Jean Monnet
Lifelong Learning Programme
‘Cross-Border Litigation in UK’
Workshop Report No 7
Friday 16th August 2013
"This project has been funded with support from the European Commission. This publication reflects
the views only of the authors, and the Commission cannot be held responsible for any use which may
be made of the information contained therein."
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BACKGROUND
On 16th August 2013, practitioners and academics connected with the Centre
for Private International Law met at the final workshop of seven dedicated to
promoting the debate on how cross-border litigation functions within
Europe. The purpose of the workshop was to offer the opportunity for a free
and frank exchange of ideas surrounding the UK perspective on EU private
international law.
This report intends to provide a brief overview of the ideas that
emerged from the workshop without attributing any views to any particular
individual.
THE
OF EU INSTITUTIONS IN DEVELOPING PRIVATE
(PIL) WITH PARTICULAR REFERENCE TO THE HANDLING OF
THE PROTOCOL GIVING THE UK THE CHOICE TO OPT IN.
EFFECTIVENESS
INTERNATIONAL LAW
The Commission
The group highlighted two problems. The first was that the Commission was
strongly influenced by political aims rather than substance and the second
was that the Commission has not been consistently provided with the right
people to do the job. There was a distinct lack of knowledgeable staff.
It was noted that the European Commission has a primary responsibility
to all the Member States and as such should, when it is formulating policy,
generally take into account all aspects of the culture and traditions of the
whole EU and do so in a spirit of openness and non-discrimination. The
successful delivery of this responsibility by the Commission depends on it
having both the capacity and the willingness to adopt an open and inclusive
approach to policy formulation, without favouring any individual member
State or group of States. Generally, and this applies especially in complex
policy areas such as PIL and Civil Justice, the Commission should work on
the basis of properly conducted and objective research into all the legal
systems of the EU before adopting new proposals and equally to evaluate the
outcomes of its policies on a similar basis before adopting amendments or
developments of those proposals.
The Commission also has to deploy appropriate resources to the tasks
involved, not least to have personnel with appropriate knowledge and
background experience. Once again it was highlighted that this can
sometimes be hindered for example where there is a shortage of expertise in a
given subject area or the ‘quota’ system requires a mix of staff with national
backgrounds where the desirable competences are diluted. The decision
making procedures of the Commission, for instance the rounds of interservice consultation leading to adoption of proposals by the College, can be a
problem in certain subject areas where other services than the one making the
proposals have different policy aims or ideas or where they have insufficient
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expertise to understand fully or analyse correctly the proposals about which
they are consulted.
In regard to the ‘Civil Law/Justice/PIL’ policies, which began to be
adopted after the entry into force of the Treaty of Amsterdam, the
Commission took over the work of a task force, which had been set up after
the Maastricht Treaty, that had been involved in the pre-Amsterdam
negotiations on Service of Documents, Jurisdiction in Matrimonial Matters,
Insolvency and Applicable Law in Tort and Delict as well as the review for
the Brussels and Lugano Conventions and so had developed significant
expertise. The original group was replaced by individuals who had little or
no expertise in PIL or in policy making and this led to problems both within
as well as externally once the Commission assumed its competences in the
subject matter. A build up of personnel with relevant expertise did not
happen till later but only partly through the recruitment of permanent staff
with a PIL background. It was pointed out that at that time the Commission
concentrated almost exclusively on converting existing instruments into
Regulations.
With reference to the relationship between the Commission and the UK,
the general observation was that the UK tended to be marginalised by the
Commission. Even though the first two Director Generals of JLS were British
this did not result in any particularly well studied link being created between
the Commission and UK policy interests in the area and, furthermore, until
2004 there was no member of staff in the relevant unit with a UK background
either because the UK did not push for this or because it was thought neither
to be necessary nor would it be welcome.
It is clear that the UK opt-in Protocol did not help as this was seen by the
Commission as unhelpful and a signal by the UK that it wished to have
special treatment and to be able to pick and choose which initiatives it would
support – in other words that the UK was choosing ‘not to be a part of the
club’. This meant that there was an incipient resistance in the Commission, at
least at management level, to accepting UK arguments on PIL policy based on
peculiarly UK circumstances though in reality this was not of particular
significance during the first years of the PIL regime because the UK adopted
a blanket opt-in policy.
The UK position as regards inputs to policy varied depending on who
was acting for the UK in the different policy areas and just as much who in
the Commission was dealing with the subject matters as from 2004 onwards
there were more experienced personnel in the relevant unit of the Directorate
General JLS who were more open to dialogue on matters of strategic
importance to the UK. The need to have people in place with appropriate
expertise for the right projects was only later realised in the Commission and
when this was done it did give rise to some of the better examples of
negotiations where not only the UK position but the positions of other
Member States were properly taken into account and these led to more
satisfactory outcomes not only for internal negotiations but also, in at least
two cases, in external negotiations.
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However in general the UK position has tended to be marginalised to a
degree especially where the Commission has been influenced by lobbying
interests, whether legal or otherwise, with an animus not to address policy
issues of importance to the UK and thus to exclude UK proposals for policy
solutions; this position will not be assisted by current political developments
in respect of which both the UK and the EU capacities to make sound
inclusive policies will be the poorer.
Other factors which have from time to time played a role in this regard
included the vicissitudes of attitude in the UK Permanent Representative
who sometimes gave different signals to Commission and officials from other
Member States to those being given in the relevant policy discussion by UK
officials and the fact that not all the relevant UK Ministers were
knowledgeable enough about, nor indeed interested in, the subject matters;
this has not been helped by priority of thought being given to other subjects
than PIL coupled with a general down grading in the subject in the relevant
Justice Ministries which led in turn to a loss without replacement of
experienced personnel.
In only one instance has the UK introduced and managed to conclude
within its own policy parameters an initiative for an EC/EU project in the
area of civil justice policy and the fact that the UK has tended to be
standoffish in many situations has given fuel to the other Member States as
well as to the Commission in their tendency to seek to marginalise the UK
policy interests in this area
The best examples of the Commission working appropriately with the
UK were in the Hague Maintenance Convention and the latter stages of the
Maintenance Regulation and the recast of Brussels I. The worst examples
were in Rome III, Succession and Matrimonial Property.
The Council
It was noted that more than 20 Regulations, Directives and Decisions in the
field of Private International Law have been approved since the Treaty of
Amsterdam came into force.
Evidence was also put forward that the Council and European
Parliament appear to have a positive relationship. Although it was noted that
negotiations were taking longer to reach the final approval stage after 2003,
only four of the acts were approved in a second sitting.
It was highlighted that it is also now normal for COM to negotiate several
acts simultaneously due to the increased length of time it takes for
negotiations combined with an increase in activity by the Council. There are
currently 7 legislative files being discussed at the working party on civil law
matters.
In the field of PIL, the Council does not engage directly on preparatory
work, be it comparative law analysis or impact assessments. As such it is
dependent on the studies gathered or produced by COM, and the national
internal consultations that Member States carry out. It is possible that the ever
growing number of legislative proposals coupled with the recent cuts in
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public expenditure at the national level, and the subsequent reduction of
available staff, in particular specialised professionals, may result in increased
difficulties in drafting legislation that adequately represent the overall
interests at stake. Practice shows that certain delegations, in particular from
small or medium size countries, need more time than others to assume a
national position in the meetings.
As regards the available feedback from internal consultations;
stakeholders and society in general tends traditionally to be more active in
certain countries (e.g. UK) than in others. Importantly, stakeholders’ activity
may not indicate correctly the interests at stake, as certain interest groups are
normally better organised than others.
COM’s studies are seldom analysed in the working party on civil law
matters and their quality is, in general, not scrutinised by Member States after
the delivery of the study despite some evident problems in collecting national
data. Recently however the impact assessment relating to the proposal for a
Regulation on a Common European Sales Law [COM(2011) 635 final] was
analysed during a two and a half day period. At stake is an initiative that a
majority of Member States considers unjustified but the discussion did show
incongruence in the data and methods applied. EP, supposed to be positive
as regards the proposal, has also encountered several weaknesses in the
thorough analysis carried out by its impact assessment department.
Nevertheless, the studies that COM offers are normally useful for
delegations to prepare their own negotiating position. Impact assessments in
PIL have been less helpful as tools as they are often not as impartial as
desirable; trying to prove an already assumed proposition. Still, worse than a
guided impact analysis is the non-existence of one, as was the case with the
Rome I proposal and the Rome III proposal. In the first case, the absence of an
impact assessment frustrated a possible agreement as regard the effectiveness
of an assignment against third parties, due to the economic and financial
consequences at stake. In the second case, it prevented certain states from
joining in.
The Council depends on Member States’ capacity to assess interests and
impacts. At present States seem to be increasingly dependent on pro bono
contributions from stakeholders and, in particular, academics. Essential
comparative law analysis is expensive and time consuming and only COM
seems to be in a position to sub-contract those. However, the accuracy of
these studies is rarely openly discussed among Member States.
In any event the process of defining interests in abstract fields like private
international law will always be highly complex, in particular if the
governing idea is “Justice for Growth”. For instance, direct economic interests
are difficult to determine and will depend on several variables that cannot be
anticipated, like whether a party happens to be the defendant or the claimant
in proceedings.
So whether or not taking into account national interests should be an
objective of the role of the Council in developing PIL is debatable; however
there is a limited role to be played as regards whatever may be considered as
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cultural diversity [Art. 3(3) TEU] and national identities, inherent in their
fundamental structures, political and constitutional [Art. 4(2)TEU].
In this regard it could be assumed that the dimension and political
relevance of a Member State would be proportionally reflected in its capacity
to assert a national interest successfully in the group. Although this may well
be generally the case, in the field of PIL experience shows that more subtle
questions than the dimension or political relevance of a country may actually
influence this capacity. In fact, a very small country like Malta may do
particularly well in asserting national interests as may be noticed by Council
Regulation (EC) No 2116/2004 amending Regulation Brussels IIbis and
Brussels I and in particular the inclusion of a gross exception on an enhanced
cooperation instrument on divorce and legal separation that rendered it
inapplicable in that territory for all divorce cases (Council Regulation
1259/2010- Rome III).
It was suggested that under unanimity it is easy to assert a national
interest. However, within the context of the negotiations of the Rome III
initial proposal, a minority group wanted to give priority to the application of
lex fori, considered to contribute not only to the speed of proceedings but also
by some as a prerogative of the right not to be married against one’s will. SE
took the lead in this defence but the result was not a postponement of
negotiations as is often the case in the EU in other fields, nor an attempt of
compromise on the basis of lex fori. Instead, shortly after the Council noted
the impasse, other Member States and Commission started discussing the
possibility of enhanced cooperation. Naturally, the enhanced cooperation
proposal for a Regulation did not try to provide any compromise with
previously explained positions but ended up including the exception for
Malta already discussed.
UK, Ireland and Denmark have nevertheless to be evaluated
separately taking into account Protocols 21 and 22 of the Treaties. Denmark
cannot opt-in to instruments but has managed nevertheless to negotiate
certain parallel Conventions. And while Ireland chooses to normally opt-in
from the start to instruments or to have a low profile in all other cases, UK
always asserts its national interest vigorously whether or not it participates
formally in the negotiations. This can probably be explained by the fact that
Protocol 21 provides for a possibility to opt-in after the conclusion of the
negotiations and the situations where an initial opt-in has not been exercised
are exactly the ones where the national interests are more clearly in
opposition with the substance of the proposal by the COM.
Practice shows that recently other Member States have become more
reluctant to accommodate UK interests in situations where it has not
exercised the initial opt-in.
The UK did not opt-in for the first time as regards the Rome I
proposal. In that situation, negotiations in Council showed a strong
willingness of the large majority of delegations to find solutions that could
also be acceptable for the UK. Compromises were found for almost all
problematic issues. Thus, the UK has exercised its opt-in after approval of the
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legislative act. As regards the maintenance proposal a similar but more
obvious accommodation of UK national interests took place, where the
Regulation final design is shaped by the fact that the UK would not submit to
the application of harmonised rules of choice of law.
However, recently certain Member States have even highlighted
during negotiations at the working party that the UK does not formally
participate. During the negotiations of the proposal on succession there was a
clear tension between the interest to have the UK participating and a
discomfort in trying to accommodate common law issues where neither the
UK nor Ireland had opted-in, despite Cyprus’s repetitive statements that it
also applies common law. A compromise was attempted and while it was
clear in COREPER that it did not ultimately please anyone, COREPER
decided to conclude the file on that basis, thus ensuring a first reading
agreement with Parliament in a situation where the rapporteur in question
was going to be retired soon.
The future will tell how the assertion of national interests in Council
by Member states in the field of PIL will develop, but Council seems to be
less flexible than in the past to accommodate them. Member States seen to
have isolated positions or seen to have special prerogatives may face
increasing opposition by certain others.
The internal procedures and practices of the Council clearly show
prolonged negotiations, but practice actually shows increased pressure by
COM and many rotating Council Presidencies to rush the conclusion of the
negotiations. In the field of PIL, in the final part of the negotiations one of the
methods to pressure conclusion of the file is the submitting of a new version
of the text that the working party has been discussing directly to COREPER
and then forward to discussion in JHA counsellors meeting only the issues
expressly mentioned by Ambassadors. Taking into account the format and
aim of discussions at COREPER, only politically relevant issues or questions
of national interest are raised. Issues of quality and clarity of legislative
drafting may not be possible to correct in this final phase. Yet this is normally
the phase where changes are introduced more rapidly in the text.
The Council has to cope with an increasingly high number of
instruments, to coordinate with jurist linguists in the European Parliament
and in certain situations to see political priorities dictate short deadlines for
the revision of complex legislative acts.
Clarity and accuracy in legislative drafting may naturally sometimes
suffer. Evidence of this are the corrigenda, e.g on the Rome I Regulation [OJ L
309, 24.11.2009, p. 87–87], certain case-law that a bit of clearer drafting could
have avoided, like C-412/10 on the Rome II Regulation and the disparity of
legal concepts used in different language versions, e.g. in Article 14(2) of
Regulation (EU) No 606/2013 on the mutual recognition of protection
measures in civil matters the English version (which was the drafting
language) uses the term withdraw that is translated differently in the several
Latin languages – as retrait in French and retrage in Romanian, while as revoca
in Italian and as anulará and anula in Spanish and Portuguese respectively.
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Finally, on the consistency between legal instruments two factors were
put forward as of great relevance: the working party involved in the
negotiations and the moment of the negotiations. Although the Council
procedures try to ensure consistency between different negotiations by
allocating acronyms to documents that intend to guarantee to people
involved in other working parties have access to what is being done in a
different group as regards related matters. Specifically in the field of PIL,
COREPER has given a mandate to the working party on civil law matters to
ensure coherence in EU action on civil matters, in particular as regards
jurisdiction and applicable law issues. The group does take note of
negotiations taking place in different working parties but since the
discussions in 2008 on the Timeshare Directive no further opinion has been
issued. The reason however is not that there are no PIL related matters being
analysed in other groups, as can be clearly evidenced by the negotiations
concerning the Patent issues or Article 6(5) of Directive 2012/28/EU on
certain permitted uses of orphan works.
Consistency may also be affected by the fact that proposals are
negotiated in different moments and while opinions may evolve approved
texts won’t. An example is the disparity between the concepts of overriding
mandatory rules in the Rome I and Rome II Regulations. The COM proposed
to include a ‘restrictive’ definition in the Rome I proposal that the Council
reformulated but maintained in the text, while no such definition had been
included in the Rome II Regulation.
The Council, as shown, before does however take the issue of consistency
seriously and the recent discussions on the CESL proposal have
demonstrated exactly that. Delegations have in general reacted negatively to
the lack of clarity of the proposal as regards the articulation of the CESL with
the Rome I Regulation, irrespective of their support or opposition to the
proposal itself. And even after an opinion by the legal service that does not
highlight major problems, delegations have not considered the present
recitals sufficient and insisted on the need for further clarity.
It was concluded that the means available to the Council may not be
ideal and time pressure may lay a heavy burden on quality and clarity of
legal drafting. Coordination between working parties and at national level
could be improved but mechanisms already exist in order to promote
consistency between legislative acts and the working party on civil law
matters is clearly engaged in achieving that objective.
European Parliament
Information provided by the European Parliament in 2008 stated that the
Parliament’s vision was that it “(…) considers that the Union’s objective
should be to simplify recourse to justice for citizens and companies and to
make justice more effective in an integrated European area”. By 2013 the
focus had changed to ‘achievements’ that stated that the European
Parliament “has played an active role in defining the content of the
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legislative instruments (…) It has also made a significant contribution to
progress in the field of civil justice through its non-legislative resolutions.
(…)’.
However it was noted that there has been a lack of involvement by the
European Parliament in agenda setting. Traditionally the strategic policy
programming has been in the hands of the Council since 1999. But there is
evidence of this changing. Rule 35 of EP’s 2013 Rules of Procedure sets out
the role of EP in legislative planning and provides for cooperation with the
Commission regarding the Commission’s work programme and the
European Parliament adopted a resolution on its priorities for the
Commission Work Programme 2014.
The European Parliament still lacks legislative initiative as that remains with
the Commission. However it was noted that the European Parliament has
adopted a number of non-legislative resolutions and adopted a number of
own-initiative reports in private international law. But the Commission
doesn’t always report on time and the European Parliament would appear to
have never rejected a legislative proposal by the Commission in PIL,
highlighting a lack of sharing in information.
It was noted that the European Parliament does not have ‘ownership’
of family law unless passerelle is used but even then it has very little to say
on its activation. A negative point was raised about the ability of the
European Parliament to negatively shape the development of private
international law in that enhanced cooperation can only be activated in an
area if the European Parliament consents. There is co-ownership where the
ordinary procedure applies, but with regards to the legal basis the
Commission chooses and the European Parliament has the right to verify the
legal basis.
With regards to the interplay with Protocol 21, the European
Parliament doesn’t have a formal role in the text of the Protocol. It was
suggested that the Commission is increasingly using art 114 and may become
the legal basis of choice in relation to PIL initiatives outside family law that
would circumvent the use of Protocol 21. The interplay with protocol 21 and
the role of the European Parliament in developing PIL in a way that suits the
UK suggests that there is evidence of possible influence by the European
Parliament but this risks a backlash if the UK makes a habit of going via art 4
of Protocol 21. The UK doesn’t have a vote in the Council, but UK MEP’s have
full voting rights in Parliament so can contribute to the necessary majority.
In conclusion it was noted that the European Parliament is attempting
to overcome its lack of expertise by increasing its number of studies, briefing
papers commissioned on PIL and workshops and institutional challenges and
is seeking to play an increasing role to play in developing and shaping PIL.
However the results so far are still mixed as the European Parliament attempts
to overcome its lack of expertise. It was made clear that the European
Parliament still needs to internalise and fully implement the powers and
competences that were envisaged in the Treaties and the Rules of Procedure.
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An alliance of the UK, Luxembourg and the European Parliament did
lead to more liberal provisions on consumer contracts than those proposed by
the Commission in Rome I.
Court of Justice
The workshop did not set out to provide a definitive answer to the question
of the CJEU’s effectiveness. Indeed, it is submitted that none can be given
because, when judging the judges, one must acknowledge that the
parameters of success are contested since the role of the Court remains
unsettled. Whether the Court delivers ‘good’ judgments depends on what
ends one considers that the Court’s judgments should fulfil. In this respect,
the hybrid nature of the Court – straddled between matters of international
relations and the resolution of private disputes – presents distinct problems
in private international law (a discipline that is ever more private and distinct
from its origins in international law). (See M. Lehmann, ‘Liberating the
Individual from Battles between States: Justifying Party Autonomy in Conflict of
Laws’ (2008) Vanderbilt Journal of Transnational Law 381, 413; J. Fawcett and J.M.
Carruthers, Cheshire, North & Fawcett: Private International Law (Oxford: OUP,
14th ed, 2008) 5; A. Mills, The Confluence of Public and Private International Law:
Justice, Pluralism and Subsidiarity in the International Constitutional Ordering of
Private Law (Cambridge: CUP 2009) 31-32.)
Nevertheless, it is possible to make a basic assumption that the Court
does, generally, deliver sound judgments. If this were not so, one would
expect (i) that the courts of the Member States would rebel against the
judgments of the CJEU, thus jeopardising the process of legal integration; (ii)
that the Union’s legislators would constantly overrule the judgments of the
Court; and/or (iii) that the legislators would be far less inclined to adopt
incomplete agreements which are to be fleshed out by the Court. (See MA
Pollack, The Engines of European Integration: Delegation, Agency and AgendaSetting (Oxford: OUP 2003) 188-194 and the references therein.) However,
notwithstanding these basic, broad assumptions, there remain a number of
matters that provide pause for thought. Below is a brief overview of selected
judgments, which highlight unresolved difficulties in the general approach of
the Court.
Perhaps the most extensive criticism of the CJEU concerns its
treatment of common law devices, which were meant to guard against
abusive exercise of jurisdiction. The criticism stems, in part, from the CJEU’s
formalistic, civilian bent and its failure to fully appreciate the more outcomeoriented common law tradition. (See eg T Hartley, ‘The European Union and
the Systematic Dismantling of the Common Law of Conflict of Laws’ (2005)
ICLQ 813, 814) In addition, judgments concerning forum non conveniens and
antisuit injunctions underscore the pitfalls of a judicial tradition that is more
preoccupied with integration than with doing justice in the cases before it.
(See Case C-281/02 Owusu v Jackson [2005] ECR I-1385; Case C-159/02 Turner
v Grovit [2004] ECR I-3565; Case C-185/07 West Tankers [2009] ECR I-663.) For
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the sake of balance, it is pertinent to note that criticism of the Court’s findings
concerning the compatibility of the antisuit injunction with the Brussels I
Regulation is not entirely sound. While the Court could have taken a more
sympathetic view of the injunction, it is submitted that it was correct in
concluding that the injunction would stultify the operation of a system of
jurisdiction that is based on the lis pendens rule. It is true that the injunction is
not addressed to a foreign court. However, the effect is clearly an
interference with the jurisdiction of that foreign court, and would constitute a
breach of the basic principle that underpins the Regulation’s rules on
jurisdiction. Indeed, what is often ignored in discussions concerning the
CJEU’s more controversial decisions is the fact that the national courts
themselves prompt these judgments. The question of the injunction’s
compatibility with the Brussels I Regulation reached the CJEU because the
House of Lords concluded that the legislation was not sufficiently clear for
the national court to render its judgment without the CJEU’s interpretative
guidance. In other words, the House of Lords thought it plausible that the
antisuit injunction was not compatible with the Brussels I Regulation. On the
other hand, the confused treatment of the exclusion of arbitration from the
scope of the Brussels regime in West Tankers emphasises the Court’s struggles
with the finer detail of private international law.
The conferral of jurisdiction to the CJEU in matters concerning
international child abduction adds emphasis to criticisms of the Court’s
overly formalistic approach to private international law. The Court’s
preoccupation with uniformity in the application of private international law
regulations results in the emasculation of national courts that seek to employ
rules in the Hague Convention and the Brussels IIBis Regulation in order to
protect children. (See Case C-211/10 PPU Povse v Alpago [2010] ECR I-6673;
C-491/10 PPU Zarraga v Pelz [2010] ECR I-14247) It is especially noteworthy
that claims based on the Charter of Fundamental Rights do not appear to
have held much sway with the Court. (J Holliday, ‘Case Comment: Aguirre
Zarraga v Simone Pelz’ (2012) 3 ASLR 126.) Constitutional ambitions
concerning uniformity in the application of EU law were preferred by the
CJEU.
Similar questions concerning the Court’s treatment of fundamental
rights arise with regard to the recognition of same-sex relationships. For
advocates of recognition of same-sex relationships, the judgment in Case C147/08 Römer v Hamburg [2011] ECR I-3591 represents a watershed in the
development of EU law. However, the judgment is equally noteworthy for
the Court’s caution and failure to engage the Charter’s prohibition of
discrimination on grounds of sexual orientation. Indeed, it is arguable that
the judgment highlights self-imposed limits to the activism of the Court. In
particular, the Court did not impose any obligation to recognise same-sex
relationships where national law did not already do so. In so doing, the Court
ensured that it did not invite unwanted controversy. In other words, while
the Court is eager to safeguard the normative supremacy of EU law, it will
often not do so in a manner that does violence to policy choices of the
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Member States. (See J Weiler, “The Community System: the dual character of
supranationalism”(1981)Yearbook of European Law 267, 292-293.) This is
certainly commendable when considered in the context of the process of
integration. However, the Court’s preoccupation with its international role
results in significant weakness concerning its relationship with EU citizens.
Indeed, it is arguable that the Court that gave meaning to EU citizenship has
failed to establish a meaningful relationship with citizens of the Union.
The Court’s failings are not restricted to natural persons. Its
judgments concerning legal persons lack sustained analysis of the diversity of
corporate law and the aims to be achieved by the private international law of
companies. A limited exception is to be found in the Advocate General’s
Opinion in Case C-214/89 Powell Duffryn plc v Petereit [1992] ECR I-1745, para
4, a case concerning prorogation of jurisdiction. However, the judgments
concerning choice of law are symptomatic of a court that is not equipped to
deal with the policy concerns relating to aspects of private international law,
and that is inclined to create overly complicated rules as a consequence of its
self-imposed path dependency. (Case 81/87 The Queen v H. M. Treasury and
Commissioners of Inland Revenue, ex parte Daily Mail and General Trust plc.
[1988] ECR 5483; Case C-212/97 Centros Ltd v Erhvervs-og Selskabsstyrelsen
[1999] ECR I-01459; Case C-208/00 Überseering BV v Nordic Construction
Company Baumanagement GmbH (NCC) [2002] ECR I-9919; Case C-167/01
Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Ltd [2003] ECR
I-10155; Case C-411/03 Sevic Systems AG [2005] ECR I-10805; Case C-210/06
Cartesio Oktató és Szolgáltató bt [2008] ECR I-9641; Case C-378/10 VALE Épitési
kft [2012] ECR I- 00000) (See generally J Borg-Barthet, ‘Free at Law? Choice of
Corporate Law in the EU Following the Judgment in Vale’ (2013) ICLQ 503512.) While the Court is to be applauded insofar as it is able to create choice of
law rules from the bare bones of the Treaty, its ability to create coherent rules
that do justice to relevant concerns is questionable.
In the final analysis, the Court’s performance as a private international
law court is not without blemishes. The CJEU remains a court that is very
much concerned with matters of international law in the traditional sense;
that is to say, the judgments of the Court reveal a general preoccupation with
the horizontal relationship between the Member States and the vertical
relationship with the Union. Consequently, there is a strong argument –
perhaps most eloquently framed by Andrew Dickinson – that specialised
courts should be established, particularly with a view to addressing the
excessively constitutional role of the Court. (See A Dickinson, ‘Trust and
Confidence in the European Community Supreme Court?’ (2008)
http://conflictoflaws.net/2008/guest-editorial-dickinson-on-trust-andconfidence-in-the-european-community-supreme-court/ last accessed 18
November 2013.) Indeed, whereas the Member States are expected to
concentrate judicial expertise concerning matters such as international child
abduction, the Court of Justice remains a generalist court that is driven by
institutional concerns. However, the argument for a specialised private
international law court within the CJEU faces several obstacles. First, the case
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for treating private international law in a distinct fashion without doing the
same in other areas of law is not clear-cut. But more pertinently, Dickinson’s
suggestion is fraught with definitional difficulty. How is one to define
private international law for the purposes of a Treaty whose central economic
rules could be viewed as private international law rules? (See M.P. Maduro,
‘So close and yet so far: the paradoxes of mutual recognition’ (2007) 14:5 Journal of
European Public Policy 814, 815.) Perhaps a more adequate approach would be
to accept the limitations of the Court. It is arguable that it is for the Member
States to resolve matters in their capacity as legislators, by avoiding
incomplete agreements insofar as this is possible, and in their appointment
role, by appointing judges who together constitute a court having a better
balance of expertise. Such balance of expertise could then be harnessed by
cases being assigned to chambers of the Court reflecting the relevant
expertise to handle that type of case, notably PIL.
THE APPLICATION OF THE MAIN EU PIL COMMERCIAL INSTRUMENTS IN THE
UK
Brussels I
In general, the approach by the legislatures, courts, and jurists in the UK
towards the Brussels Convention and the Brussels I Regulation has been
positive and cooperative. However, some concern had been expressed by a
number of English writers about the appropriateness of these instruments, a
view often made as part of a more extensive critique of any EU intervention
in private international law.
It was suggested by the group that some of the provisions in the
Brussels Convention, replicated in the Brussels I Regulation were added as a
consequence of the UK's negotiations leading to the 1978 Accession Treaty.
These include admiralty jurisdiction (articles 5(7) and 7 (ex 6a)); trusts article
5(6); insurance (article 13(4), (5) (ex 12(4); 12(5)), and article 14 (ex 12a)).
However it was noted that the Schlosser Report also pointed to issues where
existing UK law sits uneasily with the Convention.
The Civil Jurisdiction and Judgments Act 1982 contains provisions
which were designed to facilitate the operation of the Brussels Convention in
UK law, most notably re-defining domicile for the purposes of the
Convention. Further examples are interpretation of the Brussels Convention
(s 3); provisional and protective measures (ss 25 and 27); allocation of
jurisdiction within UK concerning trusts and consumer contracts (s 10).
The two most prominent examples where the Convention was used as
a model for reforming (internal) law within the UK were considered to be
Schedule 4 (allocation of jurisdiction within the UK in actions within the
scope of the Convention) and Schedule 8 (general rules of civil jurisdiction in
Scotland – essentially schedule 8 is modelled word for word on the
convention, in general, and it applies to cases wholly internal to Scotland or
where the defendant is not domiciled outside the EU and the Lugano States.
13
It has worked very well. Questions were asked by the workshop as to why
the Scottish approach wasn’t followed through to the English model with the
suggestion given that England wanted to keep its distinctive rules because of
the volume of international cases it deals with.
Whether the Convention/Regulation could be a model for the English
rules of jurisdiction was considered possible but it was noted that the
enforcement provisions in the Convention were not adopted for intra-UK
cases. However case law demonstrated the development of common law
rules that reflected the principles of the Convention/Regulation.
So has the Convention/Regulation been a success in practice? The
group felt that it had due to the fact that the whole rationale of the Brussels I
regime is the easing of recognition and enforcement of judgments in civil and
commercial matters and that the rules on jurisdiction are a means to that end.
The enforcement provisions themselves have caused little difficulty in their
operation in the UK.
Perhaps the single most important element in the assessment of the
Convention and the Regulation was considered to be just how well the
jurisdiction provisions have operated in practice. The best evidence for this
question lies in the National Reports for the UK legal systems made as part of
the Heidelberg study on the application of the Regulation in Member States.
The concluding proposals for reform in these reports reveal a general picture
that provisions of the Regulation have not caused problems in practice, sit
well with Scottish/English procedural rules and that specific grounds of
jurisdiction appear generally acceptable. However criticism was found on
issues of detail as well as in respect of a small number of ECJ decisions, which
have given rise to fundamental problems for (especially) English practice.
Some English law writers have expressed deep concern about, and
distrust of, the whole Brussels I regime. Recurrent features of these writings
are hostility towards the whole Europeanisation of English PIL, often
buttressed with a dislike of any statutory intervention in the subject. Brussels
I is used as an illustration and warning of worse things to come but the focus
of the critique are three ECJ decisions without consideration of the more
general experience of Brussels I in practice. Of these decisions the effect of
one (Gasser v MISRAT) has been removed in the Recast instrument and the
others (Turner v Grovit and Owusu v Jackson) revolve round specific
approaches to the problem of competing jurisdiction. It was suggested that
even if these cases are wrongly decided, they did not justify whole-scale
rejection of Brussels I and that the English response was an exaggerated one.
It was noted that the interpretation of Brussels I had been problematic
in some other areas (eg the relationship with arbitration, contract jurisdiction
and tort jurisdiction) but that with the exception of arbitration these are not
major concerns. Another UK problem with Brussels I remains the illiberal
regime in relation to commercial insurance contracts.
14
Rome I
It was noted that there was an inevitable tension in discussions about choice
of law between certainty – by which the idea that contracting parties should
know, or be able readily to determine, the legal system which governs their
contract – and the idea of justice – the idea that an appropriate or just legal
system applies to the contract (and in context this generally means the law of
the country with which the contract is most closely connected). Where the
parties do not choose and the applicable law is determined in accordance
with Article 4 (Applicable law in the absence of choice) the tension between
certainty and justice is great. But there is less uncertainty in Rome I than in
the Rome Convention.
The general view was that Article 4(1) has created considerable certainty.
The list of contracts in Article 4(1) represents crystallized rules of who the
characteristic performer is. Of particular note is the absence of “wriggle
room” or flexibility: if the conditions of the relevant sub-article in the list are
fulfilled then the indicated applicable law must be applied.
“Where it is clear from all the circumstances of the case that the contract is
manifestly more closely connected with a country other than that indicated in
paragraphs 1 or 2, the law of that other country shall apply” (Article
4(3))(emphasis added).
The crucial question that now arises is whether the English courts will be
able in applying Article 4 (3) to adopt an approach similar to that of the
“weak” presumption in applying the Rome Convention. It seems not. This
should “assure a higher level of uniformity and predictability within the
European area.”
With regards to overriding mandatory rules there is now a clear
definition, i.e. rules that override the usual provisions for choice of law. It is
clear (as it was in the Convention) that “nothing in this Regulation shall
restrict the application of the overriding provisions of the law of the forum”
(Article 9(2)). They cannot be derogated from by contract.
Article 7(1) of the Rome Convention was a controversial provision; it is
based on an idea that overriding public law rules, i.e. mandatory rules, of a
third party state may reasonably claim applicability where there is a close
connection between the transaction and that state. While it clearly is the case
that there may be a connection, even a close connection, between some legal
system (that is neither the lex fori nor the applicable law) and a particular
contract the introduction of such a principle---to be applied on a discretionary
basis by the court---threatens to undermine that very certainty which is so
vital in international commercial contracts and which is one of the major
beneficial results of adopting party autonomy.
But the Rome 1 Regulation has abandoned the principle of article 7(1) of
the Rome Convention and adopted, in Article 9(3) a narrower principle,
essentially similar to the common law principle: it is contrary to public policy
to enforce performance which is illegal under the law of the place of
performance.
15
Article 27(2) requires the Commission to produce a report: “on the
question of the effectiveness of an assignment or subrogation of a claim
against third parties and the priority of the assigned or subrogated claim over
a right of another person. …” Only the “Final Report” on the same topic
produced by the BIICL for the Commission is available. A useful example
from Professor Hartley was provided (in International Commercial Litigation,
752-753).
“Let us assume that A is the creditor and that he has a claim against B
(the debtor). A assigns this claim first to one assignee (C-1) and then
to another one (C-2). If either or both of the assignees approaches B
demanding payment, the question whom he should pay is a [Article
14(2)] issue: the law governing the claim assigned will decide this
question. Presumably, one assignee will get paid; the other will not.
Let us assume that C-1 is entitled to payment [under that law].
C-2 will not be able to do anything more as regards B. He
might then turn to A. If he claims a remedy from A – perhaps
rescission, perhaps damages - the law governing the contact of
assignment between them will apply: this would be an [Article 4(1)]
issue.
Let us assume that C-2 gets no satisfaction from A. Perhaps
the latter is bankrupt. The only remaining possibility would be to sue
C-1. The issue would now be one of priority of rights. Here we are in
[Article 4(3)] territory. The law applicable under [Article 4(3)] would
decide which assignment has priority. If under that law – unlike the
law governing the claim assigned [as we have seen] –the assignment
to C-2 has priority over that to C-1, the latter would have to hand over
the payment to the former.”
Thus the question, unanswered by the existing Article 14(3) and to be
answered by the 27(2) report, is what law governs the Article 14(3) issues?
The “Final Report” considers, exhaustively and very valuably, three
possibilities: the law of the contract between assignor and assignee, the law
applicable to the assigned Claim and the law of the assignor’s habitual
residence. The “best bet” is the law applicable to the assigned claim. But
perhaps an exception for factoring: the law applicable to the assignor’s
habitual residence (proposed by UK). The Commission will publish its own
report on assignment drawing from the BIICL report soon. The case law in
the UK is largely on the Rome Convention with no significant developments
yet in the interpretation of Rome I.
16
Rome II
European integration has encouraged cross-border trade, the consolidation of
industry and led to a marked increase in migration of people across Europe.
In finding methods for resolving cross-border disputes the EU legislators’
aims were based of predictability of the outcome of the litigation, to create
certainty of the applicable law, and to create private international law rules,
which designate the same national law irrespective of where the parties
litigate.
Private International Law is extremely important in Europe. Given the
legal diversity across Europe, and the subsequent difficulties in harmonising
substantive law provisions, it is unlikely that it will be possible to unify
substantive law at present. The success of European integration in the private
law field is currently being achieved by harmonising PIL instruments which
preserves the inherent characteristics of the diverse legal systems.
Homawoo v GMF Assurances SA, Case C-412/10, [2011] ECR I-11603 - The
temporal scope
This case concerned a road traffic accident, personal injury and damages,
which occurred in France on 29/8/2007. The vehicle was insured by GMF.
Homawoo made a claim on 8/1/2009. The question was whether the
assessment of damages should be governed by English law (lex fori) or French
law (lex causae)? Did Rome II apply? Rome II was published in the Official
Journal on 31st July 2007. On the one hand, Article 31 - Application in time –
“This Regulation shall apply to events giving rise to damage which occur
after its entry into force”. On the other hand, Article 32 – “this Regulation
shall apply from 11 January 2009, except for Article 29, which shall apply
from 11 July 2008”.
The issue whether Rome II applies to the claimant’s claim was important –
Justice Slade noted: “Where a tort is alleged, the parties will frequently seek
to reach a settlement before commencing proceedings. The pre-action
protocol for Personal Injury encourages this. Parties may engage in
mediation. They need to know whether Rome II applies to the calculation of
damages at issue.” Homawoo v GMF Assurances SA and Ors [2010} EWHC 1941
(QB) [46].
Re “Justice” – Justice Slade noted: “Paragraph (14) of the preamble to
Rome II refers to the requirement of legal certainty and paragraph (16) to the
fact that 'uniform rules should enhance the foreseeability of court decisions'.
In my view these objectives would not be achieved if the application of Rome
II were to depend on the date of issue of proceedings or the date of
determination by a court of an issue regarding its application.” Homawoo v
GMF Assurances SA and Ors [2010] EWHC 1941 (QB) [47]
A reference was made to the CJEU. In Case C-412/10, [2011] ECR I-11603
the Court held that: “Articles 31 and 32 of Regulation (EC) No 864/2007 of
the European Parliament and of the Council of 11 July 2007 on the law
applicable to non-contractual obligations (‘Rome II’), read in conjunction with
17
Article 297 TFEU, must be interpreted as requiring a national court to apply
the Regulation only to events giving rise to damage occurring after
11 January 2009 and that the date on which the proceedings seeking
compensation for damage were brought or the date on which the applicable
law was determined by the court seised have no bearing on determining the
scope ratione temporis of the Regulation.”
Rome II and Motor Insurer Directives
Jacobs v Motor Insurers Bureau [2010] EWHC 231 (QB)
This case concerned injury from a road traffic accident in Spain 19/12/2007.
Bartsch – German – resident in Spain - no insurance undertaking. Claim
against MIB in its capacity as compensation body under Regulations 2003;
The 2003 Regulations, by which the 4th Directive was implemented, approved
the MIB as the compensation body for the purposes of the directive.
The question was whether Rome II was applicable at all. “The fourth
motor insurance directive 2000/26/EC (4th Directive) dated 16.05.00 further
addressed the position of the victim of a motor accident occurring in a
member state other than his state of residence. Much of the directive deals
with the establishment by motor insurers in one Member State of claims
representatives in other member states, so that the victim can negotiate his
claim in his country of residence.” [11] EWHC
Judgment Jacobs v Motor Insurers Bureau [2010] EWHC 231 (QB)
Layton QC – “primary submission is that this is not a situation that involves a
conflict of law, and that in consequence Rome II does not apply. He submits
that regulation 13(2) provides a free standing right to compensation, the
enforcement of which does not involve a choice of law. He argues that once
the pre-conditions set out in regulation 13 are met, the MIB is obliged to pay
compensation, and, per regulation 13(2)(b), shall compensate the injured
party in accordance with Article 1 of the 2nd Directive as if the accident had
occurred in Great Britain.” [20]
Owen J – considered relationship between Rome II and the 2003
Regulations, and held that Rome II must prevail.[29]
The law applicable is that of Spain. Noted: “If the defendant assesses and
pays compensation to the claimant on the basis of the law of England and
Wales, and is reimbursed by the Spanish guarantee body, the latter's
subrogated claim against Mr Bartsch, if it chose to enforce it, would be
brought in the Spanish courts, and adjudicated upon under Spanish law. That
would be wholly inconsistent with the objective of Rome II” [37]; “In short
the effect of the construction for which the claimant contends would be to
allow the injured party's state of residence to determine the law to be applied
to the computation of his claim, an outcome wholly contrary to the object of
Rome II” [39]
Refused to make a preliminary reference to the CJEU [50].
18
Judgment - Jacobs v Motor Insurers Bureau [2010] EWHC 231 (QB)
Layton QC – the rights against MIB derives from the 2003 Regulations [23];
“Under English conflicts of laws rules the assessment of damages gives rise to
a separate issue. The difficulty in the present case lies in the words "as if it
were the body authorised under paragraph 4 of that Article and the accident
had occurred in Great Britain". Mr. Layton submitted that those words oblige
the MIB to pay compensation assessed on the basis that the accident had
occurred in Great Britain, that is, assessed in accordance with English law,
and he also relied on Article 1(7) of the Second Directive which provides for
each Member State to apply its own laws, regulations and administrative
provisions to the payment of compensation by the guarantee fund for which
it provides.” [33]
“O'Brien, on the other hand, submitted that the whole of the expression
"as if it were the body authorised under paragraph 4 of that Article and the
accident had occurred in Great Britain" simply reflects the fact that the MIB,
which acts as the guarantee fund for Great Britain pursuant to Article 1(4) of
the Second Directive under the terms of the Untraced Drivers Agreement and
the Uninsured Drivers Agreement, has also been designated by the United
Kingdom as the compensation body required by the Fourth Directive. Those
words were, he said, necessary to impose on the MIB in its capacity as
compensation body an obligation of the kind that it already bore as guarantee
fund, including a liability in respect of accidents occurring abroad.” [33]
“A legal fiction may have consequences beyond its immediate purpose.”
[34] So did it have consequences on this occasion? It was held that Reg
13(2)(b) was not a choice of law clause; English law applies to assessment of
damages; Spanish law would apply to the issue of liability.
Rome II Substance and Procedure
Wall v Mutuelle De Poitiers Assurances [2013] EWHC 53 (QB)
This case concerned personal injuries as a result of a traffic accident in France
14/7/2010. Wall claimed against the insurer on the 22/12/2011. On 21 May
2012 judgment was entered for the claimant for damages to be assessed.” [2]
“The issue which the court had to decide is a technical issue which had arisen
during the course of the case management being conducted by Master Cook.
On 30 October 2012 he ordered the trial of the issue, which is expressed in the
following terms: "Does the issue of which expert evidence the court should
order fall to be determined:
(a) By reference to the law of the forum (English Law) on the basis that
this is an issue of 'evidence and procedure' within Article 1.3 of Rome
II; or
(b) By reference to the applicable law (French law) on the basis that
this is an issue falling within Article 15 of Rome II?" [3].
“The Claimant has asked the Master to give permission for him to call a
number of experts, as is customary in English litigation of this kind.” [32]
“The Defendant submits that permission should be given for only one (or
perhaps one or two) expert witness to be called, and Mr Browne refers to that
19
witness as being "a French medico-legal expert". By the word "French" he is
not referring to the nationality of the witness, but to a single expert witness of
a kind who is appointed in French personal injury litigation in accordance
with French law.” [33].
It was held that the issue of which expert evidence the court should order fell
to be determined by reference to the law of the forum (English Law), on the
basis that this is an issue of 'evidence and procedure' within Article 1.3 of
Rome II. [45]. The English “court is not required to put itself in the position of
a court in France and to decide the case as that court would have decided it.
This court is not required to adopt new procedures.” [44].
Using expert witnesses is an important issue especially when dealing
with different Member States’ laws.
How is Rome II perceived?
The suggestions were that there might be a level of uncertainty, which affects
the settlement negotiations, made by Judges Tomlinson and Slade at initial
stages of application of Rome II. A question was put forward to ask if there
was any scope for further tactical manoeuvring? The general view was that
there were not too many cases as all the judgments refer to recitals of Rome II
as laying down important principles.
Three issues were identified as needing further investigation: the first
being how does Rome II affect the suing decision of potential claimants? The
second, how does Rome II affect the settlement negotiations once a dispute
has arisen? Finally, how does Rome II affect the litigation strategies and
expenditures of both parties if settlement cannot be reached?
It was recommended that further research was necessary; both a
comparative study and an empirical study. A cross-border consortium was
identified as being key as it would promote debate across boundaries,
(engaging academics and practitioners) in the targeted countries. Identify
country specific issues, bearing in mind legal traditions and feed them into
the cross-border debate. The synergies should allow us to identify a workable
solution in the European context.
THE TREATMENT IN THE UK OF SOME SPECIALIST COMMERCIAL PIL TOPICS WITH
AN EU INTEREST.
Collective Redress
As background, collective redress is a mechanism, which allows similar
claims against the same defendant to be consolidated in one action. In June
2013, the European Commission published a ‘Recommendation on common
principles for collective redress mechanisms in EU’. (COM (2013) 3539/3)
This is, at least for now, an end of the long-lasting consultation and legislative
work on the establishment of an EU framework of collective redress. The
Recommendation does not impose compulsory rules to each Member State,
but provides non-binding principles that should be respected by Member
20
States when establishing national collective redress mechanism. It sets up
criteria for competent representative entities, adopts an opt-in principle, and
prohibits contingency fees and punitive damages. This result comes as a
surprise and disappointment to most consumer bodies and legal
practitioners. In general, the Recommendation provides more safeguards to
prevent the abusive litigation than principles to facilitate collective redress for
claimants. One of the few principles that aim to facilitate collective redress
lies in the area of cross-border cases. The Recommendation clearly states that
‘where a dispute concerns natural or legal persons from several Member
States, a single collective action in a single forum is not prevented by national
rules on admissibility or standing of the foreign groups of claimants or the
representative entities originating from other national legal systems’ (Art 17)
and (‘a)ny representative entity that has been officially designated in advance
by a Member State to have standing to bring representative actions should be
permitted to seize the court in the Member State having jurisdiction to
consider the mass harm situation’. (Art 18) It demonstrates that the court of a
Member State should not decline to hear a cross-border collective redress due
to the reason of admissibility or standing of foreign representative bodies or
claimants domiciled in another Member State. It, however, implies that
hearing of a collective redress may be declined if this court has no
jurisdiction.
Jurisdiction of a collective redress action is complicated. Collective
redress is different from individual redress in that the former action involves
mass claimants, who may have domicile in more than one Member State, and
the cause of action may also occur in different countries. European private
international law is rule-based in that all jurisdiction and choice of law rules
are designed to govern the pre-designated situations. When the Brussels I
and the Rome I regime was established, no consideration was given to
collective redress. The difficulty thus is how to squeeze the new mode of
cross-border litigation into the existing Brussels I and Rome I scheme.
The task is not easy. The European private international law has the
following 6 characteristics, which are incompatible with the nature of
collective redress. Firstly, if jurisdiction is not taken by the defendant’s
domicile, special jurisdiction rules are based on the connection between the
individual dispute and the country. No matter whether the collective redress
is brought on contract or tort, Articles 5(1) and 5(3) both impose connecting
factors to grant jurisdiction to the country where the cause of action, i.e. the
performance of contract or the delictual event, occurs. While mass claimants
domiciled in multiple Member States are involved, their dispute would
inevitably concern contracts performed or delicts occurring in more than one
Member State. Whether these claims can be addressed in one collective
redress action depends on which approach is adopted, i.e. centralisation
approach (Case C-386/05 Color Drack [2007] ECR I-3699; Case C-204/08
Rehder [2009] ECR I-6073; Case C-19/09 Wood Floor Solutions [2010] ECR I2121) or proximity approach (Case C-68/93 Shevill [1995] ECR I-415; Case C420/97 Leathertex [1999] ECR I-6747). It is noted that the proximity approach
21
would prevent a pan-EU collective redress from being brought unless it is
brought in the defendant’s domicile.
Secondly, how to deal with party autonomy in collective redress? If
there is a valid exclusive choice of court agreement, the claimant is obliged to
bring the claim in the chosen court and is technically barred from opting-in to
a collective action brought in another Member States. Furthermore, what
effect should be given to a ‘collective redress waiver’ agreement? If it is held
unenforceable against consumers pursuant to the Unfair Terms in Consumer
Contracts Regulations, would it be enforced against other claimants, such as
victims in mass tort? Finally, choice of law agreements may also lead to
different substantive rights and obligations between claimants that may
prevent some claimants from opting into a collective action. (For choice of
law, see also point six below.)
Thirdly, collective redress causes particular difficulties in lis pendens.
Questions arise as to who are the same parties and what are the same causes
of action in representative actions in an opt-in scheme (Art 27); what are
related actions in collective redress. (Art 28) The recommendation does not
provide that a claimant should not opt in more than one collective action.
Furthermore, it allows the claimant to opt in and withdraw at anytime before
judgments or settlements. It shows that the composition of claimants in
representative actions may be continuously changing. It is likely that
overlapping may exist between claimants in two representative actions.
Would the lis pendens rule require the second seized court to split the action
and stay actions of those claimants who opt into the first representative
action? Furthermore, these representative actions will be ‘related actions’ any
way. How should discretion be exercised to stay jurisdiction under Art 28?
Fourthly, what would be the out of EU impact of European collective
redress? Would third country claimants be allowed to opt-in to a European
collective redress as a matter of principle? If the answer is yes, is there any
jurisdictional barrier if a representative action is brought not in the
defendant’s domicile, but in the domicile of most claimants where the
damage occurred? What if a class action against the same defendant is
pending in a third country? What happens if European claimants do not optout of a US class action but opt-in to a European representative action? How
would the concurrent collective actions affect recognition and enforcement of
judgments?
Fifthly, in terms of recognition and enforcement of judgments, two
points need to be mentioned. One, exequatur is abolished in the Brussels I
Recast and there is no exemption for collective redress. This is different from
the original Commission proposal, which maintains exequatur for collective
redress. Is the original concern in relation to collective redress addressed? Are
there sufficient safeguards to justify the abolition of exequatur in collective
redress decisions? The defendant may apply to refuse recognition and
enforcement based on the ground that the judgment is ‘manifestly contrary to
public policy’. This may be upheld if the collective redress mechanism is
22
contrary to the principles in the recommendation, e.g. punitive damages are
awarded, an opt-out scheme is adopted, contingency fees are allowed, etc.
Sixthly, in terms of substantive rights, one substantive law should be
applied to all claimants in a collective redress action. In consumer contracts,
all consumers are entitled to the protection of mandatory rules of their
habitual residence, which is fundamentally inconsistent with the requirement
of collective action. Applicable law to each claimant may also differ in
ordinary contract or tort claims. The European Parliament has suggested that
one solution could be to apply the law of the place where the majority of the
victims are domiciled. (European Parliament Resolution 2012, [27]) This
solution is reasonable given the fact that individual claimants, if one does not
want to give up the default applicable law to individual claims, are always
free not to opt in a collective action.
Competition
Private International Law and the Private Enforcement of Competition Law.
Private International Law is one of the difficult legal areas or ‘obstacles’ to
effective private enforcement. Two questions concerning jurisdiction were
put forward for discussion. The first was “Can I as one of the alleged victims
act as a claimant and sue here? Or must I sue there?” The second took a more
contentious approach and asked “Can I as the infringer sue for negative
declaration/commence proceedings as a claimant to frustrate an impending
claim via lis pendens?” The settlement strategy for each scenario was
discussed.
Under Brussels I Jurisdiction provisions the first question we need to
ask is who are we suing? Need to identify the correct defendant from the
Commission’s decision. Looking to Brussels I art 2 as modulated by art 60 or
special jurisdiction gives you a lot of options as the company may be in more
than one Member State. Need to ask if there is a jurisdiction clause as under
art 23 jurisdiction clauses may be ineffective (Provimi [2003] EWHC 961
(Comm)). (It was noted that the difficulty with these cases is that they always
settle outside of court).
What options are there for special jurisdiction? Art 5(1) is for contract
declaration claims. Art 5(3) is for delict Damages/injunction claims (having
located the harmful event. Art 6(1) for multi party claims with a risk of
irreconcilable judgments.
Challenges for the Member States’ courts applying Brussels I. The
tactical nature of the EU competition law disputes poses operational
problems for the Member States’ courts who apply Brussels I. Brussels I was
not designed with tactical competition law disputes based on Commission
Decisions concerning treaty provisions with HDE in mind. Natural national
responses to undue manipulation of jurisdictional provisions may fall foul of
Brussels I as contrary to ‘mutual trust’. Settlement strategies obstruct case law
23
development. CJEU has a limited role and is unlikely to get many cases
because settlement is the usual outcome.
With regards to Choice of Law via Rome II Art 6(3) and Art 15,
Competition Law claims came late to Rome II and were hurriedly amended
in the closing stages by Art 6 (3)(b). Art 6(3)(a) concerns the law(s) of the
country where the market is or is likely to be affected. Art 6(3)(b) if the
market is affected in more than one country then if claimant sues in the
domicile of the defendant then the law of the court seised applies, also if
multiple defendants domiciled elsewhere are sued subject to the common
restriction of competition with direct effect on the said market. Art 15 of
Rome II defined and extends the area of applicable law(s) inter alia, liability
including liability for acts of another, damages and quantum, limitation
periods and prescription rules and the potential to transfer damages claim.
With regards to further EU developments, the problematic status of
competition law claims in Rome II was partially due to DGCOMP/N Kroes
unsuccessfully pursuing an independent policy of improving private
enforcement via a European Legislative measure. On 11/06/2013
Commissioner Almunia published a draft Directive proposal (COM(2013)
404) which jettisoned many problematic issues seeking harmonisation of:
limitation periods, joint and several liability imposed, pass on defence,
allowed but restricted, disclosure of evidence, probative value of national
decisions, quantification of harm, consensual dispute resolution (suspending
limitation period).
Concerning further national developments, the Member States to
pursue their own policies concerning competition law. The UK Consumer
Rights Bill 2013 Part 3 aims to raise the powers and competences of the
Competition Appeals Tribunal (CAT) to be roughly equal with the High
Court. Allow opt out collective (class) actions with 3rd party funding subject
to control by the CAT. In Germany the 8th amendment to the 1957 GWB
comes into force soon, improving private enforcement via disclosure
obligation/ successor liability/ consumer groups/damages for assessment.
Private Enforcement of Competition law is under developed: the usual
comparator is US Antitrust Law. In the EU Member States there are many
difficulties in extracting private law rights from EU provisions during private
litigation even if the case follows a finding of infringement by the EU
Commission. The claimant will therefore seek to place his litigation in the
most advantageous forum and the defendant will resist the claimant’s claim
and preferred litigation options by all possible means
In conclusion the private enforcement remains problematic if viewed
in comparison with US law, the legal difficulties of extracting substantive and
procedural law from the EU Treaty provisions/ EU Regulations /
Commission Decisions during private cross-border litigation conducted
under the law of a given Member State. Political problems arising from laws
of the Member States can and do obstruct existing and proposed EU
legislation – and there are practical difficulties – who sues and to what end
and do we need to encourage it?
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Intellectual Property
English courts are not keen to deal with PIL of intellectual property however
the younger judges are becoming more aware. A common error in intellectual
property is that the judges only look at the infringement but there are other
factors that can be considered such as scope and duration. In our Copyright
Act 1988 there is a closed category of works. Many other countries have other
definitions that are unclear. The UK courts’ definition is not obvious at all.
There is a private international law issue. Even in harmonised law what do
you do with patents that are made by employees? Work belongs to the
Employer however many Member States have the opposite view.
Brussels I Recast numbers
Article 4 works well for intellectual property. There is nothing wrong with
the possibility of suing in the domicile of the defendant. There is also, in
relation to the unitary patent the fact that the single court is a court for the
purpose of the Regulation. Art 7(1) place of performance of the obligation in
question. This can work well for IP contracts but there can be uncertainty
where IP rights need to be performed. Art 7(2) where the infringement occurs
or may occur is fine for single jurisdictions. But there are many multiple
jurisdiction cases; the internet makes many cases potentially
multijurisdictional. One of the big problems is that Art 7(2) is simply an
alternative to Art 4. It doesn’t provide a solution if a foreign (Non EU) party
infringes local or unitary IP rights, hence the proposal to apply anyway for
unitary patent or even court of location of property.
Article 8(1) multiple defendants in one court. The Roche disaster (C539/03 [2006] ECR I-6535) - doesn’t make sense to bring individual case in
each country need an option of multiple defendants in one country Member
State. It is hard to reconcile this with Painer (Case C-145/10 [2011] ECR I00000). A copyright directive offers sufficient harmonisation for there to be
the same legal ground and risk of irreconcilability.
With regards to Art 24(4) exclusive jurisdiction and validity. This
makes less and less sense. GAT (Case C-4/03 [2006] ECR I-6509) is
commercial nonsense. The unitary patent system leaves it to the choice of the
infringement court (no inter parties limitation). This creates difficulties for
centralisation of multistate cases.
As to the Choice of Law Rome II Infringement of IP rights. Art 8 is
considered to be good. The lex loci protectionis approach reflects the
territoriality of IP. But the disadvantage is a country-by-country approach
with many different applicable laws. Two amendments are proposed, the
first is a de minimis rule, no targeting applicable law rule and the second is
that copyright and internet need a single law to be applied – law of the
defendant.
Rome I and contract choice of law. Art 3 causes no problem as it
provides for freedom of choice by the parties. Art 4 has no intellectual
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property category. It uses the habitual residence of the party performing the
characteristic performance. There could be difficulty with cases with bilateral
and reciprocal obligations and characteristic performances. It would be hard
to apply and unpredictable and uncertain. It was also put forward that there
could be a risk of heavy use of the closer connection escape clause.
IP doesn’t like characteristic performance. It is much happier with the
closest connection approach. In conclusion UK judges are trying to work
with it however it is recommended that we need a single instrument.
The effectiveness in the UK of certain family related EU PIL Instruments
Brussels IIa
The available statistics indicate that the UK is the busiest EU jurisdiction in
terms of the number of application for return of the abducted child received
from other Brussels IIbis States annually. In 2008, the UK received 146
applications from fellow Brussels IIbis States that accounted for 21% of all
intra-EU applications. The UK was followed by Germany and Poland with 76
and 54 applications respectively.
There is evidence that the majority of return applications dealt with by
the UK comes from within the EU. For example, in 2008 the UK received a
total of 220 applications for return under the 1980 Hague Abduction
Convention and the Brussels IIbis Regulation. Of these, 146 (66%) came from
other Brussels IIbis States.
In terms of outcomes, UK courts have shown an extremely high level
of commitment to the return objective of the 1980 Hague Abduction
Convention and the Brussels IIbis Regulation. This is evidenced by both
available statistical information and published case-law. With regards to the
former, in the first year of the operation of the Regulation, the majority of
intra-EU return applications received by UK CAs (51 out of 113) resulted in a
judicial order for return being made. Further 15 applications were resolved
by a voluntary return. Altogether therefore, the overall return rate was 58%
which was above the average EU return rate of 55%. Only 4 applications were
judicially refused which indicates that there was no overuse of the
Convention exceptions to return.
Unfortunately, no comparable data was available for 2008.
Art 11(3) of the Regulation imposes on the courts of Member States an
obligation to issue a decision in intra-EU return proceedings within six weeks
from being seised of the matter. Although EU jurisdictions have generally
found the six-week time limit an exceedingly hard target, UK courts have
shown a strong determination to adhere to the time-limit (Vigreux v Michel
[2006] EWCA Civ 630, [2006] 2 FLR 1180).
Also available statistics show that England & Wales is the most efficient
European jurisdiction when it comes to dealing with return applications
under the Regulation.
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What impact has the provision of Art 11(2) of the Regulation had on
the treatment of the voice of the child in abduction cases in the UK?
Following the Supreme Court decision in the non-Brussels IIbis case of Re D (a
child) [2006] UKHL 51, [2007] 1 AC 619, the obligation of Article 11(2) to give a
child an opportunity to express his/her views in return proceedings has
become a principle of ‘universal application’. In this case the principle was
declared as being applicable to all Convention proceedings, ie including
those that are not governed by the Brussels IIbis Regulation. Re D also
introduced a rule under which the obligation of Article 11(2) must be
complied with in all Convention cases, not just those in which the defence of
child’s objection is raised.
Even prior to the adoption of the Regulation, UK courts had
interpreted the ‘grave risk of harm’ defence in a very strict fashion,
essentially identical with the wording of Art 11(4) of the Regulation (eg T.B. v.
J.B. (Abduction, Grave Risk of Harm) [2001] 2 FLR 515 at para [110] per Laws LJ).
Art 13(b) defence remains very hard indeed to establish in UK courts.
Other issues concerning parental responsibility included art 20 of
Brussels IIbis and provisional measures. Here it was noted that the UK courts
have adhered to the narrow interpretation of article 20. Re S (Care: Jurisdiction),
[2008] EWHC 3013 (Fam). Art 20 empowers a local authority to take interim
protective measures and empowers a court to make interim orders in respect
of a child who is in the UK but is habitually resident in another MS. However,
a final care order would go beyond the confines of Art 20.
With regards to Art 12 concerning prorogation of jurisdiction it was
noted that it extended to a child living in a non EU Member State and that the
UK courts had responded positively to this.
Finally the English courts when dealing with a stay of court
proceedings in favour of a non Brussels IIbis State have continued to grant
discretionary stays in favour of third countries eg Ella v Ella [2007] EWCA Civ
99 and JKN v JCN (Divorce Fam) [2010] EWHC 843 (Fam). In the latter case it
was argued that it was not open to decline the jurisdiction of UK courts in
favour of 3rd States. However it was thought that this approach risks
irreconcilable judgments, parallel proceedings and increased costs.
Succession
Regulation (EU) 650/2015 (4 July 2012) seeks to harmonise rules of private
international law relating to succession amongst member states of the EU.
Both the nature and the scope of the project were hugely ambitious. There
were meetings of a group of experts appointed to advise the Commission
over several years, followed by a proposal being put forward by the
Commission, which was negotiated by the member state delegations, and
finally enacted on 4 July 2012. It mostly comes into force in relation to deaths
taking place on or after 17 August 2015, but with important transitional
provisions.
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The formal position of the UK is the same as that of Ireland. By virtue
of protocol 21 to the treaty on EU the UK is not bound by a regulation in this
area of the EU’s competence nor subject to its application, unless it chooses to
opt in. The UK and Ireland decided not to. Recital 82 now says that ‘those
Member States are not taking part in the adoption of this Regulation and are not
bound by it or subject to its application.’ So the terms of the Regulation do not
form part of the law of any part of the UK. On the other hand, the contents of
the Regulation do form part of the law of the other Member States.
The first point concerns the reference throughout the Regulation to the
phrase ‘Member State’. Is the UK a ‘Member State’ within the Regulation?
Recital 82 actually refers expressly to the UK and Ireland as ‘those Member
States’. If the UK is a ‘Member State’ then acts in the UK legal systems will
have effects in the rest of the EU (except Ireland and Denmark). For example,
if a UK Court made a succession decision involving a Frenchman, and the
judgment were taken to France, would article 39(1) apply to it? That
paragraph requires that the French court recognise a succession decision
‘given in a Member State’. That will be part of French law, and therefore (on
this view) the French Court must recognise the UK judgment. But of course
the same would not be true in the opposite direction. Even though
article 39(1) refers to a decision being ‘recognised in the other Member States’,
a French decision would not be recognised in the UK under this provision
because, as already observed, the terms of the Regulation form no part of UK
law.
The result does seem rather one-sided. Commentators have therefore
assumed that ‘Member State’ means only those Member States that are bound
by it. In that case the UK would fall within the phrase ‘third State’ used in
the Regulation. If so, a decision in the UK in proceedings involving the same
cause of action and between the same parties that was earlier in time than say
a decision in France and was irreconcilable with that decision, would mean
that the French decision would not be recognisable in another Member State,
say Italy: see article 40(d). So that even if the UK is to be treated only as a
‘third State’ a number of acts which occur in the UK may still have impact in
other Member States.
But there are also other provisions which have effect whatever kind of
state the UK is. One of the most important is article 20 of the Regulation
which provides that ‘Any law specified by this Regulation shall be applied whether
or not it is the law of a Member State.’
Article 21 of the Regulation provides that the general rule is based on
the habitual residence of the deceased at the time of death. There is an
exception for the case where at that time he was manifestly more closely
connected with another State.
However, article 34(1) provides that if the law selected were the law of
a non-Member State and its PIL rules made a renvoi to the law of a Member
State, then that renvoi would have effect, so as to bring the applicable law
back to a Member State. This is subject to article 34(2), which provides that
there should be no renvoi at all in respect of the laws referred to in some of the
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articles of the Regulation, including article 21(2), and article 22 (option to
choose nationality instead of habitual residence)
Case study: A French national could move to England and become
habitually resident there, so that under article 21(1) it would mean that
English law would apply to the succession of that French national. But under
article 34 this would include the PIL rules so far as they made a renvoi back to
the law of a Member State. The English choice of law rules would ask in
relation to immovable property where it was and in relation to movable
property what the domicile (in the English sense) of the deceased was. If he
was domiciled in France there would be a renvoi back to France for movables.
If the immovable were in France there would also be a renvoi to French law.
If on the other hand the French national were domiciled in England or any
immovable property were situated in England then there would be no renvoi
in respect of the movables or those immovables respectively and accordingly
English law would apply.
If a French national habitually resident in France at death were to buy
immovable property in England, article 21(1) would say that French law
applied to the succession even in respect to the English immovables. But the
English choice of law rules would say that because the immovable is in
England, English law should apply and accordingly there will be a conflict
between the two systems.
There is a problem in relation to so called ‘agreements as to
succession’, defined by article 3(1)(b) to mean ‘An agreement, including an
agreement resulting from mutual wills, which, with or without consideration,
creates, modifies or terminates rights to the future estate or estates of one or more
persons party to the agreement.’
This seems to cover most kinds of proprietary estoppel or constructive
trust claims in English law. If that is right, article 25 will apply. This
provides that the substantive validity of the claim is governed by the law
which under the Regulation would have been applicable to the succession of
that person if he had died on the day on which the agreement was concluded.
So if a person were to create some kind of obligation in relation to his own
estate by act done when he was habitually resident in England, but
subsequently were to go and become habitually resident and die in another
Member State, the substantive validity of this ‘agreement as to succession’
would be judged by the law which would have been applicable to the
succession of that person if he had died at the time of the acts concerned. At
that time he would have been habitually resident in England so that would
have been the applicable law under article 21(1).
Finally, there are the transitional provisions contained in article 83 of
the Regulation. As already mentioned, the Regulation is intended to apply to
the succession of persons who die on or after 17 August 2015 (paragraph 1).
But there are three other provisions which can have effect in relation to acts
which happen prior to 17 August 2015. Paragraph 2 of the article provides
that a choice of law made prior to 17 August 2015 is valid if it was valid
under the PIL rules in force in the state of his habitual residence or nationality
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at the time it was made. Paragraph 3 provides (inter alia) that a will made
prior to 17 August 2015 with substantive validity under the PIL rules in force
in the state of his habitual residence or nationality at the time it was made
remains substantively valid. Finally, paragraph 4 provides that a will is valid
if made prior to 17 August 2015 in accordance with the law which the
deceased could have chosen under article 22 being the law of his nationality
at the time of the choice.
Maintenance
Since June 2011 Regulation no 4/2009 has applied to claims for the recovery
of maintenance and child support within the EU.
The UK has four designated Central Authorities: England and Wales,
Scotland, Northern Ireland and Gibraltar. In the period October 2011September 2012, the UK received at least 970 incoming applications under the
Regulation. Of these England and Wales received 862, more applications than
any other Member State, Scotland received 80, Northern Ireland 28 and
Gibraltar zero. Each part of the UK received more applications from Poland
than from any other Member State (England and Wales received 551). The
English and Welsh Central Authority also received around 50 applications
from Finland, Ireland and Latvia and smaller numbers of applications from
the other States.
So how well are they staffed? No legal representative in REMO:
currently 5 practitioners to deal with the caseload. In Scotland: only 1 person
dealing with maintenance cases just now, although he also has to deal with
other work of the justice department. This means he was unable to complete
the questionnaire so we only have information on the number of applications
received in Scotland.
Capacity of practitioners to deal with case load: This can be measured
by looking at whether the 30 and 60 day requirements in Article 58 are being
met on a regular basis. The England and Wales Central Authority met the 30
day requirement in around 70% of cases. This is lower than the rate for all
Central Authorities, which was 76%. However there were a number of
Central Authorities who met the requirement in over 90% of cases. If the
Regulation is to operate efficiently and the effects are not to be ‘diluted’ then
all Central Authorities should seek to meet the time requirements in over 90%
of applications. The feedback on the 60 day requirement was even worse
since England and Wales only met this in 5% of applications! The rate across
the EU was 29%. There is little point in the Regulation containing time
requirements if these are not being adhered to, and the Commission should
seek to enforce the proper application of the Regulation by the Member States
as far as possible.
In Scotland we are aware of a case involving Catriona Archer who has
been trying to claim child support for her son on the basis of a Scottish
maintenance order she has had since 2007. The father is apparently in
Bulgaria, but is an Irish citizen who has worked in Kazakhstan. As an aside
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point an email address is still not available for the Bulgarian Central
Authority on the European Judicial atlas, two years after the Regulation
entered into force! However, it is noted that there is now a telephone and fax
number which is a relatively recent development. Catriona has reported
problems with both Central Authorities and their lack of willingness to deal
with the case. She has sometimes received legal aid but not always. She has
contacted both her MEP and Alex Salmond who have since tried to assist
with her case so that the order is enforced. There has recently been some
minor progress. It is argued that if the Central Authorities had appropriate
resources and sufficient numbers of staff then the First Minister would not
have to get involved.
There also appears to be problems with the provision of legal aid.
England and Wales did not provide any information on the number of
applications for which legal aid was provided. However, they were not alone
in this; the majority of Central Authorities avoided the question on legal aid.
Therefore, it is unclear whether the provision for free legal aid in child
support applications is working in the UK or being applied properly. A
contact who works for a law firm indicated recently that she was dealing
with an establishment case from Sweden for child support. Legal aid was
being claimed in respect of the application. However, the father voluntarily
paid £12,000 before the application had been dealt with fully so in the end
legal aid was not necessary and the case has not been taken any further.
Therefore, we are still awaiting a clear example of the provision of legal aid
under the Regulation in England and Wales.
The Republic of Ireland did provide information on legal aid.
Although this is a separate Member State and not part of the UK the findings
were interesting. Ireland only provided legal aid in 30 out of 290 applications.
The majority of these were for applications for recognition and enforcement
of a decision, so when this was queried they correctly pointed out that as
decisions originating in Ireland were now automatically enforceable; no legal
aid was needed at this stage. However, when carrying out the research it was
found that the majority of applications were still going through the
recognition and enforcement stage because they had not been decided in
accordance with the Protocol on applicable law. For example, Ireland had 186
applications for recognition and enforcement, in which case legal aid should
still have been provided.
Despite the abolition of exequatur, the majority of applications are still
being sent under Article 56(1)(a) for recognition and enforcement, primarily
because of the transitional period. However, it is considered that this alone
cannot account for such high numbers of applications for a declaration of
enforceability, and there is also a misunderstanding of the provisions
contained in the Regulation. This is particularly true when many of those
working at Central Authorities have not been given training on the new
instrument, which contains complicated legal rules, and many are not legally
qualified. A common misconception seems to be that all applications
involving the UK still need to go through the declaration of enforceability
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stage when in fact it is only outgoing applications from the UK and not
incoming applications that need to go through this process.
It is clear that there are a number of applications circulating under the
Regulation, but there does not appear to have been much case law to date.
This is because the majority of claims are uncontested, settled outside court or
voluntary payments are made. An interesting big money case that was heard
recently but is likely to be appealed again is Kremen v Agrest [2012] EWHC 45
(Fam). The case involved a variety of assets that are located in a number of
different States. However, the court stated that the maintenance part of its
order which amounted to £8.3 million could be circulated and enforced under
the Maintenance Regulation.
The UK did not opt in to the negotiations on the Regulation and only
opted in to the Regulation after it was agreed. The UK’s decision not to opt in
to the negotiations was primarily due to its concerns about the costs of
having to apply foreign law in low value child support claims and also due to
concerns about how to split the application of foreign law between the
maintenance and matrimonial property issues in high value matrimonial
cases. One advantage of the UK not opting in was that the negotiations on
applicable law were focused on the Hague rather than Brussels and kept out
of the Regulation. The application of the Hague Protocol in other EU Member
States has the advantage of reducing greatly concerns about UK citizens
being exposed to maintenance obligations that exist in other parts of the EU
but not in the UK (mainly maintaining elderly parents and siblings, see the
defence in Article 6 of the Protocol). The fact that the UK does not apply the
Protocol means that no equivalent protection is given to other EU citizens
facing controversial maintenance obligations in the UK (notably those arising
from civil partnerships and soon same sex marriages). This is why the public
policy defence is kept at the declaration of enforceability stage for UK
judgments in other EU Member States.
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