EAPIL blog

On 22 June 2020, Parliament and Council negotiators reached a deal on the first EU-wide rules on collective redress.

The new rules introduce a harmonised model for representative action in all member states that guarantees consumers are well protected against mass harm, while at the same time ensuring appropriate safeguards from abusive lawsuits. The new law also aims to make the internal market function better by improving tools to stop illegal practices and facilitating access to justice for consumers.

Background

The Representative Action Directive is a part of the New Deal for Consumers, launched in April 2018 by the European Commission, to ensure stronger consumer protection in the EU. It includes stronger consumer rights online, tools to enforce rights and compensation, penalties for violating EU consumer law and improved business conditions.

The Agreement

The main elements of the agreement are as follows.

1. Each Member State will name at least one qualified entity (an organisation or a public body) that will be empowered and financially supported to launch actions for injunction and redress on behalf of groups of consumers and will guarantee consumers’ access to justice.

2. On designation criteria for qualified entities, the rules distinguish between cross-border cases and domestic ones. For the former, entities must comply with a set of harmonised criteria. They have to demonstrate 12 months of activity in protecting consumers’ interest prior to their request to be appointed as a qualified entity, have a non-profit character and ensure they are independent from third parties whose economic interests oppose the consumer interest;

3. For domestic actions, member states will set out proper criteria consistent with the objectives of the directive, which could be the same as those set out for cross-border actions.

4. The rules strike a balance between access to justice and protecting businesses from abusive lawsuits through the Parliament’s introduction of the “loser pays principle”, which ensures that the defeated party pays the costs of the proceedings of the successful party-

5. To further avoid abusive lawsuits, Parliament negotiators also insisted that courts or administrative authorities may decide to dismiss manifestly unfounded cases at the earliest possible stage of the proceedings in accordance with national law.

6. Negotiators agreed that the Commission should assess whether to establish a European Ombudsman for collective redress to deal with cross-border representative actions at Union level.

7.  The scope of collective action would include trader violations in areas such as data protection, financial services, travel and tourism, energy, telecommunications, environment and health, as well as air and train passenger rights, in addition to general consumer law.

Next steps

Parliament as a whole and the Council will now have to approve the political agreement. The directive will enter into force 20 days following its publication in the Official Journal of the EU. Member states will then have 24 months to transpose the directive into their national laws, and an additional six months to apply it.

Click here to access the procedure file.

While doing some research on the topic of the application of foreign law (frustrating: nothing has happened at the international level since the issue was given up at the Hague some years ago), I have come across some publications on related topics which I believe deserve attention. One of them is whether there is a human right of public access to legal information; scholars in favor even claim a UN Convention proclaiming it should be adopted .

Thanks to these readings I remembered a case of the European Court of Human Rights which, except I am mistaken, is largely unknown. The judgement, of 6 April 2004, corresponds to application no. 75116/01, Karalyos and Huber v. Hungary and Greece. Hungary was found to have failed to comply with Article 6 ECHR in a case for the compensation of damages: the contents of the foreign applicable law had not been established nine years after the claim was lodged; the proceedings were still pending at an early stage before the Hungarian courts. What is more relevant, the local courts had not taken the approppriate steps to ascertain the contents of the foreign law, nor applied national law instead – a possibility foreseen in section 5 § 1 of Hungarian Law-Decree no. 13 of 1979 on International Private Law.

I suggest you have a look, also on the lengh of proceedings where foreign law is applicable, to  Bekerman v. Liechtenstein, on application no. 34459/10  (although less representative than Karalyos).

I would disclose nothing new by asserting the potential of Article 6 ECtHR in the area. However, to infer a fundamental right of access to legal materials from the case law mentioned above would, to my mind, go too far. On the contrary, some consequences could definitly be drawn regarding the application of foreign law – and not only in Hungary. I am not aware it has happened. It would be great to have feedback, if someone knows better.

— Some readings on access to legal information as a right: Ginevra Peruginelli, ‘Law belongs to the people: access to law and justice’, [2016] 16(2) Legal Information Management 107 – quite short; Leesi Ebenezer Mitee, The Right of Public Access to Legal Information: A Proposal for Its Universal Recognition as a Human Right’ (2017) 18 German LJ 1429 – almost 70 pages.

Aaron D. Simowitz (Willamette University College of Law) has posted Convergence and the Circulation of Money Judgments on SSRN.

The abstract reads:

For half a century at least, the several states of the United States have taken a liberal attitude toward the recognition and enforcement of foreign country money judgments. The U.S. Supreme Court invoked the “grace” of sovereign nations to justify a restrictive approach to the recognition of judgments in the famous case of Hilton v. Guyot. The New York Court of Appeals laid out a more generous approach based in the vindication of private rights. Simply put, private rights won. In 1962, the Uniform Law Commission promulgated the Uniform Foreign Money-Judgments Recognition Act, which codified a liberal approach to the cross-border circulation of money judgments. The many U.S. states that adopted the uniform act were trying to lead by example. The hope was that, if they accepted incoming judgments, judgments exported to the rest of the world would be accepted, recognized, and enforced. For decades, this effort was regarded as a failure. The European Union continued to draw a sharp distinction between E.U. judgments and U.S. judgments—though acceptance of U.S. judgments by E.U. member states crept up over time. Some of the world’s largest economies—most notably, China—outright rejected recognition of U.S. money judgments.

Change has been recent and dramatic. In 2017, a Chinese court recognized and enforced a U.S. money judgement for the first time. Chinese law requires reciprocity between nations in order to recognize a foreign money judgment. The United States has no reciprocal judgment recognition treaty with any country. A U.S. district court recognized and enforced a Chinese judgment in 2009. This “reciprocity in fact” was sufficient for a Chinese court. A few months later, China announced that it would sign The Hague Convention on Choice of Court Agreements (“COCA”), obligating Chinese courts to recognize and enforce judgments rendered under a choice of court clause selecting the courts of any contracting state. The COCA has already entered into force between the European Union, Mexico, and Singapore. The United States has signed, but not ratified, the agreement. Meanwhile, The Hague Judgments Project gathers steam to require the free circulation of judgments arising in all but a few contexts. The drivers of this apparent convergence are obscure and likely diverse. This Article will analyze the causes of this recent, dramatic shift and will attempt to assess the likelihood of further convergence.

The paper is forthcoming in the Southern California Law Review.

On 28 May 2020, the German Federal Court of Justice (BGH) decided to refer a question for a preliminary ruling to the ECJ regarding Articles 80 and 84 of the General Data Protection Regulation (GDPR). The case, brought by consumer protection groups, is about the alleged violation, by the operator of a social network, of the obligation to inform users about the scope and purpose of the collection and use of their data.

Background

The Irish-based defendant, Facebook Ireland Limited, operates the “Facebook” social network. On the internet platform of this network there is an “app center” in which the defendant makes free online games of other providers accessible to the users of its platform. In November 2012, several games were offered in this app center, for which the following information could be read under the button “Play now”: “Clicking on Play game above gives this application: your general information, your email address, about you, your status. This application may post on your behalf, including your score and more.” In one game, the notice ended with the phrase: “This application may post information on your status, photos, and more on your behalf”.

The plaintiff is the umbrella organization of the consumer centers of the Federal states. It claims, among other, that the presentation of the information under the “Play now” button in the app center is improper, including from the point of view of the legal requirements for obtaining effective data protection consent from the user. It considers itself entitled to enforce injunctive relief by bringing an action before the civil courts in accordance with the relevant German rules on unfair competition and consumer protection.

In the first instance, the district court ordered the defendant to refrain from presenting games on its website in an app center in such a way that users of the internet platform, by clicking a button such as “play game”, allow the game operator to use personal data stored there, and is authorized to transmit (post) information on behalf of the user (LG Berlin, 28 October 2014, 16 O 60/13). The defendant’s appeal was unsuccessful (Kammergericht Berlin, 22 September 2017, 5 U 155/14). The defendant has filed a second appeal with the BGH.

The question

The question referred to the ECJ focuses on whether the criteria set out in Chapter VIII of the GDPR, in particular in Article 80(1) and (2) and in Article 84(1), conflict with national rules granting to competitors and associations, institutions and bodies authorized under national law, the right to sue before the civil courts for infringements under the GDPR regardless of the violation of specific rights of individual data subjects, and without any mandate from a data subject.

This question is controversial in the case law of the lower courts and in legal literature. Some consider that the GDPR contains a final regulation for the enforcement of the data protection provisions made in this Regulation, and that associations are therefore only authorized to bring proceedings under the conditions of Article 80 of the GDPR (which have not been met in the case at hand). According to others, the GDPR is not exhaustive, hence associations continue to be authorized to try and enforce injunctive relief in case of an alleged violation of personal data protection rules, independently of any infringement of specific rights of individual data subjects, and without the need of a mandate from a data subject.

The Court of Justice ruled in Fashion ID that the provisions of Directive 95/46/EC (the Data Protection Directive), which was in force until the General Data Protection Regulation became applicable on 25 May 2018, do not preclude associations from having legal standing. However, this decision does not indicate whether this right to bring an action remains in force under the GDPR.

On 26 May 2020, the European Commission launched a public consultation on cross-border investment within the EU.

Why this initiative?

First, the Commission is currently working on a new regulatory framework for intra-EU investments in order to make the internal market more attractive for foreign investors. The main objective of the future legislation will be to better protect and facilitate cross-border investments (see communication COM/2020/102, A New Industrial Strategy for Europe).

Second, following the Achmea judgment of the European Court of Justice (Case C-284/16), an agreement for the termination of intra-EU bilateral investment treaties has recently been adopted by a broad majority of Member States. At the same time, many investors but also arbitration practitioners have raised concerns because of this brutal change in the regulatory framework. They principally  invoke the loss of effective enforcement of their rights within the EU.

The main topics of the consultation are as follows: the first section contains some general questions aimed at gaining inputs on respondents’ familiarity with cross-border investments and linked issues; the second seeks feedback from stakeholders on rules to protect intra-EU investments; the third invites views on enforcement of intra-EU investment protection rules, including dispute resolution mechanisms and remedies when issues related to cross-border investments arise; the fourth section contains some general questions to assess the overall EU investment protection framework (as presented in section two and three); the fifth section seeks views of stakeholders on measures to facilitate and promote cross-border investment.

The consultation is open until 8 September 2020 and can be found here.

In October 2019, Vincent Richard defended a PhD thesis on default judgments in the European judicial area, written under the joint supervision of Gilles Cuniberti and Loïc Cadiet.

The abstract reads:

French judges regularly refuse to enforce foreign judgements rendered by default against a defendant who has not appeared. This finding is also true for other Member States, as many European regulations govern cross-border enforcement of decisions rendered in civil and commercial matters between Member States. The present study examines this problem in order to understand the obstacles to the circulation of default decisions and payment orders in Europe. When referring to the recognition of default judgments, it would be more accurate to refer to the recognition of decisions made as a result of default proceedings. It is indeed this (default) procedure, more than the judgment itself, which is examined by the exequatur judge to determine whether the foreign decision should be enforced. This study is therefore firstly devoted to default procedures and payment order procedures in French, English, Belgian and Luxembourgish laws. These procedures are analysed and compared in order to highlight their differences, be they conceptual or simply technical in nature. Once these discrepancies have been identified, this study turns to private international law in order to understand which elements of the default procedures are likely to hinder their circulation. The combination of these two perspectives makes it possible to envisage a gradual approximation of national default procedures in order to facilitate their potential circulation in the European area of freedom, security and justice.

The thesis, in French, is titled Le jugement par défaut dans l’espace judiciaire européen and can be accessed here.

The Centre of Commercial Law Studies (CCLS) at Queen Mary University London is publishing a new journal, the Transnational Commercial Law Review (ISSN 2515-3838). This is an online fully open access peer-reviewed journal. It is dedicated to publishing academic research and commentary of the highest quality in terms of originality and rigour.

Submissions to the Review are by invitation only and no unsolicited submissions will be considered. The Review will publish research outputs linked with the academic programme of the Institute of Transnational Commercial Law recently established by CCLS in partnership with Unidroit, including the Transnational Commercial Law Lecture Series which will showcase research by eminent researchers in this field, as well as the most high-quality contributions to the CCLS’s New Voices in Commercial Law Seminar Series.

More details can be found here.

On 12 May 2020, the Court of Appeal of England and Wales delivered an interesting decision in SAS Institute Inc. v. World Programming Ltd.

This is a long and complex case, which has reached, inter alia, the European Court of Justice on certain issues of IP law. But the case also raises a number of issues of private international law (see already the reports of Geert van Calster here and here).

In this post, I would like to focus on one particular aspect of last month’s judgment, namely the territoriality of enforcement of judgments, but the case is also concerned with the conditions for issuing anti-enforcement injunctions.

Background

The background of the enforcement issues is a dispute between a U.S. company (SAS) and a UK company (WPL) which resulted in a judgment delivered by a court of North Carolina and ordering WPL to pay about US$ 79 million. The American judgment, however, was denied enforcement in the UK on various grounds, including abuse of process and public policy.

The judgment creditor then initiated enforcement proceedings in a Californian court over assets located in various jurisdictions, including the U.K. The assets were debts of customers of WPL. The Californian enforcement orders required WPL to assign the debts to SAS (the Assignment Orders) and, for debts already paid, to turnover monies already paid to SAS (the Turnover Order).

Affecting Assets, Directly or Indirectly

The Court of Appeal started by recalling the basic principle, which is undoubtedly widely shared, according to which enforcement should be strictly territorial. Accordingly, in principle, the American enforcement orders were found to be exorbitant and infringe the sovereignty of the UK insofar as they affected the debts situated in the UK.

But, the judgment creditor argued, the territoriality principle really applied only to in rem enforcement proceedings. In contrast, the Assignment and Turnover Orders acted in personam. As many readers will know, English courts have a long tradition of using equitable remedies to do indirectly what they recognise they should not do directly. In recent times, the best example has certainly been the power to issue freezing orders with respect to assets situate abroad.

The admissibility of in personam remedies in this context was addressed by Lord Collins in Masri v Consolidated Contractors International (UK) Ltd (No. 2) in 2008. In this judgment, Lord Collins explained that in personam remedies would only be admissible if three conditions were met.

59. As I have said, the fact that it acts in personam against someone who is subject to the jurisdiction of the court is not determinative. In deciding whether an order exceeds the permissible territorial limits it is important to consider: (a) the connection of the person who is the subject of the order with the English jurisdiction; (b) whether what they are ordered to do is exorbitant in terms of jurisdiction; and (c) whether the order has impermissible effects on foreign parties. 

In the SAS v. WPL case, the Court of Appeal found that there were connections between the English debtor and the U.S., as the WPL was conducting business in the U.S. But it found the foreign orders raised problems insofar as they required positive actions from the English debtor. Finally, the Court of Appeal insisted that the American orders did include any proviso protecting third parties, in particular by assuring them that their position would not be affected unless the American orders were declared enforceable by the court of the situs of the debt (ie here the English court).

The Court concluded:

83. In the circumstances, the proposed Assignment and Turnover Orders can properly be regarded as exorbitant, being contrary to the internationally accepted principle that enforcement of a judgment is a matter for the courts of the state where the asset against which it is sought to enforce the judgment is located.

The Court then moved on to discuss whether it should issue an anti-enforcement injunction.

And the Brussels Ibis Regulation?

It does not seem that the applicability of the Brussels I bis Regulation was raised at any point in this case.

One wonders, however, whether English courts were free to define territoriality of enforcement in a case concerned with enforcement of foreign judgments over assets situated in a Member State. There is no doubt that the jurisdiction of the English courts to rule on such matters was governed by Article 24(5) of the Brussels I bis Regulation, which applies irrespective of the domicile of the parties.

It could be that the Court of Appeal considered that the source of the territoriality principle did not matter, because it is so widely accepted. Lord Justice Males repeated several times that the principle is recognised internationally, and flows from rules of international law. Most unfortunately, however, he did not cite any source of international law in support of his position, but rather other English judges.

The devil is in the details. Everybody can agree on the existence and content of a principle of territoriality of enforcement when one remains at a high level of generality. But the doctrine developed by Lord Collins in Masri is sophisticated, and there is no particular reason indicating that it is representative of customary international law or, more importantly, EU autonomous law under Article 24(5) of the Brussels I bis Regulation.

The Hague Academy of International Law announced the extension of the deadline to apply for the 2021 Centre for Studies and Research (postponement of the 2020 edition) until 1 September 2020. The programme will take place between 16 August and 3 September 2021 and will focus on the topic of Applicable Law Issues in International Arbitration.

The programme description reads:

International arbitration has long been the most successful method for settling all kinds of international commercial disputes, and still is – notwithstanding the surrounding criticism – the leading method for settling disputes between foreign investors and the host state. One of the characteristics of international arbitration is that it to a large extent relies on an international or transnational legal framework. The effects of arbitration agreements and of arbitral awards, as well as the role of the courts regarding arbitration agreements and awards, are regulated in international conventions such as the New York or the ICSID Conventions. Furthermore, although there is room for specificities of national law, commercial arbitration acts are largely harmonised especially through the impact of the UNCITRAL Model Law. Similarly, even if arbitral institutions try to distinguish one from each other by providing for some specific tools, the essential content of arbitration rules does not vary. It can be said, consequently, that the transnational framework of arbitration is intended to create to the extent possible an autonomous system of dispute resolution, which can be applied in a uniform way irrespective of the country in which the proceedings take place or the award is sought enforced. The procedural autonomy of arbitration may also have an impact on how arbitral tribunals relate to the substance of the dispute.

As arbitral awards are final and binding, and domestic courts and ICSID annulment committees do not have the power to review them in the merits, arbitral tribunals enjoy a considerable flexibility in selecting and applying the rules of law applicable to the dispute, even though they are constrained to respect the will of the parties. Legal literature has strongly emphasized that this flexibility creates an expectation of delocalization: both from the procedural and from the substantive point of view, arbitration is described as a method for settling disputes that strives for uniformity on a transnational level and should not be subject to national laws. The autonomy and flexibility of arbitration, however, are not absolute. The international instruments that regulate arbitration either make, in some contexts, reference to national law or call for the application of (general or concrete) international law. Also, they do not cover all aspects of arbitration, thus leaving room for national regulation. Additionally, the restricted role that courts and ICSID ad hoc committees have in arbitration does not completely exclude that national law may have an impact. While court and committee control is not a review in the merits, application of the parameters for validity or enforceability of an award, even where these parameters are harmonised, may depend on national regulation.

Importantly, the definition of what disputes are arbitrable is left to national law. While the scope of arbitrability has been significantly expanded starting from the last two decades of the last century, there are signs now that it may be restricting. The scope of arbitrability may be looked upon as a measure of the trust that the legal system has in arbitration. From another perspective, it may represent the way in which States approach the settlement of international commercial disputes: intending to keep an exclusive power by means of the exclusion of private deciders, or adopting the role of controllers of the regularity of arbitration. As far as investment arbitration is specifically concerned, it is well known that States’ attitudes are diverse and may change from time to time. In both cases, States’ policy choices may have an impact on applicable law issues.

All the foregoing considerations, succinctly exposed, are the frame for the present topic. On such a basis, it is possible to develop two lists of issues to be individually addressed. The first list deals with the fundamental aspects of the topic. Among the issues included therein, some refer to all types of arbitration, while others are rather specific to either commercial or investment arbitration. The second list responds to the fact that the applicable law is not necessarily unitary. Indeed, according to the principle of severability, a different law may apply to the procedural aspects and to the substantive aspects of the dispute, and within these two categories there are further possibilities for severing the applicable law. Thus, one can wonder to which issues is it appropriate to apply international sources of law, to which issues is it appropriate to apply soft sources of law, to which is it appropriate to apply national sources of law, and to which issues is it appropriate to apply (or to create) transnational standards. Or a combination of these sources? On which basis may this selection be made, and what are its effects on the autonomy of arbitration, on the expectations of the parties and on the credibility and legitimacy of arbitration as an out-of-court judicial system that enjoys enforceability?

The Directors of Research, Prof. Giuditta Cordero-Moss (University of Oslo) and Prof. Diego Fernández Arroyo (Sciences Po, Paris), invite applications from researchers including students in the final phase of their doctoral studies, holders of advanced degrees in law, political science, or other related disciplines, early-stage professors and legal practitioners. Applicants should identify the specific topic on which they intend to write. Participants will be selected during the fall of 2020, and will convene at The Hague during the programme period to finalize their papers. The best articles will be included in a book to be published in the fall of 2022.

All applicants are required to register online via the appropriate registration form.

More information about the programmes of The Hague Academy of International Law can be found here.

The Russian journal Pravovedenie has issued a call for papers on Recognition and enforcement of foreign judgments: problems and prospects.

Having regard to the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, the editors seek contributions to be published in a special issue of the journal focusing on the cooperation of States in ensuring access to justice at the stage of recognition and enforcement of foreign decisions.

The deadline for submissions is 1 May 2021.

More details are available here.

Jean-Sylvestre Bergé and Giulio Cesare Giorgini have edited Le sens des libertés économiques de circulation – The sense of economic freedoms of movement, published by Bruylant.

At a time in which economic freedoms of movement (economic law, free trade, international trade and European freedoms of movement) are increasingly being challenged, it is crucial to explore in depth the capacity of disciplines (law, human and social sciences, hard sciences) to question the sense of these freedoms. Different forms of knowledge thus question the conception that their constructions and analyses relate to these freedoms. What directions are being taken? What are the objectives pursued? Are there any gaps between the initial ambitions and the achievements that can be observed today? Bringing together experienced researchers and young researchers in an intergenerational dialogue, this book is original and multidisciplinary, international and comparative in nature. It places the contemporary dynamics of economic law and flow phenomena in a perspective that allows their comprehension through studies organised around clearly identified issues.

The table of contents is can be found here.

See here for more information.

In February 2020, the Spanish Constitutional Court ordered the review of a judgment requiring the actor Christopher Lee to pay 710.000 Euros to the author of a painting that was used to promote a film without the latter’s permission.

The Court considered that the Commercial Court of Burgos (Spain) had violated Lee’s fundamental right to an effective judicial protection, in that it had not heard him nor proceeded to personal service of the judgement at any time prior to issuing an enforcement order against the actor in October 2009.

The controversy relates to the movie Jinnah and, specifically, to one of the posters by which it was promoted. The Commercial Court of Burgos considered that the use of the work “constituted an infringement of exclusive rights” and awarded a compensation to the author of the work.

The  lawsuit had been filed by the painter against a business corporation (The Quaid Project Limited), Mr. Christopher Frank Carandini Lee and Mr. Juan Francisco Aneiros Rodríguez, as representative of the official website of Christopher Lee. The three co-defendants were domiciled in London; neither The Quaid Project Limited nor Mr. Carandini Lee appeared. At the time, only Mr. Aneiros could be personally served at the address established in a contract previously signed with the plaintiff.

The decision against Lee was therefore taken in absentia. It has turned out that the Burgos Court’s attempts to have the claim and the judgment served to the defendant at the addresses provided by the claimant were unsuccessful, and that the Court contented itself with service by publication. After the judgment was delivered, a writ of execution (auto de despacho de ejecución) was granted and certified as a European enforcement order, thus allowing for enforcement to be tried in the United Kingdom (Lee’s place of residence).

According to the Constitutional Court, the absence of personal service led to a violation of Lee’s right of access to justice, for it prevented him from participating in proceedings where his financial obligations were at issue. The Court also expressed doubts regarding the assessment of the damages, which had been made without calling for any expertise. Despite this, the Court in Burgos had considered the figure to be appropriate and in September 2010 had ordered that the defendants’ bank accounts be seized, requesting information for this purpose from different banking entities.

After learning about the proceeding “through a letter” written by the claimant’s lawyers, that reached him “through a London-based office,” in February 2014 Lee asked unsuccessfully for the proceedings to be declared void. The actor passed away in June 2015; an application was filed with the Constitutional Court by his heirs, which in a judgment dated February 24 has ruled in favor of C. Lee.

On the Legal Standing of the Heirs

Before the Constitutional Court, the claimant in the ordinary proceedings contested the legal standing of Lee’s heirs in light of UK succession law, relying in particular on the condition of testamentary executor and manager of the estate of Birgit Lee.

The Constitutional Court dismissed this part of the defense recalling its previous case law based on Article 162.1 b) of the Spanish Constitution and Article 46.1 b) of the Constitutional Court Act, whereby legal standing derives from having “a legitimate interest”. The category is interpreted broadly and granted to any person whose legal stance (“círculo legal”) may be harmed by the violation of a fundamental right, even if the violation does not occur directly against him or her.

The Court went on to add that, in the past, the heirs of a deceased plaintiff had been admitted to take over in an “amparo” appeal for the defense of personality rights. When (like in the case under examination) the ruling on “amparo” entails economic consequences for the estate, the recognition of legal standing to the heirs is even more reasonable.

On the Violation of the Right to a Due Process

The main issue raised by the appellants before the Constitutional Court focused on the violation of the late Lee’s right to a due process, caused by the wrongful application by the Spanish commercial court of Regulation (EC) No 805/2004 creating a European Enforcement Order (EEO) for uncontested claims. In this context, the appellants argued first  that only a judicial decision ending the ordinary proceedings, and not the writ of execution can be certified as an EEO. Secondly, in a nutshell, they contested the enforceability of the resolution adopted in absentia, with service having been made by edicts by a court which relied on the informations given by the claimant without further ado.

The Constitutional Court was silent as to the first prong of the complaint. In my view, the appellant was wrong: whereas according to Article 517 Spanish Code of Civil Procedure (Ley de Enjuiciamiento Civil) the enforcement title is indeed the decision on the merits, the definition of “resolution” comprises as well the writ of execution which in Spanish procedural law follows and opens up the enforcement procedure itself.

As to the second prong, the Court was requested to examine whether the application made by the Spanish commercial court of the EEO Regulation, granting the EEO based on service by publication, violated the right to effective judicial protection of the defendant. For this purposes, the Constitutional Court started by asserting that the Burgos Court, to the extent it applied rules of European Union law, must have been aware that it was not only bound by Article 24.1 of the Spanish Constitution, but also by Article 47 of the Charter of Fundamental Rights of the European Union (CFREU).

The Constitutional Court focused then on how service had been made, in order to assess whether in the procedure prior to the adoption of the judgement the certification of which is at stake , the rights to a hearing and to self-defense of the debtor had been respected. This examination is reserved for cases in which the non-appearance of the defendant amounts to a tacit admission of the claim or of the facts alleged by the creditor under the law of the Member State of origin, and, as a consequence, the claim may be deemed “uncontested” for the purposes of Regulation No 805/2004. Regarding service without proof of receipt by the debtor (Article 14 of the Regulation), the Regulation describes various admissible modalities, all of which require that the debtor’s domicile is known with certainty. In this way, the Regulation establishes a minimum standard of the right of defense so as to ensure that the non-appearance of the debtor was conscious and voluntary, thus an absence of the intention to challenge the credit can be inferred therefrom.

At this point, the Constitutional Court makes the most important assertion of its judgment, acknowledging the need to assess “whether a notification by edicts made totally ignoring the debtor’s address, which may eventually be valid in our system from the point of view of Article 24.1 [Spanish Constitution], is also valid from the perspective of Article 47 CFREU for the purposes of granting a European Enforcement Order”. It goes on saying that “the answer to this question, taking into account Recital 13 of Regulation 805/2004 and the decision of the Court of Justice (First Chamber) in Case C-292/10, Cornelius de Visser, of 15 March 2012, must be negative. The Court of Justice of the European Union affirms that although a default judgment is among the titles that can be certified as European enforcement orders (Article 3 of the Regulation), this is not the case when it has been issued without determining the domicile of the respondent” (the translation is mine).

In my view, this is not a bad judgment. However, one cannot avoid feeling a little bit dismayed when learning  that one of the defendants, Mr. Juan Aneiros, who could be served at his domicile, was the son-in-law of C. Lee and, as said, the manager of his official website. Difficult to believe that C. Lee could only learn about the process after he had been sentenced to pay, but not before. However, this was for the Constitutional Court to decide; it has spoken and – not unimportat in this tough times for the EU – followed the case law of the CJEU.

By a decision of 13 March 2020, the Munich Court of Appeal, having regard to the expected delay in the processing of a request for service in China, allowed a resident of Germany to effect service by publication on a person of known residence in China, after sending an e-mail for information purposes.

The Facts

The claimant, a resident of Germany [G], had obtained an injunction in Germany. This was served on the respondent (a resident of China) [C] while the latter attended an exhibition in Germany.

Two months later, G filed a motion for the imposition of a fine [an Ordnungsmittelantrag] against C before the Court of First Instance of Munich. Pursuant to § 891 of the German Code of Civil Procedure, the debtor must be heard before such a decision is taken.

G requested to serve the application for the fine by publication, although he was aware of C’s whereabouts. G founded the request upon the serious delay to be expected in case of service through the Chinese judicial assistance channels, based on the Hague Service Convention. The Court of First Instance dismissed the request.

G challenged the decision before the Munich Court of Appeal.

The Ruling

The Court of Appeal reversed the decision of the Court of First Instance. It found that G had produced sufficient evidence, presumably emanating from the Munich Court statistics, proving the delay in the processing of requests by the Chinese authorities, i.e. nearly 18 months or more, which would seriously infringe his rights.

In this situation, the court continues, the interests of the creditor in effective legal protection outweigh the interests of the debtor in presenting his case before the Court. It ruled that the creditor must inform the debtor about the application via electronic communication channels known to the creditor and also used by the debtor. The creditor must also inform the debtor about the request for service by publication, and the possibility for the debtor to appoint a representative to receive documents on his behalf in Germany, including English-language translations.

The Court of Appeal also ruled that in view of the short limitation period of only two years provided in Article 9(1) 2 EGStGB (Introductory Law to the German Penal Code), the creditor’s right to legal protection would not be respected if she would be forced to execute the service of documents in China through judicial assistance channels, despite the known problems with this procedure. On the other hand, the debtor’s right to be heard could be violated by granting service by publication before the creditor has been informed by the debtor about the application, the request of service by publication and the possibility of appointing a representative. The final decision on the proper procedure would be left to the Court of First Instance.

Comments

The judgment has been reported (in German) by Benedikt Windau with a note here.

I have mixed feelings about the judgment. On the one hand, I would endorse the innovative idea of involving frequently used communication channels between the parties for information purposes on service of process modalities. This has been also proposed in the preparatory stages of the Service Regulation Recast (which should be published anytime soon). Regrettably, however, it has not been adopted by the competent legislative bodies.

On the other side, the Court is approaching the matter in full defiance of the Hague Service Convention, to which Germany and China are signatories. The ruling is founded upon § 185(3) of the German Code of Civil Procedure, and the interesting part here is the second scenario envisaged in the provision, i.e. when service of process does not raise hopes of success.

Prior to the application of the domestic rule, one would expect a reasoning on how the court by-passed the Service Convention. Surely the Court would have no reason to engage in a detailed analysis if the debtor was indeed of unknown residence. A sheer reference to Article 1(2) of the Convention would suffice. However, notwithstanding the fact that the debtor’s whereabouts were known to the creditor, and without even stating why Article 15 Hague Service Convention was unworthy of any reference, the court followed the course every judge prefers the most, i.e. the application of national rules.

The importance of the Service Convention has been repeatedly underlined in German legal scholarship. The Federal Republic of Germany has made a declaration concerning Article 15 (the six – months rule). In the judgment of the Supreme Court referred by the Munich Court of Appeal, the former ruled against service by publication with regard to a Russian party [BGH NJW-RR 2009, p. 855].

To sum up, the judgment raises (at least) two interesting and rather intriguing questions: If we follow this path: (a) what would be the value of Article 15 in the future? and more broadly, (b) what would be the consequences in a wider dimension? Will other contracting States follow suit?

Place of Performance – A Comparative Analysis is the title of a book authored by Chukwuma Samuel Adesina Okoli. It recently appeared in the Studies in Private International Law series of Hart Publishing.

The blurb reads:

This book provides an unprecedented analysis on the place of performance. The central theme is that the place of performance is of considerable significance as a connecting factor in international commercial contracts. This book challenges and questions the approach of the European legislator for not explicitly giving special significance to the place of performance in determining the applicable law in the absence of choice for commercial contracts. It also contains, inter alia, an analogy to matters of foreign country mandatory rules, and the coherence between jurisdiction and choice of law. It concludes by proposing a revised Article 4 of Rome I Regulation, which could be used as an international solution by legislators, judges, arbitrators and other stakeholders who wish to reform their choice of law rules.

The table of contents and more information are available here.

The University of Lausanne (LL.M. Programme in International Business Law and CEDIDAC), along with the Massachusetts Institute of Technology Connection Science Lab and the AI Transparency Institute are inviting abstracts on Artificial Intelligence (AI) and Dispute Resolution, or Distributed Ledger Technologies (DLT) and Private International Law (PIL).

Papers of interest on AI and Dispute Resolution might discuss: the impact of AI on decision-making; the impact of AI on access to justice; transparency of arbitral data; control over arbitral data; potential risks to confidentiality in view of AI; personal data protection in arbitration; and, AI and arbitral uncertainty.

Papers of interest on DLT & PIL might discuss: the law applicable to crypto assets; the law applicable to transfers on a blockchain; the law applicable to transfers outside a blockchain; the law applicable to smart contracts; the law applicable to decentralised autonomous organisations; and, jurisdiction and choice of court.

The latter list of topics follows the headings listed in Permanent Bureau of the Hague Conference on Private International Law, Prel. Doc. 28 of February 2020, Proposal for the Allocation of Resources to Follow Private International Law Implications relating to Developments in the Field of Distributed Ledger Technology, in particular in relation to Financial Technology.

Deadline for papers: 1 February 2021.

More information here.

The author of this post is Vincent Richard, Senior Fellow at the Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law.

On 14 May 2020, the CJEU gave a preliminary ruling in Bouygues travaux publics, a case regarding the binding effect of social security certificates issued by the social security authority of a Member State on the courts of another Member State where workers are posted. The judgment was rendered in the context of French criminal proceedings against Bouygues travaux publics for infringements of labour law during the construction of the EPR nuclear power plant in Normandy.

Background

EPR nuclear reactors represent the new generation of nuclear power plants conceived to be safer than current reactors. Construction have started in Finland and France fifteen years ago but both projects ran into costly delays. So far, two reactors have been completed in Taishan, in the Guangdong province of China while the European nuclear plants are still under construction.

The EPR nuclear plants constructed in Olkiluoto in Finland is scheduled for 2021 after a dispute that was concluded with a settlement whereby the Areva-Siemens consortium agreed to pay 450 million euros to the Finnish utility company TVO. Two more reactors are being built at Hinkley Point in England with a starting date scheduled between 2025 and 2027.

Construction of the French EPR reactor started in 2007 in Flamanville in Normandy with a projected cost of 3.3 billion euros. According to French newspapers, completion is now expected for 2023 with a total cost of more than 12 billion euros. The project has faced technical difficulties but it has also run into legal troubles surrounding employment contracts of Eastern European workers.

Criminal Proceedings in France

To complete such a massive project, Bouygues travaux publics formed a limited partnership with two other undertakings and it subcontracted the contract to an economic interest grouping that included, among others, Welbond, a company domiciliated in France. This grouping itself used subcontractors, including Elco, a company established in Romania to supply Romanian workers and Atlanco Ltd, a temporary employment company established in Ireland with a subsidiary in Cyprus and an office in Poland to supply Polish workers.

An investigation by the French nuclear safety authority and then the French police revealed that, between 2008 and 2012, there had been more than one hundred unreported workplace accidents on the construction site, as well as several other infringements of French labour law. Subsequently, Polish workers sued the above-mentioned companies before the labour court of Cherbourg, France, and French prosecutors initiated criminal proceedings against Bouygues, Welbond and their subcontractors before the criminal court in Cherbourg (all decisions in French can be found here).

On appeal, the court of appeal of Caen held that the companies were guilty of the offences of concealed employment and unlawful provision of workers. It ruled that Elco, the Romanian company, could not rely on the European legislation on posting of workers because it had a stable and continuous activity in France. Therefore, the contracts should be characterised as French employment contracts and the company should have complied with French labour law and declared the workers to French authorities prior to their recruitment. Workers were hired in Romania for the sole purpose of working in France and some of them had worked there for more than 24 months. Similarly, Atlanco had hired temporary Polish workers to work in France through its Cypriot branch by making them sign a contract drawn up in Greek. Atlanco never appeared in court but Bouygues and Welbond were held guilty of concealed employment offences for the workers supplied by Atlanco, by not declaring the workers to French authorities. This “declaration prior to recruitment of employees” aims to register workers officially so that the offence of concealed employment be easier to prove in the absence of such declaration.

Question Referred to the CJEU

The main argument of the defendants was to rely on the legal value of the E101 and A1 certificates that they had provided to French authorities. These certificates were required by regulations n. 1408/71 and 574/72 (replaced respectively by regulations n. 883/2004 and 987/2009) on the coordination of social security systems. These forms, issued by the social security authority of the Member State of origin, certify that the worker is covered by the social security of that Member State and thus exclude the application of another social security legislation.

According to CJEU case law in Herbosch Kiere and A-Rosa Flussschiff GmbH, the certificates are binding on both the social security institutions and on the courts of the Member State where the work is carried out. If the authority of this Member State raises doubts as to the correctness of the certificate, the issuing authority in the Member State of origin must re-examine the grounds on which the certificate was issued (Fitzwilliam). In Altun, the CJEU provided for a limited exception whereby a court can disregard the certificate when evidence supports the conclusion that a certificate was obtained fraudulently and only if the issuing authority fails to take that evidence into consideration for the purpose of reviewing the certificate.

In the present case, French lower courts have applied French labour law, whereby employers have to make a declaration to social security authorities prior to recruiting employees. This declaration allows to complete several administrative formalities at once. It aims to register workers officially not only to the social security scheme but also to the occupational health services or retirement schemes. Before the Cour de cassation (which is the French Supreme Court for civil and criminal disputes) the defendants argued that this declaration was not necessary because French authorities were bound by the foreign certificates, and therefore French social security and labour laws do not apply. Unsure about the scope of these certificates, the French Supreme Court asked the CJEU whether the binding effect of the certificates regarding the affiliation to social security extends to the law applicable to the labour obligations of the employer, such as the French declaration prior to recruitment. For the CJEU, the question is tantamount to deciding whether the certificate binds the court of the Member State where employees are working not only in the area of social security, but also in the area of employment law.

Ruling

In its decision, the CJEU stresses that the certificates are designed to facilitate freedom of movement for workers and that Member States should apply the principle of sincere cooperation, laid down in Article 4(3) TEU, which also entails the principle of mutual trust. Consequently, the certificates create a presumption that workers are properly affiliated to the social security scheme of the issuing Member State and this declaration is binding on the Member State where the work is carried out. However, because the certificates are prescribed by the European regulations on the coordination of social security systems, their scope is limited to social security matters, and they do not have a binding effect in employment law matters.

The Court held:

Article 11(1)(a), Article 12a(2)(a) and (4)(a) of Council Regulation (EEC) No 574/72 of 21 March 1972 laying down the procedure for implementing Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to their families moving within the Community, in the version amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996, as amended by Regulation (EC) No 647/2005 of the European Parliament and of the Council of 13 April 2005 and Article 19(2) of Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems, must be interpreted as meaning that an E 101 Certificate, issued by the competent institution of a Member State, under Article 14(1)(a) or Article 14(2)(b) of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to their families moving within the Community, in the version amended and updated by Regulation No 118/97, as amended by Council Regulation (EC) No 1606/98 of 29 June 1998, to workers employed in the territory of another Member State, and an A 1 Certificate, issued by that institution, under Article 12(1) or Article 13(1) of Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems, as amended by Regulation (EC) No 465/2012 of the European Parliament and of the Council of 22 May 2012, to such workers, are binding on the courts or tribunals of the latter Member State solely in the area of social security.

Comment

This decision is not ground-breaking but it will help the French authorities in their fight against social dumping. If the French Supreme Court considers that the effect of the declaration prior to recruitment are broader than social security legislation, French prosecutors will be able to sue employers before criminal courts for offences of concealed employment if companies do not submit this declaration to French authorities. That being said, in the EPR case, the court of appeal ordered defendants to pay fines ranging from 15.000 to 60.000 euros while the loss to French social security is estimated by French newspapers to be between 10 and 12 million euros.

Overall, the reasoning of the CJEU in this case and in Altun will be familiar to specialists of the Area of Freedom, Security and Justice. Here, the principle of mutual trust is derived from the principle of sincere cooperation enshrined in Art. 4(3) TEU rather than from the principle of mutual recognition of judgments of Art.67(3) TFUE but its function as an interpretative imperative is the same. Similarly, the CJEU accepted in Altun that mutual trust is not without limit and that there may be exceptional circumstances in which a court is allowed to disregard a legal document issued in another Member State.

Cambridge University Press has just published the second edition of the Concise Commentary on the Rome I Regulation edited by Franco Ferrari.

In addition to Ferrari himself, the authors of the commentary are Markus Altenkirch, Christoph Althammer, Jan Bischoff, Tim W. Dornis, Jan D. Lüttringhaus, Spyros Makris,  Sebastian Omlor, Francesca Ragno, Martin Schmidt-Kessel, Björn Steinrötter, and Felipe Temming.

The blurb reads:

This book offers an updated article-by-article commentary of the Rome I Regulation, applicable in the courts of nearly all European countries to identify the law applicable to international contracts. The commentary is authored by an international group of academics and practitioners, who all have practical experience with international contracts and, thus, were able to focus on the needs of practice. This volume will be not only a reference guide for judges and practitioners alike, but also a crucial resource for academics and researchers.

More information available here.

Bertrand Copigneaux, Nikita Vlasov and Emarildo Bani of IDATE DigiWorld, Nikolay Tcholtchev and Philipp Lämmel of Fraunhofer Institute for Open Communication Systems, Michael Fuenfzig, Simone Snoeijenbos and Michael Flickenschild from Ecorys, and Martina Piantoni and Simona Frazzani from Grimaldi Studio Legale, have written a Study on Blockchain for supply chains and international trade at the request of the European Parliament.

The study was commissioned by the Panel for the Future of Science and Technology (STOA) and managed by the Scientific Foresight Unit, within the Directorate-General for Parliamentary Research Services (EPRS) of the Secretariat of the European Parliament.

The abstract reads:

This study provides an analysis of blockchain technology in the context of international trade. It analyses the potential impacts of blockchain development and applications in eight use cases for supply chains and international trade. It also provides an analysis of the current legislative framework and existing initiatives.

Based on this analysis, and following a broad consultation of relevant organisations, the study identifies several challenges in international trade documentation and processes, and presents a range of policy options for the European Parliament.

The Study concludes by developing 20 policy options, which are organised in six themes.

Customs facilitation through blockchain

1. The European Commission could act as a bridge between EU customs authorities interested in employing blockchain technology for the digitalisation of customs, with a view to jointly developing further proofs of concept.

2. EU Single Window working groups could run through the blockchain key questions to be addressed within the guidelines developed by the World Economic Forum by means of consultations with authorities, private sector groups and mixed focus groups, to explore whether there is a business case for its development.

3. The European Commission could look to its partners in mutual recognition agreements to explore the possibility of sharing Authorised Economic Operator information via blockchain.

Involvement of small and medium-sized enterprises in the blockchain sphere

4. The European Commission could be encouraged to help SMEs keep abreast of blockchain applications relevant for their particular role in the value chain.

5. Funds could be made available to support collaboration between SMEs as both suppliers of solutions and end-users of global value chains. 

Sustainable trade through blockchain

6. The European Commission could be provided with the budget to scale up the solutions being developed under Blockchain for Social Good, particularly those relating to fair trade.

7. The European Commission could include blockchain technology solutions in the considerations for designing the practical aspects of an EU carbon border tax.

Leadership in standardisation of blockchain technology

8. The European Commission could continue to play a leading role in the standardisation process, continue its close collaboration with international partners and strive to provide a platform to enable the various actors working on pilots and standards to engage with each other in order to avoid fragmentation.

9. The European Commission could make use of the Multi-Stakeholder Platform on ICT Standardisation to further collaborate with various stakeholders on blockchain standardisation.

10. Beyond dialogue with third countries on standardisation, the EU could lead by example and set standards itself by introducing blockchain-based services for example in customs or financial transparency, based on which private actors, third countries, and international standardisation organisations could orient themselves.

11. Support could be given to the work of the European Blockchain Partnership, and collaboration encouraged with the International Association for Trusted Blockchain Applications, in order to work towards a comprehensive ecosystem of international supply chains using blockchain technology.

Evidence-based policymaking in the area of blockchain

12. Parliament could engage more actively in the work already going on at EU level with regard to blockchain technology and international trade by observing relevant organisations such as the European Blockchain Partnership or asking the European Commission for regular updates on their work.

13. Networks, such as the European Blockchain Partnership, the Observatory and others could be promoted. To this end the Parliament could also promote and fund further research in the area, including a mapping of regulatory readiness in the EU, its Member States and international partners.

14. The European Commission could be made aware that solutions should include reporting indicators and specific plans on how results will be measured, communicated and developed into lessons learned. 

15. Progress of work already being done in piloting blockchain at EU level could be monitored closely and support given for setting up future use cases and pilots under the European Blockchain Services Infrastructure and the Connecting Europe Facility.

16. Use could be made of funding schemes for research and business to support the EU’s efforts in the early stage development of blockchain-related projects in trade and supply chains.

17. In the context of the International Association for Trusted Blockchain Applications, the European Commission could be supported and encouraged to establish a public–private partnership in the area of blockchain for international trade and supply chains.

Awareness raising for the use of blockchain

18. Regarding blockchain’s potential to improve efficiency and support EU values such as transparency, fair trade, and social and environmental responsibility, the EU could promote recognition of the technology and its use in trade and supply chains.

19. Successful proof of concepts, pilots and the available building blocks on the Connecting Europe Facility platform could be promoted among Member States, private stakeholders and citizens to increase familiarity among stakeholders with the technology and its uptake.

20. The European Commission and Member States could be encouraged to make use of their roles as members of international organisations such as the World Trade Organization, the World Customs Organization and the United Nations Centre for Trade Facilitation and Electronic Business to promote trade digitalisation and the use of blockchain technology.

The Study can be freely downloaded here. A Briefing summarizing the findings of the Study is available here.

On 25 May 2020, the CJEU has resumed its activity. This means hearings will be held again. None is scheduled for June on PIL matters, though.

The decision of the third Chamber (Prechal, Rossi, Malenovský, Biltgen, Wahl) in C-41/19, FX, is expected for 4 June.

The case arises from a request for a preliminary ruling made by the Amtsgericht Köln. It is about a child resident in Poland, who had obtained a decision from the Polish courts establishing the maintenance obligations of her father, resident in Germany. After getting a declaration of the enforceability of the Polish maintenance decision in Germany, the maintenance creditor seeks to have that decision enforced there. The debtor opposes enforcement on the basis that his payment obligations have been largely fulfilled; to this aim, he has lodged an application opposing before the German courts. The key issue raised by the request for a preliminary ruling is whether the German courts have jurisdiction to rule on that application on the basis of Regulation (EC) No 4/2009 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations. AG Bobek’s Opinion was published on 27 February 2020. He suggests the CJEU answer in the following terms:

Council Regulation (EC) No 4/2009 of 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations, and, in particular, Article 41(1) thereof, should be interpreted as meaning that the courts of the Member State where the enforcement of a maintenance decision given in another Member State is sought have jurisdiction to adjudicate on an application opposing enforcement, in so far as it is intrinsically connected with enforcement proceedings, it does not seek the modification or review of the maintenance decision, and it is based on grounds that could not have been raised before the court that issued the maintenance decision. Those conditions appear to be fulfilled by the application of opposition to enforcement based on the discharge of the debt at issue in the present case, which is nonetheless ultimately for the referring court to verify.

A separate post will appear on this blog concerning the Court’s judgment.

Additionally, two Opinions will be delivered on 18 June 2020, one by AG Szpunar (C-433/19, Ellmes Property Services) and the other by AG Campos Sánchez-Bordona (C-540/19, WV).

The former addresses a request from the Austrian Oberster Gerichtshof on the first subparagraph of Article 24(1) of the Brussels I bis Regulation. The OG asks whether the provision is to be interpreted as meaning that “actions brought by a co-owner seeking to prohibit another co-owner from carrying out changes to his property subject to co-ownership, in particular to its designated use, arbitrarily and without the consent of the other co-owners, concern the assertion of a right in rem”. Should the question be answered in the negative, the CJUE should determine Article 7(1)(a) whether concern contractual obligations to be performed at the location of the property.

In C-540/19, the German Bundesgerichthof requests the CJEU to decide whether a public body which has provided a maintenance creditor with social assistance benefits in accordance with provisions of public law can invoke the place of jurisdiction at the place of habitual residence of the maintenance creditor under Article 3(b) of the Maintenance Regulation, in the case where it asserts the maintenance creditor’s maintenance claim under civil law, transferred to it on the basis of the granting of social assistance by way of statutory subrogation, against the maintenance debtor by way of recourse. A good occasion to review C-433/01.

Finally, I would also like to mention AG Hogan’s Opinion on C-454/19, Staatsanwaltschaft Heilbronn, delivered the 4 June 2020. At first sight the questions referred to the Court had little to do with PIL:

(a) Is primary and/or secondary European law, in particular Directive 2004/38/EC of the European Parliament and of the Council, in the sense of a full right of EU citizens to move and reside freely within the territory of the Member States, to be interpreted as meaning that it also covers national criminal provisions?
(b) If the question is answered in the affirmative: does the interpretation of primary and/or secondary European law preclude the application of a national criminal provision which penalises the retention of a child from his guardian abroad where the provision does not differentiate between Member States of the European Union and third countries?

This notwithstanding, Regulation 2201/2003 on jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility (Brussels II bis) and the case law of the Court relating thereto are very much present in the Opinion.

The Diesel scandal has produced a wave of litigation word-wide. We are still waiting for the CJEU’s decision on whether claims can be brought in Austria by Austrian purchasers (Case C-343/19). The Advocate General’s opinion in this case has been the subject of an earlier post on this blog.

One of the important issues in the case pending before the CJEU is whether claimants can be expected to sue Volkswagen (VW) at its seat.  VW has its seat in Wolfsburg; thus, the competent court for such claims would be the Regional Court (Landgericht) of Braunschweig (Brunswick). The Braunschweig Regional Court has, however, now introduced a new hurdle for claimants who want to sue VW at its seat.

The Court at VW’s Seat Has Spoken

On 30 April 2020, the Regional Court of Braunschweig gave judgment (docket no 11 O 3092/19) on a case concerning a German debt collection company that had brought a “collective action” based on a number of claims against VW assigned to it by Swiss purchasers who bought cars fitted with the illicit software. The debt collection company was licensed under the German Act on Out-of-Court Legal Services (Rechtsdienstleistungsgesetz – RDG).

The Regional Court dismissed the action on the basis that the company could not dispose of the authorisation necessary under the RDG to pursue the claim, despite being licensed in Germany. It specifically found that neither the company nor its employees had any knowledge of Swiss law. Such expertise was however indispensable for the present case because the Regional Court of Braunschweig assumed that the claims assigned to the company would be governed by Swiss law.

An Overly Simplistic Conflict-of-Laws Analysis

The Regional Court derived the applicability of Swiss law from Article 4(1) of the Rome II Regulation. The court concluded that the place where the damage occurred, which is decisive under this rule, was Switzerland because the purchasers had paid for the cars from Swiss bank accounts.

The Regional Court seems to refer in this respect to the CJEU judgment in Kolassa, which – in the context of international jurisdiction – had considered the place where a bank account is managed as relevant for the localisation of financial loss. However, this judgment concerned the specific situation of prospectus liability, not the sale of cars. It cannot be considered as establishing a general rule, as the CJEU has clarified in its later judgment in Universal Music.

The localisation of loss in the ‘Dieselgate’ cases is much more difficult and intricate, as the Advocate General has pointed out in its conclusions in Case C-343/19. The fact that the cars have been paid from Swiss bank accounts alone will not suffice to establish the applicability of Swiss law. Other circumstances will have to be considered, such as the place of domicile of the purchasers, or the place where they use their cars (see the comment on the AG’s conclusions here).

An Undue Restriction of Access to Justice 

More problematic still is that the Regional Court Braunschweig denied the debt collection company standing to sue VW in Germany on the grounds that it lacks sufficient knowledge of Swiss law. This argument relies on a very restrictive interpretation of German law, which requires debt collection companies to have only general legal expertise; not specific expertise in foreign law. Moreover, the ruling ignores the fact that debt collection companies may instruct experts on Swiss law to advise on certain points of the legal case. Indeed, the court will probably have to do the same were it to try the case, because it also lacks the necessary knowledge of Swiss law (see sec. 293 of the German Code of Civil Procedure).

The judgment raises an unacceptable barrier for the enforcement of foreign claims against VW in Germany. Victims whose claims are based on foreign law cannot use German debt collection companies to advance their claims, as the latter have been found not have the required expertise in foreign law. But they also cannot go via foreign debt collection companies, as these do not have the necessary German license and can only provide “temporarily and occasionally” legal services in this country (sec. 15 German Act on Out-of-Court Legal Services). To instruct a German lawyer will be too burdensome as the purchaser would have to shoulder the litigation risk of losing the case.

It is Now Up to the CJEU

The Regional Court of Braunschweig has set up an additional obstacle for foreign claims in the Diesel scandal. This makes it much more difficult to sue VW at its seat. It is hard not to form the impression that the Regional Court was looking for an efficient way to rid itself of an unattractive case. The case illustrates the difficulties foreign claimants face when bringing an action at VW’s seat. Hopefully, the CJEU will take note of this when it decides whether car purchasers may bring actions against VW abroad.