Views
Brexit: The Spectre of Reciprocity Evoked Before German Courts
The following post has been written by Ennio Piovesani, PhD Candidate at the Universities of Turin and Cologne.
While negotiations for an agreement on the future partnership between the EU and the UK are pending, a spectre haunts Europe: reciprocity.
I. The Residual Role of the Requirement of Reciprocity
In some EU Member States, provisions of national-autonomous aliens law enshrine the requirement of reciprocity. Those provisions are largely superseded by exceptions established in international law, including international treaties (so-called “diplomatic reciprocity”). EU (primary and secondary) law establishes broad exceptions concerning EU citizens and legal persons based in the EU.
In the context of EU / UK relations, the Withdrawal Agreement relieves UK nationals and legal persons from the requirement of reciprocity in the EU Member States. However, the scope of the exception established by the Withdrawal Agreement is limited in (personal and temporal) scope. An agreement on the future partnership between the EU and the UK could establish “full reciprocity” (Cf. points 29 and 49 of the Political Declaration accompanying the Withdrawal Agreement). Instead, if new arrangements will not be made, at the end of the transition period, in cases not covered by the Withdrawal Agreement, the method of reciprocity might once more play a residual role in the context of the treatment of UK nationals and legal persons in some EU Member States.
II. German Case-Law on Reciprocity with the UK and Civil Procedure
The spectre of reciprocity, in relations with the UK, was evoked in three recent cases brought before the German courts. The three cases concern provisions of German-autonomous aliens law in the field of civil procedure, which enshrine the requirement of reciprocity.
1. § 110 ZPO (Security for Court Costs)
In particular, two of the mentioned cases concern § 110 ZPO. Pursuant to § 110(1) ZPO claimants not (habitually) residing in the EU (or in the EEA) must provide security for court costs (if the defendant requests so). § 110(2) ZPO provides exceptions to that duty. The claimant is relieved from the duty to provide security if an international treaty so provides (See § 110(2) no 1 ZPO) or if a treaty ensures the enforcement of the decision on court costs (see § 110(2) no 2 ZPO; see also the other exceptions listed in § 110(2), nos 3–5 ZPO).
In 2018 – before the UK’s withdrawal from the EU –, in a case brought before the Düsseldorf Regional Court, a German defendant sought a decision ordering the UK claimant to provide security under § 110 ZPO (Düsseldorf Regional Court, interim judgment of 27 Sept 2018 – 4c O 28/12). The Regional Court dismissed the defendant’s application, since (at that time) the UK was still an EU Member State. The German court thus shun an investigation as to “whether other international treaties might relieve the claimant from the obligation of providing security for costs after the [UK’s] withdrawal”.
Subsequently, in 2019 – after the UK’s withdrawal from the EU, during the transition period –, a German defendant sought from the Dortmund Regional Court a decision ordering the claimant seated in London to provide security under § 110 ZPO (Dortmund Regional Court, interim judgment of 15 July 2020 – 10 O 27/20). The Regional Court dismissed the defendant’s application, noting that – in the light of the legal fiction created by the Withdrawal Agreement – the UK must be considered as an EU Member State until the end of 2020. The German court – like the Düsseldorf Regional Court – shun an investigation as to whether treaties other than the Withdrawal Agreement relieve UK claimants – not habitually residing in the EU (or in the EEA) – from the duty of providing security under § 110 ZPO.
It appears that, apart from the Withdrawal Agreement, a treaty establishing diplomatic reciprocity for the purposes of § 110(2) no 1 ZPO does not exist yet (cf. ECJ, judgment 20 Mar 1997 – C-323/95).
Addendum: As mentioned above, § 110 ZPO does not apply to claimants habitually residing in the EU or EEA. It is important to underline that this holds true even in the case of UK nationals (habitually) residing in Germany (or in any other EU Member State or in an EEA Member State). It is also important to underline that, if the German-British Convention of 20 Mar 1928 on the conduct of legal proceedings will “revive” in relations between Germany and the UK after the transition period, Art. 14 of that Convention will establish diplomatic reciprocity for the purposes of § 110 ZPO with respect to UK nationals having their “Wohnsitz” (domicile) in Germany. On the latter point see the ECJ’s judgment referred to above.
2. § 917(2) ZPO (Writ for Pre-Judgment Seizure)
The third case brought before the German courts concerns § 917(2) ZPO. Pursuant to the first sentence of § 917(2) ZPO, a writ for pre-judgment seizure can be issued if the prospective judgment will have to be enforced abroad and if “reciprocity is not granted” (i.e. if an international treaty does not grant that the judgment will be eligible for enforcement in the given foreign country).
In 2019 – before the UK’s withdrawal from the EU –, in a case brought before the Frankfurt Higher Regional Court, a German claimant applied for a writ under § 917 ZPO against a UK defendant (Frankfurt Higher Regional Court, judgment of 3 May 2019 – 2 U 1/19). The Higher Regional Court noted that reciprocity under § 917(2) first period ZPO could have been lacking if, after the UK’s withdrawal from the EU, the Brussels Ia Regulation would have not been replaced by new arrangements granting the enforcement of (German) judgments in the UK. This notwithstanding, the German court decided not to issue the writ under § 917(2) first period ZPO, since failure to conclude new agreements replacing the Brussels Ia Regulation was (at that time) unlikely. In fact, the court pointed to the then ongoing negotiations between the EU and UK, namely to Art. 67(II) of the draft Withdrawal Agreement (today’s Art. 67(1)(a) Withdrawal Agreement), providing for the continued application of the Brussels Ia Regulation in the UK.
It appears that, apart from the Withdrawal Agreement, a treaty establishing diplomatic reciprocity with the UK, for the purposes of § 917(2) ZPO, does not exist yet (unless the 1960 Convention between the UK and Germany for reciprocal recognition and enforcement of judgments – or even the 1968 Brussels Convention – will “revive”). An (albeit limited) exception concerns cases covered by exclusive choice-of-court agreements in favour of German courts falling under the 2005 Hague Convention (in fact, on 28 Sept 2020, the UK has deposited its instrument of accession to the 2005 Hague Convention, which should grant continuity in the application of the same Convention in the UK after the transition period).
III. Conclusion
In conclusion, at the end of the transition period, in cases not covered by the Withdrawal Agreement, unless new arrangements are made, the requirement of reciprocity might play a residual role in the context of the treatment of UK nationals and legal persons in some EU Member States, such as Germany.
The Chinese villages win a lawsuit in China to repatriate a Mummified Buddha Statue hold by a Dutch Collector —What Role has Private International Law Played?
The Chinese villages win a lawsuit in China to repatriate a Mummified Buddha Statue hold by a Dutch Collector
—What Role has Private International Law Played?
By Zhengxin Huo, Professor of Law, China University of Polit’l Science and Law; Associate Member of International Academy of Comparative Law; Observer of the UNESCO 1970 Convention. Email: zhengxinh@cupl.edu.cn. The author would like to thank Dr. Meng YU for valuable comments.
- Introduction
On 4 December 2020, the Sanming Intermediate People’s Court of China’s southeastern Province of Fujian rendered a judgment ordering the Dutch defendants to return a stolen 1,000-year-old Buddhist mummy, known as the statue of Zhanggong-zushi, to its original owner: two village committees in the Province within 30 days after the verdict comes into effect. [1]
This is the first time in history that a Chinese court seized jurisdiction over a case filed by Chinese plaintiffs to repatriate a stolen cultural property illicitly exported. Once published, the judgment has aroused immediate attention both at home and abroad. Given the enormous quantity of Chinese cultural property stolen and illegally exported overseas, the potential influence of the judgment can hardly be overstated. This note focuses on the major legal issues that the Chinese judgment dealt with and attempts to analyse the role of private international law that has played.
2. Summary of Facts
Oscar Van Overeem, a Dutch architect, purchased a Buddhist statue for 40,000 Dutch guilders (US $20,500) in 1996 from a collector in Amsterdam who had acquired it in Hong Kong. In 1996, Van Overeem contacted a restorer to repair some chips and cracks in the exterior. When the restorer opened the bottom of the statue, he found two small pillows, and resting on the pillows, the body of a mummified monk. Initial radiocarbon testing found that the body was approximately 900-1000 years old. The statue was taken to the Meander Medical Center in Amersfoort, where a full CT scan was performed and samples taken through endoscopy. The investigative team found scraps of paper on which Chinese characters were written, placed inside the body in the cavities normally containing organs. These identified the Buddhist mummy as the mummy of a monk known as “Zhanggong-zushi”.
In 2014, Van Overeem loaned the statue to the Drents Museum in Assen for an exhibition, “Mummy World,” which traveled to the Hungarian Natural History Museum in the spring of 2015. Press reporting on the Hungarian exhibition alerted the Chinese villagers. Based on photographs from Hungary and archival materials in China, the Chinese villagers believe the statue is the one that have held the mummy of the village’s patriarch, Zhanggong Zushi. The statue was enshrined in the Puzhao Temple, jointly owned by the two villages named “Yunchun” and “Dongpu”, and worshiped by the local residents, for over 1,000 years until it went missing in December 1995.
After an unsuccessful negotiation, the Committee of Yunchun Village and the Committee Dongpu Village sued Van Overeem to demand the statue’s return both in Fujian Province of China and in Amsterdam of the Netherlands at the end of 2015,[2] fearing that a statute of limitation might bar their case. Three years later, the Amsterdam District Court made a decision on 12 December 12, 2018, [3] ending one chapter in the legal battle over the statue of Zhanggong-zushi, but failed to resolve a controversial situation or illuminate the path forward for the parties, as the Dutch court did not decide anything about the ownership of the parties.[4] It simply determined not to hear the case, based on its finding that the two village committees did not have standing to sue in the Dutch court.[5]
Against this background, the lawsuit before the Chinese court is more important in terms of legal analysis. According to the information released by the Sanming Intermediate People’s Court (the Court), it formally filed the case on 11 December 2015, which then served the Dutch defendants by international judicial cooperation. The Court, thereafter, held the hearings on 26 July and 12 October of 2018 respectively, and publicly pronounced the judgement on 4 December 2020.[6] Lawyers of both sides were present both at the hearings and the pronouncement of the judgement. From the perspective of private international law, the following two issues, among others, are particularly worth of concern:
(1) Jurisdiction: The Court exercised the jurisdiction over the dispute because the Dutch defendants did not raise an objection to its jurisdiction who responded to the action timely.[7]
(2) Application of Law: Based on the interpretation of “the lex rei sitae at the time that the legal fact occurred” in Article 37 of the Private International Law Act, the Court held that Chinese law, rather than Dutch law, shall govern the ownership of the statue.[8]
3. The Jurisdiction of the Chinese Court: Prorogated Jurisdiction
Jurisdiction is the first issue that the Court had to consider when it dealt with the dispute. Under the Civil Procedure Law of China (CPL), the general rule of territorial jurisdiction is that a civil action shall be brought in the People’s Court of the place in which the defendant is domiciled subject to various exceptions grouped together under the title of “special jurisdictions”.[9] As the defendants in the present case are domiciled in the Netherlands,[10] the jurisdiction of the Court depended on “special jurisdictions” among which the jurisdiction on actions on contractual disputes or disputes over property rights is most relevant.
In international civil litigation, many cases involve a foreign defendant not domiciled or residing within China. Given the importance of some of such cases, the CPL empowers Chinese courts the jurisdiction over actions involving contract disputes or disputes over property rights against a non-resident defendant if certain conditions are satisfied. Article 265 of the CPL prescribes the following:[11]
In the case of an action concerning a contract dispute or other disputes over property rights and interests, brought against a defendant who has no domicile within the territory of the People’s Republic of China, if the contract is signed or performed within the territory of the People’s Republic of China, or if the object of the action is located within the territory of the People’s Republic of China, or if the defendant has distrainable property within the territory of the People’s Republic of China, or if the defendant has its representative office within the territory of the People’s Republic of China, the People’s Court of the place where the contract is signed or performed, or where the object of the action is, or where the defendant’s distrainable property is located, or where the torts are committed, or where the defendant’s representative office is located, shall have jurisdiction.
Therefore, for actions concerning a dispute over property rights brought against a defendant who has no domicile in China, a Chinese Court may exercise jurisdiction if one of the following conditions are satisfied: (1) the property is located in China; (2) the defendant has distrainable property in China; (3) the tort was committed in China; (4)the defendant has its representative office in China.
In the case at hand, one can hardly argue that the Court has the jurisdiction under Article 265 of the CPL, as the statue is not located in China when the action was filed, nor did the defendants steal it or purchase it in China, nor do they have distrainable property or representative office in China. However, the Court ruled that its jurisdiction over the case was established pursuant to the prorogated jurisdiction under the CPL regime.
Prorogated jurisdiction under the CPL refers to situations where a party institutes proceedings in a court, and the other party implicitly acquiesces to the jurisdiction of that court by responding to the action and not raising an objection to the jurisdiction. That is to say, the defendant’s failure to object is understood as defendant’s consent to the Chinese court’s jurisdiction. Article 127 of the CPL provides as follows:[12]
Where a party raises any objection to jurisdiction after a case is accepted by a people’s court, the party shall file the objection with the people’s court during the period of submitting a written statement of defense. The people’s court shall examine the objection. If the objection is supported, the people’s court shall issue a ruling to transfer the case to the people’s court having jurisdiction; or if the objection is not supported, the people’s court shall issue a ruling to dismiss the objection. Where a party raises no objection to jurisdiction and responds to the action by submitting a written statement of defense, the people’s court accepting the action shall be deemed to have jurisdiction, unless the provisions regarding tier jurisdiction and exclusive jurisdiction are violated.
Since the defendant’s failure to object constitutes consent to jurisdiction, it is imperative that defendants, foreign defendants in particular, raise a timely jurisdictional objection. Under Article 127 of the CPL, if a party to a civil action objects to the jurisdiction of a People’s Court, the objection must be raised within the time period prescribed for the filing of answers. According to Articles 125 and 268, defendant shall have fifteen days, or thirty days if residing outside the territory of China, to file his answer upon receipt of plaintiff’s complaint. Thus, if a defendant wants to challenge the People’s Court’s jurisdiction, he must do so within this statutory fifteen-day or thirty-day period.[13]
It should be noted that the Dutch defendants in the present case did not raise objection to the jurisdiction of the Court; instead, they had responded to the lawsuit by submitting a written statement of defense represented by two Chinese lawyers, to the surprise of many observers. Hence, jurisdiction of the Court over this case was established under the prorogated jurisdiction of the CPL in an unexpected manner.
4. Choice of Law Issue: Lex Rei Sitae = Lex Furti?
One of the most widely accepted and significant rules of private international law today is that, in determining property rights, a court applies lex rei sitae. This rule has been accepted by Chinese private international law, though party autonomy is placed before lex rei sitae by Article 37 of the Private International Law Act. Given that it is very rare that the parties reach agreement on the applicable law after the dispute over the property has occurred, the lex rei sitae plays a de facto decisive role.
However, the question of application of the lex rei sitae in specific cases remains open out of diverse possible interpretations of the rule. From the perspective of comparative law, it can be found that many jurisdictions, say England, prefer to apply the law of the place of last transaction,[14] while others, say France, apply the law of place where goods are located at the time of the litigation.[15] As far as China is concerned, its courts has never clarified the meaning of the lex rei sitae in Article 37 of the Private International Law Act; therefore, the outcome of the present action was entirely dependent on the interpretation of this article.
The Chinese plaintiffs commenced the action for recover of the stolen statue by arguing, among other things, that they are its owners because bona fide acquisition does not apply to stolen cultural property under the Property Law of China. The Dutch defendants took the stand, claiming to have purchased the statue on good title under Dutch Civil Code. Thus, it had to be decided which of the two laws shall be used in the present case: whether Chinses law or Dutch law shall govern the ownership of the statue. The Court, by resorting to Article 37 of the Private International Law Act, held that title was to be determined by Chinese law.
However, the Court acknowledged that the statue was stolen and illicitly exported before the implementation of the Private International Law Act, therefore, it had to decide in the very beginning whether the Act is applicable to the present dispute. To determine the issue, the Court referred to Article 2 of the Judicial Interpretation on the the Private International Law Act issued by the Supreme People’s Court,[16] which states that:
As to a civil relationship involving foreign elements which occurred before the implementation of the Private International Law Act, People’s Court shall determine the governing law according to the choice-of-law rules effective at the time of the occurrence of such relationship. In case no choice-of-law rules existed at that time, the Private International Law Act may be resorted to in order to determine the applicable law.
Given the General Principles of Civil Law, the most significant and primary legislation on private international law in China before 2010, is silent on the law applicable to property right,[17] the Court decided it is proper to invoke the Private International Law Act to fill the lacunae pursuant to the above article. The Court then referred to Article 37 of the Private International Law Act of China which provides that “the parties may choose the law applicable to the real rights in movable property; in the absence of such choice, the lex rei sitae at the time when the legal fact occurred applies”.[18] As the parties in the case failed to reach agreement on the applicable law, the Court decided that the ownership of the statue shall be governed by the lex rei sitae at the time when the legal fact occurred.
With regard to the meaning of “the time when the legal fact occurred”, the Court stated that it pointed to the time when the statue was stolen, rather than the time when Oscar Van Overeem purchased it in Amsterdam. Summarising the conclusion, the judge stressed that the statue is a cultural property of great historic and religious significance, instead of an ordinary property. As the illicit traffic of cultural property usually creates a number of legal facts which inevitably leads to the proliferation of the lex rei sitae, including the law of the location of a cultural property had been stolen (lex furti), the law of the place of first transaction, the law of the place of last transaction, the law of the place of exhibition, the law of the location of a cultural property at the time of litigation, etc., the judge emphasised the need to spell out the lex rei sitae at the time when the legal fact occurred for the cases of recovering cultural property.
The Court stressed that when interpreting the lex rei sitae in a cultural property repatriation case, the object and purpose of international conventions of cultural property should be taken into consideration. It went on to highlight two conventions to which China is a contracting party: Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property (“the 1970 Convention”) and Convention on Stolen or Illegally Exported Cultural Objects (“the 1995 Convention”). As both those conventions are devoting to prohibiting the illicit trafficking of cultural property and facilitating the return of cultural property to its origin nations, the Court concluded that it should interpret the lex rei sitae at the time when the legal fact occurred in the light of their object and purpose.
Hence, the Court decided that the lex rei sitae at the time when the legal fact occurred should be understood as the lex furti, i.e., law of the location of a cultural property had been stolen, insofar as such interpretation favours the protection of cultural heritage and facilitates the return of cultural property illicitly trafficked, whereas the place of transaction not only favours the laundering of stolen cultural property but also adds considerable uncertainty to the question of title.
The Court then referred to the Property Law of China under which bona fide acquisition does not apply to stolen cultural property. Consequently, the Court ruled that the Chinese village committees retain the title of the statue and demanded the defendants to return it to plaintiffs.
5. Concluding Remarks
Under the CPL, judicial proceedings in China occur in two instances, namely, trial and appeal. Therefore, the Dutch defendants are entitled to appeal to the Higher People’s Court of Fujian Province within 30 days. If they do not appeal within the time limit, the judgment will become effective.
At the present stage, it is not clear whether the defendants will comply with the judgment or appeal, or simply ignore it. Though as a Chinese, I do hope that the Dutch defendants will return the statue as ordered by the Court; nevertheless, I am afraid that ignoring the Chinese judgment may be one of their reasonable options because of serious obstacles to recognize and enforce this Chinese judgment in the Netherlands.
In spite of the uncertainty ahead, one cannot overestimate the significance of this judgment. First of all, as noted in the very beginning, this is the first time that a Chinese court exercises the jurisdiction over case to recover a Chinese cultural property stolen and illicitly exported. Therefore, it is a historic judgment, no matter it will be enforced or not in the future.
Second, the Court in the judgement clarified for the first time that “lex rei sitae at the time when the legal fact occurred” in Article 37 of the Private International Law should be interpreted in the light of the object and purpose of the 1970 Convention and the 1995 Convention, so that the lex furti, i.e., Chinese law, shall govern the ownership of cultural property lost overseas. Given the huge number of Chinese cultural property stolen and illicitly exported abroad, the author believes the impact of the judgment is tremendous.
[1] The Committee of Yunchun Village and the Committee Dongpu Village v. Oscar Van Overeem, Design & Consultancy B.V. and Design Consultancy Oscar van Overeem B.V., the Sanming Intermediate People’s Court (2015) Sanmin Chuzi No. 626, Date of judgment: 4 December 2020.
[2] China villagers launch Dutch court bid to retrieve mummy, https://www.bbc.co.uk/news/world-europe-40606593, last visited on 8 December 2020.
[3] C/13/609408 / HA ZA 16-558, Court of Amsterdam, 12 December 2018, available at https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:RBAMS:2018:8919, last visited on 8 December 2020.
[4] Chinese villagers disappointed about Dutch rejection of mummy Buddha repatriation case, http://www.xinhuanet.com/english/2018-12/14/c_137672368.htm, last visited on 8 December 2020.
[5] Uncertain Future for Golden Statue Holding Buddhist Mummy, https://culturalpropertynews.org/uncertain-future-for-golden-statue-holding-buddhist-mummy/, last visited on 8 December 2020.
[6] http://fjfy.chinacourt.gov.cn/article/detail/2020/12/id/5647265.shtml, last visited on 8 December 2020.
[7] The Committee of Yunchun Village and the Committee Dongpu Village v. Oscar Van Overeem, Design & Consultancy B.V. and Design Consultancy Oscar van Overeem B.V., the Sanming Intermediate People’s Court (2015) Sanmin Chuzi No. 626, Date of judgment: 4 December 2020, p.21.
[8] Id,. at pp. 24-35.
[9] Zhengxin Huo, Private International Law (2017), pp.148-151.
[10] The defendants are Oscar Van Overeem, Design & Consultancy B.V. and Design Consultancy Oscar van Overeem B.V.
[11] Zhonghua Renmin Gongheguo Minshi Susongfa [Civil Procedure Law] art. 265 (1991, revised in 2017) (PRC).
[12] Zhonghua Renmin Gongheguo Minshi Susongfa [Civil Procedure Law] art. 127 (1991, revised in 2017)(PRC).
[13] Zhengxin Huo, Private International Law (2017), p.157.
[14] E.g., Winkworth v. Christie’s Ltd.[1980] 1 Ch. 496.
[15] Stroganoff-Scerbatoff v. Bensimon, 56 Rev. crit. De dr. int. privé(1967).
[16] See Zhengxin Huo, ‘Two Steps Forward, One Step Back: A Commentary on the Judicial Interpretation on the Private International Law Act of China’ (2013) 43 HKLJ 685, 710.
[17] The General Principles of Civil Law was adopted at the Fourth Session of the Sixth National People’s Congress on April 12, 1986, coming into force on January 1, 1987. It was abolished on January 1, 2021 when the Civil Code of the PRC took effect. For a quite a long period, the GPCL was the most important source of Chinese private international law. Structurally, the GPCL has devoted an entire chapter to regulating the conflict of laws (i.e., Chapter Eight, Application of Laws to Civil Matters Involving Foreign Elements), where nine conflict rules can be found.
[18] Zhonghua Renmin Gongheguo Shewai Minshi Falvguanxi Shiyongfa [Act on the Application of Laws over Foreign-related Civil Relationships] art. 37 (2010) (PRC).
The Second Wave of the COVID-19 Pandemic and Force Majeure
Guest post by Franz Kaps, Attorney at law at DLA Piper, Frankfurt am Main
The resurgence of COVID-19 (Coronavirus) cases has been observed in countries around the world after COVID-19 outbreaks were successfully curbed earlier this year. To flatten the curve of the second wave of the pandemic governments again closed “non-essential businesses”, restricted travel and imposed “lockdowns” and “stay-at-home orders”. Beyond the health and human tragedy of the pandemic, it caused the most serious economic crisis since World War II, which also affected commercial contracts. In cases where the COVID-19 virus or government measures have affected commercial contracts, it is necessary to carefully analyse the state of affairs to determine the appropriate remedy.
The ICC Force Majeure Clause
Whether a force majeure clause is applicable in a particular case, and what its consequences would be, depends primarily on the wording of the clause. Courts have held that force majeure clauses are to be interpreted in a narrow sense and that performance under a contract is ordinarily excused only if the event preventing performance is explicitly mentioned in the force majeure clause. However, the state-of-the-art ICC Force Majeure Clause (Long Form) 2020 in Paragraph 3 (e) only presumes an epidemic to be a force majeure event but does not cover pandemics such as COVID-19. The difference between an epidemic and a pandemic is that an epidemic is a disease happening in a particular community. A pandemic, in contrast, is a disease that spreads over a whole country or the whole world. Due to its global spread, COVID-19 is classified as a pandemic.
In order to invoke the force majeure defence Paragraph 1 ICC Force Majeure Clause additionally requires that the party affected by the impediment proves that the following three conditions are met:
- the impediment is beyond its reasonable control; and
- the impediment could not reasonably have been foreseen at the time of the conclusion of the contract; and
- the effects of the impediment could not reasonably have been avoided or overcome by the affected party.
The events enumerated in Paragraph 3 ICC Force Majeure Clause which are presumed to fulfil conditions a) and b) under Paragraph 1 ICC Force Majeure Clause do not explicitly cover pandemics. Consequently, a party claiming a force majeure defence as a result of the COVID-19 pandemic must prove all three conditions.
Whether the impact and governmental measures triggered by COVID-19 are beyond the reasonable control of the parties depends on the specifics of each case. In many cases of mandatory governmental measures it will be relatively straight-forward for a party to argue this successfully.
With regard to the second condition – the reasonable foreseeability of the COVID-19 pandemic according to Paragraph 1 (b) ICC Force Majeure Clause – the point in time when the parties have concluded their contract is crucial. In October 2019, the effects of COVID-19 were less foreseeable than in December 2019, and in any case, as of March 2020, it was at least foreseeable that the COVID-19 virus would in some way interfere with the performance of contractual obligations.
In 2020, countries adopted differentiated approaches to combat the COVID-19 pandemic. These approaches included stay-at-home orders, travel restrictions, closure of non-essential businesses and lockdowns. It is also not yet possible to foresee which government measures will be taken to ensure a flatter curve for the second COVID-19 wave in winter of 2020 and beyond. This is particularly true as countries previously known for their laid-back COVID-19 policies are currently considering changing their policies and are willing to adopt stricter measures in response to the second wave of the COVID-19 virus. Sweden, for example, which was known for its special path without restrictions, mandatory requirements to wear masks, or lockdowns, has now introduced COVID-19 restrictions to contain the spread of COVID-19 and does not rule out local lockdowns. In the US, too, it is very probable that tougher COVID-19 measures will be implemented by the government at the latest when President-elect Biden takes office in January 2021.
Besides government COVID-19 measures, it is difficult for the parties to foresee specific effects of the COVID-19 virus on global supply chains and the performance of their obligations.
With regard to the second wave or further waves of the COVID-19 pandemic, it is therefore difficult for a party to foresee the exact impact of the Covid-19 virus in the individual countries and the various measures taken by the respective governments.
The third requirement under Paragraph 1 ICC Force Majeure Clause, that the effects of the impediment could not reasonably have been avoided or overcome by the affected party, again lacks legal certainty and is subject to the specificities of the case at hand – particularly regarding the reasonable remedies available to the party to eliminate and overcome the consequences of the COVID-19 pandemic.
Only if the conditions set out above are fulfilled can a party successfully invoke the force majeure defence pursuant to Paragraph 5 ICC Force Majeure Clause and be relieved from its duty to perform its contractual obligations and from any liability in damages or from any other contractual remedy for breach of contract.
State-of-the-Art Force Majeure Clause
This legal uncertainty regarding the impact of COVID-19 under the modern ICC Force Majeure Clause as well as under other force majeure clauses requires parties to first clarify whether their clause generally covers pandemics. Secondly, in light of the second wave of COVID-19, parties should consider amending their force majeure clauses to include or exclude the novel COVID-19 pandemic as a force majeure event in order to provide legal certainty as to whether a contract must be performed and whether a damage claim for non-performance of contractual obligations exists.
When pandemics are included in a force majeure clause as a force majeure event, an affected party under Paragraph 3 ICC Force Majeure Clause needs only to prove that the effects of the impediment could not reasonably have been avoided or overcome. Parties should therefore consider reviewing and updating their clauses and contemplate including pandemics as a force majeure event. In our globalised world, the next pandemic will spread sooner or later – therefore a lege artis force majeure clause must cover pandemics as a force majeure event. Where a pandemic is included in a force majeure clause, parties should refer to an objective criterion such as a pandemic declared by the World Health Organization to define when pandemics trigger the force majeure consequences. By linking a pandemic to such an objective criterion, disputes as to whether a pandemic in the sense of the force majeure clause exists can be avoided.
Besides updating their force majeure clause parties should consider temporarily modifying their clauses in light of the current second wave of the COVID-19 virus. Parties, when amending their force majeure clause, may decide either to introduce a clause ensuring that effects and governmental measures due to the ongoing COVID-19 pandemic are not covered by their clause, or opt for a clause encompassing the current COVID-19 pandemic. Which option a party should select is a policy question and depends on the characteristics of the case. A party affected by the COVID-19 pandemic in the performance of its contractual obligations – because, for example, it depends heavily on international supply chains easily disrupted by the effects of the COVID-19 pandemic – should, on the one hand, ensure that the parties incorporate a force majeure clause encompassing the COVID-19 pandemic as a force majeure event. On the other hand, if the risk of non-performance of contractual obligations as a result of the COVID-19 virus is primarily in the risk sphere of the other party, a party may contemplate excluding the COVID-19 pandemic from the scope of the force majeure clause. In any case, a good starting point for future “tailor-made” force majeure clauses – which take into account the parties’ specific needs – is the balanced ICC Force Majeure Clause.
News
Issue 1 of Journal of Private International Law for 2024
The latest issue of the Journal of Private International Law was published yesterday It contains the following articles.
Alex Mills, Sustainability and jurisdiction in the international civil litigation market
The sustainability of the global economy, particularly in response to the concerns of climate change, is an issue which impacts many different aspects of life and work around the world. It raises particular questions concerning globalised industries or markets which depend on long distance transportation for their function. This article takes as its focus international civil litigation – the judicial resolution of cross-border disputes – as a particular example of a globalised market in which sustainability considerations are presently neglected, and examines how this omission ought to be addressed. It proposes a modification to English law which aims to ensure that jurisdictional decisions by the English courts take into account their environmental impact – that is to say, the environmental impact of the selection of a particular forum. The article also considers the implications of adopting this change on the position of the English courts in the global litigation marketplace, arguing that the effects are likely to be limited, and it could have an incidental benefit in promoting the development and adoption of communications technologies in judicial dispute resolution.
Saloni Khanderia, The law applicable to documentary letters of credit in India: A riddle wrapped in an enigma?
Despite significantly fostering international trade in India, letters of credit and the determination of applicable law in cross-border disputes arising from the same have received negligible attention from lawmakers. The Indian Supreme Court, too, has failed to use its power to mould the law despite regularly being confronted with disputes on this subject. This paper demystifies India’s conflict of law rules on the law governing disputes on letters of credit by examining relevant judicial trends. It highlights rampant references to the lex fori – and explores reasons why it is considered the “proper law” by being the country possessing the closest and most real contractual connection. It anticipates a “ripple effect” prompting parties to evade Indian courts through choice-of-court agreements preferring a foreign forum or to avoid business with Indian traders insisting on such payment mechanisms. Accordingly, it identifies the need for coherent rules and suggests some solutions that Indian lawmakers should consider.
Frederick Rieländer, The EU private international law framework for civil disputes concerning credit ratings: Exploring the status quo and prospects of reform
This article addresses the EU private international law framework for cross-border disputes concerning credit ratings. It argues that investors harmed by faulty ratings face considerable challenges when enforcing claims against credit rating agencies. These challenges arise not only due to the high standard of proof for damages claims and additional barriers rooted in substantive law but also from the limited territorial reach of the common EU civil liability regime of Article 35a of the amended Regulation (EC) No 1060/2009. Additionally, uncertainties concerning the determination of the concurrently applicable national law and the lack of unified European cross-border collective redress mechanisms in the area of capital markets law compound the problem. Against this background, this article discusses the options for reforming the existing private international law regime to enhance investors’ access to justice in disputes with CRAs.
Tony Ward & Ann Plenderleith Ferguson, Proof of foreign law: a reduced role for expert evidence?
This article considers the position as to proof of foreign law in the English courts in light of the case of FS Nile Plaza v Brownlie [2021] UKSC 45 and the 11th edition of the Commercial Court Guide. We discuss the “old notion” of proof by expert witnesses, the extent to which recent developments displace the traditional role of the expert and enhance that of the advocate, and the dicta in Brownlie concerning the presumptions of similarity and continuity and judicial notice. While welcoming the greater flexibility in the way foreign law can be put before the English court, we argue that the use of oral expert evidence and cross-examination will remain important in at least two types of case: those where the issue of foreign law is complex or novel, and those where the English court does not just need to ascertain the “correct” interpretation of foreign law, but rather predict whether a foreign court would in reality provide appropriate relief in relation to the matter before the court.
Olivera Boskovic, Extraterritoriality and the proposed directive on corporate sustainability due diligence, a recap
Tortious actions brought against companies for the violation of human rights and/or environmental damage have raised important issues of jurisdiction and choice of law. Damage caused abroad by subsidiaries of European companies or the possibility of bringing actions against non-European companies for damage caused outside of the European union have been referred to in terms of extraterritoriality. This paper examines these issues in relation to the proposed directive on corporate sustainability due diligence.
The Brussels IIb Regulation, dealing with proceedings in matrimonial matters, those of parental responsibility and international child abduction cases, is the newest instrument of the European Union in international family law. The article critically evaluates its most significant changes compared to its predecessor, the Brussels IIa Regulation, in the fields of jurisdiction and of recognition and enforcement. In addition, it analyses how the Brussels IIb Regulation optimises the provisions of the 1980 Hague Convention on International Child Abduction between the member states of the European Union. The article argues that the regulation is overall a helpful and welcome addition to international family law because it strengthens the welfare of the child and enhances the practical functionality and normative structure of its predecessor. Nevertheless, scope for further improvements in another recast regulation is identified.
Olga Bobrzy?ska & Mateusz Pilich, Cases of cross-border child abduction in times of populism: a Polish perspective
This article analyses the case law in Poland on matters of the return of children wrongfully removed or retained within the framework of the Hague Convention of 25 October 1980 on the Civil Aspects of International Child Abduction during the period of the “populist” government (2020–2022). It takes account of the legislative and judicial developments in the EU and the European Court of Human Rights and of the aims of the Hague Convention. It seeks to ascertain whether the influence of populist reforms and politicisation of the courts has become apparent in the case law of the Polish Supreme Court on international child abduction cases.
Ye Shanshan & Du Tao, The Jurisdiction of China International Commercial Court: substance, drawbacks, and refinement
The wave of setting up international commercial courts has emerged internationally. Following the trend, China established the China International Commercial Court (CICC) in 2018. The CICC exercises consensual jurisdiction and non-consensual jurisdiction over international commercial disputes, and has jurisdiction to support international commercial arbitration. This article analyses the CICC’s criteria for determining international commercial disputes and the specific requirements for each type of jurisdiction based on the relevant provisions and judicial practice of the CICC. In addition, this article identifies the drawbacks of the CICC’s current jurisdiction system, and provides several suggestions for refinement, including the modification and clarification of the criteria for determining the internationality and commerciality of disputes, the removal of restrictions on jurisdiction agreements, the clarification of substantive standards for case transfer, and the expansion of its jurisdiction to support international commercial arbitration.
Gülüm Bayraktaroglu-Özçelik, When migration meets private international law: issues of private international law in divorce actions of Syrian migrants under temporary protection before the Turkish courts
The extended stay of Syrian nationals under temporary protection in Türkiye for more than a decade has caused an increase in their involvement in private law actions before the Turkish courts. Even though their substantive rights have mostly been regulated following their arrival, the private international law legislation has not yet been reviewed. This research, focusing on the most recent judgments of Turkish courts in divorce actions of Syrian migrants identifies important issues of private international law. These include questions on determination of international jurisdiction of Turkish courts, their access to legal aid and the obligation to provide security, questions of applicable law concerning marriage (including the recognition of the marriages validly celebrated in Syria), determination of the law applicable to divorce and the content of Syrian law. The study demonstrates that some of these questions arise because of the ongoing unfamiliarity of Turkish courts with “temporary protection status” as a relatively new concept in Turkish law, whereas others are related to application of general provisions to temporary protection beneficiaries and highlights the urgent need to review the Turkish private international law legislation considering the status of these persons to provide uniformity in court decisions and to ensure predictability.
Research Methods in Private International Law – book and webinars
As some readers will have seen through various other blogs and social media, this month the book Research Methods in Private International Law. A Handbook on Regulation, Research and Teaching, edited by Xandra Kramer (Erasmus University Rotterdam/Utrecht University) and Laura Carballo Piñeiro (University of Vigo) was published. The book is part of the Handbook in Research Methods of Law Series of Edward Elgar Publishing.
“The book seeks to provide insights into the different methodological approaches to private international law from both a regulatory approach and from a research and educational perspective. Established methodologies as well as evolving regulatory and empirical approaches that shape the future of private international law are discussed. To this end, the book is structured in three parts that correspond to three core debates, although they inevitably overlap: (I) the classification of private international law as private law and its interaction with international public law and regulation; (II) inter- and multidisciplinary approaches and research methods; and (III) how private international law helps to frame and address the critical debates of our time as well as the role of legal scholarship and education in shaping the future of private international law.” (Introductory Chapter, p. 1-2).
The book contains 18 chapters written by a team of authors spanning all continents discussing classical themes of private international law and new challenges in regulation, research, and teaching. It includes views from politics, human rights, legal theory, soft law and private regulation, comparative law, empirical studies, economics, EU law making, technology, laymen, feminism, colonialism, as well as university teaching in Mexico, Nigeria and The Netherlands.
Contributors are (in alphabetical order): María Mercedes Albornoz, Adriani Dori, Diego P. Fernández Arroyo, Sai Ramani Garimella, Marco Giacalone, Paola Giacalone, Nuria González-Martin, Christoph A. Kern, Mary Keyes, Patrick Kinsch, Dulce Lopes, Cristina M. Mariottini, Ralf Michaels, Chukwuma Samuel Adesina Okoli, Marta Pertegás, Giesela Rühl, Veronica Ruiz Abou-Nigm, Carlota Ucín, Aukje van Hoek, Christopher Whytock, and Abubakri Yekini.
Further information is available on the publisher’s website here. The Prelims and the introductory chapter by the editors ‘Private international law in a global world: a revival of methodologies and research methods’ are freely accessible here. Critical acclaim by Geert Van Calster (KU Leuven), Yuko Nishitani (Kyoto University), Hans van Loon (former SG Hague Conference on Private International Law) and Symeon C. Symeonides (Willamette University College of Law).
Save the Date! Two launch webinars will take place on:
- 10 September 2024, from 10-12am CET: Research Methods in Private International Law: Views from Regulation, Research and Education (confirmed speakers include Dulce Lopes, Diego Fernández Arroyo, Giesela Rühl, Adriani Dori and Mary Keyes)
- 23 September 2024, from 10-11.30 CET: Research Methods in Private International Law: Educational Perspectives (co-organised by the University of Sydney, moderated by Jeanne Huang; confirmed speakers include Veronica Ruiz Abou-Nigm/Ralf Michaels, Ramani Garimella, Abubakri Yekeni & Chukwuma Okoli and Aukje van Hoek
More details and information on registration will follow soon.
For those interested, a report of an extensive online interview with the editors by Young-OGEMID can be downloaded from the website of Transnational Dispute Management.
HCCH Monthly Update: May 2024
Conventions & Instruments
On 14 May 2024, Georgia deposited its instrument of ratification of the 2007 Child Support Convention and of the 2007 Maintenance Obligations Protocol. With the ratification of Georgia, 51 States and the European Union are bound by the 2007 Child Support Convention, while 32 States and the European Union are bound by the 2007 Maintenance Obligations Protocol. More information is available here.
Meetings & Events
On 14 May 2024, the kick-off meeting of the Experts’ Group (EG) on Central Bank Digital Currencies (CBDCs) was held online. Pursuant to its mandate, the EG will study the applicable law and jurisdiction issues raised by the cross-border use and transfers of CBDCs. More information is available here.
From 14 to 17 May 2024, the First Regional Meeting of Judges of the International Hague Network of Judges (IHNJ) from Latin America and the Caribbean was held in Rio de Janeiro, Brazil, with the aim of fostering discussion on the proper and effective implementation of the 1980 Child Abduction Convention. More information is available here.
On 15 May 2024, the kick-off meeting of the Digital Tokens Project was held online. Under this project, the Permanent Bureau of the HCCH, in partnership with relevant subject-matter experts and Observers, is studying the private international law issues relating to digital tokens. More information is available here.
On 17 and 21 May 2024, the first meetings of the Working Groups on the Practical Handbooks and Country Profiles for the 1965 Service and 1970 Convention were held online. More information is available here.
On 29 May 2024, the first meeting of the Working Group established to complete the Country Profile and work on the draft Cooperation Request Recommended Model Form for the 1996 Child Protection Convention was held online. More information is available here.
Calls for Tender
The HCCH recently published a call for tenders for the development of electronic Country Profiles (e-Country Profiles) for a number of key HCCH Conventions. The deadline for the submission of tenders is 27 August 2024 (17:00 CEST). More information is available here.
These monthly updates are published by the Permanent Bureau of the Hague Conference on Private International Law (HCCH), providing an overview of the latest developments. More information and materials are available on the HCCH website.