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The latest issue of the IPRax (Praxis des Internationalen Privat- und Verfahrensrechts) has been published. The following abstracts have been kindly provided by the editor of the journal. H.-P. Mansel, K. Thorn and R. Wagner, European Conflict of Law 2023: Time of the Trilogue This article provides an overview of developments in Brussels in the […]

The first issue of the Chinese Journal of Transnational Law (Vol.1 Issue 1, 2024) was recently published by SAGE. It includes three articles relevant to private international law.

Consensus and Compulsion: The Extra-territorial Effect of Chinese Judicial and Specially-Invited Mediation in Common Law Countries, Jie (Jeanne) Huang
This article conducts exhaustive research on case law in major common law jurisdictions (Australia, Canada, Hong Kong, New Zealand, Singapore, the UK, and the US) regarding the recognition and enforcement of Chinese judicial mediation decisions (MTS). In contrast to the rich literature criticizing the systematic deficiency of Chinese judicial mediation where an adjudicator plays the dual role of mediator and judge in the same case and the consequent injustice to the parties, the deficiency is not an issue currently in recognition and enforcement of MTS in common law jurisdictions. Why is this so and what would be the future trend? Answering these questions, this article explores the recent expansion from judicial mediation to Specially-Invited Mediation at the people’s courts in China and discusses whether the features of Specially-Invited Mediation impact the recognition and enforcement of MTS at the common law jurisdictions. It also addresses controversies on applicable law, challenges to the enforceability of civil liability clauses, debates on the finality of MTS, and recognition and enforcement of MTS under China’s judicial assistance agreements, the Hague Choice-of-Court Convention, the Hague Judgments Convention, and the Singapore Mediation Convention.

Procedural Estoppel in International Commercial Arbitration Proceedings, Ilias Bantekas
This article argues that arbitral practice has effectively given rise to a general principle whereby the parties to arbitral proceedings are deemed to have waived rights arising from a procedural rule where they have failed to timely raise an objection against a procedural irregularity. Tribunals do not refer to such a process as abuse of right, or procedural estoppel, but as a tacit waiver of procedural rights. Even so, the effects are the same. This rule is well enshrined in article 4 of the UNCITRAL Model Law on International Commercial Arbitration. There is a line of domestic case law suggesting that the presumption in favour of the waiver does not apply where the party in question had no knowledge of the facts giving rise to the breach; where failure to apply it was not predicated on bad faith and/or; where the delay in exercising the right was not significant.

Consumer Jurisdiction and Choice of Law Rules in European and Chinese Private International Law, Zhen Chen
This article compares consumer jurisdiction and choice of law issues in China and the EU. It aims to answer the following questions. What is the notion of consumer? Are farmers, package travel tourists and timeshare tourists consumers? Are dual-purpose contracts consumer contracts? Is a consumer jurisdiction rule needed in China and if yes, under what ground and with what conditions? Is choice of court agreement in consumer contracts valid? How to limit the exercise of party autonomy and what role mandatory provisions may play? Shall consumer contract and tort claims be subject to the same applicable law? Based on a comparative analysis with European law, this article concludes that to improve cross-border consumer protection, China should reform its law to include package travel contracts and timeshare contracts into consumer contracts and determine the nature of dual-purpose contracts pursuant to their primary purpose. Moreover, the current limitation on party autonomy should be lifted by providing freedom to both parties and relying on mandatory provisions as a safety valve. The consumer choice of law rule and its interaction with the general contract choice of law and tort choice of law rule needs to be reexamined.

The UNCITRAL secretariat is pleased to announce that the inaugural edition of the UNCITRAL Days in the Arab Sates is planned for 2024!

The UNCITRAL Days activities comprise academic gatherings organized with universities and institutions of higher learning in the region, which discuss and consider issues arising in UNCITRAL’s areas of work, i.e. the progressive harmonization and modernization of international commercial law through the adoption, use and implementation of legal texts. The events seek to raise awareness of UNCITRAL instruments and the of legal harmonization amongst the next generations of academics and policymakers.

This series of events will be held between 15 April – 31 December 2024 under the following theme: “The role of UNCITRAL in the modernization of international trade law in the Arab States”.

Information regarding the organization of an event within the framework of the UNCITRAL Days in the Arab States in 2024 can be found in the attached document in Arabic and English language.

If your institution is interested in organizing an event, simply fill out the form available at https://forms.office.com/e/nZifBytPsC or by scanning the QR code below.

The secretariat will contact you afterwards to discuss practicalities.

by Salih Okur (University of Augsburg)

On 8 and 9 March, scholars from more than a dozen different jurisdictions followed the invitation of Tobias Lutzi to discuss recent trends in punitive damages at the University of Augsburg, Germany. Despite an unfortunate combination of rail and flight strikes, only a small number of participants were ultimately unable to make it to Augsburg. While their presence was dearly missed, the option of participating in the conference online meant that nothing stood in the way of more than 50 scholars of private and private international law devoting the next 26 hours to critically discuss whether and to what extent a strict refusal to recognise foreign punitive damage awards – as notably upheld in Germany – was still tenable in light of international developments.

The conference contained five panels overall, which were split into three blocks. It was kicked off by Tobias Lutzi and Marc Lendermann (Federal Ministry for Digital and Transport, Germany), who underlined the continued relevance of punitive damages as a research topic, despite the German Federal Court of Justice’s landmark decision from 1992 (BGHZ 118, 312), which appears to have stopped claimants from seeking enforcement of punitive damage awards in Germany. It evidently has not stopped claimants from seeking enforcement of punitive damage awards in other civil law legal systems. As the conference would highlight on the second day, some legal systems, including Italy, France, and South Korea, which originally refused to recognise foreign decisions on grounds similar to those of the German Federal Court of Justice (BGH), have abandoned their strict refusal and adopted a more nuanced approach. This constant flow of international change and developments alone makes it worthwhile to keep the academic conversation going.

The first block then focused on the origin, scope, and, particularly, on the purpose of punitive damage awards. In his paper on “Compensation, Punishment, and the Idea of Private Law”, Lukas Rademacher (University of Kiel) explained the idea of punitive damages and its compatibility with German private law. Rademacher took a closer look at the BGH’s landmark decision from 1992, which deemed the concept of punitive damages intolerable in Germany mainly because its function to punish and deter doesn’t fall in the scope of German private law’s concept of strict compensation; punishment and deterrence are entirely reserved for criminal law. Rademacher then analysed whether punitive elements could be found in German tort law. He identified damage awards for pain and suffering and loss of personality as potential examples of over-compensatory remedies in German private law. Rademacher explained that these awards, when not relating to an actual loss, still serve semi-compensatory interests, especially the idea of satisfaction. In contrast to punitive damages, these interests aren’t objective sanctions detached from compensation, as they are still a means to restore an infringed right and restore equality between the tortfeasor and the injured party.

Subsequently, Jan Lüttringhaus (University of Hanover) focused on “Punitive Damages and Insurance”, picking up the BGH’s concerns regarding the insurability of punitive damage awards (which the Court deemed an incalculable and uninsurable risk). Lüttringhaus immediately dismissed these concerns, as the numbers necessary for insurability exist. According to him, data on punitive damages is well documented, delivering the required statistical data on frequency and severity of loss, which allows the inference of an average loss and therefore an adequate premium. Lüttringhaus then addressed the much more fundamental question of whether punitive damages should be insurable, as this could impede their punishing and deterrent character. On the other hand, insurability could guarantee payment where the defendant lacks the financial capacity, and the punitive and deterrent effect could still be achieved by imposing higher premiums and the tortfeasor having difficulties finding a new insurer.

Catherine Sharkey (New York University) then shifted the conference’s focus away from the stereotypical punitive damage award for intentional malicious conduct and shed light on the question, “Who’s Afraid of Punitive Damages for Product Liability?”. She observed that punitive damages in the U.S. are awarded much more often against corporations and businesses for not keeping up with safety standards than against individuals for intentional malicious conduct. Thus, it seems hard to sustain the idea of retribution when discussing punitive damages, as with corporations and businesses, there is “no soul to damn and no body to kick”. Sharkey explained that the idea of societal deterrence and compensation was taking on a more predominant role. This paradigm shift could also be observed in proposals to focus more on what is necessary to achieve adequate deterrence when deciding on whether and how much to award in cases in which punitive damages are a possibility. This idea of social deterrence was further perpetuated, according to her, when considering that many states have implemented split recovery statutes for product liability cases that direct 50 % to 75 % of punitive damage awards to the respective state or a designated fund.

Concluding the first panel (and day) of the conference, Rachel Mulheron (Queen Mary University) shared her insights into “Punitive Damages in English Law”. She pointed out that although parliament abolished punitive damages in certain areas of law (e.g. through the Law Reform Act 1934 and the Competition Act 1998), this has not prevented English courts from awarding punitive damages for common law torts such as defamation and trespass to the person, as has been established in Rookes v. Barnard [1964] AC 1129. Still, English courts seem to struggle to differentiate between compensatory and punitive damage awards. While the Court of Appeal in John v. MGN Ltd. [1997] QB 586 expressly allocated the purpose of vindication to the compensatory limb of defamation cases, the Privy Council in A v. Bottril [2002] UKPC 44 ruled that one function of punitive damages was vindication. Beyond that, punitive damages are not readily available for negligence and privacy torts, as there are lingering uncertainties identifying the requisite trigger for punitive damages.

After the foundation was laid on the first day of the conference, the second day opened with a panel on the public policy exception to the recognition and enforcement of foreign judgments. Cedric Vanleenhove (University of Ghent) gave a paper on “Punitive Damages and Public Policy”. He argued that punitive damages seem to be one of the few legal institutions showing a sharp contrast between common law and civil law jurisdictions. The central mechanism for the rejection of common law punitive damage awards is the public policy exception representing the fundamental values of a society, keeping away foreign judgements if they are manifestly unacceptable when measured against domestic legal standards. In search of the “right” approach regarding the enforcement of punitive damage awards, Vanleenhove emphasised legal coherence: the more the private law of a state derogates from full compensation and allows punitive-like damage awards, the harder it appears to sustain the argument that full compensation is part of public policy. Vanleenhove also examined the relevance of the label given to damage awards. Due to the prohibition of révision au fond, the court of enforcement might feel bound to the court of origin’s compensatory label even if the awarded damages are excessive. As could be seen in the Spanish Real Madrid case currently pending at the Court of Justice, excessive compensatory damages might trigger the public policy exception if the enforcement would give rise to a manifest breach of fundamental rights. French courts, on the other hand, seemed to apply a rather general proportionality test.

In the second paper of the day, Marko Jovanovi? (University of Belgrade) took a closer look at “The Public Policy Exception in the 2019 Hague Judgements Convention” and compared it to similar exceptions in other instruments. Comparing the public policy exception of the 2019 HCCH Judgements Convention with the 1971 HCCH Judgements Convention, the 2005 HCCH Choice of Court Convention, and the Brussels I Recast Regulation, it stands out that all of them require a manifest incompatibility to trigger the respective exception. Only the 1958 New York Convention seems to waive the high threshold of a manifest incompatibility. Nevertheless, academics as well as practitioners agree on applying this exception restrictively. These high hurdles for triggering the public policy exception speak in favour of its application only to extreme cases. However, Jovanovi? reported that some national jurisdictions misused the public policy exception as a barrier against undesirable decisions. As for most of these legal frameworks, there is no international court that oversees the uniform application, so internationalisation seems like a distant goal according to Jovanovi?, no matter how desirable it may be.

After this introduction to the public policy exception, the conference entered its third block on the exception’s actual application to punitive damages awards. The first panel was dedicated to the Netherlands (André Janssen (Radboud University)), Japan (Beligh Elbalti (University of Osaka)) and Germany (Johannes Ungerer (University of Oxford)), all of which still refuse recognition and enforcement of foreign punitive damage awards.

Before going into detail as to why Dutch courts maintain this position, Janssen presented provisions of the Dutch civil code that seem to show punitive elements, e.g., the injured person being entitled to damages for losses, which do not consist of pecuniary damages, if the tortfeasor had the intention of causing such losses. While many Dutch authors recognise punitive elements in these provisions, the Dutch Supreme Court does not share this view and denies the existence of punitive elements. Interestingly, in 2012, the Rechtbank Amsterdam enforced 5,000 € worth of punitive damages, arguing that the fact that Dutch law doesn’t recognise punitive damages does not mean that they are contrary to Dutch public policy. However, in the Hof’s Hertogenbosch case from 2021, a Dutch court denied recognition and enforcement of a punitive damage award because its character was incompatible with the fundamental nature of Dutch liability and compensation law, and beyond that, the award of $250,000 in that case was seen as disproportionate to the compensatory part.

The Japanese Supreme Court, in its Kyogo decision, reached the same conclusion as to the incompatibility of punitive damages with Japanese public policy. The court argued that the purpose of punitive damages was the same as that of criminal law, whereas Japanese tort law seeks only to restore the actual loss suffered by the victim. Based on this fundamental difference, foreign punitive damage awards are considered incompatible with the Japanese civil law system. Although the Supreme Court allowed for partial recognition and enforcement of the compensatory part, claimants cannot enforce the punitive part in the country of origin and eventually enforce the compensatory part in Japan, as Japanese courts then treat the punitive part of the decision as non-existent. Furthermore, Elbalti reported that in the academic debate, it remained unclear whether punitive damages are incompatible with Japanese public policy per se or if aspects of proportionality should be of relevance.

Finally, Ungerer argued that Germany’s rejection of foreign punitive damage awards was the result not of fear but rather of a principled approach. He emphasised the protection of German creditors as enforcing excessive punitive damage awards entails the risk of draining the defendant’s assets at the expense of domestic creditors. He also noted the risk of the defendant who faces a punitive damage award becoming insolvent, potentially leading to the claims of all the other creditors becoming worthless. Ungerer further stressed that Germany’s practice of awarding damages for immaterial losses while simultaneously rejecting foreign punitive damage awards does not make Germany guilty of a double standard, as those awards still observe a compensatory relation and limitation, similar to the point made by Rademacher on the first day of the conference. So, according to Ungerer, Germany’s rejection of enforcing punitive damages can be seen as an unafraid and principled measure.

The last panel of the conference was dedicated to France (Samuel Fulli-Lemaire (Université de Strasbourg)), Italy (Caterina Benini (Università Cattolica del Sacro Cuore)) and South Korea (Min Kyung Kim (Incheon District Court)), all of which have recently started to recognise and enforce punitive damage awards under certain circumstances.

Fulli-Lemaire clarified that France was never that afraid of punitive damages. Up until the landmark decision of the Cour de Cassation in 2010, there had been strong academic support for the recognition and enforcement of punitive damage awards. Still, in 2010, the Cour de Cassation, in its Fontaine Pajot case, made clear that this support is not without exception. The public policy exception might still trigger when the amount of punitive damages awarded is disproportionate to the loss sustained and to the severity of the breach of duty. Unfortunately, the Cour de Cassation did not give further guidelines regarding the proportionality test. On top of that, it remains unclear what even qualifies as an award for punitive damages and whether the French courts are bound by the qualifications of the original court. Fulli-Lemaire stressed that one must always keep in mind the prohibition of révision au fond, though.

In contrast to France, Benini reported that Italy was indeed once scared of punitive damages, e.g. when the Italian Supreme Court rejected recognition and enforcement of an Alabamian judgement in 2007, arguing that punitive elements were alien to Italian civil liability. Ten years later, in 2017, the Italian Supreme Court held that the evolution of civil liability, though, still predominantly serving compensation, led to also considering punitive and deterrent purposes. Thus, punitive damages were not ontologically incompatible with Italian public policy. Again, there are conditions the foreign award must comply with in order not to trigger the Italian public policy exception. Namely, the punitive damage award must be reconcilable with the legality (typicality and predictability) and proportionality principles. In Italy, the courts apply the proportionality test by comparing the amount of punitive damages to compensatory damages as well as the severity of the wrongdoer’s conduct.

Similarly to Italy, South Korean courts also rejected the enforcement of punitive damage awards, as the principle of full compensation was part of South Korean public policy. Kim describes that in 2011, the South Korean legislator began introducing acts providing treble, quadruple, and even quintuple damages, softening up the principle of full compensation in South Korean private law. With this in mind, in 2022, the Korean Supreme Court recognised that, at least when the cause of damages in a foreign judgement falls within the purview of this Korean legislation, it was difficult to justify a manifest incompatibility with fundamental principles of South Korean private law, – very much in line with Vanleenhove’s previous call for legal coherence. It remains unclear, though, whether South Korea will eventually overcome its fear of punitive damages more broadly and resort to a more generous proportionality test, similar to France and Italy.

Overall, the conference aptly demonstrated that there is still a lot of comparative legal research to be done in the field of punitive damages. The conference proceedings, which will be published by Mohr Siebeck and will contain extended versions of the papers, will certainly contribute to this endeavour.

First Advocate General Szpunar Opined last week in Case C-86/23 E.N.I., Y.K.I. v HUK-COBURG-Allgemeine Versicherung AG – let’s call that case HUK-Coburg. The case concerns the application of Article 16 Rome II’s lois de police aka lois d’application immédiate aka overriding mandatory provisions.

A claim is issued for compensation submitted by private individuals, who are Bulgarian nationals, in accordance with compulsory insurance against civil liability in respect of the use of motor vehicles, against an insurance company for non-material damage caused by the death of their daughter in a road traffic accident in Germany.

The core issue to determine by the CJEU is the concept of overriding mandatory provisions in Article 16 Rome II and in particular the determination of the criteria for classifying rules safeguarding individual rights and freedoms as ‘overriding mandatory provisions’. This echos the discussion in Unamar, where the Brussels Court of Appeal eventually held that the relevant Belgian provisions only serve the interests of private parties, not of the Belgian public legal order, hence there can be no question of application of the lois de police exception (current Opinion suggests ‘only’ as the key word in the Court of Appeal’s analysis). The current discussion by the AG also echoes the facts in Lazar.

Contrary to German law (28), Bulgarian law (lex fori) (29) provides that compensation for non-material damage is determined by the court giving judgment on the basis of fair criteria. That court points out that, under Bulgarian law, compensation is payable for all mental pain and suffering endured by parents on the death of their child as a result of an unlawfully and culpably caused road traffic accident. It is not necessary for the harm to have resulted indirectly in pathological damage to the health of the victim.

(32) The mere fact that, by applying the lex fori, there would be a different outcome with regard to the amount of compensation from that which would have been reached by applying the lex causae is not sufficient to conclude that the Bulgarian provision at issue may be classified as an ‘overriding mandatory provision’ within the meaning of Article 16 of the Rome II Regulation, provided, the AG adds,  that the application of the lex causae is compatible with considerations of justice.

(36) Over and above CJEU Unamar, the Court also in Da Silva Martins explored the concept and the criteria. (42) ff the AG recalls the general principles, and (56) he points to recital 32 Rome II’s reference to ‘‘considerations of public interest’. The AG is absolutely right in opining that safeguarding individual interest may absolutely contribute to the protection of public interest. His argument (60) is common sense and absolutely right:

A first argument is linked to the interplay of collective and individual interests. Thus, in the field of tort law, the rules that a Member State establishes in order to protect a category of persons who have sustained damage, by modifying, in particular, the burden of proof or by establishing a minimum threshold for compensation, could have the principal objective to restore the balance between the competing interests of private parties. Indirectly, they could therefore also contribute to safeguarding the social and economic order of the Member State by reducing the impact of accidents on public resources.

On the basis of CJEU authority as outlined, the AG concludes that the case at issue may absolutely lead to the court seised applying Bulgarian law however only if

it finds, on the basis of the existence of sufficiently close links with the country of the forum and a detailed analysis of the terms, general scheme, objective and context of the adoption of that directive, that it is of such importance in the national legal order that it justifies a departure from the applicable law designated pursuant to Article 4 [Rome II].

A good opinion which I hope will be followed by the Court.

Geert.

EU Private International Law, 4th ed. 2024, 4.87 ff.

First AG Szpunar this morning in C‑86/23 HUK-Coburg
Applicable law
Criteria for classifying rules safeguarding individual rights and freedoms as ‘overriding mandatory provisions’ viz A16 Rome II
citing ia @KrzysztofPacula, Bonomi, Wauthelet, Francqhttps://t.co/M0qXbb8aCu

— Geert Van Calster (@GAVClaw) March 21, 2024

In his Opinion in C-774/22 JX v FTI Touristik, Advocate General Emiliou in my opinion is spot on for both core elements of the case. A consumer domiciled in Germany issues a claim against a tour operator also established in Germany in relation to a contract for a package of travel services booked by that consumer for a trip abroad. Does Brussels Ia apply and does the consumer title of the Regulation assign territorial as well as national jurisdiction?

The trip is sold as a package holiday. That is relevant, for the consumer title does not apply to mere contracts of transport. The consumer in the case at issue suggests that the operator failed in its duties under the Package Travel Directive to inform ia re visa requirements and brings a case in his domicile, Nuremberg (as opposed to Munich, the defendant’s domicile).

The AG is absolutely right to spend a mere two paras on the territorial jurisdiction issue. The answer follows from the very wording of the consumer title. (18):

The referring court’s doubts concerning the function of the forum actoris rule for consumers call for a swift response. It stems from the very wording of Article 18(1) of the Brussels I bis Regulation. A comparison of the two provisions it contains is enlightening in that regard. The forum rei rule refers to the ‘courts of the Member State’ in which the professional is domiciled. By contrast, the forum actoris rule refers to the ‘courts for the place’ where the consumer is domiciled. That terminological difference is not trivial. It is designed precisely to indicate that, whereas the first rule merely confers international jurisdiction on the courts system of the designated State, taken as a whole, the second rule gives both international and territorial jurisdiction to the court for the locality of the consumer’s domicile, irrespective of the allocation of jurisdiction otherwise provided for by the rules of procedure of that State.

On the next issue, the international element, the AG refers to the discussion in German scholarship on ‘false internal cases’ (unechteInlandsfälle). Does the foreign destination of the trip give the contractual relationship an international character? (29) ff he finds support in the broad conception of the international element in BIa generally. Owusu of course, Lindner, ZN v Bulgarian Consulate, IRnova and most recently Inkreal are all relevant authority.

(33) The AG refers to some clear examples of what the majority view would call unechteInlandsfälle which without a doubt however are caught by Brussels Ia:

For instance, where a court of a Member State is called upon to determine a case which, on the one hand, involves two litigants domiciled in that State but, on the other, relates to a tort that took place abroad, or the tenancy of an immovable property located in another country, the Brussels I bis Regulation applies.

Emiliou AG is not a fan of ZN v Bulgarian Consulate not because it viewed the case as being international but rather because it relies too much on the definition of ‘international’ in the European Order for Payment Regulation 1896/2006 (respective domiciles of the parties and the seat of the court seised). (38-39)

On the one hand, Regulation No 1896/2006 was adopted to tackle the difficulties faced by creditors seeking to recover uncontested claims from debtors in other Member States. It is aimed at simplifying and speeding up the recovery of such claims, through the creation of a uniform procedure allowing a creditor to obtain, from a court of a Member State, a judicial decision on such a claim, which can easily be enforced in the Member State where the debtor’s assets are located, while guaranteeing a level playing field in terms of rights of defence throughout the European Union. The definition of ‘cross-border case’ given in that regulation – based on the respective domiciles of the parties and the seat of the court seised – has a certain logic in that context. Where the parties are domiciled in the same State, the remedies provided by the courts of that State, under its procedural law, are usually sufficient to ensure that the creditor swiftly recovers his or her claim. Therefore, the procedure laid down in that regulation is not necessary.

On the other hand, the Brussels I bis Regulation purports to unify the rules of conflicts of jurisdiction in civil and commercial matters. That definition is too narrow and, thus, ill-suited for that purpose. As explained in points 32 and 33 above, questions of international jurisdiction may arise even where the litigants are domiciled in the same Member State and the courts of that State are seised. Moreover, that instrument also contains rules on recognition and enforcement of judgments given by the courts of the Member States. To be fit for purpose, those rules must apply whenever the authorities of a Member State are required to recognise or enforce a decision delivered by a court of another Member State, even where it concerns an internal dispute between two persons domiciled in the latter State. That definition also does not accommodate that situation.

(41) the AG insists the CJEU no longer refer to the OFP Regulation in interpreting Brussels Ia:

I urge the Court to refrain, in the future, from referring to Regulation No 1896/2006 in that context. Should the Court wish to draw inspiration from, and to ensure consistency with, other instruments on that issue, [Rome I and Rome II] fit the bill better, as will be seen below.

(I have in the past voiced concern with too much BIa /RI and II parallel as has the CJEU itself in Kainz).

More in general though and away from purposive construction in light of other PIL instruments, the AG opines straightforwardly that the destination of the trip constitutes a relevant ‘international element’ for the purposes of BIa.

The place of destination of the trip is also the place where, under the package travel contract, (most of) the services were provided or should have been provided to the traveller (the flight would land nearby, the hotel be situated there, and so on). In other words, that contract was, or should have been, essentially performed there. In my view, where a court of a Member State is called upon to determine a dispute related to the performance of a contract, and the place of performance is in a foreign country, that factor is ‘such as to raise questions relating to the determination of the international jurisdiction of that court’. (Reference to Richard de la Tour AG in Inkreal).

CJEU Lindner at the jurisdictional level echoes in (45) in the AG’s reference to Rome I:

An analogy can also be made, in my view, with the Rome I Regulation and the relevant case-law of the Court. Similar to the Brussels I bis Regulation with respect to jurisdiction, that instrument determines the law applicable to a contract where the situation ‘involv[es] a conflict of laws’. In that regard, it stems from the case law of the Court that the rules of the Rome I Regulation are applicable to any contractual relationship with a ‘foreign element’. Indeed, it is only where such a contract has connections with a country (or countries) other than that of the court seised that that contract could potentially be governed by different, conflicting national laws, and that court may wonder which law to apply in order to resolve a dispute. Pursuant to the same case law, that concept of ‘foreign element’ is not limited to the respective domiciles of the contracting parties. The fact that the contract is to be performed in another country constitutes such an ‘element’.  A connection of that kind obviously ‘involv[es] a conflict of laws’. The court seised can contemplate the possibility that the law of the country of performance could apply instead of its own. [Much appreciated reference in footnote to the 2nd ed of the Handbook, 2016, GAVC]. Thus, the rules of that regulation are necessary to resolve that conflict.

The somewhat convoluted reasoning by which the CJEU came to international element in Maletic (where the Court could just as well simply had referred to the foreign destination of the trip) is explained by the AG (49) by the fact that the real difficulty in that case was on which party to anchor the forum solutionis analysis.

(56) In further support comes Article 18(1)s’ ‘regardless of the domicile of the other party’, clearly designed with third States parties in mind, is broad enough to capture  the situation where the supplier is domiciled in the same the Member State as the consumer.

Geert.

EU Private International Law, 4th ed 2024, 2.22 ff and 2.233 ff.

1/2 Emiliou AG Thurs in C‑774/22 JX v FTI Touristik
Both spot on imo:
consumer title Brussels Ia applies to contract btw consumer and tour operator domiciled in same MS but with trip abroad;
consumer title forum actoris determines national as well as territorial jurisdiction

— Geert Van Calster (@GAVClaw) March 9, 2024

In competition law there is a strong presumption of attributability of daughter’s action to the mother corporation as I discussed ia in my post on CJEU C-508/11 P ENI (references to further case-law there). In general in competition law there is a strong emphasis on the concept of an ‘economic unit’ which readly looks beyond the legal fiction of separate corporate personality.

In C‑425/22 MOL Magyar Olaj- és Gázipari Nyrt. v Mercedes-Benz Group AG (let’s shorten that to ‘MOL v Mercedez-Benz) Emiliou AG opined that for the purposes of Article 7(2) Brussels Ia jurisdiction a parent company cannot rely on the competition law concept of an economic unit in order to establish the jurisdiction of the courts where it has its registered seat to hear and determine its claim for damages for the harm suffered by its subsidiaries.

(14) Applicant is a company established in Hungary. It has a controlling interest in companies belonging to the MOL group. It is either the majority shareholder or holds another form of exclusive controlling power over a number of companies, such as MOLTRANS, established in Hungary; INA, established in Croatia; Panta and Nelsa, established in Italy; ROTH, established in Austria; and SLOVNAFT, established in Slovakia. During the infringement period identified by the relevant Commision Decision (the Trucks Cartel)

The AG of course refers to Bier, Dumez France (direct damage in one person rules out an extra A7(2) forum for the third party (mother corporation) victim of indirect damage), and other core cases on A7(2) which this blog frequently refers to and /or has discussed:

C‑352/13 CDC: A7(2) locus delicti commissi for cartels is the court of the place where the cartel was definitively formed, confirmed in flyLAL and criticised by me inter alia here;

C‑352/13 CDC (holding ia that A7(2) locus damni for infringement of cartel is the victim’s registered seat); that solution too as the AG notes (44) was met by criticism both by Bobek AG in his Opinion in flyLAL and by scholarship;

C-30/20 Volvo: more emphasis Emiliou AG suggests on the link between the market affected by the anticompetitive conduct and the place where the claimants allege to have suffered harm; in my post on the case I point out the CJEU’s fuzziness on the issue;

He also distinguishes CJEU Tibor Trans‘ distinct view on (in)direct damage as follows (36-37) – footnotes omitted:

36. It is true, as the applicant notes, that in the judgment in Tibor-Trans (which related to the same collusive behaviour as that established in the Commission Decision at issue in the present case), the Court distinguished that case from the scenario in Dumez. The particularity of the facts in Tibor-Trans was that the applicant in that case, an end user of the trucks, did not purchase any trucks from the defendant directly, but did so through a dealership. However, that did not prevent the Court from finding that the applicant’s claim in that case concerned direct damage, because that damage was found to be the immediate consequence of an infringement of Article 101 TFEU, given that the overcharge resulting from the collusive agreement was passed on to that applicant by the dealers.

37. Such passing-on may occur within a supply chain where the alleged victim acquires the goods (or services) which have been subject to a cartel. That, however, is not claimed to have occurred in the case in the main proceedings. Instead, the applicant appears to present the initial harm suffered by its subsidiaries as its own.

(52) The AG points out that the distinguishing feature here is that the applicant’s registered seat is situated outside the affected market. (57) Applicant seeks to extend the application of the registered seat connecting factor to establish jurisdiction in relation to its claim in which it seeks compensation for harm suffered solely by other members of its economic unit.

Emiliou AG does not believe the competition law concept can simply be extended for jurisdictional services, referring also to Szpunar AG’s Opinion in C‑632/22 (service of documents) on which see prof Matthias Weller here. For his extensive arguments based on A7(2)’s requirement of proximity, predictability of forum, Gleichlauf (less convincing imo), and that BIa’s jurisdictional rules guarantee efficient enforcement (particularly in A4 domicile jurisdiction), see the Opinion.

His final conclusion is that (98)

the term ‘the place where the harmful event occurred’, within the meaning of Article 7(2) of Regulation No 1215/2012, does not cover the registered office of the parent company that brings an action for damages for the harm caused solely to that parent company’s subsidiaries by the anticompetitive conduct of a third party, and where it is claimed that that parent company and those subsidiaries form part of the same economic unit.

As my colleague Joeri Vananroye summarises the Opinion:

“In corporate law terms: yes to outsider veil piercing, no to insider reverse veil piercing. Outsiders may disregard legal structure and go for economic reality; but not those who set up that structure. See also: rules on derivate damages.”

Blame Bier /Mines de Potasse d’Alsace for this complex set of rules and distinguishing.

Geert.

EU private international law, 4th ed. 2024, 2.438 ff.

 

Emiliou AG, A7(2) BIa
Parent company cannot rely on competition law concept of economic unit to establish jurisdiction where it has its registered seat, re claim for damages for the harm suffered by its subsidiaries.

MOl v Mercedes-Benz https://t.co/MC376UYiX0

— Geert Van Calster (@GAVClaw) February 14, 2024

On 26 April 2024, a half-day conference will be held at 9 am CET, organized by the Centre for Private International Law at the School of Law, University of Aberdeen, in collaboration with the Faculty of Law, University of Ljubljana. The conference aims to explore crucial topics within the realm of private international law. The […]

Augustin Gridel (University of Lorraine) has kindly prepared a presentation in English of his monograph titled Marchés et instruments financiers en droit international privé (Financial Markets and Financial Instruments in Private International Law), published by Bruylant in 2023. The aim of this book is to describe the relationship between the law of financial markets and […]

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 Law

The 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.

On 19 March 2024, the Council of the European Union approved the position of the European Parliament at first reading on the proposal for a directive on protecting persons who engage in public participation from manifestly unfounded or abusive court proceedings, also known as Strategic lawsuits against public participation, or SLAPPs. The directive has thereby […]

The Council of the European Union on 15 March 2024 reached a final deal on the proposal for a directive of the European Parliament and of the Council on corporate sustainability due diligence (see here and here for previous analysis on the proposal hosted on this blog). The deal comes after a series of meetings […]

A few days ago, the redesigned EAPIL website was launched. Among other things, it features a reserved area for members of the European Association of Private International Law (MyEAPIL). An automated e-mail message was sent to all the 560 members of the Association on 11 March 2024, with their personal login credentials. Several members have […]

The Rail Protocol to the Cape Town Convention on International Interests in Mobile Equipment entered into force on 8 March 2024. Resolving Conflit Mobile One of the main goals of the Cape Town Convention was to resolve the perennial problem of change of applicable law governing security interests over tangible moveable assets (conflit mobile). The […]

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:

• Welcome remarks, by Dr Christophe Bernasconi (HCCH)
• Overview of the Choice of Court Convention, by Ms Melissa Ford (HCCH)
• Application of the Choice of Court Convention in Singapore, by Prof Adeline CHONG Swee Ling (Singapore Management University)
• Choice of Court Convention and the People’s Republic of China, by Prof Zheng TANG (Wuhan University)
• Choice of Court Convention and the ASEAN Members – taking Indonesia as an example, by Prof Afifah Kusumadara (Brawijaya University)
• Concluding remarks, by Prof Yun ZHAO (HCCH)

For more information, please consult the webinar’s programme.

Introduction Beverly Hills Polo Club branded goods are sold in the USA and the UK. Trade marks in the USA are owned by X. Corresponding trade marks in the UK are owned by Y. Trade mark law is territorial. Does Amazon infringe UK trade mark law by advertising the USA branded goods on its USA […]

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 meeting of the International Hague Network of Judges in Rio de Janeiro, Brazil from 15 to 17 May 2024.
• Forum on Domestic Violence and the Operation of Article 13(1)(b) of the 1980 Child Abduction Convention in Sandton, South Africa, from 18 to 21 June 2024. This is the result of the Conclusions & Recommendations of the meeting of the Special Commission that took place last year and the existing concerns about domestic violence.
• Malta V, in Valetta from 24 to 27 September 2024. The Malta Process is a dialogue involving both Contracting States to the 1980 Child Abduction Convention and the 1996 Child Protection Convention, and non-Contracting States whose legal systems are based on or influenced by Islamic law (“Shariah”). Click here.
• Special Commission on the practical operation of the 1965 Service, 1970 Evidence and 1980 Access to Justice Conventions to take place from 2 to 5 July 2024 in The Hague.

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.

1. 1. 1. Professor Skauradszun’s reasons for reaching a contrary conclusion can be summarised as follows:

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

The fourth issue of 2023 of the Rivista di diritto internazionale privato e processuale (RDIPP) is out. Along with recent case law and materials, it features five contributions. Cristina Campiglio, Giurisdizione e legge applicabile in materia di responsabilità medica (ovvero a proposito di conflitti di qualificazioni) (Jurisdiction and Applicable Law in Matters of Medical Liability […]