The Second Circuit last week issued a split-panel decision in Duran v. Beaumont, No. 06-cv-5614 (2d Cir. 2008). The case concerned a Chilean mothers’ decision to take her child to the USA and remain there, in derogation of a Chilean court order. The child’s parents—both Chilean—are recently separated, with formal custody not yet determined. However, the child lived with the mother, who—by law—could not leave Chile without the father’s consent. When the father withheld consent for a trip to the United States, the mother obtained a court order allowing a limited, 3 month journey with her daughter. At the expiration of that 3 months, the mother and the child did not return.

The father petitioned the court in New York for return of the child. The court’s jurisdiction under the Hague Abduction Convention was in issue. If the father had “custody rights” under the law of the child’s habitual residence—here Chile—then the court could order the requested relief. If, however, the father only had a “right of access,” then the court was without power to order this remedy.

The Chilean Central Authority submitted an affidavit supporting the father, espousing that he had “custody” of the child under Chilean law because the child could not leave the country without his consent. The district court, and later the Second Circuit, gave no weight to this opinion. While recognizing that the interpretation given by a sovereign to its own law is entitled to “some deference” in U.S. courts, it is not entitled to “absolute deference.” Where, for instance, such an interpretation conflicts with prior judicial precedent over an issue, that precedent may govern the case. Here, the Second Circuit had already determined that a “ne exeat” right (i.e. the right to determine whether a child will leave the country) does not amount to custody under the Hague Abduction Convention. Under this authority, the father merely had a “right of access” under the Convention, and not custody, giving the New York Court no jurisdiction to order the child’s return. The dissenting judge strenuously objected to the panel’s refusal to give credence to the Chilean Central Authority.

The decision, and the dissent, can be found here.

This case is interesting not only for the operation of the Convention, but most of all as an illustration of the need (and difficulty) in developing some uniform mechanism for national courts to determine foreign law. Here, even with an international treaty calling on the Central Authority of a contracting state to provide an opinion on its own internal law (art. 3), a court has still chosen to ignore this decision in favor of its own precedent (interpreting Hong Kong law, nonetheless). What develops, then, is a convolution of foreign law concepts in U.S. courts, which tend to be applied over-and-over again in different cases, often erroneously. Can a new international convention on the proof of foreign law adequately address this problem?

On 24 and 25 July the Justice and Home Affairs Council held its 2887th session in Brussels, the first under the French Presidency. The official press release is currently available only in French (UPDATE: English version). Among the “Justice” issues, discussed on Friday 25th, two main points are of particular importance as regards the development of European private international law.

ROME I – UNITED KINGDOM TO OPT-IN

The United Kingdom has expressed its wish to opt-in to the Rome I Regulation (see p. 26 of the official press release; on our site, see the Rome I section and the programme of the September conference organized by the Journal of Private International Law). The decision follows the public consultation launched in April by the British Ministry of Justice, whose results have not yet been made publicly available.

ROME III – ENHANCED COOPERATION BETWEEN SOME MEMBER STATES?

As we reported in a previous post, the JHA Council of 5-6 June 2008 established that the unanimity required to adopt the Rome III Regulation could not be obtained, and therefore the objectives of the proposed instrument could not be attained within a reasonable period by applying the relevant provisions of the EC Treaty. According to press sources (IrishTimes.com and Reuters), agreement in the Council had appeared difficult to reach since the beginning of negotiations in 2006, due to the opposition of Sweden, which did not intend to put into question the application of its liberal divorce rules.

As a consequence, in the meeting of 25 July, nine Member States informally reported to the Council their decision to launch the “enhanced cooperation” mechanism (see pp. 23-24 of the official press release).

Here is an excerpt of the article published by the EUObserver.com (emphasis added):

Austria, France, Greece, Hungary, Italy, Luxembourg, Romania, Slovenia and Spain have teamed up in order to formally request the European Commission launch the so-called enhanced co-operation mechanism – allowing a group of countries to move ahead in one particular area, even though other states are opposed.

It is expected that they will make the request on Monday (28 July), one diplomat told the EUobserver. It is the first time such a move has been made.

It will then be up to the commission to make a legal proposal based on the request. This proposal will then go back to member states where it needs to be approved by a qualified majority of governments.

A controversial and politically sensitive issue anyway, this route for dealing with the divorce question has further irked some capitals because, under normal procedures, a decision in this area would have to be taken by unanimity.

Reacting to the move by the nine member states, EU justice commissioner Jacques Barrot said: “The commission will have to examine all the political, legal and practical implications of such an enhanced co-operation.” “We need to get a clearer idea,” he added. […]

Malta and Sweden are widely considered the most reluctant to give the go-ahead to a EU-wide divorce scheme. Strongly Catholic Malta does not recognise divorce, while Stockholm fears that EU harmonisation in the area could threaten its liberal family law.

Should the pioneering group achieve closer cooperation in this area, the mechanism must remain open to other countries as well. Germany, Belgium, Portugal and Lithuania are also believed to be considering joining the initiative.

The enhanced cooperation mechanism was introduced by the Treaty of Amsterdam in 1997, creating the formal possibility of a certain number of Member States establishing a closer (as it was formerly known in the English version before the Treaty of Nice) cooperation between themselves on matters covered by the Treaties, using the institutions and procedures of the EU and EC. The relevant provisions of the Treaties (as amended by the Treaty of Nice), laying down the substantive conditions and the procedure for the establishment of the cooperation, are set out in Title VII of the TEU (Articles 43-45, providing the “general framework” of the mechanism) and Articles 11-11a TEC, which add special arrangements for areas covered by the EC Treaty.

A description of the mechanism can be found on this page of the Europa website. Here’s an excerpt detailing the procedure in the Community pillar:

Member States intending to establish enhanced cooperation within the framework of the EC Treaty shall address a request to the Commission, which may submit a proposal to the Council to that effect. Authorisation shall be granted by the Council, acting by a qualified majority on a proposal from the Commission and after consulting the European Parliament. A member of the Council may still request that the matter be referred to the European Council of Heads of State and Government. Following this final discussion, the matter is referred back to the Council of Ministers, which may act by the majority provided for in the Treaties. The right of veto granted to the Member States by the Treaty of Amsterdam has thus been abolished. […]

Article 11A lays down the procedure applicable to the subsequent participation of a Member State. The Commission shall decide on the request of a Member State to participate in enhanced cooperation. The role of the Commission is thus more important within the framework of the EC Treaty than within the other pillars.

It is important to note that the provisions on closer/enhanced cooperation were never actually put into effect since their introduction, and that their potential outcome is largely debated (see the controversial issue of the so called “variable geometry”, often referred as “two-speed Europe” or “Europe à la carte”): it will be therefore very interesting to see how they will be applied for the first time, and what will be the impact of this “acceleration” by some Member States in the frame of the general debate on the future of the European integration, so much troubled after the Irish referendum on the ratification of the Lisbon Treaty.

An interesting article on the matter (in French) has been written by Jean Quatremer, over at Coulisses de Bruxelles blog, reporting the negative reactions of some Member States, such as Czech Republic, Estonia, Finland, Latvia and Poland, and the decision of Ireland, Netherlands and the United Kingdom not to participate in the enhanced cooperation.

It is paradoxical that the “dismal swamp” of the conflict of laws, one of the last sector to be communitarised, could act as a “front runner” in the progress (or regress?) of the European integration.

Further information will be posted as soon as available.

A new reference regarding the Brussels I Regulation is pending at the ECJ. The Bundesgerichtshof (Germany) has referred the following questions for a preliminary ruling:

Is the second indent of Article 5(1)(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 to be interpreted as meaning that in the case of journeys by air from one Member State to another the single place of performance for all contractual obligations must be taken to be the place of the main provision of services, determined according to economic criteria?

Where a single place of performance is to be determined: What criteria are relevant for its determination; is the single place of performance determined, in particular, by the place of departure or the place of arrival?

The case is pending as Peter Rehder v Air Baltic Corporation (Case C-204/08).

The referring decision of 22 April 2008 (X ZR 76/07) can be found at the website of the Bundesgerichtshof.

Are French courts willing to review arbitral awards on the ground that arbitrators violated European antitrust laws? As a matter of principle, French courts are extremely reluctant to review arbitral awards on the merits. In theory, an exception remains when the award violates French international public policy, but actual instances where French courts have found such violations are very few.

Now, on June 1999, the European Court of Justice held in EcoSwissChina that member states ought to consider that article 81 of the EC Treaty belongs to their public policy for the purpose of reviewing arbitral awards. In that case, however, Dutch courts had been unable to review the compatibility of the award with EU antitrust law because the plaintiff had failed to challenge the award in a timely fashion. The ECJ held that it did not intend to change the procedural laws of the member states and that the obligation under Dutch law to initiate the challenge proceedings within 3 months was such procedural rule which could prevent an actual verification of the proper application of antitrust laws.

Is that changing anything to the French position? Not if the reluctance to review awards can be presented as the consequence of the application of a French procedural rule. Question: could that be a procedural rule which prevents review not only in some cases (say when the plaintiff did not act in a timely fashion), but in all cases? For instance, what about a local rule of procedure providing that courts only review the most obvious violations of public policy rules?

In November 2004, the Paris Court of Appeal had ruled in Thales Air Defense v. GIE Euromissiles that there was such a procedural rule in France. The French rule was that only violations of French public policy which were “obvious, actual and concrete” (flagrante, effective et concrete) would be sanctioned. As a consequence, in Thalès, the Court had dismissed a challenge in a case where the parties had arguably shared the relevant European market. The issue of the validity of the contract had not been raised during the arbitration.

SNF vs CYTEC

In a judgement of June 4, 2008, the French Supreme Court for private matters (Cour de cassation) addressed the issue for the first time.
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Christopher Kourakis, the Solicitor-General for the State of South Australia, has an interesting article on the interaction of choice of law rules and the Australian Constitution in cases of conflict between state laws in volume 28 of the Adelaide Law Review. The article discusses the decision of the High Court in Sweedman v Transport Accident Commission (2006) 226 CLR 362; [2006] HCA 8, which concerned whether a Victorian statutory motor vehicle insurer, which paid compensation to Victorians injured in a car accident in New South Wales, could recover under the Victorian statute from the New South Wales driver who caused the accident. The article considers the common law choice of law rule applicable to claims for statutory indemnification, and then considers the possible ways in which it has been suggested by judges and commentators (including the newly appointed Solicitor-General for the Commonwealth) that the Australian Constitution might provide an alternative approach.

See Christopher Kourakis, ‘Sweedman v Transport Accident Commission: A Simple Crash and Bang?’ (2007) 28 Adelaide Law Review 23.