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“The Nature and Enforcement of Choice of Law Agreements” (2018) 14 Journal of Private International Law 500-531
This blog post presents a condensed version of Dr Mukarrum Ahmed’s (Lancaster University) article in the December 2018 issue of the Journal of Private International Law. The blog post includes specific references to the actual journal article to enable the reader to branch off into the detailed discussion. The journal article is a companion publication to the author’s recent book titled The Nature and Enforcement of Choice of Court Agreements: A Comparative Study (Oxford, Hart Publishing 2017).
The article examines the fundamental juridical nature, classification and enforcement of choice of law agreements in international commercial contracts. At the outset, it is observed that choice of law considerations are relegated to a secondary position in international civil and commercial litigation before the English courts as compared to international jurisdictional and procedural issues. (See pages 501-503 of the article) Significantly, the inherent dialectic between the substantive law paradigm and the internationalist paradigm of party autonomy is harnessed to provide us with the necessary analytical framework to examine the various conceptions of such agreements and aid us in determining the most appropriate classification of a choice of law agreement. (See pages 504-508 of the article and Ralf Michaels, ‘Party Autonomy in Private International Law – A New Paradigm without a Solid Foundation?’ (2013) 15 Japanese Yearbook of Private International Law 282) In binary terms, we are offered a choice between choice of law agreements as mere “factual” agreements on the one hand or as promises on the other. However, a more integrated and sophisticated understanding of the emerging transnationalist paradigm of party autonomy will guide us towards a conception of choice of law agreements as contracts, albeit contracts that do not give rise to promises inter partes. This coherent understanding of both the law of contract and choice of law has significant ramifications for the enforcement of choice of law agreements. It is argued that the agreement of the parties on choice of law will be successful in contracting out of the default choice of law norms of the forum and selecting the applicable law but cannot be enforced by an action for “breach” of contract.
It is argued that the emerging transnationalist paradigm of party autonomy supports a conception of choice of law agreements which borrows from both the internationalist and substantive law paradigms of party autonomy but cannot be comprehensively justified by either. This assimilated and coherent understanding of choice of law and the law of contract has led to the conclusion that the choice of law clause is a procedural contract but a contract nonetheless. (See Jürgen Basedow, The Law of Open Societies: Private Ordering and Public Regulation in the Conflict of Laws (Brill Nijhoff 2015) 145 and Maria Hook, The Choice of Law Contract (Oxford, Hart Publishing 2016) Chapter 2)
Professor Briggs’ promissory analysis of choice of law agreements is a seminal contribution to legal scholarship. (See Adrian Briggs, Agreements on Jurisdiction and Choice of Law (OUP 2008) Chapter 11) However, it is unlikely that the parallel existence of choice of law agreements as privately enforceable agreements will attract the attention of the CJEU and the EU legislature. The common law judicial authority coupled with the preponderance of opposing academic opinion has meant that the conventional “declaratory” classification of choice of law agreements has prevailed over the “promissory” approach. (See pages 508-517 of the article; Ace Insurance v Moose Enterprise Pty Ltd [2009] NSWSC 724 (Brereton J); Navig8 Pte Ltd v Al-Riyadh Co for Vegetable Oil Industry (The Lucky Lady) [2013] EWHC 328 (Comm), [2013] 2 Lloyd’s Rep 104, [2013] 2 CLC 461 (Andrew Smith J)) In assessing the relevance and significance of attributing an obligation to adhere to the chosen law in a choice of law agreement, the internationalist paradigm’s understanding of the fundamental nature of private international law rules and their inherent function has helped develop the counterargument.
If the choice of law regime of the forum is conceptualised as a set of secondary rules for the allocation of regulatory authority, the descriptive, normative and interpretive narrative of the promissory perspective loses its perceived dominance and coherence as it fails to yield a complete and satisfactory justification for what we really understand by those rules. In the mantle of secondary power conferring rules as opposed to primary conduct regulating rules, choice of law rules perform a very significant public function of allocating regulatory authority. From this perspective, it is misplaced and misconceived to interpret choice of law clauses as promissory in essence. The promissory justification does not adequately account for the authorisation of party autonomy by the choice of law rules of the forum, the supervening application of the laws of the forum and other states and ultimate forum control. (See pages 517-524 of the article) Moreover, the pragmatic attractiveness of anti-suit injunctions and claims for damages for breach of choice of law agreements may be unsound in principle from the standpoint of a truly multilateral conception of private international law based on mutual trust or a strong notion of comity. An international private international law will always seek to promote civil judicial cooperation between legal systems rather than encourage the clash of sovereign legal orders by interfering with the jurisdiction, judgments and choice of law apparatus of foreign courts. (See pages 524-529 of the article)
To reiterate, the more reconciled transnationalist paradigm of party autonomy strikes a balance between the competing demands of the internationalist and the substantive law paradigms. It is argued that a conception of a choice of law agreement as a contract, albeit one that does not give rise to any promises inter partes provides an appropriate solution.
On the one hand, the choice of law agreement is a legally binding contract as opposed to a mere “factual” agreement. On the other hand, the function of this agreement is not to regulate private law rights and obligations inter partes: it is to contract out of the forum’s default choice of law norms and to select the applicable law. Such a contract will not contradict the intrinsic logic of choice of law rules because the international allocative function remains paramount and is not compromised in any way by promises inter partes. The fact that the choice of law agreement is a contract which only gives rise to procedural consequences does not mean that it is not a contract per se. (See pages 530-531 of the article)
The saga of the Greek State bonds and their haircut: Hellas triumphans in Luxemburg. Really?
By Prof. Dr. Peter Mankowski, University of Hamburg
The Greek State financial crisis has sent waves of political turmoil throughout the Eurozone and is certainly going to continue. It has provided much enrichment for International Procedural Law, yet not for the creditors of Greek State bonds. ‘Haircut’ has become an all too familiar notion and part of the Common Book of Prayers of State bonds. Some creditors, particularly from Germany and Austria, were not content with having their hair cut involuntarily and put it to the judicial test. Greece has thrown every hurdle in their way which she could possibly muster: service, immunity, lack of international jurisdiction. The service issue was sorted out by the CJEU in Fahnenbrock (Joined Cases C-226/13 et al., ECLI:EU:C:2015:383), already back in 2015. The German BGH and the Austrian OGH took fairly different approaches, the former granting immunity to Greece because of the haircut, the latter proceeding towards examining the heads of international jurisdiction under the Brussels Ibis Regulation. Quite consequently, the OGH referred some question concerning Art. 7 (1) Brussels Ibis Regulation to the CJEU. Read more
Legal Aid Reform in the Netherlands: LASPO 2.0?
Written by Jos Hoevenaars, Erasmus University Rotterdam (postdoc researcher ERC project Building EU Civil Justice)
Early November, the Dutch Minister of Legal Protection Sander Dekker presented his plans for the overhaul of the Dutch system for subsidized legal aid. In his letter of 9 November 2018 to Parliament Dekker cites the increasing costs of subsidized legal aid over the past two decades (42% in 17 years) as one of the primary reasons underlying the need for reform. Read more
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Praxis des Internationalen Privat- und Verfahrensrechts (IPRax) 2/2023: Abstracts
The latest issue of the „Praxis des Internationalen Privat- und Verfahrensrechts (IPRax)“ features the following articles:
(These abstracts can also be found at the IPRax-website under the following link: https://www.iprax.de/en/contents/)
H.-P. Mansel/K. Thorn/R. Wagner: Europäisches Kollisionsrecht 2022: Bewegung im internationalen Familienrecht
This article provides an overview of developments in Brussels in the field of judicial cooperation in civil and commercial matters from January 2022 until December 2022. It presents newly adopted legal instruments and summarizes current projects that are making their way through the EU legislative process. It also refers to the laws enacted at the national level in Germany as a result of new European instruments. Furthermore, the authors look at areas of law where the EU has made use of its external competence. They discuss important decisions and pending cases before the CJEU pertaining to the subject matter of the article. In addition, the article also looks at current projects and the latest developments at the Hague Conference of Private International Law.
N. Elsner/H. Deters: Of party requested service by post and courts as transmitting agencies under the EU Service Regulation
On 1 July 2022, the EU Regulation on the Service of Documents No. 1784/20 (Recast) (EU Service Regulation) took effect and changed the law on service by postal services in cross-border proceedings. This calls for a revisiting of the divergent opinions and ways of interpretation of service by postal services according to Art. 14 EU Service Regulation 2007 and its relation to Art. 15 EU Service Regulation 2007. Against this background, this article discusses a decision of the Higher Regional Court Frankfurt (OLG Frankfurt) holding that service by postal services pursuant to Art. 14 EU Service Regulation 2007 is in principle only open to a court when effecting service in cross-border proceedings. A party shall effect service according to Art. 15 EU Service Regulation 2007 by contacting directly the foreign authorities designated to effect service in the other member state.
Firstly, the reasoning of the court and the opinions in legal scholarship on the admissibility of service by postal services effected by parties are assessed critically. Subsequently, the authors propose a different application of Art. 14 and 15 EU Service Regulation 2007 in Germany. It will be argued that the OLG Frankfurt was indeed correct in stating that service by postal services must be effected through a transmitting agency according to Art. 2 EU Service Regulation 2007. Under German law, only courts are considered transmitting agencies. However, this does not preclude parties from effecting this type of service. When parties are required to effect service themselves under German law, they may send the documents to the court, inform the court of the address of the other party and apply for service in accordance with Art. 14 EU Service Regulation 2007. The court then acts as a mere transmitting agency on behalf of the party, and thus, in its administrative capacity.
S. Schwemmer: Direct tort claims of the creditors of an insolvent company against the foreign grandparent company
In its ruling of 10 March 2022 (Case C-498/20 – ZK ./. BMA Nederland), the ECJ had to deal with a so-called Peeters/Gatzen-claim under Dutch law brought by the insolvency administrator. The court had already ruled in an earlier judgement that these claims fall under the Brussels I Regulation (recast). So the main question was now where the harmful event occurred within the meaning of Art. 7 para. 2 of the Regulation. The ECJ opts for the seat of the insolvent company, basing its analysis on the differentiation between primary damage and consequential damage. The same analysis is also used to determine the applicable law under the Rome II Regulation. In this context, however, the ECJ examines more closely the specific breach of duty of care to determine whether the claim falls under the scope of the Rome II Regulation or under the rules of international company law.
A. Kronenberg: Disapproved overriding mandatory provisions and factual impossibility
Two years after the Higher Regional Court (Oberlandesgericht, OLG) of Frankfurt am Main, the OLG Munich also had to rule on a lawsuit filed by an Israeli against Kuwait Airways. The plaintiff had demanded to be flown from Munich to Sri Lanka with a stopover in Kuwait City in accordance with the contract the parties had concluded. The OLG Munich dismissed the claim with regard to a Kuwaiti Israel boycott law, which, although inapplicable, according to the court had the effect that it was factually impossible for the defendant airline to transport Israeli nationals with a stopover in Kuwait. The ruling shows that in cases of substantive law level consideration of disapproved foreign overriding mandatory provisions the legally required result can be undesirable. However, this result depends on the circumstances of the individual case as well as on certain prerequisites that must be observed when taking into consideration overriding mandatory provisions. The article sets out these prerequisites and shows why the OLG Munich probably should have ordered the defendant to perform its obligation. It also explains why, in cases in which factual impossibility indeed exists, the result of the dismissal of the action most likely cannot be changed even by enacting a blocking statute.
C. Thomale/C. Lukas: The pseudo-foreign British one man-LLC
The Higher Regional Court of Munich has decided that a Bristish one man-LLC, which has its real seat in Germany, under German conflict of laws and substantive rules lacks legal personality altogether. This case note analyzes this decision’s implications for the conflict of company laws, notably for the interpretation of the TCA and application of the so-called “modified real seat theory”.
M. Brinkmann: Discharge in England and subsequent declaratory judgement against debtor in Germany – Binding effects of judgement trump recognition of prior bankruptcy proceedings
The Higher Regional Court Düsseldorf (OLG Düsseldorf) had to decide upon an action for the payment of damages based on a declaratory judgement. The declaratory judgement had established the defendant’s liability and was, at the time, not challenged by the defendant. In his defense against the action for payment the defendant now tries to invoke a discharge, which he had already obtained in insolvency proceedings in the UK in March 2012, i.e. prior to the declaratory judgement.
The OLG argued that under the applicable EIR, the English insolvency proceedings were, in principle, subject to automatic recognition. Under Art. 17 EIR 2002, these proceedings produce the same effects in all Member States. The OLG Düsseldorf nevertheless precluded the defendant from invoking the discharge. As the English bankruptcy proceedings were concluded before the action for the declaratory judgement was initiated, the defendant should have invoked the discharge already in the proceedings that led to the declaratory judgement in March 2013.
The OLG correctly found that the declaratory judgement was procedurally binding between the parties and hence barred the defendant from invoking the discharge in subsequent proceedings.
M. Andrae: Modification or suspension of enforcement of a decision under Article 12 of the Hague Child Abduction Convention?
The article discusses which procedural options exist if, after a final decision pursuant to 12 Hague Convention on the Civil Aspects of International Child Abduction, circumstances arise which would justify the refusal of an application for the return of the child. A procedure to change the decision is only permissible if the international jurisdiction of the German courts exists. For child abduction from EU Member States, this is determined in principle according to Art. 9 of the Regulation (EU) n 1111/2019 and for child abduction from other Contracting States of The Hague Protection of Children Convention according to Art. 7 of the Convention. As long as jurisdiction thereafter lies with the courts of the state in which the child was habitually resident immediately before the removal or retention keep, the German courts are limited to ordering the temporary stay of enforcement.
J. Oster: Facebook dislikes: The taming of a data giant through private international data protection law
Just as the Data Protection Directive 95/46/EC, the General Data Protection Regulation (GDPR) suffers from a deficit concerning both its public and its private enforcement. Among other things, this deficit is owed to the fact that European data protection law still raises many questions regarding jurisdiction and the applicable law. In its interlocutory judgment that will be discussed in this article, the Rechtbank Amsterdam established its jurisdiction and declared the GDPR as well as Dutch data protection and tort law applicable to a lawsuit by the Dutch Data Protection Foundation for alleged violations of rules of data protection and unfair competition. This article agrees with the Rechtbank’s findings, but it also draws attention to weaknesses in its reasoning and to unresolved questions of European private international data protection law.
Repeal of the RECJA and transfer of countries to the REFJA
Singapore’s Reciprocal Enforcement of Commonwealth Judgments Act 1921 (‘RECJA’) is based on the UK Administration of Justice Act 1920 and its Reciprocal Enforcement of Foreign Judgments Act 1959 (‘REFJA’) is based on the UK Foreign Judgments (Reciprocal Enforcement) Act 1933. In 2019, the government amended the REFJA in significant ways (previously detailed here), expanding its scope to include the registration of judgments from non-superior courts of gazetted countries, judicial settlements, non-money judgments and interlocutory judgments. At the same time, the RECJA was repealed from a date to be determined by the government.
That date has now (very nearly) arrived. The RECJA will be repealed on 1 March 2023. When the REFJA was amended in 2019, the intention at that time was to transfer over the countries gazetted under the RECJA gradually to the newly amended REFJA, with negotiations conducted on a country-by-country basis to determine what reciprocal arrangements would be suitable in each case. Only HK SAR has ever been gazetted under the REFJA. On 1 March 2023, it will be joined by Brunei Darussalam, Australia, India, Malaysia, New Zealand, Pakistan, Papua New Guinea, Sri Lanka and the United Kingdom of Great Britain and Northern Ireland (see here). These countries were previously gazetted under the RECJA. An omission is the Windward Islands, which does not appear in the new list. The list now also includes all the States of India; previously the State of Jammu and Kashmir was excluded under the RECJA.
Of particular note, however, is that the terms of the reciprocal arrangements generally remain the same as under the RECJA. Only money judgments rendered by the listed courts of the gazetted countries which are final and conclusive between the parties can be registered under the REFJA. Clearly, the full promise of the REFJA – with its potential for a wider range of foreign judgments to be registered under its scope – will have to be realised another day.
Career Opportunities at the American Society of International Law
The American Society of International Law (ASIL) is looking for a Director of Programmes (responsible for the oversight of the Society’s Programs Department, including major conferences, educational programming, substantive Interest Group activities, international organization engagement, and international law career training) and a Director of Finance and Administration (leading all aspects of the Society’s financial and human resources operations and oversees its general administrative operations, in partnership with the Executive Director).
More information is available on their Career opportunities page.