The British Institute of International and Comparative Law (BIICL) hosts an event titled “Private International Law – Challenges for Today’s Markets“ as part of the Herbert Smith Private International Law Seminar Series at the BIICL.

What is this event about? This conference shall offer a platform to exchange views of different industry sectors on current Private International Law problems they encounter. The speakers will deal with various issues such as the difficult new rules in the Rome I regulation on financial market contracts, current Private International law problems arising in the field of Swaps and Derivatives and in the Energy sector and will look in a more general way at the pitfalls of Private International Law for business contracts between important market players.

Date: Tuesday 9 February 2010, 17:00 to 19:00

Location: British Institute of International and Comparative Law, Charles Clore House, 17 Russell Square,London, WC1B 5JP

Chair: Lord Justice Rix, Royal Courts of Justice

Speakers: 1) Joanna Perkins, Secretary to the Financial Markets Law Committee, 2) Edward Murray, Partner, Allen & Overy London; Chair of the ISDA Financial Law Reform Committee, 3) Murray Rosen QC, Partner, Herbert Smith LLP, 4) Matthew Evans, Chief Counsel, BG Group plc

This post was written by Mrs Jenny Papettas, a PhD Candidate and Postgraduate Teaching Assistant at the University of Birmingham.

The Court of Appeal delivered its judgment in the case of Maher v. Groupama Grand Est. on 12 November 2009, upholding both the decision and reasoning of Blair J. in the Queen’s Bench Division. The case, concerning issues of applicable law in a direct action against an insurer, is noteworthy because it is illustrative of the type of case that will fall to be decided under Article 18 Rome II and serves as a reminder that individual Member State reasoning on these issues is obsolete under that Regulation.

The Claimants, an English couple, Mr. and Mrs. Maher, were involved in a collision in France with a van being driven negligently by French resident M Marc Krass.  M Krass was sadly killed in the collision. The claim was brought directly against M Krass’ third party liability insurer. Liability and the application of French law to the substantive issues in the case were not at issue. The outstanding issues to be determined by the court were; (1) Whether damages should be assessed in accordance with French law or English law, (2) Whether pre-judgment interest on damages should be determined in accordance with French law or English law.

The Assessment of Damages

Under English law the assessment of damages in tort claims falls to be decided as a procedural issue (Harding v. Wealands [2007] 2 AC 1). The issue in Maher was whether in a direct action against the tortfeasor’s insurer the issue was to be characterised as tortious, with damages being dealt with as a procedural issue under the lex fori or as a claim founded in contract, where assessment of damages is dealt with as a substantive issue by the applicable (French) law as stipulated in both the Rome Convention (implemented in English law by Contracts (Applicable Law) Act 1990, s.2 and Sch.1, Art.10(1)(c)) and the Rome I Regulation. Despite the Defendant’s arguments that the claim only arose because it was contractually obliged to indemnify the insured and that therefore the claim was contractual in nature, the Court, citing Macmillan Inc v. Bishopgate Investment Trust plc (No. 3) [1996]1 WLR 387, held that it was not the claim that fell to be characterised but each individual issue. Further citing Law Com Report No. 193 (Private international Law: Choice of Law in Tort and Delict (1990)) where it was stated that direct actions against liability insurers are better seen as an extension of a tortious action (para 3.51) the Court held that since liability was admitted and the insurer therefore had to meet the tortfeasor’s liability the claim was tortious with the consequence that assessment of damages was procedural and a matter for the lex fori.

Pre-judgment Interest

With regard to pre-judgment interest the Court found that the issue was split. The existence of a right to such interest was held to be a substantive issue whilst the calculation of any interest, being partially discretionary in nature under s 35A Supreme Court Act 1981, was procedural. However, although the quantification of interest would as a result be determined with reference to English law, s35A is flexible enough to allow the Court to apply French rates if it is necessary to achieve justice in the circumstances.

Anticipating  Rome II

Article 15 of Rome II provides a lengthy list of issues which will be determined by the applicable law, largely disposing of any possibility of subjecting different issues to different laws. This extends to the assessment of damages thereby expanding the scope of Rome II into areas previously classified as procedural under the traditional English substance /procedure dichotomy.  Indeed, it was acknowledged during Maher that the application of Rome II would have produced a different result in this regard.

However an intriguing question remains as to whether Article 18, which provides for direct actions against insurers, will be interpreted so that the injured party’s choice of either the applicable law or the law of the insurance contract will govern the whole claim or simply the question of whether a direct action can be permitted. Furthermore it will be interesting to see how the issue of characterisation plays out. For example, will the insurer be able to rely on the contractual limits of the policy where the applicable law to a direct action is determined by the law applicable under the Regulation. The only certainty is that such questions will have to be answered with reference to the autonomous definitions which are yet to develop and the methods currently employed by Member State courts will be obsolete for dealing with issues which fall within the remit of Rome II.

Over the past few months, various US federal courts have handed down opinions that may presage a more limited role for the Alien Tort Statute in US litigation.  The Alien Tort Statute provides US district courts with original jurisdiction over “any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.”  28 U.S.C. § 1350.  In a series of cases starting with Filartiga v. Pena-Irala, US courts had been willing to give a robust reading to the statute, thus allowing recovery in cases that pushed the envelope for violations of customary international law.  When the Supreme Court issued its most recent opinion on the statute in Sosa v. Alvarez-Machain, hope existed in some quarters that the statute would be more narrowly construed by US lower courts.  Decisions following that case, however, continued to follow caselaw allowing for robust recovery.

We may be witnessing a subtle sea change in ATS litigation, which is surprisingly being accomplished not by the US Supreme Court but by US lower courts.  In the past six months, five decisions in particular have changed the litigating landscape substantially and will make it harder for plaintiffs to plead and prove ATS cases.  These decisions span various subject areas, but each contributes to reining in ATS cases.  A short summary of these cases follows.

In Sarei v. Rio Tinto, the Ninth Circuit has been willing to consider applying exhaustion of remedies requirements in ATS cases, thus allowing district court judges to dismiss ATS cases unless a plaintiff can show that all local legal remedies have been exhausted or that such remedies are unavailable, ineffective, or futile.  In Turedi v. Coca-Cola and Aldana v. Del Monte Fresh Produce, the Second and Eleventh Circuits have been willing to affirm ATS dismissals on grounds on forum non conveniens.  In Sinaltrainal v. Coca-Cola, the Eleventh Circuit relied on heightened pleading standards enunciated in the Supreme Court’s Iqbal and Twombly decisions, discussed here, to impose a higher standard of pleading on ATS claimants.  Finally, and perhaps most importantly, the Second Circuit in Presbyterian Church of Sudan v. Talisman Energy, Inc., ruled that in order to find aiding and abetting liability under the ATS, a plaintiff must show “that a defendant purposefully aided and abetted a violation of international law.”  In changing the standard from mere knowledge to purpose, the Second Circuit has placed a heavier burden on plaintiffs bringing ATS claims.

The upshot of these decisions is that from pleading to proof to discretionary doctrines like forum non conveniens US federal courts are perhaps closing the door on many ATS cases.  While this movement will be favorable to defendants, at the level of process it is a surprising outcome for several reasons.  Congress has known since Filartiga that there was potential for ATS abuse and has done nothing about it.  In the wake of congressional silence, US courts had been hesitant for 28 years to restrict the statute’s use, and rather looked to the US Supreme Court to provide guidance.  The Supreme Court’s guidance in Sosa was opaque at best.  Faced with such minimal direction, US lower courts have been forced to make a choice regarding the ATS.  Momentum appears to be gathering in favor of choosing to limit ATS litigation.  As such, US lower courts have been forced to use discretionary judicial doctrines to cabin the reach of a congressional statute.

While it may be too soon to say that the death knell has sounded for ATS litigation, these developments show that we may be witnessing the demise of ATS litigation.

Much debated issue of harmonisation of the European contract law by means of the Common Frame of Reference is topic of the ERA conference taking place on 18 and 19 March 2010 in Trier, Germany. More precisely, the conference titled “European Contract Law: EU Consumer Law Revision and the CFR. Towards an optional instrument?” will address different aspects of adapting the academic DCFR to fit the purpose of the “political” CFR, the possibility for linking the CFR and the proposed Consumer Rights Directive, as well as the prospects of the CFR serving as an optional instrument.

The speakers at the conference include: Mr Giuseppe Abbamonte, DG Justice, Freedom and Security, European Commission, Brussels; Professor Christian von Bar, European Legal Studies Institute, University of Osnabrück; Professor Hugh Beale, University of Warwick; Professor Eric Clive, University of Edinburgh; Professor Bénédicte Fauvarque-Cosson, University Panthéon-Assas, Paris; Mr Rafael Gil Nievas, Permanent Representation of Spain to the EU, Brussels; Professor Piotr Machnikowski, University of Wroclaw; Dr Chantal Mak, University of Amsterdam; Professor Guillermo Palao Moreno, University of Valencia; Mr Patrice Pellegrino, Senior Adviser, EuroCommerce, Brussels; Ms Nuria Rodríguez Murillo, Senior Legal Officer, BEUC, Brussels; Professor Hans Schulte-Nölke, European Legal Studies Institute, University of Osnabrück; Professor Matthias E. Storme, KU Leuven and University of Antwerp; Ms Diana Wallis, Vice-President of the European Parliament, Brussels/Strasbourg.

The conference web page is accessible here.