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Interpreting Forum Selection Clauses

Written by John Coyle, the Reef C. Ivey II Term Professor of Law, Associate Professor of Law at the University of North Carolina School of Law

Last week, I wrote about the interpretive rules that U.S. courts use to construe ambiguous choice-of-law clauses.  Choice-of-law clauses are not, however, the only means by which contracting parties may exercise their autonomy under the rules of private international law.  Parties may also select via contract the forum in which their disputes will be resolved.  In the United States, these contractual provisions are generally known as forum selection clauses.  Elsewhere in the world, such provisions are generally known as choice-of-court clauses.  Since this post is largely focused on U.S. practice, I utilize the former term. (more…)

Deadline Extended! The Private Side of Transforming the World – UN Sustainable Development Goals 2030 and the Role of Private International Law

Outline and Call for Papers

Update!

The planned public conference has to be postponed due to the Covid-19 pandemic and will now take place at the Max Planck Institute in Hamburg on September 9-11 2021, one year later than originally announced.

On September 10-11 2020, we will instead hold a  closed online workshop among the project participants in order to feedback on the draft papers.

Deadline extended: May 17!

On 25 September 2015 the UN General Assembly unanimously adopted the Resolution Transforming our world: the 2030 Agenda for Sustainable Development. The core of the Resolution consists of 17 Sustainable Development Goals (SDGs) with 169 associated targets, and many more indicators. The SDGs build on the earlier UN Millennium Development Goals, “continuing development priorities such as poverty eradication, health, education and food security and nutrition”. Yet, going “far beyond” the MDGs, they “[set] out a wide range of economic, social and environmental objectives”. The SDGs add new targets, such as migration (8.8; 10.7), the rule of law and access to justice (16.3), legal identity and birth registration (16.9), and multiple “green” goals. And, more than the MDGs, they emphasize sustainability.

The SDGs have attracted significant attention. Although not undisputed – for example, regarding their assumption that economic growth may be decoupled from environmental degradation, and their lack of attention to the concerns of indigenous people – the SDGs have become a focal point for comprehensive thinking about the future of the world. This is so at least in the area of public law and public international law. With regard to private law, by contrast, there has been less attention, although the SDGs are directed not only to governments and parliaments, the UN and other international institutions, but also to “local authorities, indigenous peoples, civil society, business and the private sector, the scientific and academic community – and all people”.

Certainly, public action and public law will not be enough if the goals are to be achieved. Even a spurious stroll through the SDGs demonstrates interplay with private international law (PIL). The SDGs name goals regarding personal status and family relations: “By 2030, provide legal identity for all, including birth registration” (16.9), or “Eliminate… forced marriage…”(5.3), both well-known themes of PIL. The SDGs focus on trade and thereby invoke contract law in multiple ways. On the one hand, they encourage freedom of contract when they call to “correct and prevent trade restrictions and distortions in world agricultural markets”… (2.b) or “promote the development, transfer, dissemination and diffusion of environmentally sound technologies to developing countries on favourable terms… as mutually agreed” (17.7). On the other hand, they insist on restrictions, for example, the “immediate and effective” eradication of forced labour, “modern slavery” and child trafficking ((8.7, 16.2); “by 2030 significantly reduce illicit financial and arms flows”…(16.4); “substantially reduce corruption and bribery in all their forms” (16.5). There is clearly also a role for tort law, including its application to cross-border situations, for example in order to fulfill goals regarding environmental protection and climate change.

Other targets concern not substantive private law, but civil procedure. Thus, the call to “ensure equal access to justice for all” (16.3) has traditionally been confined to equal treatment within one legal system. But as a global goal it invokes global equality: for instance, the ability for European victims of the Volkswagen Diesel scandal to access courts like US victims, the access to court of Latin American victims of oil pollution on a similar level to those in Alaska, and so forth. All of this has multiple implications in the sphere of cross-border civil procedure: the admissibility of global class actions and public interest actions, judicial jurisdiction and recognition and enforcement of judgments concerning corporate social and environmental responsibility, and so on.

Finally, the SDGs have an institutional component. SDG 16 calls, among others, for “strong institutions,” and it encourages cooperation. What comes into focus here, from a private international law perspective, are institutions like the Hague Conference and treaties like the Hague Conventions, but also other possible instruments of cooperation and institutionalization in the private international law realm.

All this suggests that there are plenty of reasons to examine the relationship between the SDGs and PIL. And since the 2030 Agenda explicitly calls on the private sector and the academic world to cooperate for its implementation, and time is running fast, such an examination is also timely, indeed urgent. With this in mind, Ralf Michaels, Verónica Ruiz Abou-Nigm and Hans van Loon are organizing a conference at the Max Planck Institute in Hamburg on 10-12 September 2020. Speakers will systematically analyze the actual and potential role of Private International Law for each of the seventeen SDGs. The overall purpose is twofold:

(1) to raise awareness of the relations between the SDGs and private international law as it already exists around the world. Private international law is sometimes thought to deal with small, marginal issues. It will be important, for those inside and outside the discipline alike, to generate further awareness of how closely its tools and instruments, its methods and institutions, and its methodologies and techniques, are linked to the greatest challenges of our time.

(2) to explore the potential need and possibilities for private international law to respond to these challenges and to come up with concrete suggestions for adjustments, new orientations and regional or global projects. This exploration can aim to identify the need for further and/or new research agendas in specific fields; the development of new mechanisms and approaches, the usefulness of new international cooperation instruments, be it new Conventions at the Hague Conference or elsewhere, or be it new institutions.

Call for Papers

Submission deadline: May 17, 2019.

We are inviting contributions to this project. Interested applicants should submit the application by May 17, 2019. We ask you to identify which of the 17 development goals you want to address, which (if any) work you have already done in that area, and, in a few paragraphs (up to a maximum of 500 words), what you intend to focus on. We plan to select participants and invite them by the end of May 2019. Selected participants would be expected to come to Hamburg to present research findings in the conference, and to provide a full draft paper by the end of June 2020 (in advance of the conference), for discussion and subsequent publication as part of an edited collection to be published after the conference. We expect to be able to fund all travel and accommodation costs. If you are interested, please send your brief application to Britta Arp (@sekretariat-michaels@mpipriv.de) in Hamburg. Please title your email “SDG2030 and PIL,” and your document “SDG2030 and PIL_lastname”. We look forward to hearing from you.

Ralf Michaels, Director, Max Planck Institute for Comparative and International Private Law, Hamburg;

Verónica Ruiz Abou-Nigm, Senior Lecturer in International Private Law, University of Edinburgh;

Hans van Loon, former Secretary General of the Hague Conference.

Resistance is Futile – How Private International Law Will Undermine National Attempts to Avoid ‘Upload Filters’ when Implementing the DSM Copyright Directive

Last week, the European Parliament adopted the highly controversial proposal for a new Copyright Directive (which is part of the EU Commission’s Digital Single Market Strategy). The proposal had been criticized by academics, NGOs, and stakeholders, culminating in an online petition with more than 5 million signatures (a world record just broken by last week’s Brexit petition) and public protests with more than 150,000 participants in more than 50 European (although mainly German) cities.

Under the impression of this opposition, one of the strongest proponents of the reform in the European Parliament, Germany’s CDU, has pledged to aim for a national implementation that would sidestep one of its most controversial elements, the requirement for online platforms to proactively filter uploads and block unlicensed content. The leader of Poland’s ruling party PiS appears to have recently made similar remarks.

But even if such national implementations were permissible under EU law, private international law seems to render their purported aim of making upload filters ‘unnecessary’ virtually impossible.

Background: Article 17 of the DSM Copyright Directive

Article 17 (formerly Article 13) can safely be qualified as one of the most significant elements of an otherwise rather underwhelming reform. It aims to address the so-called platform economy’s ‘value gap’, i.e. the observation that few technology giants like ‘GAFA’ (Google, Apple, Facebook, Amazon) keep the vast majority of the profits that are ultimately created by right holders. To this end, it carves out an exception from Art 14(1) of the e-Commerce Directive (Directive 2000/31/EC) and makes certain ‘online content-sharing service providers’ directly liable for copyright infringements by users.

Under Art 17(4) of the Directive, platforms will however be able to escape this liability by showing that they have

(a) made best efforts to obtain an authorisation, and

(b) made, in accordance with high industry standards of professional diligence, best efforts to ensure the unavailability of specific works and other subject matter for which the rightholders have provided the service providers with the relevant and necessary information; and in any event

(c) acted expeditiously, upon receiving a sufficiently substantiated notice from the rightholders, to disable access to, or to remove from, their websites the notified works or other subject matter, and made best efforts to prevent their future uploads in accordance with point (b).

This mechanism has been heavily criticised for de-facto requiring platform hosts to proactively filter all uploads and automatically block unlicensed content. The ability of the necessary ‘upload filters’ to distinguish with sufficient certainty between unlawful uploads and permitted forms of use of protected content (eg for the purposes of criticism or parody) is very much open to debate – and so is their potential for abuse. In any case, it does not seem far-fetched to assume that platforms will err on the side of caution when filtering content this way, with potentially detrimental effects for freedom of expression.

In light of these risks, and of the resulting opposition from stakeholders, the German CDU has put forward ideas for a national implementation that aims to make upload filters ‘unnecessary’. In essence, they propose to require platform hosts to conclude mandatory license agreements that cover unauthorised uploads (presumably through lump-sum payments to copyright collectives), thus replacing the requirement of making ‘best efforts to ensure the unavailability of unlicensed content’ according to Art 17(4) of the Directive.

Leaving all practical problems of the proposal aside, it is far from clear whether such a transposition would be permissible under EU law. First, because it is not easily reconcilable with the wording and purpose of Art 17. And second, because it would introduce a new exception to the authors’ rights of communication and making available to the public under Art 3 of the Information Society Directive (Directive 2001/29/EC) without being mentioned in the exhaustive list of exceptions in Art 5(3) of this Directive.

Private International Law and the Territorial Scope of Copyright

But even if EU law would not prevent individual member states from transposing Art 17 of the Directive in a way that platforms were required to conclude mandatory license agreements instead of filtering content, private international law seems to severely reduce the practical effects of any such attempt.

According to Art 8(1) Rome II, the law applicable to copyright infringements is ‘the law of the country for which protection is claimed’ (colloquially known as the lex loci protectionis). This gives copyright holders the option to invoke any national law, provided that the alleged infringement falls under its (territorial and material) scope of application. With regard to copyright infringements on the internet, national courts (as well as the CJEU – see its decision in Case C-441/13 Hejduk on Art 5(3) Brussels I) tend to consider every country in which the content can be accessed as a separate place of infringement.

Accordingly, a right holder who seeks compensation for an unlicensed upload of their content to an online platform will regularly be able to invoke the national laws of every member state – most of which are unlikely to opt for a transposition that does not require upload filters. Thus, even if the German implementation would allow the upload in question by virtue of a mandatory license agreement, the platform would still be liable under other national implementations – unless it has also complied with the respective filtering requirements.

Now, considering the case law of the Court of Justice regarding other instruments of IP law (see, eg, Case C-5/11 Donner; Case C-173/11 Football Dataco), there may be room for a substantive requirement of targeting that could potentially reduce the number of applicable laws. But for the type of online platforms for which Art 17 is very clearly designed (most importantly, YouTube), it will rarely be possible to show that only audiences in certain member states have been targeted by content that has not been geographically restricted.

So either way, if a platform actually wanted to avail itself of the option not to proactively filter all uploads and, instead, pay for mandatory license agreements, its only option would be to geographically limit the availability of all content for which it has not obtained a (non-mandatory) license to users in countries that follow the German model. It is difficult to see how this would be possible… without filtering all uploaded content.

News

RabelsZ 86 (2022): Issue 3

The latest issue of RabelsZ has just been released. It contains the following contributions:

OBITUARY

Jürgen Basedow: Ulrich Drobnig *25.11.1928 †2.3.2022, 571–576, DOI: 10.1628/rabelsz-2022-0052

ESSAYS

Daniel Gruenbaum: From Statehood to Effectiveness: The Law of Unrecognised States in Private International Law, 577–616, DOI: 10.1628/rabelsz-2022-0053

One of the functions of private international law (PIL) is to determine the law that governs a legal relationship. Yet what occurs when the rules designated by PIL emanate from an entity that has not been recognised as a state by the government of the forum? This article aims firstly to identify and describe the major prevailing approaches to applying the law of unrecognised states in contemporary PIL practice. It then critically appraises the principal reasons justifying the application of foreign law despite it emanating from unrecognised states. The article finally argues that applying the law of unrecognised states reveals the potential for PIL to grapple with non-state rules and with interactions of normative orders of all different sorts, regardless of their state pedigree.

Matthias Fervers: Die Drittwirkungen der Forderungsabtretung im Internationalen Privatrecht, 617–643, DOI: 10.1628/rabelsz-2022-0054

Third-Party Effects of Assignments of Claims in Private International Law. – Although Art. 14 Rome I Regulation addresses the relationship between the assignor and the assignee as well as the relationship between the assignee and the debtor, there is still no provision as to the third-party effects of assignments. The question of what law should govern these third-party effects is, correspondingly, a subject of considerable discussion. While some propose that the law governing the assigned claim should be applicable, others suggest that third-party effects should be governed by the law that applies to the contract between the assignor and the assignee; the current prevailing opinion assumes that third-party effects should be governed by the law of the habitual residence of the assignor. This article demonstrates that a limited possibility for a choice of law for assignor and assignee is the most appropriate solution.

Christoph Wendelstein: Der Handel von Kryptowährungen aus der Perspektive des europäischen Internationalen Privatrechts, 644–686, DOI: 10.1628/rabelsz-2022-0055

The Trading of Cryptocurrencies from the Perspective of European Private International Law. – The rules in the Rome I Regulation are used to ascertain the applicable law in cases of trades in cryptocurrencies. However, these are only partially appropriate for a predictable determination of the applicable law. While in B2B and C2C cases of “stationary” trading of cryptocurrencies via Crypto-ATMs the law at the location of the ATM still provides a predictable legal system, this is not the case for online trading with crypto-brokers or via crypto exchanges. Especially in cases of online trading via crypto exchanges, a further complication results from the fact that such platforms allow their users to trade legally under a pseudonym – in line with the historical notion of cryptocurrencies. This may complicate or even prevent the determination of the applicable law. The resulting “vacuum” is to some extent filled by the technical design of the transaction through the use of smart contracts. However, this does not dispense with the question of applicable law. The article examines these and other questions and points out possible solutions de lege lata.

EU Becomes the First Party to Accede to the 2019 Hague Judgments Convention

Earlier this week, the Council of the European Union has adopted the decision for the EU to accede to the 2019 Hague Judgments Convention (which, in accordance with Art. 27(1) of the Convention, binds all Member States except Denmark). Once a second party either ratifies, accepts, or approves, or accedes to the Convention, it will enter into force one year after the deposit of the instrument of ratification, acceptance, approval or accession by that second State (Art. 28(1)). More information is available here.

CERIL Report Reviews Cross-Border Effects in European Preventive Restructuring

The independent think tank Conference on European Restructuring and Insolvency Law (CERIL) has published its latest Statement and Report 2022-2 on Cross-Border Effects in European Preventive Restructuring. As EU Member States implement the EU Preventive Restructuring Directive (2019/1023), CERIL has identified and assessed the benefits and shortcomings of applying the EU Insolvency Regulation 2015 (EIR 2015) to govern the cross-border effects of proceedings in national preventive restructuring frameworks. In the absence of an adequate framework for these new preventive restructuring proceedings, the CERIL Report and Statement formulate recommendations to the EU and national legislators.

Three Ways Forward

To date, no tailor-made framework exists which could adequately and effectively facilitate the cross-border effects of these preventive restructuring proceedings. To resolve the legal uncertainty resulting from the lack of a clear regulatory framework, CERIL suggests the following three lines of action. Firstly, as the European Commission will review the application of the EIR 2015 by 27 June 2027, it is recommended that this review critically assesses the adequacy of the EU legislator’s approach laid down in the EIR 2015 and tailor it to also cover in detail these restructuring proceedings.  Secondly, CERIL welcomes any early, if not immediate, action of the European Commission towards the adoption of a special cross-border framework to include restructuring proceedings in the EIR 2015, either as a separate chapter or take the form of a separate regulation. Thirdly, CERIL invites all Member States to timely review their cross-border frameworks to enable and/or facilitate the recognition of foreign preventive restructurings. A European rescue culture, endorsed by Directive (2019/1023), should be complemented by an instrument to adequately provide legal effects of any restructuring for creditors and shareholders, wherever they are located.

About CERIL and its project on Cross-Border Dimensions of Preventive Restructuring Proceedings

The Conference on European Restructuring and Insolvency Law (CERIL) is an independent and voluntary non-profit organisation of presently 85 members (conferees), consisting of insolvency practitioners, judges, and academics representing 30 European countries and reflecting a diverse array of national insolvency systems and legal traditions.

In January 2022, CERIL commenced a new project led by Prof. Stephan Madaus (Member of the CERIL Executive, University of Halle-Wittenberg, Germany) and Prof. em. Bob Wessels (CERIL Chair, University of Leiden, the Netherlands). This project addresses the policy issues of identifying (and possibly selecting) the regulatory cross-border framework for the new procedural options introduced in most EU Member States when implementing preventive restructuring frameworks flowing from Directive (2019/1023). CERIL studied the role of the EIR 2015, the Brussels Ibis Regulation, and the current national cross-border laws of Member States. The reporters worked with contributions of a large group of scholars and insolvency practitioners (Czech Republic, Germany, Greece, Hungary, Italy, Poland, Portugal, Serbia, Slovak Republic, Spain, The Netherlands).