Views
New book on International Negotiable Instruments by Benjamin Geva & Sagi Peari
(published by Oxford University Press, 2020)
The authors kindly provided the following summary:
The book marries two fields of law: negotiable instruments and choice-of-law. Bills of exchange, cheques and promissory notes are the main classical negotiable instruments. For centuries, these instruments have played a vital role in the smooth operation of domestic and international commerce, including in transactions between distantly located parties. Through their evolution, fusion, and sophistication, they have remained one of the primary tools for everyday commercial activity, serving as one of the primary methods of payment and credit and one of the cornerstones of the contemporary bank-centred system. The rapid technological progress of payment mechanisms has embraced the traditional institution of negotiable instruments leading to their further adaptation and sophistication in order to meet the challenges of the contemporary reality of frequent mobility of people, goods, and high daily volumes of cross-border transactions and international commerce.
The cross-disciplinary partnership between the authors, one specializing in negotiable instruments and the other in choice-of-law, aims to offer a comprehensive and thorough analysis of the choice-of-law rules applicable to negotiable instruments. The internal structure of negotiable instruments’ law is complex, which has given rise to a popular view favouring the mythological ‘law merchant’,[1] the exclusion of negotiable instruments from the scope of general contract and property law doctrines, and their subsequent exclusion from ordinary choice-of-law analysis.
The central thesis of the book is to challenge this common view. Indeed, the complex structure of negotiable instruments creates a significant challenge for traditional contract and property doctrine and the choice-of-law analysis applicable to them. Yet, in contrast to the common view, the authors argue that the complex case of international negotiable instruments should be analyzed through the lens of traditional contract & property choice-of-law doctrines rather than by crafting new specially designed rules for negotiable instruments.
In order to illustrate this point, consider the – well-known in choice-of-law literature – Giuliano & Lagarde Report (‘The Report’),[2] which has served as a basis for contemporary European Rome Regulations[3] on the question of applicable law. The Report excludes negotiable instruments law from the scope of ordinary choice-of-law analysis.[4]However, one can reassess the three rationales mentioned in the Report to justify negotiable instruments’ law exclusion. First, it makes a point that a negotiable instrument is not a contract.[5] In this book, the authors argue the opposite – from their very origin to their present-day doctrinal analysis, negotiable instruments are very much contracts and carefully follow the essentials of contract law doctrine, alongside the basic elements of tangible property law.[6]
Second, the Report characterizes a negotiable instrument as a ‘complex contract’.[7] Indeed, in their study the authors provide a precise demarcation of the special nature of the negotiable instrument as a ‘special’ contract to delineate its divergence from the ‘ordinary’ contract; its relation to basic elements of tangible property transfer; and how this divergence affects (if at all) the choice- of- law rules of negotiable instruments, comparatively to choice-of-law rules of ‘ordinary’ contracts and tangible property. While throughout their book the authors show that negotiable instruments present ‘complicated special rules’ that should be analyzed, modified and distinguished from ‘ordinary’ contract law/property law rules, they are very much based on them.
Finally, the Report makes a reference to the existing harmonization processes.[8] In this book, the authors provide a detailed comparative analysis of the various rules in diverse legal systems and they show that they are far from uniform.[9] The authors discuss the various harmonization processes of negotiable instruments,[10] and make some suggestions for possible reforms within the process of international harmonization of the choice-of-law rules,[11] which would capture the challenges of the digital age.[12] In contrast to the Report, the authors argue that the traditional choice-of-law rules in the areas of contract law and tangible property can serve as a model for such reform of choice-of-law rules of negotiable instruments.
In effect, authors’ call for a redesign of the present choice-of-law rules relating to negotiable instruments finds traces in contemporary literature. The commentators of one of the leading textbooks in the field have framed the need for a reconsideration of the choice-of-law rules of negotiable instruments in the following terms:
…it must be noted that the Bills of Exchange Act 1882 and much of the case referred to in the following paragraphs is now more than a century old. In that time, the role and significance of bills of exchange in commercial intercourse and the approach of the conflict of laws to freely incurred obligations such as these has changed radically. As the following commentary makes clear, the rules contained in the 1882 Act are neither comprehensive nor easy to understand and apply. A radical overhaul of the law in this area, whether by legislation or international convention, seems long overdue.[13]
In this book, the authors are indeed willing to take up the challenge of a ‘radical overhaul’. In line with the above-stated quotation, they suggest a radical reorientation of choice-of-law rules. They argue that choice-of-law rules in the area of international negotiable instruments need to be dramatically amended and harmonized.
The contemporary choice-of-law rules within this area of law have originated from flawed premises about the nature of the subject. Further, contemporary rules have left behind the modern development of choice-of-law doctrine. Relying on the foundation of negotiable instruments’ law within the traditional ordinary doctrines of contract and movable property and invoking developments within modern choice-of-law thought, the authors endeavour to challenge the traditional orthodoxy and offer a complete re-examination of the choice-of-law rules of negotiable instruments.
[2] Report on the Convention on the law applicable to contractual obligations by Mario Giuliano, Professor, University of Milan, and Paul Lagarde, Professor, University of Paris I, Official Journal C 282, 31/10/1980 P. 0001 – 0050.
[3] Commission Regulation (EC) 593/2008 of the European Parliament and of the Council of 17 June 2008 on the Law Applicable to Contractual Obligations (Rome I), 2008 O.J. (L 177) 6 (EU); Commission Regulation 864/2007, on the Law Applicable to Non-Contractual Obligations (Rome II), 2007 O.J. (L 199) 40 (EC)
[4] Giuliano & Lagarde Report, sec. 4.
[6] See Chapter I & Chapter II.
[10] See Chapter I & Chapter III.
[13] Lawrence Collins (ed) Dicey, Morris and Collins on the Conflict of Laws (15th edn Sweet & Maxwell 2012) 2077.
Foreign law illegality and non-contractual claims
Written by Marcus Teo (Sheridan Fellow (Incoming), National University of Singapore)
Since Foster v Driscoll [1929] 1 KB 470, common law courts have recognised that contracts made with the intention to commit a criminal offence in a foreign state are unenforceable, even if the contract contemplated an alternative mode or place of performance. However, recent developments in domestic law illegality have sparked debate on whether foreign law illegality too should be reformed in a similar light (see Ryder Industries Ltd v Chan Shui Woo [2016] 1 HKC 323, [36], [52]-[55]; cf Magdeev v Tsvetkov [2020] EWHC 887 (Comm), [331]-[332]). The debate, however, has thus far not considered whether foreign law illegality should expand to bar certain non-contractual claims – a question which the Singapore Court of Appeal’s recent decision in Jonathan Ang v Lyu Yan [2021] SGCA 12 raises.
Lyu Yan wanted to transfer money from China to Singapore. Her bank in Singapore introduced her to Joseph Lim for assistance. Joseph proposed that Lyu transfer Renminbi from Lyu’s Chinese bank account to the Chinese bank accounts of two other individuals, Jonathan Ang and Derek Lim. Jonathan and Derek would then transfer an equivalent sum in Singapore Dollars from their Singapore bank accounts to Lyu’s Singapore bank account. Lyu performed the transfer in China, but received no money in Singapore. She then sued Joseph for breach of contract; and sued Joseph, Jonathan and Derek in tort and unjust enrichment. At first instance, the Singapore High Court ruled against all three defendants. Joseph did not appeal, but Jonathan and Derek did, arguing, inter alia, that Foster barred Lyu’s non-contractual claims against them because Chinese law prohibited their transaction.
Andrew Phang JCA, who delivered the Court’s judgment, dismissed Jonathan and Derek’s appeal. It was undisputed that the transaction, if performed, would have violated Chinese law (See Lyu Yan v Lim Tien Chiang [2020] SGHC 145, [15]-[16]). However, Lyu did not intend to break Chinese law – the facts at their “highest” showed that she thought the transaction contravened Singapore law rather than Chinese law (Jonathan Ang, [18], [20]). Thus, since Foster does not apply if the claimant does not intend to contravene a specific foreign law, it was inapplicable.
Of interest, though, were Phang JCA’s obiter comments: if Lyu had known the transaction contravened Chinese law, would her non-contractual claims be barred? Foster, he noted, was “not applicable in relation to non-contractual claims” ([26]). This was contrasted with the position in domestic law illegality, where an illegality affecting a contract could sometimes also bar other non-contractual claims arising from the contractual relationship ([27]-[28]). Here, Phang JCA referenced Ochroid Trading Ltd v Chua Siok Lui [2018] 1 SLR 363, where the Court of Appeal had held that claims in unjust enrichment (and, potentially, tort) arising from a contractual relationship would be barred if it stultified the policy underlying the law which rendered the contract unenforceable (Ochroid Trading [145]-[159], [168])
Phang JCA then considered whether Foster and Ochroid Trading could be “read together” (Jonathan Ang, [30]) – i.e., whether foreign and domestic law illegality, as separate doctrines, could apply on the same facts. This could only happen when Singapore law was the lex contractus, because, while Foster barred contract claims “regardless of their governing laws”, Ochroid Trading barred only claims governed by Singapore law. If indeed Foster and Ochroid Trading were “read together”, however, “possible difficulties” arose, because it would put a plaintiff with a Singapore law contract in a worse position than a plaintiff with a foreign law contract: the former would potentially have both his contractual and non-contractual claims barred, while the latter would have only his contractual claim barred ([33]). To Phang JCA, this was undesirable, because there was “no principled reason” for this distinction ([34]). While Phang JCA did not attempt to resolve these “difficulties”, he concluded by noting that for both foreign law and domestic law illegality “the concept of policy serves as a limiting factor to ensure that the illegality involved does not inflexibly defeat recovery where such recovery is justified” ([34]) – presumably, then, Phang JCA was noting tentatively that recourse to public policy arguments might help ameliorate the differences between the two classes of plaintiffs he identified.
Phang JCA’s comments in Jonathan Ang raise more questions than answers; this was of course by design, given their tentative and exploratory nature. However, with respect, the correctness of some of the assumptions Phang JCA relied on may be doubted. First, one may only conclude that there is no “principled reason” for treating plaintiffs with Singapore law contracts differently from plaintiffs with foreign law contracts if one accepts that domestic and foreign law illegality share the same “principled” basis. However, Foster’s principled basis remains shrouded in uncertainty: courts and commentators have variously called it a doctrine of public policy, comity and international jurisdiction, but only the first conception of Foster aligns it with domestic law illegality. Second, while it is true that the public policies of the forum limit both domestic and foreign law illegality, those public policies perform that function in different ways in those two contexts. In domestic law illegality, courts ask whether barring the plaintiff’s claim would give effect to the forum’s public policies; but in foreign law illegality, courts ask whether denying recognition of the relevant foreign law, and thus allowing the plaintiff’s claim, would give effect to the forum’s public policies. It follows that public policy arguments may not consistently resolve differences between the two classes of plaintiffs identified by Phang JCA.
At base, the questions posed in Jonathan Ang (and the assumptions they relied on) were only relevant because of Phang JCA’s continued acceptance of one central proposition: that foreign law illegality bars only contractual claims. Yet, this proposition is doubtful; in Brooks Exim Pte Ltd v Bhagwandas Naraindas [1995] 1 SLR(R) 543, Singapore’s Court of Appeal considered Foster in relation to a claim for “money had and received”, and found it inapplicable only because parties there did not intend to breach foreign law (Brooks Exim, [1], [14]). Moreover, the justification for limiting Foster’s rule to contractual claims remains unclear: in Jonathan Ang Phang JCA cited the English High Court’s decision in Lilly Icos LLC v 8PM Chemists Ltd [2010] FSR 4 for it, but there that proposition was simply accepted without argument (Lilly Icos, [266]). A possible justification might be that only in contract claims may parties, by virtue of their ability to choose the governing law, avoid the applicability of the (criminal) law of a foreign state objectively connected to their relationship. This, however, would be a poor justification, since parties have the autonomy to choose the governing law for various non-contractual claims as well. An expressly chosen law, for example, may govern not just parties’ contract, but also claims in unjust enrichment arising from that contractual relationship by virtue of a characterization sub-rule, and potentially also tort claims under an exception to the lex loci delicti rule (or, in Singapore’s context, the double actionability rule). If foreign law illegality exists to prevent parties from avoiding the law of a state objectively connected to their contractual relationship, it should bar all claims arising from that contractual relationship governed by parties’ chosen law, regardless of whether those claims are “contractual” or “non-contractual”.
Just released: Opinion of the US Supreme Court regarding the consolidated Ford Motor cases – A victory for consumers in two defective-product cases
Written by Mayela Celis
On 25 March 2021, the US Supreme Court rendered its opinion on the consolidated Ford Motor cases, which deals with personal jurisdiction (in particular, specific jurisdiction) over Ford Motor Company. These cases deal with a malfunctioning 1996 Ford Explorer and a defective 1994 Crown Victoria vehicles, which caused the death of a passenger in Montana and the injury of another passenger in Minnesota, respectively. The consolidated cases are: Ford Motor Co. v. Montana Eighth Judicial District Court et al. and Ford Motor Co. v. Bandemer.
The opinion is available here. We have previously reported on this case here.
The question presented was:
The Due Process Clause permits a state court to exercise specific personal jurisdiction over a nonresident defendant only when the plaintiff’s claims “arise out of or relate to” the defendant’s forum activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (internal quotation marks omitted). The question presented is: Whether the “arise out of or relate to” requirement is met when none of the defendant’s forum contacts caused the plaintiff’s claims, such that the plaintiff’s claims would be the same even if the defendant had no forum contacts.
As noted in our previous post, it can be argued that besides jurisdictional matters relating to the defendant, these cases deal with fundamental notions of access to justice for consumers. Fortunately, the US Supreme Court sided with the victims of the car accidents. As a result, buyers of Ford vehicles are able to sue in their home State / the place of injury (instead of chasing up the defendant). Undoubtedly, this promotes access to justice as it decreases the litigation costs of suing a giant company elsewhere, as well as it avoids the hardship of suing in a remote place.
For a summary of the facts, see the syllabus of the opinion. We also include the facts here:
“Ford Motor Company is a global auto company, incorporated in Delaware and headquartered in Michigan. Ford markets, sells, and services its products across the United States and overseas. The company also encourages a resale market for its vehicles. In each of these two cases, a state court exercised jurisdiction over Ford in a products-liability suit stemming from a car accident that injured a resident in the State. The first suit alleged that a 1996 Ford Explorer had malfunctioned, killing Markkaya Gullett near her home in Montana. In the second suit, Adam Bandemer claimed that he was injured in a collision on a Minnesota road involving a defective 1994 Crown Victoria. Ford moved to dismiss both suits for lack of personal jurisdiction. It argued that each state court had jurisdiction only if the company’s conduct in the State had given rise to the plaintiff’s claims. And that causal link existed, according to Ford, only if the company had designed, manufactured, or sold in the State the particular vehicle involved in the accident. In neither suit could the plaintiff make that showing. The vehicles were designed and manufactured elsewhere, and the company had originally sold the cars at issue outside the forum States. Only later resales and relocations by consumers had brought the vehicles to Montana and Minnesota. Both States’ supreme courts rejected Ford’s argument. Each held that the company’s activities in the State had the needed connection to the plaintiff’s allegations that a defective Ford caused instate injury” (Our emphasis).
Ford alleged that the Court should follow a causation-only approach. That means that as stated in the syllabus of the opinion that “In Ford’s view, due process requires a causal link locating jurisdiction only in the State where Ford sold the car in question, or the States where Ford designed and manufactured the vehicle. And because none of these things occurred in Montana or Minnesota, those States’ courts have no power over these cases.”
Fortunately, the Court did not follow that interpretation and stated that:
“To see why Ford is subject to jurisdiction in these cases (as Audi, Volkswagen, and Daimler were in their analogues), consider first the business that the company regularly conducts in Montana and Minnesota. See generally 395 Mont., at 488, 443 P. 3d, at 414; 931 N. W. 2d, at 748; supra, at 3?4. Small wonder that Ford has here conceded “purposeful availment” of the two States’ markets. See supra, at 7-8. By every means imaginable—among them, billboards, TV and radio spots, print ads, and direct mail— Ford urges Montanans and Minnesotans to buy its vehicles, including (at all relevant times) Explorers and Crown Victorias. Ford cars—again including those two models—are available for sale, whether new or used, throughout the States, at 36 dealerships in Montana and 84 in Minnesota. And apart from sales, Ford works hard to foster ongoing connections to its cars’ owners. The company’s dealers in Montana and Minnesota (as elsewhere) regularly maintain and repair Ford cars, including those whose warranties have long since expired. And the company distributes replacement parts both to its own dealers and to independent auto shops in the two States. Those activities, too, make Ford money. And by making it easier to own a Ford, they encourage Montanans and Minnesotans to become lifelong Ford drivers” (our emphasis).
[…]
“Here, resident-plaintiffs allege that they suffered in-state injury because of defective products that Ford extensively promoted, sold, and serviced in Montana and Minnesota. For all the reasons we have given, the connection between the plaintiffs’ claims and Ford’s activities in those States— or otherwise said, the “relationship among the defendant, the forum[s], and the litigation”—is close enough to support specific jurisdiction. Walden, 571 U. S., at 284 (internal quotation marks omitted). The judgments of the Montana and Minnesota Supreme Courts are therefore affirmed.”
In sum, in this David and Goliath scenario, the US Supreme Court sided with the consumers and promoted access to justice.
News
Out Now: Aristova, Tort Litigation against Transnational Corporations. The Challenge of Jurisdiction in English Courts
Ekaterina Aristova (Bonavero Institute of Human Rights, University of Oxford) is the author of the ‘Tort Litigation against Transnational Corporations: The Challenge of Jurisdiction in English Courts’ (OUP 2024), which has just been published in the Oxford Private International Law series. She has kindly shared the following summary with us:
The book examines the approach of the English courts to the question of jurisdiction in civil liability claims brought against English-based parent companies and their foreign subsidiaries as co-defendants (e.g., Lubbe v Cape, Lungowe v Vedanta, Okpabi v Shell, etc.). While the book is written from the perspective of English law, the book also draws on examples of similar cases in Australia, Canada, EU Member States, and the US to broaden the discussion.
The assertion of jurisdiction in parent company liability claims based on a nexus with the forum state presents a challenge to the courts. The territorial focus of the adjudicative jurisdiction is often contrary to the transnational nature of cross-border business activities. Transnational corporations (TNCs) have the flexibility to spread operations over multiple jurisdictions and create a legal separation between the subsidiary’s activities and the home state of the parent company. Courts rely on various private international law rules and doctrines to resolve the question of jurisdiction in parent company liability claims, including forum non conveniens doctrine in common law legal systems, the mandatory rule of domicile under EU law, and the presumption against extraterritoriality in US jurisprudence. The broad disparities in the issues of civil jurisdiction among domestic legal regimes and the considerable controversy surrounding the exercise of extraterritorial regulation over corporate operations often lead to the creation of a ‘jurisdictional veil’ for the parent company and a significant degree of autonomy, largely free from the control of any national jurisdiction.
To address this puzzle, this book seeks to answer three questions: 1) To what extent can English courts, under existing rules, exercise jurisdiction over English parent companies and their foreign subsidiaries as co-defendants? 2) Is England a suitable forum for deciding parent company liability claims? 3) Should the jurisdictional competence of the English courts be broadened through a new connecting factor derived from the ‘economic enterprise’ theory?
The book aims to offer a new angle to the discourse by placing the discussion of parent company liability claims in the context of the topical debate about the changing role of private international law in a globalised world. The transnational adjudication of disputes, cross-border activities of non-state actors and expansion of private law-making challenge several conventional assumptions of the discipline of private international law, including its focus on territoriality and geographical connecting factors and its capacity to interact with public mechanisms. Home state courts have become the fora for struggles between TNCs and vulnerable communities from the host states, raising complex questions about (il)legitimate forum shopping, the appropriate forum, and the limits of judicial discretion. Parent company liability claims impact how we think about private international law and its function, and the reader is invited to explore these challenging dynamics.
The Bonavero Institute of Human Rights in Oxford will celebrate the publication of the book by hosting a (hybrid) book launch and wine reception on 5 June 2024.
Registration Now Open: The Hague Academy of International Law’s Winter Courses 2025
Registration for the 2025 programme of The Hague Academy of International Law’s renowned Winter Courses on International Law (6-24 January 2025) is now open. In contrast to the summer courses, this program combines aspects of both Public and Private International Law and therefore provides for a particularly valuable academic experience.
Following the Inauguaral Lecture by Bhupinder Singh Chimni (O.P. Jindal Global University), this year’s General Course in Private International Law will focus on “International Law in the Times of Globalization: Contexts, Networks, Practices” and will be delivered by Mónica Pinto (University of Buenos Aires). Furthermore, Special Courses will be offered in English by Mohamed S. Abdel Wahab (Cairo University), Payam Akhavan (University of Toronto), Enrico Milano (University of Verona) and Catherine Rogers (Bocconi University), while Niki Aloupi and Sébastien Touzé (Paris-Panthéon-Assas) will deliver their presentations in French. As always, all lectures will be simultaneously interpreted into English or French and vice versa. If you are interested in alternative dispute resolution, the lecture on “The Concept of Arbitrator Impartiality” seems particularly interesting.
Advanced Students, especially those who are ambitious to sit for the prestigious Diploma Exam, are highly encouraged to apply for the Academy’s Directed Studies as well. The French edition of these interactive afternoon seminars will be directed by Emanuel Castellarin (University of Strasbourg), while English-speaking candidates are taught by María Carmelina Londoño Lázaro (University of La Sabana).
Registration is open from 1 May 2024 to 1 October 2024 via the institution’s own Online Registration Form . Students who whish to apply for the Academy’s scholarship opportunities need to submit their application by 31 July 2024. For further information on the HAIL 2024 Winter courses and the Academy in general, please consult the HAIL Homepage or refer to the attached PDF Programme.
Job Vacancy at the University of Bonn (Germany): Research fellow in International Civil Procedural Law and/or International Commercial Arbitration
The Rhenish Friedrich Wilhelm University of Bonn is an international research university with a wide education and research profile. With a 200-year history, approximately 33,000 students, more than 6,000 staff, and an excellent reputation at home and abroad, the University of Bonn is one of the most important universities in Germany and is recognized as a university of excellence.
The Institute for German and International Civil Procedure is looking for a highly skilled and motivated PhD candidate and fellow (Wissenschaftliche/r Mitarbeiter/in) to work in the fields of International Civil Procedural Law and/or International Commercial Arbitration on a part-time basis (50%) to start as soon as possible.
(c) Volker Lannert / Universität Bonn
Responsibilities:
- Supporting research and teaching on Private International Law, International Civil Procedure and/or International Commercial Arbitraiton as well as German civil law (required by the Faculty, therefore an excellent command of German and profound knowledge of German civil law equivalent to the “First State Examination” is mandatory)
- Teaching obligation of two hours per week during term time (Semester)
Your Profile:
- You hold the First or Second German State Examination in law with distinction (or its international equivalent)
- If possible, you already had contact with International Civil Procedure Law and/or Commercial Arbitration Law
- You are interested in the international dimension of private law, in particular International Civil Procedural Law, and/or International Commercial Arbitration
- Excellent command of the English language (next to German)
- You are commited, flexible, team-oriented and interested in further professional development opportunities
We offer:
- Varied and challenging assignments with one of the largest employers in the region
- Opportunity to conduct your PhD or research project (according to the Faculty’s regulations) under the supervision of the Director of the Institute Prof Dr Matthias Weller, Mag.rer.publ., MAE
- Occupational pension scheme (VBL)
- Numerous offers of the University Sports Programme (Hochschulsport)
- Easy access to the public transport system and direct road link to the Autobahn due to the central location in Bonn as well as the possibility to use inexpensive parking facilities
- Flexible working hours; remote working options are available
- Renumeration according to German public service salary scale E-13 TV-L (50%); initial contract period is one year at least and up to three years, with an option to be extended.
The University of Bonn is committed to diversity and equal opportunity. It is certified as a family-friendly university. Its goal is to increase the proportion of women in areas where they are underrepresented and to particularly promote their careers. It therefore strongly encourages applications from relevantly qualified women. Applications are handled in accordance with the State Equal Opportunity Act. Applications from suitable persons with proven severe disabilities and persons treated as such are particularly welcome
If you are interested in this position, please send your application (cover letter in German; CV; and relevant documents and certificates, notably university transcripts and a copy of the German State Examination Law Degree) to Prof Dr Matthias Weller (weller@jura.uni-bonn.de).
For additional information, please refer to the attached pdf document (in German) or visit the Institute’s homepage.