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Enforcement of Foreign Judgments about Forum Land
By Stephen G.A. Pitel, Western University
In common law Canada, it has long been established that a court will not recognize and enforce a foreign judgment concerning title to land in the forum. The key case in support is Duke v Andler, [1932] SCR 734.
The ongoing application of that decision has now been called into question by the British Columbia Court of Appeal in Lanfer v Eilers, 2021 BCCA 241 (available here). In the court below the judge relied on Duke and refused recognition and enforcement of a German decision that determined the ownership of land in British Columbia. The Court of Appeal reversed and gave effect to the German decision. This represents a significant change to Canadian law in this area.
The Court of Appeal, of course, cannot overturn a decision of the Supreme Court of Canada. It reached its result by deciding that a more recent decision of the Supreme Court of Canada, that in Pro Swing Inc v Elta Golf Inc, 2006 SCC 52, had overtaken the reasoning and result in Duke and left the Court of Appeal free to recognize and enforce the German decision (see paras 44-45 and 74). This is controversial. It has been questioned whether Pro Swing had the effect of superseding Duke but there are arguments on both sides. In part this is because Pro Swing was a decision about whether to recognize and enforce foreign non-monetary orders, but the orders in that case had nothing to do with specific performance mandating a transfer or title to land in the forum.
I find it hard to accept the decision as a matter of precedent. The title to land aspect of the foreign decision seems a significantly different element than what is at issue in most non-monetary judgment decisions, such that it is hard to simply subsume this within Pro Swing. What is really necessary is detailed analysis of whether the historic rule should or should not be changed at a normative level. How open should courts be to recognizing and enforcing foreign judgments concerning title to land in the forum? This raises related issues, most fundamentally whether the Mocambique rule itself should change. If other courts now know that British Columbia is prepared to enforce foreign orders about land in that province, why should foreign courts restrain their jurisdiction in cases concerning such land?
In this litigation, the defendant is a German resident and by all accounts is clearly in violation of the German court’s order requiring a transfer of the land in British Columbia (see para 1). Why the plaintiff could not or did not have the German courts directly enforce their own order against the defendant’s person or property is not clear in the decision. Indeed, it may be that the German courts only were prepared to make the order about foreign land precisely because they had the power to enforce the order in personam and that it thus did not require enforcement in British Columbia (analogous to the Penn v Baltimore exception to Mocambique).
Given the conflict with Duke, there is a reasonable likelihood that the Supreme Court of Canada would grant leave to appeal if it is sought. And if not, a denial of leave would be a relatively strong signal of support for the Court of Appeal’s decision. But the issue will be less clear if no appeal is sought, leaving debate about the extent to which the law has changed.
The EAPO Regulation: An unexpected interpretative tool of the French civil procedural system
Carlos Santaló Goris, Researcher at the Max Planck Institute Luxembourg for International, European and Regulatory Procedural Law and Ph.D. candidate at the University of Luxembourg, offers an analysis of some aspects of a judgment rendered by the Paris Court of Appeals.
Regulation No 655/2014, establishing a European Account Preservation Order (“EAPO Regulation”) introduced not only the first uniform provisional measure at the EU level but also the first European specific system to search for the debtors’ bank accounts. The so-called information mechanism is, though, less accessible than the EAPO itself. According to Article 5 of the EAPO Regulation, creditors can apply for an EAPO ante demandam, during the procedure on the substance of the matter; or when they have already a title (a judgment, a court settlement, or an authentic document). However, only creditors with a title can submit a request for information. Furthermore, in case the title is not yet enforceable, creditors are subject to specific additional prerequisites.
In broad terms, the information mechanism operates following a traditional scheme of cross-border cooperation in civil matters within the EU. A court in a Member State sends a request for information to an information authority in the same or other Member State. The information authority then searches for the bank accounts and informs the court of origin about the outcome of that search.
Member States have a wide margin of discretion in implementing the information mechanism. They can freely pick the national body appointed as information authority. They also have the freedom to choose whichever method they consider more appropriate to search for the debtors’ bank accounts as long as it is “effective and efficient” and “not disproportionately costly or time-consuming” (Article 14(5)(d) EAPO Regulation).
France assigned the role of information authority to its national enforcement authority, the bailiffs (“huissiers”). Information about the debtors’ bank accounts is obtained by filing an application with FICOBA (“Fichier national des comptes bancaires et assimilés”). FICOBA is a national register hold by the French tax authority containing data about all the bank accounts existing in France. Other Member States, such as Poland or Germany, have also relied on similar domestic registers.
This is where the paradox emerges. In France, creditors without an enforceable title who apply for a French domestic preservation order do not have access to FICOBA; conversely, creditors without an enforceable title who apply for an EAPO do. Article L151 A of the French Manual on Tax Procedures (“Livre des procédures fiscales”) expressly indicates that bailiffs can access FICOBA for the purpose of ensuring the execution of an enforceable title (“aux fins d’assurer l’exécution d’un titre exécutoire”). The only exception is found, precisely, when they have to search for information in an EAPO procedure. This situation generates an imbalance between creditors who can access the EAPO Regulation and those who cannot.
In a judgment rendered by the Paris Court of Appeal on 28 January 2021 (Cour d’appel de Paris, Pôle 1 – chambre 10, 28 janvier 2021, n° 19/21727), the court found that such a difference of treatment between creditors with and without access to the EAPO Regulation “constitutes an unjustified breach of equality and discrimination between creditors” (“cette différence de traitement constitue une rupture d’égalité injustifiée et une discrimination entre créanciers”). Relying on the principle of equality, the court decided to extend access to FICOBA, beyond the context of the EAPO Regulation, to those creditors without an enforceable title.
The relevance of this judgment lies in the French court’s use of the EAPO Regulation to interpret a national domestic procedure. The influence of the national civil procedures system on the European procedure is well known. Uniform European civil procedures, such as the EAPO Regulation, contain numerous references to the Member States’ national law. Furthermore, courts tend to read these instruments through the lens of the national civil procedural systems, even with regard to those aspects that should apply uniformly (here is an example concerning the EAPO Regulation kindly offered by Prof. Requejo Isidro). The Paris Court of Appeal shows us that the European civil procedures can also be a source of inspiration when it comes to interpreting domestic procedural law.
The irony behind this judgment is that, during the travaux préparatoires of the EAPO Regulation, the French delegation expressly requested to restrain access to the information mechanism to those creditors who had “an enforceable title to support [their] application”. One of the reasons argued by the delegation was that “in French law, access to information is only given if the creditor possesses an enforceable title”. Ultimately, it is the French civil procedural system that is being influenced by the EAPO Regulation, and not the other way around.
China Enacts the Anti-Foreign Sanctions Law
Xu Huang, Sophia Tang
Wuhan University Institute of International Law
1. Background
On 10 June 2021, China’s Standing Committee of the National People’s Congress (hereinafter “NPC”) issued “Anti-Foreign Sanctions Law of the People’s Republic of China” (hereinafter “CAFSL”), which entered into force on the date of the promulgation. This is a reaction in response to the current tension between China and some western countries, in particular, the US and the EU that have imposed a series of sanctions on Chinese officials and entities. For example, in August 2020, the Trump administration imposed sanctions on 11 individuals for undermining Hong Kong’s autonomy and restricting the freedom of expression or assembly of the citizens of Hong Kong. In June 2021, President Biden issued Executive Order 14032 to amend the ban on US persons purchasing securities of certain Chinese companies. In March 2021, the EU imposed unilateral sanctions on relevant Chinese individuals and entity, based on the human rights issues in Xinjiang. China has responded by imposing counter sanctions, which were issued by the Ministry of Foreign Affairs as administrative orders. The Anti-Foreign Sanctions Law provides the legal basis for China’s further action and counter measures. This law was enacted after only two readings rather than the normal three demonstrating China’s urgent need to defend itself against a growing risk of foreign hostile measures.
2. The main content
Competent Authority: All relevant departments under the State Council have been authorized to involve issuing the anti-sanction list and anti-sanction measures (Art. 4 and Art. 5). The “Ministry of Foreign Affairs” and “other relevant departments under the State Council” are authorized to issue orders of announcement (Art. 9). Reviewing from the current practice of China’s response to foreign sanctions, the Ministry of Foreign Affairs has always issued sanctions lists against foreign individuals and organizations, so it is likely that the China’s Ministry of Foreign Affairs will still lead the movement of announcing and countering the foreign sanctions. However, other departments now also have the authority to sanction relevant individuals and entities. This provides flexibility if the foreign sanctions relate to a particular issue that is administrated by the particular department and when it is more efficient or appropriate for the particular department to handle it directly.
Targeted measures: Circumstances under which China shall have the right to take corresponding anti-sanction measures are as follows: (1) a foreign country violates international law and basic norms of international relations; (2) contains or suppresses China on various pretexts or in accordance with its own laws; (3) adopts discriminatory, restrictive measures against any Chinese citizen or organization; (4) meddles in China’s internal affair (Art. 3).The CAFSL does not expressly specify whether the circumstances should be satisfied simultaneously or separately. From the perspective of legislative intent, it is obvious that the full text of the CAFSL is intended to broaden the legal authority for taking anti-sanctions measures in China, so it may not require the fulfillment of all four conditions.
It does not clarify the specific meanings of “violates international law and the basic norms of international relations”, “contains or suppresses”, and “meddles in China’s internal affairs”, which vary in different states and jurisdictions. But considering the sanctions issued by China and answers by the NPC spokesman, the key targeted circumstances are meddling China’s internal affairs. It is reasonable to assume that these circumstances, mainly aimed at unilateral sanctions suppressing China under the pretexts of so-called sea-based, epidemic-based, democracy-based and human rights-based issues in Xinjiang, Tibet, Hong Kong and Taiwan. Therefore, other issues may not be included.
Art. 3 aims against the sanctions imposed by foreign states, for example the US and the EU. But from the text of the law, the concept of “sanctions” is not used, instead the concept of “discriminatory, restrictive measures” is adopted, which is very vague and broad. Discriminatory restrictive measures can be interpreted as foreign unilateral sanctions directly targeting Chinese individuals and organizations, which are the so-called “primary sanctions”, different from the “secondary sanctions” restricting Chinese parties from engaging in normal economic, trade and related activities with directly sanctions third state’s parties. In a press conference, the NPC spokesman stated that “the main purpose of the CAFSL is to fight back, counter and oppose the unilateral sanctions against China imposed by foreign states.” It should only apply to tackle the primary sanctions against China.
Targeted entities: The targeted entities of the anti-sanction list and anti-sanction measures are vague and broad. The targeted entities of anti-sanctions list include individuals and organizations that are directly involved in the development, decision-making, and implementation of the discriminatory restrictive measures (Art. 4). What means involvement in the development or decision-making or implementation is ambiguous. And the indirect involvement is even vaguer, which may broaden the scope of the list. Besides, following entities may also be targeted: (1) spouses and immediate family members of targeted individuals; (2) senior executives or actual controllers of targeted organizations; (3) organizations where targeted individuals serve as senior executives; (4) organizations that are actually controlled by targeted entities or whose formation and operation are participated in by targeted entities (Art. 5).
Anti-sanction measures: The relevant departments may take four categories of anti-sanction measures: (1) travel ban, meaning that entry into China will not be allowed and deportation will be applied;(2) freezing order, namely, all types of property in China shall be seized, frozen or detained; (3) prohibited transaction, which means entities within the territory of China will not be allowed to carry out transactions or other business activities with the sanctioned entities; (4) the other necessary measures, which may include measures like “arms embargoes” or “targeted sanctions” (Art. 6). Former three anti-sanction measures have been taken by the Ministry of Foreign Affairs in practice. For example, on 26 March 2021, China decided to sanction relevant UK individuals and entities by prohibiting them from entering the mainland, Hong Kong and Macao of China, freezing their property in China, and prohibiting Chinese citizens and institutions from doing business with them.
Relevant procedure: The decisions made by the competent authorities shall be final and not subject to judicial review(Art. 7).The counterparty shall not file an administrative lawsuit against anti-sanction measures and other administrative decisions. The counterparty can change the circumstance causing anti-sanction measures, and request the relevant department for the modification and cancellation of anti-sanction measures. If any change in the circumstances based on which anti-sanction measures are taken happens, the competent authorities may suspend, change or cancel the relevant anti-sanction measures (Art. 8). The transparency requirement stipulates the relevant orders shall be announced (Art. 9).
A coordination mechanism for the anti-foreign sanctions work shall be established by the state to coordinate the relevant work. Coordination and cooperation, and information sharing among various departments shall be strengthened. Determination and implementation of the relevant anti-sanction measures shall be based on their respective functions and division of tasks and responsibilities (Art. 10).
Legal consequences of violation: There are two types of legal consequences for violating the obligation of “implementation of the anti-sanction measures”. Entities in the territory of China will be restricted or prohibited from carrying out relevant activities (Art. 11). Any entities, including foreign states’ parties, will be held legally liable (Art. 14).
Besides, a party suffering from the discriminatory, restrictive measures may be entitled to bring a civil action against the entities that comply with the foreign discriminatory measures against China (Art. 12). The defendant, in theory, includes any entities in the world, even entities that are the nationals or residents of the country imposing sanctions against China. It is curious how this can be enforced in reality. In particular, if a foreign entity has no connections with China, it is hard for a Chinese court to claim jurisdiction, and even taking jurisdiction, enforcing judgments abroad can also be difficult, if not impossible. Because enforcement jurisdiction must be territorial, without assets and reputation in China, a foreign party may disregard the Chinese anti-sanction measure.
3. Impact of the CAFSL
The CAFSL is a higher-level legislation in the Chinese legal system than the relevant departmental rules, such as the Chinese Blocking Rules and “unreliable entity list”. It is a much more powerful legal tool than former departmental rules as it directly retaliates against the primary sanction on China. It provides a legal basis and fills a legal gap. However, it may not be good news for international businesses that operate in both the US and China. Those companies may have to choose between complying with US sanctions or Chinese laws, which may probably force some enterprises to make strategic decisions to accept the risk of penalty from one country, or even to give up the Chinese or US market. The CAFSL is vaguely drafted and likely to create unpredictable results to the commercial transaction and other interests. The application and enforcement of the CAFSL and Chinese subsequent rules and regulations may give detailed interpretations to clarify relevant issues to help parties comply with the CAFSL. However, to China, the CAFSL serves a political purpose, which is more important than the normal functioning of a law. It is a political declaration of China’s determination to fight back. Therefore, the most important matter for Chinese law-makers is not to concern too much of the detailed rules and enforcement to provide predictability to international business, but to send the warning message to foreign countries. International businesses, at the same time, may find themselves in a no-win position and may frequently face the direct conflict of overriding mandatory regulations in China and the US. By placing international businesses in the dilemma may help to send the message and pressure back to the US that may urge the US policy-makers to reconsider their China policy. After all, the CAFSL is a counter-measure, which serves defensive purposes, and would not be triggered in the absence of sanctions against Chinese citizens and entities.
News
Recent Developments in Private International Law: the US and Beyond
As the 118th American Society of International Law (ASIL) Annual Meeting approaches, the ASIL Private International Law Interest Group will organize a fireside chat on Thursday, April 4 from 3:30 PM to 4:30 PM ET in Washington D.C.
AMEDIP’s upcoming webinar: The role of Private International Law in the development and deployment of digital currencies (29 February 2024 at 14:30 Mexico City time) (in Spanish)
The Mexican Academy of Private International and Comparative Law (AMEDIP) is holding a webinar on Thursday 29 February 2024 at 14:30 (Mexico City time – CST), 21:30 (CET time). The topic of the webinar is the role of Private International Law in the development and deployment of digital currencies and will be presented by Dr. Israel Cedillo Lazcano (in Spanish).
Hybrid conference in Vienna on 12 April 2024: Reforming Brussels Ibis
We are happy to share the following announcement from the organisers.
On 12 April 2024, a hybrid conference will take place at the Skylounge of the University of Vienna to discuss the reform of the Brussels Ibis Regulation; the fundamental reference-instrument of cross-border judicial cooperation in civil matters within the European Union. The reform is expected to begin this year under the new European Commission. The conference is organised by the Institute for Civil Procedure and continues the work already done within the European Association for Private International Law (EAPIL) and the former Max Planck Institute (MPI) Luxembourg.
In 2021, Burkhard Hess wrote a Working Paper on a possible reform of the Brussels Ibis Regulation, identifying problems and suggesting solutions. In the same year, a Working Group was set up within the network of the EAPIL. The members of the Working Group provided information on the application and possible shortcomings of the Brussels Ibis Regulation in their jurisdictions by means of a questionnaire. The results of the questionnaire provided the basis for the conference on the Brussels Ibis reform held at the former MPI Luxembourg on 9 September 2022, where more than 80 participants discussed reform proposals in five panels (report).
Following the 2022 Luxembourg conference, Burkhard Hess and a team of researchers of the MPI prepared a second Working Paper, which put forward 32 proposals for the reforms of the Brussels Ibis Regulation. Members of the EAPIL Working Group were invited to express again their opinion and to vote on these proposals in an online poll. The poll was later opened to the public, as announced on the EAPIL-blog and ConflictofLaws.net. The purpose of this poll was to give the academic public as well as other stakeholders an opportunity to express their view on the proposals. An extensive documentation and analysis of the poll will be published soon, which serves as a basis for discussion at the upcoming conference.
The 2024 Vienna conference features speakers from various parts of the European Union. In the morning, the prospects of the reform process and overarching issues of the Brussels Ibis Regulation are addressed by Andreas Stein (EU Commission), Astrid Stadler (Konstanz), Cristina González Beilfuss (Barcelona), Gilles Cuniberti (Luxembourg), as well as Karol Weitz and Bartosz Wo?odkiewicz (Warsaw). The various proposals for the reform of the Brussels Ibis Regulation will be addressed from a practical perspective in the afternoon during a roundtable featuring, inter alia, Anthony Collins (EU Court of Justice), Georg Kodek (Austrian Supreme Court), Petra Leupold (VKI), Sabine Leupold (Freshfields Bruckhaus Deringer) and Andreas Stein (EU Commission). The full program can be found on the flyer.
Burkhard Hess, Christian Koller and Paul Oberhammer of the Institute of Civil Procedure look forward to your participation in the Vienna conference. Please send your registration to reformingbrussels-Ibis.zvr@univie.ac.at and indicate whether you will participate in person or online.