Conflict of Laws .net

Following the reference to the ECJ of the West Tankers case by the House of Lords, first comments on the subject-matter of the preliminary question are provided by three articles written by scholars affiliated to the Max Planck Institute for Comparative and International Private Law (Hamburg).

Here’s a presentation of the articles, from the Institute’s website:

On the occasion of the House of Lords referral, Institute researchers have renewed their engagement with the question of the reconciliability of the English anti-suit injunction in support of arbitration agreements with European procedural law. Their opinions conclude that the ECJ in continuance of the judicature it has thus far developed is also likely to declare that anti-suit injunctions supporting the implementation of arbitration agreements are incompatible with EC Regulation 44/2001 and other fundamental European laws.

As such, Martin Illmer and Ingrid Naumann explain in their article, appearing in Internationales Handelsrecht 2007, 64, that the rationale in the ECJ Turner decision is equally applicable to the legal context of arbitration agreements and that the economic considerations set forward by the House of Lords represent unjustified protectionism in favour of London arbitral settings.

In a continuation of their earlier published work on anti-suit injunctions, Anatol Dutta and Christian Heinze consider the English legal regulations and, moreover, comprehensively examine the legality of anti-suit injunctions in protection of arbitration agreements from a European legal perspective in light of EC Regulation 44/2001. In their article “Anti-suit injunctions zum Schutz von Schiedsvereinbarungen”, Recht der Internationalen Wirtschaft 2007, 411, they similarly argue for applying the principles of the ECJ decision in Turner and thereby conclude a breach of EC Regulation 44/2001.

Finally, in “The Impact of EU Law on Anti-suit Injunctions in aid of English Arbitration Proceedings”, Civil Justice Quarterly 2007, 358, Ben Steinbrück adopts the specific perspective of arbitration law and reasons why the decision as to the effects and scope of English arbitration agreements may not permissibly be monopolised by English courts.

The European Commission (DG Freedom, Security and Justice) has published on its website the whole set of contributions (more than 60 papers) received in response to the public consultation launched by the “Green Paper on improving the efficiency of the enforcement of judgments in the European Union: the attachment of bank accounts” (COM(2006) 618 final), released in October 2006 (see our previous posts here, presenting the Green Paper and related documents, and here, on the comments by the Max Planck Working Group).

Contributors include the European Central Bank, governments of the Member States and other national authorities, academics and private parties (banking associations, non-governmental organizations, bar associations, law firms, etc.).

A final version of the Rome II joint text, resulting from the legal and linguistic revision, is available in all languages of the EU in the Register of the Council (doc. PE-CONS 3619/07).

According to current forecasts (see the Rome II OEIL page), the joint text should be officially approved today (25 June 2007) by the Conciliation Committee. Pursuant to Art. 251(5) of the EC Treaty, the Parliament and the Council shall adopt the Regulation in accordance with the joint text within a period of six weeks (that can be extended to eight weeks) from this approval.

Further details on the joint text and the conciliation stage are available on the Rome II section of our site.

In a previous post, I had reported that the French supreme court for private matters (Cour de cassation) overruled last year a century old precedent limiting the enforcement of foreign judgments against French nationals. In Prieur, the Cour de cassation held that Article 15 of the Civil Code should not be construed anymore as giving exclusive jurisdiction to French courts to decide disputes involving French nationals. As a consequence, foreign judgments made against French nationals should be enforced in they meet the other liberal standards of the French law of judgments (as further liberalized by the Cour de cassation in Avianca).

On May 22, 2007, the Cour de cassation confirmed its Prieur decision by applying it to a US judgment. The Superior Court of Alameda County, California, had ordered French company Fontaine Pajot to pay damages to two US nationals. The French company resisted enforcement of the Californian judgment in France on the ground that they had not waived their “jurisdictional priviledge” (as Article 15 of the Civil code was sometimes known) to be tried by a French court. In other words, the French company was arguing that the foreign court lacked jurisdiction from the French perspective since one of the parties was French, and French courts had exclusive jurisdiction over disputes involving French nationals. The appeal is dimissed by the Cour de cassation on the ground that Article 15 only gives optional jurisdiction to French courts, and that it is now irrelevant to determine the jurisdiction of foreign courts, for the purpose of the enforcement of judgments in France.

Eventually, the Cour de cassation held that it was for the trial judges to determine whether there was a significant connection between the foreign court and the dispute, and thus jurisdiction of the foreign court.

For those of you who read French, I quote the important part of the decision (it is also available on legifrance.gouv.fr, but I have been unable to make a link to the decision):

Vu l’article 15 du Code civil; attendu que ce texte ne consacre qu’une compétence facultative de la juridiction francaise, impropre a exclure la compétence indirecte d’un tribunal étranger, des lors que le litige se rattache de maniere caractérisée a l’Etat dont la juridiction est saisie, et que le choix de la juridiction n’est pas frauduleux.

Two conclusions can be drawn from this case. First and most importantly, Prieur is confirmed. Second, denial of enforcement of US judgments will require the identification of a specific issue with the foreign judgment, such as a violation of French public policy for judgments awarding punitive damages. Finally, the new paradigm is doing fine when coping with decisions from jurisdictions where the judiciary is not notoriously corrupt, but a time will come when that will not be the case.

Chee Ho Tham has written an casenote in the latest issue of the Lloyd’s Maritime & Commercial Law Quarterly on “Insolvency proceedings and shareholdings: when is a foreign judgment not a judgment?” (L.M.C.L.Q. 2007, 2(May), 129-136). Here’s the abstract:

Comments on the Privy Council judgment in Cambridge Gas Transport Corp v Official Committee of Unsecured Creditors of Navigator Holdings Plc on whether a US bankruptcy ruling could be enforced against a Cayman Islands corporation which owned shares in an Isle of Man holding company. Discusses whether the US plan of reorganisation was a judgment in rem or in personam or was a judgment at all, for the purposes of enforcement in the Isle of Man.

Available to those with a subscription to the LMCLQ (not available online, unfortunately.)

(Please note that the site will probably be fairly quiet for the next few days, until the conference is over. See you on the other side!)

Here’s a seminar announcement from the British Institute of International & Comparative Law:

As you will undoubtedly know, the House of Lords has referred the case of West Tankers Inc v. RAS Riunione Adriatica di Sicurta SpA & Others [2007] UKHL 4 to the European Court of Justice for a preliminary ruling.

The question raised is whether Regulation 44/2001 permits anti-suit injunctions to protect an arbitration agreement. On 11 July (5-7pm), the Institute has planned a seminar where the case and its potential implications will be discussed.

Chair: - Rt Hon Lord Justice Lawrence Collins.

Speakers:

- Audley Sheppard, Clifford Chance LLP

- Clare Ambrose, 20 Essex Street

- Dr Christian Heinze, Max Planck Institute for Comparative and International Private Law

Participants can download a discussion note. The note introduces the case and further provides an overview of relevant findings of the 2007 Report of the Heidelberg Institute for Private International Law prepared for the European Commission on the application of Regulation 44/2001.

The event will be followed by a reception for all those attending. To register, please visit the Institute’s website by clicking here.

The Swedish Supreme Court (Högsta Domstolen) has referred the following question to the European Court of Justice for a preliminary ruling on the interpretation of Brussels II bis:

The respondent in a case concerning divorce is neither resident in a Member State nor a citizen of a Member State. May the case be heard by a court in a Member State which does not have jurisdiction under Article 3 [of the Brussels II [bis] Regulation], even though a court in another Member State may have jurisdiction by application of one of the rules on jurisdiction set out in Article 3?

This case is pending at the ECJ under C-68/07 (Kerstin Sundelind Lopez v. Miquel Enrique Lopez Lizazo). It represents the second reference on Brussels II bis so far.

The first reference for a preliminary ruling on Brussels II bis comes from the the Finnish Korkein hallinto-oikeus which referred to following questions to the ECJ:

(a) Does Council Regulation (EC) No 2201/2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation (EC) No 1347/2000, (the Brussels 11a Regulation) apply, in a case such as the present, to the enforcement of a public law decision in connection with child welfare, relating to the immediate taking into custody of a child and his or her placement in a foster family outside the home, taken as a single decision, in its entirety;

(b) or solely to that part of the decision relating to placement outside the home in a foster family, having regard to the provision in Article 1(2)(d) of the regulation;

(c) and, in the latter case, is the Brussels IIa Regulation applicable to a decision on placement contained in one on taking into custody, even if the decision on custody itself, on which the placement decision is dependent, is subject to legislation, based on the mutual recognition and enforcement of judgments and administrative decisions, that has been harmonised in cooperation between the Member States concerned?

If the answer to Question 1(a) is in the affirmative, is it possible, given that the Regulation takes no account of the legislation harmonised by the Nordic Council on the recognition and enforcement of public law decisions on custody, as described above, but solely of a corresponding private law convention, nevertheless to apply this harmonised legislation based on the direct recognition and enforcement of administrative decisions as a form of cooperation between administrative authorities to the taking into custody of a child?

If the answer to Question 1(a) is in the affirmative and that to Question 2 is in the negative, does the Brussels IIa Regulation apply temporally to a case, taking account of Articles 72 and 64(2) of the regulation and the abovementioned harmonised Nordic legislation on public law decisions on custody, if in Sweden the administrative authorities took their decision both on immediate taking into custody and on placement with a family on 23.2.2005 and submitted their decision on immediate custody to the administrative court for confirmation on 25.2.2005, and that court accordingly confirmed the decision on 3.3.2005?

This case is pending under C-435/06 (Applicant: C)

A compromise amendment to Art. 5 of the Commission’s Rome I Proposal has been presented by the Rapporteur Ian Dumitrescu in the last meeting of the EP’s Committee on Legal Affairs (JURI). The amendment seems to take into account a number of concerns recently raised on the functioning of the conflict rule on consumer contracts (see our recent posts on the note by the Luxembourg delegation, the document from the Commission on certain financial aspects relating to the application of Articles 4 and 5 and the German position on services supplied to the consumer exclusively in a country other than that of his habitual residence).

The compromise amendment is partly a redraft of the Commission’s proposal, with few relevant modifications:

- the protective rule is not limited to consumers who are habitually resident in a Member State;

- the parties may choose the law applicable to the contract pursuant to Art. 3, but such a law “may not have the effect of derogating” from the law of the consumer’s habitual residence (new para. 2a: compare this provision with current Art. 5(2) of the Rome Convention, according to which “a choice of law made by the parties shall not have the result of depriving the consumer of the protection afforded to him by the mandatory rules of the law of the country in which he has his habitual residence”);

- according to Art. 5(2) of the proposed amendment, the protective rule applies if “(a) the professional exercises his trade or profession in the Member State in which the consumer has his habitual residence; (b) or the professional, by means of deliberate acts, directs his activity towards the Member State in question or a number of countries including the Member State in question”;

- the list of contracts exempted from the protective regime is enlarged (Art. 5(3)), including

(a) a contract for the supply of services where the services are to be supplied to the consumer exclusively in a country other than that in which he has his habitual residence;

[…]

[new] (d) contracts concluded on a financial market and contracts for the purchase, by way of subscription, of shares, bonds or other newly issued securities;

[new] (e) contracts relating to the supply of investment services or financial instruments as defined by Directive 2004/39/EC.

The initial Draft Report under discussion in the JURI Committee, together with two previous sets of amendments, can be found in our previous post here.

The adoption of the Report on the Rome I Proposal is expected in the EP’s JURI Committee in one of the forthcoming meetings. According to current forecasts, the vote at first reading in the Parliament’s plenary session is scheduled on 10 October 2007 (see the Rome I OEIL page).

A very interesting compilation of contributions resulting from a research project on the elaboration of international family law rules within the European Union, funded by the European Commission and conducted by the universities of Antwerp, Barcelona, Louvain-la-Neuve, Lund, Milan, Toulouse and Utrecht has been published by Johan Meeusen, Marta Pertegás, Gert Straetmans and Frederik Swennen:

International Family Law for the European Union.

It contains the following articles:

• Johan Meeusen/Marta Pertegás/Gert Straetmans/Frederik Swennen: General Report

• Masha Antokolksaia: Objectives and Values of Substantive Family Law

• Dieter Martiny: Objectives and Values of (Private) International Law in Family Law

• Helen Stalford: EU Family Law: A Human Rights Perspective

• Alegría Borrás: Institutional Framework: Adequate Instruments and the External Dimension

• Marc Fallon: Constraints of Internal Market Law on Family Law

• Gert Straetmans: Non-Economic Free Movement of European Union Citizens and Family Law Matters

• Johan Meeusen: System Shopping in European Private International Law in Family Matters

• Sylvaine Poillot Peruzzetto: The Exception of Public Policy in Family Law within the European Legal System

• Michael Bogdan: The EC Treaty and the Use of Nationality and Habitual Residence as Connecting Factors in International Family Law

• Marta Pertegás: Beyond Nationality and Habitual Residence: Other Connecting Factors in European Private International Law in Family Matters

• Laura Tomasi, Carola Ricci and Stefania Bariatti: Characterisation in Family Matters for Purposes of European Private International Law

• Frederik Swennen: Atypical Families in EU (Private International) Family Law

• Cristina Gonzáles Beilfuss: Islamic Family Law in the European Union

• Jean-Yves Carlier and Sylvie Saroléa: Migrations and Family Law

More information can be found on the publisher’s website where the book can also be ordered.

Highly recommended.

Giuditta Cordero Moss (University of Oslo) has written an intriguing article in the Global Jurist (Vol. 7 : Iss. 1 (Advances), Article 3) entitled “International Contracts between Common Law and Civil Law: Is Non-state Law to Be Preferred? The Difficulty of Interpreting Legal Standards Such as Good Faith”. Here is the abstract:

Most commercial contracts are nowadays written on the basis of English or American contract models, irrespective of whether the legal relationship that the contracts regulate is governed by a law belonging to a Common Law system or not. These contract models are drafted on the basis of the requirements and structure of the respective Common Law system in which they were originally meant to operate. These models may therefore be in part ineffective or parts thereof may redundant, if the governing law belongs to a Civilian system. To overcome this tension between Common and Civil Law, it is sometimes recommended to subject international contracts to non-state sources of law (also referred to as transnational law, lex mercatoria, soft law). This article analyses the tension between the Common and the Civil Law of contracts, and to what extent non-state sources may represent a satisfactory solution to such tension. This is made by analyzing the role that good faith and fair dealing play in contracts according to the respective systems: English law as an illustration of Common Law systems, Norwegian, German and Italian law as illustrations of Civil Law Systems, the UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law as illustration of non-state sources.

You can download the paper from here.

An interesting article by Boris Schinkels (University of Heidelberg) has been published recently in the European Community Private Law Review (GPR 2007, 106 et seq.):

Die (Un-)Zulässigkeit einer kollisionsrechtlichen Wahl der UNIDROIT Principles nach Rom I: Wirklich nur eine Frage der Rechtspolitik?

The English summary reads as follows:

Article 3 (2) of the Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (Rome I), COM(2005) 650 final, stipulates the autonomy of the parties to choose sets of “rules” as applicable “law” of the contract that do not necessarily form part of the valid law of a state. Yet, current political reluctance towards this extension of party autonomy to non-state rules will presumably result in the deletion of this part of the provision in the legislative process towards the Rome I-Regulation. This contribution especially analyses the assumption that chosen law could be applied “as such”, on which traditional reservation in choice-of-law methodology against the eligibility of non-state law like the UNIDROIT Principles as the substantive “law” of the contract are based. It can be shown that this assumption results from an erroneous concept of “validity” of law. Hence, the traditionalist view not only ignores the general guarantee of freedom for any individual, but also the principle of equal treatment of equal situation as warranted by the EC Treaty with precedence over secondary law such as regulations on choice of law.

Highly recommended.

The Journal of Private International Law Conference 2007 is now only a couple of weeks away. Conference packs are being put together, the state-of-the-art venue is being readied, and a host of internationally-renowned speakers and delegates are preparing to descend on the University of Birmingham, UK on 26 - 27 June for what we will probably be the biggest private international law event this country has ever seen.

There is still time to book your place at the conference and the evening meal. Here are the relevant links:

• The Programme

• The Venue

• Booking and Fees

If you have any questions before or after you book, you can email the Conference Secretary, Miss Emer McKernan at: conflicts-conference@contacts.bham.ac.uk.

I hope to see all CONFLICT OF LAWS .NET readers at the conference.

Continuing the trend of interesting private international cases coming out of the patent and copyright fields (see previous posts here and here), the Second circuit recently decided a case involving the enforcement of a French judgment involving copyrighted dress designs.

In Sarl Louis Feraud International v. Viewfinder, Inc., 2007 WL 1598057 (2d Cir. June 5, 2007), a French court held, by default judgment, that Plaintiff’s copyright in the actual design of dresses was infringed by Defendant’s taking photographs of them and placing them on a website. Enforcement was sought in the U.S. under New York State law. Judge Lynch refused to enforce the French judgment on the grounds that it would be repugnant to the public policy of New York as it would violate Defendant’s First Amendment rights. 406 F. Supp. 2d 274 (S.D.N.Y. 2005). Lynch said it was obvious that Defendant’s activities fall within the protections of the First Amendment, because they are “matter[s] of great public interest, for artistic as well as commercial purposes. . . . [T]he extensive coverage given to such events in various mass media makes clear that there is widespread public interest in these matters.”

Judge Lynch said a conflict arises when U.S. courts are asked to enforce judgments from countries that do not have First Amendment protections.

“Many democratic countries, which share our general commitment to human rights and maintain free and open societies in which freedom of speech and thought is fully respected, differ from us in the resolution of certain questions involving the balance between freedom of expression and the maintenance of ordered liberty, particularly in areas where freedom of expression may be in tension with the protection of other human rights, such as equality or human dignity. . . . Even in those areas, however, where reasonable people and decent societies may reasonably disagree, American courts have recognized that foreign judgments that run afoul of First Amendment values are inconsistent with our notions of what is fair and just, and conflict with the strong public policy of our state.”

The judge noted that the First Amendment protects speech that can be banned in other democratic countries, and courts in the United States have refused to enforce foreign judgments such as one that restricted access to Nazi propaganda in France. American courts also have refused to recognize English libel judgments that would be inconsistent with the U.S. Constitution or the laws of the states.

The Second Circuit just reversed, 2007 WL 1598057 (2d Cir. June 5, 2007). The court began by noting the rule of comity inhering to default foreign judgment, and held that, “for the purposes of this action, we must accept that Viewfinder’s conduct constitutes an unauthorized reproduction or performance of plaintiffs’ copyrighted work infringing on plaintiffs’ intellectual property rights, and the only question to consider is whether a law that sanctions such conduct is repugnant to the public policy of New York.” In so considering, however, the Court held that Judge Lynch had not “conducted a full analysis” of the issue.

In particular, the Second circuit refused to allow Defendant to rest its defense entirely upon its status as a news magazine covering a public event. Because “[i]ntellectual property laws co-exist with the First Amendment in this country, . . . [t]he First Amendment does not provide such categorical protection.” Rather, in deciding whether the French Judgments are repugnant
to the public policy of New York, the district court should:

“first determine the level of First Amendment protection required by New York public policy when a news entity engages in the unauthorized use of intellectual property at issue here. Then, it should determine whether the French intellectual property regime provides comparable protections.”

On the first prong of the test, the court directed exclusive use of the “fair use doctrine,” which “balances the competing interests of the copyright laws and the First Amendment” under a four-factor test. Because the district court analyzed the “fair use doctrine” in a single sentence, and the record as it stands was insufficient for the court to decide it here, the decision was vacated and the case remanded to be addressed on a “fully-developed record.” The court also directed a more in-depth examination of the second prong of the analysis under Fed. R. Civ. P. 44.1, i.e. “the manner of protection afforded plaintiff’s fashion shows by French law.”

Because the court seemed to place any First Amendment defense to foreign judgment enforcement exclusively within, and not in addition to, the “fair use doctrine,” Commentators have already acknowledged that “[t]his is a major decision.” The court also seems to acknowledge that, if Judge Lynch concludes that Defendant’s use of plaintiff’s intellectual property would be fair under U.S. law (regardless of whether it would be permitted under French law), then the judgment cannot be enforced.

The Norwegian Court of Appeals (Frostating lagmannsrett) recently handed down a decision on enforcement in Norway, in accordance with the Lugano Convention, of a German court decision on maintenance obligations between two spouses. The decision (Frostating lagmannsrett (kjennelse)) is dated 2007-05-04, was published in LF-2007-17684, and is retrievable from here. 

Parties, facts, conclusions, legal basis for appeal, contentions before the court 

Amtsgericht Dortmund ruled in its decision of 27 September 2005 that maintenance creditor A pay maintenance debtor B (A and B were spouses) a monthly maintenance sum of 1251 Euro. On 3 July 2006, B applied to the Norwegian court of first instance (Romsdal tingrett) that court use coercive means to collect maintenance fallen due, which totalled the sum of 8757 Euro. B remarried on 21 July 2006, where upon B´s right to maintenance from A came to an end. The Norwegian court of first instance authorized on 5 October 2006 (Romsdal tingrett TROMS-2006-100712) that the court decision of the German Amtsgericht Dortmund, which accorded B a right to maintenance from A, was to be enforced, without hearing the arguments of A, in accordance with the Lugano Convention Article 34. The appealing party, maintenance creditor A, appealed the decision of the Norwegian court of first instance to the Norwegian Court of Appeals in accordance with the Lugano Convention Articles 36, first paragraph and 37, and asked the latter Court not to admit authorisation to enforce, where upon the Norwegian Court of Appeals affirmed the decision of the Court of first instance.

Before the Norwegian Court of Appeals, A contended that since A went bankrupt in September 2006, the right person to pay the maintenance obligation was, in accordance with the German Insolvenzordnung (InsO) §§ 40 and 100, A´s estate in bankruptcy, whose administrator could, with authorisation from the creditors of that estate, pay B maintenance. By consequence, A first argued, the right person to be served with the claim is A´s estate in bankruptcy located in Germany, and any attempt to seek the maintenance obligation enforced towards A in Norway is a circumvention of German laws of bankruptcy. Second, A argued that the decision to take A´s estate under bankruptcy in Germany also compass the obligation for A to pay B maintenance as decided by the German Amtsgericht Dortmund on 27 September 2005. Therefore, the decision on bankruptcy is a decision falling under the scope of §2 nr. 4, in precept to the Hague Convention of 2 October 1973 on recognition and enforcement of maintenance obligations, where, by consequence, the decision shall not be enforced, in accordance with §2 nr. 4, in precept to the Hague Convention of 2 October 1973 on recognition and enforcement of maintenance obligations, if a) that decision is irreconcilable with a decision given in Norway involving the same parties, their same cause of action and object of action, or b) that decision is irreconcilable with a decision involving the same parties, their same cause of action and object of action, provided the latter decision has been given in another State and fulfils the requirements for enforcement in Norway.

Before the Norwegian Court of Appeals, B contended that, first, the appeal was applied for too late, and, second, claims for maintenance obligations fallen due could only be made up until the time of declaring bankruptcy, and the German Insolvenzordnung (InsO) §§ 40 and 100 refers only to claims for maintenance obligations fallen due before the time of bankruptcy, and, third, a decision on having been legally declared bankrupt in Germany is not a decision falling under the scope of §2 nr. 4, in precept to the Hague Convention of 2 October 1973 on recognition and enforcement of maintenance obligations, since a court declaration on bankruptcy does not compass a decision declaring that maintenance creditor A pay maintenance debtor B a monthly maintenance sum, and no new decision on the legal relationship exist, so that the decision by the German Amtsgericht Dortmund of 27 September 2005 is binding between the parties.

Ratio decidendi of the Norwegian Court of Appeals

First, the Court identified the legal question in issue, stating that the case at hand raised the question whether the decision of the German Amtsgericht Dortmund of 27 September 2005, which was enforceable in Germany, was enforceable in Norway in accordance with the Lugano Convention when A´s estate had been declared bankrupt. The Court reasoned that in accordance with the Lugano Convention Article 1, second paragraph nr. 1, the Lugano Convention shall not apply to “the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession”, and therefore does not compass maintenance obligations between spouses, since such obligations are compassed by the Lugano Convention Article 5 nr. 2 (where upon the Court referred to legal theory; Rognlien, Luganokonvensjonen (1993, p. 124), and Thue, Internasjonal privatrett (p. 481). Hence, the Court of appeal affirmed the Court of first instance´s opinion that the Lugano Convention was applicable.

Second, on the contention that the decision of the German Amtsgericht Dortmund of 27 September 2005 - wherein the maintenance creditor A was obliged to pay maintenance debtor B a monthly maintenance sum of 1251 Euro – only could be enforced against A´s estate of bankruptcy in Germany, the Court reasoned that in accordance with the Lugano Convention Article 1, second paragraph, nr. 2, bankruptcy is not compassed by the Convention, where upon A in Norway, and independent from German authority, both can be sued and declared bankrupt, but that A´s estate in Norway was not declared bankrupt. Declaring bankruptcy in one State is not tantamount to being declared bankrupt in other States. (Norway has a system in its law on bankruptcy § 106, which is similar to the German Insolvenzordnung (InsO) §§ 40 and 100).

Third, the Court reasoned that it does not follow from §2 nr. 4, in precept to the Hague Convention of 2 October 1973 on recognition and enforcement of maintenance obligations that declaring bankruptcy in Germany hinders enforcement in Norway of the decision of the German Amtsgericht Dortmund of 27 September 2005, since declaring bankruptcy of A´s estate is not the same legal relationship as a legal relationship involving maintenance obligations and does not involve the same parties.

Fourth, the Court reasoned that recognition and enforcement of the decision of the German Amtsgericht Dortmund of 27 September 2005 is not contrary to Norwegian Public policy, in accordance with the Lugano Convention Article 27 nr. 1. Further, that decision, the Court found no reason not to recognise in accordance with the Lugano Convention Articles 27 and 28. Furthermore, the Court lacked authority to assess the substance matter of the case, in accordance with the Lugano Convention Article 29. Hence, the Norwegian Court of appeal affirmed the decision of the Court of first instance, where upon the case was sent to the latter court for enforcement.

A provisional version of the Rome II joint text which was agreed upon by the European Parliament and the Council in the meeting of the Conciliation Committee held on 15 May 2007 has been made available on the Rome II page of the EP’s Conciliations & Codecision website.

The text has been released only in English, and subject to further legal linguistic verification.

A first glance at the text reveals that the general rule in Art. 4, and the special rules set out in Articles 5 (Product liability), 7 (Environmental damage), 8 (Infringement of intellectual property rights), 9 (Industrial action), 10 (Unjust enrichment), 11 (Negotiorum gestio) and 12 (Culpa in contrahendo) are almost identical to the corresponding provisions of the Council’s Common Position, adopted in September 2006.

The Council’s text has been retained also in respect of the provision on party autonomy (Art. 14): accordingly, an ex ante agreement on the applicable law is allowed, “where all the parties are pursuing a commercial activity” and such an agreement is “freely negotiated”. The law designated by the conflict rules on unfair competition and infringement of IP rights cannot be derogated from by the parties.

As regards the most controversial issues, on which the Parliament had proposed a number of amendments in its Legislative Resolution at Second Reading of January 2007, here’s the outcome of the Conciliation:

Unfair competition and acts restricting free competition (Article 6):

While the conflict rule governing an act of unfair competition is unchanged (application of the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected; application of the law determined pursuant to the general conflict rule of Art. 4, where an act of unfair competition affects exclusively the interests of a specific competitor: see Art. 6(1) and (2)), a more complex provision, allowing the application of the lex fori in case of multi-state torts, is set out by Art. 6(3) for non-contractual obligations arising out of a restriction of competition:

(a) The law applicable to a non-contractual obligation arising out of a restriction of competition shall be the law of the country where the market is, or is likely to be, affected.

(b) When the market is, or is likely to be, affected in more than one country, the person seeking compensation for damage who sues in the court of the domicile of the defendant, may instead choose to base his or her claim on the law of the court seised, provided that the market in that Member State is amongst those directly and substantially affected by the restriction of competition out of which the non-contractual obligation arises on which the claim is based;

where the claimant sues, in accordance with the applicable rules on jurisdiction, more than one defendant in that court, he or she can only choose to base his or her claim on the law of that court if the restriction of competition, on which the claim against each of these defendants relies, directly and substantially affects also the market of the country of that court.

Violation of privacy and rights relating to the personality (including defamation):

This issue, that has been by far the most controversial in the codecision procedure (a specific rule - Art. 6 - was proposed by the Commission in its initial Rome II Proposal, and strongly advocated by the Parliament, in a very different text, both in its First and Second Reading - see Art. 5 and Art. 7a respectively), has been excluded from the material scope of application of the Regulation (see Art. 1(2)(g)). It is dealt with in the review clause provided by Art. 30(2):

Not later than 31 December 2008, the Commission shall submit to the European Parliament, the Council and the European Economic and Social Committee a study on the situation in the field of the law applicable to non-contractual obligations arising out of violations of privacy and rights relating to personality, taking into account rules relating to freedom of the press and freedom of expression in the media, and conflict of law issues related with the Directive 95/46/EC.

Damages in personal injury cases and traffic accidents:

The issue of quantifying damages in personal injury cases (especially in, but not limited to, case of traffic accidents) has been one of the main concerns of the EP Rapporteur Diana Wallis, who supported the application of “the principle of restitutio in integrum, having regard to the victim’s actual circumstances in his country of habitual residence” (see Art. 21a of the EP’s Second Reading).

Due to the disagreement of the Commission and the Council, such a provision has not been inserted in the Regulation, but Recital 33 of the joint text states:

According to the current national rules on compensation awarded to victims of road traffic accidents, when quantifying damages for personal injury in cases in which the accident takes place in a State other than that of the habitual residence of the victim, the court seised should take into account all the relevant actual circumstances of the specific victim, including in particular the actual losses and cost of after-care and medical attention.

As regards the law applicable to road traffic accidents, the Regulation does not prejudice the application of the Hague Convention of 1971 on the law applicable to traffic accidents (see Art. 28): however, the review clause calls on the Commission to prepare a study on the effects of the Convention’s supremacy, that will be included in the Report on the application of the Regulation to be submitted not later than four years after its entry into force (Art. 30(1), second indent).

Treatment of foreign law:

This issue was raised by the European Parliament (see Art. 12 and 13 of the First Reading and Recital 29b and 30a of the Second Reading), but given its general relevance in a private international law system, it has not been regulated in the context of a specific instrument such as Rome II. The review clause in Art. 30(1) provides that the Report to be prepared by the Commission shall include

a study on the effects of the way in which foreign law is treated in the different jurisdictions and on the extent to which courts in the Member States apply foreign law in practice pursuant to this Regulation.

Public policy and overriding mandatory provisions:

The public policy clause (Art. 26) does not include any reference to the question of punitive damages, nor any reference to a special concept of EC public policy, in its content and vis-à-vis the application of the law of a Member State. Punitive damages are addressed in Recital 32, according to which

Considerations of public interest justify giving the courts of the Member States the possibility, in exceptional circumstances, of applying exceptions based on public policy and overriding mandatory provisions. In particular, the application of a provision of the law designated by this Regulation which would have the effect of causing non compensatory exemplary or punitive damages of an excessive nature to be awarded may, depending on the circumstances of the case and the legal order of the Member State of the court seised, be regarded as being contrary to the public policy (”ordre public”) of the forum.

As regards overriding mandatory provisions, only the provisions of the lex fori are taken into account by Art. 16 (whose text is almost identical to Art. 7(2) of the Rome Convention). While the exclusion of the overriding mandatory provisions of a law different from the lex causae and the lex fori has been criticized, problems may arise if a different compromise is finally found in Rome I (the issue is currently under debate in the Council: see the title of Council doc. n. 9765/07, not accessible to the public).

As a last point, Articles 27 and 28 deal with the relationships with other provisions of Community law and with existing international conventions (as the above mentioned Hague Convention of 1971 on the law applicable to traffic accidents, or the Hague Convention of 1973 on the Law Applicable to Products Liability), in a traditional way, if compared with the coordination clauses that were proposed in earlier stages of the procedure (see for instance Art. 1(3) and Art. 25 of the EP’s First Reading):

Article 27 - Relationship with other provisions of Community law

This Regulation shall not prejudice the application of provisions of Community law which, in relation to particular matters, lay down conflict of law rules relating to non contractual obligations.

Article 28 - Relationship with existing international conventions

1. This Regulation shall not prejudice the application of international conventions to which one or more Member States are parties at the time when this Regulation is adopted and which lay down conflict of law rules relating to non contractual obligations.

2. However, this Regulation shall, as between Member States, take precedence over conventions concluded exclusively between two or more of them insofar as such conventions concern matters governed by this Regulation.

Pursuant to Art. 251(5) of the EC Treaty, the European Parliament (by an absolute majority of the votes cast) and the Council (by a qualified majority) must adopt the Regulation within six weeks from the date of approval of the joint text.

The vote in the European Parliament is expected in the plenary session on 9-10 July in Strasbourg (see the OEIL page on Rome II). The JHA Council, under the German Presidency, is scheduled in Luxembourg on 12-13 June.

[Update 9 June 2007: as stated on a Press release by the Council, the Presidency will deliver an oral report about the result of the conciliation with the European Parliament in the JHA session of Wednesday 13 June 2007]

I. Curry-Summer (Utrecht University) has written an intriguing article in the new issue of the Electronic Journal of Comparative Law entitled, “Private International Law Aspects of Homosexual Couples: The Netherlands Report” (vol 11.1, EJCL, May 2007). Here’s an overview of the paper’s structure:

This paper has been divided into three main sections. Section 2 will deal briefly with the substantive law rules relating to the celebration of a same-sex marriage and the registration of a partnership. Section 3 will deal solely with the private international law aspects of same-sex marriage, whilst Section 4 will be devoted to an analysis of the relevant private international law rules in relation to registered partnership. In order to aid simultaneous comparison between the relevant rules for these two institutions the same structure has been used in each section. However, from the outset it must be mentioned that this paper can, in the limited space available, only attempt to deal with some of the aspects related to such relationships. A choice has therefore been made to limit this paper to the structural aspects of such relationships, i.e. the establishment of the relationship (Sections 3.1 and 4.1) and the dissolution thereof (Sections 3.2 and 4.2). In Section 5 a number of conclusions will be reached with regards the approaches taken and the possible improvements which can be made.

You can download the paper from here free of charge.

Here’s a quick roundup of significant caselaw from the U.S. Court of Appeals and Supreme Court relating to private international law issues.

Two interesting actions relating to judgment enforcement have come down from the Ninth and D.C. Circuits. The latest salvo in Ministry of Defense for the Armed Froces of the Islamic Rep. of Iran v. Elahi, No. 03-55015 (9th Cir., May 30, 2007), seems to complete a tortured case history that included a Supreme Court decision, and ICC decision and several appellate decisions relating to the enforcment of a judgment for wrongful death agains the Republic of Iran. Plaintiff, whose brother was allegedly assassinated by agents of the Iranian state, sought to enforce the $11.7 million default judgment he received in the United States District Court for the District of Columbia. Unable to seek satisfaction of that amount under the Foreign Sovereign Immunity Act – a conclusion that was affirmed again here on appeal – plaintiff sought a lien against a $2.8 million ICC judgment in favor of Iran from its previous breach of contract action against an American defense contractor. The Terrorism Risk Insurance Act permits such an action against “terrorist parties,” provided that the judgment was not currently “at issue” before an international tribunal. Because the ICC judgment was “present[ed],” “fully adjudicated” and “reduced to judgment” in favor of Iran, and because Iran has been labelled as a “state sponsor of terrorism” since 1984, the amount currently held by the American contractor is vulnerable to attachment. Interestingly, the U.S. Government filed papers in support of Iran in this action. The full decision is available here.

The D.C. Circuit in Termorio S.A. v. Electanta S.P., No. 06-7058 (D.C. Cir., May 25, 2007) refused to enforce an arbitral award from the Republic of Columbia between a state-owned entity and two American utility companies. At issue was a $60 million arbitral award against the Columbian entity. The award was made in Columbia. Immediately thereafter, various Columbian government agencies refused to comply with the award and began criminal investigations of executives who worked for the plaintiff in that action. The award was eventually vacated by a Columbian court. Plaintiff then sued in U.S. federal court to enforce the award, notwithstanding its anullment. “[R]esolving this matter with reference to . . . the New York Convention,” particularly Article V(1)(e), the court held that once an award is lawfully set aside in its place of origin, there is nothing to enforce under that Convention. An interesting discussion of the discretion of U.S. courts to enforce such awards despite a foreign anullment followed. While the court,

accept[ed] that there is a narrow public policy gloss on Article V(1)(e) and that a foreign judgment is unenforceable as against public policy to the extent that it is ‘repugnant to fundamental notions of what is decent and just in the United States,’

Plaintiffs here failed to meet this high threshold. The full decision is available here.

The Eleventh Circuit decided an interesting case applying the “most significant relationship” test to determine the law applicable to a cross-border tort of tortious interference. In Grupo Televisa S.A. v. Telemundo Comm. Group, Inc., No. 05-16659 (11th Cir., May 10, 2007), a Mexican broadcast company sued its American rival in U.S. federal court alleging that it thwarted its contract with a Mexican soap opera star by offering her a competing role. The American company moved to dismiss the claim by arguing that Mexican law, which does not recognize the tort of tortious intereference with contractual relations, governs the dispute. The district court agreed and dismissed the case, holding, inter alia, that the “place of the injury” should not play an important role in this choice of law decision. The Eleventh Circuit reversed that decision. It began by reference to Section 145 of the Second Restatement, and the four “contacts” that should be considered in a tort action. It then considered the “principal location of the defendant’s conduct” as the single most important factor in a “misappropriation of trade values case,” and held that “the Florida contacts are both numerically and qualitatively more significant” here. Turning to the general factors in Section 6 of the Second Restatement, the court also recognized that “the relevant policies of the forum [and] other interested states,” the “protection of justified expectations,” “certainty, predictability and uniformity of result,” and “the ease in determination of the law to be applied” counselled the application of Florida law. The full decision is available here.

Finally, the Supreme Court invited the Solicitor General to file a brief in a notable conflicts case. In Teck Cominco Metals v. Pakootas, Petitioner posed the interesting question of,

[W]hether the Ninth Circuit erred in concluding, in derogation of numerous treaties and established diplomatic practice, that CERCLA (and, by extension, other American environmental laws) can be applied unilaterally to penalize the actions of a foreign company in a foreign country undertaken in accordance with that country’s laws.

The Petition and other briefs at that stage are available here.

Following our previous post on new Council documents concerning Rome I, here some new information on Art. 5 of the Proposal:

As stated on the website of the German Hotel and Restaurant Association (Deutscher Hotel- und Gaststättenverband, DEHOGA Bundesverband), the German government changed its position with regard to the applicable law on contracts governing hotel and restaurant services and supports now this branch of industry with regard to its conception that those contracts should not be governed by the law of the hotel guest’s habitual residence, but rather by the law of the country where the service is provided.

According to Art. 5 (1) of the Commission’s Rome I Proposal, consumer contracts in terms of Art. 5 (2) are governed by the law of the Member State in which the consumer has his habitual residence. However, Art. 5 (3) (a) of the Proposal provides for an exception for contracts for the supply of services where the services are to be supplied to the consumer exclusively in a country other than in which he has his habitual residence. Thus, contracts governing hotel and restaurant services are widely excluded from the application of the law of the guest’s habitual residence.

However, amendments proposed by the Committe on Legal Affairs of the European Parliament suggest the deletion of Art. 5 (3) (a) which would lead, with regard to service contracts covered by Art. 5, to the application of the law of the consumer’s, i.e. the guest’s, habitual residence for contracts involving a guest of a Member State other than the one where the service is provided. See Amendment 62 by Jean-Paul Gauzès and Amendment 63 by Diana Wallis which can be found here. Further, see also the text of Rome I as drafted by the Council Presidency (Note of 12 October 2006) as well as the text drafted by the Finnish and the German Presidency (Note of 12 December 2006) which do not include Art. 5 (3) anymore .

This development has been observed critically by the German Hotel Association (Hotelverband Deutschland, IHA) and the German Hotel and Restaurant Association which feared serious disadvantages in particular for medium-sized businesses in case the law of the guest’s habitual residence should be applied.

Now, as stated in the press release, these associations succeeded in convincing German Federal Minister of Justice Brigitte Zypries as well as Federal Minister of Economics and Technology Michael Glos of their position to apply the law of the country where the services are provided.

See in this context the Summary of Discussions of the Council Committee on Civil Law Matters (Rome I) of 16 February 2007, which contains with regard to Art. 5 (3) (a) the following statement:

Several delegations were against the deletion of Article 5(3)(a) of the Commission proposal. The
Presidency noted that there was some support for the reintroduction of that provision into the text of
the draft Regulation.

Similar also Council document No. 6935/07 of 2 March 2007 where the German Presidency states that several delegations support the idea to reintroduce Art. 5 (3) (a) of the Commission’s Proposal.

The full press release can be found on the website of the German Hotel and Restaurant Association.

Many thanks again to Dr. Jan von Hein, MPI Hamburg for the tip-off and to Giorgio Buono for valuable information on the relevant documents.

This is the interesting question that the French supreme court for private matters (Cour de cassation) addressed in a judgement of March 6, 2007.

The argument was raised in respect of the rule allowing to seek a decision of enforceability of the foreign judgement ex parte. Article 34 of the 1968 Brussels Convention provided:

the party against whom enforcement is sought shall not at this stage of the proceedings be allowed to make any submissions on the application.

In this case, a Belgian bank, Fortis, had sued in Belgium two spouses domiciled in France. The Court of appeal of Mons, Belgium, had ruled in favour of the bank, which sought enforcement of the judgement in France. The Belgian judgement was declared enforceable by a French first instance court. The defendants appealed to the Court of appeal of Amiens and lost. They then appealed to the Cour de cassation. Their only argument was that the proceedings in the first instance in France were a violation of their right to a fair trial, as they were ex parte proceedings. The Cour de cassation held that there was no such violation as they were entiteld to appeal. The appeal was thus dismissed (again).

This case raises two issues. The first is anecdotal. It is fascinating to see that the defendants could take this case up to the French supreme court. The Belgian judgement was made in 2001, and it seems that the enforcement proceedings took six years.

The second issue is much more interesting. Could the Brussels Convention or the Brussels I Regulation be found to be in violation of the European Convention of Human Rights (ECHR)? Before the Cour de cassation, the defendants argued that the ECHR was superior to any treaty concluded by the French state. In Fortis, the Court does not directly deal with the argument, but it indirectly addresses it since it accepts to rule on whether article 34 complies with article 6 ECHR.

Obviously, the Cour de cassation will only give the point of view of the French legal order. The Strasbourg or the Luxembourg courts would certainly have different views on this.

Was the issue addressed elsewhere in Europe?