Views
The Pitfalls of International Insolvency and State Interventionism in Slovenia
Written by Dr. Jorg Sladic, Attorney in Ljubljana and Assistant Professor in Maribor (Slovenia)
The most interesting development in European private international law and European insolvency law seems the Croatian AGROKOR case. Rulings of English courts have been reported (see e.g. Prof. Van Calster’s blog, Agrokor DD – Recognition of Croatian proceedings shows the impact of Insolvency Regulation’s Annex A.)[1] However, a new and contrary development seems to be an order by the Slovenian Supreme Court in case Cpg 2/2018 of 14 March 2018.[2] Read more
Krombach: The Final Curtain
Readers of this blog may be interested to learn that the well-known (and, in many ways, quite depressing) Krombach/Bamberski saga appears to have finally found its conclusion with a decision by the European Court of Human Rights (Krombach v France, App no 67521/14) that was given yesterday. Read more
Cross-border Human Rights and Environmental Damages Litigation in Europe: Recent Case Law in the UK
Over the last few years, litigation in European courts against gross human rights violations and widespread environmental disasters has intensified. Recent case law shows that victims domiciled in third States often attempt to sue the local subsidiary and/or its parent company in Europe, which corresponds to the place where the latter is seated. In light of this, national courts of the EU have been asked to determine whether the parent company located in a Member State may serve as an anchor defendant for claims against its subsidiary – sometimes with success, sometimes not:
For example, in Okpabi & Ors v Royal Dutch Shell Plc & Anor, the English High Court, Queen’s Bench Division, by its Technology and Construction Court, decided that it had no international jurisdiction to hear claims in tort against the Nigerian subsidiary (SPDC) of Royal Dutch Shell (RDC) in connection with environmental and health damages due to oil pollution in the context of the group’s oil production in Nigeria. To be more specific, Justice Fraser concluded that the Court lacked jurisdiction over the action, inasmuch as the European parent company did not owe a duty of care towards the claimants following the test established in Caparo Industries Plc v Dickman. Under the Caparo-test, a duty of care exists where the damage was foreseeable for the (anchor) defendant; imposing a duty of care on it must be fair, just, and reasonable; and finally, there is a certain proximity between the parent company and its subsidiary, which shows that the first exercises a sufficient control over the latter.
On 14 February 2018, the Court of Appeal validated the first instance Court’s reasoning by rejecting the claimants appeal (the judgment is available here). In a majority opinion (Justice Sales dissenting), the second instance Court confirmed that the victims’ claims had no prospect of success. Nevertheless, Justice Simon provided a different assessment of the proximity requirement: after analysing the corporate documents of the parent company, he observed that RDS had established standardised policies among the Shell group. According to the Court, however, this did not demonstrate that RDS actually exercised control over the subsidiary. At paragraph 89 of the judgment, Justice Simon states that it is “important to distinguish between a parent company which controls, or shares control of, the material operations on the one hand, and a parent company which issues mandatory policies and standards which are intended to apply throughout a group of companies (…). The issuing of mandatory policies plainly cannot mean that a parent has taken control of the operations of a subsidiary (…) such as to give rise to a duty of care”. Therefore, the Court of Appeal set a relatively high jurisdictional threshold that will be difficult for claimants to pass in the future.
Conversely, in Lungowe v Vedanta, a case that involved a claim against a parent company (Vedanta) seated in the UK and its foreign subsidiary for the pollution of the Kafue River in Zambia, as well as the adverse consequences of such an occurrence on the local population, the Court of Appeal concluded that there was a real issue to be tried against the parent company. Moreover, the Court considered that the subsidiary was a necessary and proper party to claim and that England and Wales was the proper place in which to bring the claims. Apparently, this case involved greater proximity between the parent company and its subsidiary compared to Okpabi. In particular, the fact that Vedanta hold 80% of its subsidiary’ shares played an important role. The same can be said as regards the degree of control of Vedanta’s board over the activities of the subsidiary (see the analysis of Sir Geoffrey Vos at paragraph 197 of the Okpabi appeal).
Unsatisfied with the current landscape, some States adopted –or are in the process of adopting– legislations that establish or reinforce the duty of care or vigilance of parent companies directly towards victims. In particular, France adopted the Duty of Vigilance Law in 2017, according to which parent companies of a certain size have a legal obligation to establish a vigilance plan (plan de vigilance) in order to prevent human rights violations. The failure to implement such a plan will incur the liability of parent companies for damages that a well-executed plan could have avoided. In Switzerland, a proposal of amendment of the Constitution was recently launched, the goal of which consists in reinforcing the protection of human rights by imposing a duty of due diligence on companies domiciled in Switzerland. Notably, the text establishes that the obligations designated by the proposed amendment will subsist even where conflict of law rules designate a different law than the Swiss one (overriding mandatory provision). Finally, some other States, such as Germany, propose voluntary measures through the adoption of a National Action Plan, as this was suggested by the EU in its CSR Strategy.
For further thoughts see Matthias Weller / Alexia Pato, “Local Parents as ‘Anchor Defendants’ in European Courts for Claims against Their Foreign Subsidiaries in Human Rights and Environmental Damages Litigation: Recent Case Law and Legislative Trends” forthcoming in Uniform Law Review 2018, Issue 2, preprint available at SSRN.
News
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.