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This document is a fiche on International Business Law that covers topics such as different actors, recognition theory, corporate structure, insolvency, and related concepts.
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Lecture 1 : Sources and actors S ources: private international law and soft law Actors: individuals, legal entities, states, consumer S tateasanactor(SOE-StateOwnedEntity)isalegalentityownedentirelyoralmostentirelybytheState.It acts as a corp...
Lecture 1 : Sources and actors S ources: private international law and soft law Actors: individuals, legal entities, states, consumer S tateasanactor(SOE-StateOwnedEntity)isalegalentityownedentirelyoralmostentirelybytheState.It acts as a corporation. The State that wants to get out of a contractual relation will invoke State immunity. Applicable law -lex societatis The law of the company Recognition theory Recognition of legal capacityto act (lex societatis determines if a company is validly established) ecognition of legal representation R Corporatestructure and organization (lex societatis determines who can represent the company. If the contract isn’t signed by the proper party, it has no legal standing) Rules of minimum capital requirement Requirementof limited liability Rules of financial compensation and identification of shareholders How to determine the HQ ? I ncorporation theory Real seat theory Statutory seat Actual center of admin/principal place of business ttempts to unify theories of lex societatis : Hague Convention, 1956 ; Warsaw Resolution, 1956 ; A International Law Association ; EC Council Regulation (Societas Europaea) Brussels Regulation etermines where a company can be sued if it’s the defendant. Forum rei rule = defendants for. D Art 63 corporate domicii→ the claimant choses whereto sue - the statutory seat - the principle place of management / administration - the principle place of business Art 7 §5special jurisdiction :possibility to suewhere the branch is. rt 24exclusive jurisdiction: we cannot agree onanother competent forum : in contradiction to art 4, 7, 25. A Disputes concerning : validity ofconstitution,nullity,dissolution,ownership,rightsinlandandtendenciesin land. The court will apply its seat of PIL : apply its own recognition theory and not art 63. S ourcesofIBL:rulesonastothesubstance,themerits(validityofthecontract) andproceduralrules(which law apply, the validity of the proof, the validity of the judgment). I nstrumentstacklingsubstantiallaw:TheHagueConvention(1985);HCC;ViennaSalesConvention(1980)- only real unified substantive law ; Rome I - conflict of law. omparative business law C Comparison of laws in order to know which one is better, to apply to the contract. Party autonomy: choose the law applicable to relations. Limits: Public policy and mandatory provisions 1 Lecture 2 : lex societatis and insolvency Principles in EU law on discrimination principle: based on nationality(determined by lex societatis). N F reedom of establishment(art 49 and 54 TFEU) : acompany can establish the same way in either MS. Only applies to MS. “ Country of origin”principle: if established in anothercountry, requirements from the initial state should be kept. It protects companies from having to comply with different rules when changing MS. In relation to the freedom of establishment. Insolvency Definition : a company doesn’t have the means to pay its debts and goes bankrupt. Competent court ?→ court of the COMI Which national insolvency law to apply ?→ The lawof where the debtors/creditors are or where the assets are. Recognition ?→ territoriality vs universality principle T erritorialityprinciple:Insolvencyproceedingsarelimitedtothejurisdictionwherethedebtorsandcreditors are. Foreign assets and debtors/creditors areexcluded.There’llbeaninsolvencyproceedingineachcountry where creditors and debtors are. isadvantages: costs ++, uncertainty ++, problemof coordinating parallel insolvency proceedings. D Advantages : territorialism in favor of local debtors ; assets are controlled by its national law, avoiding extraterritorial application. Universality principle :1 court, 1 applicable law,and recognized everywhere. egulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings - Recast R Materialscope(a rt1):Thisruleappliestocaseswhereadebtor'sassetsarepartiallyorfullytakenaway,and someone is appointed to manage or sell those assets during insolvency. T erritorial scope (a rt 3 §1, 20 and 25) : applies to proceedings where the COMI is, even if the place of incorporation is not a MS. Main proceedings (Universality) - Jurisdiction to open main proceedings at theplaceofdebtorsCOMI:art3§1(universalscopeand bounds all assets). - Lex concursus (national law of the COMI applies) :art 7 - The automatic recognition of judgments :art 19, 20and 32 Secondary proceedings (Territoriality) - Secondary proceeding where the debtor has an establishment :art 3 § 2 - Lex concursus (law of secondary proceedings applies) :art 7 - Recognition of secondary proceedings are recognized in other MS :art 19 §2, 20 §2 and 21 §2 OMI is an autonomous concept. C For natural person: habitual residence ; for self-employed: place of business Forcompanies:principleisincorporationtheory.Butifincorporationtheory≠realseattheorywe’lllookinto2 factors : objective factors and how ⅓ parties perceive us. 2 entros C Facts:acompanyseated(incorporationtheory)intheNetherlandswantedtoestablishabranchinDenmark. To do so, Denmark asked for administrative measures that wouldn’t apply to Danish companies. Centros argument : discrimination based on nationality. ECJ :any company can establish a branch in anotherMS. The refusal is contrary to freedom of establishment. berseering Ü Facts :Dutch company setting in Germany. It has nolegal personality under German law. ECJ:art49and54TFEUpreventahostMSfromdenyinglegalcapacityofacompanyvalidlyincorporatedin anotherMSwhenithasmoveditscenterofadministrationtothehostState.TheGermandecisioniscontrary to the freedom of establishment principle. It’s a violation of PIL. This decision weakens the real seat theory. I nspire Art Facts:acompanyincorporatedintheUKhasitsactivityintheNetherlands.TheACCimposesthecompanyto register as a foreign company under Dutch legislation, and imposes additional obligations. The company is contesting by saying it violates the freedom of establishment principle. ECJ : the additional obligation is contrary to art 43 and 48 EC and violates the freedom of establishment principle. Consequence : a law based on real seat theory which applies domestic law to a company incorporated in another MS is a violation of the freedom of establishment. artesio C Facts:ItaliancompanywantingtochangelexsocietatisbychangingtheseattoHungary(financialaspectwas more beneficial). Hungary said that the Italian and Hungarian law have to permit it in order to allow the conversion. The company ended up being neither Italian nor Hungarian. ale V Facts:ItaliancompanywantingtotransferitsstatutoryseatandbusinesstoHungary.Ithasderegisteredfrom Italy and Hungary rejected the transfer saying it isn’t possible for foreign companies to do so. ECJ:thedifferenceintreatmentbetweendomesticandcross-borderprocessingiscontrarytothefreedomof establishment principle. - Proportionalitytest:therejectioncanonlybejustifiedonthebasisofoverridingreasonsinthepublic interest → Hungarian State was unable to justify it. - Principleofequivalence:ifnationallawsimposestrictobligationsondomesticcompanies,theymust apply equally to foreign companies. - Principle of effectiveness: can’t refuse to takeaccount of documents obtained from the MS of origin. olbud P Facts:PolishcompanywantstotransferitsstatutoryseattoLuxembourg.Polishlawrequiresthecompanyto liquidate in order to transfer. ECJ: it’s not compatible with freedom of establishment; it can only be restricted for public interest reasons. Poland says: protection of creditors, minority shareholdersand employees. Prevent abusive practice. ECJ says : mandatory liquidation is beyond what's necessaryforprotection.Polishlawisn’tcompatiblewith TFEU. irective (EU) 2017/1132 D ResponsetothePolbudcas.However,limitsare:ifmovingacompany,youneedtorelyonMSlawandCJEU case law. Protection of stakeholders is ineffective because of overlapping or contradictory rules. 3 irective (EU) 2019/2021 D Harmonizedandlegallysecuredtheframeworkforthecross-borderoperationwhileenhancingtheprotection of stakeholders. Unifying company law for cross-border companies to avoid lex societatis, but applying the cross-borderconvention.Stakeholderprotection=transparencyrequirements. Abuse / fraud prevention = compliance requirements. alapagos case G Facts: companybasedinLuxembourgchangedthecentraladministrationtotheUK andrelocatedthecentral to Germany. The first creditor asked for an insolvency procedure in Germany, and afterwards 2otherones asked for the same thing but in Germany and the UK. 1 : Which court is competent for the insolvency proceeding after the debtor has transferred its COM to Q another MS ? Art 3 §1 of regulation 2015/848: the country where the insolvency proceedings first started keepstheauthoritytohandlethecase,evenifthedebtorshiftstheCOMItoanotherMS.Itofferspredictability and prevents forum shopping. 2 : If one court declares itself competent for insolvency proceedings, can other courts declare themselves Q competent before the initial court has delivered its decision and declined jurisdiction ?Themaininsolvency proceedings produce its effect in all MS where the regulation applies. - Maintain of jurisdiction: the initial court remainscompetent to open the main insolvency proceedings - Mutual recognition: the principle of mutual trustbetween MS is reinforced - Post Brexit impact: EU solvency regulation doesn’tapply in the UK 4 Lecture 4 : Harmonization of substantive law (Rome I) S ubstantive scope:art 1 Contractual civil and commercial relations. Are excluded : law of the company, dispute resolution, trust, evidence and procedure. A contract is an autonomous concept = an obligation that parties have expressly agreed upon. T erritorial scope Applies to all MS (except Denmark). Art2:keyrequirementisthatthejudgemustbefromenEUMS.Theoutcomedoesn’thavetonecessarilybe an EU law. Art 12: scope of the applicable law Art 23: provisions of Community law Lex specialis prevails on lex generalis Escape clauses:§3 of art 3, 4 and 5 hoice of law:art 3 C Applies to normal commercial contracts.Employee orconsumer contracts aren’t regulated by this art. §2: the choice can be made at any time, expresslyor implied.Limit: can’t contour mandatory provisions. Depending on the sector, some laws are more advantageous : lex shopping / law shopping. Partyautonomy:possibilitytochooseanylaw,nolinksarerequired.Fornow,onlyastatelawcanbechosen, not a principle or a soft law. bsence of choice of law:art 4 A Ifnochoicewasmade,thejudgewillestablishtheapplicablelaw:itusuallyleadstothehabitualresidenceof the party that needs to perform the characteristic performance. Salescontract=sellershabitualresidence;Provisionerscontract=provisionershabitualresidence;Distribution contract = distributors habitual residence. §4:iftheapplicablelawcannotbedeterminedonthebasisof§1and§2,thentheapplicablelawistheone that has the most close connection. S pecial types of contacts:art 5 §1 : Carriage of goods -inabsenceofchoiceoflaw,theapplicablelawisthelawofthecountryofhabitual residenceofthecarrier,providedthattheplaceofreceiptortheplaceofdeliveryorthehabitualresidenceof the consignor is also situated in that country. §2:Carriageofpassengers-inabsenceofchoiceoflaw,theapplicablelawisthelawofthecountrywherethe passengerhashishabitualresidence,providedthateithertheplaceofdepartureortheplaceofdestinationis situated in that country. A défaut, the law of the country where the carrier has his habitual residence. Choiceoflaw:thepassengerhashishabitualresidence;orthecarrierhashishabitualresidence;orthecarrier has his place of central administration; or the place of departure is situated; or the place of destination is situated. onsumer contract:art 6 C A person not acting in its professional capacity. If the person isn’t a consumer, then we’ll apply art 3 and 4. §2: possible choice of law, but can’t escape fromconsumer-protective mandatory provisions. § 4 : exclusion of certain contracts→ supply of servicesinaforeigncountry;contractofcarriage;contract related to a right in rem (immovable property) ; financial instruments Limits of the applicable law→art 9: overridingmandatory provisions. 5 rt 3 Rome I Regulation in the context of the Hague principles on choice of law A R1 (2008): applicable law to contracts. Applies toall EU MS except Denmark. HP (2015) : choice of law in international commercial contracts. Unification of rules worldwide and complementing existing regulations. arty autonomy principle = parties are free to choose the applicable lawtotheircontract(legalcertainty). P Limits: public policy and overriding mandatory rules. - art 3 R1 - art 2 HP utual scope:art 2 §2 b) HP and art 3 §1 R1 M Party autonomy includes thatpartiescanmakeormodifytheirchoiceoflawatanytime.Problem:thelaw chosenbypartiesgovernthevalidityofthecontract,soanychanceofapplicablelawcouldaffectthevalidity. Prevention:art 2 §3 HP, art 3 §2 R1→any change onthe choice of law doesn’t affect the validity of the contract rt 2 §4HPandart3§3R1 :partiesmayselectthelawofastatethathasnoconnectiontothepartiesor A their transaction. L imits on the choice of law :Person concerned R1 : consumer and employee contracts. Specific rules that require the application of local mandatory law. HP : focusses on commercial contracting having the same bargaining power. ature of the chosen law: R1 = has to be a statelaw. HP : can be a principle. N International scope: R1 applies only to EU MS. HPhas a broader international scope. Public policy: the judge won’t apply the chosen lawif : - art 11 HP: violation of fundamental principles ofjustice, morality or public interest - art 21 R1: if the application is manifestly incompatiblewith public policy of the forum E urofood (2006): first decision to talk about COMIfor group of companies Facts : Eurofood is a company based in Ireland, and is a wholly owned subsidiary of Parmalat, a company incorporatedinItaly.AmainproceedingwasopenedinItalyforParmalat(becauseParmalat'sCOMiwasinItaly - art 3 §1). But Eurofoodwasnotasubsidiaryestablishmentunderart3§2,sotheIrishcourtopenedmain proceedings in Ireland, thinking that Eurofood's COMI was in Ireland. ilemma: What is the determining factor for identifyingtheCOMIofasubsidiarycompany,whereitandits D parent have their respective registered offices in two different MS? - Is itthesubsidiarythatregularlyadministersitsinterests,inamannerascertainablebythirdparties and in respect for its own corporate identity, in the MS where its registered office is situated ? - Or is it thefactthattheparentcompanyisinaposition,byvirtueofitsshareholdingandpowerto appoint directors, to control the policy of the subsidiary ? Ruling:themerefactthatitseconomicchoicesareorcanbecontrolledbyaparentcompanyinanotherMSis not enough to rebut the presumption laid down by the Regulation. 6 Lecture 5 : UNIDROIT principles, Incoterms and ICC model clauses / contracts Harmonization through soft law UNIDROIT principles Since1984:aninternationalworkinggroupbasedinRome.It’sanon-bindingcodificationofhabits.Purpose: codifyandfillgapswhichnationallegislatorsdon’taddress.ICCmodelclauses(focusonpracticeofbusiness) are similar to UNIDROIT (comparable study of other national laws). NIDROIT (2016) 211 art in 11 chapters : Formation and Authority of Agents ; Validity;Interpretationand U Content ; Third Party Rights and Conditions ; Performance and Non-Performance ; Assignment of Rights, Transfer of Obligations, Assignment of Contracts ; Limitation Periods ; Plurality of Obligors and Obligees. NIDROIT is based on : Freedom of contract ; Pacta sunt servanda ; Good faith ; interpretation and ‘good U intention’ ; Specific performance ; Hardship and change of circumstances. How to use UNIDROIT model clauses : 1. Applicable law: binding when parties choose them.Downside : no body to interpret it. 2. Incorporate in the contract: ex. use UNIDROIT clauseon hardship instead of drafting our own. 3. Supplement to the Vienna Sales Convention(only substantiveunified law for the sales of goods). 4. Supplement to domestic law 2 versions of the clause :pre-dispute and post-disputeuse. ECL : Principles of European Contract Law(ProfessorOlé Lando) P Purpose : eliminate anyinsecurityininternationaltransactions/eliminateanydifferenceswithnationallaw. Parties can choose them. It touches the same topics as UNIDROIT principles. Harmonization through self-regulation I ncoterms® (2020) Set of standard contract clauses applied in a B2B contract of sale of goods. There are 11 Incoterms®rules categorized by a 3 letter trade terms. It can be used domestically or internationally. What do Incoterms® rules cover ? - Seller and buyerTASKS:Who organizes export or importclearance or transport - Passage ofRISKfor the goods from Seller to Buyer - Allocation ofCOSTS:Which party pays what (insurance,transport, packaging). What do Incoterms® rules NOT cover ? - Whether ot not there is a contract of sale - Specification of goods or details of payment - Most consequences of breach of contract or delays - Sanctions, Force majeure, hardship - Transfer of title or ownership rights in goods here do Incoterms® rules come from ?→ICC (establishedin 1919) firstly published them in 1936. W Purpose : provide a set of international rules for the interpretation of the most commonly used terms in foreign trade. They’re updated every 10 years approximately (last one in 2020). 7 Divided in 2 categories : - any mode of transport / sea and inland waterway transport - obligations of the seller / obligations of the buyer 3 tips for using Incoterms® rules 1. Choosethe right Incoterms® rules 2. Incorporatethe chosen rule into the B2B contractfor the sale of goodscorrectly 3. Make suresale contract and ancillary contractsmatch I CC model contracts and clauses 20 model commercial clauses. Deals with topics such as Force majeure and Hardship, Corruption and Environment. ims and audience A Provide balanced, internationally relevant models to help : - SMEs keep legal costs down and learn from the explanatory text included in the models - negotiate with reference to a neutral model I CC rules on combating corruption Imposesamethodforcompaniestoself-regulatethechecksonanti-corruption(youareheldaccountablefor everything that has to do with your supply chain). - foundation of ICC’s anti-corruption work - fosterhigh standardsin all business transactions - a method ofself-regulationby business - impart a solid basis for companies of all sizes to dobusiness with integrity Anti-corruption clause - Helppreserve integrityin the contract and in performanceof a business agreement. - Intended to apply to a contract that incorporates it either by reference or in full. - Provide contractual provisions that will reassure parties about the integrity of their counterparts during the pre-contractual period as well as during the contractual performance. - Put in place and maintain a corporate anti-corruption compliance program. - Helps preserve trust between parties and prevents corruption in both the negotiation and performance of contracts. 8 omparison and analysis of art 6.2.1 UNIDROIT PRINCIPLE and ICC hardship clause C Hardship (imprevision). These clauses deal with the performance of a contract, parties obligations. rt6.2.1UNIDROIT:wheretheperformanceofacontractbecomesmoreonerousforoneoftheparties,that A party is nevertheless bound to perform its obligations subject to the following provisions on hardship. ardship = any situation in which unforeseen events occur that fundamentally alter the equilibrium of a H contract resulting in an excessive burden being placed on one of the parties involved. Alteration of the equilibrium occurs if : - the cost of a party’s performance has increased (non-monetary) - the value of the performance a party receives has diminished. Requirements to identify a hardship case : - the events occur or become known to the disadvantaged party after the conclusion of the contract - theeventscouldnotreasonablyhavebeentakenintoaccountbythedisadvantagedpartyatthetime of the conclusion of the contract - the events are beyond the control of the disadvantaged party - the risk of the events was not assumed by the disadvantaged party I CC hardship clause Protectadisadvantagedpartywhenanevent,beyondparty’scontrol,rendersitsperformancemoreonerous than could reasonably have been anticipated at the time the contract was concluded. A party can rely on ICC hardship clause if it proves that : - continuing to perform contractual duties would be excessively onerous - it could not have avoided or overcome the event and its effects E volution of ICC hardship clause 2003 : possibility to only terminate the contract in the event of failure of renegotiation. 2020 : post Covid. 3 options are given : 1. terminate the contract 2. ask the judge or arbitrator to adjust / establish the equilibrium 3. ask the judge or arbitrator to declare the contract is ended S imilarities between UNIDROIT and ICC Requirements : - an event beyond the control of the disadvantaged party - the disadvantaged party couldn't have foreseen these events when making the contract Effects - a party has the right to : - terminate the contract - adapt the contract Differences : 1. UP is more restrictive in itsassessmentsofevents.ICCclauseisnotlimitedtosituationswherethe events occurred or became known to the disadvantaged party after the conclusion of the contract. 2. UP is easier for parties to implement. ICC renegotiation is subject to proof. 3. Under ICC parties have greater power to determine the effects of the hardship on the contrac (3 outcomes) 9 Lecture 6 : Dispute resolution in international context Dispute resolution → midnight clauses. Alternative dispute resolution Arbitration(outcome : award) 1. Commercial: relation between companies, private entities,states as business actors. Parties choose : - Ad hoc: no institution to guarantee the impartiality - Institutional : an arbitral institution is supervising the arbitration and guarantees the impartiality of arbitrators and the quality of awards. 2. Investment: investment treaties, relations betweena state and investor. Public international law. L egal framework for arbitration Lex arbitri : the law of the seat governs theprocedure(whatitcanandcannotdo).Ifit’snotrespectedit’s possible to challenge the award and make it invalid. Public policy: mandatory rules may apply. There’scontrol in the recognition phase. An award can be appealed. ediation(outcome : settlement agreement - contract) M It’s the onlyconsensualdisputeresolutionprocess;partiesdon’thavetosettle.It’sconductedprivatelyand confidentially.Themediatoractsasaneutralfacilitatortohelppartiesnegotiatethesettlementofthedispute. The outcome cannot be used in court or arbitration. 3 objectives 1. Low cost: average $20.000 2. Efficiency: less than 4 months (average 2) 3. High success rate : 90% ofconflictsendinsettlementafterthefirstmeeting.Partiescangetoutof mediation whenever they want. ediationallows:confidentiality;releasetensionandreducetherangeofdisputeresolution-conservegood M relations ; implementation of creative solutions (non-legal) ; no need for a mediation clause. I CC mediation rules Short and flexible Commencement with or without prior agreement Appointment of Mediator / neutral by ICC Costs (filing fee 3K + administrative expenses 6,5K + mediator’s fees and expenses). rocedure : Request → Official acknowledgement →Comments of the parties → Preliminary deposit P Appointment of the mediator → Transfer of the file → F irstmeetingwiththemediator→Mediationnote→Mediation→Followingthelifeofthecase→Termination of the case → Financial matters Model clauses : A. Possibility of using mediation B. Obligation to consider using mediation C. Arbitration and Mediation used simultaneously D. Mediation and Arbitration used successively 10 ediation is a contract, so it’s binding. If there’s a breach of contract, the court can enforce it. M UNCITRAL Singapore convention is putting the settlement contract on the same level as a court judgment. E xpertise(outcome : decision - contract) :In forcesince February 1st 2015 3 sets of rules for 3 different services: Proposal; Appointment ; Administration. Requests can be submitted by ‘any person’: Physicalperson ; Legal person ; Any court ; Any tribunal. The Centre can propose / appoint as Expert :a physicalperson ; a legal entity. o closed list → for each case the Centre commences an individual search. N The Centre will use: National committees ; Standingcommittee ; Contacts of the Centre itself Qualificationoftheexpert:Specificbackground;Languageskills;Fieldofactivity;Nationality;Independence ; Experience. nexpertisgenerallyaskedtodecideonaspecifictechnicalissue.Usually,theyariseoutofpricefixing.The A expert can have a more important role in giving evaluations ; a non binding, neutral evaluation. It’s also possibletoasktheexperttogivealegalbindingevaluation,towhichpartieshaveagreedtobindthemselfto the evaluation. If the parties don’t respect, it’s the same outcome for mediation - a violation of that contract. The contracts model how to determine an expert. The role of ICC is to propose an expert. ICC Administration of Expert Proceedings A) Optional administrated expert proceedings B) Non-binding expert proceedings C) Contractual binding expert proceedings D) Obligation to submit to non-binding expert proceedings, followed by arbitration if required ispute board(outcome : decision - contract) :Inforce since February 1st 2015 D It’s an expert in engineering for long term projects. DBsarestandingdisputeresolutionpanelsthatareoftenestablishedattheoutsetofacontractandremainin place through its duration. It’s a dispute avoidance mechanism / dispute prevention. Used for MT/ LT contracts. DBsassistthepartiesinavoidingdisagreementsbyraisingpotentialconcernssothepartiesmayaddressthem on their own. DBs provide recommendations or issue decisions regarding any disputes arising under the contract. D ispute Review Board(DRB):issuesrecommendations.Notbindingonparties;butifnonoticeof dissatisfaction is given within 30 days, it becomes final and binding. D ispute Adjudication Board(DAB):issuesdecisions.Partiesmustcomplywiththedecision.Parties mayexpressdissatisfactionwiththeDecision,butifnonoticeofdissatisfactionisgivenwithin30days, the decision will remain binding and become final. C ombined Dispute Board(CDB):normallyissuesrecommendations,butmayissuedecisions.Offers an intermediate approach between the DRB and the DAB. T he Centre can assist with : Appointment of DB members ; Challenges of DB members ; Fixing fees of DB members ; Review of the decisions. 11 Traditional Way : Transnational Court Litigation(outcome : judgment) Regional unification: - Brussels Regulation and Lugano Convention (EU and EFTA) - Mercosur agreements (South America) International unification: - The Hague Convention on Choice of Forum - Legal uncertainty - No guarantee for enforcement of decisions The (practical) complexities of international court litigation Legal uncertainty as to the competent court Differences in the applicable law Differences in procedural law - availability of high damages - level of procedural costs and costs liabilities - jury trial and pre-trial discovery - judicial delays No guarantee for enforcement of decisions (besides Brussels regulation and Lugano) Practical aspects - language barriers - additional travel expenses - finding local counsel - quality and independence of the judiciary T he traditional way of dispute resolution is uncertain and complex. Party autonomy is very important. Party autonomy = a privateinternationallawdoctrinethatpermitspartiestochoosethegoverninglawand thecompetent forumormechanism of dispute resolution. Forum fixing offers predictability and legal certainty, offers a favorable forum and reduces risks of non-endorsement. The claimant has an advantage because he’s starting the proceeding. Claimant’s advantage: forum selection and forum shopping; race to the court. The proactive defendant: declaratory judgment ; anti-suitinjunction ;reversed forum shopping. hy have a choice of forum clause ? → predictability and legal certainty ; offer favorable forum ;exclude W undesirableforums;precludeparallelproceedingsandjurisdictionconflicts;tailoringtoneedsparties;reduce risk of non-enforcement. Outside the EU, there’s no guarantee that the judgment will be recognized. Instruments : - The Hague Convention of 2005 on Choice of Forum - The Hague Judgment Convention 2019 - Brussels I Regulation 2012 - Lugano Convention russels I Regulation - 2012 B Substantive scope (art 1): civil and commercial matters Territorial scope (art 4 to art 6), exception inart25 Substantive validity (art 25) - requirement of internationality - a particular legal relationship (Powell Duffryn-relationship between shareholder and company) - no connection between the chosen court and dispute required (Castelletti) 12 - ot contrary to the mandatory provisions n - partiesmustbecapabletodisposeofthesubjectmatterofthedisputeinordertobeabetochoosea competent forum - todetermineiftheclauseisvalid,youmustexamineitsvalidityunderthelawofthedesignatedMS (p reamble 20) a) C ontract signed by both parties Salotti case- express reference to document withjurisdiction clause is sufficient) Segoura and Tilly Russ case- explicitly includingthe jurisdiction clause Powell Duffryn - a jurisdiction clause in a Ltd Company's statutes, adopted per national law and company statutes, is valid. b) In accordance with practices between parties ex. previous usage, oral agreement c) In accordance with international tradeorcommerceusagethatpartiesareoroughttobeawareof and that is widely known T he Hague Convention of 2005 on Choice of Forum Is not in force yet and is limited to B2B cases. Substantive scope (art 1 and 2): civil and commercialmatters. Territorial scope (a rt 3 a) : the chosen court has to be the court of a Contracting state (party’sdomicile/ residence is irrelevant). Key obligations : 1. Art 5 §1→ chosen court as jurisdiction, unless theagreement is null and void under national law 2. Art5§2→chosencourtcannotdeclinejurisdictionongroundthatdisputeshouldbedecidedincourt of other State 3. Art6→courtsotherthantheonedesignatedintheagreementmustdeclinejurisdictionunlessthe agreement is null and void, a party lacked legal capacity, enforcing the agreement would cause manifestinjusticeorbreachpublicpolicy,forcemajeurepreventsitsapplication,orthechosencourt declines jurisdiction rt 26 : the Convention does not override or interfere with the rules of a Regional Economic Integration A Organization (REIO), such as the European Union, that is a party to the Convention. These rules apply: - Regardless of whether they were adopted before or after the Convention. - If none of the parties involved resides in a state outside the REIO that is also a party to the Convention. ispute resolution without Forum fixing - Brussels I Regulation D General jurisdiction rule(art 4): the country ofdomicile defendant Special jurisdiction rule(art 7) a person domicilein a MS may be sued in another MS : 1.a) in matters relating to a contract, in the courts for the place of performance of the obligation in question b) the place of performance of the obligation in question shall be : - sales of goods : MS where the goods were delivered or should have been delivered - provision of services : MS where the services were provided or should have been provided c) if b) does not apply then a) applies 2. In matters relating to tort, delict, in the courts for the place where the harmful event occurred or may occur. 5. For disputes related to a branch, agency or establishment, jurisdiction where the B, A or E is situated. 13
