Praxis des Internationalen Privat- und Verfahrensrechts (IPRax) 6/2019: Abstracts

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The latest issue of the „Praxis des Internationalen Privat- und Verfahrensrechts (IPRax)“ features the following articles:

D. Einsele: The Law Applicable to Third-Party Effects of Assignments of Claims – A Critical Interjection Regarding the Commission’s Proposal

Claims are relative rights against the debtor. Therefore, third parties are not legally affected by the assignment of a claim. However, legal systems may protect third parties’ (economic) interest in knowing who the creditor of a claim is. Insofar, essentially two different means of making the assignment public have to be distinguished, i.e. “relative” publicity, in particular by notice of the assignment to the debtor, and “absolute” publicity, in particular by registration of the assignment in a public register. Whereas means of relative publicity usually can be qualified as rules covered by Art. 14(1) and 18(1) Rome I Regulation, means of absolute publicity are generally overriding mandatory provisions. Instead of qualifying different publicity provisions, Art. 4 of the Proposal establishes one single rule for all third-party effects of assignments. Yet it distinguishes, in a conceptually erratic manner, different cases of assignments of claims and allows for party autonomy relating to third-party effects, thereby infringing basic legal principles. The Proposal will also not bring about legal certainty regarding the third-party effectiveness of assignments. This is due to the “super” conflict rules of Art. 4(1) subs. 2, Art. 4(4) of the Proposal and the lack of (explicit) rules concerning chains of assignments. Requirements for absolute publicity – qualified as overriding mandatory provisions – would in any event not be caught by Art. 4 of the Proposal.

C. Thole: The distinction between EIR and Brussels Ia-reg. with respect to damage claims against third parties based on damages incurred by the general body of creditors

The recent judgment of the ECJ shows, once again, the difficulties in distinguishing between civil matters (falling within the scope of the Brussels Ia Regulation) and actions within the meaning of Art. 6 EIR which derive directly from the insolvency proceedings and are closely linked to them. The Court had to deal with a special action established under Dutch law that allows the insolvency practitioner to pursue a damage claim against third parties on the grounds of them allegedly being party to a misappropriation of assets committed by the debtor. The ECJ concluded that such a claim falls within the scope of the Brussels Ia Regulation, notwithstanding the fact that the action is brought by the liquidator in insolvency proceedings and the proceeds of the action, if the claim succeeds, accrue to the general body of creditors. Christoph Thole analyses the judgment and its consequences for other damage claims based on German law. He also argues that the ECJ is trying to more and more confine the criteria relevant under Art. 6 EIR to a sole criterion, i.e. the legal basis of the action. This shows some similarities with the approach followed by the ECJ with respect to the general distinction between civil and administrative matters under art. 1 Brussels Ia Regulation.

C.A. Kern/C. Uhlmann: International jurisdiction and actio pauliana (avoidance action) in the absence of insolvency proceedings

The ECJ ruled that international jurisdiction for the avoidance action of a Polish creditor against a Spanish third party which had received assets from the Polish co-contractor of the creditor can be based on Art. 7 No. 1 lit. a Brussels I bis Regulation. For the ECJ, international jurisdiction for an avoidance action against the “enriched” third party can be derived from the original contractual relationship between creditor and debtor. The authors criticize the decision of the ECJ and instead argue in favor of the general place of jurisdiction (Art. 4 para. 1 Brussels I bis Regulation).

K. Sirakova/P. Westhoven: Do broadly worded jurisdiction clauses cover actions based on the abuse of a dominant position?

The interpretation of jurisdiction agreements in the private enforcement of EU competition law continues to raise various questions in Member State courts even after the ECJ’s decision in CDC Hydrogen Peroxide. The latest ruling of the Luxembourg court in this context was the case Apple Sales International. The judgment clarifies some of the questions that remained open in the aftermath of the CDC-ruling and provides guidance on the interpretation of jurisdiction agreements by proposing a general differentiation between claims resulting from an infringement of Art. 101 TFEU and such based on Art. 102 TFEU. While the judgment will undoubtedly facilitate a swift decision of jurisdiction issues in many private enforcement cases, the approach of the ECJ should not be understood as entirely excluding the discretion of the national courts in interpretation matters. It remains the sole responsibility of the Member State judges to take into account the individual circumstances of each case.

C. Mayer: Pitfalls of public service and of choice of court agreements in international business transactions

In order to guarantee the applicant effective legal protection, the possibility of public service is indispensable, particularly in cross-border legal relations with non- EU Member States. However, in order to protect the defendant’s right to be heard, public service is permissible only under strict conditions, otherwise service is ineffective. A hasty recourse to this procedural means can therefore have considerable procedural, but also material legal consequences for an applicant entitled to claim, because ineffective service does not start the course of appeal periods nor the limitation period. The decision of the higher regional court of Hamburg discussed below shows that even small mistakes in allegedly simple procedural steps can be fatal to the plaintiff.

M. Brinkmann: Counterclaims under the Brussels I Regulation

In Petronas Lubricants Italy SpA ./. Livio Guida, the ECJ had the opportunity to refine the Court’s understanding of the relationship between claim and counter-claim required by Art. 8 Nr. 3 Brussels Ia Regulation. As in Northartov(C-306/17), a decision which had been published shortly before, the ECJ relied on the wording established in the Kostanjevec-case by asking whether the original claim and the counter-claim share a “common origin”. Such a common origin exists, according to the ECJ, even if the original claim is based on a contractual relationship and the counter-claim is based on a different contractual relationship as long as they arise from the “same facts”. If this requirement is met, the fact that the claim of the counter-claimant has previously been assigned to him by a third party, is irrelevant. The reasoning of the Court gives cause to revisit the basics of the jurisdiction for counter-claims in European Civil Procedure and to reflect on the admissibility of counter-claims against third parties under the Brussel Ia Regulation.

B. Heiderhoff: The „tricky” subjective element of habitual residence

The concept of habitual residence still poses problems for German courts. While the CJEU strongly favours a fact-based approach, national courts show a tendency to give greater weight to so-called subjective elements, i.e. factors such as attachment to the home state or the vague intention to move „back home“. Based on the analysis of several court decisions, including the CJEU’s UD ./. XB judgment, the article aims at clarifying the rather limited role of subjective criteria within the concept of habitual residence.

D. Looschelders: Waiving an inheritance before German courts in cases of international successions

Accepting or waiving an inheritance may pose considerable practical difficulties to heirs with habitual residence in a Member State different from the one in which the succession according to the European Succession Regulation is settled. In order to facilitate the acceptance or waiver of the succession, Article 13 of the European Succession Regulation assigns special jurisdiction to the court at the habitual residence of the person making the declaration. However, the interpretation of this provision raises some unresolved issues. The present decisions of the Higher Regional Courts of D sseldorf and Koblenz are the first statements by higher German courts in relation to this matter. Specifically, they deal with local jurisdiction, the effects of a waiver before a court at the habitual residence of the person making the declaration on the inheritance procedure of the competent court at the last habitual residence of the deceased and the necessity of court approval for waivers of minors. The article presents by means of these judgments that waivers of succession before German courts in cases of international successions lead to significant imponderability. Yet the author opines that the person making the declaration can counteract most of the uncertainties by following a careful approach.

C. Möllnitz: Violation of the national public policy by the registration of a noble name changed by deed poll and its effects on European fundamental rights

The current decision of the German Federal Court restricts the European right of freedom of movement by proscribing the registration of a name in Germany containing a former title of nobility due to a violation of the national public policy, even if the name is lawfully registered in another member state of the European Union. While the arguments on a violation of the national public policy are convincing, the justification of the restriction of the freedom of movement is questionable in the light of the European jurisprudence. The fact that former titles of nobility, as part of a name, are not completely banned in Germany raises doubts as to the necessity of this restriction.

B. Lurger: The Hypothetical Violation of EU Fundamental Freedoms Leads to a New Rule: Non-Possessory (German) Security Ownership Finally Survives the Transport to Austria

In its judgment of 23 January 2019 (3 Ob 249/18s), the Austrian Supreme Court (OGH) changed its line of decisions concerning the validity of nonpossessory security rights in movables which are brought to Austria. Before 2019, the Supreme Court (3 Ob 126/83) held that the (German) non-possessory security ownership („Sicherungseigentum“) of a German creditor in a movable became extinct the moment the movable (transported by the debtor) crossed the border from Germany to Austria. This was due to the Austrian “principle of possession of security objects”: Under Austrian law, pledges and security ownership are only valid when the security object rests in the “fists” of the creditor (= “Faustpfandprinzip” = “principle of fist pledge”). This principle was determined to apply as soon as the security object – in the hands of the debtor – entered Austrian territory. According to the judgment of 23 January 2019 the opposite is now correct: The non-possessory (German) security ownership now survives the transgression of the Austrian frontier. The Austrian “fist principle” does not apply. The validity of the foreign security right is solely based on the foreign (German) rules for security rights which applied due to the lex rei sitae when the security right was created (§ 31 Austrian IPRG) and which continue to apply. The main argument of the court for this about turn is the Austrian accession to the EU in 1995 which led to application of the fundamental freedoms of the TFEU. The (former pre-EU) application of the Austrian fist principle to imported security objects constituted (from 1995 onwards) an unjustified violation of the EU fundamental freedoms in most cases, according to the court. This argumentation is plausible and in line with major literature. The 2019 judgment establishes the recognition of non-possessory security rights in movables in Austria once these rights where validly created under the law of another EU Member State. This leads to less transparency and security on the credit security market in Austria with respect to movables. The question of whether the new PIL rule also applies to relations with Non-Member States can be answered in the affirmative.

M. Makowsky: The limitation of succession proceedings in cases of assets located in a third State pursuant to Art. 12 EU Succession Regulation

In principle, the EU Succession Regulation grants the courts of the member states jurisdiction to rule on the succession as a whole regardless of the location of the estate. If assets are located in a non-EU state, however, Art. 12 of the Regulation allows the court, at the request of the parties, to decide not to rule on these assets if it may be expected that its decision will not be recognised or declared enforceable in that third state. The Austrian Supreme Court has approved the limitation of succession proceedings in a case where part of the estate was located in Switzerland and the Swiss authorities had already issued a certificate of inheritance and appointed an executor. The Court argues that, due to these prior acts, a later decision by the Austrian probate court in respect of the Swiss estate could not be recognised in Switzerland. The article points out that firstly, it has to be determined whether the acts in the Swiss succession proceedings need to be recognised and therefore have a (res judicata) effect on the proceedings held in Austria. If the Swiss authorities’ acts, especially the certificate of inheritance, do not qualify as „decisions“ capable of recognition, they can hardly constitute a ground for non-recognition.

F. Fuchs: Cross-border effects of third-party notices and actions on a warranty with a special regard to the Portuguese Code of Civil Procedure

Under the Brussels Ia Regulation, a person domiciled abroad may be invited to join proceedings before the courts of a Member State pursuant to that Member State’s rules on third-party notice. The third-party notice enables the claimant, if he loses the case, to have a recourse against the third party with that third party being bound by the outcome of the first proceedings. Instead of rules on third-party notice, some Member States allow actions on a warranty. Both concepts aim to protect the interest of that party whose claim would be dismissed twice if the proceedings against two or more adversaries could not be combined. The situation in Portugal is quite interesting, given that its national law provides for both, third-party notices and actions on a warranty. This article offers an insight into the Portuguese Code of Civil Procedure. Moreover, it examines how the effects of a German third-party notice are recognized in other Members States and how a judgment on a warranty rendered in Portugal is recognized in Germany.

Out now: RabelsZ 4/2019

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The latest issue of RabelsZ has just been published. It contains the following articles:

Olaf Meyer, Parteiautonomie bei Mehrrechtsstaaten (Party Autonomy in States with More than One Legal System), pp. 721 et seq

Where parties’ choice of law in private international law is limited to states with which they have reasonably close ties, similar restrictions usually apply to their choice of local law in states having more than one legal system. However, applying the same limits to both contexts is not mandatory. On the international level there is already a connecting factor that has designated the applicability of the law of a multi-law state. At the local level it is then a question of fine-tuning within that state’s legal order. To undertake this fine-tuning exercise on the basis of purely objective criteria is, however, more difficult within a single non-unified legal system than it is between two different states. This is because the relevant facts are packed more densely together and people are more mobile within the same state. Hence, the habitual residence of a person or the closest connection to the facts of a case tends to be more difficult to localise than in cases with connections to different states. Here lies an essential difference between international and inter-local conflicts of laws, which would justify a different approach to resolving them.

Zufall, Frederike, Shifting Role of the “Place”: From locus delicti to Online Ubiquity in EU, Japanese and U.S. Conflict of Tort Laws, pp. 760 et seq

This article examines the evolution of conflict rules in their perception of “place”: the basis for determining jurisdiction and the applicable law. To examine this topic from a global perspective, the legal systems of the EU, Japan, and the U.S. are analyzed and contrasted as representative legal systems from around the world (I.). Europe can be seen as the cradle of the concept of locus delicti, upholding it, albeit with reinterpretation, until today. Like other Asian countries, Japan received locus delicti as a legal transplant, implementing and adapting it in its own way. Finally, the U.S. is known for pursuing a different approach and different connecting places as a result of its conflicts revolution. This study, then, aims to combine a comparative approach with conceptual analysis, tracing the evolution of locus delicti as first received from Roman law (II.), through its reinterpretation to address cross-border and multi-state torts (III.), and the adoption of different connecting approaches (IV.), to questions arising from the ubiquity raised by the Internet (V.). To ensure a comprehensive approach, this paper will cover aspects of both the applicable law and jurisdiction, while at the same time having cognizance of their conceptual differences. It will be shown that in seeking “connecting factors”, “contacts”, or “interests”, connection to a place is increasingly lost, blurring territoriality and provoking the question of whether pursuing a fair balance between the parties should, instead, lead our legal reasoning (VI.).

Oliver Mörsdorf, Private enforcement im sekundären Unionsprivatrecht: (k)eine klare Sache? (Private Enforcement under Secondary EU Private Law: (Not) a Clear Matter?), pp. 797 et seq

National private law is increasingly determined by EU legislation which either directly establishes standards of conduct between individuals or obliges Member States to do so. However, such legislation often lacks clarity as to whether private law remedies are granted in cases of non-compliance. In Van Gend & Loos the EJC held that the EEC (now EU) creates individual rights that are directly enforceable before national courts. The Court later developed this principle of direct effect into a far-reaching duty for Member States to ensure the enforcement of individual rights by providing remedies such as a right to invoke the nullity of legal provisions or contract clauses and a right to claim damages from public authorities and private persons. Most legal writers take a functional approach to the question of which EU laws contain individual rights, arguing that the involvement of individuals in enforcement of EU law calls for over-all recognition of individual rights. This private enforcement approach might fit primary law but cannot be transferred to secondary law, where the ECJ’s recognition of individual rights goes along with a reduction of EU lawmakers’ prerogative to decide on the enforcement standard. The question of whether a secondary law provision contains an individual right thus must be answered strictly by interpreting that provision, taking into account not only its wording and context but also the legislative process preceding its adoption. A prerogative to decide autonomously on the creation of individual rights should be rejected, however, regarding EU provisions that give specific expression to individual rights deriving from primary law. Even if one accepts EU lawmakers’ power to define the scope of primary law to some extent, this power cannot include the very character of provisions as individual rights.

Leon Theimer, The End of Consumer Protection in the U.S.? –Mandatory Arbitration and Class Action Waivers, pp. 841 et seq

Historically, in the early twentieth century, mandatory arbitration was almost non-existent due to the judiciary’s widespread refusal to enforce arbitration agreements. This began to change slowly when Congress passed the Federal Arbitration Act (FAA) in order to provide a forum for merchants to settle fact-based contractual disputes. […] The sweeping change towards individual arbitration in consumer disputes is underpinned by the Supreme Court’s jurisprudence, which over the last forty years has overwhelmingly favoured the party seeking to arbitrate.  While it is beyond the scope of this article to analyse the entirety of the Supreme Court’s FAA jurisprudence, Part II will trace arbitration’s ascent from the enactment of the FAA in 1925 to the prominent status it enjoys today, particularly focusing on and critically analysing key decisions rendered in the last four decades. Part III will discern some of the most important implications of the status quo and discuss what is left of consumer protection in the arbitration context in the United States today. Lastly, Part IV will explore some approaches that would enhance consumer protection in arbitration along with their prospects, criticisms and justifications.

Palau has joined the HCCH Apostille Convention

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On 17 October 2019, the island nation Palau acceded to the HCCH Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (Apostille Convention).

As indicated in the Depositary’s notification, the Apostille Convention will enter into force between the Republic of Palau and the other Contracting States, which have not raised an objection to its accession, on 23 June 2020.

This accession follows after an important neighbouring State joined the Apostille Convention, namely the Philippines (EIF: 14 May 2019).

New HCCH publication: When Private International Law Meets Intellectual Property – A Guide for Judges

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This week the Hague Conference on Private International Law (HCCH) announced the release of a new publication: When Private International Law Meets Intellectual Property – A Guide for Judges. This Guide is co-authored by Annabelle Bennett (Australia) and Sam Granata (Belgium), with the co-ordination of the Secretariats of the World Intellectual Property Organization (WIPO) and the HCCH.

For more information, see the HCCH news item.

The Hague Academy of International Law Centre for studies and research 2020 programme “Applicable law issues in international arbitration”

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Prof. Jean-Marc Thouvenin, Secretary-General of The Hague Academy of International Law, kindly informs us about the Academy’s Centre for studies and research 2020 programme – highly recommended!

The Centre for studies and research of The Hague Academy of International Law welcomes applications for its 2020 programme on “Applicable law issues in international arbitration”.

International arbitration has long been the most successful method for settling all kind of international commercial disputes, and still is – notwithstanding the surrounding criticism – the leading method for settling disputes between foreign investors and the host state. One of the characteristics of international arbitration is that it to a large extent relies on an international or transnational legal framework. The effects of arbitration agreements and of arbitral awards, as well as the role of the courts regarding arbitration agreements and awards, are regulated in international conventions such as the New York or the ICSID Conventions. Furthermore, although there is room for specificities of national law, commercial arbitration acts are largely harmonised especially through the impact of the UNCITRAL Model Law. Similarly, even if arbitral institutions try to distinguish one from each other by providing for some specific tools, the essential content of arbitration rules does not vary. It can be said, consequently, that the transnational framework of arbitration is intended to create to the extent possible an autonomous system of dispute resolution, which can be applied in a uniform way irrespective of the country in which the proceedings take place or the award is sought enforced. The procedural autonomy of arbitration may also have an impact on how arbitral tribunals relate to the substance of the dispute.

As arbitral awards are final and binding, and domestic courts and ICSID annulment committees do not have the power to review them in the merits, arbitral tribunals enjoy a considerable flexibility in selecting and applying the rules of law applicable to the dispute, even though they are constrained to respect the will of the parties. Legal literature has strongly emphasized that this flexibility creates an expectation of delocalization: both from the procedural and from the substantive point of view, arbitration is described as a method for settling disputes that strives for uniformity on a transnational level and should not be subject to national laws. The autonomy and flexibility of arbitration, however, are not absolute. The international instruments that regulate arbitration either make, in some contexts, reference to national law or call for the application of (general or concrete) international law. Also, they do not cover all aspects of arbitration, thus leaving room for national regulation. Additionally, the restricted role that courts and ICSID ad hoc committees have in arbitration does not completely exclude that national law may have an impact. While court and committee control is not a review in the merits, application of the parameters for validity or enforceability of an award, even where these parameters are harmonised, may depend on national regulation.

Importantly, the definition of what disputes are arbitrable is left to national law. While the scope of arbitrability has been significantly expanded starting from the last two decades of the last century, there are signs now that it may be restricting. The scope of arbitrability may be looked upon as a measure of the trust that the legal system has in arbitration. From another perspective, it may represent the way in which States approach the settlement of international commercial disputes: intending to keep an exclusive power by means of the exclusion of private deciders, or adopting the role of controllers of the regularity of arbitration. As far as investment arbitration is specifically concerned, it is well known that States’ attitudes are diverse and may change from time to time. In both cases, States’ policy choices may have an impact on applicable law issues.

All the foregoing considerations, succinctly exposed, are the frame for the present topic. On such a basis, it is possible to develop two lists of issues to be individually addressed. The first list deals with the fundamental aspects of the topic. Among the issues included therein, some refer to all types of arbitration, while others are rather specific to either commercial or investment arbitration. The second list responds to the fact that the applicable law is not necessarily unitary. Indeed, according to the principle of severability, a different law may apply to the procedural aspects and to the substantive aspects of the dispute, and within these two categories there are further possibilities for severing the applicable law. Thus, one can wonder to which issues is it appropriate to apply international sources of law, to which issues is it appropriate to apply soft sources of law, to which is it appropriate to apply national sources of law, and to which issues is it appropriate to apply (or to create) transnational standards. Or a combination of these sources? On which basis may this selection be made, and what are its effects on the autonomy of arbitration, on the expectations of the parties and on the credibility and legitimacy of arbitration as an out-of-court judicial system that enjoys enforceability?

The general and specific above-mentioned questions may be discussed for each of the following issues:

I. General issues

  1. Available rules of law regarding substantive issues – The strength of soft sources
  2. Available rules of law regarding procedural issues – The scope and applicability of the lex arbitri
  3. Selection of the applicable law by the parties (???)
  4. How do arbitrators ascertain the rules of law applicable to the merits?
  5. Overriding mandatory rules of a law not chosen by the parties
  6. How do arbitrators interpret international contracts?
  7. How do arbitrators interpret international treaties?
  8. Effects of precedents in arbitration
  9. Iura novit arbiter
  10. Control by domestic courts of the law applied to the merits
  11. Control by means of procedural public policy
  12. Misapplication of the law as manifest excess of powers of the tribunal under ICSID Convention

II. Specific cases of determination of the applicable law

  1. Validity of the arbitration agreement and effects on non-signatories
  2. Assignment of contract containing an arbitration clause
  3. Qualification of the arbitrators
  4. Production and admissibility of evidence
  5. Legal privilege
  6. Emergency arbitrator: procedural and substantive issues
  7. Interim measures
  8. Legal capacity to sign the disputed contract
  9. Interests on the awarded amounts
  10. Arbitrability
  11. Res iudicata
  12. Liability of arbitrators

The co-directors of the 2020 Centre (Prof. Giuditta Cordero-Moss (University of Oslo) & Prof. Diego Fernández Arroyo (Sciences Po, Paris)) invite applications from researchers including students in the final phase of their doctoral studies, holders of advanced degrees in law, political science, or other related disciplines, early-stage professors and legal practitioners. Applicants should identify the specific topic on which they intend to write. Participants will be selected during the spring of 2020, and will convene at The Hague from August 17 to September 4, 2020, to finalize their papers. The best articles will be included in a book to be published in the fall of 2021.

Further information is available here.

EUFams II – International Exchange Seminar at the Max Planck Institute Luxembourg for Procedural Law

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On 24-25 October 2019, the Max Planck Institute Luxembourg for Procedural Law will host an International Exchange Seminar in the framework of the Project “EUFams II – Facilitating Cross-Border Family Life: Towards a Common European Understanding”. Funded by the European Commission, the Project aims to develop a common expertise and understanding of the EU instruments in family law: notably, it identifies practical problems and puts forth solutions to secure a uniform, coherent and consistent application of such instruments.

The Project tackles, in particular, the Regulations on matrimonial matters and matters of parental responsibility, including child abduction ((EC) No 2001/2003 to be repealed by (EU) 2019/1111), maintenance obligations ((EC) No 4/2009), successions ((EU) No 650/2012), the two Regulations implementing enhanced cooperation in matters of matrimonial property regimes and the property consequences of registered partnerships ((EU) 2016/1103 and 1104). It also tackles the Regulation adopted to simplify the requirements for cross-border use and acceptance of certain public documents in the European Union ((EU) 2016/1191) and the relevant Hague instruments. Furthermore, to ensure a comprehensive approach the Project engages with the legal challenges arising from the current refugee crisis and the potential impacts of Brexit on family law.

Gathering renowned academics from various institutions, judges, notaries, lawyers, and representatives of international organizations and family law associations, the International Exchange Seminar will address and explore possible solutions to controversial or problematic issues that were identified in the course of the National Exchange Seminars hosted, in the framework of the Project, by the Project Partners, and namely the Universities of Heidelberg (coord.), Lund, Milan, Osijek, Valencia and Verona.

The Program of the International Exchange Seminar is available here.

The Project’s research outputs and case law database are accessible here and here (both in progress).

For more information on the Project, see here and here.

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.

3rd IBA Litigation Committee Conference on Private International Law

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On 24 and 25 October, the 3rd IBA Litigation Committee Conference on Private International Law will take place in Palazzo Turati, Milan, Italy. It will deal with Brexit, International Commercial Courts and Sanctions. More information are available on the IBA conference website.

The programme reads as follows:

Welcome remarks

  • Angelo Anglani NCTM, Rome; Co-Chair, IBA Litigation Committee
  • Vinicio Nardo Chairman, Consiglio dell’Ordine degli Avvocati di Milano, Milan

Keynote address
International dispute resolution in turbulent times – is there a role for private international law?

Professor Fausto Pocar Università degli Studi di Milano, Milan

Session One

Brexit – the impact on jurisdiction and private international law

With just one week until the deadline, we will check the status of the most controversial event in the history of the European Union. The session will focus on the impact of Brexit on jurisdiction and private international law and look at the possible effects on solutions and perspectives in international commercial disputes.

Session Chair
Carlo Portatadino Weigmann, Milan; Secretary, IBA Litigation Committee

Speakers

  • Professor Stefania Bariatti Università degli Studi di Milano, Milan
  • Alexander Layton QC Twenty Essex, London

Session Two

The mushrooming of International Commercial Courts throughout Europe – reasons and perspectives

In 2016, on the occasion of the 2nd IBA Litigation Committee Conference on Private International Law, we explored the new phenomenon of the International Commercial Courts and discussed whether the 2005 Hague Convention on Choice of Court Agreements could enhance their role in international commercial dispute resolution. Since that time, and also in light of Brexit we have been assessing the mushrooming of International Commercial Courts throughout Europe. This session will examine the experiences of several jurisdictions and focus on the future perspective on the phenomenon in Europe.

Session Chair
Jacques Bouyssou Alerion, Paris; Treasurer, IBA Litigation Committee

Speakers

  • Martin Bernet Bernet Arbitration / Dispute Management, Zurich
  • Hakim Boularbah Loyens & Loeff, Brussels
  • Jean Messinesi Honorary President, Tribunal de Commerce de Paris, Paris
  • Duco Oranje President, NCC Court of Appeal, Amsterdam
  • Professor Giesela Rühl Friedrich-Schiller-Universität Jena, Jena
  • Mathias Wittinghofer Herbert Smith Freehills, Frankfurt

Session Three

Sanctions – politics, procedures and private international law

This session will consider the increasing impact of sanctions on politics and economics. The panellists will present the workings of the European and US sanctions systems and illustrate the resulting consequences on international trade and cross-border disputes. The session will also focus on how clients approach and deal with the matter.  

Session Chair
Christopher Tahbaz Debevoise & Plimpton, New York

Speakers

  • Shannon Lazzarini Group Deputy General Counsel & Head of Group Litigation, Unicredit, Milan
  • Richard Newcomb DLA Piper, Washington DC
  • Michael O’Kane Peters & Peters, London
  • Marco Piredda Senior Vice-President, International Affairs, ENI, Rome
  • Professor Hans van Houtte KU Leuven, Leuven, Belgium

Closing remarks

Tom Price Gowling WLG, Birmingham; Co-Chair, IBA Litigation Committee

 

 

 

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.