The Supreme Court has long-extolled a federal policy favoring liberal enforcement of forum selection clauses and has held that such clauses “should control absent a strong showing that [they] should be set aside.” Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 587, 591 (1991); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 15 (1972). Despite this federal policy, however, when federal courts derive their jurisdiction from diversity, the familiar Erie doctrine requires those courts to apply state—and not federal—law to determine the enforceability of all contracts. The United States Court of Appeals for the Sixth Circuit is the most recent federal court to grapple with a question at the intersection of these concepts: When sitting in diversity, is the enforceability of a forum selection clause in an international contract determined by reference to state or federal law? A deep split of federal authority on this issue has been acknowledged for over fifteen years. See, e.g., Lambert v. Kysar, 983 F.2d 1110, 1116 n.10 (1st Cir. 1993) (citing conflicting authority, and calling the resolution a “daunting question”).

In Wong v. PartyGaming Ltd., No. 09-cv-0432 (6th Cir., Dec. 21, 2009), the Defendant—a Gilbralter-based company—earned a dismissal of the lawsuit filed against it in Ohio on the basis of forum non conveniens. One of the private factors that guided that determination was the existence of a forum selection clause favoring Gibraltar in the parties’ contract. On review, the court of appeals had to consider the enforceability of that clause. Noting the divergences between Ohio and federal law, however, it first had to confront the choice of law issue. Looking at the law of other Circuits, the court noted that “six Circuits have held that the enforceability of a forum selection clause implicates federal procedure and should therefore be governed by federal law.” On the other hand, at least two circuits have considered the question to be substantive, and thus determined under state law, while two others remain plagued by intra-circuit conflicts on the issue. The Sixth Circuit found “persuasive the law used in the majority of circuits,” and held that “[g]iven the possibility of diverging state and federal law on an issue of great economic consequence, the risk of inconsistent decisions in diversity cases, and the strong federal interest in procedural matters in federal court,” federal law should govern the question. The clause was deemed valid, and the decision affirmed.

Judge Lynch in the Southern District of New York noted nearly a decade-ago that this “question may become increasingly academic, as more and more states adopt the federal rule on forum-selection clauses. At one time, American jurisdictions generally rejected their validity. Today, a clear majority of the states have reversed this stand, and, in agreement with the federal rule of The Bremen, will enforce forum-selection clauses unless they create injustice or were imposed by fraud.” Licensed Practical Nurses, Technicians & Healthcare Workers v. Ulysses Cruises, 131 F. Supp. 2d 393 (S.D.N.Y. 2000). Still, as Ohio law illustrates, the problem remains a practical concern. This question will certainly keep arising in forum non conveniens cases, and in cases seeking to enforce the forum selection clauses at the outset of a case. At least when those clauses underlie a foreign judgment that is submitted for recognition in the United States, however, the legislation implementing the Hague Choice of Courts Convention should force some much-needed harmony into the field.

Will the new Rome I Regulation meet its goals

• to improve the predictability of the outcome of litigation?
• to bring certainty as to the law applicable and the free movement of judgments?
• to designate the same national law irrespective of the country of the court in which an action is brought?

Edited by Prof. S. Leible (University of Bayreuth) and F. Ferrari (University of Verona), the joint-first English book on the Rome I Regulation is conceived to address these issues. To do so it collects the papers submitted to the conference “The Rome I Regulation”, held in Verona on March 2009 (see post by Martin George), where the most important features of the Rome Regulation (party autonomy; contracts concerning intellectual property rights; contracts of carriage; consumer contracts; employment contracts; set off; mandatory rules; public policy…) were outlined and discussed by distinguished legal experts all over Europe and beyond.

You can view pricing and the table of contents on the Sellier website.

The University of Geneva will host a conference on the Resolution of Intellectual Property Disputes on February 8th, 2010.

The programme can be found here and after the jump.

8 février 2010:
La résolution des litiges de propriété intellectuelle / Resolution of intellectual property disputes

Matin

Président de séance : Prof. Michel VIVANT, Institut d’études politiques, Paris

8h30 Accueil et introduction
Prof. Christian BOVET, Doyen de la Faculté de droit de l’Université de Genève
Prof.Jacques de WERRA, Faculté de droit de l’Université de Genève

8h45 15 years of Intellectual Property Disputes at the WTO – where do we stand and where are we going ?
Prof.Joost PAUWELYN, The Graduate Institute of International and Development Studies, Geneva

9h30 Le contentieux du droit de la propriété industrielle en Europe : stratégies et perspectives
Me Pierre VÉRON, avocat à la cour de Paris, président d’honneur de l’European Patent Lawyers Association

10h15 Pause café

10h45 Les litiges internationaux de propriété intellectuelle et le droit international privé
Prof. Edouard TREPPOZ, Université de Lyon II

11h30 La création de juridictions spécialisées : l’exemple du Tribunal fédéral des brevets
Me Pierre-Alain KILLIAS, docteur en droit, avocat à Lausanne

12h15 Discussion suivie de la pause déjeuner (libre)

Après-midi

Président de séance : Jacques WERNER, président, Geneva Global Arbitration Forum

14h15 Solving Internet domain name disputes : the UDRP and the future dispute resolution mechanisms
Dr Torsten BETTINGER, attorney at law in Munich

15h00 L’arbitrabilité des litiges de propriété intellectuelle
Prof. Bernard HANOTIAU, Université catholique de Louvain, avocat aux Barreaux de Bruxelles et Paris

15h45 Pause café

16h15 Designing tailored alternative dispute resolution methods for intellectual property disputes : the experience of WIPO
Dr Eun-Joo MIN, Head of the Legal Development Section, WIPO Arbitration & Mediation Center

17h00 Discussion

17h30 Conclusion

Practical details can be found here.

See this report of the New York Times:

A French court ruled on Friday that Google infringed copyrights by digitizing books and putting extracts online without authorization, dealing a setback to its embattled book project.

The court in Paris ruled against Google after a publishing group, La Martinière, backed by publishers and authors, argued that the industry was being exploited by Google’s Book Search program, which was started in 2005.

The court ordered Google to pay over 300,000 euros, or $430,000, in damages and interest and to stop digital reproduction of the material. The company was also ordered to pay 10,000 euros a day in fines until it removed extracts of some French books from its online database.

The French plaintiffs had sued both Google, Inc. and Google France.

Google had first challenged the jurisdiction of the French first instance court. On March 17, 2007, the court rejected the challenge and retained jurisdiction. I do not know  what the precise arguments were, nor how the Paris first instance Court actually addressed them.

Google then argued that American law controlled. It relied on Article 5 § 2 of the Bern Convention. The Paris court applied the French common law of conflicts (but did not say why) and ruled that French law was applicable. It applied the choice of law rule that the French supreme court for private and criminal matters (Cour de cassation) has laid down for tort matters in the last 15 years or so. The rule provides that the applicable law is the place where the tort was committed. When the tort is “complex”, i.e. when the event giving rise to the damage and the damage occurred in different places, the place should be determined by assessing the proper law of the tort, i.e. which place is the most closely connected. The Paris court ruled that this was a complex tort, and looked for the various connections between the case and France (but did not weigh them against connections with the U.S.). It identified many, and then concluded that the dispute was more closely connected with France. The connecting factors identified by the court were: the litigious books were French, the plaintiffs were French, one defendant was a French company (Google France), and the site was a dot_fr site, available in the French language.

Finally, it is noteworthy that the only company which is ordered to pay damages and to stop violating French law is the American entity, Google, Inc., and that an injunction has been issued against it to stop violating French law under an astreinte (a civil penalty, not a fine as the NYTimes reported) of € 10,000 per day of non-compliance (on the recent case law of the Cour de cassation on injunctions against foreign based web sites, see my previous posts here and here).

Many thanks to V. Gaertner and B. Hess for providing me with the judgment.

It is not good to be a Franco-American couple these days.

Yesterday, the French supreme court for private and criminal matters (Cour de cassation) delivered yet another judgment on parallel divorce proceedings in the U.S. and in France.

The story was pretty much the same as in a case on which I have previously reported. The French husband sued in France, the American wife sued in New York. This time, however, the claims were not exactly the same. It seems that divorce was only sought in France, while a ruling on maintenance and parental responsibility was sought in both fora.

As it understood that it was the only one seized of the divorce action, the French court ruled on it and granted the divorce. However, on the maintenance and the parental responsability issues, the French court found that it had been seized second and declined jurisdiction on the ground of lis pendens. The husband appealed, but by the time the Paris Court of Appeal heard the case, the New York court had issued final judgments. The French Court of appeal held that, pursuant to the French common law of judgments, the American judgments were to be recognized. In particular, they were certainly not contrary to public policy for the sole reason that they had awarded what the husband considered too high a sum for maintenance.

In a judgment of december 16, 2009, the Cour de cassation confirmed the decision of the Paris Court of appeal.

The dates when each court was seized were disputed. But the Cour de cassation held again that whether the French court had been seized first was irrelevant for the purpose of assessing whether the American judgments should be recognised in France.

Should lis pendens also result in denying recognition to judgments issued by foreign courts seized second?

No, ruled the French Supreme court for civil and criminal matters (Cour de cassation) in a case involving a French court and an American court.  A Franco-American couple was breaking up. The French husband initiated divorce proceedings in Toulouse, France, on October 28, 2005. A month later, on November 21, 2005, the American wife also sought divorce before a Massachusetts Court. The American court was seized second, but it caught up and delivered a divorce judgment much before the French court, on August 16, 2006. The woman sought recognition of the American judgment in France. In May 2008, the Toulouse court held that the foreign jugdment  was entitled to be recognized in France, and thus terminated the French proceedings.

Under the French common law of jurisdiction, the rule of lis pendens applies to proceedings initiated first in a foreign country. When this happens, French courts may decline jurisdiction if an eventual jugdment of the foreign court would be recognized in France.

Here of course, the situation is different, as the French court was seized first. The question is therefore whether lis pendens could produce an indirect effect. One of the requirements for the recognition of foreign judgments is that the foreign court have jurisdiction from the perspective of the French legal order. Could a foreign court seized second lack such jurisdiction because it ignored French proceedings initiated first? Until 2006, there was no real need to answer this question, since the mere fact that the party who would resist recognition was French was enough. However, article 15 of the Civil Code is no bar anymore to the recognition of foreign judgments in France. 

In a judgment of 30 September 2009, the Cour de cassation confirmed the judgment of the Toulouse court. It merely applied the traditional requirements of the French common law of judgments and found that the American judgment deserved recognition. With respect to the lis pendens situation, it held that it was irrelevant.

Conclusion: what really matters when you might be, or even have been, sued before a French court is not to rush to court, but to rush to judgment.

The fourth issue of French Journal du Droit International (also known as Clunet) has just been released. It contains two articles dealing with conflict issues.

The first is authored by professor Sylvette Guillemard (Laval, Canada) and Mr. Jacob Stone. It discusses decisions of the Supreme court of Canadian on international jurisdiction (La Cour suprême du Canada et la compétence internationale des tribunaux). The English abstract reads:

Over the past twenty years, questions concerning the recognition of « foreign » judgements have been raised in several appeals to the Supreme Court of Canada in cases originating from both the common law provinces and the civil law province of Québec. The authors of this article examine the ensuing jurisprudential monument erected by the Court in four key decisions in an effort to solidify the issue. The authors posit that the initial decisions of the Court respond well to queries regarding the notion comity, the constitutionality of criteria for recognition and the compatibility of these criteria with the two Canadian legal traditions. The authors submit, however, that certain opinions featured in subsequent rulings are at best non-committal and, at worst, discouraging.

In the second article, Tunisian professor Lofty Chedly discusses the recognition of arbitral awards nullified in their country of origin and stresses the inconsistency of Tunisian law (L’exécution des sentences internationales annulées dans leur pays d’origine : cohérences en droit comparé et incohérence du droit tunisien).

 The issue of enforcement of annulled arbitral awards in their country of origin refers, beyond the legal technique, to the philosophy of international arbitration. A first conception of this arbitration depicts it as legally integrated to the legal system where seats of arbitration tribunal. The international arbitrator would, consequently, have a State lex fori, and it becomes coherent if we are a supporter of the conception according to which an award, even international, that is annulled at the seat of arbitration is totally annihilated and cannot be enforced elsewhere. To this territorial and localised conception of international arbitration is progressively substituted a delocalised, or openly transnational conception. According to this conception, international arbitration is not endowed with a state lex fori, and the place of arbitration has a mere role of a geographical localisation, rather than a legal role. This conception allows certain autonomy to the award in relation to the seat of arbitration, which justifies the survival of the award to the annulment at the seat, and makes it possible to grant to it the exequatur elsewhere.

By refusing to grant exequatur to arbitral awards annulled in their country of origin, the Tunisian arbitration Code seems, at first sight, to lean to the first arbitration conception. But, through the close examination of the Tunisian arbitration Code of 1993, as well as the international Conventions signed by the Tunisian State, we cannot come up to the conclusion that the Tunisian Law adopts one of the theses in presence…its multiple inspiration sources, renders it, in our opinion, incoherent, and conduces to
conflicts of texts, even more, to conflicts of coherences, not readily soluble.

Articles of the Journal are available online for lexisnexis suscribers.

Once a year, the French daily legal journal Gazette du Palais has an issue dedicated to european and international litigation (Contentieux judiciaire européen et international). It typically includes articles and case notes.

The last issue was released on November 28th, 2009.

In a first piece, Professor Marie-Laure Niboyet (Paris X Nanterre University) discusses the most recent deicisions of the French supreme court for private and criminal matters (Cour de cassation) on Article 14 of the French civil code (L’éphémère privilège de l’article 14 du Code civil).

In the second piece, Philippe Guez, who also lectures at Paris X Nanterre University, offers a substantial case commentary on case C523/07 on the Brussels IIbis Regulation.

The third piece is a substantial case comment (and the first published in France) on the Gambazzi case of the ECJ. It is authored by Marie Nioche and Laurence Sinopoli, who both lecture at Paris X Nanterre University.

Finally, I am the author of the fourth piece, which is a survey of the case law of the Cour de cassation regarding financial penalties backing injunctions (Quelques observations sur le régime de l’astreinte en droit international privé). The article discusses cases dealing with the power of French courts to issue extraterritorial injunctions backed with such penalties, the influence of sovereign immunity in this context, and the enforcement of foreign comparable penalties in France.

Articles of the Gazette can be downloaded here by suscribers to Lextenso.

May first instance courts refer cases to the ECJ? May they apply European treaties which are not in force?

We had already reported that a French first instance court referred a case to the ECJ in Martinez seeking interpretation of articles 2 and 5(3) of the Brussels I Regulation (Case C278/09). A careful reader had wondered where a first instance court got its power to make such reference. In fact, it appeared that the French court had applied article 267 of the Lisbon Treaty before it was in force.

On November 20, 2009, the ECJ issued an order declining jurisdiction. It held that the Lisbon Treaty was not in force, and that pursuant to article 68 of the EC Treaty, a first instance court did not have the power to make a reference for a preliminary ruling as an appeal could still be lodged against its decision.

Professor Masanori Kawano, from Nagoya University, leads the project “Establishing a new framework for realizing effective transnational business litigation”, supported by the Grant-in-Aid Program for Creative Scientific Research of JSPS. Main aim of this project is the setting up of an international framework and a methodology for comparative legal studies, in order to alleviate the problems stemming from legal diversity. To meet this goal, Professor Kawano has planned a series of books on civil justice in European countries.

“Civil Justice in Spain”, edited by Professors Carlos Esplugues and Silvia Barona, from University of Valencia, is the third book of this series, being preceded by its equivalent in the United Kingdom, edited by Professor Neil Andrews, and in Finland, edited by Professor Laura Ervo. Upcoming books will include Italy, France and Hungary. “Civil Justice in Spain” has been published by Jigakusha Editions (Tokio) and it offers a thorough overview on Spanish civil procedure. Authors come from different Universities in Spain and have worked according to the aforementioned methodology, in order to facilitate access to Spanish system to English-speaking readers and professionals, especially from Asia.