Equality of the parties in investment arbitration – private international law aspects

Written by Stefan Huber, University of Tübingen

Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of the contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.

1. In investor-state arbitration, one has to distinguish between arbitral proceedings which are initiated on the basis of a contract concluded between the investor and the host state, on the one hand, and arbitral proceedings which are initiated on the basis of a bilateral investment treaty, on the other hand. In the latter case, there is no arbitration agreement in the traditional sense. This entails a unilateral right of the investor to initiate arbitral proceedings. Granting the host state the right to bring a counterclaim might compensate this asymmetry up to a certain degree.

2. Whether the host state has the right to bring a counterclaim, depends on the dispute settlement mechanism provided for in the bilateral investment treaty. For future investment treaties, it is recommended to grant the host state such a right. When the investor introduces arbitral proceedings on the basis of such a treaty, the investor usually declares his consent with the entire dispute settlement clause. If, at this moment, the investor expressly excludes the right of the host state to bring a counterclaim which is provided for in the bilateral investment treaty, there is no correspondence between the declaration of the host state and the declaration of the investor to submit the dispute to arbitration. Consequently, if the host state refuses to participate in the arbitral proceedings on such a basis, the arbitral tribunal does not have jurisdiction to decide the case.

3. The subject matter of treaty-based investor-state arbitration generally concerns regulatory measures of the host state. This makes a considerable difference in comparison to commercial arbitration, which focuses on the interests of private actors. This difference entails different procedural principles, primarily as far as questions of confidentiality and transparency are concerned.

4. There are, however, procedural principles of particular importance, which reflect the cornerstones in a system based on the rule of law in its substantive sense and require, as such, observance in all types of proceedings independently of the subject matter. The principle of equality of arms is one of these principles. Tribunals shall ensure that both parties are in an equal position to present their case. If there is a systemic superiority of one group of parties, tribunals have to be particularly vigilant and, if necessary, to intervene proactively in order to compensate factual inequality.

5. The principle of equal treatment of the parties is not only to be respected within one and the same proceeding. Treating two types of party – states on the one hand and investors on the other – differently in general, i.e. not just in a specific proceeding, would likewise amount to a violation of this principle. If certain questions concerning the burden and standard of proof arise in one procedural situation typically in the interest of the host state and in another procedural situation typically in the interest of the investor, the tribunals should deal with those questions in the same manner.

6. Investments which are in conformity with the law as far as their object is concerned, but which are corruption-tainted due to corruption that took place when the investment was made lead to discussions about the content of international public policy. Against this background, there would appear to be a practice for tribunals to deny jurisdiction or admissibility of the arbitral proceedings in cases concerning corruption-tainted investments. Actually, this leads to a denial of justice. International public policy, however, does not require such an approach. A comparison with the treatment of corruption cases in commercial arbitration shows this very clearly. The circumstances of the individual cases are too manifold; a one-fits-all solution construed at the level of jurisdiction or admissibility is not convincing. The arbitral tribunals should rather undertake a comprehensive analysis on the basis of the applicable substantive rules of law in order to take into account the particular circumstances of each individual case. State interests can be properly respected via mandatory rules and international public policy.

 

Full (German) version: Stefan Huber, Die Stellung von Unternehmen in der Investitionsschiedsgerichtsbarkeit (unter besonderer Berücksichtigung von Korruptionsproblemen) – Unternehmen als gleichberechtigte Verfahrensparteien?, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 303 et seq.




Corona and Private International Law: A Regularly Updated Repository of Writings, Cases and Developments

by Ralf Michaels and Jakob Olbing

Note: This repository will stay permanent at www.conflictoflaws.net/corona.
Please send additions to olbing@mpipriv.de

Updated: September 28, 2020

The coronavirus has created a global crisis that affects all aspects of life everywhere. Not surprisingly, that means that the law is affected as well. And indeed, we have seen a high volume of legislation and legal regulations, of court decisions, and of scholarly debates. In some US schools there are courses on the legal aspects of corona. Some disciplines are organizing symposia or special journal issues to discuss the impact of the pandemic on the respective discipline.

Private international law has not (yet?) consolidated discussions of the relevance of the crisis for the field, and of the field for the crisis (though the new EAPIL blog is running a very valuable series). But of course, private international law matters are crucial to countless issues related to the epidemic – from production chains through IP over possible vaccines to mundane questions like the territorial application of lockdown regulations.

Knowledge of these issues is important. It is important for private international lawyers to realize the importance of our discipline. But it is perhaps even more important for decision makers to be aware of both the pitfalls and the potentials of conflicts of law.

This site, which we hope to update continually, is meant to be a place to collect, as comprehensively as possible, sources on the interaction of the new coronavirus and the discipline. The aim is not to provide general introductions into private international law, or to lay out sources that could be relevant. Nor is this meant to be an independent scholarly paper. What we try to provide is a one-stop place at which to find private international law discussions worldwide regarding to coronavirus.

For this purpose, we limit ourselves to the discipline as traditionally understood—jurisdiction, choice of law, recognition and enforcement, international procedure. Coronavirus has other impacts on transnational private law and those deserve attention too, but we want to keep this one manageable.

Please help make this a good informative site. Please share any reference that you have – from any jurisdiction, in any legislation – and we will, if possible, share them on this site. Please contact olbing@mpipriv.de

 

General

The European Law Institute has issued a set of Principles for the COVID-19 Crisis, covering a variety of legal topics such as Democracy (Principle 3) and Justice System (Principle 5) as well as Moratorium on Regular Payments, Force Major and Hardship, Exemption from Liability for simple Negligence (Principles 12 to 14). Ending with something everybody hopes for: Return to Normality (Principle 15).

The Secretary General of the Hague Conference provided an online message from his home. Ensuing, the Permanent Bureau developed a Toolkit for resources and publications relevant to the current global situation.

The university of Oxford‘s Blavatnik School of Government collects all measures by governments around the world in the “Coronavirus Government Response Tracker”.

A new German journal is dedicated solely to the topic “COVID-19 and the Law”. The journal is interesting for academics and practitioners alike, since it publishes papers on specific COVID-19 related issues, as well as an extensive overview of German judgements.

Matthias Lehmann discusses the role of private international law on a number of issues – the impact of travel restrictions on transportation contracts, contract law issues for canceled events, canceled or delayed deliveries, but also liability for infections.

Online Workshops and Conferences

In time of travel restrictions and social distancing the academic exchange is still active and sometimes more diverse than bevor, since people from all around the world come together, as the great number of workshops and symposiums that are held online shows.

Contrary to the regular sessions of The Hague Academy of International Law’s Centre for Studies and Research, the upcoming edition is entirely online. The topic will be “Epidemics and International Law” and held from September 2020 to June 2021. The collective works will be published by the Academy. You will find application and programme here.

A comparative analysis of reactions in Japan and Germany on COVID-19 in private and public law with scholars from both jurisdictions was the topic of an online conference (mostly in German) on August 2020. Recordings of the presentations are online.

During a live youtube conference on July 23, 2020 Humberto Romero-Muci presented with several others his views on “Migrantes, pandemia y política en el Derecho Internacional Privado”. The video is still online.

Online, Mirèze Philippe talked about the “The ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic” on June 22, 2020. Further information under info@arbitrateatlanta.org.

Another webinar was held on “Vulnerability in the Trade and Investment Regimes in the Age of #COVID19”, which is available online, as part of the Symposium on COVID-19 and International Economic Law in the Global South.

A Mexican conference about Civod-19 and its impacts on private international Law was on June 25, 2020 on Zoom.

The University of New South Wales held a talk on “COVID-19 and the Private International Law” in May, which you find on youtube.

There was an online-workshop on “COVID-19 und IPR/IZVR” by Matthias Lehmann on Tuesday June 2, 2020 at 11:00 a.m.

As a follow-up of a webinar on PIL & COVID-19, Inez Lopez and Fabrício Polido give “some initial thoughts and lessons to face in daily life

A group of Brazilian scholars organized an online symposium on Private International Law & Covid-19. Mobility of People, Commerce and Challenges to the Global Order. The videos are here.

The Organization of American States holds a weekly virtual forum on “Inter-American law in times of pandemic” (every Monday, 11:00 a.m., UTC-5h). One topic of many will be on “New Challenges for Private International Law” (Monday, June 15, 2020).

 

State Liability

Some thoughts are given to compensation suits brought against China for its alleged responsibility in the spread of the virus. One main issue here is whether China can claim sovereign immunity.

In the United States, several suits have been brought in Florida (March 12), Nevada (March 23) and Missouri (April 21) against China, which plaintiffs deem responsible for the uncontrolled spread of the virus, which later caused massive financial damage and human loss in the United States. Not surprisingly officials and scholars in China were extremely critical (see here and here).

But legal scholars, including Chimène Keitner and Stephen L. Carter, also think such suits are bound to fail due to China’s sovereign immunity, as do Sophia Tang and Zhengxin Huo. Hiroyuki Banzai doubts that the actions can succeed since it will be difficult to prove a causal link between the damages and the (in-) actions by the Chinese Gorvernment. Lea Brilmayer suspects that such a claim will fail since it would be unlikely, that a court will assume jurisdiction. Tom Ginsburg lays out the legal issues in an interview in German. Fabrizio Marrella discusses the Italian perspective. Brett Joshpe analyzes China’s private and public liability in the domestic and international framework.

A Republican Representative is introducing two House Resolutions urging the US Congress to waive China’s sovereign immunity in this regard; such a waiver has also been proposed by a Washington Post author. The claim has also found support by Fox News.

Interestingly, there is also a reverse suit by state-backed Chinese lawyers against the United States for covering up the pandemic. Guodong Du expects this will likewise be barred by sovereign immunity.

In the UK, the conservative Henry Jackson Society published a report suggesting that China is liable for violating its obligations under the International Health Regulations. The report discusses ten (!) legal avenues towards this goal, most of them in public international law, but also including suits in Chines, UK and US courts (pp 28-30). Sovereign immunity is discussed as a severe but not impenetrable barrier.

 

Contract Law

Both the pandemic itself and the ensuing national regulations impede the fulfilment of contracts. Legal issues ensue. An overview of European international contract law and the implications of COVID-19 is given here and here.

The UNIDROIT Secretariat has just released a Note on the UNIDROIT Principles of International Commercial Contracts and the COVID-19 health crisis.

Bernard Haftel highlights three different techniques to apply COVID-19 legislation to an international contract: as lex contractus, as lois des police and through consideration within the applicable law.

Gerhard Wagner presents COVID caused defaults under the aforementioned ELI principles.

If a contracting party is unable to perform its contractual obligations, incapacity to perform can be based on force majeure or hardship. Some contributions suggest to apply for force majeure certificates which are offered by most countries, for example by China, Russia. How such a certificate can influence contractual obligations under English and New York Law is shown by Yeseung Jang. The German perspective is given by Philip Reusch and Laura Kleiner, further the South Korean, French and the Common Law perspective on force majeure have been published. Bruno Ancel compares the French and American approach. The difficulty to implement appropriate force majeure clauses in a contract is shown by Matteo Winkler.

The CISG has long been of very little importance in international contract law but now is subject to many discussions. André Janssen and Johannes Wahnschaffe dedicate a detailed analysis to exemptions from liability and cases of hardship under the CISG.

Victoria Lee, Mark Lehberg, Vinny Sanchez and James Vickery go beyond force majeure implications on contracts in their expert analysis.

William Shaughnessy presents issues which might occur in international construction contracts.

Another crucial aspect is the application of overriding mandatory rules on international contracts. Ennio Piovesani discusses whether Italian decree-laws enacted in view of the pandemic can operate as overriding mandatory rules and whether that would be compatible with EU law. So does Giovanni Zarra on international mandatory rules. Aposotolos Anthimos adds the Greek perspective, Claire Debourg the French to the discussion.

The applicability of self-proclaiming mandatory provisions in Italian law in respect to package travels in general and the Directive (EU) 2015/15 on package travel in particular, is discussed by Fabrizio Marongiu Buonaiuti.

Matthias Lehmann considers more broadly possible private international law issues and responses under European law. José Antonio Briceño Laborí and Maritza Méndez Zambrano add the Venezuelan view.

The crisis hits in particular global value and production chains. Impacts are discussed by Tomaso Ferando, by Markus Uitz and Hemma Parsché and by Anna Beckers, though neither focuses specifically on private international law.

Caterina Benini explains a new Italian mandatory rule providing a minimum standard of protection for employees.

Klaus Peter Berger and Daniel Behn in their historical and comparative study on force majeure and hardship, highlight that such remedies are quite regular to find and fit to distribute the risk emanating from such a crisis evenly.

 

Tenancy

Caused by fear of loss of tenancy and the resulting evictions several countries have altered their tenancy laws accordingly. An overview of some jurisdictions can be found in the current issue of the “Zeitschrift für Europarecht, Internationales Privatrecht und Rechtsvergleichung“ (ZfVR 2020, Vol. 3)(German).

 

Corporate Law

In the race for a vaccine against SARS-CoV-2 and the expected high demand, companies with promising research become subject of financial and political turmoil. Arndt Scheffler analyses the situation in which a foreign investor tries to purchase a company, which is crucial for the domestic battle against the pandemic and the search for a vaccine.

 

Tort Law

Apart of contractual liabilities and questions of performance, several COVID-19 related questions arise in the field of non-contractual liability.

An extensive overview about damages and COVID-19 under Indian international tort law is given by Saloni Khanderia.

General implications of the coronavirus on product liability and a possible duty to warn costumers, without specific reverence to conflict of laws.

In Austria, a consumer protection association is considering mass litigation against the Federal State of Tyrolia and local tourist businesses based on their inaction in view of the spreading virus in tourist places like Ischgl. A questionnaire is opened for European citizens. Matthias Weller reports.

Florian Heindler discusses how legal measures to battle the virus could be applicable to a relevant tort case (either as local data or by special connection), by analyzing the hypothetical case of a tourist who gets infected in Austria.

Jos Hoevenars and Xandra Kramer discuss the potential of similar actions in the Netherlands under the 2005 Collective Settlement Act, WCAM.

 

Family Law

Implications also exist in family law, for example regarding the Hague Abduction Convention.

In an Ontario case (Onuoha v Onuoha 2020 ONSC 1815), concerning children taken from Nigeria to Ontario, the father sought to have the matter dealt with on an urgent basis, although regular court operations were suspended due to Covid-19. The court declined, suggesting this was “not the time” to hear such a motion, and in any way international travel was not in the best interest of the child. For the discussion see here.

Aspects of travel restrictions in international abduction cases are analysed by Gemme Pérez.

A general overview of abduction in times of corona was published by Nadia Rusinova. Another contribution by her covers recent case law and legislation on remote child related proceedings which were conducted during the last weeks around the world. She also highlights, that COVID-19 measures can impact Article 8 ECHR.

A recent webinar also discussed the impact on the Hague Abductions Convention.

Also cases of international surrogacy come into mind which are affected by COVID-19, as Mariana Iglesias shows.

 

Personal Data

The protection of personal data in transnational environments has always been a controversial topic in conflict of laws. Jie Huang shows, that due to COVID-19 existing tensions between the EU, the USA and China are reflected in their conflict of laws approach.

The European Commission published a “toolbox for the use of technology and data to combat and exit from the COVID-19 crisis”, which was an opportunity for some contributions on the GDPR and Tracing Apps.

 

Economic Law

The crisis puts stress on global trade and therefore also economic law. Sophie Hunter discusses developments in the competition laws of various countries (though with no explicit focus on conflict of laws issues).

A list of authors from around the world analyses the interrelation between “Competition law and health crises” in its international context in the current issue Concurrences.

 

Intellectual Property

Due to lockdowns and school closures, online work and teaching has exorbitantly increased but, as Marketa Trimble stresses, with little notion of transnational copyright issues.

To tackle those a prominently endorsed letter to the World Intellectual Property Organization, emphasizes the need to ensure that intellectual property regimes should support the efforts against the Coronavirus and should not be a hindrance.

 

Public Certification

In times of lockdown and closed borders notarization and public certification become almost impossible. Therefore, various countries have adjusted their legislation. You will find an overview here.

The electronic Apostille Program (e-APP)experiences a new popularity, as a considerable number of countries have implemented new components of the e-APP. For more information see here.

 

Dispute Resolution

Regulations against social contact and lockdowns make physical presence in court rooms impossible and thereby put pressure on courts. Some courts suspend their activities except for urgent matters. Developments in Italy are discussed here, developments in English law here.

Another possibility is the move to greater digitalization, as discussed comparatively by Emma van Gelder, Xandra Kramer and Erlis Themeli. The Hague Conference on Private International Law (HCCH) published a Guide to Good Practice on the Use of Video-Link under the 1970 Evidence Convention, discussed also with reference to Corona by Mayela Celis.

Using the pandemic, Gisela Rühl analyses why the potential of digitalization is so scarcely used in civil procedure and how it can be improved to serve the needs of a digital society.

In litigation, virtual hearings become a prominent measure to overcame restrictions on physical presence. While in on some jurisdiction such hearings are possible, Luigi Malferrari discusses the question if such hearings should also be enabled before the CJEU.

Maxi Scherer takes the crisis as an opportunity to analyse virtual hearings in international arbitration. Complications and long-term effects of virtual arbitration are presented here. Mirèze Philippe however sees this development as a positive game changer not just in health aspect but also to protect the environment and saving time as well as travelling costs (further articles covering international arbitration and virtual hearings: here and here).

A very broad presentation of legislation in France, Italy and Germany in civil procedure, including cross border service and taking of evidence as well as its implications on international child abduction and protection, is given by Giovanni Chiapponi.

Jie Huang examines the case of substitute service under the Hague Service Convention during the pandemic in the case Australian Information Commission v Facebook Inc ([2020] FCA 531).

A US project guided by Richard Suskind collects cases of so-called “remote courts” worldwide.

The EU gives information about the “impact of the COVID-19 virus on the justice field” concerning various means of dispute resolution.

Gilberto A. Guerrero-Rocca analyses the impacts of COVID-19 on international arbitration in relation to the CISG.

 

Bibliography

General and Workshops

Blavantik School of Government, Coronavirus Government Response Tracker, https://www.bsg.ox.ac.uk/research/research-projects/coronavirus-government-response-tracker

Direito Internacional Privado & Covid19, Mobilidade de Pessoas, Comércio e Desafios da Ordem Global, Webinar 11-22 May 2020, https://www.sympla.com.br/webinar-direito-internacional-privado-e-covid-19__848906

Hague Conference on Private International Law (HCCH), HCCH Covid-19 Toolkit, 04 May 2020, https://www.hcch.net/en/news-archive/details/?varevent=731

Matthias Lehmann, Corona Virus and Applicable Law, EAPIL Blog, 16 March 2020, https://eapil.org/2020/03/16/corona-virus-and-applicable-law/

Inez Lopes, Fabrício Polido, Private International Law and the outbreak of Covid-19: Some initial thoughts and lessons to face in daily life, CoL Blog, 10 June 2020, https://conflictoflaws.net/2020/webinar-report-private-international-law-and-the-outbreak-of-covid-19-some-initial-thoughts-and-lessons-to-face-in-daily-life/

Secretariat for Legal Affairs, Organization of American States: Inter-American law in times of pandemic, Weekly virtual forum 11 May – 06 July 2020, http://www.oas.org/en/sla/virtual_forum.asp

Società italiana di Diritto internazionale e di Diritto dell’Unione europea, Forum “Covid-19, Diritto Internatzionale e Diritto dell’Unione Europea”, SIDIBlog, 24 March 2020, http://www.sidiblog.org/2020/03/24/forum-covid-19-diritto-internazionale-e-diritto-dellunione-europea/

State Liability

Hiroyuki Akiyama, US lawsuits seek to pin coronavirus blame on China: Allegations of negligence raise legal questions about responsibility, Nikkei Asian Review, 01 April 2020, https://asia.nikkei.com/Spotlight/Coronavirus/US-lawsuits-seek-to-pin-coronavirus-blame-on-China

Stephen L. Carter, No, China Can’t Be Sued Over Coronavirus: Nation-states are immune from such lawsuits, Bloomberg Opinion, 24 March 2020, https://www.bloomberg.com/opinion/articles/2020-03-24/can-china-be-sued-over-the-coronavirus

C.D. Davidsmeyer, Strip China’s Sovereign Immunity and Sue for Damages Caused by Coronavirus, 03 April 2020, https://cddavidsmeyer.org/latest-news/

Guodong Du, Meng Yu, A Wuhan Lawyer Suing the U.S. Government Over COVID-19? In China, Legal Impediments May Surface, China Justice Observer, March 25 2020, https://www.chinajusticeobserver.com/a/a-wuhan-lawyer-suing-the-us-government-over-covid-19

Georg Fahrion, Reparationen für Coronavirus: “Soll China dem Rest der Welt einen Scheck über zehn Billionen Dollar ausstellen?”, SPIEGEL Online, 05 May 2020, https://www.spiegel.de/politik/ausland/corona-donald-trump-forder-entschaedigung-von-china-ohne-aussicht-auf-erfolg-a-5c6b7517-0ab6-4a14-b1a2-7f77b4c5b18a

Matthew Hernderson, Alan Mendoza, Andrew Foxall, James Rogers and Sam Armstrong, Coronavirus Compensation? Assessing China’s potential culpability and avenues of legal response, The Henry Jackson Society, April 2020, https://henryjacksonsociety.org/wp-content/uploads/2020/04/Coronavirus-Compensation.pdf

Brett Joshpe, Considering Domestic and International Frameworks for Analyzing China’s Potential Legal Liability in the Aftermath of COVID-19, SSRN 13 May 2020, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3598614

Chimène Keitner, Don’t Bother Suing China for Coronavirus, Just Security, 31 March 2020, https://www.justsecurity.org/69460/dont-bother-suing-china-for-coronavirus/

José Antonio Briceño Laborí, Maritza Méndez Zambrano, El Derecho Internacional Privado ante el COVID-19, Derecho y Sociedad Blog, March 2020, http://www.derysoc.com/especial-nro-3/el-derecho-internacional-privado-ante-el-covid-19/

Matthias Lehmann, Corona Virus and Applicable Law, EAPIL Blog, 16 March 2020, https://eapil.org/2020/03/16/corona-virus-and-applicable-law/

Fabrizio Marrella, La Cina deve risarcire i danni transnazionali da Covid-19? Orizzonti ad oriente, SIDIBlog, 17 May 2020, http://www.sidiblog.org/2020/05/17/la-cina-deve-risarcire-i-danni-transnazionali-da-covid-19-orizzonti-ad-oriente/

Hollie McKay, How China can be held legally accountable for coronavirus pandemic, Fox News Channel, 20 March 2020, https://www.foxnews.com/world/china-legally-accountable-coronavirus

Frank Morris, The Coronavirus Crisis: Missouri Sues China, Communist Party Over The Coronavirus Pandemic, National Public Radio, 21 April 2020, https://www.npr.org/sections/coronavirus-live-updates/2020/04/21/840550059/missouri-sues-china-communist-party-over-the-coronavirus-pandemic?t=1587575581629&t=1589901982561

Missouri Attorney General Eric Schmitt, Missouri Attorney General Schmitt Files Lawsuit Against Chinese Government, 21 April 2020, https://ago.mo.gov/home/news/2020/04/21/missouri-attorney-general-schmitt-files-lawsuit-against-chinese-government

Zhong Sheng, U.S. practice to claim compensation for COVID-19 outbreak a shame for human civilization, People’s Daily Online, 03 May 2020, http://en.people.cn/n3/2020/0503/c90000-9686646.html

Zheng Sophia Tang and Zhengxin Huo, State immunity in global COVID-19 pandemic: Alters, et. al. v People’s Republic of China, et. al., CoL Blog, 21 March 2020, https://conflictoflaws.net/2020/state-immunity-in-global-covid-19-pandemic/

Marc A. Thiessen, China should be legally liable for the pandemic damage it has done, The Washington Post, 09 April 2020, https://www.washingtonpost.com/opinions/2020/04/09/china-should-be-legally-liable-pandemic-damage-it-has-done/

Xinhua, Commentary: Suing China for pandemic damage is nothing but political pandering, edited by Huaxia, Xinhua News, 03 April 2020, http://www.xinhuanet.com/english/2020-04/30/c_139021210.htm

Ng Yik-tung, Ho Shan, Sing Man and Qiao Long, Chinese Lawyers Sue U.S. Over ‘Coronavirus Cover-up’, edited by Luisetta Mudie, Radio Free Asia, 26 March 2020, https://www.rfa.org/english/news/china/wuhan-lawsuit-03262020122653.html

Contract Law

Bruno Ancel, Les contrats français et américains face au Covid – 19: un futur nimbé d’incertitude?, AJ Contrat 2020, 217

Apostolos Anthimos, Covid-19 and overriding mandatory provisions, CoL Blog, 15 April 2020, https://conflictoflaws.net/2020/italian-self-proclaimed-overriding-mandatory-provisions-to-fight-coronavirus/

Anna Beckers, Towards Consti­tutionalizing Global Value Chains and Corporations: The State of Exception and Private Law, Verfassungsblog, 08 April 2020, https://verfassungsblog.de/towards-constitutionalizing-global-value-chains-and-corporations/

Caterina Benini, The COVID-19 Crisis and Employment Contracts: the Italian Emergency Legislation on Dismissals, EAPIL Blog, 11 May 2020, https://eapil.org/2020/05/11/the-covid-19-crisis-and-employment-contracts-the-italian-emergency-legislation-on-dismissals/

Klaus Peter Berger, Daniel Behn, Force Majeure and Hardship in the Age of Corona: A Historical and Comparative Study, McGill Journal of Dispute Resolution, Forthcoming, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3575869

Claire Debourg, Covid-19 | Lois de police et ordonnances 2020, GIDE 7 May 2020, https://www.gide.com/fr/actualites/covid-19-lois-de-police-et-ordonnances-2020

Tomaso Ferando, Law and Global Value Chains at the Time of Covid-19: A Systemic Approach Beyond Contracts and Tort, EAPIL Blog, 20 March 2020, https://eapil.org/2020/03/20/law-and-global-value-chains-at-the-time-of-covid-19-a-systemic-approach-beyond-contracts-and-tort/

Claudia Galvis, Jose Moran and James O Brien, Coronavirus Outbreak: Global Guide to Force Majeure and International Commercial Contracts, Global Compliance News UG, 19 March 2020, https://globalcompliancenews.com/coronavirus-outbreak-global-guide-to-force-majeure-and-international-commercial-contracts/

Pascel Guiomard, La grippe, les épidémies et la force majeure en dix arrêts, Dalloz actualité, 4 March 2020, https://www.dalloz-actualite.fr/flash/grippe-epidemies-et-force-majeure-en-dix-arrets#.XyKXqXduKzl

Bernard Haftel, Le Covid-19 et les contracts internationaux, Recueil Dalloz 2020, 1040

André Janssen, Christian J. Wahnschaffe, Der internationale Warenkauf in Zeiten der Pandemie, EuZW 2020, 410-416, https://beck-online.beck.de/?vpath=bibdata/zeits/EUZW/2020/cont/EUZW.2020.410.1.htm

Tony Dongwook Kang, Seong Soo Kim, COVID-19 and Force Majeure in Sales Transactions — South Korea, Bae, Kim & Lee LLC, Law Business Research, 06 March 2020, https://www.lexology.com/librar/detail.aspx?g=d07462e8-7b46-4b20-9b59-9855e3bdaeb5

José Antonio Briceño Laborí, Maritza Méndez Zambrano, El Derecho Internacional Privado ante el COVID-19, Derecho y Sociedad, March 2020, http://www.derysoc.com/especial-nro-3/el-derecho-internacional-privado-ante-el-covid-19/

Victoria Lee, Mark Lehberg, Vinny Sanchez and James Vickery, Expert Analysis: COVID-19 Contract Issues Reach Beyond Force Majeure, Law360, 13 March 2020, https://www.law360.com/articles/1251749/covid-19-contract-issues-reach-beyond-force-majeure

Fabrizio Marongiu Buonaiuti, Le disposizioni adottate per fronteggiare l’emergenza coronavirus come norme di applicazione necessaria, in: Calzolaio, Ermanno/Maccarelli, Massimo/Pollastrelli, Stefano (eds.), Il diritto nella pandemia, 2020, pp. 235-256, http://eum.unimc.it/img/cms/Full%20text_Il%20diritto%20nella%20pandemia_a%20cura%20di_Calzolaio_Meccarelli_Pollastrelli.pdf

Pedro de Miguel Asensio, Medidas de emergencia y contratos internacionales, personal Blog, 27 April 2020, http://pedrodemiguelasensio.blogspot.com/2020/04/medidas-de-emergencia-y-contratos.html

Pedro de Miguel Asensio, Contratación internacional y COVID-19: primeras reflexiones, Personal Blog, 19 March 2020, http://pedrodemiguelasensio.blogspot.com/2020/03/contratacion-internacional-y-covid-19.html

Ekaterina Pannebakker, ‘Force majeure certificates’ issued by the Russian Chamber of Commerce and Industry, CoL Blog, 17 April 2020, https://conflictoflaws.net/2020/force-majeure-certificates-by-the-russian-chamber-of-commerce-and-industry/

Ennio Piovesani: Italian Self-Proclaimed Overriding Mandatory Provisions to Fight Coronavirus, CoL Blog, 19 March 2020, https://conflictoflaws.net/2020/italian-self-proclaimed-overriding-mandatory-provisions-to-fight-coronavirus/

Philip Reusch, Laura Klein, Distribution of risk in connection with coronavirus-related trade disruptions, Reuschlaw Legal Consultants, 2020, https://www.reuschlaw.de/en/news/distribution-of-risk-in-connection-with-coronavirus-related-trade-disruptions/

William J. Shaughnessy, William E. Underwood, Chris Cazenave, COVID-19’s Impact on Construction: Is There a Remedy? — Time Extension, Force Majeure, or More?, The National Law Review, 03 April 2020, https://www.natlawreview.com/article/covid-19-s-impact-construction-there-remedy-time-extension-force-majeure-or-more

Sophia Tang, Coronavirus, force majeure certificate and private international law, Coronavirus outbreak and force majeure certificate, CoL Blog, 01 March 2020, https://conflictoflaws.net/2020/coronavirus-force-majeure-certificate-and-private-international-law/

Markus Uitz, Hemma Parsché, Coronavirus – ein Praxisleitfaden bei Unterbrechung internationaler Lieferketten, Ecolex 273, no. 4, p. 273, 04 April 2020, https://rdb.manz.at/document/rdb.tso.LIecolex20200406

UNIDROIT Secretariat, Note on the UNIDROIT Principles of International Commercial Contracts and the COVID-19 health crisis, https://www.unidroit.org/89-news-and-events/2886-unidroit-releases-secretariat-note-on-the-unidroit-principles-of-international-commercial-contracts-and-covid-19

Gerhard Wagner, Corona Law, ZEuP 2020, 531, https://beck-online.beck.de/Dokument?vpath=bibdata%2Fzeits%2Fzeup%2F2020%2Fcont%2Fzeup.2020.531.1.htm&anchor=Y-300-Z-ZEUP-B-2020-S-531-N-1

Anton A. Ware, Jeffrey Yang, Yingxi Fu-Tomlinson, Timothy C. Smyth, What to Do When You Receive a Coronavirus-Related Force Majeure Notice, Coronavirus: Multipractice Advisory, Arnold & Porter Kaye Scholer LLP, 04 March 2020, https://www.arnoldporter.com/en/perspectives/publications/2020/03/what-to-do-when-you-receive-a-coronavirus

Matteo Winkler, Practical Remarks on the Assessment of COVID-19 as Force Majeure in International Contracts, SIDIBlog, 06 May 2020, http://www.sidiblog.org/2020/05/06/practical-remarks-on-the-assessment-of-covid-19-as-force-majeure-in-international-contracts/

Giovanni Zarra, Alla riscoperta delle norme di applicazione necessaria Brevi note sull’art. 28, co. 8, del DL 9/2020 in tema di emergenza COVID-19, SIDIBlog, 30 March 2020, http://www.sidiblog.org/2020/03/30/alla-riscoperta-delle-norme-di-applicazione-necessaria-brevi-note-sullart-28-co-8-del-dl-92020-in-tema-di-emergenza-covid-19/

Corporate Law

Arndt Scheffler, Freundschaft, Meistbegünstigung und COVID-19-Impfstoff, RIW 2020, 499-506, https://online.ruw.de/suche/riw/Freundschaf-Meistbeguenstigun-un-COVI-1-Impfstof-ef50e2d3f3395df3ecf99c34a007fc68

Tort Law

Florian Heindler, Schadenersatz mit Auslandsberührung wegen COVID-19 ZAK 2020/237 https://lesen.lexisnexis.at/_/schadenersatz-mit-auslandsberuehrung-wegen-covid-19/artikel/zak/2020/8/Zak_2020_08_237.html

Jos Hoevenaars and Xandra Kramer: Mass Litigation in Times of Corona and Developments in the Netherlands, CoL Blog, 22 April 2020, https://conflictoflaws.net/2020/mass-litigation-in-times-of-corona-and-developments-in-the-netherlands/

Saloni Khanderia, Kashish Jaitley, Niharika Kuchhal, The COVID pandemic: Time to ‘ramp-up’ India’s conflict of law rules in matters of tort?, CoL Blog, 14 April 2020, https://conflictoflaws.net/2020/the-covid-pandemic-time-to-ramp-up-indias-conflict-of-law-rules-in-matters-of-tort-by-kashish-jaitley-niharika-kuchhal-and-saloni-khanderia/

Schnader Harrison Segal & Lewis LLP, Product Liability and Tort Law Implications of the COVID-19 Crisis, JD Supra, 02 April 2020, https://www.jdsupra.com/legalnews/product-liability-and-tort-law-94866/

Verein zum Schutz von Verbraucherinteressen (Verbraucherschutzverein), Class Action: Corona-Virus-Tyrol questionnaire, 2020, https://www.umfrageonline.com/s/f1fb254

Verein zum Schutz von Verbraucherinteressen (Verbraucherschutzverein), Sammelaktion Corona-Virus-Tirol, 2020, https://www.verbraucherschutzverein.at/Corona-Virus-Tirol/

Matthias Weller, Cross-border Corona mass litigation against the Austrian Federal State of Tyrol and local tourist businesses?, CoL Blog, 02 April 2020, https://conflictoflaws.net/2020/cross-border-corona-mass-litigation-against-the-austrian-federal-state-of-tyrol-and-local-tourist-businesses/

Family Law

Pamela Cross, Recent case: Hague Convention case under COVID-19 court protocols, Luke’s Place, 31 March 2020, https://lukesplace.ca/case-law-hague-convention-case-under-covid-19-court-protocols/

Mariana Iglesias, Un tema polémico: La espera de los bebés que nacieron en Ucrania durante la cuarentena reaviva el debate por el alquiler de vientres, Calrín, 06. June 2020, https://www.clarin.com/sociedad/espera-bebes-nacieron-ucrania-cuarentena-reaviva-debate-alquiler-vientres_0_932tbfYvo.html

Gemma Pérez, ¿Puede el COVID-19 tener efectos en materia de sustracción internacional de menores?, Diario Jurídico, 27 April 2020, https://www.diariojuridico.com/puede-el-covid-19-tener-efectos-en-materia-de-sustraccion-internacional-de-menores/

MK Family Law (Washington), Grotius Chambers (The Hague), COVID-19 and International Child Abduction: Pertinent Issues, CoL Blog, Webinar 08 April 2020, https://conflictoflaws.net/2020/webinar-on-covid-19-and-international-child-abduction/

Nadia Rusinova, COVID-19 and the Right to Respect for Family Life under Article 8 ECHR, EAPIL Blog, 1 June 2020, https://eapil.org/2020/06/01/the-interplay-between-covid-19-and-the-right-to-respect-for-family-life-under-article-8-echr/

Nadia Rusinova, Child abduction in times of corona, CoL Blog, 16 April 2020, https://conflictoflaws.net/2020/child-abduction-in-times-of-corona/

Nadia Rusinova, Remote Child-Related Proceedings in Times of Pandemic – Crisis Measures or Justice Reform Trigger?, CoL Blog, 30 April 2020, https://conflictoflaws.net/2020/remote-child-related-proceedings-in-times-of-pandemic-crisis-measures-or-justice-reform-trigger/

Personal Data

Stergios Aidinlis, The EU GDPR in Times of Crisis: COVID-19 and the Noble Dream of Europeanisation, EuCML 2020, 151-165, https://beck-online.beck.de/?vpath=bibdata%2fzeits%2fEUCML%2f2020%2fcont%2fEUCML%2e2020%2e151%2e1%2ehtm

Jie (Jeanne) Huang, COVID-19 and Applicable Law to Transnational Personal Data: Trends and Dynamics, Sydney Law School Research Paper No. 20/23, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3570178

Claudia Sandei, Tracing Apps, Digital Health and Consumer Protection, EuCML 2020, 156-161, https://beck-online.beck.de/?vpath=bibdata%2fzeits%2fEUCML%2f2020%2fcont%2fEUCML%2e2020%2e156%2e1%2ehtm#FNA19

Economic Law

Sophie Hunter, Competition Law and COVID 19, CoL Blog 09 April 2020, https://conflictoflaws.net/2020/competition-law-and-covid-19/

Frédéric Jenny et. al., Competition law and health crisis, Concurrences 2020, 24, https://www.concurrences.com/en/review/issues/no-2-2020/on-topic/competition-law-and-health-crisis-en

Intellectual Property

Marketa Trimble, COVID-19 and Transnational Issues in Copyright and Related Rights, IIC – International Review of Intellectual Property and Competition Law 51 (2020), 40.

Public Certification

Ralf Michaels, Notarization from abroad in times of travel restrictions, CoL Blog 22 May 2020, https://conflictoflaws.net/2020/notarization-from-abroad/

Dispute Resolution

Giovanni Chiapponi, Judicial cooperation and coronavirus: the law must go on, Judicium, 23 May 2020, http://www.judicium.it/judicial-cooperation-and-coronavirus-the-law-must-go/

Giovanni Chiapponi, The Impact of Corona Virus on the Management of Judicial Proceedings in Italy, EAPIL Blog, 13 March 2020, https://eapil.org/2020/03/13/the-impact-of-corona-virus-on-the-management-of-judicial-proceedings-in-italy/

Mayela Celis, Useful reading in times of corona and just released: The Guide to Good Practice on the Use of Video-Link under the HCCH 1970 Evidence Convention, CoL Blog, 17 April 2020, https://conflictoflaws.net/2020/useful-reading-in-times-of-corona-and-just-released-the-guide-to-good-practice-on-the-use-of-video-link-under-the-hcch-1970-evidence-convention/

European Union, Impact of the COVID-19 virus on the justice field, The European e-Justice Portal, 2020, https://e-justice.europa.eu/content_impact_of_the_covid19_virus_on_the_justice_field-37147-en.do

Emma van Gelder, Xandra Kramer and Erlis Themeli, Access to justice in times of corona, CoL Blog, 07 April 2020, https://conflictoflaws.net/2020/access-to-justice-in-times-of-corona/

Gilberto A. Guerrero-Rocca, Arbitraje internacional al ‘rescate’ de la CISG en tiempos del COVID-19, CIAR Global, 21 April 2020, https://ciarglobal.com/arbitraje-internacional-al-rescate-de-la-cisg-en-tiempos-del-covid-19/

Horacio Grigera Naón, Björn Arp, Virtual Arbitration in Viral Times: The Impact of Covid-19 on the Practice of International Commercial Arbitration, https://www.wcl.american.edu/impact/initiatives-programs/international/news/covid-19/virtual-arbitration-in-viral-times-the-impact-of-covid-19-on-the-practice-of-international-commercial-arbitration/

Hague Conference on Private International Law (HCCH), Guide on Use of Video-Link under Evidence Convention, 16 April 2020, https://www.hcch.net/en/news-archive/details/?varevent=728

Jie (Jeanne) Huang, Australian Information Commission v Facebook Inc: Substituting the Hague Service Convention during the Pandemic?, CoL Blog 11 Juli 2020, https://conflictoflaws.net/2020/australian-information-commission-v-facebook-inc-substituting-the-hague-service-convention-during-the-pandemic/

Alex Lo, Virtual Hearings and Alternative Arbitral Procedures in the COVID-19 Era: Efficiency, Due Process, and Other Considerations, Contemporary Asia Arbitration Journal, Special Issue on “COVID-19 and International Dispute Settlement, 2020, 85, https://heinonline.org/HOL/Page?handle=hein.journals/caaj13&id=&collection=journals&div=8

Luigi Malferrari, Corona-Krise und EuGH: mündliche Verhandlungen aus der Ferne und in Streaming? EuZW 2020, 393-395, https://beck-online.beck.de/?vpath=bibdata%2fzeits%2fEUZW%2f2020%2fcont%2fEUZW%2e2020%2e393%2e1%2ehtm

Aygun Mammadzada, Impact of Coronavirus on English Civil Proceedings: Legislative Measures During Emergency and Potential Outcomes, EAPIL Blog, 13 May 2020, https://eapil.org/2020/05/13/impact-of-coronavirus-on-english-civil-proceedings-legislative-measures-during-emergency-and-potential-outcomes/

Philippe Mirèze, Offline or Online? Virtual Hearings or ODR?’, Kluwer Arbitration Blog, 26 April 2020, http://arbitrationblog.kluwerarbitration.com/2020/04/26/offline-or-online-virtual-hearings-or-odr/

Gisela Rühl, Digitale Justiz, oder: Zivilverfahren für das 21. Jahrhundert, JZ 2020, 809-817 https://www.mohrsiebeck.com/artikel/digitale-justiz-oder-zivilverfahren-fuer-das-21-jahrhundert-101628jz-2020-0245?no_cache=1

Maxi Scherer, Remote Hearings in International Arbitration – and What Voltaire Has to Do with It ?, Kluwer Arbitration Blog, 26 May 2020, http://arbitrationblog.kluwerarbitration.com/2020/05/26/remote-hearings-in-international-arbitration-and-what-voltaire-has-to-do-with-it/?doing_wp_cron=1594296650.8850700855255126953125

Mark L. Shope, The International Arbitral Institution Response to COVID-19 and Opportunities for Online Dispute Resolution, Contemporary Asia Arbitration Journal, Special Issue on “COVID-19 and International Dispute Settlement, 2020, 67, https://heinonline.org/HOL/Page?handle=hein.journals/caaj13&id=&collection=journals&div=8

Richard Susskind, Remote Courts Worldwide, Society for Computers and Law, 27 March 2020, https://remotecourts.org/

 




Supreme Court of California (ROCKEFELLER TECHNOLOGY INVESTMENTS (ASIA) v. CHANGZHOU SINOTYPE TECHNOLOGY CO., LTD). A European reading of the ruling

A bit more than a month ago, the Supreme Court of California rendered its decision on a case concerning the (non-)application of the 1965 Hague Service Convention. The case has been thoroughly reported and commented before and after  the ruling of the Supreme Court. I will refrain from giving the full picture of the facts; I will focus on the central question of the dispute.

THE FACTS

The parties are U.S. and Chinese business entities. They entered into a contract wherein they agreed to submit to the jurisdiction of California courts and to resolve disputes between them through California arbitration. They also agreed to provide notice and “service of process” to each other through Federal Express or similar courier. The exact wording of the clause in the MOU reads as follows:

“6. The Parties shall provide notice in the English language to each other at the addresses set forth in the Agreement via Federal Express or similar courier, with copies via facsimile or email, and shall be deemed received 3 business days after deposit with the courier.

“7. The Parties hereby submit to the jurisdiction of the Federal and State Courts in California and consent to service of process in accord with the notice provisions above”.

ARBITRATION PROCEEDINGS

An agreement between the companies was eventually not reached, which was reason for Rockefeller to initiate arbitration proceedings. All materials were sent both by email and Federal Express to the Chinese’s company address listed in the MOU. The latter did not appear. The arbitrator awarded Rockefeller the amount of nearly 415 million $. The decision was sent to Sinotype by e-mail and Federal Express.

COURT PROCEEDINGS

In accordance with the Civil Procedure Code of the State of California [§ 1285.  Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award…], Rockefeller petitioned the award to be confirmed. The same ‘service’ method was used by the petitioner, i.e. e-mail and Federal Express. Again, Sinotype did not take part in the proceedings.

At a later stage, Sinotype became active, and filed a motion to set aside the default judgment for insufficiency of service of process. In particular, it asserted that it did not receive actual notice of any proceedings until March 2015 and argued that Rockefeller’s failure to comply with the Hague Service Convention rendered the judgment confirming the arbitration award void. The motion was denied by the Los Angeles County Superior Court; the Court of Appeal reversed; finally, the Supreme Court reversed the appellate decision.

THE RULINGS

The first instance court confirmed that the Service Convention was in principle applicable, however, the agreement between the parties to accept service by mail was valid and superseded the Convention. The Court of Appeal reversed the judgment, stating exactly the opposite, namely that the Service Convention supersedes private agreements. In light of China’s opposition to service by mail, the agreed method of communication was considered inadequate for the purposes of the Convention. The Supreme Court held yet again the opposite, because the parties’ agreement constituted a waiver of formal service of process under California law in favor of an alternative form of notification; hence, the Convention does not apply.

COMMENT

I place myself next to the commentators of the case: It is true that the Service Convention does not apply in the course of arbitration proceedings. There is convincing case law to support this view from different jurisdictions in different continents (example here). However, in the case at hand, the issue at stake was the use of a method not permitted by the Convention in court proceedings. It was lawfully agreed to send all documents by e-mail or FedEx during arbitration. Nowadays, this has become standard procedure in international commercial arbitration. However, a multilateral convention may not succumb to the will of the parties. If a contracting state refuses to accept postal service within the realm of litigation, the parties have no powers to decide otherwise. The best option would be, as already suggested, to oblige a party to appoint a service agent. This enables service within the jurisdiction, as already decided by the U.S. Supreme Court in the Volkswagen Aktiengesellschaft v. Schlunk case. In a similar fashion, the CJEU consolidated the same position in the Corporis Sp. z o.o. v Gefion Insurance A/S case, following its ruling in the case Spedition Welter GmbH v Avanssur SA.

Finally, returning to the EU, postal service would not require any agreement between the parties; Article 14 of the Service Regulation stipulates service by mail as an equivalent means of service between Member States. In addition, service by e-mail is scheduled to be embedded into the forthcoming Recast of the Regulation under certain requirements which are not yet solidified.




Public international law requirements for the effective enforcement of human rights

Written by Peter Hilpold, University of Innsbruck

Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of the contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.

1. The UN Guiding Principles on Business and Human Rights (2011) have set forth a process by which Corporate Social Responsibility (CSR) rules are to be further specified. The approach followed is not to impose specific results but to create procedures by which CSR is given further flesh on the basis of a continuing dialogue between all relevant stakeholders.

2. The operationalization of this concept takes place by a three pillar model („protect“, „respect“, „remedy“) based on an approach called „embedded liberalism“ according to which the creation of a liberal economic order allowing also for governmental and international intervention is pursued.

3. The „remedies“ pillar is the least developed one within the system of the Guiding Principles. Intense discussion and studies are still needed to bring more clarity into this field.

4. In the attempt to bring more clarity into this area guidance can be obtained by discussions that have taken place within the UN in the field of general human rights law and by ensuing academic studies referring to the respective documents.

5. The remedies mentioned in the Guiding Principles are formulated in a relatively „soft“ manner, after attempts to create „harder“ norms have failed. There are, however, initiatives underway to create a binding instrument in this field. According to the „Zero Draft“ for such a treaty much more restrictive rules are envisaged. It is, however, unlikely that such an instrument will meet with the necessary consensus within the foreseeable future.

6. In Europe, within the Council of Europe as well as within the European Union, various attempts have been undertaken to give further substance to the „remedies”. The relevant documents contain both an analysis of the law in force as well as proposals for new instruments to be introduced. These proposals are, however, in part rather far-reaching and thus it is unclear whether they can be realized any time soon.

7. If some pivotal questions shall be identified that have emerged as an issue for further discussion, the following can be mentioned:

7.1. The extraterritorial application of remedies

a) In this context, first of all, the specific approach taken by the US Courts when applying the Alien Tort Statute (ATS) has to be mentioned. However, after „Kiobel“ this development seems to have come to a halt.

b) Some hopes are associated with the application of tort law in Europe according to the „Brussels I”- and the „Rome II”-Regulation. However, on this basis European tort law can be applied to human rights violations by companies and subsidiaries abroad only to a very limited measure.

7.2. Criminal law as a remedy

According to some, remedies should be sought more forcefully within the realm of international criminal law. A closer look at the relevant norms reveals, however, that expectations should not be too high as to such an endeavour. International Investment Agreements (IIAs) and Counterclaims

Due to their „asymmetrical“ nature (As are intended to protect primarily the investor) IIAs do not offer, at first sight, a suitable basis for holding investors responsible for human rights abuses in the guest state. Recently, however, in the wake of the „Urbaser“ case, hopes have come up that counterclaims could be used to such avail. For the time being, however, these hopes are not justified. Nonetheless, attempts are under way to re-draft IIAs so that counterclaims are more easily available and, in general, to emphasize the responsibility of investors.

7.3. The national level

The national level is of decisive importance for finding remedies in the area of CSR. In this context, National Contact Points, National Action Plans and Corporate Social Reporting have to be mentioned. A wide array of initiatives have been taken in this field. Up to this moment the results are, however, not really convincing.

8. The Guiding Principles envisage a vast panoply of judicial and non-judicial initiatives, of State-based and non-State based measures. Many of these measures have to be further specified and tested. It is most probably too early to impose binding obligations in this field as the „Zero Draft“ ultimately intends. Further discussion and a further exchange of experience, as it happens within the „Forum on business and human rights”, seem to be the more promising way to follow.

 

Full (German) version: Peter Hilpold, Maßnahmen zur effektiven Durchsetzung von Menschen- und Arbeitsrechten: Völkerechtliche Anforderungen, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 185 et seq.




Private international law requirements for the effective enforcement of human rights

Written by Tanja Domej, University of Zurich

Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of the contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.

1. It is essential for the effective enforcement of human and workers’ rights to create effective local institutions and procedures. This encompasses functioning, trustworthy and accessible civil courts, but also other public, private and criminal institutions and mechanisms (e.g. permission, licencing or inspection procedures to ensure safety in the workplace; accident insurance; trade unions). Civil litigation cannot be a substitute for such mechanisms – particularly if it takes place far away from the place where the relevant events occurred.

2. This, however, is not a reason against ensuring effective enforcement mechanisms, including judicial mechanisms, for private law claims arising from violations of human rights or claims aiming to prevent or to terminate such violations. Such judicial proceedings can also help to promote the establishment of effective local mechanisms for preventing and remedying violations.

3. The usual difficulties arising in cross-border litigation tend to be aggravated in cases concerning human rights violations in developing countries. In addition to issues of jurisdiction and choice of law, there are often considerable challenges particularly with respect to litigation funding, fact-finding and establishing the content of foreign law, if required.

4. Legal aid alone usually is not a viable financial basis for corporate human rights litigation. The funding of such claims largely depends on market mechanisms, particularly on success-based lawyers’ fees or commercial litigation funding. Because of the moral hazard that may arise in this context, it is desirable to promote the establishment of public-interest litigation funders. Nevertheless, “entrepreneurial litigating” in the field of corporate human rights cases cannot be considered as per se abusive. There seems to be a need, however, to monitor practices in this field closely to assess whether further regulation is required.

5. Where cross-border judicial cooperation is not functioning, taking of evidence located in a foreign state without involving authorities of the state where such evidence is located becomes increasingly important. A generous approach should be adopted in cases where “direct” taking of evidence neither violates legitimate third-party interests nor involves the use or threat of compulsion in the territory of a foreign state.

6. In cases where liability for damage inflicted by the violation of human rights standards depends on a business’s internal operations, it is essential for an effective access to remedy that either the burden of proof with respect to the relevant facts is on the business or that there is a disclosure obligation that ensures access to relevant information. Where such disclosure could endanger legitimate confidentiality interests (particularly with respect to trade secrets), appropriate mechanisms to protect such interests should be put in place.

7. Collective redress mechanisms can improve access to justice with respect to corporate human rights claims. Meanwhile, reducing an excessive burden on the courts that could result from a large number of parallel proceedings currently does not seem to be as important a consideration in practice in the field of corporate human rights litigation as it can be in other fields of mass tort litigation. Appropriate safeguards have to be put in place to protect both the legitimate interests of defendants and those of the members of the claimant group. When designing such safeguards, it is important to ensure that they do not lead to the obstruction of legitimate claims. Particularly in collective redress proceedings, the court should have strong case management and control powers, both during the proceedings and in the case of a settlement.

8. In addition to claims aiming at remedies for victims of violations, private law claims brought by non-government organisations, by public bodies or by individuals can at least indirectly contribute to the enforcement of human rights standards. Possible examples are claims on the basis of unfair competition, and possibly also contractual claims, because of false statements about production standards. Actions by associations or popular actions for injunctive or declaratory relief could also contribute to private enforcement of human rights standards. It remains to be seen whether litigation among businesses concerning contractual obligations to comply with human rights standards will play a meaningful role in this field in the future as well.

9. Soft law mechanisms and alternative dispute resolution can supplement judicial law enforcement mechanisms, but they are not a substitute for judicial mechanisms. In particular, human rights arbitration depends on a voluntary submission. Its practical effectiveness therefore requires the cooperation of the parties to the dispute. It would, however, be possible to create incentives for such cooperation.

 

Full (German) version: Tanja Domej, Zivilrechtliche Rechtsdurchsetzungsmechanismen, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 229 et seq.




Third-party liability of classification and certification societies in the context of conflict of laws and public international law – a comment on the CJEU’s recent ‘Rina judgement’

Written by Yannick Morath

Yannick Morath, doctoral candidate at the University of Freiburg, has kindly provided us with his thoughts on the CJEU’s judgement in the case of LG and Others v Rina SpA, Ente Registro Italiano Navale (C-641/18 – ECLI:EU:C:2020:349)

(See also the earlier post by Matthias Weller concerning the CJEU’s judgement).

  1. Introduction

Private-law classification and certification societies play a vital role in modern economies. Especially in the maritime sector, external auditors issue certificates dealing with public tasks such as the seaworthiness and safety of vessels. Not only their contractual partners but also third parties rely on the accuracy of such certificates. Due to cross-border mobility of certificates and certified items, issues of Private International Law have to be taken into account when dealing with a certifiers’ liability.

When not applying the appropriate level of care, classification and certification agencies can – according to the CJEU – be sued in the courts of the Member State where the agency is seated. By finding this ruling, the CJEU had to deal with two interesting questions: Firstly, it had to establish whether an action for damages, brought against private certifiers falls within the concept of ‘civil and commercial matters’, and therefore, within the scope of the Regulation 44/2001 (Brussels I). Secondly, the CJEU had to examine the legitimacy of the certifier’s plea based on the principle of customary international law concerning immunity from state jurisdiction.

2. Facts of the ‘Rina-case’

In 2006, the Al Salam Boccaccio ’98, a ship sailing under the flag of the Republic of Panama, sunk in the Red Sea, tragically causing the loss of more than 1,000 lives. Relatives of the victims and survivors have brought an action under Italian law before the Tribunale di Genova (District Court, Genoa, Italy) against two private law corporations (the Rina companies), that are seated in Genoa and were responsible for the classification and certification of the ship.

The applicants argue that the defendants’ operations, carried out under a contract concluded with the Republic of Panama, are to blame for the ship’s lack of stability and its lack of safety at sea, which are the causes of its sinking. Therefore, they claim compensation from the Rina companies for the losses they suffered.

The Rina companies counter that the referring court lacks jurisdiction, relying on the international-law principle of immunity from jurisdiction of foreign States. They state that they are being sued in respect of activities, which they carried out as delegates of the Republic of Panama. The activities in question were a manifestation of the sovereign power of a foreign State and the defendants carried them out on behalf of and in the interests of that State.

The applicants, however, argue in favour of the case’s civil law nature, within the meaning of Article 1 (1) of Regulation 44/2001. As the Rina companies are seated in Genoa, the Italian courts should have jurisdiction under Article 2 (1) of that regulation. They submit that the plea of immunity from jurisdiction does not cover activities that are governed by non-discretionary technical rules, which are, in any event, unrelated to the political decisions and prerogatives of a State.

The Tribunale di Genova decided to stay the proceedings and consult the CJEU for further clarification under Article 267 TFEU.

3. Background: The dual role of classification and certification societies

When dealing with the classification and certification of ships it is important to be aware of the dual role private-law societies play in this area. Traditionally they are hired by a shipowner to attest that a ship is built in accordance with the standards of a specific ship class. Those ‘class rules’ are developed by the classification societies themselves. The maritime industry depends on these services, as the classification of a ship is necessary to evaluate its insurability and marketability. Therefore, these voluntary classifications are mainly prompted by private interest. This is referred to as the ‘private function’ of classification.

On the other hand, the same societies fulfil a ‘public function’ as well. Under international maritime law, states have a duty to take appropriate measures for ships flying under their flag to ensure safety at sea (Article 94 (3) of the United Nations Convention of the Law of the Sea). For this purpose ships have to be surveyed by a qualified personnel to make sure it meets all relevant safety and environmental standards. Flag states can perform these tasks themselves; however, most of them delegate executive powers to classification societies. Pursuant to Article 3 (2) of Directive 2009/15 this is also possible under EU law. When executing these powers classification agencies are subject to two contracts: The first one is the agreement on the delegation of powers with the flag state, the second contract is the actual certification agreement with the owner of the ship that is about to be surveyed. Whereas shipowners are free to choose one of the recognized classification societies, the certification itself is compulsory.

It must be noted that the classification according to class rules (private function) is a prerequisite for the statutory inspection and certification (public function). In the case at hand, the Rina companies were responsible for both aspects. They classified the ship in accordance with their class rules and then issued the statutory certificate on behalf of and upon delegation from the Republic of Panama. This public law background caused the need for clarification by the CJEU.

4. The CJEU on the interpretation of ‘civil and commercial matters’

Under Article 1(1) of Regulation 44/2001, the scope of that regulation is limited to ‘civil and commercial matters’. It does not extend, in particular, to revenue, customs or administrative matters. In order to ascertain whether Italian courts have jurisdiction pursuant to Article 2 (1) of that regulation it is necessary to interpret the concept of ‘civil and commercial matters’. This concept is subject to an autonomous European interpretation. By determining whether a matter falls within the scope of the Regulation, the nature of the legal relationships between the parties to the dispute is crucial. It must be noted that the mere fact that one of the parties might be a public authority does not exclude the case from the scope of the Regulation. It is, however, essential whether the party exercises public powers (acta iure imperii). These powers are ‘falling outside the scope of the ordinary legal rules applicable to relationships between private individuals’ (para. 34).

Following the Advocate General’s opinion and the CJEU’s judgement in Pula Parking (C-551/15 – ECLI:EU:C:2017:193), the Court notes that ‘it is irrelevant that certain activities were carried out upon delegation from a State’ (para. 39). The fact that the operations were carried out on behalf of and in the interest of the Republic of Panama and that they fulfil a public purpose, do not, in themselves, ‘constitute sufficient evidence to classify them as being carried out iure imperii’ (para. 41.).

In fact it must be taken into account that ‘the classification and certification operations were carried out for remuneration under a commercial contract governed by private law concluded directly with the shipowner of the Al Salam Boccaccio ’98’ (para. 45). Moreover, it is the responsibility of the flag state to interpret and choose the applicable technical requirements for the certification necessary to fly their flag.

The CJEU continues to examine the agency’s decision-making power. If the agency decides to withdraw a certificate, the respective ship is no longer able to sail. It argues, however, that this effect does not originate from the decision of the agency but rather from the sanction which is imposed by law (para. 47). The role of the certifier simply ‘consists in conducting checks of the ship in accordance with the requirements laid down by the applicable legislative provisions.’ As it is for the States to fix those provisions, it is ultimately their power to decide on a ship’s permission to sail.

Whereas the general remarks on the interpretation of ‘civil and commercial matters’ are convincing and based on settled case law, the findings about the ‘decision making power’ of recognised organisations give rise to further questions. If a ship does not comply with the relevant requirements, the statutory certificate must not be issued and the shipowner is not allowed to sail under the flag of the respective state. Even though this legal consequence is finally imposed by law, it is the certifier’s application of that law that leads to this effect. Whenever a certification agency refuses to issue a certificate, the ship is initially not able to sail. The CJEU’s technical perspective in paragraph 47 does not sufficiently appreciate the factual decision making of the certifier. The judgement does unfortunately not explicitly address the issue of legal discretion and its consequences on the concept of ‘civil and commercial matters’.

However, there are other grounds to qualify the case a ‘civil matter’. As the CJEU pointed out as well, it follows from Regulation 6 (c) and (d) of Chapter I of the International Convention for the Safety of Life at Sea, that the final responsibility is allocated to the flag state (para. 48). Therefore, the state is subject to far-reaching supervisory duties. Even though this is not expressively regulated by international or EU law, it appears like the flag state can at any time overrule an agency’s decision to issue or withdraw the certificate. This would result in a limitation to the finality of the agency’s powers and prepare the ground for a civil law qualification. Some further remarks by the CJEU about this aspect would have been interesting.

5. The CJEU on state immunity from jurisdiction

Doubts regarding the jurisdiction of the Italian courts arose from the Rina companies’ plea based on the principle of customary international law concerning immunity from jurisdiction. Pursuant to the principle par in parem non habet imperium, a State cannot be subjected to the jurisdiction of another State. ‘However, in the present state of international law, that immunity is not absolute, but is generally recognised where the dispute concerns sovereign acts performed iure imperii. By contrast, it may be excluded if the legal proceedings relate to acts which do not fall within the exercise of public powers’ (para. 56).

The CJEU held that this principle does not preclude the application of the Regulation in this case, although it is the referring court that has to examine whether the Rina companies had recourse to public powers within in the meaning of international law. It must be noted that a rule of customary international law will only exist where a given practice actually exists that is supported by a firm legal view (opinio iuris). Following the Advocate General, the CJEU finds that the case-law cited by the defendants ‘does not support the unequivocal conclusion that a body carrying out classification and certification operations may rely on immunity from jurisdiction in circumstances such as those of the present case` (c.f. para. 109 of his opinion).

In regard of state immunity, the CJEU changes its perspective on the case. Whereas the interpretation of ‘civil and commercial matters’ was driven by EU law, the doctrine of state immunity requires a different methodological approach, as it originates from international law. Nevertheless, the CJEU’s overall convincing remarks are in line with its earlier findings, setting a high bar for statutory certification societies to plead for state immunity.

6. Final remarks

The CJEU established legal security for the victims of maritime disasters such as the sinking of the Al Salam Boccaccio ’98. The judgement indirectly clarified the applicability of the Brussels I Regulation in cases where maritime certifiers operate only in their private function. When statutory certifications are a civil matter, this must a fortiori be the case for voluntary classifications. Having consistent results when establishing jurisdiction in such cases, also meets with the principle of foreseeability. The remarks on the applicability of the Brussels I regulation are also of significant relevance when dealing with the Brussels Ibis and the Rome I and II Regulations, as all of them apply the concept of ‘civil and commercial matters’.

Moreover, the judgement underlines the responsibility of private-law certifiers and recognises their vital role as regulators that operate in the public interest. Even though the CJEU’ findings on the interpretation of ‘civil matters’ are consistent with its earlier developed broad understanding of the concept, further clarification regarding privatised decision making powers would have been desirable.




Corporate responsibility in (public) international law

Written by Oliver Dörr, University of Osnabrück

Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of the contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.

I. Companies – responsibility

1. As for commercial entities, international law is concerned, above all, with transnational or multinational companies. The term basically describes the conglomerate of commercial entities that are acting separately in at least two different countries and which are tied together by a regime of hierarchical coordination.

2. In times of „global governance“ the international legal concept of responsibility is undergoing a process of de-formalization and, thus, encompasses the violation of social behavioural expectations, which for companies may result from international standards that are not legally binding. The resulting responsibility is a legal one insofar as the law adopts those standards and attaches negative consequences to their violation.

II. Private persons and the law of international responsibility

3. Private companies may be held responsible under international law to the extent that they are either themselves bound by primary legal obligations (direct responsibility), or their business activities are regulated by States which, in doing so, are fulfilling their own international legal obligations (indirect responsibility). A State may just as well impose such regulation without actually being under an obligation to do so (e.g. the US Alien Tort Statute).

Private persons as subjects of international legal obligations

4. Private persons being themselves bound by international legal obligations pertain to the process of de-medatization, which established the legal personality of the individual under international law.

5. Sovereign States can, by concluding international treaties, create legal obligations for private persons, including private companies, directly under international law. The personal scope of this comprehensive law-creating power of States is delimitated by their personal jurisdiction under international law. Whether an individual treaty itself gives rise to legal obligations for private persons, is, just as the creation of individual rights, a matter of treaty interpretation.

6. Genuine legal obligations have evolved for private persons under international criminal law: Here, detailed primary obligations of private persons have developed that are linked to a specific regime of individual responsibility, in particular under the Statute of the International Criminal Court.

7. In contrast, the extension of international human rights obligations to apply directly between private persons is not yet part of the international lex lata. Individual texts pointing in that direction (such as art. 29 para. 1 of the Universal Declaration of Human Rights) are merely of a programmatic nature.

8. Genuine international legal obligations of companies can today be found in the rules regulating deep sea-bed activities (arts. 137, 153 para. 2 UN Convention on the Law of the Sea) and in various treaties establishing regimes of civil liability.

9. Obligations of private persons under international law, including those having direct effect within UN Member States, may also be created by the UN Security Council through resolutions under arts. 39, 41 of the UN Charter.

10. It is fairly uncertain whether the initiative, currently being undertaken within the UN Human Rights Council, to adopt a „legally binding instrument“ encompassing direct human rights liability of private companies, will ever have a chance of becoming binding law.

11. To the extent that there actually are primary obligations of private persons under international law, a general principle of law requires their violation to result in a duty to make reparation. Only in exceptional circumstances could the rules of State responsibility be transferred to private persons.

Obligations to establish the responsibility of private persons

12. An indirect responsibility under international law applies to undertakings via the international legal obligation of States to criminalize certain activities, e.g. in respect of waste disposal, bribery in foreign countries, organized crime and corruption.

Responsibility of private persons under autonomous national law

13. Provisions in national law that autonomously sanction private acts for international law violations bridge with their own binding effect the fact that the private person is not itself bound by the international legal norm.

14. The French Law No. 399-2017 on the plan de vigilance is far too general and vague to serve as an example for an (indirect) international legal reporting responsibility. The same applies to the CSR directive of the European Union of 2014.

III. Responsibility on the basis of non-binding rules of conduct

Behavioural governance without legally binding effects

15. The values contained in certain international law principles shape some social behavioural expectations that are summarized today in concepts of corporate social responsibility (CSR). As a matter of substance, those expectations relate to human rights, the environment, conditions of labour and fighting corruption.

Processes of rule-making

16. The discussion is mainly focused on certain international, cross-sector corporate codes of conduct, such as the OECD Guidelines for Multinational Enterprises (1976), die ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (1977), the UN Global Compact (2000) and the UN Guiding Principles on Business and Human Rights (2011).

17. In particular, with regard to human rights and environment, those rules are extremely unspecific, which means that here, law merely serves as a backdrop in order to endow social behavioural expectations with moral authority.

Responsibility by reception

18. In order to adopt and implement those business-related standards, basically all instruments of law-making and application can be used, as long as they impose normative requirements on companies and their activities. Legal certainty standards under the rule of law, as well as the rules of international law on the jurisdiction of States, can limit the reception.

19. Non-binding standards could be implemented, for example, via the legal regimes of State aid (in particular with respect to export finance), public procurement, investment protection and the rules on civil liability. So far, however, the international standards on business conduct are rarely being implemented in a legally binding manner.

IV. Conclusion

20. If the distinction of law and non-law is to be maintained, responsibility of companies in international law is a theoretical possibility, but of little practical relevance: Only in very specific circumstances are private companies themselves subjected to international legal obligations; moreover, it is similarly rare that „soft“ international standards of conduct are being adopted by „hard“ law and thereby made into specific legal duties of companies.

21. Behavioural standards that determine the international debate on CSR assign a mere „backdrop function“ to the law, as they neither identify concretely the international legal norms referred to, nor differentiate them properly. In that context, companies are simply required to publicly declare their commitment to „the good cause“, which results in duties to take precautionary measures, to exercise transparency and to publish reports.

22. That is why environmental protection, human rights etc. in relation to the activities of private companies is still mainly the responsibility of States. Tools that exist in international law in this respect, such as the rules of attribution or protective duties, must be adapted and enhanced, in order to achieve adequate solutions for detrimental business conduct on the basis of State responsibility.

 

Full (German) version: Oliver Dörr, Unternehmensverantwortlichkeit im Völkerrecht, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 133 et seq.

 




The Private International Law of Virtual Zoom Backgrounds

Written by Tobias Lutzi, University of Cologne

One of the biggest winners of the current pandemic (other than toilet paper producers, conspiracy theorists, and the climate) seems to be the former Silicon Valley startup Zoom, whose videoconferencing solutions have seen its number of daily users increase about thirtyfold since the end of 2019. While the company’s success in a market otherwise dominated by some of the world’s wealthiest corporations has taken many people – including investors – by surprise, it can be attributed to a number of factors – arguably including its software’s highly popular virtual-background feature.

With more and more people using the cockpit of the Millennium Falcon, the couch from The Simpsons, and other iconic stills from movies or TV series as virtual backgrounds in their private and professional Zoom meetings and webinars, the question arises as to whether this may not constitute an infringement of copyright.

Unsurprisingly, this depends on the applicable law. Whereas using a single frame from a movie as a virtual background may often qualify as ‘fair use’ under US copyright law even in a professional setting (and thus require no permission from the copyright holder), no such limitation to copyright will be available in many European legal systems, with any ‘communication to the public’ in the sense of Art 3 of the Information Society Directive 2001/29/EC potentially constituting a copyright infringement under the domestic copyright laws of an EU Member State.

As far as copyright infringements are concerned, the rules of private international law differ significantly less than the rules of substantive law. Under the influence of the Berne Convention, the so-called lex loci protectionis principle has long become the leading approach in most legal systems, allowing copyright holders to seek protection under any domestic law under which they can establish a copyright infringement. For infringements committed through the internet, national courts have given the principle a notoriously wide application, under which the mere accessibility of content from a given country constitutes a sufficient basis for a copyright holder to seek protection under its domestic law. Accordingly, using an image on Zoom without the copyright holder’s permission in a webinar that is streamed to users in numerous countries exposes the user to just as many copyright laws – regardless of whether the image is used by the host or by someone else sharing their video with the other participants.

Interestingly, the fact that the image is only displayed to other users of the same software is unlikely to mitigate this risk. While Zoom’s (confusingly numbered) terms & conditions unsurprisingly prohibit infringements of intellectual property (clause 2.d.(vi)) and equally unsurprisingly subject the company’s legal relationship with its users to the laws of California (clause 22/20.1), courts have so far been slow to attach significance to such platform choices of law as with regard to the relationship between individual users. In fact, the EU Court of Justice held in Case C-191/15 Verein für Konsumenteninformation v Amazon (paras. 46–47) that even with regard to a platform host’s own liability in tort,

the fact that [the platform host] provides in its general terms and conditions that the law of the country in which it is established is to apply to the contracts it concludes cannot legitimately constitute […] a manifestly closer connection [in the sense of Art. 4(3) Rome II].

If it were otherwise, a professional […] would de facto be able, by means of such a term, to choose the law to which a non-contractual obligation is subject, and could thereby evade the conditions set out in that respect in Article 14(1)(a) of the Rome II Regulation.

While the escape clause of Art. 4(3) Rome II is not directly applicable to copyright infringements anyway, the decision illustrates how courts will be hesitant to give effect to a platform host’s choice of law as far as the relationship between users – let alone between users and third parties – is concerned. This arguably also applies to other avenues such as Art. 17 Rome II and the concept of ‘local data’.

The liability risks described above are, of course, likely to remain purely theoretic. But they are also easily avoidable by not using images without permission from the copyright holder in any Zoom meeting or webinar that cannot safely be described as private under the copyright laws of all countries from where the meeting can be joined.




Corporate responsibility and private (international) law

Written by Giesela Rühl, University of Jena/Humboldt-University of Berlin

Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of all contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.

1. Corporate social responsibility has been the subject of lively debates in private international law for many years. These debates revolve around the question of whether companies domiciled in countries of the Global North can be held liable for human rights violations committed by foreign subsidiaries or suppliers in countries of the Global South (so-called supply chain liability).

2. According to the majority view in the public international law literature, companies are not, at least not directly bound by human rights. Although numerous international law instruments, including the UN’s 2011 Guidelines for Business and Human Rights (Ruggie Principles), also address companies, liability for human rights violations is, therefore, a matter of domestic law.

3. The domestic law applicable to liability for human rights violations must be determined in accordance with the provisions of (European) private international law. Direct recourse to the lex fori, in contrast, is not possible. The legal situation in Europe is, therefore, different from the United States where actions which are brought on the basis of the Alien Tort Claims Act (ATCA) are governed by US-American federal (common) law.

4. Claims for human rights violations committed abroad will usually be claims in tort. Under (European) private international law it is, therefore, the law of the place where the damage occurs (Article 4(1) Rome II Regulation) and, hence, foreign law which governs these claims. Exceptions apply only within narrow limits, in particular if domestic laws can be classified as overriding mandatory provisions (Article 16 Rome II Regulation) or if application of foreign law violates the ordre public (Article 26 Rome II Regulation).

5. In addition to tort law, claims for human rights violations may also be based on company law, namely when directors are directly held liable for torts committed by a foreign subsidiary. According to the relevant private international law provisions of the Member States these claims are governed by the law of the (administrative or statutory) seat of the foreign subsidiary. As a consequence, claims in company law are also subject to foreign law.

6. The fact that (European) private international law submits liability for human rights violations to foreign law is very often criticized in the private international law literature. Claiming that foreign law does not sufficiently protect the victims of human rights violations, a number of scholars, therefore, attempt to subject liability claims de lege lata to the domestic law of the (European) parent or buyer company.

7. These attempts, however, raise a number of concerns: first, under traditional (European) private international law, substantive law considerations do not inform the determination of the applicable law. Second, the wish to apply the domestic law of a European country is mostly driven by the wish to avoid poorly functioning court systems and lower regulatory standards in countries of the Global South. Neither of these aspects, however, has anything to do with the applicable tort or company law. Regulatory standards, for example, are part of public law and, therefore, excluded from the reach of private international law. Finally, the assumption that the domestic law of the (European) parent or buyer company provides more or better protection to the victims of human rights violations does not hold true de lege lata. Since parent and buyer companies are legally independent from their foreign subsidiaries and suppliers, parent and buyer companies are only in exceptional cases liable to the victims of human rights violations committed abroad by their foreign subsidiaries or suppliers (legal entity principle or principle of entity liability).

8. The difficulties to hold (European) parent and buyer companies de lege lata liable for human rights violations committed by their foreign subsidiaries or suppliers raises the question of whether domestic laws should be reformed and their application ensured via the rules of private international law? Should domestic legislatures, for example, introduce an internationally mandatory human rights due diligence obligation and hold companies liable for violations? Proposals to this end are currently discussed in Germany and in Switzerland. In France, in contrast, they are already a reality. Here, the Law on the monitoring obligations of parent and buyer companies (Loi de vigilance) of 2017 imposes human rights due diligence obligations on bigger French companies and allows victims to sue for damages under the French Civil Code. The situation is similar in England. According to a Supreme Court decision of 2019 English parent companies may, under certain conditions, be held accountable for human rights violations committed by their foreign subsidiaries.

9. The introduction of an internationally mandatory human rights due diligence obligation at the level of national law certainly holds a number of advantages. In particular, it may encourage companies to take measures to prevent human rights violations through their foreign subsidiaries and suppliers. However, it is all but clear whether, under the conditions of globalization, any such obligation will actually contribute to improving the human rights situation in the countries of the Global South. This is because it will induce at least some companies to take strategic measures to avoid the costs associated with compliance. In addition, it will give a competitive advantage to companies which are domiciled in countries that do not impose comparable obligations on their companies.

10. Any human rights due diligence obligations should, therefore, not (only) be established at the national level, but also at the European or – even better – at the international level. In addition, accompanying measures should ensure that the same rules of play apply to all companies operating in the same market. And, finally, it should be clearly communicated that all these measures will increase prices for many products sold in Europe. In an open debate it will then have to be determined how much the Global North is willing to invest in better protection of human rights in the Global South.

 

Full (German) version: Giesela Rühl, Unternehmensverantwortung und (Internationales) Privatrecht, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 89 et seq.

 




Jurisdiction unbound: extraterritorial measures to ensure corporate responsibility

Written by Nico Krisch, Graduate Institute for International and Development Studies, Geneva

Note: This blogpost is part of a series on „Corporate social responsibility and international law“ that presents the main findings of all contributions published in August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020.

1. The conceptual framework of jurisdictional boundaries in international law continues to be dominated by the principle of territoriality and its exceptions, even if calls for a reorientation have grown in recent years.

2. The principle of territoriality leads today to far wider jurisdictional claims than in the past, and its limits are being redefined through ‘territorial extensions’ in a number of areas.

3. These extensions are rarely questioned by states, and clear and consistent jurisdictional boundaries remain hard to define. Contestation arises primarily when states seek to use extraterritorial measures to counteract important policy choices of other states.

4. The result is a far-reaching overlap of different jurisdictional spheres which, if seen in conjunction with the multiple forms of transnational regulation existing today, leads to a multi-layered ‘jurisdictional assemblage’.

5. So far, there are no accepted rules governing the relationship of competing jurisdictional spheres in this assemblage. The effective exercise of jurisdiction depends, in large part, on the political and economic power of a country in a given issue area and market.

6. The wider options for action that result from this territorial extension allow for more effective responses to existing societal challenges, especially with a view to the provision of (national and global) public goods, albeit in a limited way.

7. The new jurisdictional regime accentuates hierarchies between countries, interferes with the autonomy of weaker states, and subverts the principle of sovereign equality. Yet under certain circumstances, it also allows actors in weaker states to compensate for their otherwise limited ability to hold multinational companies to account.

8. Existing procedural and substantive proposals only have limited promise for alleviating the tensions resulting from the power imbalance in the exercise of jurisdiction.

9. The territorial principle in the law of jurisdiction has always been sufficiently limited not to overly impede powerful states’ pursuit of their interests.

10. Territoriality today appears less as a principle of effective limitations than as the basis of different strategies and tactics through which states seek to hold mobile actors to account and through which they pursue their political aims in a global context.

 

Full (German) version: Nico Krisch, Entgrenzte Jurisdiktion: Die extraterritoriale Durchsetzung von Unternehmensverantwortung, in: August Reinisch, Stephan Hobe, Eva-Maria Kieninger & Anne Peters (eds), Unternehmensverantwortung und Internationales Recht, C.F. Müller, 2020, pp. 11 et seq.