International Litigation PDF

International Litigation According to Moodle page, topics weekly to study: Week 1= International/cross-border disputes and elements and the term international litigation: Mr. Kaufman suggest that parties should develop their own checklists to pinpoint the international elements of the case. For plaintiffs, Mr. Kaufman lists the following as the minimum threshold list checklist: 1. The nature (or absence) of a dispute, forum, choice of law or enforcement clause in applicable documents 2. Possible venues for the litigation/arbitration 3. location of documents and witnesses 4. timing considerations which will impact the ultimate enforcement date 5. speed of the docket (both domestic and foreign dockets need to be carefully evaluated 6. for enforcement, estoppel and res judicata impacts) 7. location(s) of assets; a critical issue in many cases 8. enforceability of judgements For defendants: 1. The nature (or absence) of a forum, choice of law or enforcement clause in any applicable documents 2. existence of multiple venues 3. damage award exposure in the initial venue chosen by the plaintiff 4. location of documents and witnesses 5. whether key witnesses speak fluent English or will require interpreters 6. accessibility of and ability to communicate precisely with fact witnesses 7. availability of more favorable damage, discovery or other parameters in foreign venues 8. availability of forum non conveniens “jurisdictional rule of reason”, antisuit injunctions or other common law and statutory defenses or remedies 9. cost factors should be seriously considered by both parties. International litigation is frequently more expensive than comparable domestic litigation. Cross-border disputes: The field of transnational litigation, arbitration, and dispute resolution encompasses substantive and procedural aspects of public and private transnational and international dispute resolution in a range of institutional settings, ranging from national courts to ad hoc arbitral tribunals, to permanent international courts and tribunals. It embeds choice of law, enforcement of judgments, and cross-border evidentiary issues. Investment arbitration, 1 conciliation, conflict resolution, and other forms of dispute resolution are included in such practices. What is a cross border-dispute? It relates to several cases, as for example: - a contractual dispute arising from a sales or service contract where, at the time the consumer orders the goods or services, the consumer is resident in a Member State other than the Member State in which the trader is established; - where a client is domiciled or habitually resident in a Member State other than the Member State where the court is sitting or where the decision is to be enforced; - dispute concerning contractual obligations arising from a sales contract or a service contract where, at the time the consumer orders the goods or services, the traders is established in the United Kingdom and the consumer is resident in another member state; It, therefore, relates to disputes that comprise businesses and parties settled in different countries. An example would be Amazon being sued because of the massive prices increase that came up during the pandemic; or the Volkswagen Emission Scandal case in 2015; or the sailors forced in India case. Such kinds of disputes, therefore, happen daily. It can be deduced that the main characteristic of cross-border dispute is that it involves and connects more than one state. Which are the available means to resolve such a dispute? They consist of three categorizations, namely ‘’cross-border litigation’’, ‘’international commercial arbitration’’ and ‘’ADR: alternative dispute resolutions’’. 1. Cross-border litigation: Disputes arising in the context of international commerce tend to be equally complicated, often involving multiple proceedings advancing at the same time before courts of different jurisdictions. Effectively managing such disputes requires lawyers who possess a comprehensive knowledge of local law, procedure and market conditions, lawyers skilled at combining that knowledge with broad international experience, and lawyers with a truly global perspective. For example, in the case a client brings an action against the agency whom he bought his phone from. 2. International commercial arbitration: it is an alternative method of resolving disputes between private parties arising out of commercial transactions conducted across national boundaries that allows the parties to avoid litigation in national courts. 3. ADR (Alternative Dispute Resolution): refers to any methods used to resolve a dispute between parties without resorting to litigation. Alternative dispute resolution (“ADR”) may make use of a third party, such as a mediator, but it is not required. One of the benefits of alternative dispute resolution is that it reduces the load on an overburdened court system. In addition, it is often a less expensive solution for all parties, it has gained broad acceptance in the business and legal community. In fact, courts in some jurisdictions require parties to engage in some type of ADR before the matter can proceed to trial. ADR includes negotiation and mediation. Such resolutions are often embedded by Amazon to avoid bad reputation through poor quality feedbacks by customers. - Negotiation: a process of dispute resolution between parties, through mutual understanding and agreement where there is no involvement of a third party. 2 - Mediation: it makes use of a neutral third party, a “mediator,” to help guide the parties to the dispute toward a solution that all can agree to. Week 2 - Third Party Funding: What is third-party funding? Litigation finance (sometimes called litigation funding) is an investment in a lawsuit or pool of lawsuits by a third-party who does not have interest in the case. In exchange, the investor receives a contingent share of proceeds from a settlement or judgment without any control over the litigation strategy. This outside entity, known as ‘’the third-party funder’’ finances the party’s legal representation with the intention of making a profit. Common third-party funders usually relate to banks, hedge funds (fondi speculativi -> Hedge funds pool money from investors and invest in securities or other types of investments with the goal of getting positive returns), insurance companies and other similar entities. If the party seeking financial assistance is the plaintiff, the third-party funder contracts to receive a percentage of the proceeds provided only by the winning of the case. Indeed, unlike a loan, the plaintiff does not have the constraint to pay the third-party funder back in case of losing the trial. Such types of litigation financing are increasing rapidly relevant to both litigation and arbitration. The USA deals with third party fundings in cases relating to tort claims, injury claims, as well as large complex corporate disputes. There are three main drivers of the third-party funding industry worldwide: 1. Funders help individuals bring claims that they could not otherwise afford on their own. This increases access to the court system for disadvantaged persons. 2. Small companies seek third-party funding to pursue claims that they could not otherwise afford; 3. Large companies that are frequently sued seek outside funding to even out (per pareggiare/livellare) the litigation line-item on their balance sheet. Third party funders can offer these companies a fixed payment system for managing their litigation costs as defendants. What is happening, though, is that good claims are often not pursued because of the initial expense required to determine whether an action is eligible for litigation funding. Today, litigation financing is on the rise not only for the purposes of backing under-resourced plaintiffs, but also for large corporate clients seeking to utilize their capital for projects other than financing lawsuits, and to better manage their balance sheets. Law firms are beginning to value this fee structure as a new business tool to keep them competitive, and in-house attorneys see litigation finance as a risk management tool for the companies they advise. Litigation finance is a three-billion-dollar industry that provides investment capital for lawsuits to increase access to legal services and improve the legal system. Lawsuits can be highly profitable assets. 3 A potential claimant may approach a funder for various reasons (advantages): Necessity: Arbitration can be expensive. If a claimant does not have the means to pursue a meritorious claim, funding may well be its only option. Risk management: Claimants with the funds to arbitrate may want to lay off some of the risk associated with costly arbitration, and the inherent unpredictability of costs, and be prepared to give up a proportion of any recoveries to do so. It also enables a company to invest that money elsewhere. In addition, the funded party is relieved of costs pressures and cash-flow issues associated with the legal costs of the arbitration. Validation: Funders are only interested in good claims. They will therefore conduct extensive due diligence and carry out their own analysis of the merits before agreeing to provide funding. This objective analysis may assist the claimant to shape its case strategy, and may also encourage early settlement once the other party is made aware that the claim has the backing of a funder. As any other strategy, though, litigation financing has its own disadvantages and the following: Expensive: A successful claimant will generally have to pay a significant proportion of damages recovered to the funder. Autonomy: Although funders are generally prohibited from taking undue control or influence in an arbitration, there may be some loss of autonomy on the part of the funded party (in particular when considering settlement) as funders may reserve the right of approval of the settlement. Disclosure: Increasingly, funded parties are being required (whether by order of the tribunal or the applicable institutional rules) to disclose the fact of funding and the identity of the funder (but not necessarily the funding terms). This in turn may prompt the respondent to make an application for security for costs. Costs: Substantial costs can be incurred when packaging the case for presentation to a funder. These will have been wasted if the application for funding is unsuccessful. Even if successful, funders are not usually liable for any costs incurred before the funding arrangement is put into place, including the costs of packaging and the negotiation of the funding arrangements. DIFFERENCE BETWEEN MAINTENANCE AND CHAMPERTY. Furthermore, historic rules prohibiting third parties from funding arbitration are being phased out in several jurisdictions, creating opportunities both for third-party funders and parties involved in arbitrations. Historically, third parties were prohibited from funding an unconnected party’s litigation under the doctrines of maintenance and champerty. The first statutory restrictions against maintenance and champerty were enacted in England in 1305, because of royal officials and nobles lending their names to dubious legal claims in exchange for a portion of proceeds. The medieval-era statutes were repealed in 1967 and, today, the doctrines are considered as old memories. The common law, indeed, fears that the champerties maintainer might be tempted, for his own personal gain, to inflame the damages, to suppress evidence, or even to suborn witnesses. 4 The achieved goal was to protect the integrity and the independence of the courts and to prevent trafficking in litigation. Maintenance refers to an unconnected third-party assisting to maintain litigation, by providing, for example, financial assistance. Who finances the litigation does not have any interest in it. Champerty is a form of maintenance, where a third-party pays some or all the litigation costs in return for a share of the proceeds. Globally, the rules on third-party funding (TPF) are very jurisdiction-specific. England and Australia are TPF-friendly jurisdictions, while TPF is also generally lawful in civil code jurisdictions like France and Germany, but the precise terms of what is permissible vary quite sharply. Hong Kong and Singapore both changed their laws last year to allow TPF in international arbitration cases only, but the reforms are in a very early stage, and it remains to be seen how this will work in practice. TPF is unlawful in several other jurisdictions including China, Ireland, and Nigeria. Indeed, the Irish Supreme Court on 23 May 2017 explained that ‘’maintenance and champerty continue to be torts and offenses in this jurisdiction… Therefore in Ireland there is the prohibition on an entity funding litigation in which it has no independent or bona fide interests, for a share of the profits’’..Jurisdiction under EU law and Brussel I Recast Regulation (Regulation No 1215/2012). The rules used by Member State Courts dealing with the allocation of jurisdiction and the reciprocal enforcement of judgments have been updated for cases commenced on or after 10 January 2015. On 22 December 2000, the Brussels I Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (Regulation (EU) No. 1215/2012) (the “Recast Regulation”) has been adopted and entered into force on 1 March 2012, replacing the existing Brussels 1 Regulation (Regulation (EC) No. 44/2001) (the “Old Regulation”). The Old Regulation set out the rules used by Member State Courts to determine whether they had jurisdiction to deal with a cross-border case and dealt with the reciprocal enforcement of judgments within the EU. The Recast Regulation is broadly similar to the Old Regulation, but there are some key changes in the following areas: Suing non-EU parties in the Court of an EU Member State Giving priority to Member State Courts which have been granted jurisdiction by an exclusive jurisdiction clause, even if they were not the Courts first seised. Staying proceedings in Member State Courts if favour of prior proceedings in non-Member State Courts The absolute exclusion of arbitration and proceedings relating to arbitration from the scope of the Recast Regulation 5 Simplifying the procedure for the enforcement of a Member State judgment in another Member State It is also worth noting that, although the wording remains the same in many cases, the numbering of the articles of the Old Regulation has changed in the Recast Regulation. For example, Article 23 of the Old Regulation relating to jurisdiction agreements is Article 25 in the Recast Regulation. New rules governing when non-EU parties can be sued in Member State Courts The EU regime is primarily concerned with proceedings where the Defendant is domiciled in the EU. However, the Old Regulation gave effect to jurisdiction agreements set out in documents to which at least one party was domiciled in the EU, even if that party was not the Defendant, or where the Defendant submitted to the jurisdiction. The Recast Regulation has expanded the circumstances in which a non-EU domiciled Defendant can be sued in a Member State Court to the following two scenarios: Scenario no 1: Non-EU domiciled Defendants can now be sued in a Member State if: a. that Defendant is an employer whose employee habitually works in a Member State; or b. that Defendant is a trader who directs their commercial activities to a Member State. This reflects the goal of enhancing consumer and employee protections. This allows the Member State Courts to deal with employers and traders who are involved with commerce in the EU without ever establishing a formal EU base. Scenario no 2: Under Article 25 of the Recast Regulation, a non-EU Defendant can now be sued in a Member State Court which has been granted exclusive jurisdiction under a jurisdiction agreement even where neither party to that agreement is domiciled in the EU. The Recast Regulation also confirms that the law of the Member State Court which has been granted exclusive jurisdiction shall be used to determine whether that exclusive jurisdiction clause is valid if this is subject to a dispute. Greater powers for Member State Courts which have been granted exclusive jurisdiction A significant cause for complaint under the Old Regulation was the issue of the so-called “Italian Torpedo.” This described the situation where proceedings were commenced at an early stage in one Member State Court, even though a jurisdiction agreement granted exclusive jurisdiction to the Court of another Member State. This meant that until the Court first seised resolved the issue of its own jurisdiction, no proceedings could continue in the Court which had been granted exclusive jurisdiction. The tactic was used by parties to delay and frustrate claims by issuing in the Courts of Member States such as Italy which were either slow, or would only deal with jurisdiction issues at the same time as determining the substantive issues (i.e. not until trial). 6 Under the Recast Regulation, there is now an exception to the basic “first seised” rule where there is an exclusive jurisdiction clause. This defuses the effect of the Italian Torpedo because even if proceedings are commenced in another Member State Court, that Court must stay those proceedings if proceedings are commenced in the Court of the Member State which the parties had previously agreed would have exclusive jurisdiction (although the latter Court does not need to wait for the court first seised to formally order the stay before it can proceed). Discretion to defer to non-Member State Courts which were first seised. Under the Recast Regulation, Member State Courts have been granted discretion to stay proceedings in favour of non-Member State Courts, but only in the following limited circumstances: proceedings in the non-Member State Court must have been started first; the non-Member State judgment is capable of recognition and enforcement in the Member State; and The Member State Court considers that a stay is necessary for the proper administration of justice. The ECJ has the power, conferred to it by art. 267 TFEU, to interpret the BRX R. R. in a uniform way. The following main articles to keep in mind: General provisions Article 4: i. Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. ii. Persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that Member State. Article 6 i. If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Article 18(1), Article 21(2) and Articles 24 and 25, be determined by the law of that Member State. ii. 2. As against such a defendant, any person domiciled in a Member State may, whatever his nationality, avail himself in that Member State of the rules of jurisdiction there in force, and in particular those of which the Member States are to notify the Commission pursuant to point (a) of Article 76(1), in the same way as nationals of that Member State Special jurisdictions i. Article 7: A person domiciled in a Member State may be sued in another Member State: (1) (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question; 7 ii. (b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be — in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered, — in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided; iii. (c) if point (b) does not apply then point (a) applies. iv. (2) in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur (locus acti); v. (3) as regards a civil claim for damages or restitution which is based on an act giving rise to criminal proceedings, in the court seised of those proceedings, to the extent that that court has jurisdiction under its own law to entertain civil proceedings (locus damni). Jurisdiction over consumer contracts Article 18: i. A consumer may bring proceedings against the other party to a contract either in the courts of the Member State in which that party is domiciled or, regardless of the domicile of the other party, in the courts for the place where the consumer is domiciled. ii. Proceedings may be brought against a consumer by the other party to the contract only in the courts of the Member State in which the consumer is domiciled. iii. This Article shall not affect the right to bring a counterclaim in the court in which, in accordance with this Section, the original claim is pending Exclusive jurisdictions i. Article 24: ii. The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties: (1) in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the courts of the Member State in which the property is situated. (2) in proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or the validity of the decisions of their organs, the courts of the Member State in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law; (3) in proceedings which have as their object the validity of entries in public registers, the courts of the Member State in which the register is kept (4) in proceedings concerned with the registration or validity of patents, trademarks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place. Without 8 prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that Member State; (5) in proceedings concerned with the enforcement of judgements, the courts of the Member State in which the judgment has been or is to be enforced. Other meaningful information: Article 220 of the EEC Treaty member states have been assigned the power to commence negotiation to the extent necessary to guarantee their citizens the simplification of formalities governing the reciprocal recognition and enforcement of judgements of court or tribunals and of arbitration awards. The Brussels I Recast Regulation has been defined to be a Double Convention, since it deals with the recognition and enforcement of judgements within the European area, including the regulation of common grounds of jurisdiction. Cross bored disputes happen daily in the European context and the economic operators must know in advance which courts would have jurisdiction over a case (predictability). The Regulation is directly applicable without the need to be transposed into national law by member states. Cases examples. A, a German company having its principal place of business in berlin, sells furniture to B, an Italian company established in Rome. After the goods is delivered in Italy, B plans to sue B for damages, claiming the furniture is not in conformity with the contract. Which courts have jurisdiction over the claim according to the Brussels 2012? The jurisdiction of Germany, since A is domiciled there, according to art. 4.1 has general jurisdiction over the case; and the Italian jurisdiction gains special jurisdiction, according to art. 7.1.b(1), because Italy is the country to which the goods are delivered. A German driver goes to Paris on holiday. He injuries a Spanish tourist. The latter returns to Madrid, where he suffers pain, incurs medical expenses and financial losses (he is self-employed and cannot work because of the accident) and is permanently disabled. The Spanish tourist is going to bring a lawsuit against the German driver. Germany has general jurisdiction according to article 4.1 of the Brussels 2012; France has special jurisdiction according to article 7 paragraph 2, because Paris is the place where that harmful event occurred. X, a German company with statutory seat in Berlin, manufacturers in Munich a motor car with faulty brakes. The motor car fails in Lugano, injuring A, the driver, who cannot work at his business in Basel for several months. A is planning to sue X for damages. Which courts have jurisdiction over the claim and which EU instrument applies to determine jurisdiction? 9 German jurisdiction is applicable since A is based there. Special jurisdiction: the harmful event happened outside EU (Switzerland), therefore art. 7 does not apply. European free trade agreement association: Switzerland, Norway, potentially UK. John, the father, is domiciled in NY, USA. He bought a flat in Madrid. The father paid for the property, but it was registered in the son’s name (John junior, domiciled in Toronto, Canada). Subsequently, the father and son fell out, and the father brought proceedings against the son in Spain for a declaration that the latter held the property on trust for the father. Mr. Rossi resides in Rome. While he and Mr. Red (domiciled in Vilnius, Lithuania) are driving in Rome, Mr Red is injured as a result of the negligence of Mr White, domiciled in Vienna; Mr Red is going to bring a lawsuit against Mr White. General jurisdiction is conferred to the courts of Vienna according to art. 4.1; Rome has special jurisdiction under art. 7.2 of Brussels 2012. Choice of court agreements (the parties confer jurisdiction of a court which otherwise would have not). Such right has been conferred to the parties through the application of article 25 of Brussels 2012. Shall the parties agree to confer jurisdiction to courts over a case? Predictability is the key feature. For example, here the parties choose the court of Itay to hear that case in the event of a dispute. «The parties irrevocably agree that the courts of Italy [or: the court of Rome] shall have [exclusive, or] non-exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with the agreement or its subject matter». Therefore, only the court of Rome has the exclusive jurisdiction over the case (that is the one selected by the parties). The clause of the choice of court agreements. The clause enables parties to agree which Member State’s courts will hear their dispute, depriving any other courts to have jurisdiction over their case, even though the Brussels 2012 states differently. Is a national court under a duty to recognize and consider binding a choice of court agreements? Article 25 (exclusive choice of court agreement) i. If the parties, regardless of their domicile, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that Member State. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. 10 ii. The agreement conferring jurisdiction shall be either: (a) in writing or evidenced in writing; (b) in a form which accords with practices which the parties have established between themselves; or (c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned. iii. 2. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to ‘writing’. (a) The court or courts of a Member State on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settlor, trustee or beneficiary, if relations between those persons or their rights or obligations under the trust are involved. a. Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to Articles 15, 19 or 23, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 24. b. An agreement conferring jurisdiction which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. The validity of the agreement conferring jurisdiction cannot be contested solely on the ground that the contract is not valid. 1968 Brussels convention 17. i. If the parties, one or more of whom is domiciled in a Contracting State, have agreed that a court or the courts of a Contracting State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have exclusive jurisdiction. Such an agreement conferring jurisdiction shall be either: (a) in writing or evidenced in writing; or (b) in a form which accords with practices which the parties have established between themselves; or (c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned. 11 ii. Where such an agreement is concluded by parties, none of whom is domiciled in a Contracting State, the courts of other Contracting States shall have no jurisdiction over their disputes unless the court or courts chosen have declined jurisdiction. iii. The court or courts of a Contracting State on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settlor, trustee or beneficiary, if relations between these persons or their rights or obligations under the trust are involved. iv. Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to the provisions of Articles 12 or 15, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 16. v. If an agreement conferring jurisdiction was concluded for the benefit of only one of the parties, that party shall retain the right to bring proceedings in any other court which has jurisdiction by virtue of this Convention. vi. In matters relating to individual contracts of employment an agreement conferring jurisdiction shall have legal force only if it is entered into after the dispute has arisen or if the employee invokes it to seise courts other than those for the defendant's domicile or those specified in Article 5 (1). Reading article 25 there is no evidence regarding asymmetric choice of court agreements. Jurisdiction agreements: the 2005 Hague convention on choice of court agreements. (UK related) The Hague Convention came into force on 1 October 2015 between Mexico and the European Union (including Denmark). Later Singapore, Montenegro and the UK have ratified the Convention, while China, USA and Ukraine have signed but not yet ratified the Convention. The Convention aims to ensure the effectiveness of exclusive choice of court agreements in international cases. What happens to all those choice of court agreements in 2017 relating to the UK courts? The EU is a contracting party of the Hague convention, and the UK was binding by it since before it was an EU member state. The goal was having the UK as a party of the convention soon after the transitional period. The UK is not binding by the Brussels 2012, but rather by the Hague convention. How does the Hague convention work? The Hague Convention includes “three basic rules” that put choice of court clauses into effect: Rule 1: The court of a Contracting State that is designated to hear disputes pursuant to an exclusive choice of court clause has jurisdiction over, and must hear, a case put before it. Rule 2: A court in Contracting State other than that of the chosen court of a Contracting State must decline to hear a case put before it. 12 Rule 3: A judgment given by a chosen court of a Contracting State is recognizable and enforceable in a court of another Contracting State (subject to limited grounds of refusal which largely mirror those contained within the New York Convention). The asymmetric choice of court agreements does not fall into the 2005 Hague convention, a concept clarified by the report on the convention by Paul Jenard. Examples of choice of court agreements: which instruments are applicable. Hypothesis 1: Mary is domiciled in Madrid, and John in Rome, designating the courts of Berlin. In this case, The Brussels 2012 applies, because Berlin is the selected court by the parties (EU member state). Hypothesis 2: regardless of the choice of court agreement which John and Mary designate the courts of Rome; John decided to bring an action against Mary in Mexico City. Which instruments apply? The Brussels 2012 cannot be applied, simply because Mexico is not an EU member state, not allowing Mexican courts the application of European regulations. Which is the instrument that the Mexico courts should use to determine the validity of choice of court agreement? The applicable Convention is the Hague Convention, because Mexico and Italy are two contracting states of the 2005 convention itself. Hypothesis 3: What if John brings an action against Mary in Melbourne? Which instrument applies? None of the two (Brussels 2012 and the Hague since Australia is not a party of the 2005 convention, neither being a European contracting party). Therefore, the Australian national law will apply Case- study Case scenario Company S, based in Barcelona (Spain), enters into a commercial contract with company M, based in Mexico City (Mexico). The contract includes a choice of court agreement conferring exclusive jurisdiction to the courts of Dublin (Ireland). A dispute arises and S sues M before the competent court in Dublin. M dislikes proceedings in Dublin and therefore starts proceedings against S in Barcelona. Relevant provisions 2005 Hague Choice of Court Convention Article 1 – Scope (1) This Convention shall apply in international cases to exclusive choice of court agreements concluded in civil or commercial matters. (2) For the purposes of Chapter II, a case is international unless the parties are resident in the same Contracting State and the relationship of the parties and all other elements relevant to the dispute, regardless of the location of the chosen court, are connected only with that State. 13 (3) For the purposes of Chapter III, a case is international where recognition or enforcement of a foreign judgment is sought.” Article 3 – Exclusive choice of court agreements For the purposes of this Convention a) “exclusive choice of court agreement” means an agreement concluded by two or more parties that meets the requirements of paragraph c) and designates, for the purpose of deciding disputes which have arisen or may arise in connection with a particular legal relationship, the courts of one Contracting State or one or more specific courts of one Contracting State to the exclusion of the jurisdiction of any other courts; b) a choice of court agreement which designates the courts of one Contracting State or one or more specific courts of one Contracting State shall be deemed to be exclusive unless the parties have expressly provided otherwise; c) an exclusive choice of court agreement must be concluded or documented – i) in writing; or ii) by any other means of communication which renders information accessible so as to be usable for subsequent reference; d) an exclusive choice of court agreement that forms part of a contract shall be treated as an agreement independent of the other terms of the contract. The validity of the exclusive choice of court agreement cannot be contested solely on the ground that the contract is not valid.” Article 26 (6) – Relationship with other international instruments (6) This Convention shall not affect the application of the rules of a Regional Economic Integration Organisation that is a Party to this Convention, whether adopted before or after this Convention - a) where none of the parties is resident in a Contracting State that is not a Member State of the Regional Economic Integration Organisation; b) as concerns the recognition or enforcement of judgments as between Member States of the Regional Economic Integration Organisation. Questions Does the choice of court agreement between S and M fall within the scope of the Hague Choice of Court Convention (assuming its subject-matter falls within the Convention’s scope)? Why? Yes, it does fall within the scope of the Hague Choice of court convention because the court chosen is located in Dublin and Dublin, as well as Spain (the state in which the proceeding is brought), is a contracting state and party to the convention (of the brussels, because the two key factors are the place in which the court chosen in located and the place in which the proceeding is brought). Further, S and M entered a commercial contract. Indeed, it is an international case. Does this choice of court agreement fall within the scope of the Brussels I? yes, because for the regulation to apply it only matters whether the selected court is resident in the EU area. The Brussels I takes precedence over the Hague Convention because of the primacy of the EU law. 14 Discuss the relationship between the Hague Choice of Court Convention and the Brussels I Recast Regulation with regard to the choice of court agreement between S and M in view of Article 26(6) of the Hague Choice of Court Convention. Brussels 2012 is not an international treaty, but rather a legislation adopted by a supranational organization, the European Union. For such a reason, the Hague Convention will prevail over the Brussels I Recast Regulation because this latter applies to the EU member states only and Mexico does not belong to the European area. The underlying principle is that where all the parties are resident only in the EU, the Hague Convention will give way to the Brussels I. the court of Dublin will apply the Brussels I Recast Regulation. The court of Barcelona is bound by the choice of court agreement and stays the proceeding, waiting for the judgement that will be rendered in Ireland, since the two parties agreed on conferring exclusive jurisdiction to the Dublin court. Once a judgement is rendered in a member state in the EU, it directly applies to any other member state in the EU, because the European area considers itself as a unique judicial space, without any divisions regarding territories. The Lugano Convention Three are the instruments that constitute EU law: the Brussels I Recast Regulation of 2012, the Lugano Convention 1988, and the Hague Convention on choice of court agreements. The final authority of their interpretation is the CJEU. The original Lugano Convention was adopted on 16 September 1988. The purpose of the convention was to extend the system under the Brussels convention to the EFTA countries (European Free Trade of Association, namely Norway, Iceland, Austria, Switzerland, Finland and Sweden). Since the European Union was not a party to the Lugano convention, the CJEU had no jurisdiction to interpret it; however, it was recognised that it would be desirable to have a uniform interpretation as the Lugano and the Brussels Conventions contain identical or substantially identical provisions. Therefore, Protocol no 2 on the Uniform Interpretation of the Convention was added. The 1988 Lugano Convention was replaced by the Lugano Convention on 30 October 2007. Its purpose is the same as for the former convention, though with some differences. As in the case of The Hague convention, the new Lugano convention constitutes EU law, therefore the CJEU has the last words in interpreting it. On the other hand, the CJEU cannot interpret the Lugano convention when the case is pending before a court in one of the non-EU contracting states. AIMS AND OBJECTIVES: BRUSSELS 2012 AND LUGANO Conventions on the recognition and enforcement of foreign judgements usually include rules on jurisdiction, since states are unwilling to recognise them if the court of origin took jurisdiction on exorbitant grounds. Upholding exclusive jurisdiction is another policy objective. In most countries, there are some matters regarded as so important to the country concerned that it claims exclusive jurisdiction over them (property rights in land are an 15 example). Exclusive jurisdiction over such matters is upheld in the instruments, but only when the state claiming it is a Member State; domicile becomes irrelevant. Under the Brussels 2012, the same applies to choice of court agreements. The relevant provisions apply only to choice of court agreements designating a court in a Member State, applying irrespectively of the domicile of the parties. For example, if a choice of court agreement designates the courts of Belgium, an English court is forbidden to hear the case, even if it would otherwise have had jurisdiction. THE HAGUE CHOICE OF COURT AGREEMENTS. The concept of the choice of court agreements under the Brussels Regulation is an independent (autonomous) concept of EU law: its meaning does not depend on the national law of any Member State. It relates to an agreement between two or more parties as to where litigation will take place. It can have two effects: it may confer jurisdiction on a court which would not otherwise have had it; or it may take jurisdiction away from a court which would otherwise have had it. These two aspects – the positive (jurisdiction-granting) one and the negative (jurisdiction-depriving) one – are usually combined in the same agreement. In such a case, it constitutes an exclusive choice of court agreement. A choice of court agreement has a dual nature. On the one hand, it is a private-law contract: to this extent, it falls under the law of contract. On the other hand, it is intended to have, and has, procedural (jurisdictional) consequences, falling under the law of procedure. It is important to emphasize that State law is totally excluded: it cannot dispense with any of the requirements laid down by the three instruments, nor can it add further requirements. The most important features of Brussels 2012 and Lugano 2007 are: Brussels 2012 applies only when the designated court is in a Member State of the European Union They cover both exclusive and non-exclusive choice of court agreements Brussels 2012 applies irrespectively of the domicile of the parties Under Brussels 2012, the substantive validity of choice of court agreements is governed by the law of the State od the designated court (this point is not covered in Lugano) Choice of court agreements have no legal force if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Brussels 2012, article 24, or Lugano 2007, article 22 The main feature of Hague: The domicile of the parties is irrelevant, but the residence of the parties is relevant for resolving a conflict of instruments. 16 The location of the designated court All the three instruments are limited to their international scope: Brussels 2012 applies only if the designated court is in an EU Member State; Lugano 2007 to all the Lugano States and Hague 2005 only if the designated court is in a Contracting State. There would be no issues regarding the jurisdiction-conferring aspect (the positive aspect), but problems could arise with the jurisdiction-depriving aspect (the negative one). Indeed, if parties chose a court that neither falls under the Brussels, the Lugano, and Hague Convention, can this deprive an EU or Lugano court of jurisdiction it would otherwise have had under Brussels or Lugano? Therefore, if courts under Brussels or Lugano have jurisdiction, are they permitted to give effect to such a choice of court agreement by declining the jurisdiction conferred on them by the two conventions? The Schlosser Report, published in 1979 about the Brussels convention, states that if a choice of court agreement confers jurisdiction to a court of non-contracting State but the proceeding is nevertheless carried out in a court of a Contracting State, this latter must apply their own law to determine whether the choice of court agreement is valid. The clear implication is that the court is permitted to decline jurisdiction. Mahamdia v. Algeria case: an employment case brought before the German courts, which had jurisdiction under special provisions on individual employment contracts. Such contract contained an exclusive choice of court agreement designating the courts of Algeria. Did this deprive German courts of jurisdiction? It did not. Why? Because a choice of court agreement cannot affect special jurisdiction applicable in employment cases, and the CJEU considered that this also applies to choice of court agreements designating the courts of a non-Member State. Taser case: concerns a contract between a Romanian and an American company. The contract contained a choice of court agreement designated by the American courts. The American company then sued the Romanian company in Romania. This latter defended the action on the merits without challenging the jurisdiction of the court. Once the case reached the Romanian supreme court, this latter made a reference to the CJEU asking whether a choice of court agreement in favour of a non-contracting state (America) could deprive the Romanian courts of jurisdiction. The CJEU ruled that the Romanian courts had jurisdiction under Article 26 of the Brussels 2012, declaring that the entry of appearance itself gives the court jurisdiction: this provision applies even when the parties concluded a choice of court agreement. How could a case be considered international? Under Hague convention, article 1(2) provides that a case is international ‘’unless the parties are resident in the same Contracting 17 State and the relationship of the parties and of all other elements relevant to the disputes are connected with only that State’’. Therefore, the existence of a choice of court agreement designating a court of a non-contracting state, when the parties are both resident (Hague uses the residence rather than the domicile) in a same contracting state, does not constitute a strong element to confer the case the international feature. A case is considered international where ‘’recognition and enforcement of a foreign judgement is sought’’ (article 1(3)). In other words, when recognition and enforcement are concerned, the mere fact the recognition is sought in a contracting state of a judgement given in a non-contracting state, make the case international. For what concerns the Brussels 2012 and the Lugano, the two do not express provisions relating to international cases. Though, the Jenard Report goes on saying that the mere fact that the parties chose a choice of court agreement designating the court of another member state, even though they result domiciled in a same member state, constitutes an international element. However, Rome I, article 3(3) provides the opposite, stating that the choice of court agreement does not constitute an international element and since it constitutes a principle of EU law that the Rome I and Brussels 2012 should be consistent, this must be taken in consideration. Asymmetric choice-of-court-agreements. Also known as ‘’one-way choice of court agreements’’, parties agree to confer jurisdiction to the courts of a specific State but one of the two parties is bound by this agreement, whereas the other party is free taking the proceeding in any other courts. Therefore, it refers to an agreement which gives one party greater rights, or a wider range of choice, than the other. (Etihad case vs Air Berlin). CONFLICTS OF INTEREST Brussels or the Hague? Since Hague has only limited scope – it only applies to the choice of court agreements and then only if the designated court is in a State Party to Hague – conflicts with other instruments will be not commons, but they could occur anyway, and the rules laid down in article 26 deal with them. Since Hague was concluded by the EU, it is part of the EU legal system and therefore binding on the member states. Under general EU principles, it would prevail over an EU regulation, such as Brussels 2012, in the event of a conflict. Hague makes express provisions for the EU, and for conflicts with EU measures, and it does so through the adoption of the ‘’Regional Economic Integration Organization’’ (REIO): in theory, the provisions applicable to the REIOs could apply to other organizations, but in practice they will apply only to the EU. 18 Hague article 26(6) is concerned with conflicts between Hague and legislation adopted by REIO, such as the EU. The underlying principle is that where all the parties are resident within the EU, Hague gives way to Brussels 2012. Indeed: -The first EU ‘give way’ rule is contained in article 26(6)(a): where none of the parties is resident in a non-EU Hague State (a state party to Hague that is not a member state of the European Union), Hague will give way to Brussels 2012. E.g., if a person resident only in Poland and a person resident in Spain conclude a choice of court agreements designating the court of England, Brussels 2012 will prevail over Hague. However, if a person resident in Mexico and a person resident in Spain conclude such an agreement, including the choice of the court (England), in this case Hague will prevail over Brussels, since Mexico does not belong to the European Union, but it is a State Party of the Hague Convention: here, the English court will apply the Hague. Furthermore, if the parties had designated the court in Mexico, the English courts would have had to apply Hague, irrespective of the residence of the parties, because Brussels 2012 does not apply to the choice-of-court-agreements which designate the court of a non-EU State. - The second EU ‘give way’ rule on conflict with EU legislation is contained in Hague article 26(6)(b): it provides that Hague will not affect the EU rules concerning the recognition or enforcement of judgements among its member states. This means that, if a person resident in Mexico and a person resident in Spain conclude a choice of court agreements designating the courts of England, and a judgement is given by the English court against the Spaniard, the recognition of that judgement in Spain will be governed by the Brussels 2012, and not Hague. On the other hand, its recognition and enforcement in Mexico would be governed by Hague. Article 26 (6) This Convention shall not affect the application of the rules of a Regional Economic Integration Organisation that is a Party to this Convention, whether adopted before or after this Convention: a) where none of the parties is resident in a Contracting State that is not a Member State of the Regional Economic Integration Organisation. b) as concerns the recognition or enforcement of judgments as between Member States of the Regional Economic Integration Organisation The theory of jurisdiction. The general idea is that a State has no right to require a defendant to submit to adjudication by its courts unless there is some reasonable ground for doing so. Indeed, there are number of possible grounds. Consent jurisdiction. If the defendant consented the court’s jurisdiction – for example, by agreeing to a choice of court clause – it is reasonable to consider that the court has the right to hear the case. 19 Home-Court jurisdiction. The second basis of jurisdiction is that there is a link between the defendant and the territory of the forum. The justification for this is that it is fair for the defendant to be sued before his home court. Though, there is considerable difference of opinion as to what constitutes a defendant’s home country: residence, nationality, domicile. Claim-Based jurisdiction. The third basis for jurisdiction is that there is a link between the facts on which the claim is based and the territory of the forum. The assumption is that if the facts have a sufficiently close connection with the territory of the forum, it is reasonable for the court to hear the case. (Article 7 of the brussels 2012). Exclusive and non-exclusive jurisdiction, namely its consequences. If one court has exclusive jurisdiction that necessarily means that no other court has jurisdiction. Consequently, a determination of the courts of one state have exclusive jurisdiction also determines that the courts of other state do not have it, and this is an important consequence. There are two levels of exclusivity: the highest is the exclusive jurisdiction under the Brussels 2012, article 24 (below). Jurisdiction under these provisions cannot be waived by the parties. Exclusive jurisdiction Article 24 The following courts of a Member State shall have exclusive jurisdiction, regardless of the domicile of the parties: (1) in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property, the courts of the Member State in which the property is situated 4) in proceedings concerned with the registration or validity of patents, trademarks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of an instrument of the Union or an international convention deemed to have taken place (5) in proceedings concerned with the enforcement of judgments, the courts of the Member State in which the judgment has been or is to be enforced 20 moreover: Article 26 1. Apart from jurisdiction derived from other provisions of this Regulation, a court of a Member State before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of Article 24. An exclusive choice of court agreement can confer exclusive jurisdiction on the designated court as well. Though, it is a lower level of exclusivity since it can be waived by the parties. Under Brussels 2012 and Lugano 2007, the interests of the member states are more important than those of private parties. The domicile of the defendant. Brussels 2012, article 4(1) provides: Subject to this regulation, persons domiciled in a member state shall, whatever their nationality, be sued in the courts of that member state. This is the basic rule, and jurisdiction on this ground is generally called ‘’general jurisdiction’’ since it applies irrespective of the nature of the claim. Other grounds of jurisdiction (called special jurisdiction) are regarded as exceptions. Brussels 2012, recital 15, continues: Jurisdiction should always be available on this ground (domicile of the defendant) save in a few well-defined situations in which the subject-matter of the dispute or the autonomy of the parties warrants a different connecting factor. The exception relating to the ‘’subject-matter of the dispute’’ refers to the exclusive jurisdiction under Brussels I, article 24; exception relating to the ‘’autonomy of the parties’’ concerns exclusive choice of court agreements. Alternative grounds of jurisdiction, which are forms of claim-based jurisdiction or consent jurisdiction. Brussels 2012, recital 16, states: In addition to the defendant domicile, there should be alternative grounds of jurisdiction based on a close connection between the court and the action. The existence of a close connection should ensure legal certainty and avoid the possibility of the defendant being sued in a court of a member state which he could not reasonably have foreseen. 21 Protecting defendants against unfair jurisdiction is an important objective of the Brussels 2012 and Lugano. This clause, though, is extended only to defendants domiciled in a EU member state. Article 5(1) provides: Persons domicile in a member state may be sued in the courts of another member state only by virtue of the rules set out in section 2 to 7. This ensures their protection: if they cannot be sued in the courts of their domicile, they must be sued on one of the additional grounds laid down in such regulation (namely exclusive and non-exclusive jurisdiction). Non-EU defendants. Defendants who are not domiciled in the EU or the Lugano area are outside the scope of Brussels 2012 and Lugano. This is made clear by article 6(1), which provides: If the defendant is not domiciled in a member state, the jurisdiction of the courts of each member state shall, subject to article 18(1) (exception -> proceedings brought by consumers), article 21(2) (exception -> proceedings against employees), and article 24 (exclusive jurisdiction) and 25 (choice of court agreements), be determined by the law of that member state. These exceptions (in parentheses) are not for the benefit of the defendant but for that of the other party or to uphold member states’ interests. PARALLEL PROCEEDINGS; LIS ALIBI PENDENS (case pending elsewhere). The Brussels 1968 dealt with parallel proceedings as well. The principle known as the ‘’first-come, first-served’’ rule, is designed to avoid irreconcilable judgements which may arise within the European Union and is conceived as a mechanic concept that rarely allows for exceptions. The main section related to the principle in Brussels 2012 is Section 9 (articles 27-32 -> this last article does not depend on national law, rather on the European law). The weakness of Lis alibi pendens includes the uncertainty of the court first seised that could not result in the best court judging the case. Since parallel proceedings are undesirable, it is generally accepted that some mechanisms should be used to avoid them. The common law has traditionally dealt with the problem through two remedies: - The forum non convenies (permitting the forum to decline jurisdiction in favour of the other court) - The antisuit injunction (enabling the forum to insist on hearing the case itself) 22 This system, therefore, allows one of the two courts competing to hear the case to decide which one will win out. It is this specific feature which makes it unsuitable for adoption in the EU system, since our is based on the idea of equality of legal systems. The mechanism adopted by both the Brussels 2012 and Lugano 2007 (Hague is excluded since it does not deal with the matter) is the doctrine of lis pendens. Under it, the court first seised hears the case and all other courts must give it up: it has the merit of being simple and objective, but it makes no attempt to ascertain which court would be more appropriate to hear the case. The doctrine of LIS PENDENS. It is based on the idea that conflicts of jurisdictions should be settled by giving priority to the court first seised. The provisions set out in section 9 apply regardless of the domicile of the parties: the two courts must each have jurisdiction, but it does not matter whether this jurisdiction is derived from the Regulation or the Convention, or national law. Furthermore, a provision added to the text of Brussels 2012 introduces an analogous system for the situation where the court first seised is not in an EU or Lugano State (see below: First action in a non-EU or Lugano State). The same cause of action. Under both the Brussels and the Lugano, the lis pendens rule applies only if the claim is the same; indeed, the English text notes that the proceedings must involve the same cause of action. The object is what the claimant is hoping to get from the court. In Gubisch v. Palumbo, there was a contract between a German seller and an Italian buyer. The German action was aimed at giving effect to the contract and the Italian one was aimed at depriving it of effect, therefore the validity of the contract lay at the heart of both actions. For this reason, the CJEU said that the object must be regarded as the same, since that concept cannot be interpreted so restrictively as to require the two claims to be identical. The CJEU went on saying that if the claims for rescission were not decided by the courts in which the claim for enforcement was brought (court first seised), a judgement given by the first set of courts for the enforcement of the contract would not be recognised and enforced in the other Member State if the courts of that Member State had already rescinded the contract. This implies that the object of two actions is to be regarded as the same if the actions could give rise to irreconcilable judgements (test for related actions set out in article 30(3) of the Brussels Convention, below). 23 Article 30 (3) 3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Related actions in EU or Lugano States. The article dealing with such matter is to be found in Brussels 2012, article 30(1), which states: where related actions are pending in the courts of different member states, any court other that the first seised may stay the proceedings. This provision has a wider scope since the parties and the claims need not be the same, and the court seised second is not obliged to grant the stay. Under article 30(1), actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgement resulting from separate proceedings. What the provision wants to ensure is simply not having the judgement of the court seised second inconsistent with that given by the other court. Even if the court seised first has jurisdiction, in this case, the court seised second is not obliged to decline jurisdiction. Obligation of stay proceedings. Where a same claim is being initiated between the same parties in two different EU or Lugano States, the court seised second must stay proceeding in its own motion, until the jurisdiction of the court first seised is established. Though, the court seised second is unlikely to know about the other action unless one of the parties informs it. Obligation to decline jurisdiction. Once the jurisdiction of the court first seised is established, the court seised second must decline jurisdiction. Exclusive jurisdiction. Generally, the court seised second has no title to decide whether the court seised first has jurisdiction: it must allow the latter doing that. Such principle, stressed out several times by the CJEU, loses its rationale in the case of exclusive jurisdiction: indeed, if the court seised second has exclusive jurisdiction that implies that the court first seised has not. Consequently, by determining its own jurisdiction, the court seised second is also determining the jurisdiction of the court seised first. The only reference in the Brussels 2012 is article 31(2): Without prejudice to Article 26, where a court of a Member State on which an agreement as referred to in Article 25 confers exclusive jurisdiction is seised, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement. 24 Finally, the issue came before the CJEU in 2012, in Weber v. Weber, a case concerning rights in rem of immovable properties. The CJEU held that the court seised second is not obliged to stay the proceedings before it if it considers having exclusive jurisdiction under this provision. Indeed, this makes sense since, if the court seised first did give judgement, Brussels 2012 article 45(1)(e)(II) which deals with judgements in conflict with Section 6 of Chapter II, would require the court with exclusive jurisdiction not to recognise the judgement. When is a court seised? It is crucial to know at what point in the proceeding a court is to be regarded as seised. Different legal systems can give different answers to the question, creating difficulty under the Brussels 2012; consequently, the CJEU laid down a choice of law rule: a court regarded as seised is to be decided by the law of the Member State of the court in question. Though, the problem of this rule is that it might not always be clear in terms of procedural law of a country. It might also be regarded as giving some courts an unfair advantage in the race for jurisdiction: for example, if English courts regarded themselves as seised when the claim form was issued, while the German courts only when the claim was served, the former would enjoy a significant advantage. For these reasons, it was subsequently decided to have an autonomous rule, contained in Brussels 2012 article 32. In the Regulation, but not in Lugano, there is a further provision under which any court seised of a dispute must, on a request form another court seised of the dispute, inform the latter court of the date when it was seised. Forum non conveniens. Forum non conveniens (Latin for "an inconvenient forum") (FNC) is a mostly common law legal doctrine through which a court acknowledges that another forum or court where the case might have been brought is a more appropriate venue for a legal case and transfers the case to such forum. A change of venue might be ordered, for example, to transfer a case to a jurisdiction within which an accident or incident underlying the litigation occurred and where all the witnesses reside. The English courts originally took the view that since the Brussels 2012 deals with proceedings in the courts of the Member State, forum non conveniens would still apply when the court in whose favour the proceedings were stayed outside the EU or Lugano States. This idea has been rejected by the CJEU in Owusu v Jackson: the claimant Owusu was severely injured during his vacation in Jamaica after he had rented a villa from Jackson. He sued Jackson in England, the place of the domicile of the defendant, and several companies in Jamaica as well, claiming that the contract contained an implied term that the beach was safe for swimming. Since the domicile of the defendant, England had jurisdiction over the case under the Convention. Jurisdiction over Jamaican companies depended on English law: 25 Jackson, though, asked the court to stay the proceeding because of the forum non conveniens, claiming that: - The beach could have been proclaimed as safe or not only by a court which would have inspected it. - If Jackson would have been held liable, he would want to claim an indemnity from the Jamaican defendants. Therefore, a trial in Jamaica would be more appropriate. The trial judge, though, refused to grant a stay and Jackson appealed. The court of appeal made a reference to the CJEU which first considered whether the convention was applicable to a case in which there was no connection with any contracting states (EU) other than that of the forum. It held that the convention was applicable: although it does not apply unless there is some international element, that element may consist of a connection with a non-EU State. The judge continued stating whether the application of article 2 of the convention precluded the application of forum non conveniens, holding that it did, explaining its judgement with three reasons: - It should be prohibited in order to protect the defendant - It should be prohibited in order to protect the claimant - Allowing common law courts to apply the forum non conveniens would lead to a lack of uniformity in the application of the convention The result is that forum non conveniens is prohibited if the defendant is domiciled in the member state of the forum: it will apply in England only if the defendant is not domiciled in an EU or Lugano State, and the English courts have jurisdiction only under English law. Antisuit injunctions. An anti-suit injunction is an order issued by a court or arbitral tribunal that prevents an opposing party from commencing or continuing a proceeding in another jurisdiction or forum. They are often used by English courts to let their view prevail in a jurisdictional conflict, though, there are situations in which they play a valuable role in preventing a claimant form bringing or continuing abusive proceedings (Turner v Grovit). The CJEU found that even when proceedings are brought in bad faith and constitute an abuse of process, the courts of another Member State are not entitled to grant an antisuit injunction directed against those proceedings; indeed, paragraph 27 of the judgement defines what the CJEU regards as antisuit injunction and explains why it considers such a remedy inadmissible: However, a prohibition imposed by a court, backed by a penalty, restraining a party from commencing or continuing proceedings before a foreign court undermines the latter court's jurisdiction to determine the dispute. Any injunction prohibiting a claimant from bringing 26 such an action must be seen as constituting interference with the jurisdiction of the foreign court which, as such, is incompatible with the system of the Convention. The key argument is that each court in the EU should be entitled to decide for itself, free from interference by courts of other Member State, whether or not it has jurisdiction under the Brussels 2012. Therefore, this case establishes that antisuit injunctions directed against proceedings in the courts of another Member State are prohibited. First action in a non-EU or Lugano State. Brussels 2012 introduced a procedure which allows, but does not require, a court in an EU State to stay an action where the prior action is pending before the courts of a State outside the EU or Lugano area. Article 33 of the Brussels 2012: the same claim is brought between the same parties in two different countries and Article 34: where related claims are involved. However, a Member State court is not obliged to grant a stay. These above-mentioned procedures contain three significant differences. The main one is that the stay is never mandatory even if the claim and the parties are the same: the EU court may grant it if it is satisfied that it is necessary for the proper administration of justice; Secondly, the stay may be granted only when the EU court is exercising jurisdiction under one of the limited number of grounds expressly specified in the Brussels 2012, namely: - Article 4 (domicile of the defendant) - Article 7 (special jurisdiction, for example in matters relating to a contract or tort) - Article 8 (multiple parties and multiple claims) and - Article 9 (limitation of liability regarding ships) Indeed, the fact that two acts are related is not itself a ground on which the court seised first may take jurisdiction. It must have jurisdiction independently. And thirdly, it must be expected that the court of the third State will give a judgement capable of recognition and, where appropriate, enforcement in the Member State of the forum. However, the power to grant a stay does not apply when the court is exercising jurisdiction on other grounds – for example, protective jurisdiction (insurance, consumers and employers), exclusive jurisdiction (such as rights in rem in immovable property) or choice of court agreements: these grounds for jurisdictions are regarded as too important to compromise. 27 Since EU law does not apply to recognition and enforcement from states to which Brussels, Lugano or Hague do not apply, this will depend on Member-State law (applying article 33 of the Brussels 2012). Article 33 1. Where jurisdiction is based on Article 4 or on Articles 7, 8 or 9 and proceedings are pending before a court of a third State at the time when a court in a Member State is seised of an action involving the same cause of action and between the same parties as the proceedings in the court of the third State, the court of the Member State may stay the proceedings if: (a) it is expected that the court of the third State will give a judgment capable of recognition and, where applicable, of enforcement in that Member State; and (b) the court of the Member State is satisfied that a stay is necessary for the proper administration of justice 2. The court of the Member State may continue the proceedings at any time if: (a) the proceedings in the court of the third State are themselves stayed or discontinued; (b) it appears to the court of the Member State that the proceedings in the court of the third State are unlikely to be concluded within a reasonable time; or (c) the continuation of the proceedings is required for the proper administration of justice. Under article 33(3) (which applies where the same claim is being litigated between the same parties) a court of a member state which has granted a stay must dismiss the proceeding if the court of the third State has given a judgement capable of recognition and, where appropriate, enforcement in the Member State of the forum. 3. The court of the Member State shall dismiss the proceedings if the proceedings in the court of the third State are concluded and have resulted in a judgment capable of recognition and, where applicable, of enforcement in that Member State. 4. The court of the Member State shall apply this Article on the application of one of the parties or, where possible under national law, of its own motion. Instead, under article 34(3), which applies to related claims, the court of the Member State is not required to dismiss the proceedings in such situation, rather it is merely permitted to do so. A situation in which a choice of court agreement has been signed by two parties, designating the court of a third State that do not fall under Brussels, Lugano or Hague, imply that, in case a party is domiciled in an EU country and then is sued there in contravention of the choice of court agreement, the action may be stayed, providing that the designated court was seised first. 28 Recognition and enforcement within the EU. Recognition and enforcement are two distinct concepts. ‘’Recognition’’ relates to the recognitions of the res judicata effects (claim preclusion) of a judicial decision rendered in a Member State. Indeed, the res judicata effects of a declaratory judgement on the merits rendered in a Member State shall be automatically recognized in another Member State according to the Brussels 2012, following the principle of mutual trust. Indeed, recognition occurs when the court addressed accepts a determination of the parties’ legal rights and obligations made by then court of origin. Thus, if the court of origin rules that a contract is valid or invalid, the court addressed will accept this and act accordingly. Just as it is possible to obtain a declaration of recognition, so is it possible to obtain a declaration of non-recognition. Refusal of recognition is expressed in article 45(1) of the Brussels 2012 which states that recognition must be refused if one of the grounds for refusal specified in article 45 is established. Article 45 On the application of any interested party, the recognition of a judgment shall be refused: (a) if such recognition is manifestly contrary to public policy (ordre public) in the Member State addressed; (b) where the judgment was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so (c) if the judgment is irreconcilable with a judgment given between the same parties in the Member State addressed; (d) if the judgment is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed; or (e) if the judgment conflicts with: Sections 3, 4 or 5 of Chapter II where the policyholder, the insured, a beneficiary of the insurance contract, the injured party, the consumer or the employee was the defendant; or (ii) Section 6 of Chapter II Therefore, enforcement involves and goes one step further, applying the legal procedures of the court addressed to ensure that the judgement debtor obeys the order of the court of origin, for example, by making him pay a sum of money. Under Brussels 2012, a foreign judgement is enforceable without any declaration of enforceability being required. 29 As for the grounds of refusal of recognition, there are grounds for refusal of enforcement too described in article 46: On the application of the person against whom enforcement is sought, the enforcement of a judgment shall be refused where one of the grounds referred to in Article 45 is found to exist. Keep in mind that the mere fact that a State did not apply the Lis pendens doctrine is not sufficient to enforce the grounds of refusal of recognition. If a party does not comply with the enforcement of a judgement given in Member State A, the judge himself can ask the court of State B to enforce the judgement in their territory. Exequatur proceeding: it is a procedure used in civil-law countries under which a court in the State addressed grants an order permitting the enforcement of a foreign judgement, allowing the foreign judgement to enter in the legal system of the State addressed. Though, it is normally necessary to obtain an enforcement order (declaration of enforceability) from a court of the State addressed before a foreign judgement may be enforced. The Hague judgement 2019 deals with the enforcement and recognition of foreign judgements in civil or commercial matters, though has not entered into force yet. It does exist but it has not been ratified by Italy, the US and UK, but only signed by Uruguay and Ukraine. Therefore, to have a US judgment recognised in Italy, there must be applied the exequatur proceeding, since Italian national rules. Italy, before joining the Brussels convention, it was necessary to start proceedings and at the end of them the foreign judgements were declared as effective and binding. Once a contracting state of the Brussels, the automatic recognition has become the general rule of the convention 2012. Collateral estoppel (also known as issue preclusions) is a common law estoppel doctrine that prevents a person from relitigating an issue. Article 36 1. A judgment given in a Member State shall be recognised in the other Member States without any special procedure being required. 2. Any interested party may, in accordance with the procedure provided for in Subsection 2 of Section 3, apply for a decision that there are no grounds for refusal of recognition as referred to in Article 45. 3. If the outcome of proceedings in a court of a Member State depends on the determination of an incidental question of refusal of recognition, that court shall have jurisdiction over that question. 30 Previous final exam questions 1) Zara a Spanish corporation grants a patent license to Italy spa an Italian corporation with statutory seat in Rome for manufacturing and selling Spanish shoes in Italy and Slovenia But Italy spa beaches the contract and sells the shoes also in Austria and Luxembourg Italy spa preventing Zara brings a defensive action before the tribunal of Rome asking for a declaration of patent non-infringement A few days later Zara brings a lawsuit in Vienna against Italy for damages related to the breach of the patent license agreement Which court will decide the case? According to the Brussels recast 1 regulation article 4 general clause the lawsuit can be filed at the defendant's residence so in this case in Italy generally and more specifically in the court of Rome. Article 7 of the Brussels recast regulation special clause states that article 7 paragraph 1 b which states that the place of the performance of obligation Teacher’s answer First step would be applicable law So need to apply Brussels recast 1 regulation or not? Is it the Brussels recast regulation? Since both parties domiciled in EU First step is applicable law is that this case regulated by Brussels 1 recast regulation since both parties are domiciled in the EU and the issue concerns civil and commercial matters. What’s the problem here? We have 2 proceedings first pending in Italy against Zara in which Italian court has to decide on a declaration of patent non infringement Do you think Italy has jurisdiction? What about Zara we assume its not domiciled in Italy Breach of contract since can only distribute in Italy and Slovenia but what happened was products were distributed outside so matter of breach of contract instead of torts And if so article 7 paragraph 1 applies? Yes In first proceedings Italy has jurisdiction over the case according to article 7 paragraph 1 of Brussels What about the proceedings brought by Zara in Vienna? Lis pendens rule No doubt that Italy has jurisdiction over the claim A further explanation is needed Here deal with parallel proceedings so rule of lis pendens on Brussels 1 applies Since 2 proceedings between same parties and same cause of action but why? According to the ECJ case law in this case we are dealing with same cause of action since in both proceedings court has to decide whether the agreement was infringed or not and this is reason why the same dispute and so right to say that Italian court here which is first seized needs to solve the case so article 29 of Brussels 1 recast Here not applying article 24 number 4 since such article only applicable in relation to torts and infringement of patent licence and here Zara has patent license and due to contractual agreement gave Italy possibility to sell Spanish shoes in Italy and Slovenia was not patent 31 agreement breach and just complying with contract and when Italy sold the shoes in Austria and Luxembourg breached contractual agreement not license of Zara and so why not applying article 24 Case 2 Anna domiciled in Turin has shares in a French company The companies articles of association provided that all disputes between the company and its shareholders should be subject to the jurisdiction of the French courts The company went into liquidation and Peter a company creditor brought an action against Anna in France for money not paid up on Anna’s shares process was served on annas designated French address but in fact she received no notice of the proceedings as she is domiciled in Turin The French court gave judgement against Anna Is the French judgement recognisable in Italy pursuant to Brussels 1 recast regulation? And are there grounds for refusal? The Brussels 1 recast regulation is applicable since both parties are domiciled in the EU Can be refused article 45 of the Brussels recast regulation to invoke ground of refusal need to say that companies agreement was not possible and she was forced to accept this article but this service of process wasn’t effective so didn’t put Anna in conscious of the fact that the case was proceeding Here what Anna can reply to justify her behaviour is that she became allowed of final judgement was enacted against her as soon as someone in Italy tried to invoke the judgement against her Correct answer is that Anna can invoke ground for refusal of recognition if she challenges the claim in France or in Italy if not able for procedural reasons to challenge the judgement in France since as general principle when dealing with default judgement the European legislator wants that right of defence to be effected There is jurisdiction agreement and service of process agreement that should be done in France can say right of defence was breached and can invoke ground of refusal for recognition Case 3 Boris Russian Russian businessman domiciled in Madrid place of business in Rome Brussels 1 recast regulation applies On the basis of article 4 the claim can be brought before the Bucharest court where the newspaper is located In this case article 7 paragraph 2 applies on the basis of the e-date case —> presumed that the centre of interest of a person is located where such person is domiciled but in this case the Russian businessman has domicile in Madrid and place of business in Rome and thus Italy if deemed as his centre of interest ( both justifications are acceptable ) The Bucharest court retains general jurisdiction since place where journal is located Place of interest located 32 In e-date case centre of interest is located in the state in which such a person has a domicile but here Russian domiciled in Spain but doing business in Rome so here can decide which place to bring claim so can be said in court where Boris is domiciled and so assume that this man is doing business in Rome so Italy centre of his interest The Bucharest court has general jurisdiction since it is the place where the journal is located so can compensate for all damages. 33

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