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Walking Solo – A New Path for the Conflict of Laws in England
Written by Andrew Dickinson (Fellow, St Catherine’s College and Professor of Law, University of Oxford)
The belated conclusion of the UK-EU Trade and Cooperation Agreement did not dampen the impact of the UK’s departure from the European Union on judicial co-operation in civil matters between the UK’s three legal systems and those of the 27 remaining Members of the Union. At the turn of the year, the doors to the UK’s participation in the Recast Brussels I Regulation and the 2007 Lugano Convention closed. With no signal that the EU-27 will support the UK’s swift readmission to the latter, a new era for private international law in England and Wales, Scotland and Northern Ireland beckons.
The path that the United Kingdom has chosen to take allows it, and its constituent legal systems, to shape conflict of laws rules to serve the interests that they consider important and to form new international relationships, unfettered by the EU’s legislative and treaty making competences. This liberty will need to be exercised wisely if the UK’s legal systems are to maintain their positions in the global market for international dispute resolution, or at least mitigate any adverse impacts of the EU exit and the odour of uncertainty in the years following the 2016 referendum vote.
As the guidance recently issued by the Ministry of Justice makes clear, the UK’s detachment from the Brussels-Lugano regime will magnify the significance of the rules of jurisdiction formerly applied in cases falling under Art 4 of the Regulation (Art 2 of the Convention), as well as the common law rules that apply to the recognition and enforcement of judgments in the absence of a treaty relationship. This is a cause for concern, as those rules are untidy and ill-suited for the 21st century.
If the UK’s legal systems are to prosper, it is vital that they should not erase the institutional memory of the three decades spent within the EU’s area of justice. They should seek to capture and bottle that experience: to see the advantages of close international co-operation in promoting the effective resolution of disputes, and to identify and, where possible, replicate successful features of the EU’s private international law framework, in particular under the Brussels-Lugano regime.
With these considerations in mind, I began the New Year by suggesting on my Twitter account (@Ruritanian) ten desirable steps towards establishing a more effective set of conflict of laws rules in England and Wales for civil and commercial matters. Ralf Michaels (@MichaelsRalf) invited me to write this up for ConflictofLaws.Net. What follows is an edited version of the original thread, with some further explanation and clarification of a kind not possible within the limits of the Twitter platform. This post does not specifically address the law of Scotland or of Northern Ireland, although many of the points made here take a broader, UK-wide view.
First, a stand-alone, freshly formulated set of rules of jurisdiction replacing the antiquated service based model. That model (Civil Procedure Rules 1998, rr 6.36-6.37 (CPR) to be read with Practice Direction 6B) dates back to the mid-19th century and has only been lightly patched up, albeit with significant ad hoc extensions, since then. The new rules should demand a significant connection between the parties or the subject matter of the claim and the forum of a kind that warrants the exercise of adjudicatory jurisdiction. In this regard, the Brussels-Lugano regime and the rules applied by the Scots courts (Civil Jurisdiction and Judgments Act 1982, Sch 8) provide more suitable starting points than the grounds currently set out in the Practice Direction.
Taking this step would allow the rules on service to focus on the procedural function of ensuring that the recipient of a claim form or other document is adequately informed of the matters raised against it. It would enable the cumbersome requirement to obtain permission to serve a claim form outside England and Wales to be abolished, and with it the complex and costly requirement that the claimant show that England and Wales is the ‘proper place’ (ie clearly the appropriate forum) for the trial of the action. Instead, the claimant would need to certify that the court has jurisdiction under the new set of rules (as has been the practice when the rules of the Brussels-Lugano apply) and the defendant would need to make an application under CPR, Part 11 if it considers that the English court does not have or should not exercise jurisdiction. The claimant would bear the burden of establishing jurisdiction, but the defendant would bear the burden of persuading the court that it should not be exercised. This brings us to the second point.
Secondly, stronger judicial (or legislative) control of the expensive and resource eating Goffian forum conveniens model. Senior judges have repeatedly noted the excesses of the Spiliada regime, in terms of the time, expense and judicial resource spent in litigating questions about the appropriate forum (see, most recently, Lord Briggs in Vedanta Resources Plc v Lungowe [2019] UKSC 20, [6]-[14]), yet they and the rule makers have done little or nothing about it. In many ways, the model is itself to blame with its wide ranging evaluative enquiry and micro-focus on the shape of the trial. Shifting the onus to the defendant in all cases (see above) and an emphasis on the requirement that another forum be ‘clearly [ie manifestly] more appropriate’ than England would be useful first steps to address the excesses, alongside more pro-active case management through (eg) strict costs capping, a limit in the number of pages of evidence and submissions for each side and a greater willingness to require the losing party to pay costs on an indemnity basis.
Thirdly, a clipping of the overly active and invasive wings of the anti-suit injunction. English judges have become too willing to see the anti-suit injunction, once a rare beast, as a routine part of the judicial arsenal. They have succumbed to what I have termed the ‘interference paradox’ ((2020) 136 Law Quarterly Review 569): a willingness to grant anti-suit injunctions to counter interferences with their own exercise of jurisdiction coupled with an overly relaxed attitude to the interferences that their own orders wreak upon foreign legal systems and the exercise of constitutional rights within those systems. Moreover, the grounds for granting anti-suit injunctions are ill defined and confusing – in this regard, the law has travelled backwards rather than forwards in the past century (another Goffian project). Much to be done here.
Fourthly, steps to accede to the Hague Judgments Convention and to persuade others to accede to the Hague Choice of Court Convention. Although the gains from acceding to the Judgments Convention may be small, at least in the short term, it would send a strong signal as to the UK’s wish to return to centre stage at the Hague Conference, and in the international community more generally, and may strengthen its hand in discussions for a future Judgments Convention. By contrast, the success of the Hague Choice of Court Convention is of fundamental importance for the UK, given that it wishes to encourage parties to choose its courts as the venue for dispute resolution and to have judgments given by those courts recognised and enforced elsewhere.
Fifthly, a review of the common law rules for the recognition and enforcement of judgments, which are in places both too broad and too narrow. These rules have been little changed since the end of the 19th century. They allow the enforcement of foreign default judgments based only on the defendant’s temporary presence in the foreign jurisdiction at the time of service, while treating as irrelevant much more substantial factors such as the place of performance of a contractual obligation or place of commission of a tort (even in personal injury cases). Parliamentary intervention is likely to be needed here if a satisfactory set of rules is to emerge.
Sixthly, engagement with the EU’s reviews of the Rome I and II Regulations to test if our choice of law rules require adjustment. The UK has wisely carried forward the rules of applicable law contained in the Rome Regulations. Although not perfect, those rules are a significant improvement on the local rules that they replaced. The EU’s own reviews of the Regulations (Rome II currently underway) will provide a useful trigger for the UK to re-assess its own rules with a view to making appropriate changes, whether keeping in step with or departing from the EU model.
Seventhly, statutory rules governing the law applicable to assignments (outside Rome I) and interests in securities. The UK had already chosen not to participate in the upcoming Regulation on the third party effects of assignments, but will need to keep a close eye on the outcome of discussions and on any future EU initiatives with respect to the law applicable to securities and should consider legislation to introduce a clear and workable set of choice of law rules with respect to these species of intangible property. These matters are too important to be left to the piecemeal solutions of the common law.
Eighthly, a measured response to the challenges presented by new technology, recognising that the existing (choice of law) toolkit is fit for purpose. In December 2020, the UK Law Commission launched a consultation on Smart Contracts with a specific section (ch 7) on conflict of laws issues. This is a welcome development. It is hoped that the Law Commission will seek to build upon existing solutions for offline and online contracts, rather than seeking to draw a sharp distinction between ‘smart’ and ‘backward’ contracts.
Ninthly, changes to the CPR to reduce the cost and inconvenience of introducing and ascertaining foreign law. The English civil procedure model treats foreign law with suspicion, and places a number of obstacles in the way of its effective deployment in legal proceedings. The parties and their legal teams are left in control of the presentation of the case, with little or no judicial oversight. This approach can lead to uncertainty at the time of trial, and to the taking of opportunistic points of pleading or evidence. A shift in approach towards more active judicial case management is needed, with a move away from (expensive and often unreliable) expert evidence towards allowing points of foreign law to be dealt with by submissions in the same way as points of English law, especially in less complex cases.
Tenthly, measures to enhance judicial co-operation between the UK’s (separate) legal systems, creating a common judicial area. It is a notable feature of the Acts of Union that the UK’s constituent legal systems stand apart. In some areas (notably, the recognition and enforcement of judgments – Civil Jurisdiction and Judgments Act 1982, Sch 6 and 7), the rules operate in a way that allows the recognition of a single judicial area in which barriers to cross-border litigation have been removed. In other respects, however (for example, the service of documents, the taking of evidence and the ascertainment of foreign law), the UK’s legal systems lack the tools that would facilitate closer co-operation and the more effective resolution of disputes. The UK’s legal systems should consider what has worked for the EU, with its diverse range of legal systems, and for Commonwealth federal States such as Australia and work together to adopt comprehensive legislation on a Single UK Judicial Area.
Symeonides’ 30th (and last) Annual Survey of Choice of Law
Symeon Symeonides, without doubt the doyen of US conflict of laws, just published what he says is the last of his annual surveys of American Choice of Law. (The series will be continued by John F. Coyle, William S. Dodge, and Aaron D. Simowitz, suggesting it takes three of our most eminent scholars to replace Symeonides.)
As everyone in our discipline knows, reliably, at the end of the year, Symeon has posted his survey of conflict-of-laws decisions rendered over the year, according to Westlaw. He would assemble the most important decisions (of which he finds a lot), organize them around themes, and comment on them, always with (sometimes admirable) restraint from criticism. Anyone who has ever tried to survey the case law of an entire year in a jurisdiction knows how much work that is. (We at Max Planck, with IPRspr, certainly do.)
The service rendered to the discipline is invaluable. Conflict-of-laws opinions are hard to track, not least because courts themselves do not always announce them as such, and because they cover all areas of the law. Moreover, conflict of laws in the United States remains disorganized, with different states following different methods. (Symeon helpfully provides a table listing each state’s methodological approach.)
Incredibly, this is Symeon’s 30th survey in 34 years. In this one, he uses the occasion to ruminate about what the 30 years have taught him: reading all the cases, and not missing the forest for the trees, enabled him (and thereby us) to gain a truer view of the conflicts landscape.( Of course, Symeonides also compiled his superb knowledge of the case law in his Hague Lectures on the past, present, and future of the Choice-of-Law Revolution (republished as a book) and his book on (US) choice of law in the series of Oxford Commentaries.) Such surveying shows that some of our assumptions are dated, as he showed in two special surveys on product liability and more generally cross-border torts. And it shows, as he beautifully puts it, that judges are not stupid, just busy. Which is one of the reasons why the practice of conflicts owes such an amount of gratitude for these surveys.
Our discipline has seen a theoretical revival over the last ten or so years. A discipline once viewed as overly technical, doctrinal and untheoretical (a “dismal swamp”, in Dean Prosser’s much-cited words) is now being analyzed with newly-found theoretical and interdisciplinary interest – from economic analyses to political theory, philosophy, and even gender theory. The risk of such work is always to disentangle from the actual practice of the discipline, and thereby to lose what is arguably one of conflicts’ greatest assets: the concrete case. Symeonides (himself no enemy to methodological and sometimes theoretical discussions) has, with his annual surveys, made sure that such theories could always remain tied to the actual practice. For this, he deserves gratitude not only from practice but also from theory of private international law. His oeuvre is, of course, much much richer than the surveys. But even if he had written nothing beyond the surveys (and truth be told, it is not fully clear how he ever managed to write so much beyond them), his stature would have been earned.
The last twenty of Symeonides’ surveys have been compiled in a three volume edition published by Brill, a flyer allows for a 25% discount. While you wait for delivery (or maybe for approval of the loan you need to afford the books), you may want to download his lates survey, read Symeonides’ own thirty-year retrospective in the beginning, and marvel.
Correction: In the original version of this post I said that Symeonides will be replaced by four scholars. I have now been informed that Melissa Tatum will not join the group of authors for the annual surveys, leaving the list of the other three.
The CJEU Shrems cases – Personal Data Protection and International Trade Regulation
Carmen Otero García-Castrillón, Complutense University of Madrid, has kindly provided us with her thoughts on personal data protection and international trade regulation. An extended version of this post will appear as a contribution to the results of the Spanish Research Project lead by E. Rodríguez Pineau and E. Torralba Mendiola “Protección transfronteriza de la transmisión de datos personales a la luz del nuevo Reglamento europeo: problemas prácticos de aplicación” (PGC2018-096456-B-I00).
The regulatory scenario
- In digital commerce times, it seems self-evident that personal data protection and international trade in goods and services are intrinsically connected. Within this internet related environment personal data can be accessed, retrieved, processed and stored in a number of different countries. In this context, the legal certainty for economic actors, and even the materialisation or continuation of commercial transactions requires taking into consideration both, the international jurisdiction and the applicable law issues on the one hand, and the international trade regulations covering these commercial transactions on the other hand.
Too much personal data protection can excessively restrict international trade, especially in countries with less developed economies for which the internet is considered an essential sustainable development tool. Little protection can prejudice individual fundamental rights and consumers’ trust, negatively affecting international trade also. Hence, some kind of balance is needed between the international personal data flux and the protection of these particular data. It must be acknowledged that, summarising, whilst in a number of States personal data and their protection are fundamental rights (expressly in art. 8 CFREU, and as a part of the right to private and family life in art. 8 ECHR), in others, though placed in the individual’s privacy sphere (in the light of art. 12 UDHR), it is basically associated to consumer’s rights.
- The only general international treaty specifically dealing with personal data protection is the Convention 108 + of the Council of Europe, for the protection of individuals with regard to the processing of personal data. The Convention defines personal data as any information relating to an identified or identifiable individual (art. 2.a) without an express and formal recognition of its fundamental right character. The Convention, whose raison d’etre was justified for need to avoid that the personal data protection controls interfere with the free international flow of information (Explanatory Report, para. 9), “should not be interpreted as a means to erect non-tariff barriers to international trade” (Explanatory Report, para. 25). Its rules recognise the individual’s rights to receive information on the obtaining and the treatment of their data, to be consulted and oppose that treatment, to get the data rectified or eliminated and to count, for all this, with the support of a supervisory authority and judicial and non-judicial mechanisms (arts. 8, 9 and 12). On the basis of these common standards, member States agree not to prohibit or subject to special authorisations the personal data flows as long as the transfer does not imply a serious risk of circumventing them (art. 14). Moreover, the agreed rules can be exempted when it is a “necessary and proportionate” measure “in a democratic society” to protect individual rights and “the rights and fundamental freedoms of others”, particularly “freedom of expression” (art. 11). Presently, 55 States are parties to this Convention, including the EU but not the US, that have an observer status.
Along these lines, together with other Recommendations, the OECD produced a set of Guidelines Governing the Protection of Privacy and Transborder Flows of Personal Data (11.7.2013; revising the 1980 version). After establishing general principles of action as minimum standards, it was concluded that the international jurisdiction and the applicable law issues could not be addressed “at that stage” provided the “discussion of different strategies and proposed principles”, the “advent of such rapid changes in technology, and given the non-binding nature of the Guidelines” (Explanatory Memorandum, pp. 63-64).
On another side, the World Trade Organisation (WTO) administers different Agreements multilaterally liberalising international trade in goods and services that count with its own dispute settlement mechanism. In addition, States and, of course, the EU and the US, follow the trade bilateralism trend in which data protection and privacy has begun to be incorporated. Recently, this issue has also been incorporated into the WTO multilateral trade negotiations on e-commerce.
CJEU Schrems’ cases
- Last 16 July, in Schrems II (C-311/18), the CJEU declared the invalidity of the Commission Decision 2016/1250 on the adequacy of the protection provided by the Privacy Shield EU–US, aimed at allowing the personal data transfer to this country according to the EU requirements, then established by Directive 95/46 and, from 25 May 2018, by the Regulation 2016/679 (GDPR). On the contrary, Commission Decision 2010/87 (2016/2297 version) on the authorisation of those transfers through contractual clauses compromising data controllers established in third countries is considered to be in conformity with EU law.
In a nutshell, in order to avoid personal data flows to “data heavens” countries, transfers from the EU to third States are only allowed when there are guarantees of compliance with what the EU considers to be an adequate protective standard. The foreign standard is considered to be adequate if it shows to be substantially equivalent to the EU’s one, as interpreted in the light of the EUCFR (Schrems II paras. 94 and 105). To this end, there are two major options. One is obtaining an express Commission adequacy statement (after analysing foreign law or reaching an agreement with the foreign country; art. 45 GDPR). The other is resorting to approved model clauses to be incorporated in contracts with personal data importers, as long as effective legal remedies for data subjects are available (art. 46.1 and 2.c GDPR). According to the Commission, this second option is the most commonly used (COM/2020/264 final, p. 15).
- In Schrems II the CJEU confirms that, contrary to the Privacy Shield Decision, the US data protection regime is not equivalent to EU’s one because it allows public authorities to access and use those data without being subject to the proportionality principle (para. 183; at least in some surveillance programs) and, moreover, without recognising data owners their possibility to act judicially against them (para. 187). It never rains but what it pours since, in 2015, a similar reasoning led to the same conclusion in Schrems I (C-362/14, 5.6.15) on the Safe Harbour Decision (2000/520), preceding the Privacy Shield one. Along these lines, another preliminary question on the Privacy Shield Decision is pending in the case La cuadrature du net, where, differing from Schrems II, its compatibility with the CFREU is expressly questioned (T-738/16). In this realm, it seems relevant noting that the CJEU has recently resolved the Privacy International case, where, the non-discriminated capture of personal data and its access by national intelligence and security agencies for security reasons, has been considered contrary to the CFREU unless it is done exceptionally, in extraordinary cases and in a limited way (C-623/17, para. 72). Given the nature of the issue at hand, a similar Decision could be expected in the La cuadrature du net case; providing additional reasons on the nullity of the Privacy Shield Decision, since it would also contravene the CFREU. Moreover, all this could eventually have a cascading effect on the Commission’s adequacy Decisions regarding other third States (Switzerland, Canada, Argentina, Guernsey, Isle of Man, Jersey, Faeroe Islands, Andorra, Israel, Uruguay, New Zealand and Japan).
- As to the contractual clauses, beyond confirming the Commission analysis on their adequacy in this case, the CJEU states that it is necessary to evaluate the data access possibilities for the transferred country public authorities according to that country national law (para. 134). At the end of the day, EU Data Protection authorities have to control the risks of those authorities’ actions not conforming with EU standards, as much as the capability of the contractual parties to comply with the contractual clause as such. If the risk exists, the transfers have to be prohibited or suspended (para.135).
- The EU personal data protection norms are imperative and apply territorially (art. 3 GDPR; Guidelines 3/18 EDPB version 2.1, 7.1.2020 and CJEU C-240/14, Weltimmo). Therefore, data “imports” are not regulated and the “exports” are subject to the condition of being done to a country where they receive EU equivalent protection. In the light of CJEU case law, the measures to watch over the preservation of the EU standard are profoundly protective, as could be expected provided the fundamental rights character of personal data protection in the EU (nonetheless, many transfers have already taken place under a Decision now declared to be void).
Hence, once a third country legislation allows its public authorities to access to personal data -even for public or national security interests- without reaching the EU safeguards level, EU Decisions on the adequacy of data transfers to those countries would be contrary to EU law. In similar terms, and despite the recent EDPB Recommendations (01 and 02/20, 10.11.2020), one may wonder how the contracts including those authorised clauses could scape the prohibition since, whatever the efforts the importing parties may do to adapt to the EU requirements (as Microsoft has recently announced regarding transfers to the US; 19.11.2020), they cannot (it is not in their hands) modify nor fully avoid the application of the corresponding national legislation in its own territory.
As a result, the companies aiming to do business in or with the EU, do not only have to adapt to the GRDP, but not to export data and treat and store them in the EU (local facilities). This entails that, beyond the declared personal data international transferability (de-localisation), de facto, it seems almost inevitable to “localise” them in the EU to ensure their protection. To illustrate the confusion created for operators (that have started to see cases been filed against them), it seems enough to point to the EDPB initial reaction that, whilst implementing the Strategy for EU institutions to comply with “Schrems II” Ruling, “strongly encourages … to avoid transfers of personal data towards the United States for new processing operations or new contracts with service providers” (Press Release 29.10.2020).
Personal data localisation and international trade regulation
- There is a number of national systems that, one way or another, require personal data (in general or in especially sensitive areas) localisation. These kinds of measures clearly constitute trade barriers hampering, particularly, international services’ trade. Their international conformity relies on the international commitments that, in this case, are to be found in the WTO Agreements as much as in the bilateral trade agreements if existing. The study of this conformity merits attention.
- From the EU perspective, as an initial general approach it must be acknowledged that, within the WTO, the EU has acquired a number of commitments including specific compromises in trans-border trade services in the data process, telecommunication and (with many singularities) financial sectors. Beyond the possibility of resorting to the allowed exceptions, the “localisation” requirement could eventually be infringing these compromises (particularly, arts. XVI and/or XVII GATS).
Regarding EU bilateral trade agreements, some of the already existing ones and others under negotiation include personal data protection rules, basically in the e-commerce chapters (sometimes also including trade in services and investment). Together with the general free trade endeavour, the agreements recognise the importance of adopting and maintaining measures conforming to the parties’ respective laws on personal data protection without agreeing any substantive standard (i.e. Japan, Singapore). At most, parties agree to maintain a dialog and exchange information and experiences (i.e. Canada; in the financial services area expressly states that personal data transfers have to be in conformity with the law of the State of origin). For the time being, only the Australian and New Zealand negotiating texts expressly recognise the fundamental character of privacy and data protection along with the freedom of the parties to adopt protective measures (international transfers included) with the only obligation to inform each other.
Concluding remarks
9. As the GDPR acknowledges “(F)lows of personal data to and from countries outside the Union and international organisations are necessary for the expansion of international trade and international cooperation. The increase in such flows has raised new challenges and concerns with regard to the protection of personal data.” (Recital 101). In facing this challenge, Schrems II confirms the unilaterally asserted extraterritoriality of EU personal data protection standards that, beyond its hard and fully realistic enforcement for operators abroad, constitute a trade barrier that could be eventually infringing its WTO Agreements’ compromises. Hence, in a digitalised and globally intercommunicated world, the EU personal data protection standards contribute to feeding the debate on trade protectionism. While both the EU and the US try to expand their respective protective models through bilateral trade agreements, multilaterally -among other initiatives involving States and stakeholders, without forgetting the role of technology (privacy by design)- it will be very interesting to see how the on-going WTO negotiations on e-commerce cover privacy and personal data protection in international trade data flows.
News
The European Parliament’s last plenary session & Private International Law
This post was written by Begüm Kilimcio?lu (PhD researcher), Thalia Kruger (Professor) and Tine Van Hof (Guest professor and postdoctoral researcher), all of the University of Antwerp.
During the last plenary meeting of the current composition of the European Parliament (before the elections of June 2024), which took place from Monday 22 until Thursday 24 April, several proposals relevant to private international law were put to a vote (see the full agenda of votes and debates). All of the regulations discussed here still have to be formally approved by the Council of the European Union before they become binding law, in accordance with the ordinary legislative procedure.
It is interesting to note that, while many pieces of new legislation have a clear cross-border impact in civil matters, not all of them explicitly address private international law. While readers of this blog are probably used to the discrepancies this has led to in various fields of the law, it is still worth our consideration.
First, the European Parliament voted on and adopted the proposal for a Directive on Corporate Sustainability Due Diligence (CSDDD) with 374 votes in favour, 235 against and 19 abstentions (see also the European Parliament’s Press Release). The text adopted is the result of fierce battles between the Commission, Parliament and the Council and also other stakeholders such as civil society, academics and practitioners. This necessitated compromise and resulted in a watered-down version of the Commission’s initial proposal of 23 February 2022 and does not go as far as envisaged in the European Parliament’s Resolution of 10 March 2021 (see also earlier blog pieces by Jan von Hein, Chris Tomale, Giesela Rühl, Eduardo Álvarez-Armas and Geert van Calster).
The Directive is one of the few instruments worldwide that put legally-binding obligations on multinational enterprises. It lays down obligations for companies regarding their adverse actual and potential human rights and environmental impacts, with respect to their own operation, the operations of their subsidiaries, and the operations carried out by their business partners in the chains of activities. The Directive further stipulates specific measures that companies have to take to prevent, mitigate or bring an end to their actual or potential adverse human rights impacts. Besides national supervisory authorities for the oversight of the implementation of the obligations, the Directive enacts civil liability for victims of corporate harm.
The adopted Directive is more or less silent on private international law. The closest it gets to addressing our field of the law is Article 29(7), placing the duty on Member States to ensure the mandatory nature of civil remedies:
Member States shall ensure that the provisions of national law transposing this Article are of overriding mandatory application in cases where the law applicable to claims to that effect is not the national law of a Member State.
and Recital 90, which is more general:
In order to ensure that victims of human rights and environmental harm can bring an action for damages and claim compensation for damage caused when the company intentionally or negligently failed to comply with the due diligence obligations stemming from this Directive, this Directive should require Member States to ensure that the provisions of national law transposing the civil liability regime provided for in this Directive are of overriding mandatory application in cases where the law applicable to such claims is not the national law of a Member State, as could for instance be the case in accordance with international private law rules when the damage occurs in a third country. This means that the Member States should also ensure that the requirements in respect of which natural or legal persons can bring the claim, the statute of limitations and the disclosure of evidence are of overriding mandatory application. When transposing the civil liability regime provided for in this Directive and choosing the methods to achieve such results, Member States should also be able to take into account all related national rules to the extent they are necessary to ensure the protection of victims and crucial for safeguarding the Member States’ public interests, such as its political, social or economic organisation.
While the text contains references to numerous existing Regulations, Brussels I and Rome I are not among them; not even a precursory or confusing reference as in Recital 147 of the GDRP.
Second, the European Parliament voted on two other proposals that build on and implement the objectives of the European Green Deal and the EU Circular Economy Action Plan. The first is a proposal for a Regulation establishing a framework for setting eco-design requirements for sustainable products with 455 votes in favour, 99 against and 54 abstentions (see also the European Parliament’s Press Release). The Regulation aims to reduce the negative life cycle environmental impacts of products by improving the products’ durability, reusability, upgradability, reparability etc. It sets design requirements for products that will be placed on the market, and establishes a digital product certificate to inform consumers.
This Regulation does not contain a private-international-law type connecting factor for contracts or products. Neither does it expressly elevate its provisions to overriding rules of mandatory law (to at least give us some private international law clue). Its scope is determined by the EU’s internal market. All products that enter the European market have to be in conformity with the requirements of both regulations, also those that are produced in third countries and subsequently imported on the European market (Art. 3(1)). “Products that enter the market” is the connecting factor, or the basis for applying the Regulation as overriding mandatory law. The Regulation is silent on products that exit the market. Hopefully the result will not be that products that were still in the production cycle at the time of entry into force will simply be exported out of the EU.
The third adopted proposal is the Regulation on packaging and packaging waste with 476 votes in favour, 129 against and 24 abstentions (see also the European Parliament’s Press Release). This Regulation aims to reduce the amount of packaging placed on the Union market, ensuring the environmental sustainability of the packaging that is placed on the market, preventing the generation of packaging waste, and the collection and treatment of packaging waste that has been generated. To reach these aims, the regulation’s key measures include phasing out certain single-use plastics by 2030, minimizing so called “forever chemicals” chemicals in food packaging, promoting reuse and refill options, and implementing separate collection and recycling systems for beverage containers by 2029.
Like the Eco-design Regulation, no word on Private International Law, no references. The Regulation refers to packaging “placed on the market” in various provisions (most notably Art. 4(1)) and recitals (e.g. Recitals 10 and 14).
Lastly, the European Parliament approved the proposal for a regulation on prohibiting products made with forced labour on the Union market with an overwhelming majority of 555 votes in favour, 6 against and 45 abstentions (see also the European Parliament’s Press Release). The purpose of this Regulation is to improve the functioning of the internal market while also contributing to the fight against forced labour (including forced child labour). Economic operators are to eliminate forced labour from their operations through the pre-existing due diligence obligations under Union law. It introduces responsible authorities and a database of forced labour risk areas or products.
Just as is the case for the other Regulations, this Regulation does not contain references to private international law instruments, and no explicit reference to instruments in this field, even though the implementation of the Regulation requires vigilance throughout the value chain. It would be correct to assume that this provides overriding mandatory law, as the ban on forced labour is generally accepted to be jus cogens even though the extent of this ban is contentious (see Franklin).
Other proposals that are more clearly in the domain of private international law have not (yet?) reached the finish line. First, in the procedure on the dual proposals in the field of the protection of adults of 31 May 2023, the European Parliament could either adopt them or introduce amendments at first reading. However, these proposals have not reached the plenary level before the end of term and it will thus be for the Conference of Presidents to decide at the beginning of the new parliamentary term whether the consideration of this ‘unfinished business’ can be resumed or continued (Art. 240 Rules of Procedure of the European Parliament).
In the second file, the proposal for a Regulation in matters of parenthood and on the creation of a European Certificate of Parenthood of 7 December 2022 the European Parliament was already consulted and submitted its opinion in a Resolution of 14 December 2023. It is now up to the Council of the European Union to decide unanimously (according to the procedure in Art. 81(3) of the Treaty on the Functioning of the European Union). It can either adopt the amended proposal or amend the proposal once again. In the latter case the Council has to notify or consult (in case of substantial amendments) the European Parliament again.
Ficticious service still active outside Europe
With the EU Service Regulation being active for more than 20 years, and the Hague Service Convention being ratified by almost all European countries, there is little space for practicing fictitious service of proceedings in Europe. However, for service to third countries outside Europe, and especially to continents, such as Africa, Asia, and the Middle East, remise au parquet is still the ground rule for many European countries. A recent judgment issued by the Piraeus Court of Appeal provides a clear picture of how the mechanism operates in Greece [Piraeus Court of Appeal, judgment nr. 142/2024, available here].
I. THE FACTS:
The parties are two companies active in the international maritime sector. The claimant, a Greek company with its seat in Piraeus, filed an action before the Piraeus Court of First Instance, seeking the award of the total sum of $29,163,200. The defendant, an Iranian company with its seat in Tehran, did not appear in the hearing. The action was upheld as being well founded in substance by the Piraeus Court of 1st Instance. The defendant was ordered to pay the equivalent of $28. 663,200.
Both the action and the first instance judgment were duly served on the Piraeus District Attorney, in accordance with the provisions of Articles 134 §§ 1 and 2, and 136 § 1 Code of Greek Civil Procedure (henceforth CCP), due to the defendant’s domicile in a non-member state of the European Union, thus excluding the application of EU law, and because Iran has not acceded to the Hague Convention of 15 November 1965, which requires actual service of documents by one of the methods provided for therein. Finally, the court underlined the absence of a bilateral agreement between Iran and Greece, which would possibly regulate the issues of service in a different manner.
The defendant lodged an appeal. The appeal was however untimely filed, because it was brought after the expiry of the sixty [60] days period following service of the judgment, provided for in Article 518 § 1 CCP, which began with the fictitious service of the judgment on the Public Prosecutor, to be sent to the Minister of Foreign Affairs, in order to be transmitted through diplomatic channels to the addressee, as provided for by Article 134 §§ 1 and 3 CCP.
The Iranian company acknowledged that the time-limit had expired without effect. For this reason, it filed a request for restitutio in integrum in accordance with Article 152 CCP, requesting that the appeal be considered as timely lodged, claiming that the delay in lodging the appeal was due to force majeure. In particular, it is asserted that the Iranian company did not receive notification of both the claim, which resulted in a default judgment without its participation in the trial at first instance, and of the judgment given in default of appearance, due to the service method selected, i.e., ficticious service to the Public Prosecutor, which sets the time-limit for the appeal. Secondly, the appellant asserts that that it acted within the time-limit laid down in Article 153 CCP, that is to say, immediately after real service.
The appellant invokes the delay caused by the Piraeus Prosecutor’s Office and the diplomatic services of the Country, which did not take care to complete service within two months. In other words, it relies on the omission of third parties, which it could not prevent, and which prevented the appellant from being aware of the fictitious service and the commencement of the time-limit for lodging an appeal in Greece.
II.THE JUDGMENT OF THE PIRAEUS COURT OF APPEAL
The appellate court ruled as follows: The lawsuit was forwarded by the Piraeus Prosecutor’s Office to the Minister of Foreign Affairs, in order to be served at the defendant’s headquarters in Tehran. The diplomatic authorities of Greece did indeed send and their counterparts in Iran did receive and forward the statement of claim to its addressee. However, the Iranian company’s agents, namely the secretariat and the clerk in the Legal Affairs Department, refused to receive it. This is evident from the “Letter of confirmation for declaration of received documents from foreign countries” issued by the International Affairs Department of the Judiciary of the Islamic Republic of Iran. This document states that the defendant, through its aforementioned nominees, refused to receive the disputed “document”.
The reason for that refusal is not specified. However, from the document of the Consular Office of the Embassy of Greece in Iran, and the attached document of the Ministry of Foreign Affairs of the Islamic Republic of Iran, it can be inferred that the refusal was made because the document to be served was not accompanied by an official translation into Farsi. Iranian law does indeed appear to permit refusal to accept service of a foreigner’s statement of claim against an Iranian national on that ground (a legal opinion of Mr., a lawyer at the Central Iranian Bar Association was submitted to the CoA by the appellant). Still, domestic Greek law does not make the validity of service of an action dependent on the attachment of a translated copy of the action in the language of the State of destination. Therefore, service of the action, if it had been completed, would always be valid under Greek law.
In addition, the mere attempt to serve the action made it clear to the defendant in any event, irrespective of whether it had been aware of its content from the outset, that a claim has being brought against it in a Greek court and triggered its obligation under Article 116 CCP to monitor the progress of the proceedings from that time onwards, even if it chose not to participate in the proceedings, which the defendant was able to do, by behaving in a prudent and diligent manner, and by following the fate of the action brought in Greece.
To that end, it was sufficient simply to appoint a lawyer in Greece, who would arrange for the translation of the documents, and would attend the ongoing proceedings at first instance. Such an action was made by the appellant only after actual service of the judgment.
Similarly, the applicant does not explain the reason why it did not act by appointing a lawyer in Greece, after the refusal to receive the summons of the claimant, even though it was also sent to it accompanied by a translation of the summons in English. That omission gives the impression that the refusal to receive the summons was made in order to prolong the proceedings, and to prepare for the lodging of the appeal and the application for restitutio in integrum, which on the whole is considered to be abusive.
Consequently, the application for restitutio in integrum was dismissed as unfounded and the appeal, which was nevertheless brought out of time, was dismissed as inadmissible.
III. COMMENT
The judgment of the Piraeus CoA is interesting because it goes a step further in the examination of fictitious service: It did not simply reiterate the wording of the domestic rules; moreover, it scrutinized the facts, and avoided a stringent application of Article 134 CCP. Due process and right to be heard were included in the court’s analysis. Finally, the court dismissed the legal remedies of the appellant due to its reluctance to demonstrate proactivity, and its intention to bring the Greek proceedings to a stalemate.
[Out Now!] New Open Access Book on Corruption and Investment Arbitration: Nobumichi Teramura, Luke Nottage and Bruno Jetin (eds), Corruption and Illegality in Asian Investment Arbitration (Springer, 2024)
Nobumichi TERAMURA (Assistant Professor, Universiti Brunei Darussalam; Affiliate, Centre for Asian and Pacific Law in the University of Sydney), Luke Nottage (Professor of Comparative and Transnational Business Law, Sydney Law School) and Bruno Jetin (Associate Professor of Economics, Universiti Brunei Darussalam) published an edited volume entitled “Corruption and Illegality in Asian Investment Arbitration” from Springer on 20 April 2024. The book is an open access title, so it is freely available to any states and organisations, including less well-resourced institutions in transitioning economies. Corrupt behaviour by foreign investors, like bribery to local government officials, faces wide condemnation in any society. Nevertheless, there remains a paucity of research appraising the consequences of corruption and illegality affecting international investment in Asia, especially investment arbitration involving East and South Asian jurisdictions. This book intends to fill the gap from an interdisciplinary (legal-economic) perspective.
The volume’s description reads as follows:
This open access book explores Asian approaches towards investment arbitration—a transnational procedure to resolve disputes between a foreign investor and a host state—setting it in the wider political economy and within domestic law contexts. It considers the extent to which significant states in Asia are, or could become, “rule makers” rather than “rule takers” regarding corruption and serious illegality in investor-state arbitration. Corruption and illegality in international investment are widely condemned in any society, but there remains a lack of consensus on the consequences, especially in investment arbitration. A core issue addressed is whether a foreign investor violating a host state’s law should be awarded protection of its investment, as per its contract with the host state and/or the applicable investment or trade agreement between the home state and the host state. Some suggest such protection would be unnecessary as the investor committed a crime in the host state, while others attempt to establish an equilibrium between the investor and the host state. Others claim to protect investment, invoking the sanctity of promises made. The book starts with a deep dive into economic and legal issues in corruption and investment arbitration and then explores the situation and issues in major countries in the region in detail. It is a useful reference point for lawyers, economists, investors, and government officials who are seeking comprehensive and up-to-date information on anti-bribery rules in Asian investment treaties. It is of particular interest to students and researchers in economics, finance, and law, who are undertaking new research relating to the multifaceted impacts of corruption.
The book’s table of contents is as follows:
Chapter 1 – “Bribery and Other Serious Investor Misconduct in Asian International Arbitration” by Nobumichi Teramura, Luke Nottage and Bruno Jetin;
Chapter 2 – “Does Corruption Hinder Foreign Direct Investment and Growth in Asia and Beyond? The Grabbing Versus the Helping Hand Revisited” by Ahmed M Khalid (Professor of Economics, Universiti Brunei Darussalam);
Chapter 3 – “The Effect of Corruption on Foreign Direct Investment at the Regional Level: A Positive or Negative Relationship?” By Bruno Jetin, Jamel Saadaoui (Senior Lecturer of Economics, The University of Strasbourg), Haingo Ratiarison (The University of Strasbourg);
Chapter 4 – “Anti-Corruption Laws and Investment Treaty Arbitration: An Asian Perspective” by Anselmo Reyes (International Judge, Singapore International Commercial Court) and Till Haechler (Associate, Lenz & Staehelin);
Chapter 5 – “Multi-Tiered International Anti-Corruption Cooperation in Asia: A Review of Treaties and Prospects” by Yueming Yan (Assistant Professor, Chinese University of Hong Kong) and Tianyu Liu (ADR Case Manager, Hong Kong International Arbitration Centre);
Chapter 6 – “Corruption in International Investment Arbitration” by Michael Hwang SC (Arbitrator, Michael Hwang Chambers) and Aloysius Chang (Michael Hwang Chambers);
Chapter 7 – “Rebalancing Asymmetries Between Host States and Investors in Asian Investor–State Dispute Settlement: An Exception for Systemic Corruption” by Martin Jarrett (Senior Research Fellow, Max Planck Institute for Comparative Public Law and International Law);
Chapter 8 – “Foreign Investment, Investment Treaties and Corruption in China and Hong Kong” by Vivienne Bath (Professor of Chinese Law, Sydney Law School) and Tianqi Gu (Sydney Law School);
Chapter 9 – “Corruption and Investment Treaty Arbitration in India” by Prabhash Ranjan (Professor and Vice Dean, Jindal Global Law School);
Chapter 10 – “Corruption and Illegality in Asian Investment Disputes: Indonesia” by Simon Butt (Professor of Indonesian Law, Sydney Law School), Antony Crockett (Partner, Herbert Smith Freehills Hong Kong) and Tim Lindsey (Malcolm Smith Chair of Asian Law and Redmond Barry Distinguished Professor, Melbourne Law School);
Chapter 11 – “Foreign Investment, Treaties, Arbitration and Corruption: Comparing Japan” by Luke Nottage and Nobumichi Teramura;
Chapter 12 – “Corruption and Investment Arbitration in the Lao People’s Democratic Republic: Corruptio Incognito” by Romesh Weeramantry (Special Counsel, Clifford Chance Perth) and Uma Sharma (Associate, Jones Day Singapore);
Chapter 13 – “Corruption and Illegality in Asian Investment Arbitration: The Philippines” by Thomas Elliot A Mondez (Faculty Member, De La Salle University, Philippines) and Jocelyn P Cruz (Associate Professor, De La Salle University, Philippines);
Chapter 14 – “Investment Arbitration, Corruption and Illegality: South Korea” by Joongi Kim (Professor Yonsei Law School);
Chapter 15 – “Foreign Investment, Corruption, Investment Treaties and Arbitration in Thailand” by Sirilaksana Khoman (Professor, Thammasat University, Thailand), Luke Nottage and Sakda Thanitcul (Professor, Chulalongkorn University); and
Chapter 16 – “Towards a More Harmonised Asian Approach to Corruption and Illegality in Investment Arbitration” by Nobumichi Teramura, Luke Nottage and Bruno Jetin.