German Federal Supreme Court awards damages for violation of a choice of court agreement

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With judgment of 17 October 2019 (III ZR 42/19) the German Federal Supreme Court held that a contracting party may be entitled to compensation for the costs incurred through the violation of a choice of court agreement. The basic facts and the main reasoning of the Court are summarized below. The full press release (in German) is available here.

Facts of the case:

The parties involved in the litigation were telecommunications companies. The defendant was domiciled in Bonn (Germany) and the plaintiff was domiciled in Washington, D.C. (United States). They were linked through an “Internet Peering Agreement” according to which they were mutually required to receive the data traffic of the other party at so-called peering points, to transport it on their network to the customers connected via the network and to provide the necessary transmission capacity at the peering points within their networks. The contract provided for application of German law and jurisdiction in Bonn (Germany).

In 2016, after the plaintiff’s efforts to achieve the (free) increase in transmission capacity had failed, it filed a lawsuit in a District Court in the United States. requesting the creation of additional capacity. The District Court dismissed the claim for lack of jurisdiction pointing to the choice of forum clause in the contract. The plaintiff, therefore, filed a lawsuit with the Bonn Regional Court whereas the defendant filed a counterclaim demanding reimbursement of the costs it incurred through the proceedings in the United States.

The Bonn Regional Court dismissed the main lawsuit, but granted the counterclaim which, however, was rejected upon appeal of the plaintiff by the Court of Appeal. The Federal Supreme Court with its judgement of 17 October 2019 reversed the Court of Appeal judgment and held that the defendant is, in fact, entitled to reimbursement of its costs.

Legal reasoning:

The Federal Supreme Court argues that the parties’ agreement, notably the choice of court and the choice of law clause, is to be interpreted as meaning that the parties are required to bring actions only in Bonn and failing that – at least to the extent that the court seized, such as the District Court, recognizes the lack of jurisdiction – to reimburse the other party for the costs incurred thereby. The parties, through the choice of court and choice of law clause, expressed their interest in making legal disputes foreseeable both from a substantive and a procedural point of view. It was the parties’ aim to create legal certainty and to make the (economic) risk associated with litigation calculable. By specifying a place of jurisdiction, they aimed to prevent forum shopping and to avoid costly disputes about jurisdiction. This goal the Federal Supreme Court argues, can only be achieved if the aggrieved party is entitled to reimbursement of its costs.

 

Cross-border enforcement of debts: EU unified procedures in Belgium

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The research on the cross-border collection of debts (in particular through the unified procedures in the EU) in the EC²BE project has produced interesting results. Here is a summary of the Belgian results. For those who want to know more, don’t forget to enrol to our final conference, which will address the matter in various EU States.

(This blog has also referred you to the various national seminars – for an overview, see here or contact one of the partners.)

EXECUTIVE SUMMARY

Written by Fieke van Overbeeke, translated from Dutch by Albert Kruger

A    INTRODUCTION

‘By nature advocates and judges appear to adopt a conservative approach. They are generally averse to changes or reforms in the field of procedure. The apathy of legal practitioners regarding the adoption of new legal provisions concerning civil procedure is widely known. (…) New procedural routes are not followed. Some novelties do not get entrenched.’ [J. Laenens e.a., Handboek Gerechtelijk Recht, 2016, p. 9 and 26 (own translation)].

Research by the University of Antwerp shows that EU legislation concerning civil procedure, specifically the European Enforcement Order (EEO 2004), the European Payment Order (EPO 2006), the European Small Claims Procedure (ESCP 2007) and the European Account Preservation Order (EAPO 2016) are seldom applied in Belgian legal practice. These Regulations nevertheless have the common feature that they all strive to provide simpler, cheaper, faster and more efficient procedures in the European judicial area. In that framework the EU Regulations provide favourable procedures for international claims. This has an added value for Belgian legal practitioners seeking to enforce such claims.

The crucial question that arises is whether the lack of enthusiasm for these Regulations can be explained with reference to the general situation regarding “new” procedural rules in Belgium, or whether there are additional reasons that can be addressed in order to guarantee the added value of these Regulations in Belgium. The University of Antwerp examined this question during the period from the beginning of 2018 up to the end of 2019. The results and recommendations of that study are published in Dutch in Tijdschrift@ipr.be (2019 issue 3), of which this executive summary gives the main traits.

The approach of the research is a classical method of qualitative legal analysis, where the sources legislation, case law and legal literature are at the core. All the decided cases were uploaded to a special data base, where central aspects and a summary of each case can be consulted free of charge: www.ic2be.eu. Here the reader will also find similar information about Germany, France, Italy, Luxembourg, The Netherlands, Poland, Spain and case law of the Court of Justice of the EU. This information was gathered by our project partners namely the University of Freiburg, the University of Milan, Erasmus University Rotterdam, the University of Worclaw, the Complutense University of Madrid, and the Max Planck Institute in Luxembourg for Procedural Law. The research was co-funded by the European Commission.

To complement this classical legal research, we conducted semi-structured interviews with legal practitioners from four target groups: judges, advocates/attorneys, corporate lawyers and consumers’ organisations.

In what follows we start by setting out a number of issues concerning the application of the Regulations, such as the extent to which the Regulations are known, the course of the actual procedure, technical questions and the protection of (weaker) procedural parties. Thereafter we provide some highlights of the research results for each of the Regulations investigated. Finally conclusions and recommendations are provided.

B  INVESTIGATION RESULTS

B.1. Urgent problems

a) Acquaintance with the Regulations

It appears that the general acquaintance with the Regulations is relatively low in Belgium. The interview participants unanimously stated that many judicial institutions (presiding officers and registrars), advocates and bailiffs are generally unaware of, and have little knowledge of the Regulations. At the same time it was determined that acquaintance with EU Regulations is a general problem in Belgium. Various participants said that the average Belgian presiding officer or advocate has problems in “reading and understanding” EU law and, as a result, interest for it is low.

In this context the question was asked whether sufficient information about the Regulation exists. Some participants stated that it is difficult to obtain reliable information, while others said that adequate information can be found if practitioners take the trouble to find it. Often reference is made to the European Judicial Atlas. The participants agreed that the Belgian government does little to make information available and distribute it.

b) Problems related to procedure

Under problems related to procedure the following were classified: the language, the speed of the procedure, the costs of the procedure, the notice or service of documents, the standard formulas and the use of modern information technology.

The interviews indicate that these issues were indeed problematic in Belgian legal practice. This has a negative impact on the application of the procedures. The article contains a detailed discussion of the extent of these problems and how some difficulties are avoided or resolved in practice.

  1. c) Technical problems

Under technical problems are classified: the scope of the Regulations, the area of application, the determination of the judge with international and internal capacity. From the interviews it appears that uncertainty exists concerning scope of the EPO-Regulation, which is only applicable to cross-border claims. The question is whether creative constructions that aim to bring legal relationships that were initially purely Belgian within the scope of the Regulation are permissible. Opinions on this matter differ widely.

In addition, particularly concerning the domestic jurisdiction, there are a number of problems. It was seen that the complex Belgian jurisdiction rules can refer to a big merry-go-round of judges who may be able to hear the case. Some participants raised questions as to whether this situation conforms with EU rules because ‘it can hardly be expected from a foreign party to understand the complex Belgian competence rules’. Another point emerging from the interviews is that the large number of courts that may have jurisdiction could have a negative impact on the quality of the decisions because it can occur a judge with no, or only very little, experience with the Regulation or who do not properly understand it have to apply it.

d) Problems connected with the protection of parties

Problems connected with the protection of parties include consumer protection, the protection of the defendant against fraudulent or abusive procedures and the absence of a public policy test.

Problems concerning consumer protection arise in Belgium particularly in the EPO procedure. Many Belgian judges take a negative view of the system and the rules of the EPO-Regulation, particularly from the point of view of consumer protection (in particular the so-called inversion du contentieux – inversion of the procedure -, the low requirements regarding proof and the uncertain methods of service). According to one participant all Justices of the Peace are in principle opposed to an EPO procedure in B2C disputes. This attitude can be seen clearly in the various additional requirements that judicial officers impose in EPO procedures. This obviously reduces the attractiveness of these procedures, as is confirmed by various interviewed advocates and corporate lawyers, who criticise this situation severely and point to serious inroads on the EPO-Regulation.

B.2. The application of the Regulations in the Belgian legal practice

a) EEO-Regulation

The research has pointed out two problems in relation to the EEO: 1. The absence of a review procedure, as is described in the minimum standards of the EEO-Regulation; 2. The meaning of allowing a default for the possibility to dispute a claim or not.

The issue regarding the possibility of review is very serious, particularly because it is at present not even clear whether a decision can be certified as an EEO. Obviously this has a very negative effect on the application of the EEO-Regulation in Belgium, as has become apparent in the Imtech judgment of the Court of Justice EU (C-300/14) and the subsequent judgment of the Court of Appeal of Antwerp of 27 February 2017. The Court of Appeal found that the result of the Imtech judgment is that Belgian procedural law does not conform to the minimum standards set by the EEO-Regulation and that EEOs can therefore not be issued.

Having regard to these reasonably serious problems, many participants stated that they try to avoid using the EOO-Regulation. They rather opt for a national procedure in combination with the Brussel Ibis-Regulation because ‘the abolition of the exequatur in that instrument has the same effect’.

b) EPO-Regulation

From the investigation it appears that there is a fairly diverse legal practice in Belgium on the application of the EPO procedure, which has a negative effect on the success of the procedure. Without being exhaustive the following can be mentioned: the concepts ‘uncontested claim’ and ‘description of evidence’, the acceptance of the signing of the request by the bailiff, who has to serve the payment order, the time periods stipulated in the Regulation, the circumstances under which a review can take place, the requirements for compensation for legal costs and the divergent attitudes surrounding the EPO procedure itself.

The divergent practice can have far-reaching effects. For example, the concept of ‘uncontested claim’ permits the interpretation that the claim is initially (seriously) contested; the mere delivery of the plea causes the claim to be contested within the meaning of the EPO-Regulation. Some judges apply this correctly, while on the other hand a judge described the fact that the claim had previously been contested as ‘misleading’ the court, which resulted in the success of the review application.

c) ESCP-Regulation

It appears from the investigation that the ESCP procedure is seldom applied in Belgium. This means that this procedure has the same fate as in many other Member States. From earlier research it appeared that the causes are i.a. the lack of awareness of the procedure, the high translation costs and absence of clear rules regarding service and the actual enforcement.

Some participants in addition pointed out that there is a diversity between on the one hand the parties wanting to start the ESCP procedure and on the other hand the specialists dealing with cross-border disputes. The latter in principle do not concern themselves with minor claims, while the local advocate who is asked for advice is not necessarily aware of the ESCP procedure and furthermore does not derive much financial gain from conducting such proceeding.

Moreover consumer organisations point out that consumers still run the risk of high procedural costs when commencing a ESCP procedure.

d) EAPO-Regulation

It appears from the investigation that the EAPO-Regulation is seldom applied in Belgium, but this can be explained by its recent entry into force.

It is however important to note that it seems that the Belgian legislator made a mistake in the implementing act regarding the conditions under which the claimant has to provide security. Article 12 EAPO-Regulation requires that the claimant has to put up security in an amount that is sufficient to avoid abuse in the situation where the claimant does not yet have title. By means of the implementing act this has now been turned on its head in the Belgian Code of Civil Procedure, where the claimant who does have a title must provide security while the claimant who does not have a title clearly does not have to provide security. This must obviously be an error, because there is no logic to this provision.

C. CONCLUSIONS AND RECOMMENDATIONS

The main conclusion is that there is great variation in the application of the investigated Regulations in Belgian legal practice. Apart from the EAPO-Regulation, Belgium has not passed supplementary legislation to embed the Regulations in the Belgian legal order, whereas Belgian procedural law conflicts with the Regulations on various points. The absence of domestic legislation leads to many problems with regard to the efficacy of the procedure in Belgium and this has a substantial effect on the choices parties make between the different procedural routes.

It appears from the interviews that many legal practitioners experience problems when they invoke the Regulations. Some have given up the Regulations, while others use the Regulations but in doing so pay close attention to the specific legal practice at the court. The EPO procedure is comparatively used the most but, as one participant put it, it should have been used ‘millions and millions of times’.

Apart from the internal Belgian problems, it appears that the effectiveness of the procedures is still strongly influenced by the lack of harmonisation regarding the service of documents and the execution phase of the payment of the debt. Many participants said in the interviews that these two missing elements were the ‘Achilles heel’ in every cross-border case. One participant stated that ‘it could be very easy to obtain an enforceable title, but then there are paradoxically no EU rules for the actual enforcement phase’.

The low application of the Regulations in Belgium is thus not (only) caused by the general reservation by practitioners to use new procedural rules. A targeted approach can improve the success of these Regulations.

The article contains several detailed recommendations.

At a Belgian level these are mainly:

  • embedding the Regulations in the Belgian legal order via legislation; and
  • improving the judicial organisation.

At EU level these concern:

  • EU action regarding cross-border service of documents and the enforcement phase;
  • more support and stimuli for Member States to embed Regulations adequately in their national systems;
  • the adaptation of the courts’ duty to serve documents.

Cuadernos de Derecho Transnacional, Vol. 11, No 2 (2019)

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The latest issue of Cuadernos de Derecho Transnacional, an open-access online journal focusing on private international law, is out. It can be downloaded here.

The fifty papers included in this issue (written in Spanish, English, French, Portuguese and Italian) address a broad range of topics, including the recognition of registered partnerships, jurisdiction over contractual disputes, the law applicable to donations, surrogate motherhood and the recognition of declaratory arbitral awards.

The next issue is due to be out in March 2020. Submissions will be considered if received before 15 December 2019.

Conference in Verona on 15 November 2019 on “Children Protection in the EU: New Rules and National Trends”

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The conference represents the final event of the project “C.L.A.S.S.4EU – 4EU training sessions on family law regulations for Cross-border Lawyers And Social Services” (JUST-JTRA-EJTR-AG-2016-763874, www.univr.it/class4eu), coordinated by the University of Verona in partnership with the University of Milano-Bicocca, University of Minho (Braga), Eötvös Loránd University (Budapest) and the Law Institute of Lithuania.

After the opening speech by Maria Caterina Baruffi (Professor at the University of Verona and Project Scientific Coordinator), selected aspects of cross-border family disputes, in light of new Regulation 2019/1111 (Brussels IIa Recast) and marking the 10th anniversary of the EU Charter of fundamentals rights becoming legally binding and the 30th anniversary of the UN Convention on the rights of the child, will be addressed by Paolo Bruno (JHA Counsellor at the Permanent Representation of Italy to the EU), Miloš Ha?apka (JHA Counsellor at the Permanent Representation of Slovakia to the EU), Jean Ayoub (Secretary General of ISS – International Social Service), Cinzia Calabrese (President of AIAF – Italian Family Lawyers Association), Agne Limante (Senior Researcher at the Law Institute of Lithuania), Orsolya Szeibert (Professor at the Eötvös Loránd University), Anabela Gonçalves (Professor at the University of Minho) and Costanza Honorati (Professor at the University of Milano-Bicocca).

The programme and more information on the event are available here.

The registration form is available here.

Job Vacancy: Researcher in Private International Law and International Civil Procedure

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The Institute for German and International Civil Procedure at the Rheinische Friedrich Wilhelms University of Bonn, Germany, is looking for a highly skilled and motivated PhD candidate and fellow (Wissenschaftliche/r Mitarbeiter/in) to work in the fields of Private International Law and International Civil Procedure on a part-time basis (50%) as of 1 April 2020.

The successful candidate must hold the First or Second German State Examination in law with distinction (“Prädikat”) and is interested in the international dimensions of private law, in particular private international law and international civil procedure.

The fellow will be given the opportunity to conduct his/her PhD project (according to the Faculty’s regulations) under the supervision of the Director of the Institute Prof Dr Matthias Weller, Mag.rer.publ. (https://www.jura.uni-bonn.de/professur-prof-dr-weller/professor-dr-weller-magrerpubl/). The position is paid according to the German public salary scale E-13 TV-L, 50% (about 1,300 Euro net per month). The initial contract period is one year at least and up to three years, with an option to be extended. Responsibilities include supporting research and teaching on Private International Law and International Civil Procedure as well as a teaching obligation of two hours per week during term time.

If you are interested in this position, please send your application (cover letter in German; CV; and relevant documents and certificates, notably university transcripts and a copy of law degree) to Prof Dr Matthias Weller (weller@jura.uni-bonn.de). The University of Bonn is an equal opportunity employer.

Conference held in Bergamo, October 3 / 4, on Private Enforcement Of General Data Protection: Regulation New Chances, New Challenges

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(Summary of the conference by Dulce Lopes, University of Coimbra, and Massimo Foglia, University of Bergamo)

Elisabetta Bani, Viviana Molaschi and Massimo Foglia, that welcomed the participants and emphasized the importance of the subject in the currant law debate, opened the Conference, that was immediately followed by a first session chaired by Radek Strugala. In this session some general issues were discussed, detailed and exemplified such as the autonomous interpretation of GDPR concepts (Agnieszka Guzewicz, University of Wroclaw) and the international law implications of the GDPR in several subjects such as private international law and international administrative law (Dulce Lopes and Geraldo Rocha Ribeiro, University of Coimbra). Federica Persano (University of Bergamo) followed and pointed out the insufficiencies of the GDPR in what regards children that are the most vulnerable group but also the main actor in the digital era.
The Second Session chaired by Dulce Lopes, continued with a two-fold debate on Patients and Privacy, both in Italy (Massimo Foglia, University of Bergamo) and in the Czech Republic (Petr Šustek, Tomáš Holçapek, Martin Šolc, Charles University). Data concerning health and the role of consent in medical records, clinical practice and biobanks were analysed crossing EU demands with national legislations and practices, showing that clarification in some areas is a necessity. Simon Taylor (University of Paris Nanterre) ensued directing the discussion to the private enforcement of the GDPR, giving note of some recent case law in the UK on non-pecuniary losses (one of which from the day previous to the Conference, Lloyd v. Google [2019] Court of Appeal, 2 October). Discussion that was resumed by Jonas Knetsch (University Jean-Monnet of Saint-Étienne) that focused on article 82.º of the GDPR, considering it to be a directly applicable provision but whose contours are ambiguous mainly in what refers to the assessment of the amount of damages, and called for a de minimis rules
On the second day of the Conference, under the moderation of Jonas Knetsch, Radoslaw Strugala (University of Wroclaw) decomposed the segments of article 82.º, concluding that the responsibility envisaged is irrespective of fault, but stated that responsibility imposed on the controller for acts of the processor is too burdensome and may lead to over deterrence. Albert Ruda-Gonzalez (University of Girona), pointed out that big data is “the new oil” full of possibilities but also challenges and analysed the current trend towards collective redress (for instance with the Cambridge Analytica case). Shaira Thobani (University of Torino) reflected on the privacy paradox (the fact that theoretically people care about data but do few to protect it) and asked therefore which should be the role of consent in data protection and if some questions should not be considered more of a consumer type issues and not a fundamental rights one.
The last session, chaired by Simon Taylor, was devoted to specific subjects that go beyond the RGDP but that influence or are influenced by it: Pelopidas Donos (Data Protection Officer of the European Investment Bank) analysed the influence of the mirror Regulation (EU) 2018/1725 on the organisation and practices of the BEI; Marco Rizzuti (University of Florence) debated the role of the right to be forgotten in legal history and contemporary legal though, analysing relevant case law that demonstrate that this right is nor permanent nor absolute; and Luca Ballerini (University of Trieste) dwelled on the post mortem protection of personal data, not included in the protection accorded by the GDPR.
All the sessions were highly debated and a publication is envisaged in a Special Issue of the European Journal of Privacy Law and Technologies (http://www.ejplt.tatodpr.eu).

Cross-Border Enforcement in the EU (“IC2BE”) – Second Italian National Seminar, 8 November 2019

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Seminar: Instruments and solutions for a more effective cross-border debt recovery in the EU/“Strumenti e soluzioni per un più efficace recupero transfrontaliero dei crediti”.

On 8 November 2019, the University of Milan (Università degli Studi di Milano) will host a second national seminar in the framework of the research project “Informed Choices in Cross-Border Enforcement” (IC2BE-JUSTAG-2016-02) funded by the Justice Programme (2014-2020) of the European Commission.

The project – coordinated by the University of Freiburg and conducted by a consortium comprising the Max Planck Institute Luxembourg for Procedural Law and the Universities of Antwerp, Madrid (Complutense), Milan, Rotterdam and Wroclaw – aims to assess the functioning in practice of the “second generation” of EU Regulations on procedural law for cross-border cases, i.e. the European Enforcement Order (“EEO”), the European Order for Payment (“EPO”), the European Small Claims (as amended by Regulation (EU) 2015/2421) (“ESCP”) and the European Account Preservation Order (“EAPO”) Regulations.

The seminar will mark the occasion for the Italian team (Prof. Dr. Francesca C. Villata, Prof. Dr. Ilaria Viarengo, Prof. Dr. Lidia Sandrini, Prof. Dr. Elena D’Alessandro, Dr. Gabriele Molinaro, Dr. Marco Farina, Dr. Valeria Giugliano) to present the findings of the research and discuss them with experts from legal practice and academics, with the aim of assessing and improving the application of these instruments and their interface with the Brussels I-bis and Insolvency Regulations in Italy.

The working language is Italian. Practitioners and academics interested in cross-border litigation are invited to participate (free of charge) in this event. More information on the program and on the registration is available here.

(With thanks to Dr. Valeria Giugliano for the tip-off)

An Empirical Study on European Family and Succession Law (EUFams II)

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by Thomas Pfeiffer, University of Heidelberg

EUFams II is a study funded by the European Commission with the objective of assessing the functioning and the effectiveness of European family and succession law. The project is coordinated by the Institute for Comparative Law, Conflict of Laws and International Business Law of Heidelberg University (Prof. Dr. Dr. h.c. Thomas Pfeiffer). Project partners are the Universities of Lund, Milan, Osijek, Valencia and Verona as well as the MPI Luxemburg. The two-year project entails various conferences and research activities, which will be completed by 31 August 2020.

A survey conducted in the first phase of EUFams II generated responses of approximately 1,400 professionals from 17 Member States. The main findings of the survey are presented in a report (with executive summary) drafted by Quincy C. Lobach and Tobias Rapp (Heidelberg University).

The results show a striking lack of overall familiarity with the instruments of European family and succession law. Respondents indicated that the legal framework is characterized by a high degree of complexity due to the multitude of instruments. Further matters include private divorces, party autonomy, and the impact of global migration flows and the so-called refugee crisis.

More information on EUFams II and its future research outputs can be found on the project’s website.

This project was funded by the European Union’s Justice Programme (2014-2020). The content of this study represents the views of the authors only and is their sole responsibility. The European Commission does not accept any responsibility for use that may be made of the information it contains.

Max Planck Institute Luxembourg: Upcoming Conference on International Commercial Courts and the Coordination of Cross-Border Proceedings

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The progressive global establishment of international commercial courts has marked a defining moment in the growth of the legal services sector in international commercial dispute resolution. By offering litigants the option of having their disputes adjudicated by experienced and specialized judges, often from both civil law and common law traditions, these courts have resulted in the jurisdictions that embraced them become a choice destination for foreign trade and investment dispute resolution. In this regard, see in particular this publication by Prof. Dr. Marta Requejo Isidro.

Contextualizing the establishment of international commercial courts – duly taking into account, in this framework, the role of Luxemburg as a dispute resolution hub – and investigating the impact of current national and global events on international commercial litigation, with a particular focus on the consequences potentially arising from Brexit, the Max Planck Institute Luxembourg for Procedural Law will host, on 14 October 2019, a conference on The New Litigation Landscape: International Commercial Courts and the Coordination of Cross-Border Proceedings.

The Conference will focus, in particular, on the following four major topics:

  • The establishment of commercial courts around the globe specializing in cross-border disputes of high value;
  • The new framework of global traditional cooperation established by the Hague Conference on Private International Law;
  • The impact of Brexit on commercial cross-border litigation in Europe;
  • The role of Luxembourg in the new litigation landscape.

More information on this event is available here.

6th Petar Sarcevic International Scientific Conference: “Intellectual Property Rights in the EU: Going Digital”, Zagreb, Croatia, 18-19 October 2019

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The 6th Petar Sarcevic International Scientific Conference titled “Intellectual Property Rights in the EU: Going Digital” will be held in Zagreb, Croatia, on 18 and 19 October 2019. The conference is structured in three sessions and will gather EU and national judges, practitioners and academics to discuss current topics in copyright, trademarks and designs, along with the issues in IP enforcement. The conference is co-organised by the Croatian IP Office,the Faculty of Law of the University of Rijeka and the Croatian Comparative Law Association, while the main supporter is the EUIPO.

The conference is in Croatian and English with simultaneous translation.

More information is available at the conference web page: ps6conference.law.hr or at ikunda@pravri.hr.