Views
A Dangerous Chimera: Anti-Suit Injunctions Based on a “Right to be Sued” at the Place of Domicile under the Brussels Ia Regulation?
This post introduces my case note titled ‘A Dangerous Chimera: Anti-Suit Injunctions Based on a “Right to be Sued” at the Place of Domicile under the Brussels Ia Regulation?’ which appeared in the July 2020 issue of the Law Quarterly Review at page 379. An open access version of the case note is available here.
In Gray v Hurley [2019] EWCA Civ 2222, the Court of Appeal (Patten LJ, Hickinbottom LJ and Peter Jackson LJ), handed down the judgment on the claimant’s appeal in Gray v Hurley [2019] EWHC 1972 (QB). The appellant appealed against the refusal of an anti-suit injunction.
The appellant (Ms Gray) and respondent (Mr Hurley) had been in a relationship. They acquired property in various jurisdictions using the appellant’s money, but held it in either the respondent’s name or in corporate names. The relationship ended and a dispute commenced over ownership of some of the assets and properties. The appellant was domiciled in England; the respondent lived in New Zealand after the relationship ended and was no longer domiciled in England. He initiated proceedings there for a division of the property acquired by the couple during the relationship. The appellant issued proceedings in England seeking a declaration that she was entitled absolutely to the assets. She also applied for an anti-suit injunction to restrain the defendant from continuing with proceedings in the courts of New Zealand. Lavender J held that England was the appropriate forum for the trial of the appellant’s claims but that the respondent’s New Zealand claim could not be determined in England. He rejected her argument that Article 4(1) of the Brussels Ia Regulation obliged him to grant an anti-suit injunction to prevent the respondent from litigating against her in a non-EU state.
The appellant argued that Samengo-Turner v J&H Marsh & McLennan (Services) Ltd [2007] EWCA Civ 723, [2007] 2 All E.R. (Comm) 813 and Petter v EMC Europe Ltd [2015] EWCA Civ 828, [2015] C.P. Rep. 47 were binding authority that Article 4(1) provided her with a right not to be sued outside England, where she was domiciled, obliging the court to give effect to that right by granting an anti-suit injunction.
The Court of Appeal considered that the issue was not acte claire and sent a preliminary reference to the CJEU (pursuant to Article 267 TFEU) asking whether Article 4(1) of the Brussels Ia Regulation provided someone domiciled in England with a right not to be sued outside England so as to oblige the courts to give effect to that right by granting an anti-suit injunction.
The case note examines the Court of Appeal’s decision in Gray v Hurley [2019] EWCA Civ 2222. It offers a pervasive critique of the argument that the general rule of jurisdiction under the Brussels Ia Regulation gives rise to a substantive right to be sued only in England and that this right is capable of enforcement by an anti-suit injunction. It is argued that the previous decisions of the Court of Appeal in Samengo-Turner v J&H Marsh & McLennan (Services) Ltd [2007] EWCA Civ 723 and Petter v EMC Europe Ltd [2015] EWCA Civ 828 were themselves wrongly decided. In light of this, it will be even more difficult to justify the broader application of a similar result in the present case.
Indeed, the law would take a wrong turn if the present case is allowed to build on the aberrational foundations of the developing law on anti-suit injunctions based on rights derived from the Brussels Ia Regulation. Essentially, a chimerical remedy based on a fictitious right would not only infringe comity but would also deny the respondent access to justice in the only available forum. The note also anticipates the CJEU’s potential findings in this case.
An open access version of the case note is available here.
Uber Arbitration Clause Unconscionable
In 2017 drivers working under contract for Uber in Ontario launched a class action. They alleged that under Ontario law they were employees entitled to various benefits Uber was not providing. In response, Uber sought to stay the proceedings on the basis of an arbitration clause in the standard-form contract with each driver. Under its terms a driver is required to resolve any dispute with Uber through mediation and arbitration in the Netherlands. The mediation and arbitration process requires up-front administrative and filing fees of US$14,500. In response, the drivers argued that the arbitration clause was unenforceable.
The Supreme Court of Canada has held in Uber Technologies Inc. v. Heller, 2020 SCC 16 that the arbitration clause is unenforceable, paving the way for the class action to proceed in Ontario. A majority of seven judges held the clause was unconscionable. One judge held that unconscionability was not the proper framework for analysis but that the clause was contrary to public policy. One judge, in dissent, upheld the clause.
A threshold dispute was whether the motion to stay the proceedings was under the Arbitration Act, 1991, S.O. 1991, c. 17 or the International Commercial Arbitration Act, 2017, S.O. 2017, c. 2, Sch. 5. Eight judges held that as the dispute was fundamentally about labour and employment, the ICAA did not apply and the AA was the relevant statute (see paras. 18-28, 104). While s. 7(1) of the AA directs the court to stay proceedings in the face of an agreement to arbitration, s. 7(2) is an exception that applies, inter alia, if the arbitration agreement is “invalid”. That was accordingly the framework for the analysis. In dissent Justice Cote held that the ICAA was the applicable statute as the relationship was international and commercial in nature (paras. 210-18).
The majority (a decision written by Abella and Rowe JJ) offered two reasons for not leaving the issue of the validity of the clause to the arbitrator. First, although the issue involved a mixed question of law and fact, the question could be resolved by the court on only a “superficial review” of the record (para. 37). Second, the court was required to consider “whether there is a real prospect, in the circumstances, that the arbitrator may never decide the merits of the jurisdictional challenge” (para. 45). If so, the court is to decide the issue. This is rooted in concerns about access to justice (para. 38). In the majority’s view, the high fees required to commence the arbitration are a “brick wall” on any pathway to resolution of the drivers’ claims.
The majority then engaged in a detailed discussion of the doctrine of unconscionability. It requires both “an inequality of bargaining power and a resulting improvident bargain” (para. 65). On the former, the majority noted the standard form, take-it-or-leave-it nature of the contract and the “significant gulf in sophistication” between the parties (para. 93). On the latter, the majority stressed the high up-front costs and apparent necessity to travel to the Netherlands to raise any dispute (para. 94). In its view, “No reasonable person who had understood and appreciated the implications of the arbitration clause would have agreed to it” (para. 95). As a result, the clause is unconscionable and thus invalid.
Justice Brown instead relied on the public policy of favouring access to justice and precluding an ouster of the jurisdiction of the court. An arbitration clause that has the practical effect of precluding arbitration cannot be accepted (para. 119). Contractual stipulations that prohibit the resolution of disputes according to law, whether by express prohibition or simply by effect, are unenforceable as a matter of public policy (para. 121).
Justice Brown also set out at length his concerns about the majority’s reliance on unconscionability: “the doctrine of unconscionability is ill-suited here. Further, their approach is likely to introduce added uncertainty in the enforcement of contracts, where predictability is paramount” (para. 147). Indeed, he criticized the majority for significantly lowering the hurdle for unconscionability, suggesting that every standard-form contract would, on the majority’s view, meet the first element of an inequality of bargaining power and therefore open up an inquiry into the sufficiency of the bargain (paras. 162-63). Justice Brown concluded that “my colleagues’ approach drastically expands the scope of unconscionability, provides very little guidance for the doctrine’s application, and does all of this in the context of an appeal whose just disposition requires no such change” (para. 174).
In dissent, Justice Cote was critical of the other judges’ willingness, in the circumstances, to resolve the issue rather than refer it to the arbitrator for decision: “In my view, my colleagues’ efforts to avoid the operation of the rule of systematic referral to arbitration reflects the same historical hostility to arbitration which the legislature and this Court have sought to dispel. The simple fact is that the parties in this case have agreed to settle any disputes through arbitration; this Court should not hesitate to give effect to that arrangement. The ease with which my colleagues dispense with the Arbitration Clause on the basis of the thinnest of factual records causes me to fear that the doctrines of unconscionability and public policy are being converted into a form of ad hoc judicial moralism or “palm tree justice” that will sow uncertainty and invite endless litigation over the enforceability of arbitration agreements” (para. 237). Justice Cote also shared many of Justice Brown’s concerns about the majority’s use of unconscionability: “I am concerned that their threshold for a finding of inequality of bargaining power has been set so low as to be practically meaningless in the case of standard form contracts” (para. 257).
The decision is lengthy and several additional issues are canvassed, especially in the reasons of Justice Cote and Justice Brown. The ultimate result, with the drivers not being bound by the arbitration clause, is not that surprising. Perhaps the most significant questions moving forward will be the effect these reasons have on the doctrine of unconscionability more generally.
The end of fostering outdated injustice to children born outside marriage through reparation of Nazi-expatriation acts: Ruling of the German Constitutional Court of 20 May 2020 (2 BvR 2628/18)
Marie-Luisa Loheide is a doctoral candidate at the University of Freiburg who writes her dissertation about the relationship between the status of natural persons in public and private international law. She has kindly provided us with her thoughts on a recent ruling by the German Constitutional Court.
According to Article 116 para. 2 of the German Basic Law (Grundgesetz – GG), every descendant of former German citizens of Jewish faith who have been forcibly displaced and expatriated in a discriminatory manner by the Nazi-regime is entitled to attain German citizenship upon request. This rule has been incorporated in the Basic Law since 1949 as part of its confrontation with the systematic violations of human rights by the Nazi-regime and is therefore meant to provide reparation by restoring the status quo ante.
Descendants (“Abkömmlinge”) as referred to in Article 116 para. 2 are children, grandchildren and all future generations without any temporal constraint. Regardless of their parents’ choice of citizenship, they have a personal right to naturalisation which is exercised upon request by reactivation of the acquisition of citizenship iure sanguinis. This very wide scope is legitimated by the striking injustice done by the Nazi-regime. Yet, according to the settled case law of the Federal Administrative Court, it had been limited by a strict “but-for” test: in order to solely encompass those people affected by this specific injustice. This meant that the descendant must hypothetically have possessed German citizenship according to the applicable citizenship law at the time of its acquisition which is usually the person’s birth. To put it more clearly, one had to ask the following hypothetical question: Would the descendant be a German citizen if his or her ancestor had not been expatriated by the Nazis?
Exactly this limiting prerequisite was the crucial point of the matter decided upon by the German Constitutional Court on 20 May 2020. In the underlying case, the hypothetical question described above would have had to be answered in the negative: Until its revocation in 1993, German citizenship law stated that children of an unmarried German father and a mother of other citizenship did not acquire the German citizenship of their father but only that of their mother, contrary to today’s principle of ius sanguinis-acquisition. As in casu the daughter of a forcibly displaced and expatriated former German emigrant of Jewish faith and a US-American mother was born outside marriage in 1967, she was denied the acquisition of the German citizenship. Whereas this was not criticised by the administrative courts seised, the German Constitutional Court in its ruling classified the denial as an obvious violation of the principle of equal treatment of children born within and outside marriage underlying Article 6 para. 5 GG as well as the principle of equal treatment of women and men according to Article 3 para. 2 GG, as alleged by the plaintiff. In its reasoning, the Court emphasised that an exception from the principle of equal treatment of children born outside marriage could only be made if absolutely necessary. This corresponds to the case-law of the European Court of Human Rights on Article 14 of the ECHR that a difference in treatment requires “very weighty reasons”. The former non-recognition of the family relationship between an unmarried father and his child, however, did obviously contradict the stated constitutional notion without being justified by opposing constitutional law. Out of two possible interpretations of “descendant” as referred to in Article 116 para. 2 GG the court must have chosen the one that consorts best with the constitution. According to the Constitutional Court, the more generous interpretation of descendant also prevents a perpetuation of the outdated notion of inferiority of children born outside marriage through Article 116 para 2 GG and corresponds to its purpose of reparation.
As the notion of inferiority of children born outside marriage has fortunately vanished, a clarifying judgment was highly overdue and is therefore most welcome. It is not acceptable that outdated notions are carried to the present through a provision of the Basic Law that is meant to provide reparation of Nazi crimes. Especially in post-Brexit times, the question dealt with has become more and more urgent with respect to people reclaiming their German citizenship in order to maintain their Union citizenship and the rights pertaining to it (see here).
In regard to conflicts law, this clarification of a key question of citizenship law is relevant to the determination as a preliminary issue (incidental question or Vorfrage) when nationality is used as a connecting factor. The judgment is likely to lead to more cases of dual citizenship that are subject to the ambiguous conflicts rule of Art. 5 para. 1 sentence 2 EGBGB.
News
Out now: RabelsZ, Volume 88 (2024), Issue 2
The latest issue of RabelsZ has just been released. It contains the following contributions which are also available open access:
OBITUARY
Holger Fleischer, Heike Schweitzer: Ernst-Joachim Mestmäcker – † 22 April 2024, pp. 215–222, DOI: https://doi.org/10.1628/rabelsz-2024-0033
ESSAYS
Klaus Ulrich Schmolke: Das Prinzip der beschränkten Gesellschafterhaftung – Ein Streifzug durch die Debatten- und Argumentationsgeschichte, pp. 223–277, DOI: https://doi.org/10.1628/rabelsz-2024-0022
The Concept of Limited Shareholder Liability – A Walk Through History’s Debates and Lines of Argument. Today, the concept of limited shareholder liability is considered a core feature of the modern corporation. And indeed, limited liability has been continuously provided for in the corporate (and limited partnership) laws of western jurisdictions since the 19th century. However, limited liability is not such a matter of course as it is widely perceived today. Rather, it took tough disputes and hard-fought debates before the legislators of the major European jurisdictions of the time were able to bring themselves to provide for limited shareholder liability without tying it to prior state approval. Even after this breakthrough, the debate about the legitimacy and scope of limited liability flared up time and again. This is particularly true for the close corporation, in which the shareholders also exercise control over the management of the business. This article traces the historical dimension of the transnational debate and evaluates the arguments for and against limited shareholder liability that have been put forward over time. The insights gained thereby provide a basis for analysing and evaluating the currently revived criticism of limited shareholder liability.
Sandra Hadrowicz: Natural Restitution in a Comparative Legal Perspective –
An Underappreciated Remedy or an Unnecessary Relic?, pp. 278–306, DOI: https://doi.org/10.1628/rabelsz-2024-0030
Natural restitution is one of the permissible methods for remedying damage in numerous legal orders. However, this form of compensation is much less frequently used in practice than monetary compensation. While monetary compensation is a universally found method of reparation in major legal orders, the issue is more complex when it comes to natural restitution. In some countries (e. g. England, France, the Netherlands), natural restitution is used only by way of exception, in specific cases. In others (e. g. Poland), despite the injured party being given the right to choose the method of reparation, natural restitution is very rarely requested by injured parties. Even more intriguingly, in jurisdictions where natural restitution is theoretically upheld as a principle – including Germany, Austria, Portugal, and Spain – its actual adoption by courts remains relatively rare. The question then arises: Have courts and victims come to undervalue natural restitution or even forgotten of its existence? Or, conversely, does it represent an obsolete or unnecessary element of compensation law?
Domenico Damascelli: Determining the Applicable Law in Matrimonial Property Regimes –
On the Interpretation of Article 26 Regulation (EU) No 2016/1103 in the Absence of Choice-of-law and Common Habitual Residence, pp. 307–324, DOI: https://doi.org/10.1628/rabelsz-2024-0032
Wishing to remain faithful to the alleged principle of immutability of the law governing matrimonial property regimes, the literature interprets Art. 26 para. 1 Regulation (EU) No 2016/1103 such that if the spouses have their habitual residence in different States at the time of marriage, it is necessary to wait for a period of time to ascertain whether they will move it to the same State. If so, only the law of that State is to apply (retroactively); if not, one of the other two laws indicated in Art. 26 is to apply (once and for all). This position gives rise to uncertainty in the determination of the applicable law and is contradicted by literal, systematic and teleological interpretations of the Regulation, which show that, in the absence of a common habitual residence, the law governing the matrimonial property relationships is, depending on the circumstances, the one provided for in letters b or c of para. 1 of Art. 26. However, this law may change the moment the existence of a first common habitual residence is ascertained, regardless of whether it was established immediately, shortly, or long after the conclusion of the marriage.
María Mercedes Albornoz: Private International Law in Mexico’s New National Code of Civil and Family Procedure, pp. 325–354, DOI: https://doi.org/10.1628/rabelsz-2024-0031
In June 2023, Mexico enacted a National Code of Civil and Family Procedure that includes private international law provisions on procedural matters. The adoption of this Code constitutes a landmark reform in the Mexican legal system, modernizing and, for the first time, unifying civil and family procedural laws across the country. The Code’s primary objectives are to streamline legal processes, enhance judicial efficiency, and promote consistency in civil and family litigation. This article contains a study of the main rules that adjust the goals of the Code to cross-border cases. Some of those rules introduce significant innovations compared with previous bodies of procedural legislation in force in Mexico. It sets direct rules for international jurisdiction as well as novel provisions on foreign law, rules on international cooperation and recognition and enforcement of foreign judgments, and provisions on international child abduction. Furthermore, the Code promotes digital justice and thus expressly allows and promotes the use of technological resources in international cooperation. All these rules are expected to improve access to justice in private international law cases.
MATERIALS
Jürgen Samtleben: Mexiko: Nationales Zivil- und Familienprozessgesetzbuch 2023 (Auszug) [Mexico: National Code of Civil and Family Procedures 2023 (German Translation, Excerpt)], pp. 355–378, DOI: https://doi.org/10.1628/rabelsz-2024-0021
BOOK REVIEWS
As always, this issue also contains several reviews of literature in the fields of private international law, international civil procedure, transnational law, and comparative law (pp. 379–421).
ZEuP – Zeitschrift für Europäisches Privatrecht 3/2024
Issue 3/2024 of ZEuP – Zeitschrift für Europäisches Privatrecht has just been published. It includes contributions on EU private law, comparative law, legal history, uniform law, and private international law. The full table of content can be accessed here.
The following contributions might be of particular interest for the readers of this blog:
- Die Europäisierung des internationalen Erwachsenenschutzes
Jan von Hein on the proposal for a regulation on the international protection of adults: On 31.5.2023, the European Commission presented a proposal for a regulation on the international protection of adults. This proposal is closely intertwined with the Hague Convention on the international protection of adults. Therefore, the proposed regulation shall be accompanied by a Council decision authorising Member States to become or remain parties to the Hague Convention. The following contribution analyses the proposed regulation and its relationship with the Hague Convention. - Justizgrundrechte im Schiedsverfahren? – Pechstein und die Folgen fu?r die Handelsschiedsgerichtsbarkeit
Gerhard Wagner and Oguzhan Samanci on human rights and commercial arbitration: Does the ECHR and the German constitution require public hearings in arbitral proceedings, provided that one of the parties had the power to impose the arbitration agreement on the other through a contract of adhesion? This article analyzes the potential implications that the Pechstein decision of the Federal Constitutional Court and ist precursor in the jurisprudence of the ECHR may have for commercial arbitration. The focus is on arbitration clauses in general business terms and in contracts with undertakings that occupy a dominant position in a specific market. The conclusion is that, despite the broad formula employed by the Federal Constitutional Court, the right to a public hearing should remain limited to sports arbitration. - Die Auslegung von EuGH-Entscheidungen – ein Blick aus der Gerichtspraxis
David Ullenboom on the interpretation of CJEU decisions: This article examines the question whether a European methodology is needed to interpret judgments of the CJEU for judicial practice. It argues that judgments of the CJEU need to be interpreted in the same way as legal provisions and are therefore subject to a grammatical, systematic, genetic and teleological interpretation in order to determine their meaning for future legal cases. - Schweizerisches Bundesgericht, 8 June 2023, 5A_391/2021
Tanja Domej discusses a decision of the Swiss Federal Tribunal on the recognition of the deletion of a gender registration under German law.
OUT NOW!! New Book on Private International Law in BRICS: Convergence, Divergence, and Reciprocal Lessons (Stellina Jolly and Saloni Khanderia eds)
Hart Publishing, Oxford, UK is proud to announce the release of Private International Law in BRICS: Convergence, Divergence, and Reciprocal Lessons co-edited by Dr. Stellina Jolly, South Asian University, Delhi, India, and Professor Saloni Khanderia, O.P. Jindal Global University, Sonipat, India. The book forms part of Hart’s prestigious Private International Law Series with Professor Paul Beaumont, University of Stirling, as its Series Editor.
Authored by leading scholars and practitioners in private international law, the chapters draw on domestic legislation and case law interpretations in each of these emerging economies. They cover a wide array of topics, including contractual and non-contractual obligations, choice of court agreements, and personal matters such as marriage, divorce, matrimonial property, succession, and surrogacy—all within the context of increased cross-border movement of people.
As the title suggests, this book explores the intricate landscape of private international law within the BRICS countries—Brazil, Russia, India, China, and South Africa. Divided into six sections, each part of the book offers a thematic analysis of core private international law-related questions and an in-depth examination of the reciprocal lessons each BRICS country can share concerning each of three core conflict of law issues – the international jurisdiction of courts, the applicable law and the effectiveness of foreign decisions (both judgments and arbitral awards) overseas.
This book serves as an invaluable comparative resource for governments, legislators, traders, academics, researchers, and students interested in the intricate legal dynamics at play within the BRICS nations. With the BRICS countries collectively representing around 42% of the world’s population and approximately 23% of global GDP, the need for enhanced legal cooperation and harmonization is more critical than ever. Over the past decade, cross-border interactions within the BRICS bloc and beyond have escalated significantly. However, the diversity in political, legal, economic, and social structures, coupled with the lack of geographical proximity and historical connections, has posed challenges to effective cooperation and the ability of BRICS to play a proactive role in global governance. The 15 BRICS Summits held between 2009 and 2023 have primarily focused on economic cooperation, particularly in trade, investment, foreign affairs, and innovation. While these areas are crucial, they cannot be viewed in isolation. Increased trade and cooperation inevitably lead to the movement of persons, goods, and services across national boundaries, raising important legal questions. For instance, economic cooperation that facilitates the movement of people also impacts personal relationships. Scenarios such as marriage, divorce, adoption, surrogacy, and inheritance across borders create complex legal challenges that require a robust understanding of private international law. Will a marriage or divorce be recognized in the home country? How will the nationality of a child born through surrogacy or adopted abroad be determined? These questions, though critical, have not yet been thoroughly examined in the context of BRICS.
Recognizing this gap, our book seeks to explore and analyze the role of private international law in fostering enhanced cooperation among BRICS countries. In pursuit of its objectives, the project draws lessons from various multilateral and supranational instruments operating under the HCCH – Hague Conference on Private International Law and in the European Union, renowned for pioneering clear, predictable rules to regulate international disputes through the unification of laws.
Details of the book as well as purchase options can be found here!