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The Corporate Sustainability Due Diligence Directive: PIL and Litigation Aspects
Written by Eduardo Silva de Freitas (Erasmus University Rotterdam) and Xandra Kramer (Erasmus University Rotterdam/Utrecht University), members of the Vici project Affordable Access to Justice, financed by the Dutch Research Council (NWO), www.euciviljustice.eu.
Introduction
After extensive negotiations, on 24 April 2024, the European Parliament approved the Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) as part of the EU Green Deal. Considering the intensive discussions, multiple changes, and the upcoming elections in view, the fate of the Commission’s proposal has been uncertain. The Directive marks an important step in human rights and environmental protection, aiming to foster sustainable and responsible corporate behaviour throughout global value chains. Some Member States have incorporated similar acts already, and the Directive will expand this to the other Member States, which will also ensure a level playing field for companies operating in the EU. It mandates that companies, along with their associated partners in the supply chain, manufacturing, and distribution, must take steps to avoid, halt, or reduce any negative effects they may have on human rights and the environment. The Directive will apply to big EU companies (generally those with more than 1,000 employees and a worldwide turnover of more than EUR 450 000 000) but also to companies established under the law of a third country that meet the Directive’s criteria (Article 2 CSDDD).
Among the CSDDD’s key provisions is the rule on civil liability enshrined in Article 29. This rule states that companies shall be held liable for damages caused in breach of the Directive’s provisions. Accompanying such a rule are also some provisions that deal with matters of civil procedure and conflict of laws, though as has been pointed out earlier on this blog by Kilimcioglu, Kruger, and Van Hof, the CSDDD is mostly silent on PIL. When the Commission proposal was adopted in 2022, Michaels and Sommerfeld elaborated earlier on this blog on the consequences of the absence of rules on jurisdiction in the CSDDD and referred to the Recommendation of GEDIP in this regard. The limited attention for PIL aspects in the CSDDD is does not mean that the importance of corporate sustainability and human rights is not on the radar of the European policy maker and legislator. In the context of both the ongoing evaluation of the Rome II Regulation and Brussels I-bis Regulation this has been flagged as a topic of interest.
This blog post briefly discusses the CSDDD rules on conflict of laws and (international) civil procedure, which underscore the growing importance of both in corporate sustainability and human rights agendas.
Conflict of laws and overriding mandatory provisions
The role of PIL in the agenda of business and human rights has increasingly received scholarly attention. Noteworthy works addressing this intersection include recent contributions by Lehmann (2020), as well as volumes 380 (Van Loon, 2016) and 385 (Marrella, 2017) of the Collected Courses of The Hague Academy of International Law. Additionally, pertinent insights can be found in the collaborative effort of Van Loon, Michaels, and Ruiz Abou-Nigm (eds) in their comprehensive publication, The Private Side of Transforming our World (2021). From an older date is a 2014 special issue of Erasmus Law Review, co-edited by Kramer and Carballo Piñeiro on the role of PIL in contemporary society.
While the CSDDD contains only a singular rule on PIL, specifically concerning overriding mandatory provisions, it should be viewed in the broader EU discourse. The relevance of PIL for the interaction between business and human rights extends beyond this single provision, as evidenced by the Commission’s active role in shaping this development. As indicated earlier, this is further indicated by studies on both the Rome II and Brussels I-bis Regulations, both of which delve into the complexities of PIL within the business and human rights debate. Thus, the CSDDD’s rule should not be viewed in isolation, but as part of a larger, dynamic conversation on PIL in the EU.
The mentioned Rome II Evaluation Study (2021) commissioned by the Commission, summarised on this blog here, assessed Rome II’s applicability to matters pertaining to business and human rights in detail. With regards to overriding mandatory provisions, the study outlines several initiatives at national level in the Member States that were discussed or approved to enact a mandatory corporate duty of care regarding human rights and the environment. Likewise, the Brussels I-bis Evaluation Study (2023) also examined how the Brussels I-bis applies to business and human rights disputes. Within the EU, establishing jurisdiction over EU-domiciled companies is straightforward under the Regulation, but it becomes complex for third-country domiciled defendants. Claims against such defendants are not covered by the Regulation, leaving jurisdiction to national laws, resulting in varied rules among Member States. Forum necessitatis and co-defendants rules may help assert jurisdiction, but lack harmonization across Europe. In this context, as explained by Michaels and Sommerfeld, while the CSDDD applies to certain non-EU firms based on their turnover in the EU (Article 2(2)), jurisdictional issues persist for actions against non-EU defendants in EU courts, with jurisdiction typically governed by national provisions. This could result in limited access to justice within the EU if relevant national rules do not establish jurisdiction.
As was mentioned above, the CSDDD is mostly silent on PIL. However, it does include a rule on overriding mandatory provisions enshrined in Article 29(7) and accompanying Recital 90. This rule aims to ensure the application of the (implemented) rules of the CSSDD regardless of the lex causae. Under EU private international law rules, the application of overriding mandatory provisions is also enabled by Article 9 Rome I Regulation and Article 16 Rome II Regulation.
Article 29(7) CSDDD states that ‘Member States shall ensure that the provisions of national law transposing’ Article 29 CSDDD ‘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’. A similar provision to that effect can be found in the draft UN Legally Binding Instrument on business and human rights.
This means that the national laws transposing Article 29 CSDDD in their liability systems are applicable irrespective of any other conflict of law provisions in force. This rule also extends to the matters of civil procedure addressed below, as explicitly stated by Recital 90 CSDDD. On this matter, the potential for the CSDDD to become a dominant global regulatory force and overshadow existing and future national regulations, which is only beneficial if effectively prevents and remedies corporate abuses, has been highlighted. However, there is concern that it might mitigate the development of stronger regulatory frameworks in other countries (see FIDH, 2022).
Matters of civil procedure
The rules contained in the CSDDD that pertain to civil procedure are essentially laid down in Article 29(3). These rules on civil procedure naturally apply to both domestic cases and cross-border situations.
Firstly, Article 29(3)(b) CSDDD states that the costs of judicial proceedings seeking to establish the civil liability of companies under the Directive shall not be prohibitively expensive. A report published in 2020 by the EU Agency for Fundamental Rights (FRA) on ‘Business and human rights – access to remedy’ stressed that private individuals face significant financial risks when resorting to courts due to high costs such as lawyer fees, expert opinions, and potential liability for the opposing party’s costs, particularly daunting in cases involving large companies. Suggestions for improvement include making litigation costs proportionate to damages, providing free legal representation through state bodies, and setting thresholds for the losing party’s financial obligations, along with supporting civil society organizations offering financial and legal aid to victims of business-related human rights abuses. Secondly, Article 29(3)(c) CSDDD provides the possibility for claimants to seek definitive and provisional injunctive measures, including summarily, of both a restorative or enforcing nature, to ensure compliance with the Directive. Lastly, Article 29(3)(d) and (e) CSDDD, respectively, outline rules on collective actions and disclosure of evidence, the latter two explained below.
Collective actions
The FRA report mentioned above emphasized that many legal systems in the EU lack effective collective redress mechanisms, leading to limited opportunities for claimants to seek financial compensation for business-related human rights abuses. Existing options often apply only to specific types of cases, such as consumer and environmental protection, with procedural complexities further restricting their scope. Article 29(3)(d) CSDDD ensures that collective action mechanisms are put in place to enforce the rights of claimants injured by infringements of the Directive’s rules. This provision states that ‘Member States shall ensure that […] reasonable conditions are provided for under which any alleged injured party may authorise’ the initiation of such proceedings. In our view, if this provision is interpreted in a similar way as the alike-rule on private enforcement contained in Article 80(1) GDPR (which uses the synonym ‘mandate’), then this collective action mechanism shall operate on an opt-in basis (see Pato & Rodriguez-Pineau, 2021). The wording of both provisions points to a necessity of explicit consent from those wishing to be bound by such actions. Recital 84 CSDDD further underscores this interpretation by stating that this authorisation should be ‘based on the explicit consent of the alleged injured party’. Importantly, this is unrelated to the collective enforcement of other obligations, outside the scope of the CSDDD, that may impinge upon the types of companies listed in Article 3(1)(a) CSDDD, like those stemming from financial law and insurance law (e.g. UCITS Directive, EMD, Solvency II, AIFMD, MiFID II, and PSD2). All the latter are included in Annex I Representative Actions Directive (RAD) and therefore may be collectively enforced on an opt-out basis pursuant to Article 9(2) RAD (see Recital 84 CSDDD).
Furthermore, Article 29(3)(d) CSDDD grants the Member States the power to set conditions under which ‘a trade union, non-governmental human rights or environmental organisation or other non-governmental organisation, and, in accordance with national law, national human rights’ institutions’ may be authorized to bring such collective actions. The Directive exemplifies these conditions by mentioning a minimum period of actual public activity and a non-profit status akin to, respectively, Article 4(3)(a) and (c) RAD, as well as Article 80(1) GDPR.
In our view, the most relevant aspect of the collective action mechanism set by the CSDDD is that it provides for the ability to claim damages. Indeed, Article 29(3)(d) CSDDD allows the entities referred therein to ‘enforce the rights of the alleged injured party’, without making any exceptions as to which rights. This is an important recognition of the potentially pervasive procedural imbalance that can affect claimants’ abilities to pursue damages against multinational corporations in cases of widespread harm (see Kramer & Carballo Piñeiro, 2014; Biard & Kramer, 2018; Buxbaum, Collected Courses of The Hague Academy of International Law 399, 2019).
Disclosure of evidence
Finally, Article 29(3)(e) CSDDD enacts a regime of disclosure of evidence in claims seeking to establish the civil liability of companies under the Directive. This provision, similar to Article 6 IP Enforcement Directive, Article 5 Antitrust Damages Directive, and Article 18 RAD, seeks to remedy the procedural imbalance of evidentiary deficiency, existent when there is economic disparity between the parties and unequal access to factual materials (see Vandenbussche, 2019).
When a claim is filed and the claimant provides a reasoned justification along with reasonably available facts and evidence supporting their claim for damages, courts can order the disclosure of evidence held by the company. This disclosure must adhere to national procedural laws. If such a disclosure is requested in a cross-border setting within the EU, the Taking of Evidence Regulation also applies.
Courts must limit the disclosure of evidence to what is necessary and proportionate to support the potential claim for damages and the preservation of evidence. Factors considered in determining proportionality include the extent to which the claim or defense is supported by available evidence, the scope and cost of disclosure, the legitimate interests of all parties (including third parties), and the need to prevent irrelevant searches for information.
If the evidence contains confidential information, especially regarding third parties, Member States must ensure that national courts have the authority to order its disclosure if relevant to the claim for damages. Effective measures must be in place to protect this confidential information when disclosed.
Outlook
The CSDDD regime on civil procedure described above largely follows the EU’s ‘silo mentality’ (Voet, 2018) of enacting sectoral-based and uncoordinated collective action mechanisms tied to a specific area of substantive law, such as consumer law, non-discrimination law, and environmental law (e.g. UCTD, RED, UCPD, IED, EIAD, etc.). An important difference being, however, that this time the RAD is already in force and being implemented. On this matter, Recital 84 CSDDD states that Article 29(3)(d) CSDDD ‘should not be interpreted as requiring the Member States to extend the provisions of their national law’ implementing the RAD.
However, being the first EU-wide collective action mechanism and prompting historically collective action-sceptic Member States to adapt accordingly, it is conceptually challenging to posit that the RAD would not potentially influence regimes on collective actions beyond consumer law, including the CSDDD. In this context, it would not deviate significantly from current developments if some Member States opted for a straightforward extension of their existing and RAD-adapted collective action regimes to the CSDDD, though that demands caution to the latter’s specificities and is not legally required.
Another aspect worthy of attention is how these collective actions would be funded. Since such actions may seek damages compensation for widespread harm under Article 29 CSDDD, they can become notably complex and, consequently, expensive. At the same time, a large number of injured persons can mean that these collective actions will ask for high sums in damages. These two factors combined make these collective actions an enticing investment opportunity for the commercial third-party litigation funding (TPF) industry. The CSDDD does not make any reservations in this regard, leaving ample room for Member States to regulate, or not, the involvement of commercial TPF. A report published in mid last year by Kramer, Tzankova, Hoevenaars, and Van Doorn by request of the Dutch Ministry of Justice and Security found that nearly all collective actions seeking damages in the Netherlands make use of commercial TPF. This underscores the crucial role commercial TPF plays in financing such actions, significantly impacting access to justice.
Moreover, the complexities surrounding the integration of PIL into specialized legislation such as the CSDDD, the GDPR, and the anti-SLAPPs Directive reflect a tension between the European Parliament and the Commission. This tension revolves around the extent to which PIL should be addressed within specialized frameworks versus traditional EU legislation on PIL. So far, a clear direction in this regard is lacking, which will trigger further discussions and potential shifts in approach within the EU legislative landscape.
There and Back Again? – The unexpected journey of EU-UK Judicial Cooperation finally leads to The Hague
by Achim Czubaiko, Research Fellow („Wissenschaftlicher Mitarbeiter“) and PhD Candidate, supported by the German Scholarship Foundation, Institute for German and International Civil Procedural Law, University of Bonn.
Union Jack and European Union flag 2012 © Dave Kellam (CC BY-SA 2.0 Deed)
Today marks a significant step towards the reconstruction of EU-UK Judicial Cooperation. As neither House of Parliament has raised an objection by 17 May 2024,[1] the way seems to be paved for the Government’s ambitious plans to have the HCCH 2019 Judgments Convention[2] implemented and ratified by the end of June 2024.[3] For the first time since the withdrawal of the United Kingdom from the European Union (so-called Brexit) on 31 January 2020, a general multilateral instrument would thus once again be put in place to govern the mutual recognition and enforcement of judgments in civil and commercial matters across the English Channel.
We wish to take this opportunity to look back on the eventful journey that the European Union and the United Kingdom have embarked on in judicial cooperation since Brexit (I.) as well as to venture a look ahead on what may be expected from the prospective collaboration within and perhaps even alongside the HCCH system (II.).
I. From Brexit to The Hague (2016-2024)
When the former Prime Minister and current Foreign Secretary David Cameron set the date for the EU referendum on 23 June 2016, this was widely regarded as just a political move to ensure support for the outcome of his renegotiations of the terms of continued membership in the European Union.[4] However, as the referendum results showed 51.9% of voters were actually in favour of leaving,[5] it became apparent that Downing Street had significantly underestimated the level of voter mobilisation achieved by the Vote Leave campaign. Through the effective adoption of their alluring “take back control” slogan, the Eurosceptics succeeded in framing European integration as undermining Britain’s sovereignty – criticising inter alia a purportedly dominant role of the Court of Justice (CJEU) – while simultaneously conveying a positive sentiment for the United Kingdom’s future as an autonomous country[6] – albeit on the basis of sometimes more than questionable arguments.[7]
http://www.voteleavetakecontrol.org/why_vote_leave.html
Whatever the economic or political advantages of such a repositioning might be (if any at all), it proved to be a severe setback in terms of judicial cooperation. Since most – if not all – of the important developments with respect to civil and commercial matters[8]in this area were achieved within the framework of EU Private International Law (PIL) (e.g. Brussels Ibis, Rome I-II etc.), hopes were high that some of these advantages would be preserved in the subsequent negotiations on the future relationship after Brexit.[9] A period of uncertainty in forum planning for cross-border transactions followed, as it required several rounds of negotiations between EU Chief Negotiator Michel Barnier and his changing UK counterparts (David Frost served for the final stage from 2019-2020) to discuss both the Withdrawal Agreement[10] as well as the consecutive Trade and Cooperation Agreement (TCA).[11] While the first extended the applicability of the relevant EU PIL Regulations for proceedings instituted, contracts concluded or events occurred during the transition period until 31 December 2020,[12] the latter contained from that point onwards effectively no provision for these matters, with the exception of the enforcement of intellectual property rights.[13] Thus, with regard to civil judicial cooperation, the process of leaving the EU led to – what is eloquently referred to elsewhere as – a “sectoral hard Brexit”.[14]
With no tailor-made agreement in place, the state of EU-UK judicial cooperation technically fell back to the level of 1973 before the UK’s accession to the European Communities. In fact, – in addition to the cases from the transition period – the choice of law rules of the Rome I and Rome II-Regulations previously incorporated into the domestic law, remained applicable as so-called retained EU law (REUL) due to their universal character (loi uniforme).[15] However, this approach was not appropriate for legal acts revolving around the principle of reciprocity, particularly in International Civil Procedure.[16] Hence, a legal stocktaking was required in order to assess how Brexit affected the status of those pre-existing multilateral conventions and bilateral agreements with EU Member States that had previously been superseded by EU law.
First, the UK Government has been exemplary in ensuring the “seamless continuity” of the HCCH 2005 Choice of Court Convention throughout the uncertainties of the whole withdrawal process, as evidenced by the UK’s declarations and Note Verbale to the depositary Kingdom of the Netherlands.[17] The same applies mutatis mutandis to the HCCH 1965 Service Convention, to which all EU Member States are parties, and the HCCH 1970 Evidence Convention, which has only been ratified so far by 23 EU Member States. Second, some doubts arose regarding an ipso iure revival of the original Brussels Convention of 1968,[18] the international treaty concluded on the occasion of EU membership and later replaced by the Brussels I Regulation when the EU acquired the respective competence under the Treaty of Amsterdam.[19] Notwithstanding the interesting jurisprudential debate, these speculations were effectively put to a halt in legal practice by a clarifying letter of the UK Mission to the European Union.[20] Third, there are a number of bilateral agreements with EU Member States that could be reapplied, although these can hardly substitute for the Brussels regime, which covers most of the continental jurisdictions.[21] This is, for example, the position of the German government and courts regarding the German-British Convention of 1928.[22]
It is evident that this legal patchwork is not desirable for a major economy that wants to provide for legal certainty in cross-border trade, which is why the UK Government at an early stage sought to enter into a more specific framework with the European Union. First and foremost, the Johnson Ministry was dedicated to re-access the Lugano Convention[23] which extended the Brussels regime to certain Member States of the European Free Trade Association (EFTA)/European Economic Area (EEA) in its own right.[24] Given the strong resentments Brexiteers showed against the CJEU during their campaign this move is not without a certain irony, as its case law is also crucial to the uniform interpretation of the Lugano Convention.[25] Whereas Switzerland, Iceland and Norway gave their approval, the European Commission answered the UK’s application in the negative and referred to the HCCH Conventions as the “framework for cooperation with third countries”.[26] What some may view as a power play by EU bureaucrats could also fairly be described as a necessary rebalancing of trust and control due to the comparatively weaker economic and in particular judicial integration with the United Kingdom post-Brexit.[27] At the very least, the reference to the HCCH reflects the consistent European practice in other agreements with third countries.[28]
Be that as it may, if His Majesty’s Government implements its ratification plan as diligently as promised, the HCCH 2019 Judgments Convention may well be the first new building block in the reconstruction what has been significantly shattered on both sides by the twists and turns of Brexit.
II. (Prospective) Terms of Judicial Cooperation
Even if the path of EU-UK Judicial Cooperation has eventually led to The Hague, there is still a considerable leeway in the implementation of international common rules.
Fortunately, the UK Government has already put forward a roadmap for the HCCH 2019 Judgments Convention in its responses to the formal consultation carried out from 15 December 2022 to 9 February 2023[29] as well as the explanatory memorandum to the Draft Recognition and Enforcement of Judgments Regulations 2024.[30] Generally speaking, the UK Government wants to implement the HCCH Convention for all jurisdictions of the United Kingdom without raising any reservation limiting the scope of application. Being a devolved matter, this step requires the Central Government to obtain the approval of a Northern Ireland Department (Roinn i dTuaisceart Éireann) and the Scottish Ministers (Mhinistearan na h-Alba).[31] Furthermore, this approach also implies that there will be no comparable exclusion of insurance matters as under the HCCH 2005 Convention.[32] However, the Responses contemplated making use of the bilateralisation mechanism in relation to the Russian Federation upon its accession to the Convention.[33]
Technically, the Draft Statutory Instrument employs a registrations model that has already proven successful for most recognition and enforcement schemes applicable in the UK.[34] However, registration within one jurisdiction (e.g. England & Wales) will on this basis alone not allow for recognition and enforcement in another (e.g. Scotland, Northern Ireland), but is rather subject to re-examination by the competent court (e.g. Court of Session).[35] This already constitutes a significant difference compared to the system of automatic recognition under the Brussels regime. Moreover, the draft instrument properly circumvents the peculiar lack of an exemption from legalisation in the HCCH 2019 Convention by recognizing the seal of the court as sufficient authentication for the purposes of recognition and enforcement.[36] It remains to be seen if decisions of third states “domesticated” in the UK under the common law doctrine of obligation will be recognized as judgments within the European Union. If the CJEU extends the position taken in J. v. H Limited to the HCCH 2019 Judgments Convention, the UK may become an even more attractive gateway to the EU Single Market than expected.[37] Either way, the case law of the CJEU will be mandatory for 26 Contracting States and thus once again play – albeit not binding – a dominant role in the application of the HCCH legal instrument.
As far as the other legal means of judicial cooperation are concerned, the House of Lords does not yet appear to have given up on accession to the Lugano Convention.[38] Nevertheless, it seems more promising to place one’s hopes on continued collaboration within the framework of the HCCH. This involves working towards the reconstruction of the remaining foundational elements previously present in EU-UK Judicial Cooperation by strengthening the HCCH Jurisdiction Project and further promoting the HCCH 1970 Evidence Convention in the EU.
III. Conclusion and Outlook
After all, the United Kingdom’s withdrawal from the European Union has dealt a serious blow to judicial cooperation across the English Channel. A look back at the history of Brexit and the subsequent negotiations has revealed that the separation process is associated with an enormous loss of trust. Neither could the parties agree on a specific set of rules under the TCA, nor was the European Union willing to welcome the United Kingdom back to the Lugano Convention.
Against this background, it is encouraging to see that both parties have finally agreed on the HCCH as a suitable and mutually acceptable forum to discuss the future direction of EU-UK Judicial Cooperation. If Brexit ultimately brought about a reinvigorated commitment of the United Kingdom to the HCCH Project, this might even serve as an inspiration for other States to further advance the Hague Conference’s ambitious goal of global judicial cooperation. Then the prophecies of the old songs would have turned out to be true, after a fashion. Thank goodness!
[1] HL Int. Agreements Committee, 11th Report of 8 May 2024 “Scrutiny of international agreements: 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters” (HL Paper 113), para. 1. According to sec. 20 (1) (a) and (2) of the Constitutional Reform and Governance Act 2010 (c. 25) is a treaty not ratified unless a Minister of the Crown has laid a copy before parliament for a period of 21 sitting days.
[2] Convention on the recognition and enforcement of foreign judgments in civil or commercial matters (HCCH 2019 Judgments Convention) of 2 July 2019, UNTS I-58036 and Tractatenblad 2024, 42 (Verdragsnr. 013672).
[3] Civil Procedure Rule Committee, Minutes of 1 December 2023, para. 28
[4] See inter alia, Mason, “How did UK end up voting to leave the European Union?”, The Guardian of 24 June 2016; Boffey, “Cameron did not think EU referendum would happen, says Tusk”, The Guardian of 21 January 2019; Duff, “David Cameron’s EU reform claims: If not ‘ever closer union’, what?”, Blogpost of 26 January 2016 on Verfassungsblog | On Matters Constitutional; von Lucke, “Brexit oder: Die verzockte Demokratie”, Blätter 8/2016, 5 et seq.
[5] UK Electoral Commission, “23 June 2016 referendum on the UK’s membership of the European Union”, Report of September 2016, p 6.
[6] Compare Haughton, “Ruling Divisions: The Politics of Brexit”, Perspectives on Politics 19 (2021), 1258, 1260; Özlem Atikcan/Nadeau/Bélanger, “Framing Risky Choices: Brexit and the Dynamics of High-stakes Referendums”, p. 44.
[7] E.g. Rankin, “Is the leave campaign really telling six lies?”, The Guardian of 7 June 2016.
[8] This finding might look different for International Family Law, according to Beaumont, “Private International Law concerning Children in the UK after Brexit: Comparing Hague Treaty Law with EU Regulations”, Child & Fam. L. Q. 29 (2017), 213, 232: “In all these matters students, practitioners and judges will be grateful to have fewer operative legal regimes post-Brexit”.
[9] For example, on this blog Fitchen, “Brexit: No need to stop all the clocks”, Blogpost of 31 January 2020 or Lutzi, “Brexit: The Spectre of Reciprocity Evoked Before German Courts”, Blogpost of 13 December 2020.
[10] Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (Withdrawal Agreement) of 24 January 2020, OJ EU CI 384/1.
[11] Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part (TCA) of 30 December 2020, OJ EU L 149/10.
[12] Art. 126 of the Withdrawal Agreement.
[13] Compare Chapter 3: Art. 256-273 of the TCA.
[14] Bert, “Judicial Cooperation in Civil Matters: Hard Brexit After All?”, Blogpost of 26 December 2020 on Dispute Re§olution Germany.
[15] Sec. 3 (1) European Union (Withdrawal) Act 2018, Chapter 16/2018, sec. 10, 11 The Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2019, SI 2019/834; For the current status of the Retained EU Law, see House of Commons Library “The end of REUL? – Progress in reforming retained EU law”, Research Briefing No.°09957 of 2 February 2024 (author: Leigh Gibson).
[16] Implicitly Dickinson, “Realignment of the Planets – Brexit and European Private International Law”, IPRax 2021, 213, 217 et seq.
[17] See Notes Verbales of the United Kingdom to the Kingdom of the Netherlands in its capacity as depositary of the HCCH 2005 Judments Convention from 28 December 2018 to 28 September 2020 in the Treaty Database.
[18] Convention on jurisdiction and the enforcement of judgments in civil and commercial matter (Brussels Convention) of 27 September 1968, OJ EU L 229/31; See e.g. Rühl, “Judicial Cooperation in Civil and Commercial Matters after Brexit: Which Way Forward?”, ICLQ 67 (2018), 99, 104 et seq.
[19] Art. 73m of the Treaty of Amsterdam amending the Treaty on European Union, the Treaties establishing the European Communities and certain related acts of 2 October 1997, OJ EU C 340/1.
[20] UK Mission to the European Union, Letter to the Council of the European Union of 29 January 2021, NO 17/2021.
[21] See, for example, the Agreement on the continued Application and Amendment of the Convention between the Government of the United Kingdom and the Government of Norway providing for the Reciprocal Recognition and Enforcement of Judgments in Civil Matters singed at London on 12 June 1961, SI 2020 No. 1338.
[22] Convention on the Facilitation of Legal Proceedings in Civil and Commercial Matters between His Majesty and the President of the German Reich of 20 March 1928; RGBl. 1928 II Nr. 47; for the position of the German Government, please refer to German Federal Government “Response to the parliamentary enquiry on judicial cooperation in civil matters with the United Kingdom post-Brexit”, BT-Drucks. 19/27550 of 12 March 2021, p. 3, for a recent decision of the German Judiciary, see Higher Regional Court of Cologne, Decision of 2 March 2023, I-18 U 188/21, paras. 60 et seq.
[23] Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Lugano Convention) of 30 October 2007, OJ EU L 339/3.
[24] With the notable exception of Liechtenstein.
[25] Art. 64 Lugano Convention as well as the Protocol concerning the interpretation by the Court of Justice of 3 June 1971, OJ EU L No°204/28.
[26] For the consent of the other Contracting State (except Denmark), see Swiss FDFA, “Communications by the depositary with respect to the application of accession by the United Kingdom”, Notification of 28 April 2021, 612-04-04-01 – LUG3/21; for the rejection of the EU Commission, Note Verbale to the Swiss Federal Council of 22 June 2021 and, “Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention”, COM(2021) 222 final of 4 May 2021, pp. 3 et seq. However, this decision was not without criticism, for example by the Chair-Rapporteur of the OHCHR Working Group on the issue of human rights and transnational corporations and other business enterprises in a letter to the EU Commission of 14 March 2024.
[27] For these arguments see EU Commission, “Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention”, COM(2021) 222 final of 4 May 2021, p. 3 and European Parliamentary Research Service (EPRS), “The United Kingdom’s possible re-joining of the 2007 Lugano Convention” Briefing PE 698.797 of November 2021 (author: Rafa? Ma?ko), pp. 3 et seq. For a theoretical foundation, see M. Weller, “ ‘Mutual Trust’: A Suitable Foundation for Private International Law in Regional Integration Communities and Beyond”, RdC 423 (2022), 37, 295 et seq.
[28] See e.g. Art. 24 of the Association Agreement between the European Union and its Member States, of the one part, and Ukraine, of the other par, OJ EU No°L 161/3: “The Parties agree to facilitate further EU-Ukraine judicial cooperation in civil matters on the basis of the applicable multilateral legal instruments, especially the Conventions of the Hague Conference on Private International Law in the field of international Legal Cooperation and Litigation as well as the Protection of Children”. Until recently, the regulation of judicial cooperation specifically in and for extra-EU trade relations appeared to be aout of sight, see M. Weller, “Judicial cooperation of the EU in civil matters in its relations to non-EU States – a blind spot?”, in Alan Uzelac/Rhemco van Rhee (eds.), Public and Private Justice (PPJ) 2017: The Transformation of Civil Justice, Intersentia 2018, pp. 63 et seq.
[29] UK Ministry of Justice, The Hague 2019 – Response to Consultation of 23 November 2023 (“Responses”).
[30] Draft Statutory Instruments 2024 No. XXX Private International Law: The Recognition and Enforcement of Judgments (2019 Hague Convention etc.) Regulations 2024 (“Draft Guidelines”). The competence to make regulations in that respect is based on sec. 2 (1) of the Private International Law (Implementation of Agreements) Act 2020 (c. 24). According to sec. 2 (11) read in conjunction with sched. 6 paras. 4 (2) (a) and (d) draft regulations need to be laid before parliament for approval of each House by a resolution.
[31] Sec. 2 (12) Private International Law (Implementation of Agreements) Act 2020 (c. 24); see also Letter from the Scottish Minister for Victims and Community Safety of 19 March 202 regarding the “UK SI Notification – The Recognition and Enforcement of Judgments (2019 Hague Convention etc) Regulations 2024”.
[32] See Response, para. 51; a similar discussion took place regarding “mixed litigation issues”, where only certain elements are within the scope of the HCCH 2019 Judgments Convention.
[33] Responses, para. 53.
[34] See inter alia the Administration of Justice Act 1920, Chapter 81/1920 (Regnal. 10 & 11 Geo 5) or the Foreign Judgments (Reciprocal Enforcement) Act 1933, Chapter 13/1933 (Regnal. 23 & 24 Geo 5.
[35] Sec. 15 Draft Guidelines and Draft Explanatory Memorandum, para. 5.5.5.
[36] Sec. 12 Draft Guidelines; Garcimartin/Saumier, HCCH 2019 Judgments Convention: Explanatory Report, para. 307.
[37] See CJEU, Judgment of 7 April 2022, J. v. H. Limited, C-568/20, para. 47. However, there is a certain chance that this case law will be corrected in the upcoming revision process of the Brussels Ibis-Regulation, see e.g. Hess/Althoff/Bens/Elsner/Järvekülg, “The Reform of the Brussels Ibis Regulation”, MPI Luxembourg Research Paper Series N.°2022 (6), proposal 15.
[38] HL Int. Agreements Committee, 11th Report of 8 May 2024 “Scrutiny of international agreements: 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters” (HL Paper 113), para. 17: “Many stakeholders have called for the Government to continue its efforts to join the Lugano Convention in addition to ratifying Hague 2019. We agree that the Government should do so.”
Way Out West? Understanding The CISG’s Application in Australia
Way out west, where the rain don’t fall
There’s a treaty for the sale of goods that’s good news for all
But you might not know it’s here
Unless you’re livin’ and a workin’ on the land …
In 2009, Associate Professor Lisa Spagnolo observed – based upon her census of Australia’s CISG case law at that time – that the Convention was effectively ‘in the Australian legal outback’. For those unfamiliar with Australia’s geography, most of its population is concentrated on the continent’s eastern coast. Australia’s outback extends, amongst other places, across much of Western Australia. With that geographic imagery in mind, one might not be surprised to hear that a recent decision of the County Court of Victoria – in Australia’s east – overlooked the Vienna Sales Convention’s application.
The circumstances in which this omission occurred are interesting, and provide a useful opportunity for Australian practitioners to learn more about the CISG’s application in Australia.
The case at issue is last year’s C P Aquaculture (India) Pvt Ltd v Aqua Star Pty Ltd [2023] VCC 2134. That case involved a sale of goods dispute (concerning prawn and shrimp) between Australian and Indian parties. Whilst the CISG has been part of Australian law since 1989, it is a well-known fact that India is not a CISG Contracting State. It is perhaps this well-known fact – taken at face value – that led the County Court of Victoria to overlook the CISG’s application.
The C P Aquaculture judgment indicates that ‘[t]he parties are agreed that the proper law of the contracts between CP (India) and Aqua Star for the sale of shrimp or prawns is Victorian law’. As recorded in the judgment, this followed from the plaintiff’s view that ‘India has not adopted the convention on contracts for the international sale of goods’, and from the defendant’s view that there was a ‘failure on the part of either part[y] to allege and prove the terms of any other law as a proper law’.
On either view, however, there is actually a very good basis for applying the CISG, rather than non-harmonised Victorian law. This case therefore represents an excellent opportunity for Australian lawyers to better understand how and why the CISG applies in Australia.
Taking the plaintiff’s position first, the fact that India has not adopted the CISG is actually not fatal to the Convention’s application. In fact, the Convention specifically provides for its application in those exact circumstances. This follows from Art. 1(1) CISG, the treaty’s key application provision:
This Convention applies to contracts of sale of goods between parties whose places of business are in different States:
(a) when the States are Contracting States; or
(b) when the rules of private international law lead to the application of the law of a Contracting State.
Where – as in C P Aquaculture – it is not the case that both parties are from Contracting States, the CISG cannot apply by virtue of Art. 1(1)(a) CISG. But it can still apply pursuant to Art. 1(1)(b) CISG. The key here is whether ‘the rules of private international law’ call for the application of a Contracting State’s law.
In an informal discussion I once had with a leading Australian barrister, I was asked ‘what does “the rules of private international law” here actually mean?’ It may be that uncertainty over the meaning of this phrase contributes to the CISG’s application being overlooked in cases like C P Aquaculture. In short, private international law rules include choice of law rules (where a sales contract is governed by a CISG State’s law because of a choice of law clause) and conflict of laws rules (where, absent party choice of law, the forum’s rules indicate that a CISG State’s law is to apply). In a way, Art. 1(1)(b) CISG might have been more easily understood by non-specialists if it read ‘when a Contracting State’s law is the governing law’. Although it doesn’t read this way, that is essentially the provision’s effect, and understanding Art. 1(1)(b) CISG accordingly may better help Australian practitioners identify cases requiring the treaty’s application.
Taking the defendant’s position second, where the law of an Australian jurisdiction governs, it is actually not necessary to ‘allege and prove’ the CISG’s terms because the CISG – despite its abstract existence as a treaty – is not foreign law. Roder Zelt-Und Hallenkonstruktionen GmbH v Rosedown Park Pty Ltd – Australia’s first ever case applying the CISG – confirmed this by explaining that the CISG is ‘part of’ Australian law and is thus ‘not to be treated as a foreign law which requires proof as a fact’.
Indeed, the Goods Act 1958 (Vic) – a statute that the defendant itself sought to rely upon in C P Aquaculture – is the very vehicle giving effect to the CISG in Victoria, via its pt IV.
All this being said, C P Aquaculture provides Australian practitioners (and lawyers representing Australian traders’ counterparts) with some useful lessons in understanding how and why the CISG applies. If the CISG really is still in the Australian legal outback, then perhaps what Australian practitioners need is a good understanding of the lay of the land. And to that end, private international law can be their map.
Dr Benjamin Hayward
Associate Professor, Department of Business Law and Taxation, Monash Business School
X (Twitter): @LawGuyPI
International Trade and International Commercial Law research group: @MonashITICL
News
Out now: The Korean Journal of International and Comparative Law, Volume 12 (2024), Issue 1
The following information has been kindly provided by Wilson Lui, PhD Candidate, Melbourne Law School; Part-time Lecturer, Faculty of Law, University of Hong Kong.
The latest issue of the Journal is available online and features the following papers delivered at the ILA-Korea’s 60th Anniversary Conference on Private International Law held in Seoul, Korea on 11 June 2024:
Call for Papers: 3rd Asian Private International Law Academy Conference (8th to 9th December 2024)
The following information has kindly been provided by Anselmo Reyes.
The third Asian Private International Law Academy (APILA) Conference will take place in person at Thammasat University in Bangkok, Thailand on Sunday 8 (Day 1) and Monday 9 (Day 2) December 2024. Persons whose abstracts have been selected (see next paragraph) will deliver oral presentations in turn on Days 1 and 2. Each presentation will run for about 10 minutes and be followed by a discussion of about 10 to 15 minutes in which participants will have the opportunity to comment on a presentation. The APILA Conference will be in the form of two days of roundtable discussions in English. The objective of the APILA Conference is to assist presenters to refine prospective research papers with a view to eventual publication. Read more
Virtual Workshop (in German) on November 12: Dennis Solomon on the foreign element in Private International Law and International Civil Procedure Law
On Tuesday, November 12, 2024, the Hamburg Max Planck Institute will host its monthly virtual workshop Current Research in Private International Law at 11:00-12:30 (CET). Prof. Dr. Dr. h.c. Dennis Solomon, LL.M. (Berkeley) (University of Passau) will speak, in German, about the topic
The foreign element in Private International Law and International Civil Procedure Law: same same, but different?
The presentation will be followed by open discussion. All are welcome. More information and sign-up here.
If you want to be invited to these events in the future, please write to veranstaltungen@mpipriv.de.