jurisdictional basis for schemes of arrangement and restructuring plans for corporations without English anchor prior to the restructuring, is less certain than court practice suggested.
Prior to AGPS Bondco and as I report in many posts which readers can find using the ‘scheme of arrangement’, in the event of a non-E&W incorporated debtor whose debt was being restructured, the classic technique is to insert a newly incorporated English company as a substitute obligor or co-obligor of debt owed by a foreign company in order to engage the jurisdiction of the English court. That technique in itself has not changed, but the court’s fairly ready acceptance of jurisdiction arguendo is now coming under some pressure.
As I reported in the past, the arguendo technique’s smoot riding through the courts first if all was assisted by the general absence of challenge by creditors. Even those not entirely convinced of the economic soundness of the restructuring at issue would eventually give up opposition when push came to shove. Further, pre-Brexit the assumption that a scheme or a plan would be readily recognised across the EU as a ‘judgment’ under Brussels Ia, despite question marks over the soundness of that ia viz the definition of ‘judgment’ and the application of BIa’s ‘insolvency’ exception, similarly lubricated passage through the courts. Post Brexit and absent UK Lugano membership, things have not necessarily changed from the content point of view; however they have certainly changed from the perception point of view.
In the case at issue, Richards J refers to AGPS Bondco and discusses COMI shift of the Plan corporation at length [69] ff.
The plan company having its COMI in E&W is one of the jurisdictional routes available. The Insolvency (Amendment) (EU Exit) Regulations 2019 are the main port of call, and Re Swissport Holding International SARL [2020] EWHC 3556 (Ch) (unreported), which I flagged in my discussion of Barings v Galapagos here is the lead judgment referred to on the principles of COMI. One of the issues in Barings is the question of ‘permanency’ of COMI move, an urgent issue in Barings but perhaps less immediately concerning in current case (the judge does briefly address it [85]).
The judge having decided that COMI was indeed located in E&W then [86] ff discussed whether this move of COMI might have been in breach of Luxembourg law. The structure of this analysis is not entirely clear. Whether COMI moved in breach of applicable lex societatis is not in itself I would suggest relevant to the COMI move itself and indeed this is not how the judge seems to approach it. One assumes his analysis on this point is part of his consideration of whether the courts at Luxembourg would recognise the Plan, alongside [103] ff where the potential of exclusive Luxembourg jurisdiction is considered. Consideration including by the experts is made of CJEU C-723/20 Galapagos BidCo Sarl, with the judge eventually by a slender margin deciding that the view is to be preferred that Lux courts would not consider themselves to have such jurisdiction.
On recognition proper (again I am not quite sure of the structure here). [112] ff consider the Re DTEK Energy BV test, with consideration in particular of the COMI move as fraude à la loi /fraus (additionally in the form of fraude au jugement) and on balance the judge holds that it is unlikely that the LUX courts would object on ordre public grounds (ia given EU law’s acceptance of COMI move for restructuring purposes.
The same ordre public test under German law with an important Brexit consequence [125]: “Both experts agree that an English judgment sanctioning the Plan would be recognised in Germany only if the Plan Company’s COMI is in England at the time of any order sanctioning the Plan. Without that, the German courts would not accept that the English courts have jurisdiction for the purposes of s343 of the InsO.” I am not an expert on German law but it seems prima facie implicit in that opinion that a Plan would have to be considered an insolvency and indeed [125] ff follows that discussion. Here the judgment takes an interesting turn with [130] the presence of cross-class cram-down in an English Plan leading to pro inspiratio an Annex A EU Insolvency Regulation notified German procedure, StaRUG, in implementation of EU Directive 2019/1023 on Preventive Restructurings (the “Restructuring Directive”), the Plan being considered one in insolvency.
Consider the competing reasons:
Professor Thole’s reasons for concluding that the Plan would be recognised and given effect to in Germany can be summarised as follows:
i) The Plan is similar in nature to a StaRUG. StaRUGs fall within the list of “insolvency proceedings” set out in Annex A.
ii) Proceedings set out in Annex A are “insolvency proceedings” for the purposes of the InsO. In official commentaries on German domestic legislation, the German legislature has stated that, in deciding whether non-EU proceedings constitute “insolvency proceedings”, it is helpful to consider their similarities with proceedings listed in Annex A.
iii) Since the Plan is similar to a StaRUG, which falls within Annex A, a German court would likely conclude that an order sanctioning the Plan would be an order in “insolvency proceedings” for the purposes of the InsO.
iv) That conclusion is not altered by the accepted fact that the Plan does not deal with all the Plan Company’s creditors (such as professional advisers). The requirement for “collective proceedings” is present by virtue of the fact that the Plan deals with the rights of the Plan Company’s financial creditors. That conclusion is supported by a comparison with StaRUGs which likewise do not need to deal with the claims of all creditors.
v) Accordingly, the Plan would be enforced and recognised under the terms of the InsO.
i) German legal literature categorises plans under Part 26A as “preventive restructuring frameworks” which are the province of the StaRUG Act rather than the InsO. Accordingly, a German court would consider that the question whether the Plan should be recognised and enforced in Germany should be answered by reference to the StaRUG Act, rather than by reference to the InsO.
ii) The StaRUG Act does not provide for preventive restructuring frameworks of a non-EU member state to be recognised or enforced in Germany. There is, therefore a “gap” in German domestic legislation which means that non-EU “preventive restructuring frameworks” are inherently incapable of being recognised in Germany. Since Germany has a civil law tradition, the courts would not seek to fill that gap by adopting a strained interpretation of the concept of “insolvency proceedings” so as to enable the Plan to be recognised under the InsO. Rather, a German court would look to the legislature to fill the gap if it saw fit.
iii) The Plan falls outside the definition of “insolvency proceedings” in the InsO applying orthodox principles of interpretation which are not affected by any wish to fill a perceived gap in the legislation. That is because the Plan lacks the requisite element of “collectivity” to satisfy the definition.
iv) The fact that the Plan is similar to procedures (such as a StaRUG) listed in Annex A is not relevant. While German legislation does indeed take into account similarities with EU insolvency proceedings, the InsO only requires a comparison to be made with proceedings listed in the EU Insolvency Regulation prior to it being recast in 2015. The German court would not apply an “always speaking” doctrine of statutory interpretation to “update” those references to include Annex A of the Insolvency Regulation Recast.
These are interesting positions and in the end the judge sides by a very narrow margin with the former.
Further consideration of the plan then lead to the judge suggesting a number of amendments but for the purposes of the blog, the findings on jurisdiction and recognition are as extensive as they are exciting.
Geert.
EU Private International Law, 4th ed. 2024, 5.35 ff.
More on the blog soon
Refusal to sanction Restructuring Plan
Extensive review of LUX, DE expert opinion on jurisdiction, COMI, fraude à la loi (held i/t end E&W courts do have jurisdiction)
Project Lietzenburger Strabe Holdco, Re [2024] EWHC 468 (Ch)https://t.co/y4Mv0uDEE2
— Geert Van Calster (@GAVClaw) March 4, 2024
In Granville Technology Group Ltd v Chunghwa Picture Tubes Ltd & Ors [2024] EWHC 13 (Comm) Pelling J deals with a follow-on damages claim in the context of the LCD cartel (an EC decision under Article 101 TFEU). In E&W these are characterised as tortious claims for breach of statutory duty, as they are in most EU jurisdictions, too.
The applicable law issues were dealt with under residual English law pre Rome II. The events with which this claim is concerned occurred before 11 January 2009, when Rome II came into effect. For the Brussels Ia and Rome II issues see my paper here. However the judge’s discussion of elements displacing the English law’s presumption of locus damni have important comparative context to EU law as I discuss below.
Claimants were English registered companies carrying on business in England and Wales in the manufacture and/or sale primarily of desktop PCs sold with monitors and notebooks. They are now all in liquidation. The judge handily recalls the principles [18]] for those not familiar with follow-on actions
A claimant alleging a competition law infringement can bring a claim before the English courts either as a ‘standalone’ claim (in which case it must establish both the breach of competition law alleged and the loss which it alleges was caused thereby); or (as in this case) as a ‘follow-on’ claim, where the claimants rely on the findings of the relevant competition authority (in this case the Commission) to establish breach. The “follow on” option is available because in law the High Court is bound by infringement decisions of the Commission, such as the Decision. However the claimant in a follow on claim must prove the loss it alleges it has been caused by the infringement relied on…
Damage of course is an issue and [27] in this case as in many similar ones, “complex economic evidence involving statistical modelling at various levels of complexity and sophistication was deployed by both parties but in particular by the defendant in an attempt to identify what part of the price increases in LCD panels over the Relevant Period was attributable to the cartel’s infringing activity.”
[34] Applicable issues of law that arise against some of the defendants, are:
i) Whether any losses that arise out of purchases by the claimants of LCD panels or LCD Products containing LCD panels which were first put onto the market outside the EEA fall outside the territorial scope of EU law and are therefore unrecoverable;
ii) whether the Claim in so far as it arises out of purchases by the claimants of LCD panels or LCD Products containing LCD panels which were first put onto the market in South Korea, Taiwan, China and Japan is governed by the laws of these countries; and if so whether the claims by the claimant to recover damages for breach of TFEU, Article 101 and/or AEEA, Article 53 is a cause of action within the laws of those states. The claimants have not attempted to prove the relevant laws of any of those states and rely on the presumption (“Presumption of Similarity”) that those laws are materially the same as English law unless the contrary is pleaded and proved. The defendants case is that the Presumption of Similarity is of no application applying the decision of the Supreme Court in Brownlie v FS Cairo (Nile Plaza) LLC [2021] UKSC 45 per Lord Leggatt at [119] – [124]. If the defendants are correct on this issue, they maintain the claim fails to the extent that it is based on purchases by the claimants of LCD panels or LCD Products containing LCD panels which were first put onto the market in South Korea, Taiwan and China and Japan. The defendants estimate this at about 78% of the whole. There is a dispute as to the correct percentage in the event the defendants succeeds on the principle In any event, the claimants submit that if I agree with the defendants on the issue of principle I should adjourn determination of the issue and give the claimants the opportunity to plead and prove the relevant foreign law. I return to that issue below; and
iii) Whether the claims against the third and fourth defendants are statute barred under the Limitation Act 1980 (“LA”). The claimants rely on LA, s.32 and maintain that they could not have with reasonable diligence discovered the relevant facts before publication of the Decision, particularly given that all the claimants are in liquidation and have acted at all material times by their liquidators and their support staff.
The foreign law issue is dealt with [292] ff. The relevant agreements, decisions and concerted practices all occurred outside the EU in Taiwan, Japan and South Korea, as did the overcharge for the LCD panels incorporated into the goods which the claimants ultimately bought: this occurred when the LCD panels were first sold by the cartelists including the defendants to the manufacturers of screens that were then incorporated into monitors and notebooks. Loss to the claimants loss (subject to downstream pass on) happened in E&W, when they purchased monitors or notebooks with LCD screens incorporated into them or the parts necessary to enable them to assemble notebooks. Their losses on reduced sales were also suffered in E&W.
This is where PILA s11 and 12 come in: for their content and implications see my post on UKSC Zubaydah. This is where interesting comparative elements emerge with EU law.
[297]
Once the different elements of the events and the country in which they occurred have been identified, the court then has to make a ‘value judgment’ regarding the ‘significance’ of each of those ‘elements’ in relation to the tort in question – see Iiyama (UK) Ltd v Samsung Electronics Co Limited (ibid.) at [48]. In that case, it was conceded that “…in the modern world the place where a cartel agreement happens to be made is of little significance…” Neither party in this case suggests, and in particular the defendants do not suggest, otherwise. I agree. That being so, the primary considerations that remain by a process of elimination are (a) the place or places where the cartel was intended to be implemented; and (b) the place or places where the damage resulting from the infringing activity was suffered.
In my aforementioned paper p.150 I criticise the CJEU’s approach for jurisdictional purposes) in C-352/13 CDC which it repeated in C-27/17 flyLAL. For locus delicti commissi, under Article 101 TFEU (cartels), with reference to CDC, the CJEU opted for courts for the place in which the agreement was definitively concluded: this truly is extraordinary for it allows for forum shopping by the cartel participants, and it is a far cry form the sentiment expressed in current judgment (for applicable law) that the place where a cartel agreement happens to be made is of little significance…. For Article 102 TFEU (abuse of dominant position) the picture is more fuzzy at the CJEU as I discuss in my post on flyLAL. I realise the analysis in current judgment is for applicable law, not jurisdiction and I also realise that on applicable law Rome II’s Article 6 is closer to a forum damni analysis (as befits the general DNA of Rome II) than the CJEU’s locus delicti commissi analysis for jurisdiction in CDC and flyLAL.
Parties still disagree however on where that place is where the cartel was first implemented. Defendants say this was at the time prices first incorporated the Overcharge, which was when LCD panels were sold to original equipment manufacturers in Taiwan, Japan, China and South Korea.
The judge in this context discusses the territorial scope of EU competition law [299] ff:
….if and to the extent that the focus in relation to applicable law should be on the restriction on competition within the internal market, then concluding that EU competition law should not apply to infringing activity that has effect within the EU because the cartelists are based, or conspired, or first gave effect to their conspiracy outside the EU would have a chilling effect on the efficacy of EU competition law as an effective mechanism for protecting and enhancing fair competition for the benefit ultimately of all consumers within the EU.
Enter CJEU Woodpulp, Gencor and Intel. [308] “in my judgment the evidence available establishes that the cartel in issue in these proceedings was a worldwide cartel which was intended to produce and in fact produced substantial indirect effects on the EU internal market.”
[313]
I conclude that the claim is one that comes within the territorial scope of EU competition law Returning to the applicable law issue, these conclusions lead me to the further conclusion that applying PILA, s.11(2)(c), the applicable law is that of England and Wales including the law of the EU that applied at the time of the events giving rise to this claim. I reach that conclusion because the most significant elements of those events were (a) the place or places where the cartel was intended to be implemented, which for the reasons I have identified was materially the territory of the EU including the UK and, therefore, England and Wales ; and / or (b) the place or places where the damage resulting from the infringing activity was suffered which again materially was England and Wales. As the Commission makes clear in Article 331 of the Decision, while the effects of the cartel were experienced elsewhere as well that is entirely immaterial for present purposes, as is the fact that a number of sales were first put on the market outside the EU. That is so because the Commission has decided and the Decision establishes that the indirect sales of panels were targeted at the EU (including England and Wales) and were intended to and in the event had substantial effects on competition in the EU (including England and Wales).
Reference here is also made to Deutsche Bahn Ag & Ors v Mastercard Incorporated & Ors [2018] EWHC 412 (Ch) in which both a pre and a post Rome II scenario was at issue.
Obiter, [314]
…had I concluded that the general rule was that the applicable law in relation to sales that were first put on the market outside the EU was the law of the state where that had occurred, I would nonetheless have concluded that the significance of the factors referred to above which connect the tort to the EU and, therefore, England and Wales, so outweighed the factors connecting the tort to the states where LCD screens were first put on the market outside the EU during the Relevant Period so as to make it substantially more appropriate for the applicable law to be the law of England and Wales incorporating that of the EU as relevant. EU competition law is the most appropriate law to apply to a tort concerned with a breach of TFEU, Article 101 to the extent that it has effect within the EU because it comes within the territorial scope of EU competition law and English law is the most appropriate intra EU system of law to apply by reason of the effect on the market so far as the claimants are concerned being in England and Wales, the claimed losses having been suffered in England and Wales and the claimants having carried on business in England and Wales during the whole of the relevant period until they were each placed in administration. The geographical place of incorporation of each claimant is a minor consideration although the first and second claimants were registered in England and Wales and although OTC was registered in Jersey, it nonetheless carried on business in England and Wales and claims in respect of losses suffered there. To my mind it is also at least realistically arguable, given the cost and inconvenience of having to prove separately the competition law of each state where LCD screens were first put on the market outside the EU during the Relevant Period, that to decide otherwise would undermine the direct effect and/or the effectiveness principles.
Of note. Geert.
EU private international law, 4th ed. 2024, [2.447] ff, 4.53 ff.
CJEU Woodpulp claxon
Follow-on damages claim, LCD panels cartel
Applicable law under residual E&W law
Determination of locus delicti commissi, territorial reach of EU competition law
Granville Technology v Chunghwa Picture Tubes ea [2024] EWHC 13 (Comm)https://t.co/ymihdaLesC
— Geert Van Calster (@GAVClaw) February 9, 2024
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