A recent decision by the United States Court of Appeals for the Third Circuit raises a very simple, but still very fragmented, issue regarding U.S. jurisdictional doctrine: When does a claim “arise out of” a foreign defendant’s contacts with the forum so as to justify the assertion of specific jurisdiction over him. In O’Connor v. Sandy Lane Hotel, Inc., a Pennsylvania resident sued a Barbados resort in federal district court in Philadelphia, Pennsylvania, for a slip-and-fall accident that occurred in its spa. Plaintiff sought to pin personal jurisdiction over the defendant based on the advertisements and promotional mailings that defendant sent, and plaintiff received, in that state. The District Court found no specific jurisdiction and dismissed the case.

The Third Circuit reversed. In a studious opinion by Judge Chagares, the panel began by recognizing the yet-unsettled nature of the specific jurisdiction doctrine. It noted that the Supreme Court granted certiorari over this very question in 1991, but decided that case – Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) — on other grounds. It then went on to discuss the three-way split among at least five circuits on the required degree of connectedness between purposeful forum contacts and the plaintiff’s claims to justify specific jurisdiction. On the one end of the continuum, the First Circuit uses a narrow “proximate causation” test, and asserts specific jurisdiction only when the forum contact is the proximate cause of the harm and the claim. On the other end, the Ninth Circuit uses an expansive “but-for” test, and asserts specific jurisdiction simply if the harm would not have occurred without the forum contact. The Second and D.C. Circuits apply a fluid “substantial connection” test that falls somewhere in the middle, and pins specific jurisdiciton on the “totality of the circumstances.” Judge Chagares purported to take the middle road – requiring more than a ‘but-for’ link and shy of proximate causation. The Third Circuit now seems comitted to specific jurisdiction so long as the defendant’s forum contacts were “meaningfully link[ed]” to the “substance of plaintiff’s claims.” Apparently, soliciting a “contract for spa services” via out-of-forum mailings is “meaningfully link[ed]” to a later action sounding in tort.

Beyond the uncertainty of the national rule, there is an immediate practical concern as well. For the time being, in at least the Third and Ninth Circuits, there seems to be emerging a categorical rule that any out-of-jurisdiction services solicited by mail or other communication into the forum will give rise to potential tort suits for negligence if the service would not have been provided without the forum contact. That seems to extend the specific juriusdiciton doctrine from its original moorings substantially.

Some other reports on this decision are located here. A link to the decision is provided here.

The German Federal Supreme Court (Bundesgerichtshof) has referred with decision of 21 June 2007 (IX ZR 39/06) the following questions to the European Court of Justice for a preliminary ruling:

On interpreting Article 3(1) of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings and Article 1(2)(b) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, do the courts of the Member State within the territory of which insolvency proceedings regarding the debtor’s assets have been opened have international jurisdiction under Regulation (EC) No 1346/2000 in respect of an action in the context of the insolvency to set a transaction aside that is brought against a person whose registered office is in another Member State?

If the first question is to be answered in the negative:

Does an action in the context of the insolvency to set a transaction aside fall within Article 1(2)(b) of Regulation (EC) No 44/2001?

Jurisdiction with regard to proceedings which are closely connected with the insolvency proceedings themselves is highly contentious.

Since the Insolvency Regulation does not contain an explicit provision on this matter – even though referring to “judgments which are delivered directly on the basis of the insolvency proceedings and are closely connected with such proceedings” in Recital No. 6 – there are, briefly summarised, three different approaches: According to the first opinion jurisdiction has to be based on the Brussels I Regulation, according to a second approach it has to be referred to national law, while a third position suggests an analogous application of Art. 3 (1) Insolvency Regulation.

In the present case the Court of Appeal (Oberlandesgericht Frankfurt) favoured the first approach and held that Art. 1 (2) lit. b Brussels I Regulation had to be – in view of the Regulation’s goal to establish uniform rules in civil and commercial matters – interpreted narrowly and did therefore, as Art. 3 (1) Insolvency Regulation, only include collective insolvency proceedings, not however actions to set aside transactions in insolvency (Insolvenzanfechtungsklagen). Consequently the application of the Brussels I Regulation was not excluded, which led in the present case to the result that German courts lacked international jurisdiction.

This point of view is supported by some German legal writers who argue that Art. 1 (2) lit. b Brussels I Regulation had to be, at least since the entry into force of the Insolvency Regulation, construed more strictly. This, however, can be regarded as a departure from the previous case law of the ECJ (Gourdain v. Nadler) as well as the Bundesgerichtshof. In Gourdain v. Nadler, the ECJ held that Art. 1 (2) No. 2 Brussels Convention (which is identical with Art. 1 (2) lit. b Brussels Regulation) includes all proceedings which “derive directly from the bankruptcy or winding-up and [are] closely connected with the proceedings […].” The same view was taken by the Bundesgerichtshof in 1990 (judgment of 11 January 1990 – IX ZR 27/89, ZIP 1990, 246) by holding that avoidance proceedings by a trustee in bankruptcy are included by Art. 1 (2) No. 2 Brussels Convention and therefore excluded from the scope of the Convention.

Contrary to the Court of Appeal, the Bundesgerichtshof tends in the present case, in accordance with a widely held opinion in German literature, to apply Art. 3 (1) Insolvency Regulation and assumes therefore international jurisdiction of German courts in the present case. However, since the Bundesgerichtshof regards the question not to be unambiguous, it decided to refer the aforementioned questions to the ECJ.

The referring decision can be found at the website of the Bundesgerichtshof as well as in the following legal journals:
ZIP 2007, 1415 et seq.; DB 2007, 1693 et seq.; ZInsO 2007, 770 et seq.

An annotation by Lars Klöhn and Olaf Berner (both Göttingen) arguing in favour of an application of Regulation 44/2001 – and not 1346/2000 – can be found in ZIP 2007, 1418 et seq.

The case is pending at the ECJ as Rechtsanwalt Christopher Seagon als Insolvenzverwalter über das Vermögen der Frick Teppichboden Supermärkte GmbH v. Deko Marty Belgium N.V. (C-339/07).

Following swiftly on from our previous post on the amendments provided by the Draft Reform Treaty to the provisions dealing with judicial cooperation in civil matters, we would like to point out a very detailed analysis of the entire text of the Treaties, prepared by Prof. Steve Peers (University of Essex) and published on the statewatch.org website. The analysis is divided in several parts, each consisting of an article by article comparison, with comments, of the text resulting from the Draft Reform Treaty, the current version of the TEC/TEU and the 2004 Constitutional Treaty. The new Title IV of the future Treaty on the Functioning of the European Union, on the “Area of Freedom, Security and Justice”, is the subject of the Analysis no. 1 (Justice and Home Affairs issues).

Here’s a presentation by the author, including a list of the various parts of the analysis (the .pdf files can be downloaded from the home page of the project):

In order to further public understanding of and debate upon the draft Reform Treaty, the following Statewatch analyses make the text of the draft Treaty comprehensible, by setting out the entire texts of the existing TEU and TEC and showing precisely how those texts would be amended by the draft Treaty. There are explanatory notes on the impact of each substantive amendment to the Treaties, and each analysis includes general comments, giving an overview of the changes and pointing out exactly which provisions of the draft Reform Treaty were taken from the Constitutional Treaty, and which provisions are different from the Constitutional Treaty.

There are 3 analyses, divided into ten parts.

Analysis no. 1

• focusses on the issue of Justice and Home Affairs

Analysis no. 2 is the amended text of the TEU, and is divided into 2 parts:

• the non-foreign policy part of the Treaty (basic principles and key institutional rules of the EU) and
• the foreign policy part of that Treaty

Analysis no. 3 is the amended text of the TEC, and is divided into seven parts more or less following the structure of the Treaty:

• Part One of the Treaty on general provisions
• Part Two on non-discrimination and citizenship
• half of Part Three on the internal market and competition (except for the JHA clauses, which are the subject of analysis no. 1)
• the second half of Part Three, on other internal EU policies (such as social policy, monetary union and environment policy)
• Parts Four and Five, on the associated territories and external relations (including trade and development policy)
• Part Six, on the institutional rules (including the rules on the political institutions, the Court of Justice and the ‘flexibility’ rules)
• Part Seven, the final provisions

(Thanks to Allard Knook, of the ECJBlog, for the tip off)

The second issue of 2007’s Revue Critique de Droit International Privé has been released. In addition to ten case notes, it contains two articles on conflict issues.

The first is authored by Professor Sylvain Bollée, of Reims University, and deals with the extension of the scope of the method of unilateral recognition (L’extension du domaine de la méthode de reconnaissance unilatérale). The English abstract reads:

While the method of unilateral recognition is traditionally considered to apply only to foreign judgements or decisions, one can observe that it is now taking on a more extensive form, in particular insofar as it covers the effect of non-decisional foreign public acts. In such cases, closer analysis reveals that recognition does not actually apply to the public act itself, but to the rules by virtue of which such an act produces legal effects within the foreign legal system. These rules are therefore given effect independantly of any designation by a bilateral conflict of laws rule of the legal system to which the acting authority belongs. This is a discrete and perfectly legitimate expression of unilateralism, of which the precise conditions need to be determined. In this respect, it is submitted that rules governing the recognition of foreign judgements could be applied here, except for discrete adjustments and the exclusion of any enforcement procedure such as exequatur.

The second article is authored by Professor Ana Quinones Escámez, of Pompeu Fabra University (Barcelona). The article offers a proposition for the creation, the recognition and the effect of marriages and like unions (Proposition pour la formation, la reconnaissance et l’efficacité internationale des unions conjugales ou de couple). The English abstract reads:

Linked to the proliferation of new forms of marriage or quasi-marriage, the latest methodological effort required of Private international law is to apply the development of a real lex matrimonii in which the law of the place of registration coincides with the lex fori, sometimes hidden under the mantle of public policy. Analysis of situations born of a public act reveals the lex matrimonii as the product of the maxim auctor regit actum and the unilateralist problematic of conflict of public authorities. It leads to proposing solutions which as far as the formation of marriage is concerned, subordinate the issue of choice of applicable law in order to concentrate on issues of jurisdiction and which, at the level of international movement of the new status, make recognition depend on a proximistic-type of assessment of the jurisdiction of the foreign authority and the substantive conformity of the foreign institution to the requirements of forum public policy. For situations resulting from common law or other non formalised marriages the bilateral application of the law of the common habitual residence is recommended.

The article of Professor Quinones Escámez builds on her recent book on Uniones conyugales o de pareja : formación, reconocimiento y eficacia internacional (actos públicos y hechos o actos jurídicos en el derecho internacional privado), Barcelona, 2007.

Articles of the Revue Critique cannot be downloaded.

In the case Phelan v Phelan 2007 (1) SA 483 (C) (judgment date 27 July 2006), the High Court of South Africa (Cape Provincial Division) confirmed the conflict of law rule that the place of marriage celebration determines the validity of the marriage. That law applies not only to formal validity, but also to substantial validity, eg whether the parties had the capacity to conclude a valid marriage etc. In this case, the validity of a marriage concluded in New South Wales, Australia was questioned. The parties were ordinarily resident in Ireland at the time of the marriage. One of the spouses had prior to the marriage obtained a divorce order in the Dominican Republic, while neither he nor his ex-spouse had any connection with that country (no domicile, residence, nationality). (It was impossible to divorce in Ireland at the time.) There was no reciprocity regarding the recognition of decrees between the Dominican Republic and Australia. The High Court came to the conclusion that the divorce could therefore not be recognised in Australia and that no valid marriage had come into existence.

The use of the law of the place of marriage celebration to determine validity has the advantage of applying one set of legal rules to both formal and substantive validity. It also reduces the risk of limping marriage, ie the situation where people are married in one country, but divorced in another.