Views
Brexit: Three modest proposals
After last Thursday’s EU summit, which resulted in a double-barreled “flextension” of the date for Brexit, all cards are on the table again. Insofar, it is worth noticing that the German journalist Harald Martenstein, in his weekly column for the Berlin-based “Tagesspiegel”, has recently offered three innovative solutions for the Brexit dilemma:
The first one may be called the “one island, two countries” proposal: Great Britain would be split into two parts, one leaving the EU, the other remaining. All Britons would then be granted double citizenship and be free to make up their minds according to their preferences.
The second solution that the columnist proposes takes up the frequently raised demand for a second referendum that should overturn the first Brexit vote. Well, if there is going to be a second referendum, why not a third or even a fourth one? Thus, Martenstein suggests that, in the future, a referendum should be held every year on 2 January; for the remaining part of the year, the United Kingdom would then be either in or out of the EU.
Thirdly and finally, if all else fails, Martenstein argues that the UK might simply turn the tables and offer the other Member States the possibility of leaving the EU as well and joining the UK instead, which would then change its name to “Greatest Britain Ever”.
Obviously, the proposals made by the columnist are meant as a satirical comment. Yet, there are some elements of reality contained in his mockery: who knows whether, in case of a hard Brexit, Scotland (or Northern Ireland) would stay a part of the UK or whether a new referendum on seceding from the UK – and re-joining the EU – would be organized? And already today, numerous Britons are applying for a double citizenship in order to keep a foothold in the EU. Who knows whether a second referendum on Brexit will take place and whether it will actually settle the matter once and for all? And wasn’t the EU summit an attempt by the EU-27 to avoid the Brexit populist contagion from spreading to the continent via the impending EU parliamentary elections? In sum, the situation is increasingly reminiscent of a book title by Paul Watzlawick: hopeless, but not serious…
Interpreting Choice-of-Law 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
Over the past few decades, the concept of party autonomy has moved to the forefront of private international law scholarship. The question of whether (and to what extent) private actors may choose the law that will govern their relationship has generated extensive commentary and discussion. The result? An ever-expanding literature on the role of party autonomy in private international law.
Recognition and Enforcement of Chinese Monetary Judgments in Australia based on Chinese Citizenship
The Australian common law does not require reciprocity for recognizing and enforcing foreign judgments. Therefore, although Chinese courts have never recognized and enforced an Australian monetary judgment, Australian courts have recognized and enforced Chinese judgments. Thus far, there have been two Chinese judgments recognized and enforced in Australia (both in the State of Victoria). In both cases, the Australian judges considered whether the Chinese courts had international jurisdiction based on the defendants’ citizenship/nationality.
The first case is Liu v Ma.[1] The plaintiff sought to recognize and enforce a default Chinese judgment (worth RMB 3,900,000) against the defendants. The defendants defaulted in the Australian judgment recognition and enforcement (hereinafter ‘JRE’) proceedings. By applying Australian law, the Supreme Court of Victoria held that the Chinese court had international jurisdiction over the defendants because they were born in China and held a Chinese passport, they had substantial activities or financial affairs in China, and Chinese law does not recognize dual nationality.
The second case, Suzhou Haishun Investment Management Co Ltd v Zhao & Ors, was rendered recently on 27 February 2019.[2] It is a summary judgment but, in contrast to Liu, the defendant thoroughly argued her case in the Australian JRE court. The plaintiff sought to recognize and enforce three Chinese judgments (worth RMB 20,000,000). The plaintiff brought Chinese proceedings against a Ms. Zhao and her company where she was the director and the sole shareholder. A few days before the Chinese proceeding was commenced, Ms. Zhao was informed that the plaintiff intended to sue her, and she left China with no intention to return. However, Ms. Zhao was still registered to an address in the Chinese court’s jurisdiction under the hukou system (China’s system of household registration). She possessed a Chinese identity card and held a Chinese passport. The plaintiff tried various ways to serve Ms. Zhao but was unsuccessful. Finally, the service was conducted by public announcement. Ms. Zhao defaulted in the Chinese proceedings. But at the first hearing, a man purporting to be an employee of Ms. Zhao’s company appeared before the Chinese judge. This man was asked by the Chinese judge whether he knew Ms. Zhao, to which he responded that she was ‘the boss.’ Although this man did not hold Ms. Zhao’s power of attorney, he nevertheless indicated that he had with him documents verifying that Ms. Zhao was diagnosed with depression which explained why she could not attend the hearing. The Chinese court held that Ms. Zhao was aware of the proceedings and service by the public announcement was effective. Chinese judgments were rendered against Ms. Zhao and her company. Her company had no assets in China, so the plaintiff went to Australia to locate Ms. Zhao. The Australian court held that service by the public announcement was legal according to Chinese Civil Procedural law and there was no denial of natural justice. The Australian court also held that the Chinese court had international jurisdiction. First, because the parties submitted to the Chinese court by a choice of court clause in the loan contracts. Second, Ms. Zhao was a citizen of China, possessed a Chinese passport, held an identity card and submitted to the jurisdiction of the Chinese Court by agreement, so it is not necessary to decide whether she was considered by Chinese law to be domiciled in China.
Although the defendant’s citizenship is not a ground for Australian courts to exercise direct jurisdiction, it remains to be ground in the Australian JRE proceedings to determine whether a foreign court has international jurisdiction. In Independent Trustee Services Ltd v Morris,[3] the plaintiff applied to enforce a UK judgment in Australia on the ground that the defendant had an active UK citizenship. The defendant was a UK citizen and held a UK passport issued in 2003 and current until 2013, and he used this passport to travel to Australia. The Supreme Court of New South Wales found that the defendant’s citizenship was not some relic of an early stage of his life but was an active part of his present situation on which he had relied for international travel and for other purposes. It held that the UK judgment should be recognized and enforced because citizenship of a foreign country means allegiance to the foreign country, and it is a recognized ground of international jurisdiction on which the effectiveness of foreign judgments is accepted under the common law. However, even the judge deciding Morris acknowledges the ‘absence of citation in the English authorities of any case in which this ground of jurisdiction has been contested and upheld after argument’.[4] Liu cites the English case Emanuel v Symon[5], which found that a foreign court has international jurisdiction if the defendant is a subject of the foreign country in which the judgment has been obtained. However, this is a dictum rather than a holding. As Dicey, Morris and Collins The Conflict of Laws indicates there is no actual decision in English common law which supports that the courts of a foreign country might have jurisdiction over a person if he was a subject or citizen of that country. Private International Law in Australia by Reid Mortensen and et al also considers active citizenship is a dubious ground of international jurisdiction.
The cases involving Chinese citizenship and Hukou are more complicated. First, the fact that China does not recognize dual citizenship does not mean China is necessarily a Chinese citizen’s domicile. A Chinese citizen automatically loses his/her Chinese citizenship only when a Chinese citizen has obtained foreign citizenship and resides overseas.[6] It is not uncommon that a Chinese citizen may reside overseas under a foreign permanent residency visa. Second, these groups of Chinese citizens still maintain a registered address in China (Hukou). This is because every Chinese citizen must have a Hukou even if s/he resides abroad. This Hukou may enable them to receive Chinese pension and voter registration. Third, under Chinese civil procedure law, a Chinese court has jurisdiction on a Chinese citizen when his or her Hukou is in its jurisdiction,[7] even if the Chinese citizen (defendant) is not present in China when the initiating process is commenced. If all other service methods are not successful, people’s courts can use a public announcement to effect service. The question is whether Australian courts recognize and enforce the consequent Chinese default judgment based on the defendant’s citizenship. I would suggest Australian courts to be cautious to follow Liu and Zhao regarding the issue of citizenship. The classical grounds for international jurisdiction are presence and submission. Service by a public announcement is hard to establish international jurisdiction on a defendant who is neither present nor submitted. Citizenship as a ground of international jurisdiction has been doubted by three English High Court judges[8] and rejected by the Irish High Court.[9] Additionally, Liu is a default judgment, so the citizenship issue has not been contested, and the defendant in Zhao submits to Chinese court by a choice of court clause.
[1] Liu v Ma & anor [2017] VSC 810.
[2] Suzhou Haishun Investment Management Co Ltd v Zhao & Ors [2019] VSC 110.
[3] Independent Trustee Services Ltd v Morris [2010] NSWSC 1218.
[4] Ibid, para 28.
[5] Emanuel v Symon[1908] 1 KB 302.
[6] Art. 9 of the Chinese Nationality Law, http://www.mps.gov.cn/n2254996/n2254998/c5713964/content.html.
[7] Under the Hague Service Convention, service on Hukou may not be upheld if the defendant can demonstrate that his habitual residence is different. If a Chinese citizen leaves its Hukou address and resides in another address continuously for more than one year, the latter address becomes his habitual residence and the court in that address also has jurisdiction.
[8] Blohn v Desser [1962] 2 Q.B. 116, 123; Rossano v Manufacturers’ Life Insurance Co Ltd [1963] 2 Q.B. 352, 382–383; Vogel v RA Kohnstamm Ltd [1973] Q.B. 133; see also Patterson v D’Agostino (1975) 58 D.L.R. (3d) 63(Ont). Dicey, Morris and Collins The Conflict of Laws (15th ed) 14-085.
[9] Rainford v Newell-Roberts [1962] I.R. 95.
News
Dutch Journal of PIL (NIPR) – issue 2023/1
The latest issue of the Dutch Journal on Private International Law (NIPR) has been published.
NIPR 2023 issue 1
Editorial
M.H. ten Wolde / p. 1-2
A.V.M. Struycken, Arbitrages in Nederland waarop de Nederlandse rechter geen toezicht kan houden / p. 3-8
Abstract
The Code of Civil Procedure contains a chapter on arbitration. Procedures and awards rendered in the Netherlands are subject to a certain degree of scrutiny by the civil courts. This authority, however, does not extend to arbitration on litigation between private enterprises and a foreign State.
This exception applies to such awards rendered at the Peace Palace under the flag of the Permanent Court of Arbitration. This also applies to awards, if rendered in the Netherlands, based on investment treaties like the Washington Convention of 18 March 1965 which created the International Center for the Settlement of Investment Disputes (ICSID). It was correctly recognized by the Act of 1 November 1980 providing for a special rule.
A 1983 proposal to declare that awards rendered by the Iran-US Tribunal situated in The Hague are Dutch awards was not successful. The proposal was only retracted in 2000.
The Comprehensive Economic and Trade Agreement (CETA) 2016, between the EU and its Member States, on the one side, and Canada, on the other, which was approved for ratification by the Netherlands in July 2022, provides for arbitration in its Articles 27 and 28, within the framework of its investment court system. The recognition and execution of its awards in the Netherlands must still be implemented.
In arbitration based on investment treaties an issue of public international law is involved. This is ignored in Dutch caselaw, however.
N. Touw & I. Tzankova, Parallel actions in cross-border mass claims in the EU: a (comparative) lawyer’s paradise? / p. 9-30
Abstract
In the context of cross-border mass harms, collective redress mechanisms aim to offer (better) access to justice for affected parties and to facilitate procedural economy. Even when national collective redress mechanisms seek to group cases together, it is likely that cross-border parallel actions will still be filed. Parallel actions risk producing irreconcilable judgments with conflicting or inconsistent outcomes and the rules of European private international law aim to reduce this risk. This contribution argues that the rules on parallel actions currently run the risk of not achieving their objective in the context of mass claims and collective redress. Given their lack of harmonization, when collective redress mechanisms with different levels of representation are used, the application of the rules on parallel actions can cause procedural chaos. In addition, judges have a great deal of discretion in applying the rules on parallel actions, whilst there is a lack of guidance on how they should use this discretion and what criteria to apply. They may be unaware of the effects on the access to justice of their decisions to stay or proceed with a parallel collective action. This contribution argues that there should be more awareness about the interaction (and sometimes perhaps even a clash) between the goals of private international law and of collective redress and of how access to justice can come under pressure in the cross-border context when the traditional rules on parallel actions are applied. A stronger focus on the training and education of judges and lawyers in comparative collective redress could be a way forward.
N. Mouttotos, Consent in dispute resolution agreements: The Pechstein case law and the effort to protect weaker parties / p. 31-50
Abstract
The unending Pechstein saga involving the German speed skater and Olympic champion Claudia Pechstein and the International Skating Union has acquired a new interesting turn with the decision of the German Federal Constitutional Court. Among the various interesting questions raised, the issue of party autonomy, especially in instances of inequality in bargaining power, and the resulting compelled consent in dispute resolution agreements is of great relevance for private international law purposes. This article deals with the part of the judgment that focuses on the consensual foundation that underpins arbitration in the sporting context, providing a systematic examination with other areas of the law where other forms of regulation have emerged to remedy the potential lack of consent. This is particularly the case when it involves parties who are regarded as having weaker bargaining power compared to their counterparty. In such cases, procedural requirements have been incorporated in order to ensure the protection of weaker parties. The legal analysis focuses on European private international law, also merging the discussion with substantive contract law and efforts to protect weaker parties by way of providing information. This last aspect is discussed as a remedy to the non-consensual foundation of arbitration in the sporting context.
CASE NOTES
A. Attaibi & M.A.G. Bosman, Forumkeuzebeding in algemene voorwaarden: de ‘hyperlink-jurisdictieclausule’ nader bezien. HvJ EU 24 november 2022, ECLI:EU:C:2022:923, NIPR 2022-549 (Tilman/Unilever) / p. 51-58
Abstract
Tilman v. Unilever concerns the validity of a jurisdiction clause included in the general terms and conditions contained on a website, in case the general terms and conditions are referenced via a hyperlink in a written B2B contract. The CJEU held that such a jurisdiction clause is valid, provided that the formal requirements of Article 23 Lugano Convention 2007, that ensure the counterparty’s consent to the clause, are met. In this annotation the authors discuss and comment on the CJEU judgment, also in the broader context of earlier CJEU judgments on jurisdiction clauses contained in general terms and conditions.
K.J. Saarloos, Arbitrage en de effectiviteit van de EEX-Verordening naar aanleiding van de schipbreuk van de Prestige in 2002. Hof van Justitie EU 20 juni 2022, zaak C-700/20, ECLI:EU:C:2022:488, NIPR 2022-544 (London Steam-Ship Owners’ Mutual Insurance Association Ltd/Spanje) / p. 59-74
Abstract
The CJEU’s ruling in the Prestige case confirms the rule from the J/H Limited case (2022) that a judgment by a court of a Member State is a judgment within the meaning of Article 2 of the EEX Regulation if the judgment is or could have been the result of adversarial proceedings. The content of the judgment is not relevant for the definition. Judgments recognising judgments by arbitrators or the courts of third countries are therefore judgments within the meaning of the EEX Regulation. The question of the definition of the term judgment must be distinguished from the material scope of the EEX Regulation. A judgment recognising an arbitral award is not covered by the EEX Regulation’s rules on recognition and enforcement; however, such a judgment may be relevant for the application of the rule that the recognition of the judgment of a court of a Member State may be refused if the judgment is irreconcilable with a judgment given in the Member State addressed.
The ruling in the Prestige case also makes it clear that a judgment by a Member State court on arbitration cannot impair the effectiveness of the EEX Regulation. If it does, that judgment cannot be opposed to the recognition of an incompatible judgment from the other Member State. The CJEU thus formulates an exception to the rule that a judgment from a Member State may not be recognised if the judgment is irreconcilable with a judgment in the Member State addressed: that ground for refusal is not applied if the irreconcilable judgment in the requested Member State violates certain rules in the EEX Regulation. The ruling raises questions both in terms of substantiation and implications for the future. It is not convincing to limit a statutory limitation on the effectiveness of the EEX Regulation by invoking the same effectiveness. Moreover, the ruling creates tension with the rule that the New York Convention takes precedence over the EEX Regulation.
German professors comment on the Commission Proposal for a Regulation on Parenthood
Discussion on the Commission Proposal for a Regulation on Parenthood is intensifying – recall the virtual workshop by Tobias Helms in February and the current regular webinars on the proposal. Now, a group of German professors (including Helms) that calls itself “the Marburg group” has published critical comments. Their verdict: “The Marburg Group welcomes the initiative of the Commission. The Group embraces the overall structure of the Parenthood Proposal. Nevertheless, it suggests some fundamental changes, apart from technical amendments.”
For details, see here.
Chinese Journal of Transnational Law Special Issue Call for Papers
The appeal of alternative dispute resolution (ADR) mechanisms is on the rise and so is also the pull to prevent international disputes from arising altogether. In the area of cross-border commercial and investment disputes, the renewed interest in the interface between dispute prevention and alternative dispute resolution springs from a growing awareness of the need to overcome the shortcomings of arbitration. This is shown by the recent setting up of a series of new ‘global labs’ in international commercial resolution provided with new diversified and integrated commercial dispute resolution mechanisms linking ‘mediation, arbitration and litigation’ in recent years. Equally indicative of this trend is the entering into force of the UN Convention on International Settlement Agreements Resulting from Mediation (The Singapore Convention) in September 2020 and that ‘dispute prevention and mitigation’ has become one of the most dynamic focal points for UNCITRAL Working Group III mandated with examining the reform of investor-state dispute settlement.
However, the contemporary move towards devising more effective preventive ‘cooling off’ mechanisms, increasing the transnational appeal of mediation and, when feasible, sidestepping altogether the need to resort to third-party judicialized processes is not unique to international commercial and investor-state dispute resolution. At a time of backlash against international courts and tribunals, prevention and alternative dispute settlement mechanisms are gaining momentum across both established and emerging areas of public, private and economic international law.
Against this background, the inaugural issue of the Chinese Journal of Transnational Law to be published in 2024 invites submissions that engage critically with the on-going transformation of the transnational dispute settlement system in an increasingly multipolar international legal order in which a paradigm shift away from the Western-model of international adversarial legalism and towards de facto de-judicialization is arguably gaining hold.
Topics on which the contributions could focus on include, but are not limited to:
*Transnational Dispute Prevention and Settlement in international trade law
*Transnational Dispute Prevention and Settlement in emerging areas: cyberspace, outerspace etc.
* Transnational Dispute Prevention and Settlement in international environmental law
* Transnational Dispute Prevention and Settlement in international commercial disputes
*Transnational Dispute Prevention and Settlement in Investor-State dispute settlement
*Transnational Inter-State Dispute Prevention and Settlement in inter-state disputes under general public international law
Contributors may choose between: Research articles (up to 11,000 words inclusive of footnotes) or short articles (up to 6,000s inclusive of footnotes). Those interested, please submit your contribution before 31 Aug 2023 through the journal homepage.