This blog post presents a condensed version of Dr Mukarrum Ahmed’s (Lancaster University) article in the December 2018 issue of the Journal of Private International Law. The blog post includes specific references to the actual journal article to enable the reader to branch off into the detailed discussion. The journal article is a companion publication to the author’s recent book titled The Nature and Enforcement of Choice of Court Agreements: A Comparative Study (Oxford, Hart Publishing 2017).

The article examines the fundamental juridical nature, classification and enforcement of choice of law agreements in international commercial contracts. At the outset, it is observed that choice of law considerations are relegated to a secondary position in international civil and commercial litigation before the English courts as compared to international jurisdictional and procedural issues. (See pages 501-503 of the article) Significantly, the inherent dialectic between the substantive law paradigm and the internationalist paradigm of party autonomy is harnessed to provide us with the necessary analytical framework to examine the various conceptions of such agreements and aid us in determining the most appropriate classification of a choice of law agreement. (See pages 504-508 of the article and Ralf Michaels, ‘Party Autonomy in Private International Law – A New Paradigm without a Solid Foundation?’ (2013) 15 Japanese Yearbook of Private International Law 282) In binary terms, we are offered a choice between choice of law agreements as mere “factual” agreements on the one hand or as promises on the other. However, a more integrated and sophisticated understanding of the emerging transnationalist paradigm of party autonomy will guide us towards a conception of choice of law agreements as contracts, albeit contracts that do not give rise to promises inter partes. This coherent understanding of both the law of contract and choice of law has significant ramifications for the enforcement of choice of law agreements. It is argued that the agreement of the parties on choice of law will be successful in contracting out of the default choice of law norms of the forum and selecting the applicable law but cannot be enforced by an action for “breach” of contract.

It is argued that the emerging transnationalist paradigm of party autonomy supports a conception of choice of law agreements which borrows from both the internationalist and substantive law paradigms of party autonomy but cannot be comprehensively justified by either. This assimilated and coherent understanding of choice of law and the law of contract has led to the conclusion that the choice of law clause is a procedural contract but a contract nonetheless. (See Jürgen Basedow, The Law of Open Societies: Private Ordering and Public Regulation in the Conflict of Laws (Brill Nijhoff 2015) 145 and Maria Hook, The Choice of Law Contract (Oxford, Hart Publishing 2016) Chapter 2)

Professor Briggs’ promissory analysis of choice of law agreements is a seminal contribution to legal scholarship. (See Adrian Briggs, Agreements on Jurisdiction and Choice of Law (OUP 2008) Chapter 11) However, it is unlikely that the parallel existence of choice of law agreements as privately enforceable agreements will attract the attention of the CJEU and the EU legislature. The common law judicial authority coupled with the preponderance of opposing academic opinion has meant that the conventional “declaratory” classification of choice of law agreements has prevailed over the “promissory” approach. (See pages 508-517 of the article; Ace Insurance v Moose Enterprise Pty Ltd [2009] NSWSC 724 (Brereton J); Navig8 Pte Ltd v Al-Riyadh Co for Vegetable Oil Industry (The Lucky Lady) [2013] EWHC 328 (Comm), [2013] 2 Lloyd’s Rep 104, [2013] 2 CLC 461 (Andrew Smith J)) In assessing the relevance and significance of attributing an obligation to adhere to the chosen law in a choice of law agreement, the internationalist paradigm’s understanding of the fundamental nature of private international law rules and their inherent function has helped develop the counterargument.

If the choice of law regime of the forum is conceptualised as a set of secondary rules for the allocation of regulatory authority, the descriptive, normative and interpretive narrative of the promissory perspective loses its perceived dominance and coherence as it fails to yield a complete and satisfactory justification for what we really understand by those rules. In the mantle of secondary power conferring rules as opposed to primary conduct regulating rules, choice of law rules perform a very significant public function of allocating regulatory authority. From this perspective, it is misplaced and misconceived to interpret choice of law clauses as promissory in essence. The promissory justification does not adequately account for the authorisation of party autonomy by the choice of law rules of the forum, the supervening application of the laws of the forum and other states and ultimate forum control. (See pages 517-524 of the article) Moreover, the pragmatic attractiveness of anti-suit injunctions and claims for damages for breach of choice of law agreements may be unsound in principle from the standpoint of a truly multilateral conception of private international law based on mutual trust or a strong notion of comity. An international private international law will always seek to promote civil judicial cooperation between legal systems rather than encourage the clash of sovereign legal orders by interfering with the jurisdiction, judgments and choice of law apparatus of foreign courts. (See pages 524-529 of the article)

To reiterate, the more reconciled transnationalist paradigm of party autonomy strikes a balance between the competing demands of the internationalist and the substantive law paradigms. It is argued that a conception of a choice of law agreement as a contract, albeit one that does not give rise to any promises inter partes provides an appropriate solution.

On the one hand, the choice of law agreement is a legally binding contract as opposed to a mere “factual” agreement. On the other hand, the function of this agreement is not to regulate private law rights and obligations inter partes: it is to contract out of the forum’s default choice of law norms and to select the applicable law. Such a contract will not contradict the intrinsic logic of choice of law rules because the international allocative function remains paramount and is not compromised in any way by promises inter partes. The fact that the choice of law agreement is a contract which only gives rise to procedural consequences does not mean that it is not a contract per se. (See pages 530-531 of the article)

By Prof. Dr. Peter Mankowski, University of Hamburg

The Greek State financial crisis has sent waves of political turmoil throughout the Eurozone and is certainly going to continue. It has provided much enrichment for International Procedural Law, yet not for the creditors of Greek State bonds. ‘Haircut’ has become an all too familiar notion and part of the Common Book of Prayers of State bonds. Some creditors, particularly from Germany and Austria, were not content with having their hair cut involuntarily and put it to the judicial test. Greece has thrown every hurdle in their way which she could possibly muster: service, immunity, lack of international jurisdiction. The service issue was sorted out by the CJEU in Fahnenbrock (Joined Cases C-226/13 et al., ECLI:EU:C:2015:383), already back in 2015. The German BGH and the Austrian OGH took fairly different approaches, the former granting immunity to Greece because of the haircut, the latter proceeding towards examining the heads of international jurisdiction under the Brussels Ibis Regulation. Quite consequently, the OGH referred some question concerning Art. 7 (1) Brussels Ibis Regulation to the CJEU. In its recent Kuhn decision (of 15 November 2018, Case C-308/17, ECLI:EU:C:2018:911), the CJEU answered that the entire Brussels Ibis Regulation would not be applicable by virtue of its Art. 1 (1) 2^nd sentence since the CJEU believed the haircut to constitute an actum iure imperii. Rapporteur was the newly (only six days before) promoted Vice President Rosario Silva de Lapuerta from Spain. The core of the judgment is surprisingly succinct, not too say: short, comprising only some ten paragraphs:

34 Thus, the Court has held that, although certain actions between a public authority and a person governed by private law may come within the scope of that regulation, it is otherwise where the public authority is acting in the exercise of its public powers (judgment of 15 February 2007, Lechouritou and Others, C?292/05, EU:C:2007:102, paragraph 31 and the case-law cited).

35 That applies, namely, to disputes resulting from the exercise of public powers by one of the parties to the case, as it exercises powers falling outside the scope of the ordinary legal rules applicable to relationships between private individuals (judgment of 15 February 2007, Lechouritou and Others, C?292/05, EU:C:2007:102, paragraph 34).

36 As regards the dispute in the main proceedings, it must, consequently, be established whether its origin stems from the acts of the Hellenic Republic, which arise from the exercise of public authority.

37 As stated by the Advocate General in points 62 et seq. of his Opinion, the manifestation of that exercise is the result of both the nature and the modalities of the changes to the contractual relationship between the Greek State and the holders of the securities at issue in the main proceedings and the exceptional context in which those changes took place.

38 Those securities, following the adoption of Law 4050/2012 by the Greek legislator and the retroactive introduction of a CAC according to that law, were replaced by new securities with a much lower nominal value. Such a substitution of securities was not provided for in the initial borrowing terms or in the Greek law in force at the time that the securities subject to those conditions were issued.

39 Thus, that retroactive introduction of a CAC allowed the Hellenic Republic to impose on all of the holders of securities a substantial amendment to the financial terms of those securities, including on those that would have sought to oppose that amendment.

40 Furthermore, the unprecedented reliance on the retroactive inclusion of a CAC and the resulting amendment to the financial terms took place in an exceptional context, in the circumstances of a serious financial crisis. They were namely dictated by the necessity, within the framework of an intergovernmental assistance mechanism, to restructure the Greek State’s public debt and to prevent the risk of failure of the restructuring plan of that debt, to avoid that State failing to pay and to ensure the financial stability of the euro area. By declarations of 21 July and 26 October 2011, the euro area Heads of State or Government affirmed that, regarding the participation of the private sector, the situation of the Hellenic Republic called for an exceptional solution.

41 The exceptional nature of that situation also results from the fact that, according to Article 12(3) of the EMS Treaty, CACs are to be included, as of 1 January 2013, in all new euro area government securities with maturity above one year, in a way which ensures that their legal impact be identical.

42 It follows that, having regard to the exceptional character of the conditions and the circumstances surrounding the adoption of Law 4050/2012, according to which the initial borrowing terms of the sovereign bonds at issue in the main proceedings were unilaterally and retroactively amended by the introduction of a CAC, and to the public interest objective that it pursues, the origin of the dispute in the main proceeding stems from the manifestation of public authority and results from the acts of the Greek State in the exercise of that public authority, in such a way that that dispute does not fall within ‘civil and commercial matters’ within the meaning of Article 1(1) of Regulation No 1215/2012.

43 In those circumstances, the answer to the question referred is that Article 1(1) of Regulation No 1215/2012 is to be interpreted as meaning that a dispute, such as that at issue in the main proceedings, relating to an action brought by a natural person having acquired bonds issued by a Member State, against that State and seeking to contest the exchange of those bonds with bonds of a lower value, imposed on that natural person by the effect of a law adopted in exceptional circumstances by the national legislator, according to which those terms were unilaterally and retroactively amended by the introduction of a CAC allowing a majority of holders of the relevant bonds to impose that exchange on the minority, does not fall within ‘civil and commercial matters’ within the meaning of that article.

This mirrors sometimes to the letter the core of the opinion delivered by A-G Bot from France (delivered on 4 July 2018, ECLI:EU:C:2018:528 paras. 62-76). Only rarely the CJEU has argued in such an openly political manner when deciding issues of the Brussels I/Ibis regime. The underlying ratio is evident: Greece must not fall for otherwise the Eurozone in its entirety is feared to break down. The individual creditors’ particular interests are sacrificed for the common good of Greece, the Eurozone and the EU. (The so called Troika including the EU was mainly responsible for the introduction of the haircut into Greek law by demanding the reduction of Greece’s public debt.)

Yet a second, more technical thought appears necessary: Hellas might have triumphed in the concrete case. But the victory she scored might turn out to be a Pyrrhic victory. Declaring Art. 1 (2) 2^nd sentence Brussels Ibis Regulation operational wipes out for instance jurisdiction under Art. 7 (1) Brussels Ibis Regulation – but it also wipes out Art. 5 Brussels Ibis Regulation. Greece as the defendant is left to the possibly tender mercy of the national jurisdiction rules of her EU partner States once one is prepared to proceed to the realm of international jurisdiction. Hence, as to the admissibility of the claims all boils down to the question whether Greece enjoys immunity for her haircut administered. Kuhn in fact reduces the number of defenses available to Greece by one.

Written by Jos Hoevenaars, Erasmus University Rotterdam (postdoc researcher ERC project Building EU Civil Justice)

Early November, the Dutch Minister of Legal Protection Sander Dekker presented his plans for the overhaul of the Dutch system for subsidized legal aid. In his letter of 9 November 2018 to Parliament Dekker cites the increasing costs of subsidized legal aid over the past two decades (42% in 17 years) as one of the primary reasons underlying the need for reform.

The proposed intervention in legal aid follows after years of research and debate. Last year, the Van der Meer Committee, the third committee in 10 years, concluded that the legal aid system is functioning well, but that it was suffering from ‘overdue maintenance’ and that especially the fees for legal aid professionals are no longer up to date. Currently, lawyers miss out on about 28 per cent of the hours they work on legal aid cases. According to said Committee, an additional 127 million euros would be needed annually to compensate for that gap in income. Such an increase in expenditure seems off the table given that the coalition agreement of the current government stipulates that ‘the legal aid system will be revised within the current budgetary framework’. A budget that has come under additional pressure due to recent failed attempts at digitizing Dutch procedure under the Quality and Innovation Program (KEI) (see this blogpost).

Strikingly, these reform plans coincide with alarming criticism from the Dutch judiciary as to the current state of affairs in the Dutch justice system. On 8 November, in an unprecedented move, a group of concerned judges and counsellors sent a letter to Parliament expressing their concerns about the conditions under which they have to work and the perceived threat to the future independence of the judiciary and in which they denounce the exclusive focus on finances.

Those with an international outlook will recognise these suggested reforms as part of an international trend in constricting public spending on the civil justice system in general and subsidized legal aid specifically. Especially the fairly recent reforms in England and Wales following the Legal Aid Sentencing and Punishment of Offenders Act (LASPO) of 2012 may provide a cautioning example for other jurisdictions.

The proposed changes to the Dutch legal aid system, as well as the rhetoric used to justify such reforms, closely resembles developments in the English civil justice system over the past two decades. As Dame Hazel Genn analysed in 2008, looking back at the beginning of transformative changes in England and Wales proposed in the infamous Woolf report on Access to Justice in 1995: “On the one hand the report seeks to break down barriers to justice, while on the other it sends a clear message that diversion and settlement is the goal, that courts exist only as a last resort and, perhaps, as a symbol of failure.” Similarly, the current Dutch government has as one of its aims to stimulate out-of-court dispute resolution, and the proposed reforms are geared significantly towards pre-judicial triage, (online) information and advice, and out-of-court settlement.

In many ways the problem analysis presented by the Minister mirrors those made in England at the end of the 20^th Century: the ever-increasing cost of legal aid (now over 400 million annually) is seen as unsustainable and perverse incentives in the current system encourage misuse by lawyers. However, the Minister also looks closer to home and concludes that the government is the counterparty in the majority (about 60 percent) of the cases in which subsidized legal aid is used. Most of these cases include criminal law and asylum law, but also (almost 11 percent) other administrative procedures with government bodies and municipalities. This is often based on complex legislation, or legislation in which much of the details are deliberately left to practice, with court proceedings as a result. The implicit call for de-judicialization is therefore accompanied by a call for de-juridification.

If the discussed English reforms are any gauge of what we can expect in the Netherlands, those with their eye on the access to justice ball are paying attention. The reforms in England included drastic cuts to legal aid, which saw entire categories of litigants, especially in family law, suddenly unable to access legal aid. As a result the English system today is filled with litigants without legal representation.

While such a dramatic increase in litigants in person is not likely to present itself in the Netherlands – the Dutch system has mandatory legal representation for all but sub-district courts – the reforms are bound to leave some portions of potential justice-seekers out in the cold. The Minister’s proposal includes the creation of so-called ‘legal aid packages’ aimed at a more holistic approach to legal issues, and with much more focus on self-reliance of the citizen, seemingly underplaying the fact that those citizens that rely on legal aid are generally less self-reliant.

What may provide a sense of cautious optimism is that the proposal includes a commitment to ongoing and iterative review of the measures and experiments that are part of the overhaul. In that sense, the proposed reforms to the Dutch system, at least as far as legal aid is concerned, do not seem to be destined to make the mistake made in other jurisdictions, where sweeping reforms were implemented in the absence of any research or understanding of the dynamics of civil justice.

Much hinges on the degree to which this commitment finds meaningful and consequential follow-up. The proposed reforms will be discussed in the Dutch Parliament on 19 November 2018

More information on this topic? Don’t hesitate to contact us (hoevenaars@law.eur.nl).

Current policy discussions on ADR/ODR in France: towards greater regulation for the Legaltech?

By Alexandre Biard, Erasmus University Rotterdam (postdoc researcher ERC project Building EU Civil Justice)

In April 2018, the French government published a new draft legislation aimed at reforming and modernizing the French Justice system (Projet de loi de programmation 2018-2022 et de réforme pour la Justice). Among other things, the proposal is likely to trigger some significant changes in the French ADR/ODR landscape, and may have important consequences for the future development of the legaltech. The proposal is currently discussed before the French Parliament and Senate. The following elements should be noted:

• A generalisation of compulsory mediation (tentative de médiation obligatoire) for small claims (Article 2 of the draft legislation). It should be noted that France has already launched several pilot projects with the intent to experiment compulsory mediation in several areas, including in family law and for certain administrative matters.
• A new certification scheme for ODR platforms (Article 3 of the draft legislation). As a result of the European Directive 2013/11/EU (the Consumer ADR Directive), France has already established a certification scheme applying to consumer ADR providers. Consumer ADR entities seeking certification must show compliance with several quality criteria listed in the Consumer ADR Directive, and transposed in France by Ordinance 2015-1033 of 20 August 2015 and two additional implementing decrees. A new ad hoc public entity – Commission d’Evaluation et de Contrôle de la Médiation de la Consommation (CECMC) closely linked to the General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF, a branch of the Ministry of Economy) is in charge of certifying consumer ADR providers. CECMC must also verify that Consumer ADR providers comply with the quality criteria listed in the Directive and the national legislation on an on-going basis. Under the new draft legislation, the proposed certification scheme will apply to all ODR systems. While noticing the development of ODR services, a previous draft legislation of 25 October 2017 suggested to introduce a certification scheme for private ODR platforms, and, in parallel, also aimed to create a free public ODR system (Service public gratuit en ligne d’aide à la résolution amiable des litiges, see Article 8 of the proposal). However, the development of this public ODR system was finally discarded for budgetary reasons. Interestingly, whereas the initial proposal from the Government made certification non-compulsory and voluntary, amendments adopted by the French Senate have made certification compulsory for all ODR providers. Senate has also designated the Ministry of Justice as competent authority in charge of certifying ODR providers. At the time of writing, it remains unclear whether certification will ultimately be compulsory or not (an amendment from the National Assembly dated 6 November 2018 reintroduced the voluntary/non-compulsory nature of certification). A decree from the State Council (Conseil d’Etat) will specify the details of the certification procedure. As a general rule, to be certified, ODR platforms will have to show that they comply with data protection rules and confidentiality, and prove that they are independent, impartial, and that their procedures are fair and efficient. Importantly, rules also provide that ODR system cannot be based solely on algorithms or automated systems. In other words, human intervention will remain necessary and compulsory. If the ODR platform uses algorithms, it will have to inform parties beforehand, and will have to collect their informed consent. The draft legislation also provides that consumer ADR entities already certified by the CECMC will automatically benefit from the new certification scheme.

The draft proposal has been criticized as a step towards ‘a privatisation of justice’. It remains to be seen how the new proposed certification scheme will be implemented.

More information on this topic? Don’t hesitate to contact us (biard@law.eur.nl)

By Friederike Henke, Advocaat & Rechtsanwältin at Buren in Amsterdam

The international demand for English language dispute resolution is increasing as the English language is commonly used in international trade and contracts as well as correspondence, not only between the trading partners themselves, but also by international parties, their legal departments and their advisors. Use of the English language in legal proceedings is expected to save time and money for translations and language barriers in general.

We would like to note that Dutch courts tend to allow parties to provide exhibits in the English language and often allow parties to conduct hearings in English, at least in part. Moreover, the district courts in Rotterdam and The Hague offer the possibility for proceedings in certain types of cases to be held in English: maritime, transportation and international trade cases in Rotterdam and intellectual property rights cases in The Hague. The courts render their judgments in the Dutch language with an English summary.

In order for the Dutch courts to be able to render valid and binding judgments in the English language, the Dutch code of civil procedure needs to be amended.

Netherlands Commercial Court: draft legislation
As mentioned in earlier posts on this blog (see here) in the Netherlands, legislation is on its way for the introduction of English language courts for the settlement of commercial disputes:  the Netherlands Commercial Court (“NCC”) and the Netherlands Commercial Court of Appeal (“NCCA”).

On 8 March 2018, the Dutch parliament adopted the draft legislation, following which it was expected to be approved by the Dutch senate soon. However, to date, despite earlier optimism, the legislation has not yet been passed. The (draft) rules of procedures are ready though (see here) and the judges have been selected as well. The courts are now expected to open their doors in 2019.

In anticipation to the adoption and effectiveness of the draft legislation, the below blog offers an overview of the key characteristics of the proceedings with the NCC and NCCA.

The NCC and NCCA: structure and location
The NCC and NCCA will be imbedded in the ordinary judiciary. The NCC will thus be a chamber of the Amsterdam district court and the NCCA will be a chamber at the Amsterdam court of appeals. Any appeal from a judgment by the NCC will go to the NCCA. An appeal (cassation) from the NCCA to the highest court of the Netherlands (Hoge Raad) will take place in the Dutch language.

The judges of the NCC and NCCA who have already been selected, will be from the ordinary judiciary. No lay judges will be appointed. The selected judges (six for each instance) are judges who have vast experience in commercial disputes and excellent language skills.

Situating the chambers with the courts of Amsterdam has mostly practical reasons: Amsterdam is the financial capital of the Netherlands and a lot of international companies have their corporate seats there. Also, practical reasons have been mentioned: Amsterdam is easy to reach and internationally active law firms have their offices in Amsterdam.

The NCC procedure
Proceedings with the NCC and NCCA will in principle be held in the English language. All legal documents will be in English. Evidence may be handed in in the French, German or Dutch language, without a translation being required. The court hearing will be held in English and the judgment will be rendered in English.

In addition to the NCC’s rules of procedure, the NCC will apply Dutch procedural law and the substantive rules of Dutch private international law. The proceedings will be paperless and legal documents will be submitted electronically.

According to article 1.2.1 of the NCC’s draft rules of procedure, an action may be initiated in the NCC in case the following three requirements have been met:

1. the action is a civil or commercial matter within the autonomy of the parties and is not subject to the jurisdiction of the cantonal court (kantongerecht, the court for small claims) or the exclusive jurisdiction of any other chamber or court;
2. the matter has an international aspect;
3. the parties to the proceedings have designated the Amsterdam District Court as the forum to hear their case or the Amsterdam District Court has jurisdiction to hear the action on other grounds; and
4. the parties to the proceedings have expressly agreed that the proceedings will be in English and will be governed by the NCC’s rules.

The NCC has jurisdiction in any commercial case, regardless the legal ground. So it may hear both contractual disputes – claims for performance or breach of contract, rescission of a contract, termination or damages – as well as claims for unlawful acts.

In line with the case law of the Court of Justice of the EU, the internationality requirement is to be interpreted broadly. Only if all relevant aspects of a case refer to one case, it will thus be considered an internal dispute. An international aspect can e.g. be that one of the parties has its seat outside of the Netherlands or was incorporated under foreign law, that the contract language is not Dutch or a foreign law applies to the contract, that more than 50% of the employees works outside of the Netherlands, etcetera.

The NCC is only competent if the Parties have agreed to settle their dispute under the procedural rules of the NCC. Such agreement may be done in a procedural agreement, before or after a dispute has arisen. The NCC’s rules of procedure contain a template clause for a forum choice reflecting such procedural agreement in Annex I:

“All disputes arising out of or in connection with this agreement will be resolved by the Amsterdam District Court following proceedings in English under that Court’s Rules of Procedure of the Chamber for International Commercial Matters (“Netherlands Commercial Court” or “NCC”). Application for provisional measures, including protective measures, available under Dutch law may be made to the NCC’s Preliminary Relief Judge in proceedings in English in accordance with the Rules of Procedure of the NCC.”

The choice of parties to conduct proceedings with the NCC is thus not a forum choice but rather a procedural agreement between the parties.

Court fees
The court fees for proceedings with the NCC will amount to EUR 15,000.- for substantive proceedings and EUR 7,500.- for summary proceedings. The court fees for proceedings with the NCCA will amount to EUR 20,000.- for substantive proceedings and EUR 10,000.- for summary proceedings.

When compared to other courts in the Netherlands, the court fees for the NCC and NCCA are relatively high. In comparison: the highest court fee for cases in first instance currently amount to EUR 3,946.- and for appeal cases to EUR 5,270.-. Within the international playing field, the NCC and NCCA courts fees are however relatively low, especially when compared to arbitration.

By Diana Kostina

The recent Court of Appeal judgment in Alexander Vik and Deutsche Bank AG [2018] EWCA Civ 2011confirmedthat contempt of court applications for alleged non-compliance with a court order can be served on a party outside the jurisdiction of England and Wales. The Court of Appeal’s judgment also contains a useful reminder of the key principles governing the powers of English courts to serve defendants outside of the jurisdiction.

Background

This Court of Appeal’s judgment is the latest development in the litigation saga which has been ongoing between Deutsche Bank (‘the Bank’) and Alexander Vik, the Norwegian billionaire residing in Monaco (‘Mr Vik’) and his company, Sebastian Holdings Inc (‘the Company’). The Bank has been trying to enforce a 2013 judgment debt, which is now estimated to be around US $ 320 million.

Within the enforcement proceedings, the English court made an order under CPR 71.2 requiring Mr Vik to appear before the court to provide relevant information and documents regarding the assets of the Company. This information would have assisted the Bank in its efforts to enforce the judgment against him. Although Mr Vik did appear in court, the Bank argued that he had deliberately failed to disclose important documents and lied under oath. Accordingly, the Bank argued that Mr Vik should be held in contempt of court by way of a committal order.

To obtain a committal order, the Bank could have applied under either CPR 71.8 or CPR 81.4. The difference is that the former rule provides for a simple and streamlined committal procedure, while the latter is more rigorous, slow, and — as accepted by courts — possibly extra-territorial. The Bank filed an application under CPR 81.4, and the court granted a suspended committal order. The Bank then sought to serve the order on Mr Vik in Monaco.

High Court decision

The Judge at first instance, Teare J, carefully considered the multi-faceted arguments. Teare J concluded that permission should not be required to serve the committal order on Mr Vik, because the debtor was already subject to the incidental jurisdiction of the English courts to enforce CPR 71 order. A similar conclusion could be reached by relying on Article 24(5) of the Brussels Recast Regulation (which provides that in proceedings concerned with the enforcement of judgments, the courts of the member state shall have exclusive jurisdiction regardless of the domicile of the parties). However, if the Bank had needed permission to serve the committal order outside the jurisdiction, then his Lordship concluded that the Bank could not rely on the gateway set out in PD 6B 3.1(10) (which provides that a claim may be served out of the jurisdiction with the permission of the court where such claim is made to enforce a judgment or an arbitral award). Both parties appealed against this judgment.

Court of Appeal decision

The Court of Appeal, largely agreeing with Teare J, made five principal findings.

(1) The court found it ironic that Mr Vik argued that CPR 71.8 (specific ground), rather CPR 81.4 (generic ground) applied to the alleged breach of CPR 71.2, since CPR 81.4 offered greater protections to the alleged contemnor. The likely reason for this “counter-intuitive” step was that the latter provision was extra-territorial. The Court of Appeal confirmed that CPR 71.8 is not a mandatory lex specialis for committal applications relating to a breach of CPR 71.2, and that the Bank was perfectly entitled to rely on CPR 81.4.

(2) The Court of Appeal agreed with the findings of Teare J that the court’s power to commit contemnors to prison is derived from its inherent jurisdiction. The CPR rules only provide the technical steps to be followed when this common law power is to be exercised. It followed that it did not make much difference which rule to apply –  either the broader CPR 81.4 or the narrower CPR 71.8. Thus, if the Bank had made the committal application under CPR 71.8, the application would have had an extra-territorial effect.  

(3) Mr Vik sought to challenge Teare J’s finding that he should be deemed to be within the jurisdiction in the contempt of court proceedings, because they are incidental to the CPR 71.2 order in which he participated. Instead, he argued, such proceedings were distinguishably “new”, and would require permission to serve outside the jurisdiction.  The Court of Appeal disagreed and confirmed that the committal order was incidental as the means to enforce the CPR 71.2 order. Therefore, in the light of the strong public interest in the enforcement of English court orders, it was not necessary for the Bank to obtain permission to serve the committal order outside the jurisdiction.

(4) Teare J observed that Article 24(5) of the Brussels Recast Regulation meant that that permission to serve Mr Vik outside of the jurisdiction was not required. Article 24(5) confers exclusive jurisdiction on the courts of the Member State in which the judgment was made and to be enforced by, regardless of the domicile of the parties. The Court of Appeal (in obiter) was generally supportive of this approach, opining that the committal application in the case at hand was likely to fall within Article 24(5) of the Brussels Recast Regulation. However, the careful and subtle wording of Article 24(5) implied that this conclusion might be subject to further consideration on a future occasion.

(5) Under CPR 6.36, a claimant may serve a claim form out of the jurisdiction with the permission of the court where the claim comes within one of the “gateways” contained in PD 6B. The relevant gateway in the Mr Vik’s case was to be found at PD 6B, para 3.1(1), as a claim made to enforce a judgment. Teare J was of the view that the Bank could not rely on this gateway to enforce the committal order. The Court of Appeal was reluctant to give a definitive answer on this point, even though “there may well be considerable force” in the Teare J’s approach. Thus, it remains unclear whether the CPR rules regulating service outside the jurisdiction would apply to the CPR 71 order and the committal order.

The importance of the judgment

This Court of Appeal’s judgment serves as an important reminder for parties who are involved in the enforcement of English judgment debts. Rather than giving a short answer to a narrow point of civil procedure, the judgment contains an extensive analysis of English and EU law. The judgment highlights the tension between important Rule of Law issues such as “enforcing court orders on the one hand” and “keeping within the jurisdictional limits of the Court, especially as individual liberty is at risk, on the other” (Court of Appeal judgment, at para. 1).

The judgment demonstrates the broad extra-territorial reach of the English courts. It also confirms the English court’s creditor-friendly reputation. The findings on the issues of principle may be relevant to applications to serve orders on defendants out of the jurisdiction in other proceedings, for instance worldwide freezing orders or cross-border anti-suit injunctions.

Nevertheless, the judgment demonstrates the need for clear guidance on the jurisdictional getaways to serve out of the jurisdiction for contempt of court. In giving judgment, Lord Justice Gross carefully suggested that the Rules Committee should consider implementing a specific rule permitting such service on an officer of a company, where the fact that he is out of the jurisdiction is no bar to the making of a committal application.

Another issue that seems subject to further clarification is whether a committal order or a provisional CPR 71 order are covered by the Brussels Recast Regulation. A definitive answer to this question becomes particularly intriguing in the light of Brexit.

On October 5^th, The Cour de Cassation, the highest court in France for private law matters, requested an advisory opinion of the ECtHR (Ass. plén. 5 octobre 2018, n°10-19053). It is the first time a Contracting State applies to the ECtHR for an advisory opinion on the basis of Protocol n° 16 which entered into force on August 1^st, 2018. The request relates to the legal parentage of children born to a surrogate mother. More specifically, it concerns the intended mother’s legal relationship with the child.

The Mennesson case is again under the spotlight, after 18 years of judicial proceedings. Previous developments will be briefly recalled, before the Advisory opinion request is summarized.

Previous developments in the Mennesson case:

A French couple, Mr and Mrs Mennesson, went to California to conclude a surrogacy agreement. Thanks to the surrogate mother, twins were born en 2000. They were conceived with genetic material from the intended father and eggs from a friend of the couple. The Californian Supreme Court issued a judgment referring to the couple as genetic father and legal mother of the children. Birth certificates were issued and the couple asked for their transcription into the French civil status register.

French authorities refused the transcription, arguing that it would be contrary to public policy. Surrogate motherhood, in particular, is forbidden under article 16-7 of the Civil Code. Such agreements are then considered void and resulting foreign birth certificates establishing parentage are considered contrary to public policy (Cass. Civ. 1ère, 6 avril 2011, n°10-19053).

As a last resort, The Mennesson family brought a claim before the ECtHR. They claimed that the refusal to transcribe the birth certificate violated their right to respect for private and family life. While the Court considered that the parent’s right to family life was not infringed, it ruled that the refusal to transcribe the birth certificates violated the children’s right to identity and was not in their best interest. As a consequence, it ruled that the refusal to establish the legal parentage of the indented parents was a violation of the children’s right to private life, particularly so if the indented father was also the biological father.

After the ECtHR ruling: the French landscape

After the ECtHR ruling, the Cour de Cassation softened its position. In 2015, sitting in Assemblée plénière, it ruled that the mere fact that a child was born of a surrogate mother did not in itself justify the refusal to transcribe the birth certificate, as long as that certificate was neither unlawful nor forged, nor did it contain facts that did not correspond to reality (Ass. plén., 3 juillet 2015, n° 14-21323 et n°15-50002).

As a consequence, the Court only accepted the transcription of foreign birth certificate when the intended father is also the biological father. When it came to the other intended parent, the Cour de Cassation refused the transcription. By so doing, the Cour de Cassation reiterates its commitment to the Mater semper certa principle as the sole basis of its conception of motherhood. Meanwhile, in 2017, the Cour de Cassation signalled that the genetic father’s spouse could adopt the child if all the requirements for adoption were met and if it was in the best interest of the child (Cass. Civ. 1ère, 5 juillet, 2017, n°15-28597, n°16-16455, and n°16-16901 ; 16-50025 and the press release)

However, the Mennessons’ fight was not over yet. Although according to the latest decisions, it looked like both Mr and Mrs Mennesson could finally establish their kinship with the twins, they still had to overcome procedural obstacles. As the Cour de Cassation had refused the transcription in its 2011 judgment which had become final, the parents were barred from applying for it again. As pointed out by the ECtHR in the Foulon and Bouvet v. France case (21/07/2016, Application n°9063/14 and 10410/14), French authorities failed to provide an avenue for the parties involved in cases adjudicated before 2014 to have them re-examined in the light of the subsequent changes in the law. Thus, France was again held to be in violation of its obligations under the Convention. (See also Laborie v. France, 19/01/2017, Application n°44024/13).

In 2016, the legislator adopted a new procedure to allow for the review of final decisions in matter of personal status in cases where the ECtHR had ruled that a violation of the ECHR had occurred. The review is possible when it appears that the consequences of the violation of the Convention are serious and that the just satisfaction awarded on the basis of article 41 ECHR cannot put an end to the violation (see articles L.452-1 to L.452-6 of the Code de l’organisation judiciaire). 

Current situation:

Taking advantage of this new procedure, the Mennesson family asked for a review of their situation. They claimed that the refusal to transcribe the birth certificates was contrary to the best interest of the children. They also argued that, as it obstructed the establishment of parentage, it amounted to a violation of article 8 ECHR. Moreover, they argued that the refusal to transcribe the birth certificates on the ground that the children were born of a surrogate mother was discriminatory and infringed article 14 ECHR.

Sitting again in Assemblée plénière, the Cour de Cassation summarized its previous case law. It concluded that while the issue of the transcription of the father biological parentage is settled, the answer is less certain regarding the intended mother. The Court wondered if its refusal to transcribe the birth certificate as far as the intended mother is concerned is consistent with the State margin of appreciation under article 8. It also wondered whether it should distinguish between cases where the child is conceived with the genetic material of the intended mother and cases where it is not. Finally, it raised the issue of whether its approach of allowing the intended mother to adopt her husband’s biological child was compatible with article 8 ECHR.

After pointing out the uncertain compatibility of its reasoning with ECtHR case law, the Court chose to request an advisory opinion from the ECtHR. Protocol 16 allows Contracting States to apply to the ECtHR for its advisory opinion “on questions of principles relating to the interpretation or application of the rights and freedom defined in the Convention or the protocols thereto” (Protocol 16 art.1).

Thus, the Cour de Cassation asked the ECtHR the two following questions:

• By refusing to transcribe into civil status registers the birth certificate of a child born abroad from a surrogate mother inasmuch as it refers to the intended mother as the “legal mother”, while the transcription has been accepted when the intended father is the biological father of the child, does a State Party exceed its margin of appreciation under article 8 ECHR? In this respect, is it necessary to distinguish between whether or not the child is conceived with the gametes of the intended mother?
• If the answer to one of the two preceding questions is in the affirmative, does the possibility for the intended mother to adopt her husband’s biological child, which constitutes a mean of establishing parentage open to her, comply with the requirements of article 8 of the Convention?

As the Cour de Cassation indicates on the press release accompanying the request of an advisory opinion, it seized the opportunity of initiating a judicial dialogue between national jurisdictions and the ECtHR. However, it looks more like a sign of caution on the part of the French court, in a particularly sensitive case. Depending on the answer it receives, the Cour de Cassation will adapt its case law.

Although Protocol n°16 does not refer to a specific deadline, the Explanatory report indicates that it would be appropriate for the ECtHR to give high priority to advisory opinion proceedings.

Thus, it looks like the Mennesson saga will be continued soon…

Last year the New Zealand singer Lorde cancelled a concert in Tel Aviv following an open letter by two New Zealand-based activists urging her to take a stand on Israel’s illegal occupation of Palestine. A few weeks later, the two activists found themselves the subject of a civil claim brought in the Israeli court. The claim was brought by the Israeli law group Shurat HaDin, on behalf of three minors who had bought tickets to the concert, pursuant to Israel’s so-called Anti-Boycott Law (the Law for the Prevention of Damage to the State of Israel through Boycott). The Israeli court has now released a judgment upholding the claim and ordering the activists to pay NZ$18,000 in damages (plus costs).

Readers who are interested in a New Zealand perspective on the decision may wish to visit The Conflict of Laws in New Zealand, where I offer some preliminary thoughts on the conflict of laws issues raised by the judgment. In particular, the post addresses – from a perspective of the New Zealand conflict of laws – the concern that the judgment represents some kind of jurisdictional overreach, before discussing the enforceability of the judgment in New Zealand (and elsewhere).

The Permanent Bureau of the Hague Conference on Private International Law has made available two reports for the attention of its governance Council (i.e. the Council on General Affairs and Policy): the Report of the Experts’ Group on the Parentage / Surrogacy Project and the Report of the Experts’ Group on the Co-operation and Access to Justice for International Tourists.

The Group on Parentage/Surrogacy Project will need to meet one more time early next year to reach final Conclusions on future work. In particular, the Group discussed possible methods to ensure cross-border continuity of legal parentage both established by and in the absence of a judicial decision.

Importantly,  “[t]he Group recalled that the absence of uniform PIL rules on legal parentage can lead to limping parentage across borders in a number of cases and can create significant problems for children and families. The Group further recalled that uniform PIL rules can assist States in resolving these conflicts and can introduce safeguards for the prevention of fraud involving public documents, while ensuring that the diverse substantive rules on legal parentage of States are respected. Any new instrument should aim to provide predictability, certainty and continuity of legal parentage in international situations for all persons involved, taking into account their fundamental rights, the UN Convention on the Rights of the Child and in particular the best interests of children. The Group agreed that any international instrument would need to be developed with a view to complementing the existing Hague Family Conventions and to attracting as many States as possible.”

Regarding the Group on the Tourism Project, it should be noted that it is currently exploring the need for an international instrument on the co-operation and provision of access to justice for international tourists. The Group concluded that “[t]he Experts’ Group recommends to the CGAP that it mandates the Experts’ Group to continue its work, with a view to assessing the need for, the nature (soft law and hard law options) and the key elements of, a possible new instrument. The composition of the Experts’ Group should remain open, and, if possible, also include representatives of Stakeholders, such as the UNWTO, as well as representatives of relevant organisations and private international law experts.” It was noted that the Consultant will finalise his draft (substantive) Report, which will be circulated at the end of this year.

The aide-mémoire of the Chair of the Tourism Project noted: “[i]f a new instrument were to be developed, the Experts identified a number of possible expected values such instrument might add. These included that tourists might be able to obtain appropriate information, including in a language they understand, to ascertain and understand their rights, and the potentially available options to seek redress. It might also provide co-operation mechanisms among suitable bodies that can work in a concerted manner to facilitate the resolution of complaints, with a view to guaranteeing access to justice in the broadest sense, including through alternative dispute resolution, in a non- discriminatory way. The instrument might also have a preventive effect. Finally, it might create an official record of the complaint, including for subsequent use abroad.”

In March 2019, the HCCH governance Council will determine whether work on these two subjects will go forward.

Earlier today, the Court of Justice held that, under certain circumstances, special jurisdiction for an actio pauliana can be based on Art. 7(1) Brussels Ia (Case C-337/17 Feniks).

The actio pauliana is an instrument provided by the national laws of several EU member states that allows the creditor to challenge fraudulent acts by their debtor that have been committed to the creditor’s detriment. The ECJ already had several opportunities to decide on the availability of individual grounds of special jurisdiction for such an action, but has reliably denied their availability. In today’s decision however, the Court confirmed the availability of special jurisdiction for matters relating to contract, contrary to the proposition of AG Bobek (Opinion delivered on 21 June 2018).

Previous Decisions

Many readers of this blog will be aware of the Court of Justice’s earlier decisions on the availability of special or exclusive jurisdiction for a creditor’s actio pauliana.

In Case C-115/88 Reichert I, the question was referred to the Court in the context of a transfer of immovable property from Mr and Mrs Reichert to their son, which had been challenged in the French courts by their creditor, a German bank. The Court held that the actio pauliana did not fall under the head of exclusive jurisdiction for actions concerning rights in rem; accordingly, the French courts did not have jurisdiction based on what is now Art 24(1) Brussels Ia.

Still in the context of this transfer of property, the ECJ held in Case C-261/90 Reichert II that the heads of jurisdiction in what are now Art 7(2) (matters relating to tort, delict or quasi-delict), Art 24(5) (proceedings concerned with the enforcement of judgments) and Art 35 (provisional, including protective, measures) Brussels Ia would be equally unavailable.

The Court has never explicitly excluded the availability of the ground of jurisdiction for matters relating to contract in what is now Art 7(1) Brussels Ia. In his Opinion on Case C-339/07 Deko Marty Belgium, AG Ruiz-Jarabo Colombo still appears to understand the decisions in Reichert I and II as leading to the conclusion that within the framework of the Brussels Ia Regulation, jurisdiction for an actio pauliana ‘lies [only] with the courts in the defendant’s State of domicile.’ (ibid, [32]).

The Decision in Feniks

The case underlying today’s decision involved two Polish companies, Feniks and Coliseum, who were in a contractual relationship relating to a development project. When Coliseum was unable to pay some of its subcontractors, Feniks had to pay them instead (pursuant to Polish law), thus becoming the creditor of Coliseum. Coliseum subsequently sold some immovable property to a Spanish company, a transaction which Feniks now challenges in the Polish courts, relying on the provisions of the Polish Civil Code that provide for the actio pauliana.

While the Court considered the action to be ultimately based on the contract between Feniks and Coliseum (see below), it is not immediately clear to what extent the situation differs from the one in Reichert. Still, it is true that the question of whether such an action could be based on the head of special jurisdiction for contract was raised in neither of the two orders for reference. AG Bobek had nonetheless offered several important arguments for why this head of jurisdiction should not be available. In particular, he had argued that there was no ‘obligation freely assumed’ by the defendant towards the claimant (Opinion, [68]) and the contractual relationships between the claimant and their debtor and between the debtor and the defendant were ‘too tenuous and remote’ or too ‘detached’, respectively, to be considered for the purpose of establishing jurisdiction (Opinion, [65], [67]). More fundamentally, the Advocate General considered the ‘chameleon-like nature’ of the actio pauliana, which allows a creditor to challenge a wide range of legal acts, to prevent it from falling within the scope of any head of special jurisdiction (Opinion, [76]–[87]).

In today’s decision, the Court very much rejects these arguments. After having established the applicability of the Brussels Ia Regulation – the action not falling into the scope of Regulation No 1346/2000, which would exclude them from the Brussels Ia Regulation (see Art 1(2)(b) Brussels Ia; Case C-339/07 Deko Marty Belgium, [19]) – the ECJ reiterates that the decisive criterion for jurisdiction to be based on Art 7(1) Brussels Ia is the existence of a legal obligation freely entered into by one person towards another on which the claimant’s action is based (Feniks, [39]; see also Joined Cases C-359/14 and C-475/14, ERGO Insurance, [44]); the claimant does not necessarily have to be party to the contract, though (Feniks, [48]; see also Joined Cases C-274/16, C-447/16 and C-448/16 flightright, [61]). According to the Court,

[42] … both the security that Feniks has over the debtor’s estate and the present action regarding the ineffectiveness of the sale concluded by the debtor with a third party originate in the obligations freely consented to by Coliseum with regard to Feniks upon the conclusion of their contract relating to those construction works. [own emphasis]

In such a case, the creditor’s action is based on the breach of a contractual obligation (ibid, [43]).

[44] It follows that the actio pauliana, once it is brought on the basis of the creditor’s rights created upon the conclusion of a contract, falls within ‘matters relating to a contract’ … .

Accordingly, the contract between Feniks and Coliseum being for construction works to be carried out in Poland, the Polish courts would have jurisdiction under Art 7(1)(b) Brussels Ia (ibid, [46]).

Special Jurisdiction under the Brussels Ia Regulation

One of several interesting details of today’s decision is the degree to which the Court’s approach to the grounds for special jurisdiction differs from the Advocate General’s opinion. According to AG Bobek, the actio pauliana might be

[97] … one of the rare examples that only allows for the applicability of the general rule and an equally rare confirmation of the fact that ‘… there is no obvious foundation for the idea that there should always or even often be an alternative to the courts of the defendant’s domicile’.

Importantly, for AG Bobek, requiring the claimant to rely on the general ground of jurisdiction provided in Art. 4(1) Brussels Ia would not be a problem because

[93] … the defendant’s domicile is precisely the key connecting factor for the purpose of application of Regulation No 1215/2012.

– an argument that seems to echo the Court of Justice’s considerations in Case C-256/00 Besix, [50]–[54].

Besides, allowing for special jurisdiction to be based on Art 7(1) Brussels Ia because the defendant must be aware of the fraudulent nature of the transaction for the action to succeed would amount to

[94] … effectively presuming the existence of the awareness of the fraud on the part of the transferee.

Put differently, if the Court could justify the unavailability of special jurisdiction for matters relating to contract for claims brought by a sub-buyer against the manufacturer in Case C-26/91 Jakob Handte by the fact that such jurisdiction would be unforeseeable and ‘therefore incompatible with the principle of legal certainty’ (ibid, [19]), does the mere allegation that the buyer of a plot of land has been aware of the fraudulent character of the transaction really justify its application?

The Court of Justice seems to believe it does. Indeed, it appears to have remained rather unimpressed by the above considerations when arguing that if the claim could not be based on Art 7(1) Brussels Ia, then

[45] … the creditor would be forced to bring proceedings before the court of the place where the defendant is domiciled, that forum, as prescribed by [Art 4(1) Brussels Ia], possibly having no link to the place of performance of the obligations of the debtor with regard to his creditor.