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Brexit Deal: What Happens To Judicial Cooperation in Civil Matters?
The Brexit deal (officially the [draft] EU-UK Trade and Cooperation Agreement) was agreed upon, finally, on December 24. Relief in many quarters (except Universities participating in the Erasmus program, which is discontinued in the UK).
But private international lawyers worry what happened to judicial cooperation in civil matters: is there any agreement at all? Peter Bert provides a detailed analysis of all available documents and finds almost no mention, which leads him to think we are facing a sectoral hard brexit. (Update: he provides a more comprehensive analysis in German here.) Other experts on social media do not know more. The Law Society also seems worried. There seems to be no new information on the UK application to join the Lugano Convention, let alone any of the other areas of judicial cooperation. Given the intense discussion on these matters since the day of the Brexit vote, this can hardly be an oversight, but on the other hand it seems strange that such a core issue remained unaddressed.
Any further information or analysis in the comments is welcome.
Update: more comments from Ted Folkman
The Italian Supreme Court on Jurisdiction in Purely Financial Damages
The case
In a recent decision published October 30th, 2020 (ordinanza 24110/2020) the Italian Supreme Court has applied two provisions of the Brussels Ia Regulation, namely art. 8 n. 1, and art. 7 n. 2, in a context of multiple actions for fraud started by the Italian investors against a number of defendants. The first being a UK based bank for alleged breaches of its duties of control over financial experts who collected money from investors. The others being a UK based financial company and a financial expert who were supposed to invest the collected money by way of establishing trust. As emerges from the order of the Supreme Court, all investments collected in Italy were spent in gambling houses in Italy.
Proceedings were collectively started in Italy against all defendants, who challenged the Italian jurisdiction before the court of first instance, which thus requested the Supreme Court to settle the issue.
Last known domicile of one of the defendants
Following a logical order, the Italian Supreme Court seeks to determine in the first place if one of the defendants is domiciled in Italy. In this regard, the solution of the Court is interesting in that it focuses on the last known domicile of the financial expert, whose actual whereabouts have become unknown. According to the Court, the simple fact that current domicile of the party is unknown, and that consequently service of documents has followed domestic rules for unknown residents, is per se not sufficient to argue that that person is no longer domiciled in Italy. To some extent, even though this decision is not clearly mentioned in the order of the Italian Supreme Court, this conclusion seems consistent with the ratio expressed by the Court of Justice of the European Union in Hypotecní banka a.s. v Lindner (case C-327/10), where it was argued that defendants with unknown domicile are domiciled at their last known domicile for the purpose of the Brussels I(a) Regulation (see para. 42 ff).
Art. 8 n. 1 Brussels Ia Regulation
Having established that Italian jurisdiction exists under art. 4 Brussels Ia Regulation at least in respect to one of the defendants (i.e. the financial expert cooperating with the British financial company who should have been appointed as trustee for the management of the investments), the Italian Supreme Court turns to the analysis of Italian jurisdiction over the UK investment company and the UK Bank under art. 8 n. 1 Brussels Ia Regulation.
The Supreme Court concedes that the special head of jurisdiction is subject to a restrictive interpretation and should not be applied when the different proceedings have different petitum and causa petendi, or where there is no subordination between the actions with no risk of incompatible judgments – the mere ‘inconsistency’ between decisions being insufficient to trigger art. 8 n. 1 Brussels Ia Regulation and derogate from art. 4.
In the case at hand, however, even though the action against the UK bank was contractual in nature for alleged violation of its control duties, and non-contractual in nature against the other parties, the Italian Supreme Court notes how the non-contractual liability of those who have collected the money to unlawfully spend it in gambling houses in Italy is strictly interconnected and intertwined with the contractual conduct of the bank – as proper ex ante controls by this subject might have avoided the investment in favor of companies who had unclear bank operations incompatible with investment activities. Moreover, damaged parties have started proceedings seeking damages collectively against all parties for solidary liability – in the Court’s eye, this renders it fundamental to unitarily address all conducts even though these are grounded on different titles. Again, a solution that appears to be consistent with the case law of the Court of Justice of the European Union (Freeport plc v Olle Arnoldsson, case C-98/06, para. 41).
For these reasons, the Italian Supreme Court argues that the Italian jurisdiction extends from that of the Italian domiciled also to both the British investment company and the British bank.
Art. 7 n. 2 Brussels Ia Regulation
The Italian Supreme Court also addresses the existence of the Italian jurisdiction under art. 7 n. 2 Brussels Ia Regulation. The Court does not however determine at this stage local competence – referring the issue to the court of first instance.
The case deals in concreto with damages following investment frauds – in this sense the only ‘damage’ for the purposes of the provision at hand is financial in nature. The Italian Supreme Court quotes the decision of the European Court of Justice in Volkswagen AG (Verein für Konsumenteninformation v Volkswagen AG, case C-343/19) to support the idea that the place of financial loss might ground the existence of Italian international jurisdiction, as in Italy the investors transferred their sums (thus lost their money).
The Supreme Court additionally argues that the ‘conduct’ can be localized in Italy as well – thus Italian jurisdiction follows. In Italy the sums were allegedly fraudulently collected from investors, and in Italy such sums were allegedly fraudulently used in Italian gambling houses (contrary to contractual indications). With a brief passage, the Court gives a strong value to this specific head of jurisdiction, the place of the ‘harmful conduct’, as it can be used by the plaintiffs to ground their actions superseding uncertainties that could follow the application of art. 8 n. 1 Brussels Ia.
Massimo V. Benedettelli, International Arbitration in Italy
Arbitration community lacked a comprehensive guide in English to move through the multiple and multifaceted connections between arbitration and the Italian legal system: International Arbitration in Italy fills in this gap, addressing both international commercial and investment arbitration.
The book deeply depicts said connections, raising interpretative problems and providing solutions with the view to building a coherent system against the backdrop of the author’s thought about the phenomenon of the arbitration taken as a whole.
This approach qualifies the entire analysis elaborated on in 12 Chapters, which start with the focus on what international arbitration is and what its grounds are, then moving on how arbitration “dialogues” with the different sources of Italian law, and what the principles for the right interpretation of this law are.
The book proceeds on “traditional” topics pertaining to a handbook of international commercial arbitration (the interplay between arbitration and national courts, the arbitration agreement, the arbitral tribunal, the arbitral proceedings, the provisional measures, the law applicable to the merits, the costs of arbitration, the different awards, related challenges, recognition and enforcement) with a closing attention to investment arbitration.
International Arbitration in Italy also includes three useful appendices which gather the main provisions of Italian law on arbitration (1), the rules of arbitration of the Milan Chamber of Arbitration (2) and the list of the Bilateral Investment Treaties in force for Italy (3).
Given its well-balanced theoretical and practical approach, the book will stimulate the scientific debate while helping practitioners to handle even the trickiest cases featuring interactions between international arbitration and Italian law.