Out now: Fabrizio Marrella / Nicola Soldati (eds.), “Arbitration, Contracts and International Trade Law / Arbitrato, contratti e diritto del commercio internazionale. Essays in honor of Giorgio Bernini/ Studi in onore di Giorgio Bernini”, Milan, Giuffré – Francis Lefebvre, 2021.

/in /by

This book celebrates the work and scholarship of Professor Giorgio Bernini, Honorary President of ICCA, who held the chair of European Union Law, Arbitration and International Commercial Law at the University of Bologna for almost 30 years. A very successful international lawyer, he was the Italian Minister of Foreign Trade and a Member of the Italian Antitrust Authority. Bernini has built a long career in the study and practice of arbitration with a record of 450 cases. The book is divided into an introduction and two parts, to highlight many of Bernini’s contributions to the Law.

In a special introductory section of the book, entitled ‘portraits of a pioneer’, some authors offer specific references to some of his many activities in the field: from the ICC Institute of World Business Law to the International Council for Commercial Arbitration, from the Italian Arbitration Association to his professional life as an international lawyer. Then, in the first part of the book, essays on Contract Law and International Trade Law have been collected. The second part is dedicated to arbitration in its many dimensions: domestic, international, commercial and investment Law.

The contributors are amongst the most highly qualified publicists of the various Nations, with the highest academic credentials and proven experience in the field: Yves Derains, Lise Bosman, Maria Beatrice Deli, Antonio Fraticelli, Guido Alpa, Alfonso-Luis Calvo Caravaca, Javier Carrascosa González, Roberto Ceccon, Gabriele Crespi Reghizzi, Abdel Hamid El Ahdab, H. Ercüment Erdem, Marcel Fontaine, Roy Goode, Kaj Hober, Ernst-Ulrich Petersmann, Fausto Pocar, Stefano Azzali, Ronald A. Brand, Sergio M. Carbone, Dominique Carreau, Claudio Consolo, Giorgio De Nova, Donald Francis Donovan, Romain Zamour, Ugo Draetta, José Carlos Fernandez Rozas, Emmanuel Gaillard, Maria Chiara Malaguti, Eleonora Finazzi Agrò, Fabrizio Marrella, Margaret L. Moses, William W. Park, Hassan Rahdi, Christoph Schreuer, Nicola Soldati, Shengchang Wang.

For further information please visit here:

 

 

New issue alert: RabelsZ 4(2021)

/in /by

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

 

Jaakko Husa: Merging International Law and Comparative Law – Balancing Between Normative and Non-Normative, Volume 85 (2021) / Issue 4, pp. 745-774 (30), https://doi.org/10.1628/rabelsz-2021-0045

The relationship between comparative law and public international law is paradoxical. These fields are in principle close to each other but remote in practice. The emergence of comparative international law has changed the situation as it invites comparative law scholars to enter into discussion on international law. This article provides a critical analysis on the possibilities for comparative law in the field of international law. It discusses and explains why a non-normative understanding of comparative international law works well together with the pluralist conception of comparative law, and why a normative understanding of comparative international law is incompatible with it. This article explains why comparative law scholars do not welcome the use of comparative law for international law purposes with open arms.

 

Malte Kramme: Mehr als ein Qualifikationsproblem: Zum Verhältnis von Verbrauchervertrags- und Geschäftsfähigkeitsstatut, Volume 85 (2021) / Issue 4, pp. 775-810 (36), https://doi.org/10.1628/rabelsz-2021-0046

More than a Problem of Characterization: The Relationship Between Consumer Contract Law and the Law of Capacity. – The EU regulations in the area of private international law largely exclude legal capacity. The law applicable to questions of capacity is determined by the applicable national conflict-of-law rules. This raises the question of the scope of the law of capacity and how it is to be distinguished from neighbouring fields of law. In particular, drawing this distinction vis-à-vis contract law presents difficulties in cases involving consumers. Both consumer law and the law of capacity place the protection of the weaker party in the foreground. Distinguishing the law of capacity from neighbouring fields of law is therefore more than a mere problem of characterization: it is a matter of not undermining the level of protection sought by the different fields of law in cross-border cases. In this paper, a proposal is made as to how the boundaries of the law of capacity can be determined in relation to contract law, taking into account this intended protection of the weaker party.

 

Jürgen Samtleben, Gonzalo A. Lorenzo Idiarte: Das Allgemeine Gesetz des Internationalen Privatrechts von Uruguay, Volume 85 (2021) / Issue 4, pp. 811-851 (41), https://doi.org/10.1628/rabelsz-2021-0047

The Uruguayan General Law of Private International Law. – Uruguay has always been a center for private international law. The Montevideo Congress, held in 1888 and 1889 at Uruguay’s invitation – before the Hague Conference on Private  International Law – was of instrumental significance for the development of private international law in Latin America. Uruguay has consistently played an active role in preparing the inter-American specialized conferences on private international law and in propagating bilateral PIL treaties. The new private international law legislation underway since the end of the last century does not break with tradition completely, but seeks to develop it further adapting it to present-day demands. Some major features of the reform bear emphasis: a comprehensive regulation of the general rules of private international law, refinements to the contours of international family law, a recasting of international contracts law based on party autonomy,  and detailed rules on the exercise of jurisdiction by national courts in international disputes.

For a German translation of the Uruguayan General Law of Private International Law of 27 November 2020 by Samtleben, see: Volume 85 (2021) / Issue 4, pp. 907-925 (19), https://doi.org/10.1628/rabelsz-2021-0052

 

Issue 4/2021 also includes the following contributions originating in the Symposium “The Code of Capital”, held at the Max Planck Institute for Comparative and International Private Law in Hamburg on 11 May 2021:

  • Hans-Bernd Schäfer: Nationalreichtum und private Armut durch Zivilrecht? – Eine Besprechung des Buchs »The Code of Capital« von Katharina Pistor, Volume 85 (2021) / Issue 4, pp. 854-875 (22), https://doi.org/10.1628/rabelsz-2021-0049
  • Katharina Pistor: Recht und Ökonomie im Spannungsfeld verschiedener Schulen – Eine Replik auf Hans-Bernd Schäfers Buchbesprechung, Rabels Zeitschrift für ausländisches und internationales Privatrecht (RabelsZ), Volume 85 (2021) / Issue 4, pp. 876-889 (14), https://doi.org/10.1628/rabelsz-2021-0050
  • Ralf Michaels: Der Code des Kapitals und seiner Portabilität – Anmerkungen zu Katharina Pistor, Rabels Zeitschrift für ausländisches und internationales Privatrecht (RabelsZ), Volume 85 (2021) / Issue 4, pp. 890-906 (17), https://doi.org/10.1628/rabelsz-2021-0051

 

Illumina & Grail: Another Step Toward The Europeanization Of U.S. Antitrust Law

/1 Comment/in /by

This post is by Alberto Pomari, LLM Student at the University of Pittsburgh School of Law and JD Student at the University of Verona School of Law.

Although the United States has historically led the way in the field of antitrust law, it is currently taking a backseat to the European Union, which has become the global role model in competition law. The Illumina/Grail merger illustrates this tendency.

In March 2021, the FTC challenged the merger and filed an administrative complaint for a temporary restraining order to keep Illumina and Grail from closing the transaction. Specifically, the FTC avers that Illumina’s acquisition of Grail will “lessen competition in the U.S. MCED test market by raising costs and hindering development efforts of Grail’s rivals.” Effectively, the FTC is leaning on the theory of harm, known as “increased leverage theory,” that aims at protecting competitors in the downstream market from the merged firm’s stronger “bargaining position in affiliate negotiations.” However, this theory was soundly rejected only a few years ago in United States v. AT&T, Inc. where the Court stuck with the traditional lodestar of American antitrust law, i.e. the consumer welfare theory. In a fanciful attempt to overrule the AT&T decision, the increased leverage theory was incorporated in Section 4 of the (already withdrawn) 2020 Vertical Merger Guidelines. Notwithstanding, after only two months, the FTC dropped its temporary restraining order petition as Illumina and Grail had, in the meantime, been prevented from merging under European competition law. Indeed, in view of its cooperation with the FTC, the European Commission announced in April 2021 an investigation into the transaction at stake pursuant to a new interpretation of Article 22 of the E.U. Merger Regulation.

Unlike its American counterpart, European competition law has traditionally served an array of policy goals that, going beyond the mere consumer welfare, include the protection of small- and medium-sized enterprises as well as the preservation of a competitive market structure. Accordingly, mergers like Illumina/Grail usually have a harder time passing the scrutiny of the European institutions. However, what is unprecedented in this case is the European Commission’s willingness to go the extra mile to crack down on an acquisition that involves two American companies, one of which—Grail—does not even have any business activity in the European Union.

In March 2021, the EC issued a new interpretation of the referral mechanism set out by Article 22 of the Merger Regulation. Particularly, National Competition Authorities may now require the European Commission to assess any proposed merger that “may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States,” irrespective of the merging parties’ actual presence in the European market. By adopting this new interpretation, the European Union was able to come to the rescue of the ill-equipped FTC by halting the Illumina/Grail transaction thanks to the (administrative) standstill obligation imposed by Article 7 of the E.U. Merger Regulation.

In conclusion, Illumina and Grail have been the hapless victims of a joint EC-FTC scheme that should send chills down the spine of any American company interested in a vertical merger, mainly for two reasons. First, according to the new interpretation of Article 22 of the E.U. Merger Regulation, many cutting-edge U.S. mergers are likely to be scrutinized by the European Commission under the E.U. stringent theory of harm, even if the companies involved have no current business in the European Market. Second, to challenge these mergers, the FTC will likely engage in unprecedented transatlantic forum shopping to obtain from the European Commission a (administrative) temporary restraining order that should otherwise be sought before an American court. This may be just the beginning of a far-reaching “Europeanization of the U.S. antitrust.”

UNCITRAL LAC DAY 2021 – 21 October 2021 (10:00 ARG time, 15:00 CEST time): International commercial mediation, expedited arbitration – in Spanish

/in /by

The UNCITRAL LAC Day 2021 will take place online on Thursday 21 October 2021 at 10:00 Argentinian time and 15:00 CEST time (in Spanish). This event has been organised by UNCITRAL, the Organization of American States (OAS – OEA), Secretaría de Integración Económica Centroamericana / Secretariat for Central American Economic Integration (SIECA) and ASADIP.

The focus of the conference will be international commercial mediation and expedited arbitration. In particular, it will be discussed the work carried out by UNCITRAL’s Working Group II: Dispute Settlement.

/in /by

By Jack Wass (Stout Street Chambers, New Zealand)

The enforcement of judgments from Chinese courts continues to generate controversy in common law countries. In Hebei Huaneng Industrial Development Co Ltd v Shi, the New Zealand courts have been faced with the argument that because Chinese courts are not independent of the political arms of government, they do not qualify as “courts” and their judgments are not entitled to recognition.

In 2020, the High Court rejected this argument in a jurisdictional context: see our report here and the issue has also arisen in the United States. The issue arose again, in the same case, on an application for summary judgment by the plaintiff judgment creditor. Here the argument received more traction from a different judge of the same court.

The judges at both stages recognised that there were two ways to look at allegations that courts lacked impartiality and independence: the first is to assess whether the courts, as a general matter, possess the characteristics of judicial bodies whose decisions are entitled to recognition; the second is to assess whether the absence of independence resulted in a breach of natural justice in the circumstances of the actual case.

Both approaches present the court with a potentially invidious inquiry, but the clear message from the judges in both decisions is that a defendant has a better chance of showing that justice was not done in an individual case than convincing the court to condemn an entire judicial system. With the application for summary judgment rejected, the case will now go to trial; this will not be the last word on the enforcement of Chinese judgments in New Zealand.

Italian Supreme Court rules on recognition and enforcement of a foreign judgment even if preceded by a worldwide freezing injunction

/1 Comment/in /by

Written by Marco Farina, Italian lawyer, PhD in Civil Procedural Law at the University La Sapienza of Rome – Adjunct Professor of Civil Procedural Law at the University LUISS of Rome

In a judgment rendered on 16 September 2021, the Italian Supreme Court (Corte di Cassazione) reversed a decision from the Court of Appeal of Rome, which had denied recognition and enforcement of a monetary judgment issued by the Royal Court of Guernsey, due to a breach of the fundamental rights of defence allegedly occurred in the proceedings.

The Court of Appeal of Rome reasoned under Article 64 (b), of the Italian Act on Private International Law (Law 31 May 1995 no. 218), which provides, inter alia, that a foreign judgment may be not recognized and enforced if fundamental rights of defence have been breached in the foreign proceedings.

The Court of Appeal found that a relevant breach of the fundamental rights of defence had occurred because, at the outset of the proceedings, a worldwide freezing injunction (associated with a disclosure order) had been issued against the defendant. In the Court of Appeal’s opinion, the injunction and its effects altered the procedural equality of the parties before the foreign court, since it was a “highly coercive measure against the defendant who is not only severely affected in the free disposal of his assets, but is also exposed to the risk of even being deprived of his personal freedom, if he does not cooperate with his counterpart in the identification of his assets to be seized” (English translation).

This relevant alteration of the procedural equality of the parties existed, according to the Court of Appeal, because, whilst the defendant was impacted by this order, the plaintiff was not.

In the end, the Court of Appeal held that the injunction issued against the defendant had “the concrete ability – in the absence of any conduct of the defendant indicating that he intended to harm the claimant’s rights – to limit, restrict, diminish the defendant’s ability to defend itself, both in imposing significant limitations on the free disposal of his assets and in constraining him to collaborate with the claimant before of preparing its own defence. All this, while nothing of the same kind affected the assets or the defensive opportunities of the claimant. The defendant, therefore, found himself in a much weaker defensive position than his counterpart” (English translation).

The Supreme Court found several flaws in this reasoning.

Firstly, the Supreme Court held that if, in principle, it could not be denied that a relevant alteration of the procedural equality might amount to a breach of the fundamental rights of defence, the mere fact that the judgment to be recognized and enforced in Italy had been preceded by a provisional order – in the form of an injunction (associated with a disclosure order) – could not, in any case, lead to such a breach.

Regarding the functioning of a freezing injunction issued by a common law court, the Supreme Court asserted that (i) the injunction is sought to preserve the defendant’s assets until judgment can be obtained or satisfied, (ii) the injunction may be rendered when the claimant has shown a good arguable case and a risk of dissipation exists, (iii) it operates in personam; therefore, its effectiveness depends on the threat of punishment for contempt of court, and (iv) it is usually associated with other orders, which are aimed at rendering the freezing injunction more effective, thus constraining the affected party to identify its assets and their location (disclosure order) under the threat of being excluded (debarred) from the proceedings (unless order).

Having said that, the Supreme Court went on to state that, in the case at hand, the injunction was associated with a disclosure order but not with an unless order. So, even if the defendant were not to comply with the injunction and the disclosure order, he remained fully entitled to participate in the proceedings defending himself as no exclusion and/or debarring was pronounced against him.

In the light of the above, the Supreme Court had good reason to observe that the Court of Appeal should not have found any breach in the fundamental rights of defence (in terms of the alteration of the procedural equality of the parties) since – as the same Italian Supreme Court held in its previous judgment (judgment no. 11021 rendered on 9 May 2013 in the well-known Gambazzi case, following the decision from CJEU in Case C-394/07, 2 April 2009, Gambazzi) – the right to a fair trial should be considered breached in the event of “manifest and disproportionate infringement of the defendant’s right to be heard” (English translation).

Thus, the Supreme Court noted that, if a judgment rendered against a defendant who – due to his failure to comply with a disclosure order associated with a freezing injunction – had been excluded and/or debarred from the proceedings, must be recognized and enforced in Italy (see again judgment no. 11021 of 9 May 2013 in the Gambazzi case), a fortiori a monetary judgment rendered against the defendant whose participation in the proceedings had not been prevented notwithstanding its failure to comply with the disclosure order associated with the freezing injunction, ought to be recognized and enforced in Italy.

The validity of this line of reasoning must be inferred, according to the Supreme Court, from the injunction (and the disclosure order which was associated with it) being a provisional and protective measure aimed at preserving the claimant’s right to enforce the judgment which might be rendered in its favour at the end of the proceedings on the merits. Therefore, such measures are as much an essential part of the common law procedural system as the attachment and/or preservation orders are in Italy (sequestro conservativo, Article 671 of Italian Code of Civil Procedure).

Hence, asserting that – as the Court of Appeal did – the mere fact that a freezing injunction has been issued and enforced against a defendant (and not against the claimant) amounts to a breach of the right to a fair trial (in terms of the alteration of the procedural equality of the parties), would insinuate that a breach of the fundamental right of defence occurs in Italy every time a claimant succeeds in obtaining a protective measure against the defendant, when the former is not addressed with the same measure.

This is not an alteration of the procedural equality of the parties. On the contrary, this is the essence of litigation between two parties in an adversarial system.

It is natural in contentious civil proceedings that the party against whom a claim is brought may be affected by measures which result in finding itself in a different situation from that of the claimant. This cannot, by definition, give rise to any relevant breach of the fundamental rights of defence in terms of violation of the principle of the so-called ‘equality of arms’. For example, in the ordinary proceedings instituted by the debtor for opposing an enforceable order of payment obtained by the creditor, the debtor finds himself in different position from that of the creditor; a defendant, in ordinary civil proceedings, finds himself in a different situation from that of the claimant who has obtained – before or during the proceedings – an attachment order for the defendant’s assets.

Accordingly, provided that both parties are granted equal chances to obtain and enforce a protective and/or provisional measure, is part of the ordinary functioning of a civil proceeding that a party will succeed in obtaining it and the other will not.

In the case at hand – the Supreme Court noted – both parties were granted equal and fair chances of defence as, (i) the freezing injunction and the disclosure order were given ex parte but the defendant was given the right to apply to the court to vary or reverse the order, and (ii) the claimant had assumed the obligation of complying, under the same threat of the “contempt of court”, with any subsequent order of the Court condemning the claimant for any loss suffered by the defendant.

Moreover, the Supreme Court asserted that nothing to the contrary may be inferred from the fact that the injunction and the disclosure order operate in personam and that the infringement thereof triggered the consequences of a “contempt of court”. The Cassazione did not see any violation of the fundamental rights of defence, all the more because the Italian legal system features cases in which a failure to comply with a judicial order could amount to a criminal offence.

The judgment of the Italian Supreme Court can be read here (in Italian).

Brazilian Superior Court: foreign judgement on child support has to be enforced despite the excessive amount resulting from the economic pattern of the country of origin

/in /by

By Julian Henrique Dias Rodrigues

 

The Brazilian Superior Court of Justice reinforced the understanding that a foreign judgment that sets the amount of child support must be enforced even if the high economic-financial standard of the country of origin gives rise to an excessive amount, when compared to the national standards.

 

The case concerns the enforcement in Brazil of a decision from the District Court of Bludenz, in the Republic of Austria, against a debtor residing in Brazil.

The Austrian court set the monthly amount of maintenance at EUR 290.00 and determined that the amounts in arrears totaled EUR 35,090.00.

The debtor claimed that the decision could not be enforced since such amount would be totally unreasonable in relation to the economic reality of the defendant, characterizing the foreign decision as violating human dignity and the basic principles of the Brazilian legal system by ignoring the socioeconomic reality of Brazil and of the defendant in particular.

However, the Court emphasized that the enforcement of a foreign decision is a merely formal act, whereby is not possible to enter into the merits of the original dispute, nor investigating any injustice of the foreign decision. This enforcement, therefore, has the sole and exclusive purpose of transferring into the Brazilian legal system a decision handed down abroad, provided the formal requirements required by Brazilian law are met.

With this, the enforcement does not deprive the debtor of the possibility of filing a suit to review the amount of the child support, in view of the alleged disparity between the economic realities in Brazil and in the country where the amount was fixed.

The decision was rendered in Application HDE n.º 4.289 (Special Section of the STJ) and took into consideration the requirements under Brazilian law for enforcement of a foreign decision.

Brazilian legal framework on enforcement of foreign decisions

The Brazilian Federal Constitution states that the enforcement of foreign judgements is a competence of the Superior Court of Justice (STJ). The Brazilian legal instrument, therefore, for the recognition of foreign decisions is, in Portuguese, the Ação Especial de Homologação de Decisão Estrangeira (HDE).

The requirements for the enforcement of a foreign judgment through HDE are foreseen in Article 963 of Código de Processo Civil (CPC) and in Articles 216-C and 216-D of the Internal Rules of the STJ. In this regard, it is worth remembering that neither Brazil nor Austria ratified the Convention of 2 October 1973 on the Recognition and Enforcement of Decisions Relating to Maintenance Obligations.

The article 216-D states that the foreign decision must:

  1. have been rendered by a competent authority,
  2. contain evidence that the parties have been duly summoned or that a default judgement has been legally issued, and
  • have become effective or res judicata in the country in which it was rendered.

According to Article 216-F a foreign decision shall not be enforced if that offends national sovereignty, human dignity and/or public order.

In short, the debtor argued that the economic disparity and the lack of analysis by the Austrian Court about his financial condition in particular would imply a violation of human dignity and the Brazilian legal order, but the Brazilian Court found that these issues would be a question of merit, and not of formal requirements. Whereas related to the merit of the suit filed before the foreign Court, these questions cannot be analyzed before the Court in the exercise of its competence merely to enforce the decision rendered abroad.

Click here to access the full decision (in Portuguese)

 

 

Book Release: EUFams II Final Study

/in /by

Thomas Pfeiffer/Quincy C. Lobach/Tobias Rapp (Eds.), “Facilitating Cross-Border Family Life – Towards a Common European Understanding”, Heidelberg University Publishing 2021 (link)

The EUFams II consortium has just released the project’s Final Study. The volume contains the papers presented at the project’s Final Conference. The contributors were invited to present historical developments, discuss the status quo, and draw the lines along which European family and succession law may develop. The authors hope to inspire the readership and the scientific community at large to engage in further research along and across these lines.

The book is available both online (open access) as well as in print (link). Its contributors are (in alphabetical order): Marlene Brosch, Laura Carballo Pineiro, Diletta Danieli, Rosario Espinosa Calabuig, Ivana Kunda, Quincy C. Lobach, Cristina M. Mariottini, Ulf Maunsbach, Nicolo Nisi, Cinzia Peraro, Thomas Pfeiffer, Paula Poretti, Tobias Rapp, Lenka Valkova, Ilaria Viarengo, Francesca Villata, Marcel Zühlsdorff, and Mirela Zupan.

The EUFams II project (2018-2020) was coordinated by the Institute for Comparative Law, Conflict of Laws and International Business Law of Heidelberg University. Project partners were the Universities of Lund, Milan, Osijek, Valencia, and Verona as well as the MPI Luxembourg. This blog has previously reported on some of the project’s research outputs, including the Final Conference.

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.

The European Union is preparing an initiative to enact the implementing acts establishing the decentralised IT system to be used for cross-border service of documents and cross-border taking of evidence

/1 Comment/in /by

This week the European Union has given notice to all stakeholders that it is preparing an initiative relating to justice and fundamental rights, the purpose of which is to enact the implementing acts establishing the decentralised IT system to be used for cross-border service of documents and cross-border taking of evidence. Click here and here.

This is in accordance with the Regulation (EU) 2020/1784 of the European Parliament and of the Council of 25 November 2020 on the service in the Member States of judicial and extrajudicial documents in civil or commercial matters (service of documents) (recast) and the Regulation (EU) 2020/1783 of the European Parliament and of the Council of 25 November 2020 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters (taking of evidence) (recast).

As stated in the notifications, the implementing acts will set out the technical specifications of the methods of communication and communication protocols, security objectives and relevant technical measures, minimum availability objectives and the establishment of a steering committee.

It is planned for the first quarter of 2022.

Karnataka High Court (India) Frames Comprehensive Guidelines to Ascertain ‘Passing Off’ in Intellectual Property Disputes Involving the Application of Indian Law

/in /by

Vacating the interim injunction that was granted earlier this year to prevent CG Corp. Global – a Nepal-based company, registered in India from manufacturing and selling its instant noodles under the name of Wai Wai X-Press Noodles Majedar Masala in a passing-off action by ITC Ltd, the Karnataka High Court formulated detailed guidelines to ascertain the circumstances in which there will be a passing-off of a trademark and an infringement of copyright under Indian law.[1] The Karnataka High Court was exercising its appellate jurisdiction under Section 13(1A) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 (CCA) that authorizes the creation of commercial courts in India. These courts are equally competent to adjudicate domestic and international disputes on matters that fall within the purview of the Act. The scope of the legislation is vast and includes, inter alia, disputes concerning intellectual property rights such as trademarks, copyright, patents, designs or geographical indications – which will be considered of a commercial nature if the value of the subject matter is more than INR 3,00,000. The Act confers jurisdiction over the Commercial Division of the High Courts – as a court of the first instance – whenever the dispute arises within the local limits of Delhi, Bombay, Calcutta, Madras or Himachal Pradesh. In all other States of India, the commercial courts created at the district level will be competent to adjudicate such matters. The legislation has been promulgated to promote trade and commerce in India by fast-tracking the settlement of such disputes. In matters of intellectual property such as these, the Act confers the Commercial Court or the Commercial Division of the High Court in some states with the exclusive jurisdiction to adjudicate such matters, which were initially within the domain of the District Courts.

The Commercial Appellate Division of the Karnataka High Court was faced with the predicament of whether the defendant, CG Corp, had damaged ITC’s goodwill and reputation by incorporating a similar colour scheme of red and orange in packaging its Wai Wai X-Press Noodles Majedar Masala. As a result, ITC claimed that the defendant’s product was deceptively similar to its Sunfeast Yipee! Magic Masala Noodles and, thus, CG Corp’s act constituted passing-off and an infringement of ITC’s copyright under Indian law.

Rejecting ITC’s contentions, the court formulated a two-pronged formula to ascertain the circumstances in which a defendant could be considered to have passed off a product as that of the claimant – to have violated the latter’s registered trademark. In doing so, the court placed emphasis on the position under English law as emphasized in Payton v Snelling,[2] Lampard; Reckitt & Colman v Borden;[3] and Pasquali Cigarette Co Ltd v Diaconicolas & Capsopolus.[4]

The first and foremost factor, as the court stressed, would be to identify the features in the plaintiff’s product that are distinctive to him or her. As the court elaborated, distinctiveness in this context refers to distinctiveness in law as opposed to distinctiveness in fact. Distinctiveness in fact, as the court clarified, are the features of the mark that are distinctive according to the claimant’s perspective. Instead, the claimant must clearly demonstrate whether the hypothetic person or the class of persons constructed and identified by the court are likely to be deceived by the similarities in the product. The identification of the hypothetical persons would essentially depend on a variety of factors and, in particular, the nature of the goods sold, the circumstances of the sale and the class of persons to whom the product is targeted. Drawing an analogy with surgical and pharmaceutical products, the court elaborated that in a product such as this, the hypothetical person would be an ordinary purchaser and one of average intelligence – who being neither too careful nor too careless and knowing more or less the peculiar characteristics of the product, accepts what he or she is given after examining the general appearance of the article. It is unlikely, as the court further substantiated, for the ordinary consumer to mentally capture every minute detail of the packaging of the product – including the colour scheme.

Having regard to the circumstances of the case, the court asserted that the dominating feature in the claimant’s product remains the verbal as opposed to the visual marks because the ‘striking and most distinguishing feature of the defendant’s wrapper was its-brand name Sunfeast Yipee! Therefore, CG’s act cannot constitute passing-off under Indian law unless ITC can demonstrate that the deception was likely to occur even if the expression Sunfeast Yippee! was missing from the CG’s product which, instead, had its own brand name (Wai Wai X-Press Noodles Majedar Masala). The court’s observation was substantiated on a variety of factors – including the claimant’s marketing strategy and central arguments in past litigation. Consequently, the court took note of a previous dispute that was initiated by the claimant against Nestle on a similar ground, where the plaintiff argued that the latter had led the customers to believe that the Maggi’s Magic Masala Noodles (sold by Nestle) and the plaintiff’s Sunfeast Yippee! Magic Masala Noodles were one and the same. In that case, the claimant, ITC, had argued that the expression ‘Magic Masala’ as distinctive to its mark.

Further, the court noted that the claimant had adopted a similar strategy in its advertising campaigns -whether the striking feature remained its brand name – Sunfeast Yippee! as opposed to the colour combination. Referring to the decisions of the English courts in Payton v Snelling, Lampard and Pasquali Cigarette Co. Ltd. v Diaconicolas & Capsopolus, the court stated that regardless of how ‘novel, original or striking’ the colour scheme may be, it was not a feature that was relied upon by the ordinary purchaser to identify the source of the product. As the court further asserted, the chief question invariably remains: what is the function that the get-up of the product actually serves and not how well that get-up has been designed to serve that purpose.

The second factor would be to discern whether the products being manufactured and sold by the defendant are ‘deceptively similar’ to the one’s being manufactured by the claimant. However, whether the goods were in fact deceptively similar would be assessed only after it has been ascertained whether the goods bearing the mark were distinctive in law according to the criterion indicated above. In order to assess whether the defendant’s product was deceptively similar to the plaintiff’s, not merely the features that bear a resemblance with the plaintiff’s product would be considered – but also the measures that were undertaken by the defendant to eliminate the possibility of confusion would be considered.

Therefore, in situations (such as these) where there has been no direct misrepresentation, whether there has been passing-off as a result of deceptive similarity would, in turn, depend on two factors –

  1. a) that the name, mark or distinctive feature had acquired a reputation among a class of persons and
  2. b) that the mark or feature, being the same or sufficiently similar, had led those persons to believe that the goods are from the same or a connected source.

The comparison of the marks or features discern whether they are the same or sufficiently similar, must be done by looking at all the surrounding circumstances – and whether it is likely to cause confusion in the minds of the hypothetical customer that has been identified based on the principles to ascertain whether the mark/feature is distinctive in law. Consequently, the manner in which the goods or services were supplied would bear a strong influence in ascertaining whether the consumer is likely to be deceived. Here, the role of the mark or the feature and the various ways in which the product is being sold so as to influence the decisions of the consumers in purchasing the product will play a predominant role. In the present case, the court evaluated the significance and the role that the red and orange colour scheme had to play in the various ways in which the product has been sold – but also the way in which the ordinary hypothetical consumer is likely to behave in its ‘noodle-purchasing decisions’. Consequently, the court concluded that the fact that the defendant’s product similarly incorporated the red and orange colour scheme was of little relevance in confusing the hypothetical consumer – regardless of the way in which the product is being purchased. In digital shopping, the search words ‘Red-Orange Noodles’ did not even result in the display of the products of either of the parties – in turn demonstrating how unlikely it was for the consumers to be deceived merely by the similarities in the colour scheme. Likewise, in brick and mortar stores, it was unlikely for the consumer to ask for red and orange packet noodles instead of providing the shopkeeper with the brand name. Even if, in the very improbable situation, the consumer did ask for red and orange packet noodles, it was unlikely for the shopkeeper to directly reach out for the claimant’s product.

Having regard to the aforementioned factors, the court further noted that ITC’s copyright had not been violated, either chiefly because CG Corp has not copied the essential features of the former’s product. Merely showing some similarity in the non-essential features would not suffice and would not constitute a copyright violation under Section 51 of the Copyright Act, 1957.[5]

Despite being of persuasive value to courts outside Karnataka, by being a judgment of the High Court, the judgment is likely to have far-reaching consequences by providing the much-needed clarity under Indian law and, in particular, the provisions of the Trade Marks Act, 1999, which presently does not substantiate the circumstances that constitute ‘passing off’ under Indian law. Instead, the Act merely indicates the right to relief to the aggrieved party in the form of an injunction when its trademark has been passed off by the defendant. The judgment could also shape the decision of the mediation panel in a suit of a similar nature that was recently initiated by Nestle against the same defendant (CG Corp. Global) on the ground that the latter’s Wai Wai Noodles were deceptively similar to the Swiss-based corporation’s Maggi Noodles. As per the provisions of the CCA, the mediation proceedings would have to be concluded within ten days – failing which the matter would be transferred to the Delhi High Court under Section 7 of the CCA for further hearing.

 

 

[1] See, ITC Ltd v CG Goods (India) Private Limited, Commercial Appeal No. 105/2021 (dated 28 September 2021).

[2] 1901 AC 308.

[3] [1990] 1 All E.R. 873.

[4] 1905 TS 472.

[5] Act No. 14 of 1957.