Yesterday, Advocate General Kokott delivered her opinion in case C-168/08 (Hadadi).

The case concerns the interpretation of the Brussels II bis Regulation and raises the question whether a Hungarian or a French court has jurisdiction over a divorce decree where both spouses are habitually resident in France and have both Hungarian and French nationality.

The French Cour de Cassation had referred the following questions to the ECJ for a preliminary ruling:

Is Article 3(1)(b) [of Regulation No 2201/2003] to be interpreted as meaning that, in a situation where the spouses hold both the nationality of the State of the court seised and the nationality of another Member State of the European Union, the nationality of the State of the court seised must prevail?

If the answer to Question 1 is in the negative, is that provision to be interpreted as referring, in a situation where the spouses each hold dual nationality of the same two Member States, to the more dominant of the two nationalities?

If the answer to Question 2 is in the negative, should it therefore be considered that that provision offers the spouses an additional option, allowing those spouses the choice of seising the courts of either of the two States of which they both hold the nationality?

On 19 June 2008, the Supreme Court of Luxembourg for private and criminal matters (Cour de cassation) delivered a judgment in an interesting case involving related actions and a jurisdiction clause.

The related actions were pending before Belgian and Luxembourg courts. Bonds had been issued by a Luxembourg financial institution and sold by a Belgian bank to a Belgium couple, who had then resold them to a member of their family, who lived in Belgium. The new holder of the bonds initiated proceedings to set aside the initial sale and decided to sue both the issuer and the seller of the bonds.

Understandably, it seems that the plaintiff wanted to have both actions tried by one single court. However, he did not directly sue both defendants before the Belgian court. Instead, he sued the Belgian seller in Belgium and the Luxembourg issuer in Luxembourg, but only then to argue that the Luxembourg court ought to decline jurisdiction in favor of the Belgian court on the ground of the law of related actions. The actions were certainly similar, since they each aimed at setting aside the sale, but they did not meet the conditions of lis pendens, as the parties were different. Article 28 of the Brussels I Regulation clearly controlled.

The judgment of the Luxembourg Cour de cassation

The first instance court of Luxembourg (tribunal d’arrondissement) had resolved the dispute by ruling that the claim was inadmissible. It was reversed by the Court of appeal of Luxembourg, which first addressed the issue of jurisdiction and agreed to decline jurisdiction in favor of the Belgian court. The defendant appealed to the Cour de cassation.

The first issue that the Cour de cassation had to resolve was that the Belgian Court was the first instance court of Liège. The language of Article 28, however, seemed to imply that its scope is limited to actions pending before courts of first instance (“Where these actions are pending at first instance”), and that it does not apply to an appeal court. The Cour de cassation dismissed the argument by ruling that the purpose of this condition is to protect the right of the parties to an appeal. In other words, the Court held that there was no real issue as long as the parties would not lose the opportunity to appeal, which would not be the case when an appeal court would decline jurisdiction in favor of a first instance court. The Luxembourg Cour de cassation does not cite the authorities on which it relies, but a judgment of the French Cour de cassation of 27 October 1992 which had reached the same solution was relied upon in the proceedings and clearly influential.

The second issue was the extent to which the Luxembourg Court had cared about the consequences of its decision in respect of the dispute which it would not handle. Article 28 rightly requires that any European court willing to decline jurisdiction on the ground of related actions verify “if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof”. In that case, that meant that the Luxembourg court ought to have verified whether the Belgian court would have had jurisdiction over the action initiated in Luxembourg against the Luxembourg defendant. The Cour de cassation found that the court of appeal had explored neither the jurisdiction of the Belgian court, nor whether Belgian law allowed consolidation, and thus allowed the appeal. The solution seems obvious, so much so that one wonders how the court of appeal could have missed it.

The jurisdiction clause

Although the Cour de cassation did not care to mention it, there was a jurisdiction clause in the bonds’ prospectus. It had been drafted by a clever lawyer, so clever that it was not easy to understand what the clause meant.

Any dispute arising between the bond holders and the Issuer and/or the Guarantor will be settled by the courts of Luxembourg and/or Belgium as far as the Guarantor is concerned (translation from the French)

The clause could be construed in at least two ways. First, it could have provided for the exclusive jurisdiction of the courts of two countries for two different kinds of disputes. In other words, Luxembourg courts could have had jurisdiction over actions against the Luxembourg party (the Issuer), while Belgian courts would have had exclusive jurisdiction over disputes against the Belgian party (the seller and possibly the Guarantor). If the plaintiff construed the clause that way, that might explain why he decided to sue each of the defendants in their own courts: because he thought the jurisdiction clause actually compelled him to.

Alternatively, the clause could have meant that the parties had an option, and could choose to sue before either court. In particular, the plaintiff could have sued the issuer either in Luxembourg or in Belgium. That is how the court of appeal interpreted the clause. And this simplified any issue of jurisdiction of Belgian courts the Court of appeal of Luxembourg might face. Obviously, if the clause allowed the parties to choose between the courts of both countries, this meant that each of these courts had jurisdiction. So, the Court of appeal of Luxembourg had not applied so badly article 28.

However, the Court of appeals of Luxembourg went on to rule that there was no evidence that the clause had actually been accepted by both parties, and that it was part of their agreement. The clause had thus been found unenforceable. It could not confer jurisdiction on any court. And the Cour de cassation was therefore right to allow the appeal.

So the case is not as interesting as it could have been. Article 28 still awaits its Gasser case.

The European Centre of Tort and Insurance Law will host its annual Conference on European Tort Law in Vienna from 16th-18th April.

Detailed information on the programme, registration and accomodation can be found on their specially-designed website and on the following information folder.

Many thanks to Thomas Thiede for the tip-off.

I just caught wind of an interesting new read from Oxford University Press. Here’s the quick summary on their website:

Today, a California resident can incorporate her shipping business in Delaware, register her ships in Panama, hire her employees from Hong Kong, place her earnings in an asset-protection trust formed in the Cayman Islands, and enter into a same-sex marriage in Massachusetts or Canada–all the while enjoying the California sunshine and potentially avoiding many facets of the state’s laws. In this book, Erin O’Hara and Larry E. Ribstein explore a new perspective on law, viewing it as a product for which people and firms can shop, regardless of geographic borders. The authors consider the structure and operation of the market this creates, the economic, legal, and political forces influencing it, and the arguments for and against a robust market for law. Through jurisdictional competition, law markets promise to improve our laws and, by establishing certainty, streamline the operation of the legal system. But the law market also limits governments’ ability to enforce regulations and protect citizens from harmful activities. Given this tradeoff, O’Hara and Ribstein argue that simple contractual choice-of-law rules can help maximize the benefits of the law market while tempering its social costs. They extend their insights to a wide variety of legal problems, including corporate governance, securities, franchise, trust, property, marriage, living will, surrogacy, and general contract regulations. The Law Market is a wide-ranging and novel analysis for all lawyers, policymakers, legislators, and businesses who need to understand the changing role of law in an increasingly mobile world.

In a recent talk on the book at the American Enterprise Institute, Professor Ribstein contended that “widespread enforcement of choice-of-law clauses powerfully enhances [the] ‘law market,’ whose forces can in turn profoundly affect legal systems.” When people can choose the laws by which they are governed or create contracts, they said, “a new set of political actors gains influence, and state lawmakers are thereby more effectively disciplined.” Professor Ribstein called for:

a federal statute to require that states adhere to contractual choice-of-law provisions, except in cases where states pass “explicit legislation” to designate which choice-of-law provisions they will refuse to enforce. Ribstein contended that this solution offers “predictability, which is one thing we’re not getting from the chaos of state choice-of-law rules now,” as well as more interest group and individual involvement in state legislative processes. Over time, he argued, the proposal will produce an “equilibrium” that protects contractual rights, allows states and local jurisdictions to enact “reasonable regulations,” and offers contracting parties “a way out of the tangle” of existing federal, state, and local laws.

I haven’t read it yet, but I certainly will soon. The early reviews have certainly been very good. You can order the book here.

The Faculty of Law and the European Documentation Centre of the University of Verona will host on 20 March 2009 (14:30 h) a conference on maintenance obligations and successions: “Le nuove competenze comunitarie dello spazio giudiziario europeo: obbligazioni alimentari e successioni“ (New EC Competences in the European Judicial Area: Maintenance Obligations and Successions).

Here’s the programme:

Chair: Prof. Maria Caterina Baruffi (University of Verona);

• Prof. Fausto Pocar (University of Milan): La disciplina comunitaria della giurisdizione e del riconoscimento delle sentenze in tema di alimenti: il reg. 4/2009;
• Prof. Alegría Borrás (University of Barcelona – Co-Rapporteur of the Explanatory Report on the 2007 Hague Convention): La Convenzione ed il Protocollo dell’Aja del 2007 in tema di alimenti;
• Prof. Rosario Espinosa Calabuig (University of Valencia): La responsabilità genitoriale e le obbligazioni alimentari nei confronti dei minori: tra il regolamento 2201/2003 e il regolamento 4/2009;
• Prof. Rainer Haussmann (University of Konstanz): The proposal of the Commission on applicable law, jurisdiction, recognition and enforcement of decisions and cooperation in matters relating to successions and wills of 2009;
• Prof. Ruggiero Cafari Panico (University of Milan): Riconoscimento ed efficacia degli atti in materia successoria;
• Prof. Alberto Malatesta (University “Carlo Cattaneo” – LIUC of Castellanza): Relazione di sintesi.

For further information and registration, see the conference’s webpage and the downloadable flier.

(Many thanks to Fabrizio Marongiu Buonaiuti, University of Rome “La Sapienza”, for the tip-off)

 On October 2007, a company named Roda Golf & Beach Resort S.L. (‘Roda Golf’), executed before a notary an instrument of notification and request, seeking the service of 16 letters giving notice of the termination of a contract on addressees residing in the United Kingdom. On November 2007, the notary appeared before the clerk of the Juzgados de Primera Instancia e Instrucción, San Javier, and formally served the notarial instrument together with the original copies of the 16 letters. The clerk of the referring court issued a measure refusing to effect service of the letters. Roda Golf lodged an application for review before the Juzgado de Primera Instancia e Instrucción No 5, San Javier, in accordance with Article 224 of the Ley de Enjuiciamiento Civil (Law on Civil Procedure). When examining the action contesting the measure of organisation issued by the clerk, the court was uncertain about the interpretation of Regulation (EC) No 1348/2000; therefore, on January 2008 it referred the following two questions to the Court of Justice for preliminary ruling:

‘1.       Does the scope of Regulation (EC) No 1348/2000 extend to the service of extrajudicial documents exclusively by and on private persons using the physical and personal resources of the courts and tribunals of the European Union and the regulatory framework of European law even when no court proceedings have been commenced? Or,

2.       Does Regulation (EC) No 1348/2000 on the contrary apply exclusively in the context of judicial cooperation between Member States and court proceedings in progress (Articles 61(c), 67(1) and 65 EC and recital 6 of the preamble to Regulation (EC) No 1348/2000)?’

AG Ruiz-Jarabo Colomer’s long opinion has been delivered on March, the 5th. He starts analysing the  matter of admissibility of the question, which is a twofold objection raised by the Commission.

A) According with Article 68 EC, only courts or tribunals of last instance may refer a preliminary ruling question concerning Title IV of the EC Treaty and acts based thereon; the Spanish court asserts it is a court of last instance in accordance with the aforementioned article; the Commission denies it. AG sets out the history and the reasons which led the Member States to adopt Article 68 EC; he concludes that the rule has to be interpreted in accordance with the fundamental right to effective legal protection, therefore restrictively. He then turns to consider what is a “court of last instance” within the meaning of Article 68 EC:  only a court sitting at the apex of the national court structure (if so, the Spanish question would not be admissible), or the final court which may give a decision in accordance with the domestic system of remedies?. Judging from previous cases before the ECJ -although concerning Article 234 EC- he rejects the organic approach in favour of the specific-case approach: Article 68 EC refers to courts against whose decisions there is no judicial remedy, applying to supreme courts and also to any other national courts against whose decisions there is no right of appeal.

Unfortunately, under Spanish procedural law it is unclear whether an appeal may be brought against a decision such as the one pending before the Juzgado de Primera Instancia e Instrucción No 5, San Javier. Under this circumstances, AG draws attention to the referring court’s view that it has the status of a court of last instance; he also points out that where uncertainties arise, it is appropriate to choose the approach which is most favourable to the reference for a preliminary ruling. He therefore concludes that the first plea of inadmissibility must be dismissed.

B) The second plea of inadmissibility concerns another essential condition that a court has to meet in order to seek a preliminary ruling: the question must arise in the context of proceedings; ‘a national court may refer a question to the Court only if there is a case pending before it and if it is called upon to give judgment in proceedings intended to lead to a decision of a judicial nature’. This means two requirements: the reference must be made by a court or tribunal (first requirement), in relation to a case in which (second condition) it exercises a judicial function. In the instant case, although the referring court is part of the Spanish judicial structure, there are uncertainties regarding whether the action concerned is an inter partes dispute , and whether the decision of the court is judicial in nature.

AG Ruiz-Jarabo Colomer studies EC case law on Article 234 EC, stating that it also applies to preliminary rulings sought under Article 68 EC. He then recalls the conditions set by the ECJ for a proceeding to be considered inter partes: first, it will suffice if an individual is claiming a right and seeks a ruling from a court; second, the claim must be clearly defined in terms of both the facts and the law; third, the national court must ensure the observance of all procedural safeguards when it exercises jurisdiction. Applying such criteria to the present case, AG concludes that the main proceedings are inter partes.

As for the requirement of judicial nature of the function, the AG brings up a special exception set by the EJ in the Job Centre affair (case C- 11/94), where the applicant asked for an order to register a company: the Court ruled that there was no judicial activity, but only the exercise of administrative authority; it nevertheless went on to state that ‘Only if the person empowered under national law to apply for such confirmation seeks judicial review of a decision rejecting that application – and thus of the application for registration – may the court seised be regarded as exercising a judicial function, for the purposes of Article [234]”. Applying the exception to the present case, AG concludes that the function performed by the referring court is judicial in nature.

The issue of admissibility being solved, AG tackles the questions referred for preliminary ruling. The Juzgado de Primera Instancia e Instrucción No 5, San Javier, seeks a precise definition of extrajudicial documents in the context of Regulation (EC) No 1348/20. For some Member States, extrajudicial documents may be served under this Regulation only where court proceedings have been commenced; since ordinary declaratory proceedings have not yet been commenced in the matter referred by the Juzgado de Primera Instancia e Instrucción No 5, San Javier, those Member States propose that the Court should restrict the service of extrajudicial documents to situations where proceedings are underway. However, this opinion is not shared by the AG: leaning on the purpose of Regulation (EC) Nº 1348/2000 and its legal basis (art. 65 EC), he defends a broad interpretation of the scope of the Regulation; extrajudicial documents are not only documents which are included in a case-file; the term also covers documents which are required to be served, regardless of whether or not proceedings have been commenced.

To end, AG suggest a definition of extrajudicial document mid way between an autonomous interpretation and interpretation by reference to the law of the State of origin: in his view extrajudicial documents are documents which, first, require the involvement of an authority or a public act; second, give rise to specific and different legal effects as a result of that involvement; and, third, are used to support a claim in possible court proceedings.

(Regulation (EC) Nº 1348/2000 has been replaced by Regulation (EC) Nº 1393/2007, which is already in force)

According to the January 2009 issue of Brussels News, the information bulletin of the Brussels Office of the Bar Council, the European Commission will present its Proposal for a regulation on PIL aspects of succession and wills on 24 March 2009:

Wills and Succession
The Commission’s long-awaited private international law proposal is due out on 24 March. It is expected to cover not only applicable law, but also jurisdiction, recognition and enforcement. The Chancery Bar Association has been actively following preparations, and will react.

As it is widely known, works on the proposed EC legislation have been prepared by the Commission through a Green Paper on Succession and Wills, published in 2005 (see also the annex working document – in French), and a subsequent public hearing, held on 30 November 2006, based on the contributions received in reply to the Green Paper. On 16 November 2006, the European Parliament voted a resolution with recommendations, calling on the Commission to submit a legislative proposal (see our post here).

A thorough research had been previously carried at an academic level, on behalf of the Commission, by the Deutsches Notarinstitut in cooperation with Prof. H. Dörner and Prof. P . Lagarde (the whole documentation – including the Final Report – can be downloaded from the Documentation Centre of the DG Justice, Freedom and Security).

Following the research, a conference, “Conflict of Law of Succession in the European Union – Perspectives for a Harmonisation“, was organized in Brussels on 10-11 May 2004, where a number of very interesting papers were presented by leading scholars from various European jurisdictions. The proceedings of the symposium (highly recommended) are available on the DNotI website.

On the Commission’s initiative, see also our Guest Editorial (“Reflections on the Proposed EU Regulation on Succession and Wills“) by Prof. Jonathan Harris (University of Birmingham, co-editor of the Journal of Private International Law), who has been advising the UK Ministry of Justice on the proposed Regulation, and gave oral evidence to the House of Lords Select Committee on European Union Law in October 2007. The transcript of this evidence is available here.

The Law Commission of Ontario has released a consultation paper written by Professor Janet Walker (Osgoode Hall Law School, York University).  The paper (available here) proposes that Ontario’s current law on the taking and retaining of jurisdiction in civil matters is in need of reform.  It offers a proposed statute which would reform the law in this area.  The proposals have some common elements with the Uniform Law Conference of Canada’s model statute, the Court Jurisdiction and Proceedings Transfer Act (available here), but also some important differences.

The Law Commission welcomes comments on the paper, and the process for commenting is explained in the paper.  Beyond this, those generally interested in how countries resolve issues of jurisdiction in civil matters should find the points raised in the paper of interest.

To date three Canadian provinces have moved away from the traditional approach, which is based on a combination of common law and rules of civil procedure, and have brought into force the Court Jurisdiction and Proceedings Transfer Act (British Columbia, Saskatchewan and Nova Scotia).  Some other provinces have enacted the statute but not yet brought it into force, and some other provinces are considering adopting it.

I am grateful to Henry Saint Dahl, the President of the Inter-American Bar Foundation, for contributing this report.

In General Electric Company v. Varig S Aviação Aérea Rio-Grandense, the Superior Court of Justice in Brazilia, Brazil allowed the recognition (homologação) of a US judgment issued by the New York Southern District Court. The Brazilian decision was dated November 5, 2008 but was only published on December 11, 2008.

The parties signed a contract, General Terms of Agreement, according to which Varig purchased from GE an aircraft engine. The contract had a New York choice-of-law clause. The New York judgment was declaratory and it established that General Electric was not responsible for certain malfunctioning of the engine. The American court had decided that: “a) the General Terms of Agreement entered between Varig and GE is in full force and it is applicable to the incident caused by the engine malfunction of June 7, 2000; and b) the Agreement shall be construed following the substantive law of New York.”

Varig argued that the chosen law should be stricken, as a matter of Brazilian public policy, and that the Brazilian Consumer Code (Código de Defesa do Consumidor) should be applied instead. In particular, Varig asserted that this was a consumer transaction and that the Brazilian Consumer Code banned clauses whereby the buyer waived any redress in instances of the seller’s negligence.

The case was complicated by a related action, against General Electric, filed in Brazil by Varig’s insurance company (Presumably the declaratory action would be used to defend against this lawsuit.)

The Brazilian court allowed recognition of the foreign judgment. It held that the Consumer Code applied internally and that it did not prevent the law chosen by the parties to operate freely. It also determined that the recognition requirements (jurisdiction, service, translations, etc.) of art. 15 of the introductory law to the Civil Code had been complied with. Finally, the court decided that the existence of related litigation in Brazil posed no obstacle to the recognition of the foreign judgment according to art. 90 of the Code of Civil Procedure (no lis pendens).

This is an important case where the Brazilian court applied truly international standards to an international case. Other Latin American countries should take notice.

Priscila Sato, a Brazilian attorney at Arruda Alvim Wambier Advocacia e Consultoria Jurídica provided a copy of the text and general guidance.

Canadian provincial courts continue to analyze how to manage class actions that include class members from other provinces.  While Canada is a federal country, it is acceptable for the court in a province to certify a class that includes members from other provinces.  A difficulty arises if two provinces are each asked to certify a multijurisdictional class in respect of the same underlying claim.

Currently there are class actions against Merck Frosst in both Ontario and Saskatchewan in respect of Vioxx.  In each of these provinces, the class action regime is “opt-out”, so that the class as defined catches all described members without any specific action on the part of a particular member.  Merck moved to stay the Ontario action on the basis that it should not be subject to two multijurisdictional class actions that involve substantially the same plaintiffs and issues.  In Mignacca v. Merck Frosst Canada Ltd. (an as-yet unreported decision of the Ontario Divisional Court, dated Feb. 13, 2009) the court refused to stay the Ontario action.

The court refused to adopt an approach that would defer to the court that first certified the class action: “a rule of swiftest to the finish line taking all encourages tactics that may well be contrary to the interests of justice” (para. 47).  The court noted that in other cases parallel class actions involving jurisdictional overlap had been resolved through the cooperation of counsel and guidance from the court. 

An unusual element of this case was the Ontario court’s concern about the lawyer representing the plaintiff class in the Saskatchewan proceedings.  It noted that he had five disciplinary violations from 1972 to 2006.  This strengthened the court’s desire to have the Ontario proceedings continue.