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The curious case of personal jurisdiction for cyber-based transnational transactions in India: Does one size fit all?
By Radhika Parthasarathy
The advent of the internet has led to mass-communication like no other. Everything one wants is at the tip of our fingers now, thanks to mobile phones, laptops, iPads and the likes. Mass consumerism has seen an exponential increase in the last ten years. If one needs to buy quirky stationery, we have the likes of Amazon and Chumbak online; if one wants to watch the latest episode of Brooklyn Nine-Nine, Netflix does the needful; if we wish to read multiple newspapers, while also saving papers, multiple Apps such as InShorts exist. Platforms such as these stream large quantities of data across the globe, thus bringing the world closer, but also leading to certain jurisdictional issues in case of litigations. Such activity requires a cross-cutting need and definition of personal jurisdiction.
Personal jurisdiction relates to the jurisdiction of a Court to adjudge a dispute between parties. The general rule is that to exercise such jurisdiction, physical presence is mandatory. As such, jurisdiction in personam is not to be exercised over a person who is not subject to the jurisdiction of courts. This has become a commonly accepted principle domestically and globally. However, the advent of technology and the pervasiveness of the world wide web has led to massive debates in this regard. How is personal jurisdiction then to be adjudicated for matters of cyber torts, or that of defamation that takes place online? In the context of the internet, personal jurisdiction oft refers to and deals with websites or services on the internet that deal with advertisements or promotions of business or brands online in their home State but debate their liability to be litigated within another foreign State. However, courts in the United States, Europe and, India are now determining how to assess and enforce such jurisdiction.[1]
Understanding Personal Jurisdiction: the United States and Europe
A. The United States
In the United States [“the US”], the criteria of “certain minimum contact” with the jurisdiction where the cyber transaction has occurred must be met to assess personal jurisdiction. This aligns with the Long Arm Statute of the United States of America. Traditionally, in International Shoe v. Washington, the Supreme Court held that a defendant may be held liable for such cross-border issues if they have at least a minimum level of contact with the State that seeks to hold them liable and there must be a reasonable expectation of being sued in that State.[2] In this regard, courts in the US have held that mere advertisements on a website are not enough to hold a defendant liable for a cross-border tort and to exercise personal jurisdiction there.[3]
Before this, however, was the iconic case, Calder v. Jones,[4] where the Court, in 1984, held that where an action is targeted at a particular forum, even if there is minimum contact, the “effects” test may be applied. In this case, an article was written and edited in Florida, the article concerned a resident in California and relied on sources in California, and thus, the Court held that the intentional tortious act was “expressly aimed at California”. This test essentially, thus, lays down that where an act is done intentionally, has an effect within the forum state and is directed or targeted at the forum state, then jurisdiction will be satisfied.[5] Thus, the effects test is useful when the exact nature of the defendant’s internet activities need to be assessed vis-à-vis, injury caused to a resident elsewhere, in a different State.[6]
The legal position in the US has been seemingly settled, off late, in this regard in Zippo Manufacturing Co. v. Zippo Dot Com Inc,[7] which rendered the famous Zippo Test. Per the Zippo Test, a finding of jurisdiction would be contingent upon the nature of the website and sought to employ a sliding scale test. It further laid down two important points:
- The interactive nature of the site, which would aid in quantifying the extent of the damage so caused;
- The harmful effect within the jurisdiction of the concerned state.
Per Zippo, websites are of three kinds- websites that conduct business over the internet; websites where users exchange information with the host computers; and websites that do little more than present information.[8] However, this has been criticized for not providing enough information on the assessment of the extent of interactivity of the website to justify purposeful availment.[9]
Multiple cases, however, well into the 2000s, yet apply the Calder case. For instance, in Blakey v. Continental Airlines,[10] the minimum contacts test was applied along with the effects test to assess “proper jurisdiction”. This was further cemented by Young v. New Havem Advocate,[11] where two Connecticut newspapers defamed the warden of Virginian prison. Here, the court assessed the issues based on the Calder test once again and opined that proof must be derived that the defendant’s internet activity is expressly targeted at or directed to the forum State. Similarly, in Yahoo! Inc. v. La Ligue Contre Le Racisme et l’antisemitisme,[12] the Calder test was applied once again to establish personal jurisdiction between two French organizations and Yahoo (an American company). Thus, it seems more appropriate to say that Courts in the US, first apply the Zippo Test, but then apply the effects test as laid down in Calder to have a wholly encompassing test.
B. European Standing
In the European Union [“EU”], the Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters [“Brussels Convention”][13] regulates acts concerning torts, delict and quasi-delict under Art. 5(3) and thereby, a defendant may be sued in the court of the place where the harm has occurred.[14] The leading law on the matter of defamation can be found in Shevill & Ors. v. Presse Alliance S.A.,[15] where a libellous article was published in one place but distributed across multiple jurisdictions. Here, the ECJ devised what came to be known as the mosaic approach and held that the place where the harm has occurred includes:
- the place where publisher resides, or where the defamatory statement came into existence, or the place of publication;
- the place of distribution or where the material was read and received.
This approach was also applied in Handelskwekerij G J Bier B. V. v. Mines de Potasse d’Alsace SA, where the Court held that the “place where the harmful event occurred” must be understood as being intended to cover both the place where the damage occurred and the place of the event giving rise to it.[16] However, this approach has led to criticism that it enables forum shopping for the plaintiff.[17] This approach suggests that the plaintiff may choose the more convenient forum under Art. 5(3) as one forum may have a more liberal approach to prove defamation than another.
Article 5(3) was subject to further interpretation in 2011 when the ECJ held that a person may bring an action for liability when their rights have been infringed on the internet before:
- the courts of the Member State in which the publisher of that content is established; or
- before the courts of the Member State in which the centre of his interests is based; or
- the courts of each Member State in the territory of which content placed online is or has been accessible.[18]
This position has since been challenged in the Svensk Handel case, wherein Article 7 of the Brussels Recast Regulation (similar to Article 5(3)) was assessed.[19] Here, while the Court didn’t expressly reject the Mosaic Approach, it did, however, lay down that “the centre of interest” must be located and interpreted broadly to include residence, where the most harm occurs. However, the Court laid down an important safeguard by stating that any order for the takedown of insulting content cannot be initiated in every Member State where the website is accessible. Since the earlier days till now, there seems to be a newfound cogency in the application of personal jurisdiction for defamatory matters in the EU.
Banyan Tree Holdings and the Indian Position
In the case of Banyan Tree Holdings v. A. Murali Krishna Reddy,[20] the plaintiff is part of the hospitality business and has since 1994, used the word mark, “Banyan Tree” which has now acquired a secondary meaning. It also maintains websites that use the mark and are accessible in India. However, in 2007, the defendants began work on Banyan Tree Retreat and hosted a website which directed to a “Banyan Tree” project. The Plaintiffs contended that the use of this mark is dishonest and aimed at encashing on the reputation and goodwill of the Plaintiff. They also claim that it would lead to confusion and deception if such usage was so allowed.
In this case, the Court found that the website of the defendant is accessible in Delhi and is thus, not a passive website, as derived from American laws. Further, the defendant also sent a brochure to Delhi regarding their property’s sale. In this case, parties relied on the holdings and observations of International Shoe Co., the Zippo Test of “sliding scale”, Cybersell Inc. and the effects test in Calder, among multiple other American cases on the same issue. It then discussed cases from Australia and Canada before assessing the Indian Position on the same.
In India, there seems to have been some form of debate on such issues. In a similar factual matrix as Banyan Tree, the Delhi High Court in Casio India Ltd. v. Ashita Tele Systems Pvt Ltd.[21] held that even a mere likelihood of deception on the internet would entertain an actual action for passing off and no actual deception needed to be proven. Thus, the mere accessibility of the website from Delhi could invoke the Court’s jurisdiction. However, in another case,[22] the Court held that the mere accessibility of a website from one jurisdiction may not be enough or sufficient for a court to exercise its jurisdiction.
In Banyan Tree, on an analysis of these positions, Justice Muralidhar found that essential principles developed in other jurisdictions may be seamlessly adopted into our own.[23] The Court chose to disagree with Casio and held that a passive website, with no intention to specifically target audiences outside the State where the host of the website is located, cannot vest the forum court with jurisdiction.[24] Further, it observed that the degree of the interactivity apart, the nature of the activity permissible and whether it results in a commercial transaction has to be examined while adjudging the “effects” test.[25] Additionally, there is a need to assess whether the Plaintiff can show a prima case that the specific targeting in the forum State by the Defendant resulted in an injury or harm to the Plaintiff within the forum state.[26] The Court thus chose to apply the “effects” test with the “sliding scale” taste, this reconciling the application of the Calder test with the Zippo Test in India.
On the matter of jurisdiction, the Court held that to establish a prima facie case under Section 20(c) of the Code of Civil Procedure, 1908 [“the CPC”], the Plaintiff will have to establish that irrespective of the passive or interactive nature of the website, it was targeted specifically at viewers in the forum State, which in this case would have been Delhi.[27] They will then have to establish that there has been specific harm or injury caused to it by the Defendant’s actions.
Conclusion: Certainty in India’s Position?
In India’s case, it has become abundantly clear that cross-border defamation will be adjudged as per Section 19 of the CPC, as per the residence of the defendant or where the wrong has been done. Additionally, India also follows the double actionability rule to adjudge applicable law in such matters. However, if the tort is committed outside India, then Section 19 yields to Section 20 of the CPC, and the territorial jurisdiction is adjudged as such.[28] The factors relating to the cause of action and its assessment have been discussed in multiple cases. For instance, online sale of property in a different jurisdiction did not constitute sufficient cause of action for courts in Kerala.[29] However, while the test in Banyan Tree may be quite descriptive, Muralidhar J. opines that it does not lay down a “one size fits all” test,[30] in the sense that while it is foolproof for an online commercial transaction and intellectual property issues, it does not cover the area of torts such as defamation.
In a differing opinion, in World Wrestling Entertainment, Inc. v. M/s Reshma Collection & Ors,[31] the Appellant was a Delaware based company providing the online sale of digital merchandise to customers world over and also in Delhi and held the trademark for the same. Here, the Court held that due to the spontaneous nature of the transactions (offer and acceptance and payment of consideration) over the internet, the cause of action is deemed to have occurred at the place the customer carried out his part of the transaction.[32]
The jurisprudence in such torts is still developing in India and largely follows the double actionability rule. The double actionability rule is the foundation or cross-border torts, particularly, defamation.[33] This rule lays down two points:
- The act must be “actionable” as a tort in England; and
- The act must be “non-justifiable” by the law of the place where it was committed. (this was eventually overruled by Boys v. Chaplin)[34]
This rule was further discussed and upheld in Govindan Nair v. Achuta Menon,[35] when the then Raja of Cochin (which was at the time an independent Indian State), sent a communication to the plaintiff excommunicating him from his caste in British India. The High Court applied the rule but dismissed the case as there was no trace of malice. In more recent times, the order in Baba Ramdev and Anr. v. Facebook Inc.,[36] is highly interesting. The allegation here was that a book based on the plaintiff was being circulated on a global basis by social media platforms, such as Facebook. The basic issue here was whether a global takedown order could even be passed by the Court. The Court essentially held that:
- If the content was uploaded in India, or from IP addresses in India, the content had to be taken down, blocked/ restricted on a global basis;[37]
- However, if uploaded from outside India, the Court cannot exercise its jurisdiction.[38]
Such exercise of jurisdiction has also been discussed in YouTube v. Geeta Shroff, wherein the Court held that any exercise of jurisdiction must be done assuming that the internet transaction is one akin to a real-life transaction, thereby ensuring that the Court cannot assume extra-territorial jurisdiction on the matter.[39]
Julia Hornle points out that the laws in the US are quite liquid on the point of personal jurisdiction and can be used to adapt to multiple scenarios.[40] However, tests in India have seemingly been fact-specific and not one test that can cover the entirety of actions that take place on the internet. Thus, courts may exercise jurisdiction either very broadly or very narrowly. However, this does not mean that India does not follow any minimum standard. The laws laid down in the US and other common law jurisdictions have gone a long way in establishing India’s position on personal jurisdiction in matters of cyber-transactions. Thus, it is easy to conclude by saying India has given the concept of personal jurisdiction a wide berth and a multi-dimensional interpretation and one can hope to have a “one size fits all” criteria in the foreseeable future, as Courts get better acclaimed with the use of and the advancement of technology in all fields – legal, commercial
[1] TiTi Nguyen, A Survey of Personal Jurisdiction based on Internet Activity: A Return to Tradition, 19 Berkeley Tech. L.J. 519 (2004).
[2] International Shoe v Washington, 326 U.S. 310 (1945)
[3] Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414 (9th Cir. 1997)
[4] Calder v. Jones, 465 U.S. 783 (1984)
[5] Id.
[6] Dudnikov v. Chalk & Vermilion, 514 F.3d 1063 (10th Cir. 2008).
[7] Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119
[8] Id; Christopher Wolf, Standards for Internet Jurisdiction, FindLaw (May 03, 2016), https://corporate.findlaw.com/litigation-disputes/standards-for-internet-jurisdiction.html
[9] No Bad Puns: A different Approach to the Problem of Personal Jurisdiction and the Internet, 116 Harv. L. Rev. 1821, 1833 (2003).
[10] Blakey v. Continental Airlines, 751 A.2d 538 (NJ 2000)
[11] Young v. New Havem Advocate, 315 F 3d 256 (4th Cir, 2003)
[12]Yahoo! Inc. v. La Ligue Contre Le Racisme et l’antisemitisme, 433 F.3d 1199 (9th Cir. 2006)
[13]Brussels Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters, Regulation 44/2001 (Dec. 22, 2000)
[14] Article 5(3) allows for two jurisdictions – the place of domicile of the defendant OR the place where the harm has occurred; Handelskwekerij G. J. Bier B.V. v Mines de Potasse d’Alsace S.A. (preliminary ruling requested by the Gerechtshof of The Hague) (Case 21/76) [1976] ECR 1735, [1978] QB 708, [1977] 1 CMLR 284.
[15] Shevill & Ors. v. Presse Alliance S.A., Case C-68/93 [1995] 2 W.L.R. 499
[16] Handelskwekerij G J Bier B. V. v. Mines de Potasse d’Alsace SA, Case 21/76 [1976] E.C.R. 1735
[17] Christopher Forsyth, Defamation under the Brussels Convention: A Forum Shopper’s Charter?, 54(3) Cam. L.J. 515 (1995)
[18] eDate Advertising GmbH and Others v X and Société MGN Limited, Cases C-509/09 and C-161/10
[19] Bolagsupplysningen OÜ Ingrid Ilsjan v. Svensk Handel AB, Case C-194/16, ECJ
[20]Banyan Tree Holdings v. A. Murali Krishna Reddy, CS (OS) No.894/2008 (Nov. 23, 2009) [hereinafter Banyan Tree]
[21] Casio India Co. Limited v. Ashita Tele Systems Pvt. Limited 2003 (27) PTC 265 (Del)
[22] (India TV) Independent News Service Pvt. Limited v. India Broadcast Live Llc And Ors., 2007 (35) PTC 177 (Del.).
[23]Banyan Tree, supra note 20 at ¶38
[24] Id at ¶38
[25] Id at ¶42
[26]Id
[27] Id at ¶45
[28] Sarine Technologies v. Diyora and Bhanderi Corpn., 2020 SCCOnline Guj 140.
[29] Presteege Property Developers v. Prestige Estates Projects Pvt. Ltd., 2008 (37) PTC 413 (SC)
[30] Justice Muralidhar, Jurisdictional Issues in Cyberspace, 6 Ind. J. L & Tech. 1 (2010).
[31] World Wrestling Entertainment, Inc. v. M/s Reshma Collection & Ors, AO (OS) 506/2013 and CM Nos. 17627/2013 & 18606/2013, decided on October 15, 2014.
[32] Id.
[33] Philips v Eyre, 6 L.R. Q.B. 1, 28 (1870, Queen’s Bench).
[34] Boys v. Chaplin, 2 Q.B. 1 (1968, Queen’s Bench).
[35] Govindan Nair v. Achuta Menon, (1915) I.L.R. 39 Mad 433.
[36] Baba Ramdev and Anr. v. Facebook Inc, CS (OS) 27/2019
[37]Id at ¶96(i)
[38] Id at ¶96(ii)
[39] YouTube v. Geeta Shroff, FAO 93/2018
[40] Julia Hörnle, The Conundrum of Internet Jurisdiction and How US Law has Influences the Jurisdiction Analysis in India, 14 Ind. J. L. Tech. 183 (2018).
Mass Litigation in Times of Corona and Developments in the Netherlands
By Jos Hoevenaars and Xandra Kramer, Erasmus University Rotterdam (postdoc and PI ERC consolidator project Building EU Civil Justice, Erasmus University Rotterdam)
Introduction
As is illustrated in a series of blog posts on this website, the current pandemic also has an impact on the administration of justice and on international litigation. As regards collective redress, Matthias Weller reported on the mass litigation against the Austrian Federal State of Tyrol and local tourist businesses. The Austrian Consumer Protection Association (Österreichischer Verbraucherschutzverein, VSV) has been inviting tourists that have been in the ski areas in Tyrol – which turned into Corona infection hotspots – in the period from 5 March 2020 and shortly afterwards discovered that they were infected with the virus, to enrol for claims for damages against the Tyrolean authorities and the Republic of Austria. Hundreds of coronavirus cases in Iceland, the UK, Germany, Ireland, Norway, Denmark and the Netherlands can be traced back to that area. Currently over 4,000 (including nearly 400 Dutch nationals) have joined the action by the VSV.
It may be expected that other cases will follow as the global impact of the pandemic is overwhelming, both in terms of health and economic effects, and it seems that early warnings have been ignored. Like for instance the Volkswagen emission case, these events with global impact are those in which collective redress mechanisms – apart perhaps from piggybacking in pending criminal procedures – are the most suitable vehicles. This blog will address mass litigation resulting from the corona crisis and use the opportunity to bring a new Dutch act on collective action to the attention.
Late Response
After the WHO declared the coronavirus a global emergency on 30 January 2020, and after the virus made landfall in Europe in February, the beginning of March still saw plenty of skiing and partying in Tyrolean winter sports resorts such as Ischgl and Sankt Anton. It later turned out that during that period thousands of winter sports tourists were infected with the corona virus and who, upon returning to their home countries, spread the virus throughout Europe. A group of Icelandic vacationers had already returned sick from Ischgl at the end of February. In response, Iceland designated Tyrol as a high-risk zone. They warned other countries in Europe, but these did not follow the Icelandic example.
The first alarm bells in Tyrol itself rang on 7 March 2020 when it became known that a bartender from one of the busiest and best-known après-ski bars in Ischgl, Café Kitzloch, had tested positive for the corona virus. A day later it appeared that the entire waiting staff tested positive. Still, the bar remained open until 9 March. Other bars, shops, restaurants were open even longer, and it took almost a week for the area to go into complete lockdown. The last ski lifts stopped operating on 15 March.
The public prosecutor in Tirol is currently investigating whether criminal offenses were committed in the process. The investigation started as early as 24 March, at least in part after German channel ZDF indicated that at the end of February there was already a corona infection in an après ski bar in Ischgl and that it had not been made public. Public officials in Tyrol might thus face criminal proceedings, and civil claims are to be expected later in the year. For instance Dutch media have reported that Dutch victims feel misinformed by the Austrian authorities and nearly 400 Dutch victims have joined the claim.
Corona-related Damage as Driver for International (Mass) Litigation
It is unlikely that COVID-19 related mass claims will be confined to the case of Tirol, and to damages resulting directly from infections and possible negligent endangerment of people by communicable diseases. The fall-out from the wide-spread lockdown measures and resulting economic impact on businesses and consumers alike, has been called a ‘recipe for litigation’ for representative organizations and litigation firms.
With the coronavirus upending markets, disrupting supply chains and governments enacting forced quarantines, the fallout from lockdowns as well as the general global economic impact will provide fertile grounds for lawsuits in a host of areas. Some companies are already facing legal action. For instance, GOJO, the producer of Purell hand sanitizer, is being accused of ‘misleading claims’ that it can prevent ‘99.9 percent of illness-causing germs’ (see for instance this NBC coverage), and law suits have been brought for price gouging by Amazon for toilet paper and hand sanitizer, and for sales of face masks through eBay (see here for a brief overview of some of the cases).
Further down the line, manufacturers may sue over missed deadlines, while suppliers could sue energy companies for halting shipments as transportation demand dwindles. Insurers are likely to find themselves in court, with businesses filing insurance claims over the coronavirus fallout. And in terms of labor law, companies may be held liable in cases where work practices have led to employees being exposed and infected with the virus. For instance, this March, in the US the nurses’ union filed a law suit against the New York State Department of Health and a few hospitals for unsafe working conditions (see for instance this CNN coverage). Already at the end of January, the pilots’ union at American Airlines Group Inc. took legal action to prevent the company from serving China, thereby putting its employees at risk (see for instance this CBS coverage).
Private care facilities too, like nursing homes that have seen disproportionate death rates in many countries, could face claims that they didn’t move quickly enough to protect residents, or didn’t have proper contingency plans in place once it became clear that the virus posed a risk especially to their clientele. Similarly, states have a responsibility for their incarcerated population and may face liability claims in case of outbreak in prison facilities. Airlines that have spent years in EU courts fighting and shaping compensation rules for passengers may well again find themselves before the Court of Justice pleading extraordinary circumstances beyond their control to avoid new payouts to consumers. And finally, governments’ careful weighing of public health against individual rights could result in mass claims in both directions.
Developments in the Netherlands: the WAMCA
Dutch collective redress mechanisms have been a subject of discussion in the EU and beyond. While we are not aware of cases related to COVID-19 having been brought or being prepared in the Netherlands so far, the latest addition to the Dutch collective redress mechanisms could prove to be useful. In the Netherlands, a procedure for a collective injunctive action has been in place since 1994. This was followed by a collective settlement scheme in 2005 (the Collective Settlement Act, WCAM) which facilitates collective voluntary settlement of mass damage. Especially the Shell and Converium securities cases have attracted widespread international attention. The decision by the Amsterdam Court of Appeal – having exclusive competence in these cases – has been criticized for casting the international jurisdiction net too wide in the latter case in particular (see for a discussion of private international law aspects Kramer 2014 and Van Lith 2010). These, and a number of other Dutch collective redress cases, have spurred discussions about the alleged risk of the Netherlands opening itself up to frivolous litigation by commercially motivated action groups, a problem that has often been associated with the US system. In an earlier blog post our research group has called for a nuanced approach as there are no indications that the Dutch system triggers abuse.
At the time of enacting the much discussed WCAM, the Dutch legislature deliberately chose not to include the possibility of bringing a collective action for the compensation of damages in an attempt to avoid some of the problematic issues associated with US class actions. However, last year, after many years of deliberating (see our post of 2014 on this blog on the draft bill) the new act enabling a collective compensatory action was adopted. The Collective Redress of Mass Damages Act (Wet afwikkeling massaschade in collectieve actie, WAMCA) entered into force on 1 January 2020. It applies to events that occurred on or after 15 November 2016.
As announced in an earlier post on this blog, this new act aims to make collective settlements more attractive for all parties involved by securing the quality of representative organizations, coordinating collective (damages) procedures and offering more finality. At the same time it aims to strike the balance between better access to justice in a mass damages claim and the protection of justified interests of persons held liable. The WAMCA can be seen as the third step in the design of collective redress mechanisms in the Dutch justice system, building on the 1994 collective injunctive action and the 2005 WCAM settlement mechanism. An informal and unauthorised English version of the new act is available here.
The new general rule laid down in Article 3:305a of the Dutch Civil Code, like its predecessor, retains the possibility of collective action by a representative association or foundation, provided that it represents these interests under the articles of association and that these interests are adequately safeguarded by the governance structure of the association or foundation. However, stricter requirements for legal standing have been added, effectively raising the threshold for access to justice. This is to avoid special purpose vehicles (SPVs) bringing claims with the (sole) purpose of commercial gain. In addition to a declaratory judgment a collective action can now also cover compensation as a result of the new act. In case more representatives are involved the court will appoint the most suitable representative organisation as exclusive representative. As under the old collective action regime, this has to be a non-profit organisation. The Claim Code of 2011 and the new version of 2019 are important regulatory instruments for representative organisations. Should parties come to a settlement, the WCAM procedural regime will apply, meaning that the settlement agreement will be declared binding by the Court of Appeal in Amsterdam if it fulfils the procedural and substantive requirements. This is binding for all parties that didn’t make use of the opt-out possibility.
Limited territorial scope and the position of foreign parties
To meet some of the criticism that has been voiced in relation to the extensive extraterritorial reach of the WCAM, the new act limits the territorial scope of collective actions.
First, the new Article 3:305a of the Dutch Civil Code contains a scope rule stating that a legal representative only has legal standing if the claim has a sufficiently close relationship with the Netherlands. A sufficiently close relationship with Dutch jurisdiction exists if:
(1) the legal person can make a sufficiently plausible claim that the majority of persons whose interests the legal action aims to protect have their habitual residence in the Netherlands; or
(2) the party against whom the legal action is directed is domiciled in the Netherlands, and additional circumstances suggest that there is a sufficiently close relationship with Dutch jurisdiction; or
(3) the event or events to which the legal action relates took place in the Netherlands
Though this is not an international jurisdiction rule – that would be at odds with the Brussels I-bis Regulation – this scope rule prevents that the Dutch court can decide cases such as the Converium case in which the settling company was situated abroad and only 3% of the interested parties were domiciled in the Netherlands. In fact, it is a severe restriction of the international reach of the Dutch collective action regime.
Second, another often debated issue is the opt-out system of the WCAM. While this makes coming to a settlement obviously much more attractive for companies and increases the efficiency of collective actions, an exception is made for collective actions involving foreign parties. Dutch parties can make use of an opt-out within a period to be set by the court of one month at least. However, for foreign parties the new act provides for a general opt-in regime for foreign parties. Article 1018 f (5) of the Dutch Code of Civil Procedure provides that persons who are not domiciled or resident in the Netherlands are only bound if they have informed the court registry within the period set by the court that they agree to having their interests represented in the collective action. There is a little leeway to deviate from this rule. The court may, at the request of a party, decide that non-Dutch domiciles and residents belonging to the precisely specified group of persons whose interests are being represented in the collective action, are subject to the opt-out rule.
The introduction by the WAMCA of a compensatory collective action complementing the injunctive collective action and providing a stick to the carrot of the WCAM settlement offers new opportunities, while increased standards of legal standing provide the necessary safeguards. However, the limitation of the scope of the new regime to cases that are closely related to the Netherlands – on top of the international jurisdiction rules – and deviating from the effective opt-out rule for foreign parties restrict the scope of Dutch collective actions. Time will tell what role the new Dutch collective action regime will play in major international cases, and whether it will be of use to provide redress for some of the culpable damage caused by the present pandemic.
Israeli Requirement of Good Faith Conduct in Enforcement of Foreign Judgments
Written by Haggai Carmon, Carmon & Carmon, an international law firm with offices in Tel Aviv and a front office in New York.
The requirement of parties’ good faith conduct is fundamental in Israeli law and jurisprudence. However, only recently the Supreme Court has applied that doctrine to enforcement of foreign judgments as thus far, only lower courts have followed that doctrine.
In Civil Appeal X [Name removed upon request of Claimant, General Editors of CoL, 26 October 2022] v. Bankruptcy Office Geneva, the Supreme Court (per Esther Hayut, Chief Justice,) on August 27, 2019, unanimously denied an appeal over a District Court’s earlier finding that procedural bad faith is independently sufficient grounds to rule against a party whose conduct during proceedings to enforce a Swiss judgment, was so egregious that it warranted such extreme measure.
“In the course of the proceedings in the case, the appellant demonstrated contempt for the court’s proceedings, the counterclaimant’s rights and the duties imposed on him under the Rules of Civil Procedure and the judicial decisions given in his case. In doing so, the appellant violated his duty to act fairly and reasonably to enable proper judicial proceeding. In light of all the foregoing, there is no escaping of the conclusion that the appeal before us is one of those rare instances where the appellant’s bad faith conduct, who has taken practical measures to thwart the enforcement of the judgment rises to an abuse of court proceedings. Under these exceptional circumstances, in my opinion, it is justified to use the authority given to us and order the appeal be denied in limine.”
Although lack of good faith or unacceptable conduct do not, pursuant to the Israeli Foreign Judgments Enforcement Law, provide independent cause to refuse recognition or enforcement of a foreign judgment, “however certainly this carries weight in the court’s considerations together with all other conditions”[1] for such recognition or enforcement. [Judge Keret-Meir’s ruling in Bankruptcy File (T.A.) 2193/08 First International Bank of Israel Ltd. v. Gold & Honey (1995) L.P. et al.
Earlier, the Jerusalem District Court’s judgment in D.C.C. (Jm.) 3137/04 Ahava (USA) Inc. v. J.W.G. Ltd (Ahava)[2]concerned whether a U.S. judgment precluding an Israeli company from marketing Israeli products in the United States through a website was a foreign judgment enforceable pursuant to the Enforcement Law. The court held that “the filter of ‘public policy’ allows us to uproot unjust outcomes that may arise from the application of a foreign law,”[3] and addressed at length the essence of public policy:[4]
What is public policy? It is a broad term, “flexible and not entirely definable” …. Some will emphasize the local nature of public policy… but it seems that the basic requirements of law, including good faith, equity, and human rights, do not carry national identities, nor do they evaporate at international borders. Recognition of this approach grew with the erosion of “the archaic definition of the sovereignty doctrine, and as territorial sovereignty boundaries between legal systems blurred” (I. Canor, Private International Law and the Decay of Sovereignty in the Globalization Age: The Application of Foreign Public Law on International Contracts… p. 491). This process expanded the definition of public policy and imparted it with a quality of tikkun olam (bettering society) in its literal sense, such that appropriate applications are made from the public and private law of foreign legal systems to a domestic forum. In this context, we can even identify certain international rules which obligate even the parties of a purely domestic contract (Canor, id. 513). The inclination to apply rules of global public policy will increase as the link between the contract and local law weakens. A component of this global public policy is the very need to enforce foreign judgments.
The District Court held essentially that the protection of intellectual property does not in and of itself violate public policy in Israel, as this includes as well the principle that prohibits taking another’s work or basing one’s work on it, and this principle also applies to trademark law and other protections related to the appearance of the product. In these circumstances, the court ruled that the prohibition placed by the U.S. court, on the basis of internal U.S. trademark law, did not conflict with public policy in Israel.
In D.C.C. (T.A.) 22673-07-10 Nader & Sons LLC et al v. Homayon Antony Namvar (Nader),[5] the District Court rejected arguments that a summary judgment by the Supreme Court of the state of New York was unenforceable in Israel as having been rendered in unjust and improper proceedings, so that it conflicted with the public policy of Israel. The respondent argued that the choice of such proceedings in a suit of such broad scope constituted lack of good faith and an attempt to evade thorough investigation of the claims, as well as that significant details and facts withheld from the New York court might have affected the outcome of the proceedings.
The court dismissed these arguments:[6]
As stated, external public policy, in the sense of Article 3(3) of the Foreign Judgments Enforcement Law, refers to conformance with the basic principles of Israeli law, and the argument of the respondent regarding the flaws that, in his opinion, characterize the proceedings in New York, as decisive as they may be, do not testify to any conflict with these basic principles (regardless of the validity of these claims) and are not directly connected to the content of the judgment.
In Justice Procaccia commented in C.A. 5793/05 The Great Synagogue Shone Halachot Association v. Netanya Municipality:[7]
It is true that the Arbitration Law, 5728-1968 does not set a binding deadline on the prevailing party in an arbitration award to file a motion for its confirmation.… Nevertheless, this does not signify that there exists no limit whatsoever for filing a motion for the confirmation of an arbitration award and that the procedural rights of the holder of such an award are everlasting. A party who prevailed in arbitration is required by procedural good faith to submit the award for confirmation within a reasonable time period, given the special circumstances of the relevant incident. A party who for years ignored the award, did not act on it, and appeared to no longer have any intention of enforcing it, is liable to face a procedural estoppel claim (Ottolenghi, Arbitration: Law and Procedure, 4th ed., 2005, 914-916). Like any other complaint filed with a court, a motion for confirmation of an arbitration award is also subject to the rules of procedural good faith and reasonability regarding the timing, form, and content of the filing. The civil rules of laches apply to the timing of filing, as they apply to civil suits in the framework of statutory periods of limitations.
The question of whether this judgment, which deals with a 30-year delay in filing a motion for the confirmation of an Israeli arbitration award, will also apply to an arbitral award issued abroad under the New York Convention, remains open and has not been addressed. Because the New York Convention and the regulations for its execution make no mention of laches, it is unclear if the application of the Convention should be restricted and subjected to those principles, thus bypassing the absence of deadline for filing for confirmation under the Convention. In general, foreign arbitration takes place between commercial entities or countries, and at times, the difficulty in enforcing arbitration awards for various reasons is universal. There are many cases in which enforcement in one country encounters protracted difficulties, and then, upon locating debtor’s assets in another country, the award holder applies for enforcement of the award in that country. This may be many years after the award was issued. Blocking the procedural path of the holder through laches is unjust, at least under such circumstances, and it appears that the New York Convention’s silence in this context is not for naught. Presumably for the same reason, the Convention does not list laches among the grounds for refusal to recognize or enforce an award, nor does it impose a time limit for filing a motion for the confirmation of an arbitration award under the Convention.
For more informaiton, see Haggai, Foreign Judgements in Israel — Recognition and Enforcement, published in Hebrew by the Israeli Bar Association. Springer published an English translation.
[1] See Judge Keret-Meir’s ruling in Bankruptcy File (T.A.) 2193/08 First International Bank of Israel Ltd. v. Gold & Honey (1995) L.P. et al.
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Lancaster Workshop on Challenges in Contemporary International Litigation – 21 June 2023
The University of Lancaster has organised a workshop on Challenges in Contemporary International Litigation on Wednesday, 21 June 2023, 12.30 – 5 pm UK time (in person and online via Teams). Some well established and emerging experts will discuss cutting edge issues of practical significance in private international law (broadly understood).
12.30 pm
Welcome remarks by Dr Mukarrum Ahmed and Professor David Milman (Co-chairs – University of Lancaster)
Professor Paul Beaumont FRSE (University of Stirling), ‘HCCH Jurisdiction Project’
Professor Paul Torremans (University of Nottingham), ‘CJEU case law on Article 7.2 Brussels I Regulation and its application to online copyright cases’
Dr Kirsty Hood KC (Discussant)
1.45 pm – 3.00 pm
Professor Zheng Sophia Tang (Wuhan University), ‘The challenge of emerging technology to International litigation’
Professor Veronica Ruiz Abou-Nigm (University of Edinburgh), ‘Sustainability and Private International Law’
Dr Mihail Danov (University of Exeter), ‘Private International Law and Competition Litigation in a Global Context’
3.00 pm – 3.15 pm Break
3.15 pm – 5.00 pm
Dr Jayne Holliday (University of Stirling), ‘The non-recognition of transnational divorces’
Dr Chukwuma Okoli (University of Birmingham), ‘Implied Jurisdiction Agreement in International Commercial Contracts’
Dr Michiel Poesen (University of Aberdeen), ‘The interaction between UK private international law and liability arising out of the use of artificial intelligence’
Mr Denis Carey (University of Lancaster), ‘The Consultation on the Reform of the Arbitration Act 1996’
The workshop is free to attend, but registration is required via email. A Teams link will be provided for remote attendees.
No Recognition in Switzerland of the Removal of Gender Information according to German Law
This note has been kindly provided by Dr. Samuel Vuattoux-Bock, LL.M. (Kiel), University of Freiburg (Germany).
On 8 June 2023, the Swiss Federal Supreme Court (Bundesgericht) pronounced a judgment on the removal of gender markers of a person according to German Law and denied the recognition of this removal in Switzerland. Read more
Regional Developments in International Law in Africa and Latin America – Annual Meeting of the German Branch of the ILA, Frankfurt, 7 July 2023
This year’s annual meeting of the German Branch of the International Law Association will take place at the Goethe-University in Frankfurt (Main) on Friday, 7 July 2023. The subject will be “Regional Developments in International Law in Africa and Latin America”. The list of distinguished speakers includes Prof. Dr. Thoko Kaime, University of Bayreuth, Alan Diego Vogelfanger, LL.M., University of Bonn/Universidad de Buenos Aires, Kholofelo Kugler, LL.B., M.A., University of Lucerne (Switzerland), and Priv.-Doz. Dr. Jan Peter Schmidt, Max-Planck-Institute for Comparative and International Private Law. The full program can be found here. For registration, please click here. A passive attendance via Zoom will be possible.